Delhi District Court
Ms V.K.Jain Campany vs Ms Fucon Technologies on 6 May, 2024
IN THE COURT OF METROPOLITAN MAGISTRATE,
(NEGOTIABLE INSTRUMENT ACT) -07, SOUTH, SAKET
COURTS, NEW DELHI
Presided over by: SH. RISHABH TANWAR
CT Cases 463796/2016
M/s V. K. Jain And Company v. M/s.
Fucon Technologies Ltd. and Ors.
A. CNR No. : DLST020007772014
B. Date of Institution : 19.03.2014
C. Date of commission of : 02.03.2014
offence
D. Name of the complainant : M/s V. K. Jain And Company
(through its proprietor late Sh. V.
K. Jain)
S/o Sh. Gopi Chand Jain
Add: T-10, Green Park Extension,
New Delhi
E. Name of the accused, his : 1. M/s Fucon Technologies
parentage and address Ltd.
71/4, Shivaji Marg,
Najafgarh Road, Industrial
Area, Moti Nagar, New
Delhi
2. Sh. Rahul Parikh
CT Cases 463796/2016
M/s V. K. Jain And Company v.
M/s. Fucon Technologies Ltd. and Ors.
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Managing Director,
B-3/52, Safdarjung Enclave,
New Delhi - 110029
3. Ms. Deep Parikh
Whole Time Director,
B-3/52, 2nd floor, Safdarjung
Enclave, New Delhi -
110029
4. Ms. Gurmeet Verma
Director,
B-3/52, 2nd floor, Safdarjung
Enclave, New Delhi -
110029
Offence complained of : Under section 138 Negotiable
Instruments Act, 1881
G. Plea of the accused : Pleaded not guilty and claimed trial.
H. Judgment reserved on : 10.04.2024
I. Date of Judgment : 06.05.2024
J. Final Order : Accused company and accused
no. 3 - Convicted.
Accused no. 4 - Acquitted.
BRIEF FACTS OF THE CASE:-
1. The instant matter has originated out of a complaint under Section 138 Negotiable Instruments Act (hereinafter referred to as 'NI Act'), filed by the complainant firm namely M/s V. K. Jain And Company, through its proprietor Sh. V. K. Jain against CT Cases 463796/2016 M/s V. K. Jain And Company v.
M/s. Fucon Technologies Ltd. and Ors.
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2024.05.06 16:05:45 +0530 the company M/s Fucon Technologies (hereinafter referred to as 'the accused company') and its managing director Sh. Rahul Parikh (hereinafter referred to as 'the accused no.2'), whole time director Ms. Deep Parikh (hereinafter referred to as 'the accused no.3') and director Ms. Gurmeet Verma (hereinafter referred to as 'the accused no.4') (hereinafter together referred to as 'the accused persons') alleging that cheque bearing no. 814261 dt. 31.10.2013 for a sum of Rs.15,00,000/- drawn on Syndicate Bank, Green Park Extension branch was issued by the accused company in favor of the complainant firm in discharge of a legal liability. The above-mentioned cheque has been dishonored and the accused company as well as accused no. 2, 3 and 4 have not paid the said amount even after receiving the prescribed legal demand notice dated 14.02.2014. By virtue of this judgment, the present complaint is being disposed of.
2. It is the case of the complainant that accused persons have approached the complainant through accused no. 2 with the fraudulent and dishonest intentions to induce him to invest money in the accused company with an assurance of profits on the same. It is the case of the complainant that the complainant had invested a total sum of Rs. 8.19 crores with the accused company, which was paid through cheques and bank transfer from his business and family account. Out of the aforesaid Rs. 8.19 crores, Rs. 15,00,000/- was paid by the complainant through cheque no. 966170 dated 12.06.2010 drawn on his CT Cases 463796/2016 M/s V. K. Jain And Company v.
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2024.05.06 16:05:50 +0530 bank account in Syndicate bank, Green Park Extension branch and the accused company promised to return the same along with profit up to 30.03.2012, but the accused persons failed to return the aforesaid amount with profits.
3. It is the case of the complainant that the complainant pursued the accused persons but to no avail. The accused persons, instead of returning the amount, entered an agreement/memorandum of understanding dated 07.05.2012 (hereinafter referred to as 'MOU') with the complainant.
4. It is in this background that the accused no. 2, being the managing director of the accused company and its authorized signatory, issued the cheque bearing no. 814261 dt. 31.10.2013 for a sum of Rs.15,00,000/- drawn on Syndicate Bank, Green Park Extension branch, in accordance with the aforesaid MOU, with the assurance that the same would be cleared on presentation. The complainant presented the said cheque with his banker, however, the same was returned dishonored with the remark 'funds insufficient' vide memo dated 22.01.2014. The complainant issued the statutory legal notice dated 14.02.2014 through registered A.D. and speed post, which was duly served upon the accused persons, consequently, the present complaint was filed against accused persons as the accused persons have failed to pay the same within the prescribed statutory period of 15 days.CT Cases 463796/2016
M/s V. K. Jain And Company v.
M/s. Fucon Technologies Ltd. and Ors.
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5. Summons were issued against the accused vide order dated 19.03.2014. The accused entered his first appearance on 02.06.2014 and a notice under section 251 Criminal Procedure Code 1973 (hereinafter referred to as 'Cr.P.C.') was framed against accused company and accused no. 2 on 01.08.2014, wherein both pleaded 'not guilty' and stated that cheques in question were delivered as security. It was further stated that V.K. Jain and the accused no. 2 had regular money transactions with each other and whenever he used to take loan from the complainant firm, he used to provide blank signed security cheques. It was further stated that accused no. 2 had re-paid all the loan amount availed by him through bank transfer/RTGS. It was further stated that as per the books of accounts, there was an outstanding amount of Rs. 34,01,500/- towards Shubham Agency by the accused company and towards V. K. Jain firm, there was an outstanding amount of Rs. 59,505/-. It was further stated that the accused company also provided bank signed papers and company letters and that accused no. 2 had misplaced his cheque book issued by Syndicate Bank in favour of accused company containing blank signed cheques for which he had filed an NCR with the police station concerned.
