Delhi District Court
In Re: Davinder Nath Lohtia vs . Manmohan Gupta on 4 August, 2022
IN THE COURT OF SH. SHASHANK NANDAN BHATT,
MM, NI ACT-06, SOUTH WEST, DWARKA, DELHI
IN RE: Davinder Nath Lohtia Vs. Manmohan Gupta
CC No. 13323/19
CNR No. DLSW02-016806-2019
Davinder Nath Lohtia
(Deceased Through Legal Heirs)
a. Sushant Lohtia
b. Smt. Anuradha Lohtia
c. Abhishek Lohtia
d. Akanksha Lohtia
All R/o
A-2/5, Janak Puri, New Delhi-110058 ........Complainant
Versus
Manmohan Gupta
S/o Late Sh Lal Chand Gupta
R/o H. No. 171, Block-FIU, First Floor,
Pitampura, Delhi-88.
Also at
KNB/18, Gali no. 10, Anand Parbat
Industrial Area,
Anand Parbat, New Delhi-5 .........Accused
DATE OF INSTITUTION : 18.08.2011
OFFENCE COMPLAINED OF : U/s 138 N I
Act
DATE OF JUDGMENT : 04.08.2022
DECISION : Convicted
JUDGMENT
1. The instant matter has originated out of a complaint under section 200 Cr.PC read with Section 138 Negotiable Instruments Act (hereinafter referred to as the 'N I Act'), filed by the complainant against the accused alleging that cheques bearing no. 031048 and 031049 dated 03.05.2011 and 19.05.2011 respectively, each Davinder Nath Lohtia Vs. Manmohan Gupta Page 1 of 23 CC No. 13323/19 Judgment amounting to Rs. 20,00,000/- (Total amounting to Rs. Forty Lakhs), both drawn on Union Bank of India- Patel Nagar, issued by the accused in favour of the complainant, in discharge of a legal debt or other liability, has been dishonoured and the accused has not paid the said amount even after receiving the prescribed legal demand notice. By virtue of this judgment, the present complaint is being disposed of.
Brief Facts of the case
2. The case of the complainant, in brief, is that the complainant runs a business of CRC/HRC sheets at Anand Parbat and supplies articles all over India. The accused is a regular customer of the complainant and in the month of March 2011, the accused approached the complainant under the pretext that he is in urgent need of money to release his goods from the wholeseller and requested the complainant to pay Rs. 80,00,000/- (80 lakhs) citing the reason that the accused will suffer great losses in business, if, the said goods are not released. The complainant was not in a position to complete his demand immediately and asked the accused for some time to arrange the funds. Thereafter, on 04.04.2011 and 06.04.2011, the complainant paid Rs. 20 lakhs each(Rs. 40,00,000/- in total), to the accused, in order to help him. In lieu of the same, the accused issued two cheques of Rs. 20,00,000/- each (cheques bearing no. 031048 and 031049, dated 03.05.2011 and 19.05.2011 respectively) to the complainant with an assurance that the same will be encashed upon presentation.
3. The complainant has further averred that, upon the assurances of the accused, he presented the abovementioned cheques in his bank on 14.06.2011, but, to his surprise, both the above mentioned cheques got dishonored with the reason 'Insufficient Funds' vide return memos dated 17.06.2011. The complainant informed the accused about the fate of the cheques in question and demanded the cheque Davinder Nath Lohtia Vs. Manmohan Gupta Page 2 of 23 CC No. 13323/19 Judgment amount but the accused paid no heed to his requests. Thereafter, a legal notice dated 04.07.2011 was served by the complainant upon the accused and even after the expiry of the statutory period, the accused failed to repay the amount mentioned in the above stated cheques. Being aggrieved with the abovestated facts, the complainant instituted the present complaint.
4. Pursuant to presentation of the present complaint, summons were issued against the accused. Upon the appearance of the accused, notice u/s 251 Cr.PC was framed against him vide order dated 21.12.2015, to which he pleaded not guilty and claimed trial. In the defence recorded u/s 251 Cr.P.C. on the same date, the accused stated that the cheques belongs to the sole proprietorship firm M/s Durga Enterprises and late Sh. Jagmohan Gupta was the sole proprietor of the said firm. He was merely an employee of the said firm and was not aware of the transaction of the cheques in question. He further stated that he has not issued the cheques in question. He is only the authorized signatory on behalf of the above stated firm. Except the amount, none of the particulars of the cheques were filled by him. The accused has also stated that he does not owe any legal debt or liability to the complainant nor has he received any legal notice in the present matter.
