Delhi District Court
Abhishek Mathur vs Ms Orxygen Infrastrutures on 18 March, 2025
CC NI ACT 40133/2016
ABHISHEK MATHUR VS. M/S OXYGEN INFRASTRUCTURES & DEVELOPMENT PVT. LTD.
IN THE COURT OF MS. NEHA SHARMA,
JUDICIAL MAGISTRATE FIRST CLASS (NI ACT) -04,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS, NEW DELHI
CRIMINAL COMPLAINT NO: 40133/2016
ABHISHEK MATHUR ............COMPLAINANT
VERSUS
M/S OXYGEN INFRASTRUCTURES &
DEVELOPMENT PVT. LTD. ............ACCUSED
1. CIS number : DLND020052502016
2. Name of the complainant : Abhishek Mathur
R/o 86, Vasant Enclave,
Rao Tula Ram Marg,
Vasant Vihar, New Delhi
3. Name of the accused, : 1) M/s. Oxygen Infrastructures & Developers Pvt.
parentage & Ltd.
residential address H-70, Sector-63, Noida-201301, UP
2) Mr. N.K. Sharma
Director / Proprietor of
M/s. Oxygen Infrastructures & Developers Pvt.
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JMFC NI Act-04/NDD/PHC/ND NEHA
NEHA SHARMA
SHARMA Date:
2025.03.18
16:48:07
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ABHISHEK MATHUR VS. M/S OXYGEN INFRASTRUCTURES & DEVELOPMENT PVT. LTD.
Ltd.
H-70, Sector-63, Noida-201301, UP
3) Mr. Gaurav Mittal
Director / Proprietor of
M/s. Oxygen Infrastructures & Developers Pvt.
Ltd.
H-70, Sector-63, Noida-201301, UP
4. Offence complained of or : U/s 138 of Negotiable Instruments Act, 1881
proved
5. Plea of the accused : Pleaded not guilty and claimed trial.
6. Date of Institution : 03-02-2016
7. Date of judgment/order : 18.03.2025
8. Final Judgment/order : ACCUSED NO. 1 AND 2 ARE CONVICTED.
ACCUSED NO. 3 IS ACQUITTED.
JUDGMENT
1. By way of the present Judgment, this court shall dispose of the present complaint case filed by the complainant Abhishek Mathur (hereinafter referred to as 'complainant') against 1) M/s. Oxygen Infrastructures & Developers Pvt. Ltd., 2) Mr. N.K. Sharma & 3) Mr. Gaurav Mittal (hereinafter referred as the 'accused no.1, accused no.2 & accused no.3, respectively') u/s 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act').
CASE OF THE COMPLAINANT
2. Succinctly, the complainant's case is that the Accused No.1 is a Private Limited Company having its office at H-70, Sector-63, Noida 201301, U.P, and Accused Page no. 2 of 20 (Neha Sharma) Digitally signed by JMFC NI Act-04/NDD/PHC/ND NEHA NEHA SHARMA SHARMA Date:
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No. 2 and 3 are the Directors of the Accused No. 1 Company responsible for the management, control, and supervision of Accused no. 1 Company and also responsible for its day to day affairs. The complainant had booked an apartment measuring 1080 sq. ft. @ Rs. 2550/- per sq. ft. at basic sale price, from the accused persons in their upcoming residential group housing project "Spanish Heights" located on NH24, Village Mehrauli Ghaziabad, U.P.
3. The complainant and Accused no. 2 & 3, on behalf of Accused no. 1, had signed an agreement dated 11th June 2013 regarding the same housing project. As per the clause 2 of the agreement, if the buyer will pay Rs. 7,50,000/- at the time of booking, the developer shall give an investment return @ Rs. 200/- per sq. ft. (i.e. Rs. 2750/- per sq. ft.) on booking amount and the same will be payable to the buyer after 9 months of receipt of the booking amount. The complainant had paid Rs. 7,50,000/- to the accused persons as booking amount vide cheque no. 259660 dated 11.06.2013. As per clause 4 of the agreement, the complainant decided to quit after 9 months after taking the premium of Rs. 200/- per sq. ft. with the deposit/booking amount, which was agreed by the accused persons.
