Delhi District Court
In Matter Of "Krishna Janardhan Bhat vs . Dattatraya G. Hegde" (2008) 4 on 10 October, 2019
IN THE COURT OF PARAS DALAL,
METROPOLITAN MAGISTRATE - 04, N. I. ACT,
SOUTH-EAST DISTRICT, SAKET DISTRICT COURTS, DELHI.
JUDGMENT
M/s. Advance India Projects Limited ....................Complainant Versus M/s. Silver Tone Motors (Pvt.) Ltd. & Other ....................Accused PS - Greater Kailash Under Section 138 of N. I. ACT, 1881
a) Sl. No. of the case : CT 617636/2016
b) Alleged date of commission of offence : 10.04.2010 Approx.
c) Name of the complainant : M/s. Advance India Projects Ltd.
Through its authorized representative
Mr. Vikram Wahi
Registered Office at:
232-B, Okhla Industrial Estate-II
New Delhi-110020
d) Name of the accused company no.1 : M/s. Advance India Motors(P)Ltd.
Name of the accused person no.2 : Mr. Dimpy Kapoor
Both at: D-179, Phase-I,
Okhla Industrial Area, New Delhi
e) Offence complained of : Under Section 138 of N. I. Act, 1881
f) Plea of accused : Pleaded not guilty
g) Final order : Convicted
h) Date of such order : October 10, 2019
BRIEF STATEMENT OF THE REASONS FOR DECISION : -
1. The present complaint for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 has been filed by the complainant M/s. Advance India Projects Ltd. through its Authorized Representative Mr. Vikram Wahi against accused no.1 Company M/s. Silver Tone Motors (Private) Limited and another accused alleged to be the Directors of Accused no.1 company. In gist, it is alleged in complaint that complainant CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 1 of 15 company was approached by the accused company through its director Mr. Dimpy Kapoor/ Accused no.2 that the accused company is creating a new division for doing the business of Real Estate and can easily arrange approximately 20 acres of land in Panipat or Sonipat at average cost of Rupees one crore per acre. The complainant company was induced and made Rs.2 Crore of initial investment by way of two cheque bearing number 958598 and 847575 drawn on HDFC Bank and Citi Bank, respectively, both were duly encashed on 15.12.2007 and 18.12.2007. The complainant further alleged that there was no response even after six months and when accused was approached, some more time was sought, finally in September 2009, the accused expressed his failure to procure any piece of land and stated that the advance has been utilized for its benefits and further accused agreed to return the initial instalment alongwith Rupees 80 Lakhs. Against the repayment Rs.55 Lakhs was returned by way of three cheques between October to December 2009. Against further repayment the accused drew five cheques in March 2010, four cheques of Rs.50 Lakhs each and one fore Rs.25 Lakhs. The first four cheques of Rs.50 Lakhs each are in question in complaint case bearing no. 617685/2016 and for the fifth cheque, present complaint is filed. The cheque is Ex.CW1/2. The cheque was returned unpaid by the accused's bank for the reason "stop payment marked by drawer" vide memos Ex.CW1/3. Legal Demand notice dt. 25.03.2010 was sent within the stipulated time Ex.CW1/4 and the same was replied vide reply dated 04.10.2010 Ex.CW1/8, however, accused did not make payment within statutory period of legal demand notice, hence, this complaint.
PRE-SUMMONING EVIDENCE & NOTICE
2. Pre-summoning evidence was led by the complainant side and after hearing complainant side, both number 1 being company and 2 being director were summoned for offence punishable under Section 138/141 of The Negotiable Instruments Act, 1881. After appearance of accused persons, it was ensured that copy of complaint has been supplied.
