Delhi District Court
M/S.Track Cargo Pvt.Ltd vs M/S.Aero Marine Logistics Pvt.Ltd on 2 December, 2023
IN THE COURT OF RAHUL JAIN,
METROPOLITAN MAGISTRATE - 04, N. I. ACT,
SOUTH-WEST DISTRICT, DWARKA DISTRICT COURTS, DELHI.
JUDGMENT
M/s Track Cargo Pvt. Ltd. & Ors. ....................Complainant Versus M/s Aero Marine Logistics Pvt. Ltd. & Ors. ....................Accused PS - Dwarka North Under Section 138 of N. I. ACT, 1881
a) Sl. No. of the case : CC No. 15518/20
b) Name of the complainant :1.M/s Track Cargo Pvt. Ltd. & Ors.
Office at WZ-497 (B), Street No. 16, Sadh Nagar, Palam Colony, New Delhi-110045.
2.Mr. Sudhir Kumar.
Through its AR/Director Office at WZ-497 (B), Street No. 16,Sadh Nagar, Palam Colony, New Delhi-110045.
c) Name of the accused : 1.AERO Marine Logistics Pvt.
Ltd.
International Freight Forwarders, S-5,S-6 & S-7, Second Floor, Pocket-IV, Sector-11, Dwarka, New Delhi - 110075.
2. Mr. Swaraj Mohanty Director, International Freight Forwarders, S-5,S-6 & S-7, Second Floor, Pocket-IV, Sector-11, Dwarka, Digitally signed Rahul by Rahul Jain Date: 2023.11.03 Jain 15:47:10 +0530 CC No. 15518/20 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 New Delhi - 110075 Also at:
Mr. Swaraj Mohanty.
S/o Sh. B.K Mohanty R/o E-19, Anand Lok CGHS Mayur, Vihar-1, New Delhi
-110019.
3. Sarvinder Singh Director, International Freight Forwarders, S-5,S-6 & S-7, Second Floor, Pocket-IV, Sector-11, Dwarka, New Delhi - 110075 Also at :
R./o Glenbow-7B, Raisina Residency,Sector-59, Near Village Ullawas, Post Office: Kadarpur, Gurgoan- 1122101.
d) Offence complained of : Under Section 138 of N. I. Act, 1881.
e) Plea of accused : Pleaded not guilty. f) Final order : Conviction g) Date of such order : 03.11.2023
BRIEF STATEMENT OF THE REASONS FOR DECISION : -
1. Vide this judgment, this Court shall dispose off complaint for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 filed by the complainant M/s Track Cargo Pvt. Ltd. & Ors., through its AR Sh. Sudhir Pandey, against accused namely M/s Aero Marine Logistics Pvt. Ltd.
International Freight Forwarders & Ors, Swaraj Mohanty and Sarvinder Singh.
2. In gist, it is alleged in the complaint that complainant is a company incorporated under the Companies Act, 1956, having its registered office at WZ- 497 (B), Street No. 16, Sadh Nagar, Palam Colony, New Delhi-110045 and are in business of custom clearings, forwarding and logistics services etc. only.
Accused no.1 is logistic company , accused no. 2 and 3 are the Directors of the Digitally
signed by
CC No. 15518/20 Rahul Rahul
Date:
Jain
Jain 2023.11.03
15:47:20
+0530
M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26
accused no.1 company. Accused no.2 and 3 are responsible for the day-to-day affairs of the business of the accused no.1 company. It is stated that accused no. 2 and 3 are running the company under the name & style of " M/s Aero Marine Logistics Pvt. Ltd". Further, accused no. 2 and 3 are well known have friendly relationship with the complainant since 25 years and in the month of February 2019 they approached the complainant to invest some capital in their company with handsome return but complainant did not do so. After some time accused no.2 and 3 again approached the complainant and requested for short term loan. Further, it is stated that accused no.2 & 3 on different times/ dates and occasions borrowed a total sum of Rs. 95,00,000/- for a short term through check and NEFT etc. Moreover, accused persons agreed to return the said amount @ 1.50 % per month within two months. Thereafter, the accused persons, to discharge their legal liability issued cheque bearing No. 247881 amounting to Rs. 25,00,000/- and No. 247882 amounting to Rs. 70,00,000/- dated 11.08.2020 Ex. CW1/C (colly) drawn on SBI, Dwarka, New Delhi. On assurances, the complainant presented the cheques in question in the bank but the same were dishonored vide returning memo dated 12.08.2020 with the remark "Funds Insufficient", Ex. CW-1/C. Thereafter, the complainant had attempted to inform about the dishonour the cheque but in vain.