4. In discharge of liability, the accused persons issued a cheque bearing no. 005726, dated 01.03.2014, of Rs. 9,66,000/- drawn on Axis Bank, Branch Vaishali Ghaziabad, U.P (hereinafter referred to as "cheque in question"), which included deposit/booking as well as premium amount, to the complainant and when the cheque was presented for encashment, the cheque got dishonoured for the reason "Funds Insufficient" vide cheque return memo dated 16.04.2014. The Accused No. 2 is the signatory of the agreement on behalf of Accused No. 1 while Accused No. 3 is the signatory of the cheque issued to the complainant on behalf of Accused No. 1.
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5. Thereafter, the complainant sent a legal demand notice dated 07.05.2014 which was issued to the accused demanding the payment of the cheque amount. Despite the service of legal demand notice, accused did not make any payment to discharge the liability. Hence, being aggrieved, the complainant has filed the present complaint and prayed that the accused be summoned, tried and punished under Section 138 of the NI Act.
SUMMONING OF ACCUSED
6. On the basis of complaint and pre-summoning evidence filed by the complainant, and on the basis of documents annexed with the complaint, cognizance of the offence U/s 138 NI Act was taken and process was issued against the accused on 14.07.2014. The Accused no. 2 and 3 entered appearance in the present case on 11.08.2016 and on the same day, they were admitted to bail. Accused No. 1 company entered appearance on 28.11.2019 through an Authorized Representative (hereinafter referred to as "AR").
NOTICE
7. The court framed notice of accusation under Section 251 of the Criminal Procedure Code, 1973 (hereinafter referred to as 'Cr.P.C.') against the Accused no. 2 and 3 on 06.04.2021 while on AR of Accused No. 1 on 21.02.2022. The substance of accusation was read over and explained to the accused persons and after being satisfied that the accused persons comprehended the same, the court recorded their plea. The accused persons pleaded not guilty and claimed trial. The Accused No. 3 admitted his signatures on the cheque in question. Upon being questioned regarding the legal demand Page no. 4 of 20 (Neha Sharma) NEHA JMFC NI Act-04/NDD/PHC/ND SHARMA Digitally signed by NEHA SHARMA Date: 2025.03.18 16:48:17 +0530 CC NI ACT 40133/2016 ABHISHEK MATHUR VS. M/S OXYGEN INFRASTRUCTURES & DEVELOPMENT PVT. LTD.
notice, the Accused No. 1 and 2 denied receiving the legal demand notice but Accused no. 3 admitted receiving the same.
8. In their plea of defence, the AR of Accused No. 1 denied having knowledge of dealing between the complainant and accused no. 2 and 3. He stated that accused no. 2 and 3 resigned without any prior intimation and without handing over the records of the company and till date the resignation of accused no. 2 and 3 has not been accepted by the company. The Accused no. 2 stated that the cheque was issued without his knowledge and it does not bear his signatures while, accused No. 3 stated that he resigned from the company on 12.09.2012 and the cheque in question was issued to the complainant without his knowledge.
9. Vide order dated 05.01.2022 and 21.02.2022, the requirement of filing application U/S 145(2) NI Act was dispensed with and accused persons were allowed to cross examine the complainant. The matter was, thereafter, listed for the evidence of the complainant.
EVIDENCE OF THE COMPLAINANT
10. To prove his case prima facie, the complainant examined his AR Sh. Manoj Kumar Srivastava who filed his affidavit of evidence under Section 200 of the Cr.P.C. by way of an affidavit i.e. Ex. CW-1/G wherein he has reiterated the averments made in the complaint. He placed reliance upon the following documents:
1) Ex. CW1/A i.e. Copy of Authority letter;
2) Ex. CW1/B i.e. Copy of said agreement dt. 11.06.2023;
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3) Ex. CW1/C i.e. Original cheque bearing no. 005726 dt. 11.03.2014;
4) Ex. CW1/D i.e. Return memo dated 16.04.2014;
5) Ex. CW1/E (Colly) i.e. Legal demand notice dated 07.05.2014 along with postal receipts and Tracking report;
6) Ex. CW1/F i.e. Original complaint.
11. CW-1 was cross examined by Accused No. 2 and 3 separately. Thereafter, vide order dated 13.10.2023, the Accused No. 1 company was proceeded against in absentia in terms of Section 304 Cr.P.C.