3. Notice was put to the accused by my scholarly predecessor for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 on 03.04.2012 to which accused CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 2 of 15 pleaded not guilty and claimed trial. Notice on behalf of accused no.1 company was accepted by accused no.2. The accused admitted the factum of investment as alleged by the complainant, however defended that the initial investment was returned as agreed by Rs.55 Lakhs paid to the complainant and there was no outstanding liability on the accused towards the complainant company. Thereafter, matter was fixed for complainant's evidence and accused side was granted opportunity to cross-examine the complainant's evidence. COMPLAINANT'S POST NOTICE EVIDENCE
4. Complainant examined its authorized representative as CW1, adopted affidavit of pre- summoning as his evidence reiterating almost all facts of complaint, stating all exhibits available on record and in gist in his cross-examination his testimony was unshaken. The witness admitted that from the name it appears that the accused company was into motor vehicle business and they never checked if there was any change in the MOU or AOA of the accused company to venture into real estate business. The witness also admitted that there was no documentation done with respect to land, or that no land was mentioned, however, the witness volunteered that it was only an advance payment and the accused company was to procure land between Panipat and Sonipat on the main road and therefore, there was no land finalised when advance payment was done. The complainant witness CW1 denied the suggestion that the cheques were given as security or that they were given in blank to the complainant company. CW1 stated that they were introduced to accused company by Mr. Kuldeep Ahuja and hence he was called as CW2, who deposed in the lines of CW1 and in his cross examination also his testimony was unshaken. In gist the witness deposed that the accused no.2 approached him with an offer to sell a piece of land of about 20 acres between Sonipat and Panipat and therefore, he suggested the accused that Complainant Company might be interested in buying the said piece of land. The witness reiterated the complainant's stand that Rs. 2 crores were given to accused as advanced payment and even deposed that later the transaction failed and accused company agreed to give cheques totalling Rs.2.8 Crores to the complainant company. CW2 stated that he did not remember the date of CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 3 of 15 meetings and admitted that no documentation took place, however he negated the suggestion that present case was false. CW4 is Bank witness who was called to produce the account statement of Complainant's bank account for the period when the advance payments of Rs.2 Crores were made to the accused. The account statement were exhibited Ex.CW4/1. CW3 was further called by the complainant to prove accused's bank statement, but later another bank witness CW3A was called to support the exhibits marked through CW3. CW3A in his cross examination identified the bank statements produced through CW3.
5. Complainant post-notice evidence was closed vide order dated 27.01.2015 and thereafter, matter was fixed for recording statement of accused. STATEMENT OF ACCUSED
6. The statement of accused was recorded on 29.09.2015 under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 separately. Incriminating evidence was put to them. Sh. Inder Mohan Jha, AR of Accused no.1 company took the defence that the accused company was never into business of land sale and purchase and complainant company had offered to make an investment of Rs.10 Crores against which tax free debentures were to be issued. However, he again said that interest free debentures were to be issued. The accused further deposed that only Rs.2 Crores out of the total investment was made and Complainant Company failed to make remaining payment. Thereafter as per agreement arrived between the two parties, the accused gave five cheques of Rs.11 Lakhs each. However, he again said that the five cheques were given in blank and only bore his signatures. He further stated that the complainant recovered Rs.55 lacs and got one cheque of Rs.25 Lacs dishonoured and he does not know about the remaining cheques. When asked specific question about the present four cheques in question, the accused stated that present four cheques were given 3-4 months after receiving the initial investment from the complainant company and were given as security. Accused no.2 in his defence stated that the complainant company had offered to make capital investment for equity partnership in the accused company and a total of Rs.10 Crores were to be investment. He further stated that the CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 4 of 15 complainant company made initial investment of Rs.2 Crores and did not make the remaining payment of Rs.8 Crores. As against the present four cheques the accused no.2 deposed that the said cheques were given as security, out of which two were returned due to court orders.
