Delhi District Court
Complainant vs . on 29 April, 2015
IN THE COURT OF SHRI PUNEET PAHWA
METROPOLITAN MAGISTRATE 01 (N.I. ACT)
PATIALA HOUSE COURTS : NEW DELHI
Technology Development Board
Board Constituted under the Provisions
of the Technology Development Board Act, 1995,
Having its Office at:
Technology Bhawan,
New Mehrauli Road,
New Delhi110016.
....................... Complainant
Vs.
1.M/s Samudra biopharma (P) Ltd.
1, 4th East Street, Kamaraj Nagar, Thiruvanmiyur, Chennai600041.
Formerly known as:
M/s Shantha Marine Biotechnologies Pvt. Ltd.
2. Mr. K.O. Issac (Chairman) M/s Samudra biopharma (P) Ltd.
1, 4th East Street, Kamaraj Nagar, TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 1 of 36 Thiruvanmiyur, Chennai600041.
3. Mr. K.O. Philip (Managing Director) M/s Samudra biopharma (P) Ltd.
1, 4th East Street, Kamaraj Nagar, Thiruvanmiyur, Chennai600041.
4. Mr. T.R. Venkatraman General Manager (Finance) M/s Samudra biopharma (P) Ltd.
1, 4th East Street, Kamaraj Nagar, Thiruvanmiyur, Chennai600041.
[DECLARED AS ABSCONDER] ...................................Accused Case No. Date of Institution 147/1 07.03.2008 154/1 02.05.2007 155/1 15.01.2008 156/1 04.04.2007 157/1 31.05.2008 158/1 02.02.2008 161/1 03.04.2008 162/1 29.01.2007 163/1 10.09.2007 164/1 05.12.2007 TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 2 of 36 165/1 10.08.2007 166/1 17.07.2007 179/1 24.10.2007 218/1 12.05.2008 Offence Complained Of. : U/s 138 NI Act Plea of the Accused. : Not Guilty Arguments Heard On. : 11.03.2015 Final Order. : Convicted.
Date of Judgment. : 29.04.2015
− :: JUDGMENT ::
1. Vide this common judgment, I shall dispose of above mentioned fourteen complaints, pending between the same parties, filed by the complainant u/s 138 Negotiable Instrument Act, 1881 (hereinafter referred to as "N.I Act").
2. In brief, the facts of all the cases are that the complainant is a Board constituted under the provisions of the Technology Development Board (hereinafter referred to as "TDB") for TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 3 of 36 assisting and disbursing loans to the Companies/Organizations engaged in development and commercialization of indigenous technologies and adaptation of imported technologies for domestic applications. The TDB Act, 1955, authorizes the Chairperson/Secretary of TDB to file the present complaints and do all acts in furtherance of the complaints. He is also authorized to delegate his authority to any other official of TDB. Consequently he had authorized Sh. Sharad Kumar Srivastava to file the instant complaints.
3. It has further been alleged in the complaints that accused 2 & 3 are the Chairman and Managing Director of accused no.1 and are responsible for the day to day affairs of accused no.1. Accused no.2, as Managing Director of accused no.1, executed the loan agreement and later, as its Chairman, executed the deed of settlement. Accused no.4 being the General Manager (Finance) of accused no.1 company signed the cheques in question. It has further been alleged that one loan agreement was executed on 24.07.2000 between the complainant and accused no.1 vide which the complainant sanctioned a loan of Rs.350 lacs to the accused for production of Marine Alga Dunaliella Salina and the extraction of natural provitaminA Beta Carotene. As per the loan agreement, the accused no.1 undertook to repay the loan amount alongwith TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 4 of 36 interest. However, the accused failed to adhere to the repayment schedule as per the loan agreement dated 24.07.2000.
4. Thereafter on request of the accused, one supplementary agreement was executed on 20.08.2002 for deferment of repayment of loan installments and payment of interest. As per the supplementary agreement, the repayment of loan and interest was agreed to be started from 01.11.2002 whereas, in the original loan agreement the repayment of the loan was to start from 01.05.2002. However, the accused again defaulted in adhering to the repayment schedule agreed between them as per the supplementary agreement dated 20.08.2002. Thereafter a deed of settlement was executed between the complainant and the accused, wherein, it was agreed that the accused would pay to the complainant the entire principal amount of Rs.350 lacs and outstanding simple interest @ 5% per annum, by way of step up payments starting from April, 2004. The entire payment was to be paid within 14 months from the date of starting of payment. The repayment schedule agreed between the parties was a part of settlement deed dated 21.06.2005 and in discharge of part of the schedule repayment amount, the accused issued the following cheques which are the subject matter of present fourteen complaints:
TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 5 of 36 TABLE 'A' Sl. No. CC CHEQUE NO./ DATE / AMOUNT RETURN MEMO RETURN NO. EXHIBIT DATE MEMO /REASON OF EXHIBIT RETURN 1 147/1 003545 / 25.12.2007 15,60,000/ 31.12.2007 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 2 154/1 003535 / 25.02.2007 12,59,000/ 06.03.2007 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 3 155/1 003543 / 25.10.2007 15,60,000/ 02.11.2007 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 4 156/1 003534 / 25.01.2007 12,50,000/ 06.02.2007 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 5 157/1 003548 / 25.03.2008 15,98,000/ 03.04.2008 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 6 158/1 003544 / 25.11.2007 15,60,000/ 01.12.2007 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 7 161/1 003546 / 25.01.2008 15,60,000/ 04.02.2008 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 8 162/1 003527 / 25.08.2006 12,50,000/ 19.09.2006 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 9 163/1 003539 / 25.06.2007 15,60,000/ 02.07.2007 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 10 164/1 003542 / 25.09.2007 15,60,000/ 03.10.2007 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 11 165/1 003538 / 25.05.2007 15,60,000/ 31.05.2007 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 12 166/1 003537 / 25.11.2007 15,60,000/ 12.05.2007 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 13 179/1 003441 / 25.08.2007 15,60,000/ 06.09.2007 Ex. CW 1/C Ex. CW 1/B Exceeds Arrangement 14 218/1 003547 / 25.02.2008 15,60,000/ 15.03.2008 Ex. CW 1/C Ex. CW 1/B Insufficient Funds TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 6 of 36
5. Thereafter, legal demand notice was issued by the complainant calling upon the accused to make the payment within 15 days of receipt of the notice. But when the accused failed to make payment within 15 days of receipt of the legal demand notice, the complainant was constrained to file the present complaints u/s 138 N.I. Act.