Lastly, the complainant had sent a legal notice dated 25.08.2020, Ex. CW- 1/D through his advocate but despite its service the accused did not make any payment instead sent a frivolous reply to the complainant, hence, this complaint.
PRE-SUMMONING EVIDENCE & NOTICE
3. In pre-summoning evidence, AR of complainant Sh. Sudhir Kumar was examined and tendered his evidence Ex. CW1/1 and the documents i.e. Copy of Digitally CC No. 15518/20 signed by Rahul Rahul Date:
Jain Jain 2023.11.03 15:47:26 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 Resolution Ex. CW1/A, Copy of Promissory note Ex. CW1/B (colly), Original cheques Ex. CW1/C (colly), Return Memo Ex. CW1/D, Copy of Legal notice and receipts of speed post Ex. CW1/E (colly) complaint is Ex. CW1/F. 3.1 Pre-summoning evidence was led by the complainant side and after hearing complainant side, accused persons were summoned for offence punishable under Section 138 of The Negotiable Instruments Act, 1881. After appearance of accused persons, it was ensured that copy of complaint has been supplied. Separate notices were put to the accused persons for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 on 30.07.2022 by the undersigned to which accused persons pleaded not guilty and claimed trial. Accused no.1 company represented by accused no. 2 Swaraj Mohanty and accused no.2 stated that the company had taken the loan of Rs. 95 lacs from the complainant. Further, accused no.2 stated that he personally paid the complainant around Rs. 25 lacs. He had paid some amount before the bouncing of the cheques and some after the bouncing of the cheques. The company is closed now and he is personally trying to pay the loan back to the complainant. Accused no. 3 Sarvinder Singh stated that the company had taken the loan of Rs. 95 lacs from the complainant. However, cheques, were issued as security cheques as son and daughter of the complainant were inducted into the company as director as they wanted his share in the company. Thereafter, complainant had threatened him to leave the company and hand over the share to son and daughter of the complainant. He stated that he is not liable to pay the cheque amount and complainant has misused the cheques in question.
Thereafter, matter was fixed for complainant's evidence and accused side was granted opportunity to cross-examine the complainant's evidence.
4. Vide order dated 30.07.2022 the statement of the accused persons u/s 294 Cr.P.C recorded, the accused persons admitted the genuineness of Ex.
Digitally CC No. 15518/20 signed by Rahul Rahul Date:
Jain Jain 2023.11.03 15:47:36 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 CW1/C, Ex. CW1/D and Ex. CW1/E (colly). Accused no.3 denied the genuineness of promissory note Ex. CW1/B (colly) but admitted his signatures on the same. Accused no. 2 admitted second promissory note. In view of the same, vide separate statement of AR, the witnesses at S.No. 2 & 3 was dropped from the list of witnesses.
4.1. Thereafter, matter was listed for CE on behalf of accused no. 3. Accused no. 1 & 2 did not choose to cross examine the complainant. Sh. Sudhir Kr.
Srivastav AR of the complainant was examined as CW-1. In his cross- examination by accused no.3, witness stated that he and the accused No. 1 (i.e company) is in similar business. He has been doing the business approximately since 23 years. He stated that he have given the money on interest for 02 months and he stated that it is correct that neither he nor complainant No. 1 has any money lending license. He deposed that he had attached two promissory notes with the complaint one has signed by only accused No. 3 and one of them signed by both accused no. 2 & 3 in his office in front of him. He stated that there is no witness of the sign on the promissory notes. He further stated that he is not sure whether the promissory note were dated or not. 4.2 Witness was shown the promissory notes and stated that first one contains the date and the second does not contain the date. Two status report Mark A & Mark B were shown to the witness in which IO SI Mamta of PS Dwarka South has mentioned that an inquiry is going on in the said PS against accused No. 2 regarding the forgery of promissory notes attached in the complaint in which she has mentioned that the deponent has not joined the inquiry to that date. He further stated that it is correct that this complaint has been filed for the dishonour of the cheque drawn in the name of Track Cargo Pvt. Ltd and he had sent legal notice through counsel for dishonourement of the said cheque to all accused persons alongwith accused company. Witness stated that it is not correct Digitally signed by Rahul Rahul Date:
Jain CC No. 15518/20 Jain 2023.11.03 15:47:43 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 that accused No. 2 has given any amount/sum of money to him neither before presenting the cheque nor after in the name of Track Cargo Pvt. Ltd. He further stated that he knew accused No. 2 & accused No. 3 personally. He admitted that his children namely Rajat Kumar and Somya Srivastav become directors in M/S. AERO MARINE LOGISTICS PVT. LTD, however, they were made only for 1- 2 days. Witness was shown form No. 12 of M/S. AERO MARINE LOGISTICS PVT.LTD and OTA FALLOONS FORWARDERS PVT LTD Mark C & Mark D in which children of the witness were made directors in both the above companies. He further deposed that the cheques in question were given to him on 10.08.2020 and he presented both the cheques in question on 11.08.2020. He deposed that he does not remember whether his children were directors in the company i.e accused No. 1 on the date of handing over the cheques and presenting the cheques in question.