6. Accused no. 3 and 4 moved a discharge application, which was dismissed by the Ld. Predecessor vide order dated 23.08.2014 and a notice under section 251 Criminal Procedure Code 1973 (hereinafter referred to as 'Cr.P.C.') was framed against accused no. 3 and accused no. 4 on 15.09.2014, wherein both CT Cases 463796/2016 M/s V. K. Jain And Company v.
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pleaded 'not guilty' and stated that they were not the signatory of the cheque in question and they were not responsible for the day-to-day affairs of the accused company either on the date of issuance of cheque in question or date of dishonour. They further stated that they were not aware of the transaction that took place between the parties and that they have never visited the office of the accused company or take part in its business at any point of time. They further stated that the cheque in question has been presented dur to personal enmity with accused no. 2.
7. In the meanwhile, the order dated 23.08.2014 was set aside by the then Ld. Principal District and Session Judge, South Saket, with directions to rehear the application. After hearing the application seeking discharge afresh, the accused no. 4 was discharged from the present case vide order dated 23.01.2015, however the application seeking discharge was dismissed again qua accused no. 3.
8. The order dated 23.01.2015 was against challenged by both the complainant and accused persons respectively before the then Ld. Principal District and Session Judge, wherein the order dated 23.01.2015 was upheld qua accused no. 3, however it was revered qua accused no. 4 and this court was, again, directed to proceed against accused no. 4, vide order dated 05.07.2017.
9. In the meanwhile, the accused no. 2 Mr. Rahul Parikh was CT Cases 463796/2016 M/s V. K. Jain And Company v.
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2024.05.06 16:06:06 +0530 declared a proclaimed person vide order dated 11.09.2018, after the proclamation under section 82 Cr.P.C. had been issued against the aforesaid accused and the accused had failed to appear before the court subsequently.
10. Vide order dated 19.11.2018, the application under section 145(2) NI Act moved by the remaining accused persons was allowed and the complainant was recalled for his cross- examination.
11. Legal Heir of the complainant, that is, his wife namely Ms. Manju Jain was impleaded in place of the complainant, as he had passed away during the pendency of the case. Ms. Manju Jain had entered the witness box and examined herself as CW- 1 on 31.01.2019, wherein she had adopted her pre-summoning evidence by way of affidavit in her post-summoning evidence affidavit as Ex. CW-1/K and relied on documents:
a. Proof of proprietorship of M/s V. K. Jain (Ex. CW-1/A), b. LLP Master Data (Ex. CW-1/B), c. Bank account statement of M/s V. K. Jain (Ex. CW-1/C), d. Memorandum of Understanding (hereinafter referred to as "MoU") (Ex. CW-1/D), e. Cheques in question (Ex. CW-1/E), f. The return memos (Ex. CW-1/F), g. Legal notice (Ex. CW-1/G) h. Postal receipts (Ex. CW-1/H) i. Courier Receipt (Ex. CW-1/I) CT Cases 463796/2016 M/s V. K. Jain And Company v.
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12. Thereafter, Ms. Manju Jain legal heir of complainant namely Late Mr. V.K. Jain adopted pre-summoning evidence by way of affidavit Ex.CW1/K and relied on documents already Ex.CW1/A to Ex.CW1/J. She also relied upon document namely settlement agreement which was marked as Mark A, Mark B which is her voter ID and Mark C i.e. death certificate of Mr. V.K. Jain.
13. CW-1 in her cross-examination under section 145(2) NI Act stated she was M.A. pass from Delhi University and at present she was taking care of her cases and office work. She further stated V.K. Jain company was formed more than 35 years back somewhere in 1973-75. She admitted there was no document attached in the file showing the formation of firm. She further admitted that she was never a proprietor of the complainant firm. She voluntarily stated that there were two firms and one of which was Shubham Agencies of whom she was the proprietor. She admitted that there were only two firms and no other firm in which she was participating. She admitted that she had not personally applied to the bank for issuance of certificate Ex.CW1/A. She further stated at the time of filing of the complaint, around 8-9 persons used to work in complainant firm and Mr. Saurabh Jain and Mr. Jaiswal were two accountant who used to look after the accounts work of the firm. She further stated complainant firm was approved custom clearance and forwarding agent and the firm used to obtain the custom CT Cases 463796/2016 M/s V. K. Jain And Company v.
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clearance for other companies and firm, apart from this, the firm was not doing any other work. She further stated there was agent code for the complainant work for doing business which was obtained from Custom Authorities. She admitted that she did not remember the said agent code. She further stated she did not remember the exact year in which accused company came in touch with complainant firm. She voluntarily stated that it was year 2004, the director of accused company approached them for importing some part for themselves. Witness was confronted with para No.3 of Ex.CW1/K and asked what were the various businesses of accused company including automobiles to which she replied that the other business were also related to automobiles. She further stated in the starting, they imported some automobiles parts from accused company. She voluntarily stated that there was little involvement between accused firm and complainant company professionally. She further stated she did not know from where aforesaid parts were imported. She admitted that with regard to the import business no document was attached with the present complaint. She further stated she did not know whether accused No.3 and 4 had given aforesaid import orders to complainant firm or not. She further stated complainant firm used to file ITR in the name of firm. She again stated she did not know exactly. She further stated proprietor of V.K. Jain & Company also used to file ITR in his name. Witness shown Ex.CW1/C(Colly) and asked how much amount had been given by complainant firm V.K. Jain & company to accused No.2 out of total of CT Cases 463796/2016 M/s V. K. Jain And Company v.