6. Finding a prima facie case against the accused persons, they were summoned. The accused persons entered appearance and Notice u/s 251 Cr. P.C was served upon them, to which they pleaded not guilty and claimed trial.
7. It is pertinent to mention here that during the course of proceedings, accused no.4 stopped appearing and consequently process u/s 82/83 Cr. P.C was issued against him. Process u/s 82 Cr. P.C was duly executed against accused no.4 and thereafter the trial proceeded in his absence. It is worth mentioning that during the trial the AR of complainant was substituted and a new AR was appointed who had filed his evidence by way of affidavit. Sh. Rakesh Bhardwaj was the new AR of complainant who stepped into the witness box and deposed as CW 1. In his affidavit he has reiterated the averments made in the complaint and fully supported the case of the complainant. The complainant has also relied upon TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 7 of 36 the following documents:
TABLE'B' SL. Nature of Documents No. 1 Authority letter issued in favour of Sharad Kumar Srivastava, previous AR of complainant.
2 Authority letter issued in favour of Rakesh Bhardwaj, new AR of complainant. 3 Cheques in question and cheque returning memos 4 Postal receipts 5 A/D Cards 6 Complaints 7 Supplementary Agreement dated 20.08.2002 8 Deed of Settlement dated 21.06.2005 9 Legal demand notices
8. After his crossexamination the CE was closed. Statement of accused u/s 313 Cr. P.C was recorded and the accused persons were called upon to lead DE.
9. Accused no.2 himself stepped into the witness box and deposed as DW 1. After his examination DE was closed. Thereafter final arguments were heard and the case was fixed for orders.
10. Basically the defence of the accused was that the amount of Rs.350 lacs was disbursed in installments over a period of three years. But since the plant was located in a desolate area and was TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 8 of 36 under the control of militants, the construction was delayed due to non availability of building material. Thereafter, the TDB's assessment team concluded that the project would not be completed in time and therefore time was extended by the assessment team. Although he had admitted the loan agreement, the supplementary agreement and also deed of settlement entered into between the parties but it was stated by the accused persons that vide an order, the Central Govt had issued directions for placing natural betacarotene under the Drug Price Control which made the project unviable. Because as per the said order, they were forced to sell their product below its manufacturing cost.
11. Further, the cheques in question were issued alongwith the deed of settlement, which were to be encashed during the course of four years. They were not aware about the time when those cheques would be presented for encashment. Subsequently the accused company made the payment through Demand drafts and out of total liability of Rs.4.71 crores the amount of Rs.1.89 crores was paid by the accused by way of demand drafts. The cheques in question were issued as security only and the payments were to be made by demand draft. They have also submitted that it was a secured loan and it was taken against company's land and assets and shares valuing approx. Rs.1.3 crores and corporate guarantee TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 9 of 36 was also given by the promoters, Shantha Biotechnologies Pvt. Ltd. The accused company had requested TDB to dispose of the collateral property and recover the balance amount from the said property. They have further submitted that the promoters of the accused company paid Rs.3 crores to the complainant which means that total amount of Rs.4.89 crores has already been paid by the accused to the complainant against the specified liability of Rs.4.71 crores. Therefore, the accused company has already made payment against its entire liability and now nothing is due to be paid by the accused. The TDB is further authorized to dispose of assets of the company and thus the demand of the complainant company is unjust and illegal.
12. After perusing the defence raised by the accused persons, it appears that the basic defence of the accused persons is that they have already made the entire payment to the complainant and now since there is no liability upon them, the matters stood compounded and thus they are entitled to be acquitted.
13. Bare perusal of Section 138 of the NI Act clarifies that five essential ingredients for completing the offence under Section 138 of the Act are as below:
i) Issuance of the cheque in discharge of a legally TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 10 of 36 recoverable debt or liability;
ii) Presentation of the cheque with the bank;
iii)Returning of the cheque unpaid by the drawee bank;
iv) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, and
v)failure of the drawer to make payment within 15 days of the receipt of the notice.