4.3 Witness was shown AOC-4 Mark E which shows at page No. 1, the date of 27.09.2020, this form AOC-4 is a submission of financial records of accused No. 1 company filed with ROC daily in which at page No. 2, it is shown that both the children of deponent have signed these financial document in the capacity of directors of accused No. 1 company. This form AOC-4 has been filed ROC on 21.12.2020 under the digital signature of accused No. 2 and CA of accused No. 1 company namely Pritty Garg. During cross-examination he was asked question whether master data of accused No. 1 company has been filed by him in his complaint or evidence by way of affidavit. He answered that he doesn't remember. He was also shown the file where Master Data Mark F of accused No. 1 company was indeed filed. Suggestions were put to the witness that no money was given by him i.e M/S. TRACK CARGO PVT.LTD to accused No. 1 i.e M/S. AERO MARINE LOGISTICS PVT. LTD as loan or otherwise. Further, there was an ongoing deal of purchase of shares of accused Digitally signed by Rahul Rahul Jain CC No. 15518/20 Date:
Jain 2023.11.03 15:47:49 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 No. 3 and his wife in accused No. 1 company and shares of accused No. 3 in OTA FALLOONS FORWARDERS PVT LTD by him and because of same, while the deal was being negotiated by him and made his children directors on board of both the above mentioned companies and he himself become signatory to the bank account of accused No.1 company in ICICI bank, Sector-11, Dwarka, Delhi. Further, suggestion was put that since the very beginning, complainant and accused No. 2 were in conspiracy with each other and had no intention of paying any money/consideration to accused No. 3 and his wife for their shares in the companies mentioned above and in consonance of the same, accused No. 2 gave him the blank cheques in question while informing accused No. 3 that these cheques are given as security till the time the deal of share transfer between him and accused No. 3 and his wife finalized. Further, it was suggested that this objective of extorting shares of accused No. 3 and his wife in the companies mentioned above without paying any consideration and also some other undue favours, he in conspiracy with accused No 2 also forged the promissory notes that he has put on record against which, an inquiry is going on in PS Dwarka South in which he was not deliberately cooperating in the same. Further, it was suggested that he deliberately did not mention in his complaint or evidence affidavit that deal is being negotiated as above-mentioned because of which his children also became directors of accused No.1 company and in the company OTA FALLOONS FORWARDERS PVT LTD and he himself became the signatory of bank account of accused No. 1 and further the accused No. 3 did not get any information about the present case, he deliberately did not inform accused No. 3 of the present case till very long since inception of this case to make sure that warrants be issued against accused No. 1 company so that more pressure can be put on accused No. 3 to agree to illegal demand.
4.4 Witness was shown bank records exhibited as Ex. CW-1/DX1 wherein, CC No. 15518/20 Rahul Digitally signed by Rahul Jain Date: 2023.11.03 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Jain Page No. 26 of 26 15:47:55 +0530
the very first page shows MCA record which was given to the bank by the company accused No. 1 for opening the aforementioned account and this first page shows four names as Directors of accused No. 1 company. These names are as under :-
1. Swaraj Kumar Mohanty (Accused No.2)
2. Sarvinder Singh (Accused No. 3).
3. Rajat Kumar (Son of CW-1 i.e Mr. Sudhir Kumar Srivastava)
4. Saumya Srivastava (Daughter of CW-1 i.e Mr. Sudhir Kr. Srivastava). 4.5 After seeing these documents, the he stated that this is not in his knowledge however, witness accepted that the photocopy of PAN CARD attached with these document i.e account opening form belongs to him. He further agreed that the photographs which are shown were clicked in the bank while opening the bank account belongs to the witness however, he states that he has no idea of this. He further stated that it is correct that when on the last date of hearing, he was shown the master data of accused No. 1 company which he placed on record is correct. The part of these complaints consisting master data of accused No 1 company shows both the children of witness as directors.