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Rs.6,38,66,175/- to which she stated since 2005, accused company and accused No.2, 3 & 4 were lending money from them and thereafter, in June 2010 they agreed to sign an MOU. She further stated she did not know exactly how much amount was given by the complainant firm to accused in respect to the aforesaid MOU. On her further cross-examination on 28.02.2019, she stated she did not remember the exact amount which was lent to the accused company since 2005 till signing MOUs with complainant and accused company. She voluntarily stated MOU was between the complainant and accused persons. She further stated she did not have the money lending license as loan given to accused persons was the friendly loan. She admitted that nowhere in her complaint as well as in her evidence by way of affidavit, it was mentioned that the loan in question was a friendly loan. She voluntarily stated that it was a friendly loan.
14. CW-1 further stated MOUs were signed in June 2010 and May- June 2012 in front of her and were signed by Mr. Rahul, Mrs. Deep Parikh and may be Mrs. Gurmeet Verma and on behalf of complainant company her husband Mr. V.K. Jain signed the MOUs. She admitted that MOU dt. 07.06.2010 and dt. 07.05.2012 does not bear her signatures. Witness was shown MOU dt. 07.05.2012 to which she admitted that it does not bear signatures of Mr. V.K. Jain. Witness was shown MOU dt. 07.06.2010 to which she admitted that it does not bear signatures of Mr. V.K. Jain. She further stated that on third CT Cases 463796/2016 M/s V. K. Jain And Company v.
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internal page of aforesaid MOU it bears signature of Mr. V.K. Jain. She further stated she does not know who had typed or when the aforesaid MOUs were typed. She further stated she did not remember whether she had signed any document on behalf of V.K. Jain & Company or not pertaining to advancing of loan etc. to accused company or accused persons. She further stated she did not remember what the principal amount was and what was the interest amount in the MOU dt. 07.05.2012 and 07.06.2010. She voluntarily stated that whatever the amount was mentioned in the MOUs was full and finally agreed amount which was due upon accused persons towards complainant company. She further stated total loan of Rs.25,00,00,000/- were advanced to accused company/accused persons by complainant company and she had the record about advancing of the loan to accused company. She admitted that there was no document on the judicial file which shows the total advanced loan to the accused persons by complainant company was of Rs.25 crores. She further stated that complainant company had shown the above-mentioned loan amount in the ITR, and she further stated she could produce her ITR from 2005 to 2012, if available with her. She further stated source of loan was LIC policies and Kisaan Vikas Patra, ancestral assets and the income from the business, aforesaid properties/assets were mortgaged in the bank and whatever money received from the bank was forwarded to the accused persons as loan. She admitted that aforesaid source of loan was not mentioned in her complaint or in her affidavit. She further admitted that MOU CT Cases 463796/2016 M/s V. K. Jain And Company v.
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2024.05.06 16:06:32 +0530 dt. 07.06.2010 had not been placed on record by her in the present case. She further stated that she had original MOU with her, and she can produce it, if asked. She further admitted that cheques in question were not executed in front of her. She voluntarily stated that cheques in question were handed over to her sometimes by Mr. Pranav and sometimes by Mr. Subodh and she does not have knowledge who had filled the particulars on the cheques in question and she also did not remember the number of cheques which were handed over to her by the accused firm. On her further cross-examination on 16.05.2019, she stated that she had not brought Income Tax Return of complainant firm from year 2005 to 2012 as the copies were not available with her employee or her CA. She admitted that she was not having any official designation in the complainant firm. She voluntarily stated she was just assisting her husband in his business. She did not get any remuneration for assisting, she used to do all kinds of work like receiving documents, sending documents, bank related works and used to sign the documents. She admitted that there was no document alongwith complaint which shows that she was participating in the complainant's firm. She further admitted she had not attached any document which shows that complainant's source of funds that were advanced to accused company was by obtaining funds by mortgaging the assets in the bank. She admitted that Mr. V.K. Jain had filed police complaint on 06.03.2014 against directors of accused company in respect to cheating played by them upon complainant firm. She admitted CT Cases 463796/2016 M/s V. K. Jain And Company v.
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that the complaint was not on record. She voluntarily stated she could bring it if asked. In her further cross-examination on 18.07.2019 she brought the copy of complainant filed against accused No.1 and its director to Commissioner of Police (Mark Y1). She further stated she did not know whether any police complaint was lodged in the local police station or not. She further denied all other suggestions put to her.
15. Thereafter, vide order dated 23.01.2020, CW-1 closed her evidence.
16. The statement of accused No.3 Sh. Deep Parikh, whole time director and accused No.4 Gurmeet Verma, being the director of accused No.1 u/s. 313 Cr.P.C was recorded on 05.04.2021 wherein they stated that they were director of accused no.1 company, however they were not responsible for day-to-day affairs of the accused No.1. They further stated that they had not signed any MOU. they further stated they had no knowledge of issuance of the cheques bearing No.814263 dt. 31.10.2013 for an amount of Rs.10,00,000/- though it is matter of record. They further stated they had no knowledge of dishonour of the aforesaid cheque. They had no knowledge of legal demand notice if they received it or not. They further stated that they had no knowledge about the transaction in question. They further stated they had been falsely implicated in the present case and that they had no liability to repay any amount to the complainant. They further stated they had no CT Cases 463796/2016 M/s V. K. Jain And Company v.