14. It is pertinent to mention here that there are two presumptions of law as mandated by the Negotiable Instruments Act. According to Section 118 (a) of the Act, it shall be presumed that every negotiable instrument was made or drawn for consideration. By virtue of this clause, the Court is obliged to presume that the promissory note was made for consideration or until the contrary is proved. In Mallavarapu Kasivisweswara Rao Vs. Thadikonda Ramulu Firm and Others AIR 2008 SC 2898 it was held as under: "... ... ... The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, defendant has to bring on record such facts and TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 11 of 36 circumstances upon consideration of which the court may either believe that the consideration did not exist or its nonexistence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist...."
15. According to Section 139 of NI Act "it shall be presumed, unless the contrary is proved that the holder of a cheque received the cheque for discharge in whole or in part, of any debt or other liability." Under Section 139 NI Act there is a legal presumption that the cheque was issued for discharging a liability and that presumption can be rebutted only by the person who drew the cheque. This presumption can be rebutted by the accused by adducing evidence. So the burden of proof is on the accused.
16. In Hiten P. Dalal Vs. Bratindranath Banerjee AIR 2010 SC 1898 it was held as under: "The words 'unless the contrary is proved' which occur in this provision (Section 139) make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 12 of 36 be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted......".
17. Now it is to be seen whether the accused persons have been able to rebut the presumptions raised again them and if yes, whether the complainant has been able to bring home the guilt of the accused beyond all reasonable doubt or not? To rebut the presumptions raised against the accused persons, Ld. Counsel for the accused had crossexamined the complainant witness and tried to bring on record that the entire payment has been made by the accused to the complainant and now there is no more liability upon the accused persons.
18. Ld. Counsel for the accused has crossexamined the complainant witness i.e. CW 1 Rakesh Bhardwaj at length. During his crossexamination, CW 1 deposed that he had joined the services on June, 2011. He was appointed as AR of TDB by its secretary. He further deposed that he has been appointed as AR vide authority letter Ex. CW 1/A. He denied the suggestion that as per the deed of settlement the total amount of Rs.4,71,30,833/ shown in the schedule of installment was the full and final payment towards the loan agreement. He voluntarily deposed that it was a TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 13 of 36 part liability and as per para F of the said deed of settlement dated 21.06.2005 the total outstanding on 31.03.2004 was Rs.202.84 crores. He further deposed that the accused had issued total 48 cheques in pursuance to the deed of settlement.
19. He admitted that the complainant company TDB has received Rs.4,83,01,649/ from the accused and M/s Shantha Biotechnologies Pvt. Ltd. He deposed that the complainant has received Rs.3 crores from M/s Shantha Biotechnologies Pvt. Ltd. on 01.07.2011 in compliance of the award passed by Ld. Sole Arbitrator Sh. N.K. Sharma and the remaining amount of Rs.1,83,01,649/ has been received from the accused i.e. M/s Samudra Bio Pharma till date. A question was put to the witness that did the aforesaid two companies i.e. M/s Shanta Biotechniques Ltd. and M/s Samudra Bio Pharma jointly owe him Rs.4,83,01,649/ ?. In answer to this question, the witness deposed that it was accused M/s Samudra Bio Pharma who owed the complainant Rs.4,83,01,649/. He admitted the suggestion that as per para 1.1A of the loan agreement, the loan was secured by deed of hypothecation/mortgage.
20. He admitted that the cheques in question have been issued by Samudra Bio Pharma Pvt. Ltd. through accused no.2 K.O. Issac. He admitted the suggestion that the amount of Rs.3 crores from TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 14 of 36 Shanta Biotechniques Pvt. Ltd. was reflected in the account of the accused Samudra Bio Pharma Pvt. Ltd. in the ledger account of TDB Ex. CW 1/6. During the crossexamination the witness placed on record copy of arbitration award dated 28.05.2010 and since it was not disputed by the parties, the same was exhibited as Ex. CW 1/7. He admitted the suggestion that the arbitration proceedings were initiated by TDB in pursuance of a dispute in respect to the loan Rs.3.5 crores was given to the accused.
21. I have gone through the crossexamination of the complainant witness and after going through the same this court is of the view that no major contradiction came out from his cross examination.
22. The accused has further tried to rebut the presumptions by leading DE and the accused no.2 K.O. Issac himself stepped into the witness box and deposed as DW 1.
23. DW 1 deposed in his examinationinchief that Samudra Bio Pharma Pvt. Ltd. (formerly known as Shanta Marine Bio Technologies Pvt. Ltd.) was promoted by Sh. Varaprasad Reddy, Mrs. K. Vasantha Reddy and Shanta Bio Techniques Pvt. Ltd., Hyderabad. The company entered into a loan agreement on 24.07.2000 for Rs.350 lacs which is Ex. CW 1/H from the TDB TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 15 of 36 against a corporate guarantee for the full loan from the promoters M/s Shanta Bio Techniques Pvt. Ltd., hypothecation of the land and assets of the borrowing company and pledge of 1,30,000 shares in the company owned by ABL. On 25.09.2003, he resigned from Board and Form 32 was filed on 31.10.2003 with the Registrar of Companies under cash counter receipt record no.406489 and registration no.01/033834. The said document is marked as DW 1/B. He further deposed that of the total 33 payments made during the tenure of the deed of settlement which were totally amounting to Rs. 189 lacs, 8 payments were given by way of cheques and remaining 25 payments were made by demand drafts. Certification of these payments and the statement of account issued by Axis Bank and Canara Bank were submitted and were exhibited as Ex. DW 1/1 (colly).
