Delhi District Court
Spicejet Ltd. vs . Vivek Kumar on 4 May, 2023
IN THE COURT OF SH. PANKAJ RAI
METROPOLITAN MAGISTRATE 05 (N.I. ACT), ROUSE AVENUE COURTS:
NEW DELHI DISTRICT
CC No.16631/18
Spicejet Ltd. Vs. Vivek Kumar
1.Complaint Case number : 16631/18 2 Name and address of : Spicejet Ltd.
the complainant 319, Udyog Vihar PhaseIV, Gurugram, Haryana.
3. Name and address of : Vivek Kumar the accused S/o Rajeshwar Prasad Singh R/o Flat No. B907, Panchsheel Apartments, Gandhi Ashram CGHS, Plot No. 9, Sector 10, Dwarka, New Delhi110075.
4. Offence complained of : Section 138 of the Negotiable Instruments Act, 1881.
5. Plea of the accused : Pleaded not guilty and claim trial.
6. Final Order : Acquitted
7. Date of Institution : 30.11.2018
8. Date of Reserving the : 27.04.2023 Judgment
9. Date of pronouncement : 04.05.2023 Judgment:
1. Vide this judgment I shall dispose of the complaint filed by the complainant under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the 'Act ').
2. Brief facts relevant for the decision of the case are as under: It is the case of the complainant that it had inducted the accused as a Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 1/15 trainee officer as per its letter of offer dated 29.12.2015 and that vide complainant's letter of appointment dated 11.01.2016, the accused was appointed as Trainee First Offer (TFO) - B737 in the filghts operations department of the complainant. It is also averred in the complaint that the said appointment was governed by the terms and conditions of employment as per Annexure A to the said letter of apointment dated 11.01.2016. That the accused was required to undergo extensive ground school training, simulator training, pursuant to his selection and that its expenses on actual basis were to be borne by the accused. That the accused agreed that the aforesaid recovery shall continue for full five years, after the release of accused as First Officer, upon the successful completion of training. That the accused had also signed a Indemnity cum Service Agreement dated 11.01.2016 and agreed to serve the complainant for a minimum period of five years pursuant thereto till
10.01.2021. That the accused also undertaken that in case he leaves the employment before the above lock in period of five years then he shall indemnify the complainant to the tune of Rs. 20 lacs on account of various heads and that the accused also deposited five undated cheques of Rs. 4 lacs each against the aforesaid undertaking. That the complainant was entitled to present the above cheques for encashment in the event of breach of above undertaking. That the accused was further bound to comply with the terms of bond as per clause 17.2 of Annexure A of letter of appointment. It is also averred that the accused committed the breach of terms of his employment when he tendered his resignation on 31.01.2018 by giving six months notice to the complainant and that the accused, thereafter, stopped attending his duties from 30.07.2018 and that he had failed to comply with the stipulations of the bond and is guilty of its breach. That, consequently, the complainant became entitled to claim a sum of Rs. 20 lacs as damages / penalty from the accused as per the bond and that in this regard it had deposited the five cheques in Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 2/15 question bearing nos. 097026, 097027, 097028, 097029 and 097030, all dated 27.09.2018 for an amount of Rs. 4,00,000/ each, and drawn on ICICI Bank, Sector 31, Gurugram, Haryana. However, the above cheques in question got dishonored on presentation for the reason "account closed" vide returning memo dated 28.09.2018, constraining the complainant to send a legal demand notice dated 15.10.2018 to the accused, which was delivered to the accused. However, no payment was made to the complainant within stipulated statutory time period. Hence, the present complaint.
3. Being summoned, accused appeared before this court and notice was framed on 18.09.2019, to which he pleaded not guilty and claimed trial. In his plea of defence, the accused has stated that he had joined the complainant as a pilot and that before undergoing the training, he had signed an agreement with the complainant and had made a payment of Rs. 20 lacs by way of demand draft. It is also stated by accused that he had issued the five cheques in question as a security cheque. That it was agreed by the complainant that it would pay a stipend to the accused right from the inception but no payment was made by the complainant in this regard. That after a half of month of training, the complainant forcibly took demand draft of Rs. 3.5 lacs from him. That he had resigned from the services of the complainant on 31.01.2018 after the completion of training. That he had received emails from the complainant wherein he was informed that he had not completed the notice period, to which he had replied that he had already served the notice as per DGCA guidelines and that he had already cleared all of his dues for the training and that he had additionally paid a sum of Rs. 3.5 lacs. That he had no liability towards the complainant for the cheque amount.