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knowledge about director of accused company approaching complainant for importing some part for themselves in the year 2004. They denied signing any MOUs with the complainant company. They further denied any loan of Rs.25,00,00,000/- approx. given to accused persons by the complainant. They further stated that they got to know about Mark Y1 i.e. copy of complaint against accused No.1 and its director before the Commissioner of Police when an FIR was lodged, and they were called to join investigation though it was a false FIR.
17. Thereafter accused no. 3 and 4 examined Dr. Sumeet Kumar, Scientific Officer, FSL Moradabad, U.P. ON 28.05.2022 wherein he stated that on 12.09.2018 he was posted as Junior Forensic/ Assistant Chemical Examiner. He further stated that he had prepared FSL report no. FSL 2018/D-6520 dt. 12.09.2018, the copy of which was then Ex.DW1/A (Colly) (pages 1 to 35) (the certified copy of the same is kept in CC No.463645/2016). He further stated that the investigating official of case bearing number FIR No.631/2014 PS S J Enclave had deposited document Q1 (Guarantor agreement dt. 07.06.2010), Q2 & Q3 i.e. two memorandums of understanding both dt. 07.05.2012 and specimen standard signatures Mark S1 to S4 and A1 to A12 (account opening form, letter to thanks, customer masters form, specimen signatures, nomination all pertaining to Punjab National Bank of Deep Parikh). He further stated that after examining the document provided by the investigating officer, he had opined that that the persons who CT Cases 463796/2016 M/s V. K. Jain And Company v.
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2024.05.06 16:06:49 +0530 wrote red enclosed signatures stamped and marked S1 to S4 and A1 and A12 did not write the red enclosed signatures/writing similarly stamped and marked Q1 to Q3.
18. In his cross-examination, he stated that he cannot say whether in MOUs dt. 07.05.2012, the signatures of second accused Rahul Parikh were also referred for opinion. He further stated that all the documents were sent to him in original. He further admitted that it was not mentioned in his report that original documents were submitted to him for opinion. He voluntarily stated that if it is in original then they do not write in the report, however in case of photocopy they mention the same. He further stated that there was no rule in their laboratory that they need not write whether they were given originals or not. He denied the suggestion that he had compared the signatures based on photocopies. He further stated that a person can disguise his or her own handwriting, it depends on her or his skill. He further stated that a person with inferior handwriting cannot disguise in handwriting of superior writer. He admitted that in the present case, he cannot say whether it is inferior or superior. He further stated that change in signatures depends on many factors like progression in age, disease related to central nervous system, any injury etc. He admitted that the signatures stamped and marked S1 to S4 were not signed in his presence.
19. Thereafter accused no. 3 and 4 examined Mr. Nirmal Kumar, MTS, Income Tax Officer, New Delhi wherein he stated that he CT Cases 463796/2016 M/s V. K. Jain And Company v.
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had brought the summoned documents i.e. ITR pertaining to AY 2004-05 to 2013-14 running into pages 1 to 128. Same were then Ex.DW2/A (Colly). The witness was not cross examined by the complainant.
20. Thereafter accused examined Mr. Jitender Kumar, Inspector, Income Tax Department, Circle 281, S.P. Mukherjee Civic Centre, Delhi wherein he stated that he had brought the summoned record i.e. ITR pertaining to PAN No. AAFPJ6210N for the assessment years 2004-2005 to 2012- 2013 (running into 27 pages) with covering letter. The same is Ex.DW3/A (Colly). In his cross-examination, he stated that he had no personal knowledge about the document.
21. Thereafter, on 17.09.2022, accused no. 3 and 4 through their counsel closed the defense evidence and matter was put up for final argument.
ARGUMENTS ADVANCED ON BEHALF OF THE PARTIES
22. Sh. Jinender Jain, Ld. Counsel for the complainant has argued that to the effect that accused no. 3 and 4 were involved in day- to-day affairs of the accused company. And that out of 57 cheques given by the accused company, 24 cheques had been cleared and now accused no. 3 cannot say her signature were forged on the MoU. He has lastly argued that the complainant has proved all the pre-requisites of the offence under section CT Cases 463796/2016 M/s V. K. Jain And Company v.
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2024.05.06 16:07:00 +0530 under section 138 NI Act and has prayed that the accused persons be convicted of the offence alleged against him.
23. Per contra, Sh. Neeraj Aggarwal, Ld. Counsel for the Official Liquidator (OL) of the accused no. 1 company has argued that the directors have not informed the OL regarding the transaction of the present case and has argued that the accused company has no liability towards the complainant.
24. Sh. Shivaji Shukla, Ld. Counsel for the accused no. 3 and 4 has argued that in Ex. CW-1/B i.e., that is the accused company's master data, accused no. 3 and 4 did not have their Digital Signature Certificate (DSC) registered, hence they were not involved in day-to-day affairs of the accused company. He has further argued that accused no. 3 and 4 had not signed upon Ex. CW-1/C and that the signature of accused no. 3 on the same were forged. He has further argued that the loan in question was not shown in ITR of the complainant and the mediation agreement was signed only to finish all the pending disputes between the parties. He has lastly argued that CW-1 had no personal knowledge of the present case and has prayed that accused no. 3 and 4 be acquitted of the offence alleged against them.
POINTS OF DETERMINATION
25. The following points of determination arise in the present case:
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A. Whether the complainant has successfully proven the facts which would raise the presumption u/s. 118 r/w Section 139 of NI Act by proving that the cheque in question bears the signature of the accused?
B. If yes, whether the accused has been successful in raising a probable defence?
THE APPLICABLE LAW
26. Before appreciating the facts of the case in detail for the purpose of decision, let relevant position of law be discussed first. Now, Section 138 Negotiable Instrument Act provides as under:
Section 138.- Dishonour of cheque for insufficiency, etc., of funds in the account.- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that 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 that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished CT Cases 463796/2016 M/s V. K. Jain And Company v.