5. During the pendency of the trial, the complainant expired and his son Sushant Lohtia was substituted as an LR. In support of the case of the complainant, the LR of the complainant -Sushant Lohtia has examined himself as CW-1 and presented the following documents:
(i) Cheques bearing no. 031048 and 031049 dated 03.05.2011 and 19.05.2011 Ex.CW1/1 and Ex.CW1/2 respectively;
(ii) Return memos both dated 15.06.2011 as Ex.CW1/3 and Ex.CW1/3A;
(iii) Legal notice as Ex.CW1/4;
(iv) Postal receipts as Ex.CW1/5 and Ex.CW1/6;
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(v) Certified copy of proceedings in CC No. 174/A/12
(DW2/DX colly);
(vi) Telephone directory of Anand Parbat Iron and Steel Traders
Weflare Association (Ex.DW2/DX-2 and Ex.DW2/DX-3).
6. During his examination in chief, LR of the complainant / Sushant Lohtia (CW-1), has reiterated the contents of the complaint. He was duly cross examined by the Ld. Counsel for the accused and in his cross examination dated 01.06.2018, he stated that he can identify the signatures of his father and denied the suggestion that his father had never signed before him. He has also stated that he mostly has knowledge of the present case but not the entire case. He has not filed any affidavit about having personal knowledge of the present matter. He had personal dealings with the accused Manmohan Gupta. He has denied the suggestion that complainant is not doing any business of CRC/HRC sheets at Anand Parbat. He has admitted the fact that he has not filed any document with respect to the fact that the accused carries on the business of CRC/HRC sheets nor has he produced any document to show that accused is his regular customer.
7. The witness (Sushant Lohtia/CW-1) has further denied the suggestion that the accused never transacted with him. He admitted the suggestion that he did not verify the financial position of the accused. His father paid Rs. 20 lakhs each on 04.04.2011 and 26.04.2011 to the accused. He has admitted that there was no written agreement regarding the said transactions. He first stated that cash money was kept at his home but later stated that it was arranged from somewhere. He has admitted the suggestion that he had not disclosed the source from which money was arranged. He has denied the suggestion that the complainant had no source of income to advance the loan in question. He cannot say whether the complainant had any banking transaction with the accused prior to 02.04.2011.
Davinder Nath Lohtia Vs. Manmohan Gupta Page 4 of 23CC No. 13323/19 Judgment He had paid Rs. 20 lakhs in cash apart from Rs. 40 lakhs, which he had paid to the accused. His father used to file ITRs. He files ITRs amounting to Rs. 5-6 lakhs. He has denied the fact that he did not file the ITRs of the complainant or his own ITRs as his financial capacity to file ITR was nil.
8. The witness (Sushant Lohtia/CW-1) has also stated that he cannot tell the exact date regarding the meeting held between the complainant and the accused. The accused handed over the cheques in question to the complainant before him and the details of cheques were already filled by him. He has denied the suggestion that the accused never issued or delivered the cheque to him. The legal notice was sent to the factory address at Anand Parbhat and home of the accused in Pitampura. He has denied the suggestion that his father never met the accused after the cheque got dishonored. He has denied the suggestion that he knew that the cheques in question belong to M/s Durga Enterprises which was the sole proprietorship firm of Late Sh. Jagmohan Gupta. He has also denied the suggestion that Manmohan Gupta was only the authorized signatory. The complainant met the accused after dishonor of cheque in June 2011 at his office. The legal notice filed by him is a photocopy and he has not filed any tracking report regarding the service of legal notice. The accused had stated that he will repay the money after receiving legal notice. The witness also stated that accused stated that he will handover the possession of the shop located at Anand Parbhat.
9. In his statements recorded u/s 313 Cr.PC, the accused stated that he had not issued any cheque in favour of the complainant in discharge of his legally enforceable liability. The cheque in question does not pertain to his account. Same pertains to M/s Durga Enterprises wherein he was an authorized signatory. He had no legal debt towards the complainant and had signed the cheque only as an authorized signatory.
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10. The accused chose to lead defence evidence and produced two witnesses in support of his case. Rahul Batra/DW-1, Asst. Manager UBI, stated in his examination in chief that he has brought the statement of account of M/s Durga Enterprises bearing no. 308005040132078(Ex.DW1/A) and the original copy of specimen signatures card (Ex.DW1/B), other forms (Ex.DW1/B1 and Ex.DW1/B2), GPA (Ex.DW1/C) and letter issued by branch manager Vinod Kumar (Ex.DW1/D). During his cross examination, the witness stated that 'either or survivor' from A to A1 on Ex.DW1/B is written by bank official and the account in question is a joint account of 'either or survivor'. Account holders of the said account are Late Sh. Jagmohan Gupta and Manmohan Gupta. The witness has further stated that he has not brought the account opening form of account bearing no 308005040132078 and he cannot say whether the said account opening form is available in the bank record or not. He has no personal knowledge of the firm M/s Durga Enterprises. The witness has stated that vide GPA Ex.DW1/C, late Jagmohan Gupta had given authority to Manmohan Gupta regarding account no. 132078 to act on his behalf. The account no. 308005040132078 is a cash credit account of late Jagmohan Gupta. He has also admitted that he has stated that the account in question is 'either or survivor' type account and there is a stamp reflecting that Mamohan Gupta is authorized signatory and Late Sh. Jagmohan Gupta is the account holder.