Suggestion was put to the witness that he deliberately did not file the correct master data with this complaint at the time of filing of the complaint because if he would have filed the real one of the fact that his children were directors and in control of accused No. 1 company would have shown.
4.6 He was shown the final order of writ petition (M/S) No. 1545 of 2016 which was filed in High Court of Uttarakhand in which he admitted that writ petition Ex. CW1/DX2 was filed by him. He was confronted with the status report dated 11.05.2023 filed by SI Mamta, PS Dwarka South which is filed in the court of Ms. Kritika Chaturvedi, Ld. MM, Dwarka Courts marked as Mark G wherein it is mentioned that the witness joined the inquiry going against him Digitally signed by Rahul Rahul Jain CC No. 15518/20 Date:
Jain 2023.11.03 15:48:02 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 in PS Dwarka South and made a statement before the inquiry officer i.e SI Mamta that Mr. Swaraj Kumar Mohanty (Accused No.2) has already paid him some amounts which the witness had allegedly lent to both the accused persons herein. He also mentioned that issue of these payments is already subjugated before the court in the form of NIA Case. After seeing that status report, he denied making such statement before anyone. Thereafter, vide order dated 17.03.2023 opportunity to cross-examine the witness was closed and thereafter, matter was fixed for recording statement of accused.
STATEMENT OF ACCUSED
5. The statement of accused persons was under Section 313 Cr.P.C of the Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 separately on 17.03.2023 as well as on 05.08.2023. Incriminating evidence was put to them. Accused no.1 company represented by accused no.1 M/s Aero Marine Logistics Pvt. Ltd. represented by Swaraj Kumar Mohanty, accused no.2 Swaraj Kumar Mohanty and accused no.3 Sarvinder Singh. Accused no.1 represented by accused No. 2 Swaraj Kumar Mohanty and accused no.2 Swaraj Kumar Mohanty stated that a loan of RS. 95,00,000/- was taken from the complainant company and two cheques were issued to the complainant as blank signed cheques. It was stated that second promissory note was executed and that the legal notice was received by the company. Accused no. 3 Sarvinder Singh stated that he did not approach the complainant for any investment or loan. In May 2019, the children of the complainant became Directors in accused no.1 company. Complainant was in discussion with him to purchase his and his wife's shares and in turn he had to leave the company. In the meantime, the complainant became authorized signatory in the bank account of accused no.1 company. Around March 2020, he got to know that the complainant company had transferred some money in the account of accused Digitally signed by CC No. 15518/20 Rahul Rahul Jain Date:
Jain 2023.11.03
15:48:13
+0530
M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 no.1 company. He told him why has he transferred the money to the company when he wanted to purchase his share as he should rather transfer money to him. He was at Punjab at that time. At that time, accused no.2 informed him that the complainant company and the director are fearing that the accused company will oust the children of the director of the complainant company as directors of accused no.1 company and thus they want security cheques as assurance. He used to keep his signed cheques at company office for business transactions. Accused no.2 gave him company cheques that he have kept for business transactions to the complainant company even though he told him not do so as the children of the director of the complainant company are already director in the accused no.1 company. He was in Punjab at that time as his father had expired and during that time COVID lock down was also imposed. Thereafter, he got to know about this case in March 2021. He had not signed the promissory note at page no. 48 & 49 in the case file Ex. CW1/B (colly). The same has been forged. He stated that he had kept the two cheques as blank signed cheques at his company office for business transactions. They have been misused. The particulars are not filled by him. He stated that he had not received the legal notice. But the address mentioned in legal notice is correct. He stated that he was not responsible for day to day affairs of the company. He was only responsible for sales and marketing department. He did not have any knowledge about the alleged transaction or the misuse of the cheques till March 2021 when he got the summons of the court. Then only he got to know that hid cheques have been misused and his signature have been forged. Accused did not opt to lead DE. However, did not lead any evidence. Vide order dated 05.08.2023, DE was closed.