7. Accused was given opportunities to lead defence evidence and accused side called in witness box as many as 9 witnesses. Out of the 9 defence witnesses DW6 Sunil Kumar Agarwal, DW7 Daljeet Singh, DW8 Ajay Kumar Matta and DW9 Ajay Bharti did not turn up for their cross-examination and hence there deposition cannot be read in defence evidence. The counsel for the accused also dropped Sh. Kirti Kumar as defence witness. Therefore, as defence witness, there is complete deposition on record only of DW1 to DW5. Accused no.2 Sh. Dimpy Kapoor stepped in witness box as DW1 under section 315 CrPC and he deposed that he was one of the director of accused company and through Mr. Kuldeep Ahuja the complainant company proposed to invest Rs.10 Crores and it was only after full investment that equity partnership was to be executed. DW1 further deposed that the complainant company only paid token investment of Rs.2 Crores and failed to make the remaining payment within stipulated time of 3 months. Thereafter it was resolved to repay as full and final settlement Rs.55 Lakhs, against which 5 cheques were given. DW1 deposed that out of the five cheques given 3 were realised by the complainant company for Rs.25 Lakhs, Rs.25 Lakhs and Rs.5 Lakhs. The last cheque was misused for Rs.25 Lakhs which are subject matter of present complaint. The four cheques in question and part of CC No.617685/2016 were deposed to be given as security to Mr. Kuldeep Ahuja when the initial investment was realised. DW1 was cross examined at length and he admitted that no documentation was done. The witness further deposed that the four cheques were given as security in 2008. The witness even admitted that no balance sheet, profit and loss account or ledger account of Complainant Company was filed. The witness later stated that a total of five-six cheques were given as security. The witness admitted that no communication was given to the complainant company asking for remaining investment of Rs.8 Crores. The witness in the later part of his cross examination on 02.09.2015 deposed that present four cheques were given after realising the initial investment and settlement took place in end of 2009 or early 2010. CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 5 of 15
8. DW2 to DW5 were employees of accused company and have all deposed in the lines of DW1/accused no.2 Sh. Dimpy Kapoor. DW2 to DW4 deposed that against the total investment of Rs.10 Crores, the complainant company was to be issued debentures. DW5 was employed with the accused company from 2001 till 2007 and his deposition was more of hearsay and he was not a witness to any of the transaction in question in the present case. DW4 in his cross examination admitted that the names on the cheques were already filled but the amount was not filled. Later DW4 specifically admitted that the four security cheques were filled by him in the year 2007 and the same were given to the complainant company in the year 2008. DW3 deposed that four security cheques all drawn on Bank of India were given as blank after 3 months of receiving initial investment. DW3 further deposed that settlement was arrived at and five cheques all drawn on HDFC bank were given which were to be filled with amount of Rs.11 Lakhs each towards full and final settlement. DW3 however, in later part of his cross examination dated 16.12.2015 failed to identify the four cheques in question in CC no. 617685/2016 and stated that the said cheques were not given at the time of settlement. DW2 admitted that four cheques in question were duly filled and given 2-3 months after the initial investment was received. DW2 admitted that management official used to take decision and only used to hear about the decisions from the Managing Director or General Manager, therefore whatever deposition he has given is based on hearsay, he was not part of the meetings and deliberations regarding present transaction in question. During the entire defence evidence, none of the witness DW1 to DW5 could depose as to under which head of the balance sheet, the initial investment was shown. As regards the present cheque the accused defended that the same was part of five cheques which were given at the time of settlement of Rs.55 Lacs. Three were used to receive Rs.55 Lacs, fourth is the cheque in question which has been misused and there is nothing stated about the fifth cheque.
9. Although the deposition of witnesses DW6 to DW9 were not complete and cannot be read in evidence, however to show the conduct of the accused side, their deposition in examination in-chief is reiterated briefly herein. DW6 was a customer of accused company and was not at all part of any of the transaction in question. DW8 was auditor of the accused CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 6 of 15 company deposed in the lines of accused side, and he deposed that four cheques were given as undated security cheques. However, even though he was an auditor, he stated that he did not remember when the last audit of the company was done. He admitted that he was not part of business transaction and was only the auditor, therefore, his (incomplete) deposition is only hearsay. Most noteworthy are DW7 and DW9, DW7 was Director of Complainant Company and he deposed in the lines of complainant and DW9 was one of common acquaintance of accused no.2/ Dimpy Kapoor and Sh. Daljit Singh from complainant company.
10. The accused side failed to avail various opportunities to conclude his defence evidence and vide order dated 01.11.2017 defence evidence was closed. Final arguments from both sides heard on 13.09.2019. Case file perused.
POINTS FOR DETERMINATION : -
11.1 Whether the complainant has been able to establish ingredients of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 beyond shadow of reasonable doubt against the accused or not?
11.2 Final order.
APPRECIATION OF FACTS/CONTENTIONS/ANALYSIS & FINDINGS
12. To bring home conviction for offence punishable under Section 138 of The Negotiable Instruments Act, 1881, the complainant is obliged to prove : -
(a) The cheque(s) was/were drawn/issued by the accused person(s) to the complainant on an account maintained by him/her/them/it with the bank for discharge, in whole or in part, of any debt or liability.
(b) The cheques(s) was/were presented to the bank within a period of six months or within period of its/their validity.
(c) The cheque(s) so presented for encashment was/were dishonored.CT No. 617636/2016
M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 7 of 15
(d) The payee/complainant of the cheque(s) issued a Legal Demand Notice within 30 days from the receipt of information from the bank regarding dishonourment of the cheque(s).
(e) The drawer of the cheque(s) failed to make the payment within 15 days of receipt of afore-said Legal Demand Notice.
(f) The complaint was presented within 30 days after the expiry of above 15 days.