11. Accused - Manmohan Gupta/DW-2, during his testimony deposed that he had appended his signatures on the subject cheque. He had signed the said cheque in the capacity of authorized signatory of M/s Durga Enterprises. He was only looking after the bank related transactions of the said proprietorship which was owned by Late Sh. Jagmohan Gupta, who passed away in November 2011(approx). He had not taken any loan from the complainant and the cheque in Davinder Nath Lohtia Vs. Manmohan Gupta Page 6 of 23 CC No. 13323/19 Judgment question was not issued in discharge of his personal liability. He was merely an authorized signatory.
12. During his cross examination, the witness (Manmohan Gupta/ DW-
2) has stated that he has studied till 11th standard and he is presently not working. He does not file ITR and he does not remember whether he filed the ITR in the year 2011 or before it. He has denied the suggestion that he is not placing the record of relevant ITR as the same would reflect that he was doing his own business and not working as a salaried employee. In the year 2011, he worked at M/s Durga Enterprises having office at Anand Parbat for a salary of Rs. 10,000/-, which he received in cash. He remained employed from 2006 to 2011. He does not have any documentary evidence to show that he was employed with M/s Durga Enterprises. Other persons were also employed with M/s Durga Enterprises but he does not remember their names. He has denied the suggestion that he was a proprietor of M/s Durga Enterprises and not its employee. He has denied the suggestion that he was a proprietor of M/s Durga Enterprises.
13. The witness further stated that he has documentary proof that Jagmohan Gupta was the proprietor and the documents regarding the same must be in the court. He stated that if the documents are not in the court file, he can produce the same on the NDOH. Witness was confronted with the cheque in question (Ex.CW1/1), to which he said that the same bears his signatures and the amount in words and figures were also filled by him. He has denied the suggestion that the word 'authorized' mentioned in the cheque is only to mislead that he was an authorized signatory and not an account holder. He did not give any cheque to the complainant and it must have been given by his brother. The cheuqe book of the bank account remained in the possession of his brother. He does not remember the number of cheques which were signed by him upon being asked by his brother. He does not know how the cheques in question reached the Davinder Nath Lohtia Vs. Manmohan Gupta Page 7 of 23 CC No. 13323/19 Judgment complainant through his brother. He did not file any complaint against his brother regarding the handing over of the cheuqes in question. The witness first stated that the bank account in question was closed by him after the death of his brother but later stated that the said account was never closed and the same must be operational. He has denied the suggestion that the said account was 'either or survivor' bank account in his name and the name of his brother.
14. In his cross examination dated 29.10.2021, accused Manmohan Gupta (DW-2) deposed that he has not brought any document pertaining to alleged proprietorship M/s Durga Enterprises and the said documents are already on record. M/s Durga Enterprises has ceased to exist. He did not receive any notice from Income Tax Department and he does not know whether the same was received by his brother or not. He has not brought the bank account statement of M/s Durga Enterprises and he also cannot bring the same. He has admitted the suggestion that matters are pending against M/s Durga Enterprises and he has been arrayed as a party in them. Upon being confronted with certified copy of complaint bearing no. 174/A/12 u/s 138 of the N I Act (Ex.DW2/DX-1), he admitted that the same was filed against him and he also admitted to giving his statements and signing them in the said matter. He also admitted that at point Y on his statements, the work 'Prop' had been mentioned by him and at point Z word 'Durga Enterprises' has been mentioned. He stated that the said statements were written and signed by him upon asking of his brother but he has no proof of the same. The witness was also confronted with the telephone directory of Anand Parbad Iron and Steel Traders Weflare Association (Ex.DW2/DX-2 and Ex.DW2/DX-3), and he stated that he does not know how his name appears in the said telephone directory. The witness has denied the suggestion that his name appears on said directories and form as he was the proprietor of M/s Durga Enterprises.
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15. Thereafter, the matter was listed for final arguments. During the course of arguments, it was argued by the Ld. Counsel for the complainant that in view of the fact that the accused has admitted his signatures and the fact that he filled the particulars on the cheques in question, the presumptions under 118(a)/139 N I Act are attracted and the case is fit for conviction. He has further stated the accused has put up a frivolous defence regarding the fact that he was merely an authorized signatory of M/s Durga Enterprises. The Ld. counsel for the complainant has also argued that even otherwise as per a catena of decisions, the signatory holds the primary liability in cases u/s 138 of the N I Act and the liability of the accused has been proved beyond reasonable doubt.
16. Per contra, the counsel for the accused has stated that the complainant has foisted a false case against the accused. The actual liability is that of M/s Durga Enterprises whose sole proprietor was deceased Jagmohan Gupta. The accused was merely an authority signatory and signed upon the instructions of his employer. He owes no personal debt or liability to the complainant. In view of the above, the Ld. counsel for the accused has prayed that the accused be acquitted.