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with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless - (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation -- for the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
It is well settled position of law that to constitute an offence under S.138 N.I. Act, the following ingredients are required to be fulfilled: (1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability; (2) cheque has been presented to the bank within a period of six months (now three months) from the date on which it is drawn or CT Cases 463796/2016 M/s V. K. Jain And Company v.
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within the period of its validity whichever is earlier; (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 30 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice. Being cumulative, it is only when all the ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the N I Act.
The Act raises two presumptions in favour of the holder of the cheque i.e. Complainant in the present case; firstly, in regard to the passing of consideration as contained in Section 118 (a) therein and, secondly, a presumption under Section 139, that the holder of cheque receiving the same of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. Analysing all the concerned provisions of law and various pronouncements in this regard, the Hon'ble Apex Court in Basalingappa v. Mudibasappa, AIR 2019 SC 1983, noted at para 23 as follows [Bharat Barrel and Drum Manufacturing Company v. Amin Chand Pyarelal, (1999) 3 CT Cases 463796/2016 M/s V. K. Jain And Company v.
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SCC 35; M.S. Narayana Menon alias Mani v. State of Kerala and another, (2006) 6 SCC 39; Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54; Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513; Rangappa v. Sri Mohan, (2010) 11 SCC 441 referred]:
(i) 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.
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or 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.
(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposes an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the accused to come in the CT Cases 463796/2016 M/s V. K. Jain And Company v.
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witness box to support his defence.
To put in nutshell, the law regarding the presumption for the offence under Section 138 N.I. Act, is that the presumptions under Sections 118(a) and 139 have to be compulsorily raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter burden is shifted upon the accused to prove otherwise. These presumptions shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability etc. The onus to prove the issuance of the cheque lies upon the complainant, and the same has to be proved beyond reasonable doubt, unless the accused admits the same. Once the issuance of cheque is established, either by admission or by positive evidence, the presumption under Section 139 of the Negotiable Instruments Act, 1881 arises. We can summarize the general principles in the following way:
Onus of proof: Section 139 of the Negotiable Instruments Act, 1881 states that it shall be presumed, unless the contrary is proved that the holder of a cheque received the cheque, of the nature referred to in Section 138, for the discharge, in whole or in part, of any debt or other liability. Therefore, here the onus shifts upon the accused to prove the nonexistence of debt or other liability. Section 139 of the N.I. Act uses the word "shall presume", which means that the presumption under Section 139 is rebuttable.CT Cases 463796/2016
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Standard of proof: The standard of proof required to rebut the presumption under Section 139 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 other liability, the onus shifts back to the complainant to prove by way of evidence, beyond reasonable doubt, that the cheque in question was issued by the accused in discharge, whole or in part, of any debt or other liability, and now the presumptions under Section 118 (a) and Section 139 will not come to the aid of the complainant.
Mode of Proof: The accused may adduce direct evidence to prove that the cheque in question was not supported by consideration, and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should prove the nonexistence of the consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that a bare denial of passing of consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances upon the consideration of which, the Court may either believe that the consideration and debt did not exist, or their nonexistence was so probable CT Cases 463796/2016 M/s V. K. Jain And Company v.
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that a prudent man would, under circumstances of the case, act upon the plea that they did not exist. As discussed above, from the legal provisions and the law laid down in various judgments, it can be safely gathered that it is for the accused to rebut the presumptions. He can do so by cross examining the complainant, leading defence evidence, thereby demolishing the case of the complainant. It is amply clear that the accused does not need to discharge his or her liability beyond the shadow of reasonable doubt. He just needs to create holes in the case set out by the complainant. Accused can say that the version brought forth by the complainant is inherently unbelievable and therefore the prosecution cannot stand. In this situation the accused has nothing to do except to point inherent inconsistency in the version of the complainant or the accused can give his version of the story and say that on the basis of his version the story of the complainant cannot be believed.
FINDINGS OF THE COURT
27. At the onset, it is important to mention that this judgment would only adjudicate the guilt of the accused no. 1 company as well as accused no. 3 Deep Parikh and accused no. 4 Gurmeet Verma only, as accused no. 2 Mr. Rahul Parikh has been declared a proclaimed persons and the evidence was recorded in the present case in his absence under section 299 CT Cases 463796/2016 M/s V. K. Jain And Company v.
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Cr.P.C., therefore, the determination of guilt of accused no. 2 Mr. Rahul Parikh shall be done when he is apprehended and brought before this court.
Points of determination number A:
28. The accused no. 3 and 4 during the trial has disputed that the cheque did not bear their signature. It is noteworthy that the accused no. 3 and 4 have been arraigned as an accused persons in the present case under section 138 NI Act read with section 141 NI Act. In another words, they were shown to be directors of the accused company at the time of when the offence under section 138 NI Act had been committed. Section 141 NI Act reads as:
"141. Offences by companies. --
(1)If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly..."
29. Therefore a cumulative reading of section 141 and section 138 would inform us that when the principal offender under section 138 NI Act is a company, who had signed upon the cheques in question through its authorised signatory, every director - who CT Cases 463796/2016 M/s V. K. Jain And Company v.
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at the when the cheque in question was dishonoured, for which no payment of the same is made within the stipulated time - was in charge of, and was responsible to the company for the conduct of the business of the company, is deemed to be guilty of the offence under section 138 NI Act. This deeming fiction created by section 141 NI Act conjures the liability of an accused on the principle of vicarious liability and thus it does away with the requirement that the accused must necessarily be the signatory of the cheque. (Reliance is placed upon the judgment of Hon'ble Apex Court in " Sabitha Ramamurthy v. R.B.S. Channabasavaradhya (2007) 1 SCC (Cri) 621").