4. To prove his case the complainant has examined its AR as CW1, who reiterated the version of the complaint and relied upon his evidence by way of Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 3/15 affidavit (Ex. CW1/A) alongwith the following documents to prove the liability of the accused:
(i) Ex. CW1/1 : copy of certificate of incorporation;
(ii) Ex.CW1/2 : copy of board resolution;
(iii) Ex.CW1/3 : copy of authority letter;
(iv) Ex.CW1/4 : letter of offer to the accused;
(v) Ex.CW1/5 : letter of appointment of accused;
(vi) Ex.CW1/6 to Ex.CW1/10 : Original cheques in question;
(vii) Ex.CW1/11 to Ex.CW1/15 : Original Return memos;
(viii) Ex.CW1/16 : Office copy of legal notice and postal receipt; and
(ix) Ex.CW1/17 : copy of postal tracking report.
(x) Ex.CW1/18 (OSR) : Indemnity bondcumservice undertaking dated 11.01.2016.
5. The AR of the complainant was cross examined and discharged as CW 1 and CE was closed on 14.10.2019. Thereafter, statement of accused was recorded under section 313 Cr.P.C on 06.08.2022 and accused chose to lead DE. Accused examined himself as DW1 and he has relied upon documents Mark A to Mark K and he was duly cross examined on 13.02.2023 and DE was closed. Thereafter, the matter was fixed for final arguments. Arguments heard from both the sides. Case record and written submissions perused. There is no dispute on the propositions of law laid down in the judgment relied upon by the parties.
6. It is submitted by Ld. Counsel for the complainant that this is a fit case for conviction of the accused as all the essential ingredients of Section 138 of the Act read with Section 139 of the Act have been fulfilled and that the same Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 4/15 has been aptly demonstrated by the complainant before the court. That the accused had deliberately committed the breach of bond and undertaking requiring him to serve for a minimum period of five years from the date of his appointment and hence, the complainant is entitled to encash the cheques in question for claiming Rs. 20 lacs as damages / penalty from the accused. That the accused had admitted his signatures on the cheques in question. That the legal demand notice was duly delivered to the accused and that no payment was made by the accused to the complainant within 15 days of its receipt. That the defence of the accused does not inspire confidence. That nothing material came out in the cross examination of AR of the complainant. It is finally submitted that accused failed to raise the probable defence to disprove the case of complainant and to rebut the presumption under Section 139 of the Act. Therefore, accused be convicted for the offence under Section 138 of the Act.
7. Per contra Ld. Counsel for the accused has argued that the present case is not sustainable on facts for the reason that the facts averred by the complainant itself shows that it is a case of pure civil liability and that the alleged breach of bond and undertaking are not enforceable under section 138 NI Act. That there does not exist any crystallised debt/liability against the accused as the complainant is first required to prove the alleged amount of damages/penalty in terms of section 74 of Indian Contract Act and for that too only a reasonable compensation could be awarded by the civil court upon proof of loss by the complainant and that all this is a matter of evidence and trial before civil court and that this cannot be adjudicated in a criminal case and hence, no case is made out under section 138 of NI Act against the accused. It was further argued that evidence of complainant suffered from material lapses and was not sufficient to establish the case against accused.
Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 5/15He submitted that complainant has failed to prove its case beyond reasonable doubt and accused is entitled to be acquitted of offence u/s 138 of the Act.
8. Before delving into the rival contentions of the parties, it would be apposite at the stage to briefly discuss law applicable to the offence of dishonour of cheque. For the offence under Section 138 of the Act to be made out against the accused, the complainant must prove the following points, that:
(i) the accused issued a cheque on account maintained by him with a bank;
(ii) the said cheque had been issued in discharge, in whole or in part, of any legal debt or other liability;
(iii) the said cheque has been presented to the bank within a period of three months from the date of cheque or within the period of its validity;
(iv) the aforesaid cheque, when presented for encashment, was returned unpaid/dishonoured;
(v) the payee of the cheque issued a legal notice of demand to the drawer within 30 days from the receipt of information by him from the bank regarding the return of the cheque; and
(vi) the drawer of the cheque failed to make the payment within 15 days of the receipt of aforesaid legal notice of demand.