24. He further deposed that TDB appointed a sole arbitrator on the matter, who, in his final award dated 28.05.2010 Ex. CW 1/7, directed that the liabilities be recovered through the encashment of the corporate guarantee for the entire loan given by the promoter and holding company Shanta Bio Techniques P. Ltd, Hyderabad as well as through sale of the company's assets. He further deposed that in the balance sheet for the year ending 31st March, 2010 Ex. DW 1/5, filed with the Department of Company Affairs and ROC, TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 16 of 36 Shantha Biotechnologies Pvt. Ltd. had specifically made a provision for Rs.6.01 crores. However, the TDB, in its wisdom decided to accept only Rs.3 crores against this provision of Rs.6.01 crores inspite of displaying a liability of Rs.6,86,84,039/ on that date, as shown in their statement of accounts Ex. CW 1/6. The company's assets have been lying with the TDB since 2000 under a Deed of Hypothecation dated 24.11.2000 and Form 8 and 13 confirming hypothecation filed with the Registrar of Companies and registered u/s 132 of the Companies Act, 1956. He further deposed that the assets have been independently valued by Shri E.S. Vijay Raghavan, Government approved and registered Valuer under C.I. No. 153 of 90, Corporate Valuer F1479 on 12.10.10 wherein he has valued land at Rs.510 lacs. This is submitted as Ex. DW 1/6.
25. He further deposed that both, TDB's bye laws and the final award from the arbitrator, required and mandated sale of assets of the company, in order to recover liabilities. Inspite of the Technology Development Board authorizing its asset managers, M/s Dimensions Consulting P. Ltd and inspite of the company continuously requesting that the assets be sold to recover the dues, the property remained unsold.
TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 17 of 36
26. He further deposed that of the total liability of Rs.471 lacs in pursuance of the deed of agreement, the company has made payments of Rs.189 lacs during the tenure of the agreement. The holding company and promoters have made a payment of Rs.300 lacs against the company's liabilities thereby totaling Rs.489 lacs as against the claimed liability of Rs. 471 lacs. He further deposed that when the value of the land of Rs.510 lacs as shown in the Ex. DW 1/6 was taken into account, the company made a payment in cash and kind of a total of Rs.999 lacs towards a claimed liability of Rs.471 lacs. He further deposed that total value of the 21 cheques approximates around 279 lacs which has been recovered against the payment of Rs.300 lacs made by the promoters. Thus the company has made full payment against liabilities claimed by the Technology Development Board.
27. DW 1 was crossexamined by Ld. Counsel for complainant. During crossexamination a question was put to the witness that as to whether he had signed as a Director on Ex. CW 1/J, dated 21.06.2005 for entering into a settlement with the complainant ? To this question the witness replied that since the agreement specifically says "authorized signatory", he had stepped down as Managing Director.
TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 18 of 36
28. The witness was confronted to portion A to A of Ex. CW 1/J i.e. deed of settlement and was suggested that the witness was the Director and authorized signatory. The witness replied that he had resigned as Managing Director of the company and the promoters and holding company had requested him to sign as authorized signatory. A suggestion was put to the witness that he was deposing falsely that he was not a Director as even Ex. CW 1/J which was signed by him, clearly mentioned him as a Director and authorized signatory vide Board Resolution dated 22.03.2003. The witness denied the suggestion and strenuously deposed that he was not the Managing Director and the Form 32 filed in the court substantiates his resignation as Managing Director. However, the witness admitted that at the time of entering into the settlement deed Ex. CW 1/J he had represented himself to be the Director and authorized representative of the company. One more suggestion was put to the witness that he signed as a Director and now he has taken false stand with a view to avoid his liability and prosecution. To this suggestion the witness deposed that he had signed representing the company and he did not seek to put any false stand.
29. I have gone through the examinationinchief and cross examination of DW 1.
TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 19 of 36
30. I have heard Ld. Counsel for complainant as well as Ld. Counsel for accused and have also gone through the case file.
31. Ld. Counsel for the complainant has argued that the complainant has proved its case beyond all reasonable doubt whereas the accused persons have failed to rebut the presumptions raised against them and, therefore, they are liable to be convicted.