Findings of the Court-
17. Before delving into the facts of the case, it is apposite to bear in mind the law with respect to section 138, Negotiable Instrument Act. In order to prove his case under section 138 N I Act, the complainant must prove the following facts-
i) The accused issued a cheque on a bank account maintained by him
ii) The said cheque must have been issued, wholly or partly, in discharge of a 'legal debt or other liability'
iii) The said cheque was presented before the bank within 3 months from the date of issuance and was dishonoured Davinder Nath Lohtia Vs. Manmohan Gupta Page 9 of 23 CC No. 13323/19 Judgment
iv) The payee issued a legal demand notice, within 30 days of receipt of information of dishonour of the cheque
v) The drawer failed to make payment within 15 days of receipt of the said legal demand notice
18. Further, the NI Act raises two important legal presumptions in favour of the holder of the cheque as soon as the execution of cheque is proved. As per Section 118(a), NI Act, it shall be presumed that every negotiable instrument was 'made, accepted, transferred, negotiated or endorsed for consideration, unless the contrary is proved'. Furthermore, as per section 139, NI Act, it shall be presumed that 'the holder of cheque, received the cheque for the discharge, in whole or in part, of any debt or other liability, unless the contrary is proved.'
19. The principles with respect to above mentioned presumptions, have been succinctly laid down in Para 25 of the judgment by Hon'ble apex court in Basalingappa v. Mudibasappa (2019) 5 SCC 418, which lays down as under-
" 25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.Davinder Nath Lohtia Vs. Manmohan Gupta Page 10 of 23
CC No. 13323/19 Judgment 25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden."
20. At the very outset, it is pertinent to note that in the present matter the cheques in question (Ex.CW1/1 and Ex.CW1/2) were issued on 03.05.2011 and 19.05.2011 respectively. The said cheques were presented before the bank within the stipulated time and were dishonored vide return memos (Ex.CW1/3 and Ex.CW1/3A) both dated 15.06.2011 with the reason 'Funds insufficient'. Thereafter, a legal notice (Ex.CW1/4) was sent by the complainant on 04.07.2011. Thereafter, the present matter was instituted by the complainant on 18.08.2011, within the prescribed period of limitation provided by section 142 of the N I Act.
21. Before going into the merits of the case, the court is of the opinion that it is important to deal with the defence of non-receipt of notice taken by the accused. The position of law in this regard is no longer res integra in view of the judgment of Hon'ble apex court in C.C. Alavi Haji v. Palapetty Muhammed (2007) 6 SCC 555, wherein it has been held that an accused who has not received the legal demand notice cannot claim the benifit of the defence of non receipt of the same as once summons are served upon him, it is the duty of such an accused to make the payment of the cheque in question within 15 days of recieving summons from the court. Once this option is not availed by him, the benefit of defence of non service of notice cannot be given to the accused. Moreover, in view of the fact that the said notice was sent at the address of the accused, which has been admitted by him to be his correct address, during his cross examination on 29.10.2021, the court is of the opinion that a presumption u/s 27 of the General Clauses Act, can be drawn and the fact that the legal notice (Ex.CW1/4) was delivered to the accused can be deemed to have been proved.
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22. In view of the above discussion, it is clear that the cheques in question and after their dishonor, the legal demand notice, were both
- made/presented within the stipulated period and upon non payment of the amount of the cheques in question, by the accused after receiving the legal notice, the matter was instituted within limitation. It is pertinent to note that in the present matter, during the course of trial, the accused has admitted his signatures on the cheques in question. During his cross examination, the witness has also admitted the fact that in cheque bearing no. 03105, he had filled the amount in words and figures. As laid down in Basalingappa (Supra), once the execution of cheque is admitted by the accused, section 139 of the NI Act mandates a presumption that the cheque was for the discharge of any debt or other liability. In such a case, the onus of raising a probable defence shifts upon the accused.
23. In the present case, the case of the complainant is that the accused had issued the cheques in question total amount of Rs. 40 lakhs to him, in discharge of debt taken by him from the complainant. On the contrary, the defence of the accused is that he had signed the cheques in question as an authorized signatory and he was not the proprietor of the firm in question. He has further submitted that he had nothing to do with the business of the firm and he was merely an employee in it. As discussed above, in view of the mandatory presumptions of law as laid down by section 139 of the N I Act, the onus to raise a probable defence in the present case is on the accused. Upon a perusal of the facts of the case, it emerges that the cheques in question were issued from the account of M/s Durga Enterprises, which is not in dispute between the parties. Thus, in order to effectually adjudicate the present matter, the following are the points of determination:-
(i) Whether the accused has been successful in rebutting the presumption that the loan in question was not his personal loan and the loan of the firm - M/s Durga Enterprises?Davinder Nath Lohtia Vs. Manmohan Gupta Page 12 of 23
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(ii) What is the effect of the cheques in question belonging to the
account of M/s Durga Enterprises, upon the liability of the accused?