EXAMINATION OF THE ACCUSED UNDER SECTION 313 CR.P.C.
12. In the statement of the Accused No. 2 recorded under Section 313 Cr.P.C. on 18.12.2023, the Accused No. 2 stated that he had business dealings with the complainant. He stated that the cheque in question was given to the complainant in pursuance of the agreement Ex. CW1/B. He denied signing the cheque in question and also issuing the cheque. He stated that he has no personal liability towards the complainant as he has resigned from the directorship of Accused No. 1 company in the year 2017. He further stated that he was not concerned with the day to day affairs of Accused No.1 company and he did not receive the legal demand notice Ex.CW1/E as the address mentioned on the legal demand notice Ex. CW/E belongs to the Accused No. l company. He admitted that he was the director of the Accused No.1 company on the date of the legal demand notice.
13. In the statement of the Accused No. 3 recorded under Section 313 Cr.P.C. on 18.12.2023, the Accused No. 3 stated that he had resigned from the directorship of Accused No.1 company in the year 2012. H stated that he was not associated with the day Page no. 6 of 20 (Neha Sharma) NEHA JMFC NI Act-04/NDD/PHC/ND SHARMA Digitally signed by NEHA SHARMA Date: 2025.03.18 16:48:24 +0530 CC NI ACT 40133/2016 ABHISHEK MATHUR VS. M/S OXYGEN INFRASTRUCTURES & DEVELOPMENT PVT. LTD.
to day affairs/ functioning of the Accused No.1 company and he has no liability towards the complainant. He admitted his signatures on the cheque in question and he stated that he did not receive the legal demand notice Ex. CW1/E. The address mentioned on the legal demand notice Ex. CW1/E belong to the Accused No.1 company. Thereafter, since the Accused no. 2 and 3 expressed their willingness to lead DE, the matter was listed for defence evidence.
DEFENCE EVIDENCE
14. Pursuant thereto, the Accused No. 2 examined a witness from ROC office as D2/W1. The witness was cross examined by Ld. Counsel for complainant. Thereafter, Accused No. 3 examined a witness from office of newspaper "Veer Arjun" as DW3A. The witness was cross examined by Ld. Counsel for complainant. The matter was listed for final arguments.
FINAL ARGUMENTS
15. Both parties addressed their final arguments. Ld. counsel for the complainant, argued that the accused persons have admitted execution of agreement and issuance of cheque to the complainant. He argued that the accused no. 3 has admitted his signatures on the cheque in question. He further argued that the address on the legal demand notice has been admitted but accused persons failed to rebut the presumption U/S 139 NI Act and the legal demand notice is deemed to be served under Section 114 of the Indian Evidence Act (hereinafter referred to as "IEA"). Accordingly, Ld. counsel prayed that the accused be convicted for the offence under section 138 NI Act. Reliance is placed on judgment in S.M.S. Pharmaceuticals Ltd., Vs. Neeta Bhalla & Anr. (2005 8 SCC 89).
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16. Per contra, Ld. counsel for the accused no. 2, argued that the accused owes no legal liability for payment of amount of cheque to the complainant as cheque has been misused. He further argued that there is no liability of the accused no. 2 for the amount of cheque in question as the accused no. 2 had resigned from the company in 2017. On the other hand, Ld. counsel for the accused no. 3, separately argued that the accused no. 3 owes no legal liability for payment of amount of cheque to the complainant as accused no. 3 had resigned from the company in 2012 i.e. before the date of the cheque in question. He further argued that the accused no. 3 has rebutted the presumption raised U/S 139 NI Act but complainant failed to prove the guilt of the accused no. 3 beyond reasonable doubt, hence, accused no. 3 is entitled to be acquitted. He placed reliance upon judgment in Rajesh Viren Shah vs. Redington (India) Limited (2024 INSC 111),
17. The file has been carefully and minutely perused and my issue-wise findings with reasons thereof are as under: -
FINDINGS
18. Before appreciating the facts of the case and evidences led by the both the sides for the purpose of decision, let us first discuss the relevant position of law which is embodied in section 138 of NI Act. In the case of Kusum Ingots and Alloys Ltd. vs. Pennar Peterson Securities Ltd. (2000) 2 SCC 745, the apex court has expounded the ingredients which are required to be fulfilled in order to constitute an offence under Section 138 of the NI Act. The relevant portion of the said judgment laying down the ingredients to be satisfied for making out a case under Section 138 of the NI Act is reproduced as under:
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a) A person must have drawn a cheque on an account maintained by him in a bank for payment of a certain sum of money to another person from out of that account for the discharge of any legally enforceable debt or liability;
b) cheque has been presented to the bank within a period of three months from the date on which it is drawn or within the period of its validity whichever is earlier;
c) That cheque has been 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;
d) The payee or the holder in due course of the cheque has made 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; and
e) 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.