5.1. Final Arguments were heard on behalf of both the parties. Case file perused. Digitally signed by Rahul Rahul Date:
Jain Jain 2023.11.03 CC No. 15518/20 15:48:26 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 POINTS FOR DETERMINATION : -
6. 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?
FINAL ORDER APPRECIATION OF FACTS/CONTENTIONS/ANALYSIS & FINDINGS
7. 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.
(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 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.
141 Offences by companies. --
(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be Digitally signed by Rahul Rahul Date:
Jain Jain 2023.11.03 CC No. 15518/20 15:48:33 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: 22 [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.-- For the purposes of this section,--
(a) "company" means any body corporate and includes a firm or other association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm.] UNDISPUTED/UNCONTROVERTED FACTS
8. At the outset, it is pertinent to mention herein that it is not in dispute that cheque in question belong to the accused no. 1 company, it bears signatures of accused no. 2 &3 , it was drawn on an account maintained by the accused company with a bank, cheque in question was dishonored as alleged, legal demand notice was sent to correct address of accused no1,2 and 3 and accused Digitally CC No. 15518/20 signed by Rahul Rahul Date:
Jain Jain 2023.11.03 15:48:48 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 +0530 persons failed to make the payment of cheque in question till date. 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.
CONTENTIONS QUA LEGAL NOTICE
9. The first major contention which has been raised by accused No. 3 in this matter is that accused has not received any legal demand notice, therefore, ingredients of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 are not complete, hence accused should be acquitted in this matter.
Per contra, it is contention of the complainant side that the legal demand notice was sent to the accused on his correct address, therefore, accused should be held guilty in this matter.
9.1 This Court sees no substance in this defence of accused no. 3 side. It is the not the case of accused side that legal demand notice was not sent vide postal receipt available on record on his correct address. Once, it is not disputed and proved on record that the legal demand notice was sent to correct address of the accused then the defence of the accused side that accused side has not received any legal demand notice is no defence in the eyes of law in view of the judgment passed by Hon'ble Supreme Court of India in matter of "C. C. Alavi Hazi Vs. Palapetty Mohd. & Anr." reported in (2007) 6 Supreme Court Cases
555. In said judgment, Hon'ble Supreme Court of India has held that : -
"Any drawer who claims that he did not received the notice sent by post, can, within 15 days of receipt of summons from the court in respect of complaint Under Section 138 of the Act, make the payment of the cheque amount and submit to the court that he had made the payment within 15 days of the receipt of summons (by Digitally signed Rahul by Rahul Jain Date: CC No. 15518/20 2023.11.03 Jain 15:48:55 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 receiving a copy of complaint with the summons) and, therefore, the complainant is liable to be rejected. A person who does not pay within 15 days of receipt of summons from the court along-with the copy of complaint Under Section 138 of the Act, can not obviously contend that there was no proper service of notice as required Under Section 138, by ignoring statutory presumption to the contrary Under Section 27 of G. C. Act and 114 of the Evidence Act."
In this case, since, the accused side has not made payment of cheque(s) amount in question within 15 days of the receipt of summons of this Court, therefore, in the light of above-said judgment and discussions, this Court is of the opinion that defence of the accused side that he has not received any legal demand notice is without any force and is hereby rejected.
CONTENTIONS QUA CONSIDERATION & VICARIOUS LIABILITY 10.1(a) The contentions which have been raised by Accused no. 3 are that the accused is not liable to pay the cheque amount as he has was not responsible for day to day afairs of the company and that his security cheques have been misused. It is the contention of defence that accused side has been able to rebut the presumption of consideration available in favour of the complainant as consideration qua cheques in question and complainant has failed to prove accused no. 3 was responsible for day to day affairs of the company. It is contended that accused should be acquitted in this matter.
Digitally signed by Rahul Rahul Date:
Jain Jain 2023.11.03 15:49:02 +0530 CC No. 15518/20 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 10.1(b) On the other hand, it is the contention of the complainant side that the accused company had taken loan and directors had issued cheques in question in discharge of legal liability. Both directors are responsible for day to day affairs of the company. Legal demand notice was issued and received by accused side, hence, all ingredients of commission of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 stands established on record, therefore, accused should be held guilty in this matter.