(iii) Whether the accused was merely an authorized signatory /employee of M/s Durga Enterprises? If yes, then what is his liability on account of being an authorized signatory?
(iv) Whether the accused has been successful in challenging the financial capacity of the complainant to advance the loan in question?POINT OF DETERMINATION NO. 1
24. In the present matter, one of the first defences that the accused has taken is that the alleged loan in question, if any, was not his personal loan. As per the accused, his brother - Jagmohan Gupta, being the sole proprietor of M/s Durga Enterprises, was entrusted with the entire working of the said proprietorship and his sole duty was to issue cheques and act on behalf of his brother, as per his directions.
25. As discussed previously, the accused has not disputed the fact that the cheques in question were issued by him. He has also admitted that in one of the cheques, he had filled the amount in figures and words and in view of the same, a mandatory presumption of law provided under section 139 of the N I Act arises by virtue of which, it has to be presumed that the said loan was received by the complainant in discharge of a 'debt or liability'. The necessary question that arises now is as to what is the extent of onus of proof that lies on the accused to rebut this presumption of law.
26. In this regard, the judgment of The Hon'ble Supreme Court of India in Krishnan Janardhan Bhat v. Dattatraya G Hegde (2008) 4 SCC 54 is relevant, which lays down that the accused has to prove his defence as per the touchstone of 'preponderance of probabilities'.
Davinder Nath Lohtia Vs. Manmohan Gupta Page 13 of 23CC No. 13323/19 Judgment The attention of the court also goes towards the judgment of the Hon'ble Supreme Court of India in Rohit Bhai Jeewan Lal Patel Vs. State of Gujarat 2019 SCC OnLine 389, which has been relied upon by the Ld. counsel for the complainant, wherein it has been mentioned that mere denial on the part of the accused, would not fulfill the requirements of rebuttal envisaged u/s 118 and 139 of the N I Act. In the present matter, the accused has denied the fact that he owed personal debt to the complainant, but has not adduced any positive evidence to prove this fact. At this juncture, it is pertinent to note that admittedly, the accused is the real brother of Mr. Jagmohan Gupta (stated by the accused to be the sole proprietor of M/s. Durga Enterprises) and he had all the resources in his hands to prove the fact whether any loan was taken by his brother Late Mr. Jagmohan Gupta or not. Further, by adducing positive evidence in this regard, he could have very well proved that the said loan was solely the liability of his brother - Late Mr. Jagmohan Gupta. By taking resort to the presumption laid down in illustration (g) appended to section 114 of the Indian Evidence Act, this court is of the opinion that it can be presumed that had the accused produced any such evidence regarding the transactions of M/s Durga Enterprises, in his defence, it would have been unfavourable to his case.
27. Furthermore, there is absolutely nothing on record which suggests that the accused after coming to know about the institution of the present case, lodged any formal complaint before an authorized official, regarding the fact that the cheques in question had been misused by the complainant and the same do not pertain to his personal liability. Thus, on account of the above appreciation of facts and evidences on record, the accused has failed to prove that the cheque in question was not given by him in discharge of his personal liability.
POINT OF DETERMINATION NO. 2 Davinder Nath Lohtia Vs. Manmohan Gupta Page 14 of 23CC No. 13323/19 Judgment
28. In the present matter, it is not in dispute that the cheques in question belong to the account of M/s Durga Enterprises. During the course of arguments, Ld. counsel for the accused has argued that since the cheques in question do not belong to the account of the accused, no personal liability can be attributed to him. To determine the nature of the account from which the cheques were issued, the testimony of Rahul Batra/DW-1, Asst. Manager UBI, is relevant. The said witness has categorically stated that the account in question was a joint account of Manmohan Gupta and Jagmohan Gupta, of 'either or survivor' type. Upon a perusal of the concerned bank records i.e. Ex.DW1/B, there is no iota of doubt in the mind of the court that the cheques in question were issued from a joint account, which was jointly held by the accused. The question of liability of the a joint account holder has been dealt with by the Hon'ble Apex Court in Aparna A Shah Vs. Sheth Developers Pvt. Ltd. 2013 8 SCC 71, which cogently laid down that - in case of joint accounts, it is the drawer, who is liable for prosecution under section 138 of the N I Act.
29. During the course of arguments, Ld. counsel for the accused has submitted that witness Rahul Batra/DW-1, has given contradictory statements. On one hand, he has stated that the account in question was a joint account of the accused and his brother- Late Mr. Jagmohan Gupta and on the other hand, he stated that vide GPA (Ex.DW1/C) late Sh. Jagmohan Gupta, had given authority to Manmohan Gupta, to act on his behalf. A perusal of the said documents clearly reveals that the account in question is a joint account of Mr. Manmohan Gupta and Sh. Jagmohan Gupta of 'either or survivor' type. In the opinion of the court, merely because a GPA, by which the accused has been authorized by Late Sh. Jagmohan Gupta, to act on behalf of the firm, has been appended with the bank account in question, does not take away the fact that the account in Davinder Nath Lohtia Vs. Manmohan Gupta Page 15 of 23 CC No. 13323/19 Judgment question is a joint account and the accused is one of the account holders of the said account.