19. Being cumulative, it goes without saying that it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act. Having said that, it becomes imperative to mention section 139 of NI Act which carves out a presumption in favour of the drawee that the cheque was issued to him in discharge of a debt or other liability of a legally enforceable nature. Also, the said provision must be read along with the section 118 of the same enactment which spells out another presumption in favour of the drawee that every negotiable instrument was drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was Page no. 9 of 20 (Neha Sharma) Digitally signed by JMFC NI Act-04/NDD/PHC/ND NEHA NEHA SHARMA SHARMA Date:
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accepted, endorsed, negotiated or transferred for consideration.
20. Having said that, what follows from the above is that the journey of evidence in a trial under section 138 NI Act, begins not from the home of the prosecution story but from the point of the defence. As rebuttal evidence, the accused merely has to prove that the cheque was not given for any consideration or that there was no legal liability in existence against him for which the negotiable instrument was given. In the backdrop of the factual narrative of the case, following points of determination arise in the present case:
A. Whether the complainant has been successful in raising the presumption un- der section 118 read with section 139 of the N.I Act, 1881? B. If yes, whether the accused has been successful in raising a probable defence to rebut the presumptions?
21. Since criminal liability can be attached by proving each element of the section under which liability is sought to be enforced, I shall now go on to appreciate the evidence- documentary and oral, in light of how compellingly it satisfies each of such ingredient, if at all. The first condition pertains to the issuance of the cheque in question to make the payment from an account maintained by the drawer of the cheque towards a legally en- forceable debt or other liability. The agreement i.e. Ex. CW1/B is not denied. The com- plainant has proved the original cheque and original return memo i.e. Ex. CW1/C and Ex. CW1/D respectively which the accused persons have not disputed as being drawn on the account of the accused no. 1 company.
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SHARMA Date:
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22. At the time of framing of Notice U/S 251 Cr.P.C. and recording of his state- ment U/S 313 Cr.P.C., the accused no. 2 admitted issuing the cheque in question in pur- suance of the agreement i.e. Ex. CW1/B and accused no. 3 has admitted his signatures on the cheque in question. As per the scheme of the NI Act, once the accused admits signature on the cheque in question, certain presumptions are drawn, which result in shifting of onus. The combined effect of Section 118(a) and Section 139 of NI Act is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability.
23. It has been held by Hon'ble Supreme Court in Hiten P. Dalal vs. Bratin- dranath Banerjee (2001) 6 SCC 16 and Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the pre- sumptions and the onus of proof were summarized by the Hon'ble Apex Court in Basalin- gappa vs. Mudibasappa (2019) 5 SCC 418 wherein it was held;
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to Page no. 11 of 20 (Neha Sharma) NEHA JMFC NI Act-04/NDD/PHC/ND SHARMA Digitally signed by NEHA SHARMA Date: 2025.03.18 16:48:41 +0530 CC NI ACT 40133/2016 ABHISHEK MATHUR VS. M/S OXYGEN INFRASTRUCTURES & DEVELOPMENT PVT. LTD.
rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
24. In the case in hand, at the time of framing of Notice U/S 251 Cr.P.C., the sole plea of defence taken by Accused No. 1 is that there is no knowledge of any transaction between the complainant and Accused No. 2 and 3 and the resignation of Accused No. 2 and 3 is not accepted by the company. The plea of defence taken by the accused no. 2 is that he had resigned from the company in 2017 but accused no. 2 admitted issuance of cheque to the complainant in pursuance of Ex. CW1/B while accused no. 3 stated that he resigned from Accused No. 1 company in 2012.