10.2 Submissions of both side considered and perused the written submission filed on behalf of accused.
11. Before coming to the facts of the case, let us the discuss the laws related to a cheque bounce case.
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." Rahul Digitally signed by Rahul Jain Date:
Jain CC No. 15518/20 2023.11.03 15:49:13 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 "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 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 Digitally signed CC No. 15518/20 Rahul by Rahul Jain Date:
2023.11.03 Jain 15:49:20 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 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 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 Digitally signed by CC No. 15518/20 Rahul Rahul Date:
Jain Jain 2023.11.03 15:49:28 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 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."
With regards to liability of the directors, following judgment gave some guidelines:-
S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 :
(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.
(b) Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.
(c) The managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 Digitally CC No. 15518/20 signed by Rahul Rahul Jain Date:
Jain 2023.11.03 15:49:35 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 +0530 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under subsection (2) of Section 141.
In National Small Industries Corporation v. Harmeet Singh Paintal, (2010) 3 SCC 330 the Hon'ble Supreme Court has reiterated that: "Every person connected with the company shall not fall within the ambit of the provision. Only those persons who were incharge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action." Merely holding a designation or office in a company was not sufficient for liability under section 141. The Hon'ble Supreme Court further observed as under: "37. A combined reading of Sections 5 and 291 of Companies Act, 1956 with the definitions in clauses (24), (26), (30), (31) and (45) of Section 2 of that Act would show that the following persons are considered to be the persons who are responsible to the company for the conduct of the business of the company : (a) the Managing Director(s); (b) the whole-time Director(s); (c) the Manager; (d) the Secretary; (e) any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act; (f) any person charged by the Board of Directors with the responsibility of complying with that provision: Provided that the person so charged has given his consent in this behalf to the Board; (g) where any company does not have any of the officers specified in Clauses (a) to (c), any Director or Directors who may be specified by the Board in this behalf or where no Director is so specified, all the Directors: Provided that where the Board exercises any power under Clause (f) or Clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form38. But if the accused is not one of the persons who falls under the category of "persons who are responsible to the company for the conduct of the business of the company" then merely by stating that "he was in charge of the business of the company" or by stating that "he was in charge of the day-to-day management of the company" or by stating that "he was in charge of, and was responsible to the company for the conduct of the business of the company", he cannot be made vicariously liable under Section 141(1) of the Digitally signed by CC No. 15518/20 Rahul Rahul Date:
Jain Jain 2023.11.03 15:49:41 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No.+053026 of 26 Act. To put it clear that for making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under sub-section (2) of Section 141 of the Act . 39. From the above discussion, the following principles emerge: (i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. (ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company . (iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with. (vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint. (vii) The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases." otherwise."
12.1 In the present case, accused no.1, the company is the main accused as the cheque has been issued by the company while accused no.2 and 3 are directors and signatories on the cheque. Accused no.2 represented the accused no.1 Digitally signed by Rahul Rahul Jain CC No. 15518/20 Date:
Jain 2023.11.03 15:49:50 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 company and admitted the liability of the company that it had taken a loan of Rs. 95 lacs from the complainant.
12.2 Accused no. 2 put up a defence that he had already paid sum amount before the dishonour of the cheque but no evidence was produced to prove the same.
12.3 Accused no. 3 admitted the liability of the company but took a defence that cheques in question were issued as security cheques as son and daughter of the complainant were inducted into the company as director as they wanted his share in the company.
12.4 Accused no. 3 denied his signatures on the promissory note Ex. CW1/B (colly) and also filed a status report which was marked as Mark A and B for a case which was filed against the complainant and accused no. 2 for cheating and forging the promissory notes. It is pertinent to note that accused admitted the signatures on the promissory note in his statement u/s 294 Cr.P.C claiming that he had signed on a blank paper. Thus, the accused no 3 admits his signatures on Ex. CW1/B (colly) i.e. promissory notes at one point of trial only to retract from that admission later on his statement u/s 313 Crpc. Perusal of Ex. CW1/B (colly) reveals that the first one is a promissory note where the accused no.1 company promises to pay the complainant company Rs. 25 lacs and the same has been signed by the director accused no.3 on behalf of the company. The second promissory note is not a promissory note per se but it contains an acknowledgment of having availed loan of Rs. 75 lacs from the complainant and states a further need of Rs. 20 lacs. Additionally, it states that the responsibility of the payment alongwith the bank interest is responsibility of the undersigned directors of the accused no. 1 company. The same was signed by both the directors including accused no.3.