32. On the other hand Ld. Counsel for the accused has raised the following issues:
i. That summoning order passed by this court is not proper and is defective as it does not clearly mention the name of the accused persons who have been summoned. He has argued that complete address of the accused persons are to be mentioned in the summoning order so as to clearly show as to which accused has been summoned by the court. To substantiate this arguments Ld. Counsel for the accused has relied upon the judgment of Hon'ble Rajasthan High Court titled as Ram Pal Vs. State of Rajasthan, CriLJ 3261, 1998(2) WLC 31;
ii. That the authority letter dated 09.07.2012 issued in favour of Rakesh Bhardwaj is also defective as it is general in nature and it TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 20 of 36 does not authorize him to depose in a criminal complaint u/s 138 N.I. Act.;
iii. That the accused persons have already paid more than the cheque amount, which has been admitted by the AR himself which means that the entire liability has been discharged and the matter has been compounded between the parties. Moreover property worth Rs.5 crores is still hypothecated with the complainant and the complainant can very well recover the amount from that property. The fact that the complainant is not recovering the said money from hypothecated property implies that intention of the complainant is not good and they just want to harass the accused persons. To substantiate this argument, Ld. Counsel for the accused has relied upon the judgment of Hon'ble Supreme Court in Damodar S. Prabhu Vs. Sayed Babalal H. (2010) 5 SCC 663;
iv. That the complainant has not come with clean hands as sometimes the complainant is resorting to the original agreement whereas sometimes it relied upon the deed of settlement executed between the parties. Once the deed of settlement is executed between the parties, the original agreement stands substituted. However, the complainant without terminating the deed of settlement is reverting back to original agreement;
v. That no evidence has been led by the complainant to show that TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 21 of 36 accused no.2 & 3 are Chairman and Managing Director of accused no.1 and there is nothing to show that they were responsible for day to day affairs of accused no.1 company. Accused no.2 & 3 have not signed the cheques and therefore they are not liable to be prosecuted u/s 138 of N.I. Act. Ld. Counsel for the accused has placed reliance on two case laws titled as H.B. Chaturvedi Vs. State & Anr. 2006(1) ALD Cri 52 and Mrs. Aparna A. Shah Vs. M/s Sheth Developers Pvt. Ltd. & Anr. Cri. Appl. No.813 of 2013; and vi. That in the crossexamination of defence witness no question was asked regarding the defence raised by the accused and therefore the entire evidence has gone unrebutted which is deemed to have been admitted by the complainant. To substantiate his arguments, Ld. Counsel for the accused has relied upon the judgment of Hon'ble Supreme Court in Sarwan Singh Vs. State of Punjab AIR 2002 SC 3652.
33. In rebuttal Ld. Counsel for the complainant has argued that the objections with respect to summoning order are not maintainable at this stage as the summoning order was not challenged by the accused persons and accordingly the same has become final and now at this stage they can not raise this issue.
TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 22 of 36 Otherwise also no prejudice has been caused to the accused persons and all the accused persons have been summoned and the judgment relied upon by the accused to substantiate this defence is not applicable in the present case. Since all the accused persons have been summoned in this case, there was no need to separately mention the name of the accused persons in the summoning order. Secondly there is no defect in the authority letter filed by the complainant and it clearly authorizes the AR to pursue with the present complaints.
34. So far as the payment by coguarantor is concerned the same can not be said to have been made to compound the present complaints. Since compounding is a bilateral act, it can be done only with the consent of both the parties. Nothing has been brought on record to show that the present complaints have been compounded between the parties. Moreover the complainant is free to appropriate the payment made by the coguarantor towards the interest of the loan amount. The basic ingredients for an offence u/s 138 N.I. Act is return of the cheque unpaid; issuance of notice and failure of the drawer to make the payment within 15 days of receipt of notice. Once the 15 days period is over, the cause of action arises on the 16th day and the offence stands committed. Any subsequent payment made by the accused or any TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 23 of 36 other person does not exonerate the accused persons from their liability to be prosecuted u/s 138 N.I. Act. Just because some amount has been paid by the accused does not imply that the matter has been compounded. On these grounds Ld. Counsel for the complainant has argued that the accused persons have failed to rebut the presumptions raised against them and therefore they are liable to be convicted.
35. The major defence of the accused persons is that the total outstanding liability of the accused was Rs.4,71,30,883/ whereas they have already paid Rs.4.89 Crores which is much more than the outstanding liability and therefore the entire amount has already been paid and hence the present complaints are not maintainable. The accused has raised the issue that since the entire amount has been paid, the present complaints stood compounded and the accused persons are entitled to be acquitted.
36. Admittedly it has come on record that the accused persons have paid Rs.1.71 Crores to the complainant and Rs.3 Crores has been paid by M/s Samudra Bio Pharma which is the promoter of accused company. Ld. Counsel for the accused has also relied upon the decision of arbitrator, appointed to resolve the dispute between the complainant and the accused. Now it is to be seen TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 24 of 36 whether the payment made by the accused and its promoters, pursuant to the arbitration proceedings would amount to compounding of matter or not.
37. In Gurucharan Singh Vs. M/s Allied Motors Ltd. 2006 (2) RCR (Crl.)30 the Hon'ble Supreme Court set aside the orders of Hon'ble High Court by which the criminal proceedings u/s 138 N.I. Act were stayed till the conclusion of civil proceedings. In this matter in respect of the dispute, arbitrator had passed an award in favour of the accused and complainant had challenged the award in civil proceedings. The complainant case was pending even before the passing of the award by an arbitrator. The Hon'ble Supreme Court had held as under:
"....civil proceedings or arbitration proceedings for recovery and the criminal proceedings under section 138 N.I. Act are based upon independent cause of action. The making of the award may be a defence to such a complaint but to what extent the defence would be valid, shall depend upon the facts and circumstances of the case. Mere making of the award cannot be a ground to stall or stay the proceedings initiated under section 138 N.I. Act"
TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 25 of 36
38. Besides the abovesaid judgment of Hon'ble Supreme Court, there are catena of judgments passed by Hon'ble Supreme Court and various Hon'ble High Courts which provide that enforcement of liability through a civil court will not disentitle the complainant from prosecuting the accused for an offence u/s 138 N.I. Act. Both remedies may be simultaneously possible. It has further been observed that a civil suit or arbitration proceedings can not debar the criminal prosecution. In fact the Hon'ble Supreme Court in Rajneesh Aggarwal Vs. Amit J. Bhalla 2001 AD (SC) 44 has held as under:
"So far as the criminal liability is concerned, once the offence is committed, any payment made subsequent thereto will not absolve the accused of the liability of criminal offence, though in the matter of awarding of sentence it may have some effect on the court trying the offence. But no stretch of imagination a criminal proceedings could be quashed on account of deposit of money in the court or that an order of quashing of criminal proceedings which is other wise unsustainable in law could be sustained because of deposit of money in the court. Hence, merely full or part payment of the cheque made during pendency of the prosecution itself TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 26 of 36 is not a ground to absolve the accused from his liability attached to the conviction for the offence but this fact can be a basis to ascertain and fix the extent of punishment".