25. The Accused No. 1 company did not lead any evidence in support of its pea of defence. Accused no. 2 examined witness from office OF Registrar of Companies as D2/W1 who placed reliance upon the certificate of incorporation, master data and list of directors of accused no. 1 company which is Ex. D2/W1/A, Ex. D2/W1/B and Ex. D2/W1/C respectively. While, Accused No. 3 examined Mr. Ramashray Singh, Manager, Advertisement from newspaper Veer Arjun as DW3A in support of his case who relied upon the original newspaper published on 10.04.2015 i.e. Ex. DW3A/1.
NEHA
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26. Ex. D2/W1/C shows the date of cessation of directorship of Accused No. 3, Sh. Gaurav Mittal to be 12.09.2012 while directorship of Accused No. 2, Sh. Narender Sharma ended on 08.12.2017. Ex. DW3A/1 further shows that Accused No. 3 had gotten the same published in the newspaper on 10.04.2015. The law regarding liability of a director who is not a director on the date of cheque is settled. In a recent judgment in Rajesh Viren Shah vs. Redington (India) Limited (supra), it was observed by Apex Court that;
"10. The record reveals the resignations to have taken place on 9th December 2013 and 12th March 2014. Equally, we find the cheques regarding which the dispute has travelled up the courts to have been issued on 22nd March 2014. The latter is clearly, after the appellant(s) have severed their ties with the Respondent- Company and, therefore, can in no way be responsible for the conduct of business at the relevant time. Therefore, we have no hesitation in holding that they ought to be then entitled to be discharged from prosecution."
27. The veracity of Ex. D2/W1/A, Ex. D2/W1/B and Ex. D2/W1/C has neither been disputed by the complainant nor has the act of resignation simpliciter been questioned. In fact, during cross examination, CW-1 stated that he does not know if Accused No. 3 resigned from Accused No. 1 company on 25.09.2012. He admitted that only Pawan Gaur is the director of Accused No. 1 company. He stated that cheque was signed in his presence but he admitted that he had not seen Accused No. 3 signing the cheque in question. Thus, from the cross examination of CW-1 and evidence led, Accused No. 3 has been able to establish that he ceased to be a director of Accused No. 1 company on 12.09.2012 even before the agreement i.e. Ex. CW1/B dated 11.06.2013 was signed NEHA Page no. 13 of 20 (Neha Sharma) SHARMA JMFC NI Act-04/NDD/PHC/ND Digitally signed by NEHA SHARMA Date: 2025.03.18 16:48:47 +0530 CC NI ACT 40133/2016 ABHISHEK MATHUR VS. M/S OXYGEN INFRASTRUCTURES & DEVELOPMENT PVT. LTD.
and the cheque in question dated 11.03.2014 was issued. Thus, Accused No. 3 cannot be held liable for the dishonour of the cheque in question U/S 141 NI Act.
28. On the other hand, Accused No. 2 has admitted his signatures on Ex. CW1/B and issuance of cheque in question to the complainant in pursuance of Ex. CW1/B. Admittedly, the Accused No. 2 was the director of company on the date of issuance of cheque in question as he only ceased to be a director on 08.12.2017. The Accused No. 2 only stated that he has no liability for the cheque in question, however, no documentary or oral evidence was led in this regard. The AR of complainant specifically stated in his cross examination that cheque was given in pursuance of Ex. CW1/B, however, CW-1 was not further cross examined on this point. Thus, there is nothing on record to exonerate Accused No. 2 of his liability U/S 141 NI Act.
29. It would be pertinent here to mention that this case has been filed against a company and its two directors. Section 141 of NI Act states that if a person committing an offence u/s 138 NI Act is a Company, every director of such Company who was in charge of and responsible to that Company for conduct of its business shall also be deemed to be guilty. I am supported by judgment in SMS Pharmaceuticals (supra). The liability of Accused no. 1 and 2 has been assessed on the record and they have failed to prove that they had no liability at the time of presentation of cheque in question. The accused persons have only presented oral testimony on their behalf even though the defense evidence is pitted against the documentary evidence in the form of the cheque in question. The accused did not bring any evidence to impeach the credibility of the documents upon which reliance is placed by the complainant, rather accused agreed on the point of having executed the agreement and issuance of cheque in question.