9. It is the submitted by the accused that he had not received the legal demand notice sent by the complainant. A perusal of the record shows that though at the time of recording of statement under section 313 CrPC the accused had stated that he had not received the legal demand notice from the Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 6/15 complainant,however, he had admitted therein that the address mentioned on the legal demand notice dated 15.10.2018 was correct and that he was residing at that address uptill 31.12.2016. Since the accused had admitted that the address as mentioned on the legal demand notice was correct, the burden is upon the accused to prove that he had already vacated this address on 31.12.2016 and that he was not residing at that address at relevant point of time in terms of section 103 of Evidence Act. However, the said burden of proof has not been discharged by the accused. No suggestions were given by Ld. Counsel for the accused in this regard even during the cross examination of CW1.
10. Even otherwise, it was held by Apex Court in C.C. Alavi Haji vs Palapetty Muhammed & Anr. (2007) 6 SCC 555 that 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 General Clauses Act and Section 114 of the Evidence Act. Thus, the argument of the accused that the legal demand notice was never received by him is without any merit and is, accordingly, rejected.
11. Moving ahead, in the case in hand the issuance of cheques in question by the accused, and the signatures of accused on the cheques are not disputed. In a case under Negotiable Instrument Act, the complainant need not to prove the existence of liability as once these facts that the cheques in question belongs to the accused and the signature on the cheques in question are of the accused are established, a presumption of the cheques having been issued in discharge of a legally recoverable liability and drawn for good consideration, arises by virtue of Section 118 (a) and Section 139 of the NI Act Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 7/15 and the court presumes that the cheque was issued in discharge, in whole or in part, of any debt or their liability. At this stage, with the help of the presumption under Section 139 of the Act, the case of the complainant stand proved. When the presumption is raised in favor of the complainant, the burden shifts upon the accused to disprove the case of the complainant by rebutting the presumption raised in favour of the complainant. Being the rule of reverse onus, it is the duty on the accused to prove that he does not owe any liability towards the complainant. The accused can displace this presumption on the scale of preponderance of probabilities by raising a probable defence and the lack of consideration or a legally enforceable debt need not be proved beyond all reasonable doubts. The accused has to make out a fairly plausible defence which is acceptable to the court. This the accused can do either by leading own evidence in his defence, or by raising doubt on the material/evidence brought on the record by the complainant. For this, reliance is placed upon the judgment of Apex Court in case title Rangappa Vs. Sri Mohan (2010) 11 SCC 441 and Kumar Exports vs Sharma Carpets (2009) 2 SCC 513.
12. Recently in Anss Rajashekar v. Augustus Jeba Ananth (2020) 15 SCC 348 a two Judge Bench of Apex Court, reiterated the decision of the threejudge bench of Apex Court in Rangappa v. Sri Mohan (supra). The court held:
"12. Section 139 of the Act mandates that it shall be presumed, unless the contrary is proved, that the holder of a cheque received it, in dis charge, in whole or in part, of a debt, or liability. The expression "unless the contrary is proved" indicates that the presumption under Section 139 of the Act is rebuttable. Terming this as an example of a "reverse onus clause" the threeJudge Bench of this Court in Rangappa held that in determining whether the presumption has been rebutted, the test of pro portionality must guide the determination. The standard of proof for re Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 8/15 buttal of the presumption under Section 139 of the Act is guided by a preponderance of probabilities. This Court held thus:
"28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of preponderance of probabilities".
Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
13. Therefore, the main question which is to be adjudicated by this court is as to whether the accused, on a scale of preponderance of probabilities, has raised any probable defence and has led evidence sufficient to discredit the case of the complainant by showing that there is no legally recoverable debt / liability against the accused so as to shift the onus placed upon him to the complainant or not.