30. At this stage, it is mindful to note that it is a settled legal position that, principles of vicarious liability do not apply in cases pertaining to section 138 of the N I Act, except under specific conditions mentioned in the Act itself. In the present matter, although the account in question is in the name of M/s Durga Enterprises, yet, the said account is a joint account of the accused and the accused was very well within his rights to issue cheques from the said account. At this juncture, it is apposite to mention that the object behind enacting the N I Act is to further the faith of general public in cheque transactions. In this regard, the judgment of Hon'ble Apex Court in Laxmi Dyechem Vs. State of Gujarat and Ors. (2012) 13 SCC 375, is relevant, wherein it has been laid down that- "while interpreting a penal provision which is also remedial in nature a construction that would defeat its purpose or have the effect of obliterating it from the statute book should be eschewed and that if more than one constructions are possible, the court ought to chose a construction that would preserve the workability and efficacy of the statute rather than an interpretation that would render the law otiose or sterile." The Hon'ble Supreme court had further laid down that - 'there are situations and contingencies arising out of deliberate act of omission or commission on part of the drawers of the cheque which would inevitably result in dishonor of cheque by them', and even such situations fall within the rigors and wrath of the provisions of section 138 of N I Act.
31. On account of the above discussion, the court is of the opinion that when a joint account holder, issues a cheque from the account, it is solely his responsibility to ensure that such cheque is honored. In the eventuality that the said cheque gets dishonored, he cannot be permitted to take the defence that the cheques in question belongs to the bank account of the firm. Such an interpretation has to be Davinder Nath Lohtia Vs. Manmohan Gupta Page 16 of 23 CC No. 13323/19 Judgment eschewed as it would be contrary to the workability and efficacy to the provisions of the N I Act and would have the effect of rendering the said provisions sterile or otiose. Consequently, the accused cannot be granted any benefit of the fact that the account from which the cheques in question were issued is in the name of M/s Durga Enterprises, as he is one of the joint account holders of the said account and it is his responsibility to ensure that cheques issued by him are duly honored.
POINT OF DETERMINATION NO. 332. In the present matter, one of the defence taken by the accused is that he is not the proprietor of the firm - M/s Durga Enterprises and he being an employee / authorized signatory of the said firm, cannot be held liable for the liabilities of his brother. Upon a careful scrutiny of the record, it emerges that, there is nothing in the cross examination of the LR of the complainant- Sushant Lohita(CW-1), that goes onto prove the defence of the accused regarding him being an employee of M/s Durga Enterprises. The witness has admitted that he did not verify the contents (regarding the proprietor of M/s Durga Enterprises), however, in the opinion of the court, the said fact alone cannot be used against the complainant as the transaction was entered into by Mr. Devinder Nath Lohtia( the original complainant), and not by the LR.
33. As discussed previously, the NI Act, casts a positive duty on the accused to rebut the mandatory legal presumptions, existing against him, upon admitting his signatures on the cheques in question. During his evidence, the accused (Manmohan Gupta/DW-2) has categorically stated that he had nothing to do with the transactions of the firm - M/s Durga Enterprises. He has stated that he was merely an authorized signatory who was acting at the behest of his brother. During his cross examination dated 08.04.2021, the accused Manmohan Gupta/DW-2, stated that he has the documents to prove Davinder Nath Lohtia Vs. Manmohan Gupta Page 17 of 23 CC No. 13323/19 Judgment that Late Jagmohan Gupta was the proprietor of M/s Durga Enterprises. However, the accused has failed to produce any documentary evidence on record, to prove that he was merely an employee of the said firm and had nothing to do with the business of the firm. During his cross examination, the accused (DW-2) was confronted with certified copy of complaint bearing no. 174/A/12 (DW2/DX-1), wherein he had signed statements in the capacity of proprietor of M/s Durga Enterprises, he was further confronted with telephone directory of Anand Parbat Iron and Steel Traders Weflare Association (Ex.DW2/DX-2 and Ex.DW2/DX-3), wherein his name has been mentioned as the proprietor of M/s Durga Enterprises and the accused could not give any satisfactory answers regarding the same.
34. In the opinion of the court, the best evidence as to who is the proprietor of M/s Durga Enterprises, would have been the proprietorship documents of the said firm. If not the proprietorship documents, the accused could have atleast produced the salary slips or salary transactions that took place between him and the firm, so as to prove that he was merely an employee of the said firm. Admittedly, the accused is the real brother of late Mr. Jagmohan Gupta and as such was very well within his capacities to produce the relevant documents (as admitted by him in his cross examination dated 08.04.2021) to discharge the onus of proof that rested on his shoulders. Considered intoto, the accused has failed to lead any evidence to prove the fact that the cheque in question was signed by him merely as an employee/ authorized signatory and not as a proprietor.