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30. It is held in the case of Kumar Exports v. Sharma Carpets AIR 2009 SUPREME COURT 1518 that the accused might refute the assumption under Section 139 of the NI Act by demonstrating a gap in the complainant's evidence rather than by providing direct proof. However, the court cannot cast doubt on the complainant's case if the accused fails to submit any evidence to counter the assumption. The Accused No. 1 and 2 failed to produce or get produced any document to corroborate their stand. Since, in the present case all the defences taken by the Accused No. 1 and 2 stand beseeched, therefore, considering the weight of the attending circumstances viz, the consistency in the prosecution story, the compelling documentary evidence adduced by the complainant, the first element of Section 138 NI Act stands assembled.
31. As far as the second and third conditions are concerned, the same is satisfied upon the perusal of the cheque in question and the return memo i.e. i.e. Ex. CW1/C and Ex. CW1/D. The cheque in question has been presented within the prescribed period of limitation of three months. The accused did not adduce any evidence whatsoever to contradict the same. Thus, this element of Section 138 NI Act stands proved. The return memo shows that cheque was dishonoured due to the reason 'funds insufficient'. This fact has not been disputed by the accused throughout the trial. Further, section 146 of the NI Act, in this regard comes into play which raises a presumption that the court shall presume the fact of dishonor of the cheque in case the cheque is returned vide a return memo having thereon the official mark denoting that the cheque has been dishonoured. Such bank slip or memo is a prima facie proof of dishonor and the defence has failed to rebut the presumption U/S 146 of the NI Act.
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32. Fourthly and lastly, it is required that the payee or the holder in due course of the cheque has made 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 and 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. In the present case, the Accused No. 2 denied receiving the legal demand notice at the time of framing of notice U/S 251 Cr.P.C. and in his statement recorded U/S 313 Cr.P.C., but admitted the address mentioned on the legal demand notice to be correct address of Accused No. 1.
33. The Hon'ble Supreme Court held in the case of Krishna Texport & Capital Markets Ltd. v. ILA A. Agarwal & Ors. Criminal Appeal No. 1220 of 2009, particularly in Paragraph No.14 of the judgment which read as follows:
"14. Section 141 states that if the person committing an offence under Section 138 is a Company, every director of such Company who was in charge of and responsible to that Company for conduct of its business shall also be deemed to be guilty. The reason for creating vicarious liability is plainly that a juristic entity i.e. a Company would be run by living persons who are in charge of its affairs and who guide the actions of that Company and that if such juristic entity is guilty, those who were so responsible for its affairs and who guided actions of such juristic entity must be held responsible and ought to be proceeded against. Section 141 again does not lay down any requirement that in such eventuality the directors must individually be issued separate notices under Section 138. The persons who are in charge of https://www.mhc.tn.gov.in/judis the affairs of the Company and running its affairs must naturally be aware of the notice of demand under Section 138 of the Act issued to Digitally signed by Page no. 16 of 20 (Neha Sharma) NEHA NEHA SHARMA JMFC NI Act-04/NDD/PHC/ND SHARMA Date:
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such Company. It is precisely for this reason that no notice is additionally contemplated to be given to such directors. The opportunity to the 'drawer' Company is considered good enough for those who are in charge of the affairs of such Company. If it is their case that the offence was committed without their knowledge or that they had exercised due diligence to prevent such commission, it would be a matter of defence to be considered at the appropriate stage in the trial and certainly not at the stage of notice under Section
138."
34. Admittedly, Ex. CW1/E was sent on the correct address of the Accused No. 1 company and it is found that there is no proof regarding the service of notice on the Accused No. 2, however, the claim of the Accused No. 2 that statutory notice is found to be defective cannot be accepted in the light of the reported decision of Hon'ble Supreme Court stating that the statutory notice to each of the Directors of the Company is not mandatory/necessary, if it is found that statutory notice was served on Company. Thus, it is only to be assessed if legal demand notice was served upon Accused No. 1 company.