UNDISPUTED/UNCONTROVERTED FACTS
13. At the outset, it is pertinent to mention herein that it is not in dispute that cheque in question belongs to the accused, it bears signature of accused no.2 on behalf of accused company, it was drawn on an account maintained by the accused with the bank and cheque in question was dishonoured as alleged. So, there is no need of discussion qua said ingredients and same can be regarded as being duly proved on record and being non-controverted. It is also not controverted that the complainant company made the investment of Rupees Two Crores by way of cheques. The accused has also not disputed the genuineness of Ex.CW3/1 and Ex.CW4/1. Therefore, no discussion is required qua above facts being non-controverted. The accused side has admittedly received the legal demand notice and the same was replied Ex.CW1/8 and therefore, the said ingredient of Section 138 NI Act, also need not be discussed.
CONTENTIONS QUA CONSIDERATION 14.1 At the very onset it is clarified that the investment of Rs.2 Crores made by the complainant company to the accused company is not denied. The same was also made by way of cheques and the account statements are on record as exhibited through CW3 and CW4 as Ex.CW3/1 and Ex.CW4/1. The accused side has pleaded that complainant has not disclosed the true facts and actually they had failed to honour their commitment of investing a full amount of Rs.10 Crores. The accused side further pleaded that they were never into real estate CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 8 of 15 business and even in their AOA and MOU no purpose of dealing in property is mentioned. The accused side has finally submitted that since there was oral settlement of Rs. 55 Lacs, which already stands paid and therefore no legally recoverable liability is due on the accused towards the complainant. The accused side has relied on the testimonies of DW1 to DW5 and have reasoned that they be acquitted since the complainant has been unable to prove its case. 14.2 The complainant side on the other hand submits that the payments of Rs.2 Crores were advance for some immovable property to be arranged by the accused company and the receipt of Rs.2 Crores has not been denied by the accused side. The complainant side has also relied on the testimonies of CW1 and CW2 and has also relied on testimonies of DW8 and DW9 (although incomplete).
14.3 The complaint is then supported by presumptions under section 118 and 139 Negotiable Instruments Act, 1881. Section 118 (a) of The Negotiable Instruments Act, 1881 provides as under : -
"Section 118. Presumption as to negotiable instruments.- Until the contrary is proved, the following presumption shall be made:-
(a) of consideration- that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, was indorsed, negotiated or transferred for consideration;........."
Section 139 of The Negotiable Instruments Act, 1881 provides as under :-
"Section 139 Presumption in favour of holder.- It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
In matter of "Krishna Janardhan Bhat Vs. Dattatraya G. Hegde" (2008) 4 SCC 54, Hon'ble Supreme Court of India has observed : -
"32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the accused and that of the prosecution in a criminal case is different."
"34. Furthermore, whereas prosecution must prove the guilty of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of the accused is 'preponderance of probabilities'. 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 he relies."
In matter of "Mallavarapu Kasivisweswara Rao Vs. Thadikonda Ramulu Firm" (2008) 7 SCC 655, Hon'ble Supreme Court of India (though it was a civil matter related to promissory note, but is relevant to refer herein) has held : -
"17. Under Section 118 (a) of the Negotiable Instruments Act, the court is obliged to presume, until the contrary is proved, that the promissory note was made for consideration. It is also a settled position that the initial burden in this regard lies on the defendant to prove the non-existence of consideration by brining on record such facts and circumstances which would lead the court to believe the non-existence of CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 9 of 15 the consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal."
In matter of "Bharat Barrel & Drum Mfg. Co. V. Amin Chand Payrelal"
(1999) 3 SCC 35, Hon'ble Supreme Court of India (though it was also a civil matter related to promissory note, but is relevant to refer herein) has held : -
"12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118 (a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under the law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118 (a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. 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, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist."
In matter also relied on by the counsel for the accused no.2 of "Rangappa Vs. Sri Mohan" (2010) 11 SCC 441 which is a Full Bench Decision, Hon'ble Supreme Court of India while discussing above said provisions, judgments and other case law on the point has held : -
"26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To the extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant".
"27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard or proof."
"28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."CT No. 617636/2016
M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 10 of 15 14.4 So, precisely there is initial presumption of legally enforceable debt or liability against the accused side, but same is rebuttable. The standard of proof for rebuttal is preponderance of probabilities. Accused side can lead evidence in defence, even can rely on materials submitted by complainant and can rely upon circumstances also to show non- existence of consideration or it being improbable and need not adduce evidence of his own for the same.