14. Coming to the cross examination of AR of the complainant as CW1 on 14.10.2019, he deposed that he has no personal knowledge about the present matter. It is the case of the accused that he was not paid stipend by the complainant. In this regard, it is noteworthy that CW1 had not specifically denied this claim of the accused during the cross examination on 14.10.2019. He has rather stated that he cannot tell whether there are any dues of the stipend payment that was being given to the accused. He has also not specifically denied the claim of the accused regarding outstanding salary dues towards the complainant. CW1 had simply stated that he cannot tell as to whether there are any outstanding dues of the salary to the accused. It is not the case of CW1 that the entire salary amount has been paid to the accused Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 9/15 as implicit from his statement.
15. When questioned by Ld. Counsel for the accused as regards the claim of the accused that the complainant had taken a sum of Rs.3.5 lacs over and above the training cost from accused, CW1 initially stated that he does not remember about the exact cost given by the accused for training purpose and that no other demand was made for the training cost apart from the initial demand and that there is no fixed amount for the refreshers training and that it depends upon the nature of training provided. However, subsequently at a later stage in his cross examination CW1 had given a vague and evasive reply that he cannot accept or deny the fact that the complainant company had taken a sum of Rs.3.5 lacs over and above the training cost from the accused. Therein again CW1 has not specifically denied during the cross examination the above claim of the accused regarding receipt of additional Rs. 3.5 lacs by the complainant. This has further weakened the case of the complainant against the accused regarding his overall liability for the cheque amount. It is implicit in the above statement of CW1 that the complainant is not categorically refuting the claim of the accused that a further payment of Rs.3.5 lacs has been received by the complainant from the accused in addition to the receipt of payment of earlier training cost.
16. CW1 stated in his cross examination that indemnity bond is binding if the candidate chooses to accept the offer letter and that both complainant and accused are bound by DGCA guidelines. He stated that the purpose of indemnity bond is that in case the pilot discontinues the service within the stipulated period, the bond shall be forfeited and that the indemnity bond also included for further refresher trainings. Though CW1 had denied the suggestion that the accused had no existing liability as per the indemnity bond on the date of its execution, however, the above noted vague, evasive and Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 10/15 selfserving statements of CW1 during his cross examination, had clearly casted a doubt on the actual quantum of liability of the accused for the cheque amount. It has been simply stated in para no.6 of complaint that the accused had agreed to indemnify the complainant to the tune of Rs. 20 lakhs "on account of various heads" in case he leaves employment before five years. There is no explanation in the entire complaint as to under what heads the complainant is claiming an amount of Rs. 20 lakhs from the accused.
17. It is further argued by Ld. Counsel for the accused that the present case is not sustainable under section 138 NI Act as the damages have to be proved by giving evidence of loss suffered by the complainant and this is in the domain of a civil proceedings only in a civil court and this claim cannot be adjudicated herein.
18. It has emerged from record that the complainant is casting liability upon the accused in the present case for breach of bond and undertaking which was executed by the accused initially at the time of entering into the employment with the complainant and it is essentially in the nature of claim for damages for breach of bond and undertaking allegedly committed by the accused. The damages upon breach of bond and undertaking have been quantified in the agreement itself to the tune of Rs. 20 lakhs. The seminal issue for consideration herein is as to whether such a claim for the entire amount of sum stipulated by way of damages / penalty can be said to be a legally enforceable liability under section 138 NI Act.
19. Section 74 of Indian Contract Act deals with the provision regarding recovery of damages for breach of contract, where a sum is named in the contract itself. Such damages can be either in nature of liquidated sum of money, which is the genuine preestimate of loss anticipated to be suffered in Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 11/15 case of breach of contract or it can be stipulated by way of penalty, which is essentially an amount in terrorem so as to deter the parties from committing breach of the contract. It is a settled law that proof of loss is essential in order to claim the damages even under section 74 of Indian Contract Act and without proof of damages the court cannot award damages in favour of the aggrieved party / complainant simpliciter merely on the basis of unsubstantiated ipse dixit of the complainant. All these aspects are purely a matter of evidence and trial in a civil case and such disputed issues of facts cannot be adjudicated in the present proceedings under section 138 NI Act. Even assuming that the accused is guilty of alleged breach of bond and undertaking, the complainant in such facts, has to resort to civil law of contract for breach of agreement, the remedy for which is a claim for damages for the loss suffered, by breach of contract. Even assuming for the sake of arguments that the bond and undertaking Ex. CW1/18 (OSR) is a valid document, however, the amount of damages / penalty mentioned therein still has to be proved by the complainant by giving proof of loss in accordance with the settled law regarding a claim of damages / penalty. It is also well settled law that if damages cannot be calculated and the terms of the contract provides therefor only for penalty by way of liquidated damages, having regard to the provisions contained in Section 74 of the Indian Contract Act a reasonable sum only could be recovered which need not in all situations even be the sum specified in the contract, however, proceedings under section 138 NI Act cannot be used to enforce payment thereunder.