30. Thus the presumption under section 139 NI Act does arise in the present case against accused no. 3 and 4 under section 139 read with section 138 read with section 141 NI Act.
31. Accordingly, the point of determination number A is decided in the affirmative.
Points of determination number B:
32. Once the presumption is raised, the burden of proof shifts upon the accused to prove otherwise. It is trite law that the accused does not need to necessarily lead positive evidence in his or her favour, she can shift the said burden by blowing holes in the story of the complainant. Reliance is placed upon the judgment of Hon'ble Apex Court passed in Bharat Barrel and Drum Vs. CT Cases 463796/2016 M/s V. K. Jain And Company v.
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Amin Chand Pyarelal (1999) 3 SCC 35. It is further pertinent to note that the standard of proof required to rebut the presumption u/s.139 NI Act is that of "preponderance of probabilities" and at the same time, the complainant is required to prove its case beyond the shadow of reasonable doubt.
Qua Accused company M/s Fucon Technologies Ltd.
33. Sh. Neeraj Aggarwal, Ld. Counsel for the Official Liquidator of the accused no. 1 company has argued that the directors have not informed the OL regarding the transaction of the present case and has argued that the accused company has no liability towards the complainant. However, the same is not a tenable argument and is insufficient to rebut the presumption under section 139 NI Act.
34. The MoU dated 07.05.2012 has been signed by accused no. 2, in the capacity of managing director of accused company, clearly admitting that the complainant firm had invested Rs. 03,55,90,000/- with the accused company. No defence has been led on behalf of the accused company to refute the aforesaid MoU. The complainant has proved the transfer of sum of Rs. 15,00,000/- in the bank account of the accused firm through Ex. CW-1/C, i.e., the bank account statement of the complainant firm.
35. The complainant has also proved beyond reasonable doubt that CT Cases 463796/2016 M/s V. K. Jain And Company v.
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the cheque Ex. CW-1/E was issued by the accused company though its authorized signatory and the same was dishonored vide return memo (Ex. CW-1/F) and the accused company has failed to pay the cheque amount within 15 days of receiving the legal notice (Ex. CW-1/G).
36. Therefore, the presumption under section 139 NI Act has not been rebutted by the accused company and accordingly, the point of determination No. B is decided in the negative qua accused company.
Qua Accused no. 3 Ms. Deep Parikh
37. Accused no. 3 is the wife of the accused no. 2 and is also a director in the accused company. Accused no. 3 has been shown to be a 'whole time director' in the accused company, as per the accused company's master data Ex. CW-1/B.
38. Ld. Counsel for the accused no. 3 and 4 has argued that since as per Ex. CW-1/C, the accused no. 3 and 4 were not shown to have registered Digital Signature Certificate (DSC), they cannot be held to be in-charge of day-to-day affairs and responsible for the management of accused company. The said argument is not tenable as it is not mandatory for all directors to be registered for DSC. Only those directors/persons of a company are supposed to register their DSC who have to sign e-forms on behalf of the company, however the same has no CT Cases 463796/2016 M/s V. K. Jain And Company v.
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bearing on the ability of a person to be in-charge of day-to-day affairs and responsible for the management of a company.
39. The accused no. 3 has taken a defence that she was not the signatory of the cheque in question. This defence has been dealt with and rejected in paragraph no. 28 and 29 of this judgment and need not be reiterated. She has further taken the defence that she was not responsible for the accused company for day to day affairs as she was neither in charge or responsible for the conduct of the accused company either on the date of issuance of cheque in question or on it dishonour. She had further taken a defence that she was not aware of the transaction that took place between the parties and that he had never visited the office of accused company nor take part in its business at any point of time.
40. Admittedly, it is not the case of the accused no. 3 that she had resigned from the position of the directorship in the accused company before the dishonour of the cheque in question. As already mentioned in paragraph no. 27, the accused is shown to be a 'whole time director' in the accused company.
41. It would bode well for the discussion in the present case to refer to case laws on section 141 NI Act. In the case of 'K.K. Ahuja vs V.K. Vora & Anr' [(2009) 10 SCC 48], which has also taken into consideration the earlier judgment of the Hon'ble Apex court in 'S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla CT Cases 463796/2016 M/s V. K. Jain And Company v.
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& Anr. [2005 (8) SCC 89]' and 'Saroj Kumar Poddar v State (NCT of Delhi) [2007 (3) SCC 693]', the Hon'ble Apex Court had held that:
"10. Having regard to section 141, when a cheque issued by a company (incorporated under the Companies Act, 1956) is dishonoured, in addition to the company, the following persons are deemed to be guilty of the offence and shall be liable to be proceeded against and punished :
(i) Every person who at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company;
(ii) Any Director, Manager, Secretary or other officer of the company with whose consent and connivance, the offence under section 138 has been committed; and
(iii) Any Director, Manager, Secretary or other officer of the company whose negligence resulted in the offence under section 138 of the Act, being committed by the company.
While liability of persons in the first category arises under sub-section (1) of Section 141, the liability of persons mentioned in categories (ii) and
(iii) arises under sub-section (2). The scheme of the Act, therefore is, that a person who is responsible to the company for the conduct of the business of the CT Cases 463796/2016 M/s V. K. Jain And Company v.