14.5 The factum of receipt of Rs.2 Crores being admitted and supported by documentary evidence, there is absolutely no defence available to the accused side. In view of the discussion above, there already exists a presumption in favour of the complainant. The accused side has pleaded two defence, firstly, that the complainant has not pleaded the true facts; and secondly, even if fact of investment in some property is admitted, the same not being in AOA or MOU of the accused company, the same is not valid agreement and not a legally recoverable debt.
14.6 As against the first defence, it is only an oral defence and no document has been proved to support that the initial amount received was against issuance of equity shares or debentures. On perusal of the case records, it is seen that this defence was taken only at statement of the accused under section 313 r/w 281 CrPC. No question or suggestion was put to CW1 or CW2 in respect of the said defence of investment in shares or debentures of accused company. Even the reply to the legal demand notice Ex.CW1/8 does not record any such defence. The accused side has also not produced any document i.e. balance sheet, ledger account or profit or loss account to show as to under which head the money was received. Also, there appears discrepancies in the testimonies of DW1 to DW5. DW1 and DW4 deposed that money received was only for issuance of equity partnership once the whole of the Rs.10 Crores were to be received; however, DW2, DW3 and DW5 deposed that debentures were to be issued. There is a stark difference in the nature and rights associated with shares and debentures. It is a settled law that debentures holders are mere creditors of the company and confers no ownership rights on the debenture holders. Another reason not to believe the version of the accused side is that it was alleged that the remaining payment of CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 11 of 15 Rs.8 Crores was not made by the complainant company despite numerous requests, however, neither any fact was alleged as to when the said demand (oral or written) was made, nor any document was produced on record to show that any demand of remaining investment was made. Attention is also drawn towards the conduct of the accused side in calling DW8 and DW9 in witness box for examination in-chief, however, when they deposed in line of the complainant's story, they were not recalled for cross examination and several dates were sought. Perusal of the ordersheet further shows that no steps were taken by the accused side to re-summon the said two witnesses. DW8 was director of the complainant company, but perhaps DW9 was an independent witness neither employed with accused company nor Complainant Company. DW9 in his examination in-chief deposed favouring the facts alleged in complaint; however he could not be cross examined since no steps were taken by the accused side to re-summon the said witness. CW2 is another independent witness and admittedly is common known person to both side, so much so that he actually introduced both the parties for finalising a deal relating to buying and selling of property. Another fact to discard the defence of the accused is that it was pleaded that five cheques were given to be filled by the complainant with Rs.11 lacs each, and if the amount was already decided, by blank cheques were handed over and not filled beforehand. It is unnatural to believe that a company regularly dealing in banking transaction will not know the consequences of issuing blank cheques. Based on the oral testimonies of the complainant through CW1 and CW2, and presumption in favour of the complainant, the accused's oral defence which is neither corroborated nor established by any documentary evidence is not sufficient to discharge the burden of proof on the accused side.
14.7 The accused side to bring home its case has relied on the reasoning delivered by the Hon'ble High Court Delhi in S.S. Chouhan v. State & Ors., Crl..L.P. No. 164/2012 dated 23.03.2012 and Veena v. State & Ors., Crl. A 398/2017 dated 22.08.2017. However, the facts of the present case are entirely different in S.S. Chouhan case (Supra) the complainant changed its stand during his deposition as against her complaint from advancing a friendly loan to investment in property. In the present case however, the complainant has from the very CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 12 of 15 beginning alleged a single story of investment in property, it is the defence which has unsuccessfully tried to prove investment towards shares or debentures. Further in Veena Case (Supra) it proved that the complainant has not pleaded the correct facts, and fact of an earlier loan transaction was proved between the parties. None of the case applies to the facts and circumstances at hand in the present case.