35. In C.C. Alavi Haji Appellant V. Palapetty Muhammed & Anr. Respondents 2007 STPL(DC) 952 SC, it was observed that the service of notice is presumed until such presumption is rebutted by the addressee by proving to the contrary. It was held:
"14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is Page no. 17 of 20 (Neha Sharma) Digitally JMFC NI Act-04/NDD/PHC/ND signed by NEHA NEHA SHARMA SHARMA Date:
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deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement "refused" or "not available in the house" or "house locked" or "shop closed" or "addressee not in station", due service has to be presumed. [Vide Jagdish Singh Vs. Natthu Singh, AIR 1992 SC 1604, State of M.P. Vs. Hiralal & Ors. (1996) 7 SCC 523 and V. Raja Kumari Vs. P. Subbarama Naidu & Anr. (2004) 8 SCC 774]. It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play, in the return of the notice unserved."
36. It was further observed that even if the accused claims that he did not receive the legal demand notice, he may have paid the cheque amount within 15 days of receipt of summons from the court but if he fails, he cannot contend that he has not received the legal demand notice. The relevant extract is reproduced below:
"17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. 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 Digitally Page no. 18 of 20 (Neha Sharma) signed by JMFC NI Act-04/NDD/PHC/ND NEHA NEHA SHARMA SHARMA Date:
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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. As observed in Bhaskaran's case (supra), if the "giving of notice" in the context of Clause (b) of the proviso was the same as the "receipt of notice" a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."
37. Thus, from the above observations it is clear that when a registered letter is sent to the correct address, it is deemed to be served upon the addressee in the ordinary course. From perusal of Ex. CW1/E alongwith Ex. CW1/F and Ex. CW1/G i.e. i.e. legal demand notice, corresponding postal receipt and tracking report, it is evident that the legal demand notice was issued on the correct address of the Accused No. 1 company on 07.05.2014. The burden was on the Accused no. 1 and 2 to rebut the said presumption. However, the accused persons have not disputed the address mentioned on the legal demand notice to be the correct address of the Accused No. 1 company nor it is stated that Accused No. 1 is not at the said address.
38. It is only contended by the AR of Accused No. 1 company, in his notice U/S 251 Cr.P.C., that the address mentioned on the legal demand notice was sold at that time and no one on behalf of company was available at the said address but no evidence was led to prove the same. Thus, it can be safely concluded that the Accused No. 1 and 2 were NEHA Page no. 19 of 20 (Neha Sharma) SHARMA JMFC NI Act-04/NDD/PHC/ND Digitally signed by NEHA SHARMA Date: 2025.03.18 16:49:08 +0530 CC NI ACT 40133/2016 ABHISHEK MATHUR VS. M/S OXYGEN INFRASTRUCTURES & DEVELOPMENT PVT. LTD.
served with the legal demand notice as envisaged by Section 138 NI Act but failed to make the payment. Thus, the fourth and last limb of what will entail the liability against the accused is also structured.
DECISION
39. In the instant case, the Accused No. 1 and 2 have failed to lead any convincing evidence to aid them in discharge of their onus and the presumption of law operates in favour of existence of debt or liability. Thus, having considered the entire evidence, I am of the opinion that the complainant has successfully proved all the essential ingredients of Section 138 of the NI Act. Accordingly, this Court finds Accused No. 1 M/s. Oxygen Infrastructures & Developers Pvt. Ltd. and Accused No. 2 Mr. N.K. Sharma guilty and are they are hereby convicted for the offence under Section 138 of the NI Act, while Accused No. 3 Mr. Gaurav Mittal is acquitted of the offence under Section 138 of the NI Act. Let Accused No. 1 and 2 be heard on the point of sentence separately.
40. Let the copy of this judgment be given to the convicts free of cost and the same be also uploaded on CIS forthwith. Digitally signed by NEHA NEHA SHARMA Announced in the open court on SHARMA Date:
2025.03.18 16:49:12 +0530 on this 18.03.2025.
(NEHA SHARMA) JUDICIAL MAGISTRATE FIRST CLASS NI ACT-04/NDD/PHC/ND Note :-This judgment contains twenty pages and all the pages have been checked and Digitally signed signed by me. NEHA by NEHA SHARMA SHARMA Date: 2025.03.18 16:49:16 +0530 (NEHA SHARMA) JUDICIAL MAGISTRATE FIRST CLASS NI ACT-04/NDD/PHC/ND Page no. 20 of 20 (Neha Sharma) JMFC NI Act-04/NDD/PHC/ND