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company and who is in charge of business of the company is vicariously liable by reason only of his fulfilling the requirements of sub- section (1). But if the person responsible to the company for the conduct of business of the company, was not in charge of the conduct of the business of the company, then he can be made liable only if the offence was committed with his consent or connivance or as a result of his negligence." (emphasis supplied)
42. It was further held in the aforesaid case that:
"14. The words "every person who, at the time of the offence was committed, was in charge of, and was responsible for the conduct of the business of the company" occurs not only in section 141(1) of the Act but in several enactments dealing with offences by companies, to mention a few - Section 278 B of the Income Tax Act, 1961, Section 22C of Minimum Wages Act, 1948, Section 86A of the Employees State Insurance Act, 1948, Section 14A of Employees Provident Fund and Miscellaneous Provisions Act, 1952, Section 29 of Payment of Bonus Act, 1965, Section 40 of The Air (Prevention and Control of Pollution) Act, 1981 and section 47 of Water (Prevention and Control of Pollution) Act, 1974. But neither section 141(1) of the Act, nor the pari materia provisions in other enactments give any indication as to who are the persons responsible to the company, for CT Cases 463796/2016 M/s V. K. Jain And Company v.
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the conduct of the business of the company. Therefore, we will have to fall back upon the provisions of Companies Act, 1956 which is the law relating to and regulating companies. Section 291 of the said Act provides that subject to the provisions of that Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do. A company though a legal entity can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in charge of and responsible for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other directors are concerned, they can be prosecuted only if they were in charge of and responsible for the conduct of the company's business. A combined reading of Sections 5 and 291 of Companies Act, 1956 with the definitions in clauses (24), (26), (30), (31), (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 whole-time director/s;
(c) the manager;
(d) the secretary;CT Cases 463796/2016
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(e) any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to act;
(f) any person charged by the Board with the responsibility of complying with that provision (and who has given his consent in that behalf to the Board); and
(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. It follows that other employees of the company, cannot be said to be persons who are responsible to the company, for the conduct of the business of the company."
43. Therefore, the accused no. 3 accordingly would be considered to be the persons responsible to the company for the conduct of the business of the company and the complainant by proving Ex. CW-1/B showing the accused no. 3 as a 'whole time director' has been able to prove legally that accused no. 3 was responsible to the company for the conduct of the business of the company.
44. In the case of "Susela Padmavathy Amma V. M/S Bharti Airtel Limited 2024 INSC 206", the Hon'ble Apex Court had held that:
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"This Court held that there is no universal rule that a director of a company is in charge of its everyday affairs. It was, therefore, necessary, to aver as to how the director of the company was in charge of day-to-day affairs of the company or responsible to the affairs of the company. This Court, however, clarified that the position of a managing director or a joint managing director in a company may be different. This Court further held that these persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. To escape liability, they will have to prove that when the offence was committed, they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence." (Emphasis supplied)
45. In the present case, the onus was upon accused no. 3 to prove that she had no knowledge of the offence or that they have exercised all due diligence to prevent the commission of the offence.
46. The accused no. 3 has only examined one witness namely DW- 1, who had proved his report Ex. DW-1/A (colly.), i.e, a FSL report, wherein the MoU (Ex. CW-1/D) was submitted to him by the investigating officer in FIR no. 631/2014 P.S. Safdarjung Enclave, for examining the signature of the accused no.3 on the CT Cases 463796/2016 M/s V. K. Jain And Company v.
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same, marked as Q1 to Q3, and to compare them with admitted signatures (A1 - A12) and sample signature of accused no. 3 (Mark S1 to Mark S4) were submitted to him. He had further deposed that the person who had written the enclosed signature stamped and marked as Mark S1 to Mark S4 and A1 - A12 did not write the enclosed signature marked as Q1 to Q3. However, testimony of DW-1 casts a shadow of doubt only on the aspect whether the signature of the accused no. 3 has signed the aforesaid MoU or not and whether the signature on the same belongs to accused no. 3.
47. It is also pertinent to note that except a mere suggestion that the accused no. 3 was not responsible for day to day affairs of the accused company put to CW-1 in her cross-examination, no other specific question was asked to CW-1 qua accused no. 3 by her.
48. It is pertinent to note that when the dispute between the complainant and the accused company was referred to the Delhi High Court Mediation and Conciliation Centre, the accused no. 3 has signed upon the said agreement dated 25.03.2015 (Mark A) in the capacity of the director of the accused company. The accused no. 3 had stated at the time of her defence under section 251 Cr.P.C. dated 15.09.2014 and in her statement under section 313 Cr.P.C. dated 21.03.2020 that she had no knowledge of the transaction with the complainant. It is noteworthy that the aforesaid statement was recorded much CT Cases 463796/2016 M/s V. K. Jain And Company v.
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after in time than the mediation agreement (Mark A). Therefore, judicial cognizance of the fact can be taken that where the accused no. 3 had participated in the mediation proceedings in the year 2015, which included a reference to the present proceedings, her statement recorded in the year 2020 that she had no knowledge of the transaction does not appear to be true and trustworthy.
49. Ld. Counsel for the accused no. 3 had raised an argument that the present complaint is liable to be dismissed that CW-1 had no personal information of the case. He has placed reliance upon the judgment of "A.C. Narayanan vs State Of Maharashtra & Anr 2014 (11) SCC 790". It is pertinent to note that the threshold in the background of which the hon'ble Apex Court had passed the aforesaid judgment was 'at the stage of summoning the accused under section 204 Cr.P.C.'. Moreoever, the case pertains to 'power of attorney holders' and not 'legal heirs'. There is a difference in both the phrases as the former would mean that a persons who is alive, may appoint someone else as his power of attorney holder, which may be specific or general. However, however he may pass away later on, still power of attorney holder would come into the existence only when the persons issuing the authority is alive. In the latter case, legal heirs come into existence in a given case only when the original complainant has passed away.