39. Thus it is clear that the criminal remedy is separate from civil remedy and filing of civil suit for recovery or pendency of arbitration proceedings or approaching to consumer forum in respect of dishonour of cheque is not a ground to debar the complainant to file complaint u/s 138 N.I. Act. The ingredients for an offence u/s 138 N.I. Act are entirely different and once those ingredients are established and the accused has failed to make the payment within 15 days of receipt of notice, the accused can very well be prosecuted for an offence u/s 138 of N.I. Act and subsequent payment by the accused will not exonerate him from his liability.
40. It is also well settled that compounding of an offence is a bilateral act which can be done only with mutual consent of both the parties and just because the accused has made the payment does not mean that the matter has been compounded. It is nowhere on record to show that the payments have been made for the purpose of compounding of present complaints u/s 138 N.I. Act. Hence, TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 27 of 36 this defence raised by Ld. Counsel for the accused is not sustainable. Otherwise also this court find force in the arguments of Ld. Counsel for the complainant that where the payment has been made without any stipulation then the complainant is free to appropriate that payment towards the interest part. Thus, this defence is not sustainable and stands overruled.
41. Next defence raised by the accused is that the summoning order is defective as it does not disclose the name of the accused persons who have been summoned. This defence is also not sustainable as the accused persons have never challenged the summoning order passed by this court and thus the same has obtained finality. Otherwise also since all the persons impleaded as accused have been summoned, no injustice has caused to the accused persons. Just because their names have not been mentioned in the summoning order, it does not mean that the order is per se bad in law. It will not amount to any injustice. The description/particulars of all the accused persons are very well mentioned in the complaints and merely non mentioning of the accused persons in summoning order will not affect the trial in the present complaints. The judgment relied upon by Ld. Counsel for the accused is not applicable in the present case as the facts are entirely different.
TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 28 of 36
42. The next defence raised by the accused is that the authority letters on the basis of which the present complaints have been filed and also on the basis of which the AR has deposed as a witness, are not proper as the same do not authorize the AR to file the criminal complaints u/s 138 N.I. Act and to depose as a witness.
43. I have gone through both the authority letters Ex. CW 1/A & Ex. CW 1/A1 and after perusing both the authority letters I am of the considered opinion that the authority letters are not defective and they very well authorize the AR to pursue with the present complaints u/s 138 N.I. Act. The authority letters clearly authorizes the AR to sign, file and verify pleadings on behalf of TDB and to do all necessary acts in furtherance thereof before any court of law and/or before any Tribunal with respect to recovery of loan assistance extended by TDB to M/s Samudra Biopharma Pvt Ltd. Merely because the terms complaint u/s 138 N.I. Act is not mentioned will not disentitle the AR to pursue with the present complaints. Words used in the authority letters very well cover filing of complaint u/s 138 N.I. Act and to depose on behalf of the complainant so as to recover the loan assistance extended by TDB to the accused and, hence, this defence is also not sustainable and is accordingly overruled.
TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 29 of 36
44. The next defence raised by Ld. Counsel for the accused is that the complainant has not come with clean hands and the present complaints have been filed just to extort money from the accused persons as on one occasion the complainant is resorting to original agreement whereas on other occasions he is relying upon the provisions of deed of settlement, which can not be done. However, this defence is also not sustainable as the present complaints are based upon the act of dishonour of cheques and for non payment by the accused even after 15 days of service of legal demand notice. The agreement and deed of settlement are just an evidence to prove guilt of the accused and even if those are not considered, the onus was upon the accused to rebut the presumptions raised against them. The fact that the complainant is relying upon the original agreement as well as on deed of settlement, will not affect the initial onus of the accused to rebut the presumptions raised against them. The cause of action in the present complaints has not arisen from the original agreement or deed of settlement. The cause of action has arisen due to dishonour of the cheques and failure of the accused in making the payment which is not dependent upon the agreement or deed of settlement and, hence, this defence holds no ground so far as the present complaints are concerned.
TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 30 of 36
45. The next defence raised by Ld. Counsel for the accused was that no document has been brought on record to show that accused no.2 & 3 were the Directors of accused no.1. If we peruse the deed of settlement Ex. CW 1/J, it is clear that the said deed of settlement has been signed by accused no.2 K.O. Issac as Director and authorized signatory of accused no.1. In fact the accused no.2 when appeared as defence witness was confronted with portion A to A of the said deed of settlement and the accused failed to give any satisfactory reply as to why he had signed the said document as Director and authorized signatory of accused no.1. Thus from the said document, it stands proved that accused no.2 was a Director of accused no.1 and had actively participated in the transactions between accused no.1 and the complainant. In fact during his crossexamination a specific question was put to him as to whether he was the Director of accused no.1 or not, to which he did not give any clear reply and stated that he had resigned as Managing Director only and did not deny that he was not the Director of accused no.1. The Form 32 filed by the accused also shows that he had resigned from the post of Managing Director and not from the Directorship and thus he was the Director of accused no.1 at relevant time.
46. So far as liability of accused no.3 is concerned, the TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 31 of 36 complainant in his complaint as well as in his affidavit has very categorically stated that accused no.3 was also the Director of accused no.1. Accused no.3 has failed to rebut this averment and thus it also stands proved that accused no.3 was also the Director of accused no.1 at the relevant point of time. In fact Ex. CW 1/D which has been filed by the accused himself is a letter issued by accused no.3 to one Sh. Dinesh Sharma, Secretary, Department of Science & Technology. This letter clearly shows that accused no.3 is Managing Director of accused no.1 and thus he is liable to be prosecuted in the present complaints u/s 138 r/w S.141 of N.I. Act. Furthermore, the document Ex. CW 1/C also refers accused no.3 as Managing Director of M/s Samudra Biopharma Pvt. Ltd and hence this defence of the accused is also not sustainable and accordingly overruled.
47. The next defence of Ld. Counsel for the accused was that accused no.2 when appeared had very categorically stated that the entire payment has been made by the accused to the complainant and he has not been crossexamined by Ld. Counsel for the complainant on this aspect.
48. At the cost of repetition it can be said that even if the payment has been made by the accused, it will not exonerate them TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 32 of 36 from the liability u/s 138 N.I. Act and even if no crossexamination has been done by the complainant in this regard, it will not affect their liability so far as the complaint u/s 138 N.I. Act is concerned. Hence, this defence also holds no ground so far as the present complaints are concerned.
49. In the end, it would be pertinent to mention that there are 21 complaints pending between the same parties based upon the same transactions. In fact in 14 complaints the parties are exactly the same whereas in 7 complaints the complainant is the same and accused no.1,2 & 3 are same and accused Mr. T R Venkatraman has not been impleaded as accused in those seven complaints. It is also pertinent to mention here that in all the 21 complaints accused no.1 has been represented by accused no.2 only. While perusing the files, it came to the notice that in four complaints bearing CC No.157/1, 164/1, 166/1 & 179/1, Notice u/s 251 Cr. P.C has not been served upon the accused persons. Although this issue has not been raised by either party at any stage yet it is to be seen whether this has caused any prejudice to the accused persons so far as the trial in those four complaints is concerned.
50. Here it would be appropriate to consider the position/stand taken by Hon'ble Apex Court and various High Courts on such TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 33 of 36 type of omissions. It has been held that even a total omission to frame a charge, even under the warrantprocedure, is per se no ground for setting aside the conviction. The real question is whether such omission or irregularity has occasioned a failure of justice. It has been observed by Hon'ble Apex Court that the same position would follow from S.456, post, as regards a summons case by reason of the words "omission or irregularity in...other proceedings" in that section. Hence, whenever any grievance is made as to omission to state the particulars as required by S.251, the decision of the Court would rest on the questionWhether such omission has occasioned a failure of justice or prejudiced the accused.
Section 204(3) requires that every summons in a complaint case shall be accompanied by a copy of the complaint. Hence, there would be no prejudice for omission to state particulars under S.251 where the accused has been apprised of the facts from the copy of the complaint served on him.
Apart from the above, there may not be any prejudice to the accused
a) Where, notwithstanding such omission, the accused, being represented by a lawyer, crossexamined the prosecution witnesses fully and also examined defence witnesses.
TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 34 of 36
b) Where he had filed written statement, replying to the complaint, paragraph by paragraph.
Reliance may be placed upon the following case laws 1) Bidyadhar Vs. Daitari, AIR 1959 or 121; 2) Halim Vs. State of Assam AIR 1971 A&N 39 and 3) State of Rajasthan Vs. Bhanwarlal, AIR 195 Raj 296(DB).
51. Therefore merely because Notice u/s 251 Cr. P.C has not been served upon the accused in four complaints will not vitiate the entire trial in those four complaints. It is to be seen whether it has prejudiced the accused persons or not. In those four complaints the complainant witness has been thoroughly crossexamined by Ld. Counsel for the accused. Statement of accused u/s 313 Cr. P.C has been recorded and the accused have also led DE. After reading the crossexamination, Statement of accused and DE, this court is of the opinion that the accused persons were very well aware of the case against them and no prejudice has been caused in those four complaints, just because Notice u/s 251 Cr. P.C has not been served upon them. Inadvertently framing of notice was left but the same is not such an irregularity so as to vitiate the entire trial. Otherwise also this ground has not been raised by either of the TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 35 of 36 parties during the entire trial especially by the accused persons. This fact also strengthens the opinion of this court that no prejudice has been caused due to said irregularity.