35. On the contrary, the complainant has placed on record the statements of the accused in CC No. 174/A/12 (Ex.DW2/DX-1) wherein he has admitted to give statements in writing after mentioning the fact that he is the proprietor of the firm in question. Furthermore, the complainant also placed on record the telephone directory Davinder Nath Lohtia Vs. Manmohan Gupta Page 18 of 23 CC No. 13323/19 Judgment documents of the trade welfares association (Ex.DW2/DX-2 and Ex.DW2/DX-3), wherein the name of the accused has been mentioned as a proprietor of the firm M/s Durga Enterprises. During his evidence, the accused did not give any satisfactory answers upon being confronted by the above stated documents.
36. At this stage, it is axiomatic to reiterate that a matter pertaining to section 138 of the N I Act is a 'Civil Sheep' in a 'Criminal Wolf's Clothing' (as laid by the Hon'ble Apex Court in P. Mohan Raj Vs. M/s Shah Brothers Ispat Ltd. LL 2021 SC 120). In the present matter, the accused has taken the defence that his brother late Mr. Jagmohan Gupta was the sole proprietor of M/s Durga Enterprises and he has nothing to do with the working and business of the said firm. During his cross examination, the accused also stated that he can produce the documents to prove this fact but, he did not produce any document in this regard. Further, as evidenced by the statements of the accused given in CC No. 174/A/12 (Ex.DW2/DX-1) and the contents of telephone directory documents (Ex.DW2/DX-2 and Ex.DW2/DX-3), the name of the accused is mentioned as a proprietor of firm M/s Durga Enterprises. Thus, the accused is blowing hot and cold at the same time, inasmuch as, in the present matter, he contends to be merely an authorized signatory of the firm but in another matter (CC No. 174/A/12), he has himself mentioned his name as the proprietor of M/s Durga Enterprises. In view of the above, it is quite evidence that the accused has not approached the court with clean hands and the credibility of his defence becomes highly doubtful and he has failed to prove that he was not the proprietor of the firm - M/s Durga Enterprises and merely its authorized signatory/ employee.
37. During the course of arguments, the Ld. counsel for the accused has drawn the attention of the court towards the GPA (ExDW1/C), as per which, Mr. Jagmohan Gupta has authorized Mr. Manmohan Gupta to act on his behalf and on behalf of the firm, to buttress his arguments Davinder Nath Lohtia Vs. Manmohan Gupta Page 19 of 23 CC No. 13323/19 Judgment that the accused is merely an authorized signatory. If for the sake of argument, it is believed that the cheque in question was signed by the accused merely upon the directions of Mr. Jagmohan Gupta, still, he cannot be permitted to escape the wrath of section 138 of the N I Act, as the Act, does not contemplate the principle of Vicarious Liability unless in specific cases already mentioned in the NI Act. In this regard, the Ld. counsel for the complainant has also relied on the judgment of Hon'ble Kerala High Court in J H Thampi Vs. Don Bosco 2014 SCC OnLine Kerala 25745, which lays down that - the principles of vicarious criminal liabilities cannot be attributed upon the principal who has granted power of attoney in favour of the power of attorney holder for the commission of offence u/s 138 of the N I Act and the power of attorney holder cannot escape from penal liabilty by saing that cheque in question was signed by him only under the authority given by his principal and not in his individual capacity. Similar view has been taken by the Hon'ble Gujarat High Court in Krishna Trading Company Vs. State of Gujarat. In view of the law laid down in the above judgments, the court is of the opinion that even if the accused had been successful in proving that he is merely an authorized signatory (as mentioned in GPA Ex.DW1/C) of M/s Durga Enterprises, then also in view of the above law and the fact that the account in question is a joint account of the accused and Mr. Jagmohan Gupta, no benefit of the said fact can be given to him.
POINT OF DETERMINATION NO. 438. During the course of arguments, the Ld. counsel for the accused has relied on the judgments of Sanjay Verma Vs. Gopal Halwayi and K Subramani Vs. Damodar Naidu and argued that the complainant has failed to prove his financial capacity and in view of the same, the accused is entitled to acquittal. The case of the complainant is that, he worked in the business of HRC/CRC sheets at Anand Parbat and supplied articles, all over the country. During his cross examination, Davinder Nath Lohtia Vs. Manmohan Gupta Page 20 of 23 CC No. 13323/19 Judgment the LR of the complainant- Mr. Sushant Lohtia (CW-1), has stated that his father used to file ITR but, he does not remember the exact amount on ITR filed by him. He also stated that he used to file ITRs amounting to Rs. 5-6 lakhs, but he has not filed any ITR along with the complainant. He has also denied the suggestion that he and the complainant had no capacity to file the ITR and therefore, they both did not file any ITRs.