14.8 The second defence that the debt is not legally recoverable also does not hold water. The accused side has relied on judgment passed by Hon'ble Company Law Board, Principal Bench, New Delhi in Birla Education Trust & Ors. v. Birla Corporation Ltd. & Ors., C.A. No. 302 of 2011 in C.P. No. 1 of 2010 dated 17.06.2011, wherein it was held that no company can carry on an activity that is not mentioned in the main object. The accused has also relied on the judgment passed by the Hon'ble Supreme Court of India in A. Lakshmanaswami Mudaliar & Ors. v. Life Insurance Corporation of India and Ors., Cri. A. 400 of 1961 dated 11.12.1962. The facts and purpose of rendering the above two judgements were entirely on different facts, however, it was held that where a company passes a resolution ultra vires to its memorandum of understanding, then the office bearers were held liable. Although the context was different from that contemplated herein; however, liability was yet fastened on the office bearers. The same facts and circumstances cannot by any stretch of imagination be equated to that of a special legislation of dishonour of cheque under the Negotiable Instrument Act, 1881. The accused company cannot be allowed to approbate and reprobate at the same time. The accused side admits receiving a sum of money for a purpose ultra-virus to its memorandum of association, however, when asked to repay pleads that the same is not recoverable being ultra-virus. The said illegal practice cannot be allowed to evade the process of law. Be that as it may, the memorandum of association of the accused company was never placed on record to show if the purpose of dealing in buying and selling of property was within its stipulated purpose or not.
14.9 The defence of the accused that the present cheques were security also does not hold water. The law is clear in regards to post-dated security cheques that as on the date of cheques if there is any existing debt or liability the cheques given as post-dated cheques can CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 13 of 15 also attract the provisions of section 138 of the Negotiable Instruments Act, 1881. The Hon'ble High Court of Delhi in Suresh Chandra Goyal v. Amit Singhal, Crl.L.P. 706/2014, decided on 14-5-2015 held vide para 61 that-
"...the mere fact that the debtor has given a security in the form of a post dated cheque or a current cheque with the agreement that it is a security for fulfillment of an obligation to be discharged on a future date itself, is sufficient to read into the arrangement, an agreement that in case of failure of the debtor to make payment on the due date, the security cheque may be presented for payment, i.e. for recovery of the due debt. If that were not so, there would be no purpose of obtaining a security cheque from the debtor. A security cheque is issued by the debtor so that the same may be presented for payment..."
14.10 Reliance is also placed on the judgment rendered by the Hon'ble Supreme Court of India in National Small Industries Corporation Ltd. v. Harmeet Singh Paintal and Ors., (2010) 3 SCC 330 wherein it was held that there is no presumption of vicarious liability against the directors. However, it also settled that no specific averment is required against the accused who was the Managing Director/ Joint Managing Director of the accused company or who is signatory of the cheque, they by virtue of their position are vicariously liable for the offence punishable under section 138 read with 141 of the Negotiable Instruments Act, 1881. FINAL CONCLUSION
15. It stands established on record in the form of evidence of the complainant given vide affidavit (which can be read in evidence at all stages as per judgment of "Rajesh Agarwal Vs. State & Anr." 171 (2010) DELHI LAW TIMES 51), documents exhibited in evidence, admission of accused during notice/accusations explained to him and statement of accused recorded under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 that complainant paid to the accused side a sum of Rupees Two Crores in December 2007 by way of two cheques, accused issued post-dated cheques in question for discharge of their liability, cheque got dishonored on presentment, complainant served legal demand notice upon accused demanding the cheque amount in question, however, accused failed to make the said payment within statutory period CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 14 of 15 despite service. The accused no.1 M/s. Advance India Motors (Pvt.) Ltd. is guilty of the offence and the accused no.2 Mr. Dimpy Kapoor was in charge of, and was responsible to, the company for the conduct of the business of the company, the same has not been rebutted by the accused during the entire trial. So, all the ingredients of offence punishable under Section 138 read with Section 141 of The Negotiable Instruments Act, 1881 stands established on record.
FINAL ORDER
16. In view of the aforementioned facts and circumstances, this Court is of the opinion that complainant has duly proved its case against the accused for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 beyond shadow of any reasonable doubt. Accordingly, accused no.1 M/s. Advance India Motors (Pvt.) Ltd. is convicted for offence punishable under Section 138 of the Negotiable Instruments Act, 1881. And the management of the accused no.1 was being carried out by the accused no.2 Mr. Dimpy Kapoor, accordingly accused no.2 Mr. Dimpy Kapoor director/authorized signatory of accused no.1 stands convicted being director/ authorised signatory of the present cheque in question for offence punishable under Section 138 read with Section 141 of The Negotiable Instruments Act, 1881.
Digitally signed by PARAS Announced in the open Court PARAS DALAL on October 10, 2019. DALAL Date: 2019.10.11 15:35:18 +0530 (PARAS DALAL) M.M.-04/N.I.Act/South-East Saket/Delhi/10.10.2019 CT No. 617636/2016 M/s. Advance India Ltd. v. M/s. Silver Tone Motors (Pvt.) Ltd. & Ors. 15 of 15