FINAL ORDER
52. In the end it can be said that the complainant has proved beyond all reasonable doubt the guilt of the accused whereas the accused persons have failed to rebut the presumptions raised against them. Accordingly, accused no.1,2 & 3 stand convicted u/s 138 of N.I. Act.
Now to come up for arguments on quantum of sentence today itself i.e. 29.04.2015 at 1:00 p.m. Announced in the open Court on 29th April, 2015 (PUNEET PAHWA) MM (NI ACT1) PATIALA HOUSE COURTS NEW DELHI TDB Vs. Samudra Biophara Pvt. Ltd. Page No. 36 of 36 IN THE COURT OF SHRI PUNEET PAHWA METROPOLITAN MAGISTRATE 01 (N.I. ACT) PATIALA HOUSE COURTS : NEW DELHI Technology Development Board Board Constituted under the Provisions of the Technology Development Board Act, 1995, Having its Office at:
Technology Bhawan, New Mehrauli Road, New Delhi110016.
....................... Complainant Vs.
1. M/s Samudra biopharma (P) Ltd.
1, 4th East Street, Kamaraj Nagar, Thiruvanmiyur, Chennai600041.
Formerly known as:
M/s Shantha Marine Biotechnologies Pvt. Ltd.
2. Mr. K.O. Issac (Chairman) M/s Samudra biopharma (P) Ltd.
1, 4th East Street, Kamaraj Nagar, Case No.234/1 Thiruvanmiyur, Chennai600041.
3. Mr. K.O. Philip (Managing Director) M/s Samudra biopharma (P) Ltd.
1, 4th East Street, Kamaraj Nagar, Thiruvanmiyur, Chennai600041.
...................................Accused Case No. Case No. Case No. 159/1 147/1 162/1 160/1 154/1 163/1 167/1 155/1 164/1 168/1 156/1 165/1 216/1 157/1 166/1 217/1 158/1 179/1 219/1 161/1 218/1 At 3:00 p.m. ORDER ON SENTENCE Present: Ms. Geeta Malhotra and Sh. Vishal Dabas, Ld. Counsel for complainant alongwith Ms. Swasthika Kumari, employee of the complainant company in person.
Case No.234/1Sh. Jaydip Bhattacharya, Sh. Abid Ali Beeran P and Sh. Robin George, Ld. Counsel for convict no.1,2 & 3 alongwith convict no.2 & 3 in person.
Arguments on quantum of sentence heard.
Ld. Counsel for the complainant has argued that the complainant has been pursuing with the present complaints for the last approx. 78 yrs and the complainant being a Govt. Agency must be fully compensated so as to prevent loss of public money. She has further requested for maximum punishment to the convicts so that message could be sent to the society at large.
On the other hand Ld. Counsel for the convicts has argued that the convicts have clean antecedents and in fact they are Scientist by profession and are well educated and they did not have any intention to commit any offence. He has further argued that the purpose for taking loan from the complainant was to develop an indigenous technology i.e. "production of Marine Alga Dunaliella Salina and the extraction of natural provitaminA Beta Carotene" and, if the project had been successful, it would have benefited the entire country. It is just because of policy change they could not pursue with the project. He further argued that since the drugs which were being extracted were to be used for the benefit of the mankind, a lenient view may kindly be taken against the convicts. He further argued that the convicts are not business Case No.234/1 professionals and they did not take the said loan for the purpose earning profits and they just intended to develop a drug so that infant mortality rate can be reduced. Ld. Counsel for the convicts has further argued that from the record it is clear that the loan taken was approx. Rs.2.8 Crores and the total outstanding liability was to the tune of Rs.4.71 Crores whereas, the convicts have already paid Rs.4.89 Crores to the complainant, which the complainant has himself admitted. This fact should be taken into consideration while awarding sentence. Moreover property worth Rs.5 Crores is still hypothecated with the complainant and it is best known to the complainant only as to why the complainant has not recovered the amount from the said property.
Arguments heard.
Admittedly it has come on record that an amount of Rs.4.89 Crores has been paid to the complainant by the convicts and by Samudra Biopharma, which is the promoter of convict no.1. It is also not in dispute that the property worth Rs.5 Crores is still hypothecated with the complainant. This court can not ignore the fact that the convicts are well educated and are scientist by profession and the project which they had undertaken would have benefited the entire nation had it been succeeded. However, it also can not be ignored that the complainant is a Govt. Agency which has been pursuing the present complaints for the last approx. 78 Yrs.
Looking into the facts and circumstances of the case and to Case No.234/1 meet ends of justice, this court does not deem it fit to send the convicts behind the bars. However, to properly compensate the complainant which is a Govt. Agency, convict no.2 & 3 are sentenced to custody till rising of the court and they are further sentenced to pay compensation to the complainant of Rs.1,00,000/ (Rs. One Lac) in each complaint, totaling to Rs.21,00,000/ (Rs. Twenty One Lacs Only), which is to be paid to the complainant within 45 days from today and in case of default in payment of compensation to the complainant, the convicts shall be liable to undergo Simple Imprisonment for One month. Copy of judgment and order on sentence be given to the convicts free of cost.
File be consigned to record room after due compliance.
Announced in the open Court on 29th April, 2015 (PUNEET PAHWA) MM (NI ACT1) PATIALA HOUE COURTS NEW DELHI Case No.234/1