39. At this stage, it is pertinent to note that the court is mindful of the law laid down by the Hon'ble Apex court in Basalingappa (Supra), which lays down that - it is not imperative for the accused to step into the witness box to prove his defence regarding financial incapacity of the complainant and it is the duty of the complainant to prove his financial capacity, once the accused challenges the same. However, in the opinion of the court, in the present matter, it was expected of the accused, that apart from challenging the financial capacity of the complainant, he should also have insisted upon the fact that the complainant should produce his ITRs of the relevant period to show his income. During the stage of cross examination, the accused failed to ask any question to the LR of the complainant as to whether he can produce the ITRs of the complainant for the relevant period or not. The accused was well within his rights to ask the complainant to produce his ITRs and after production of the same, he could have questioned the complainant upon the same. However, the accused did not avail any such opportunity and by taking resort to section 114 of the Indian Evidence Act, it can very well be presumed that, if the accused had asked the complainant to produce ITRs of the relevant period, it would have had an adverse impact upon his case. In such a case, the court is of the opinion that the complainant was under no obligation to produce his ITRs and prove his income for the relevant period. Moreover, the version of the LR of the complainant that his father worked in CRC/HRC Sheets and owned a well reputed firm that supplies articles all over Davinder Nath Lohtia Vs. Manmohan Gupta Page 21 of 23 CC No. 13323/19 Judgment India, has not been rebutted. Thus, the accused has failed to successfully challenge the financial capacity of the complainant and in the opinion of the court, the complainant was financially capable to advance the loan in question.
40. Before parting with the judgment, it is apposite to mention that the Ld. counsel for the accused has relied on N K Bhagat Vs. Bishwanath Day 2017 SCC OnLine Cal 326 , Dr. V Balaraju Vs. IMS Pashak Feeds Ltd. , Raghu Laxmi Narayan Vs. Fine Tools , Ebay Ondoa Pct. Ltd. Vs. State, M M Lal Vs. State of Delhi and Girish Bhasin Vs. Anita Proprietors which lay down that authorized signatory of a company cannot be prosecuted u/s 138 of N I Act and section 141 of the N I Act is not applicable to Proprietorship firms. However, the accused cannot be given benefits of these judgments, as he has been unsuccessful in proving that the liability was not his personal liability and also that he was not the proprietor of the firm in question. Apart from the above judgments, the Ld. counsel for the accused has also relied upon K Prakashan Vs. P K Sundaram & Pine Products Ltd. Vs. R P Gupta and Sons. This court in humble agreement with the law laid down in said matter, however, since the facts of these matters (inasmuch as the averment of the complainant is that the loan was sought to release goods of the accused form the market) are different from the present matter, accused cannot be given any benefit of the same.
41. The Ld. counsel for the complainant has relied on Bir Singh Vs. Ramesh Kumar 2019 4 SCC 197, V S Yadav Vs. Reena & APX Corex Vs. Shakti International, which lays down that section 139 of the N I Act introduces an except to the rule of burden of proof. The court has considered the above judgments and has relied upon them in appreciating the facts and circumstances of the present matter. Lastly, the attention of the court also goes towards the fact that the LR of the complainant did not file his examination in chief by way of affidavit, upon being substituted in the present matter. None of the Davinder Nath Lohtia Vs. Manmohan Gupta Page 22 of 23 CC No. 13323/19 Judgment parties raised any objection in this regard. Since two connected matters were pending between the same parties before the same court, the same appears to be a bonafide mistake on the part of the complainant. In the opinion of the court, the said fact is only a procedural irregularity and since the LR of the complainant has been duly cross examined, no benefit of said fact can be given to the accused.
42. Consequently, in the considered opinion of the court, the accused has failed to rebut the presumptions u/s 118A and 139 of the N.I. Act. In light of the specific admissions of the accused as to issuing the cheque in question and the fact that the accused has not been able to prove his defence that the loan in question was not his personal loan or that he had nothing to do with the business of M/s Durga Enterprises, the case of the complainant has been duly proved.
CONCLUSION
43. Thus, on account of above appreciation of facts, evidences and materials on record, this court is of the considered opinion that the complainant has proved his case on the touchstone of 'beyond reasonable doubt'. Consequently, accused- Manmohan Gupta is convicted under the accusation of committing the offence u/s 138 N I Act.
44. This judgment contains 23 pages. This judgment has been pronounced by the undersigned in the open court and each page bears the signatures of the undersigned.
45. A copy of this judgment be given free of cost to the convict.
46. Let a copy of the judgment be uploaded on the official website of District Courts, Dwarka forthwith.
PRONOUNCED IN THE OPEN COURT TODAY i.e. ON 04th August 2022.
(Shashank Nandan Bhatt)
Metropolitan Magistrate (NI Act)-06
South- West, Dwarka
04.08.2022
Davinder Nath Lohtia Vs. Manmohan Gupta Page 23 of 23
CC No. 13323/19 Judgment