50. In the present case, the case was instituted by the original CT Cases 463796/2016 M/s V. K. Jain And Company v.
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complainant, who was examined under section 200 Cr.P.C. and on the basis of his evidence by way of affidavit, the accused company as well as its directors were summoned. It is only during the pendency of the case that the original complainant had passed away and the present complainant was substituted in his place.
51. Moreover, when the wife of the complainant was cross- examined, she was asked regarding the business of the accused company, she had explained that the accused company is engaged in the business of servicing of cars, furnishing of cars, import of cars and business of car oil and lubricants. No suggestion was put to her that accused company was not engaged in the aforesaid business. Now the fact CW-1 could not deposed regarding the exact amount of loan in her cross- examination would not mean that she has no personal information of the present case, firstly as the loan in question has been given through bank account in the account of accused company, proved by the documentary proof (Ex. CW-1/C) and any witness cannot be expected to depose perfectly. Memory of witness may tend to lose grip on certain facts due to the passage of the time and in such a situation, it has to be seen whether what the witness has deposed is in tune with the flavour of the complaint. In the present case, CW-1 has sufficiently answered questions put to her in her cross- examination, therefore the defence of the Ld. Counsel for the state is liable to be rejected.
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52. Therefore, the accused no. 3 has miserably failed to prove that she had no knowledge of the offence or that they have exercised all due diligence to prevent the commission of the offence. Consequently, the accused no. 3 has failed to raise a probable doubt on the story of the complainant and has failed to rebut the presumption under section 139 NI Act.
53. Accordingly, the point of determination No. B is decided in the affirmative qua accused no. 3.
Qua Accused no. 4 Ms. Gurmeet Verma
54. Accused no. 4 has been shown to be a 'director' in the accused company, as per the accused company's master data Ex. CW- 1/B.
55. The accused no. 4 has taken a defence that she was not the signatory of the cheque in question. This defence has been dealt with and rejected in paragraph no. 28 and 29 of this judgment and need not be reiterated. She has further taken the defence that she was not responsible for the accused company for day to day affairs as she was neither in charge or responsible for the conduct of the accused company either on the date of issuance of cheque in question or on it dishonour. She had further taken a defence that she was not aware of the transaction that took place between the parties and that he had never visited the CT Cases 463796/2016 M/s V. K. Jain And Company v.
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office of accused company nor take part in its business at any point of time.
56. It is pertinent to note that no specific averment has been made by the complainant in her evidence by way of affidavit (Ex. CW-1/K). When asked about the role of accused no. 4, CW-1 (the complainant) in her cross-examination had deposed that she did not know whether accused no. 4 had given the import orders to the complainant firm or not. Therefore, CW-1 failed to delineate the role of the accused no. 4 in the transaction that occurred between the complainant firm and the accused company. Admittedly accused no. 4 is not the signatory of the cheque nor she has signed upon the MoU (Ex. CW-1/D).
57. In the case of "S.M.S. Pharmaceuticals Ltd. vs Neeta Bhalla and another (2005) 8 SCC 89" Hon'ble Apex Court had considered the definition of the word "director" as defined in Section 2(13) of the Companies Act, 1956 and observed thus:
"8. ....... There is nothing which suggests that simply by being a director in a company, one is supposed to discharge particular functions on behalf of a company. It happens that a person may be a director in a company but he may not know anything about the day-to-day functioning of the company. As a director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a CT Cases 463796/2016 M/s V. K. Jain And Company v.
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company. It may be that a Board of Directors may appoint sub-committees consisting of one or two directors out of the Board of the company who may be made responsible for the day-to-day functions of the company. These are matters which form part of resolutions of the Board of Directors of a company. Nothing is oral. What emerges from this is that the role of a director in a company is a question of fact depending on the peculiar facts in each case. There is no universal rule that a director of a company is in charge of its everyday affairs. We have discussed about the position of a director in a company in order to illustrate the point that there is no magic as such in a particular word, be it director, manager or secretary. It all depends upon the respective roles assigned to the officers in a company. ....."
58. No evidence has come on record to show that accused no. 4 was in charge of and responsible for the business of the accused company at the time of issuance of cheque in question. Accordingly, the accused no. 4 has been able to rebut the presumption under section 139 NI Act, which had been raised in favour of the complainant.
59. Accordingly, the point of determination No. B is decided in the affirmative qua accused no. 4.
CONCLUSION CT Cases 463796/2016 M/s V. K. Jain And Company v.
M/s. Fucon Technologies Ltd. and Ors.
Page 40 of 41
Digitally
signed by
RISHABH
RISHABH TANWAR
TANWAR Date:
2024.05.06
16:09:07
+0530
60. In view of the aforesaid discussion, the accused company 'M/s Fucon Technologies Ltd.' is held guilty and accordingly, accused no. 3 Ms. Deep Parikh is also held 'guilty'. Consequently, accused company as well as accused no. 3 are hereby convicted of the offence under section 138 read with section 141 NI Act.
61. However for the reasons stated above, accused no. 4 Ms. Gurmeet Verma is held 'not guilty' and accordingly, acquitted of the offence under section 138 read with section 141 NI Act.
62. This judgment contains 41 pages. This judgment has been pronounced by the undersigned in the open court and each page bears the signatures of the undersigned.
63. Let a copy of the judgment be uploaded on the official website of District Courts, Saket forthwith.
Digitally signed by RISHABH Announced in the open court RISHABH TANWAR on this Court on 06th Day of May 2024 TANWAR Date:
2024.05.06 16:09:13 +0530 (Rishabh Tanwar) MM (NI Act)-07/South District, (Saket District Court) CT Cases 463796/2016 M/s V. K. Jain And Company v.
M/s. Fucon Technologies Ltd. and Ors.Page 41 of 41