20. Reliance is placed upon the judgment of Apex Court in Kailash Nath Associates v. Delhi Development Authority and Another, (2015) 4 SCC 136 wherein the court has considered the ratio of Fatehchand v. Balkishan Das AIR 1963 SC 1405 and held as under in paras 40 and 43: Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 12/15 "40. .....The law laid down by a Bench of 5 Judges in Fateh Chand's case is that all stipulations naming amounts to be paid in case of breach would be covered by Section 74. This is because Section 74 cuts across the rules of the English Common Law by enacting a uniform principle that would apply to all amounts to be paid in case of breach, whether they are in the nature of penalty or otherwise....."
43. On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows:
1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine preestimate of damages fixed by both parties and found to be such by the Court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the Court cannot grant reasonable compensation.
2. Reasonable compensation will be fixed on well known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act
3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the Section.
4. The Section applies whether a person is a plaintiff or a defendant in a suit.
5. The sum spoken of may already be paid or be payable in future.
6. The expression ―whether or not actual damage or loss is proved to have been caused thereby means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 13/15 difficult or impossible to prove that the liquidated amount named in the contract, if a genuine preestimate of damage or loss, can be awarded....."
21. It is also an admitted factual position that all the cheques in question were taken from the accused at the time of execution of indemnity bond and undertaking as a security in terms of agreement between the parties. CW1 himself has admitted in his cross examination that the dates on the cheques have been written by the finance department of the complainant. It is implicit herein that complainant had taken undated cheques from the accused right in the beginning of his employment. The cheques in question were obviously not issued towards payment of damages/penalty to the complainant. Therefore, on the date of issuance of the cheques in question there was no existing legally enforceable liability for the cheque amount. It is not the pleaded case of the complainant that the amount of Rs. 20 lakhs has been mentioned in the bond as liquidated damages or as a genuine preestimate of the loss anticipated to be suffered by it due to the absence of the accused. Para 12 of the complaint itself mentions the amount of Rs. 20 lakhs as "damages / penalty". There is also dispute regarding the time period for which the notice is to be given by the accused before leaving the services of the complainant inasmuch as according to complainant this time period is of 12 months, however, as per the accused it is 6 months only as per DGCA guidelines. CW1 had also admitted in the cross examination that both the parties are bound by DGCA guidelines but he has also volunteered to state that these guidelines are not related to the service condition of the pilot. Pertinently, all these disputed issues are aspects of civil liability, and Section 138 of NI Act cannot be resorted to for recovery of this amount as there is no crystallised debt / liability in favour of the complainant without proof of loss.
Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 14/1522. The judgments of Capt. Deepak Verma Vs. Pawan Hans Helicopters Ltd. (2018) by Hon'ble Delhi High Court and Capt. Bindu Kelunni v. M/s. Blue Dart Aviation Ltd. (2017) by Hon'ble Madras High Court as relied upon by Ld. Counsel for the complainant were distinguishable on facts as they deal with recovery of liquidated damages upon an indemnity bond for service contract in a civil suit and has no application to the present proceedings under section 138 of NI Act.
23. Therefore, in terms of above discussion, the accused has been successful in rebutting the presumption under section 139 of NI Act by showing that there does not exist any legally recoverable debt / liability against him and the ingredient of Section 138 of Negotiable Instruments Act, 1881 are not proved.
24. Accordingly, accused Vivek Kumar is acquitted of the offence punishable under Section 138 of the Negotiable Instrument Act, 1881. Bail bonds stands cancelled and surety, if any, stands discharged.
File be consigned to record room after due compliance.
Announced in the Open Court
on 04th Day of May, 2023 (PANKAJ RAI)
Metropolitan Magistrate05, NI Act
RAC/New Delhi/04.05.2023
Case No. 16631/18 Spicejet Ltd. Vs. Vivek Kumar Page No. 15/15