Digitally signed by Rahul Rahul Date:
Jain Jain 2023.11.03 15:49:57 CC No. 15518/20 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 12.4 First of all, the loan is itself admitted by the primary accused i.e. the company. Even if it is assumed that promissory notes were forged( although there is nothing on record to prove the same as accused no. 3 has just filed status report where inquiry is going on), then also it doesn't discharge the burden when the accused no. 1 company itself admits the liability. Secondly, accused no. 3 alleges that there was a collusion between accused no. 2 and complainant to defraud him and extort undue favours from him. If that is the case , then accused no. 3 could have file case against the accused no. 2 for misuse of his cheques in question immediately or soon after acquiring knowledge of the same.
Suggestions were put that complainant with the objective of extorting shares of accused no. 3 and his wife forged promissory notes and accused no. 2 misused the cheques. But there is nothing on record to substantiate these claims of criminal conspiracy between complainant and accused no. 2. Suggestions were also put that complainant and accused no. 2 were in conspiracy and had no intention of paying any money/ consideration to accused no. 3 and his wife for their shares in the companies - Accused company and OTA Falloona Forwarders Pvt. Ltd. and in consonance of the same, accused no. 2 gave the blank cheques in question while informing accused no. 3 that these cheques are given as security till the time of deal of share transfer was finalized. It is not clear as to why accused no. 3 allowed these cheques to be given as security for a simple deal of transfer of shares between him and complainant. It is also not clear if the deal had failed and no consideration was given to accused no. 3, then why the alleged consideration was transferred into the account of accused no. 1 company as admitted by accused no. 3 in his notice u/s 251 Cr.P.C when he answered to question no. 2 that "the company had taken loan of Rs. 95 lacs from the complainant" and substantiated in his statement u/s 313 Cr.P.C where he stated "
I told him why have you transferred the money to the accused no. 1 company Digitally signed by Rahul Rahul Date:
Jain CC No. 15518/20 Jain 2023.11.03 15:50:03 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 when you want to purchase my share as you should rather transfer money to me". If the money was transferred to the company by mistake or to defraud accused no. 3 , then he can very well return that amount through these cheques. Also, the children of complainant were made directors in the accused no. 1 company and complainant admits the same but deposes that same was for 1-2 days. However, accused no. 3 filed Balance sheet of accused no. 1 company signed on 27/09/2020 Mark E which shows the children of complainant as directors. Perusal of the same reveals that accused no. 3 is still the director of accused no. 1 company. Thus , the children of complainant have become directors in the accused no. 1 company. Accused no. 3 in his notice u/s 251 Cr.P.C deposed that the cheques were issued as security cheques as son and daughter of the complainant were inducted into the company as director as they wanted his share in the company. Thereafter, complainant had threatened him to leave the company and hand over the share to son and daughter of the complainant. Now, complainant has admitted that his children did become directors in the accused no. 1 company. But there is no proof about the deal of negotiations for shares transfer between complainant and accused no. 3. There is no proof that cheques in question were provided as security till the time deal finalized. Hence, that is where the defence of the accused no. 3 fails. 12.5 Now, let's come to his statement u/s 313 Cr.P.C- "In May 2019, the children of the complainant became Directors in accused no.1 company.
Complainant was in discussion with him to purchase his and his wife's shares and in turn he had to leave the company. In the meantime, the complainant became authorized signatory in the bank account of accused no.1 company. Around March 2020, I got to know that the complainant company had transferred some money in the account of accused no.1 company. I told him why have you transferred the money to the company when you wanted to purchase Digitally CC No. 15518/20 signed by Rahul Rahul Date:
Jain Jain 2023.11.03 15:50:09 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 +0530 my share as you should rather transfer money to me. I was at Punjab at that time. At that time, accused no.2 informed me that the complainant company and the director are fearing that the accused company will oust the children of the director of the complainant company as directors of accused no.1 company and thus they want security cheques as assurance. I used to keep his signed cheques at company office for business transactions. Accused no.2 gave my company cheques that I had kept for business transactions to the complainant company even though I told him not do so as the children of the director of the complainant company are already director in the accused no.1 company. I was in Punjab at that time as my father had expired and during that time COVID lock down was also imposed. Thereafter, I got to know about this case in March 2021. I had not signed the promissory note at page no. 48 & 49 in the case file Ex. CW1/B (colly). The same has been forged. I had kept the two cheques as blank signed cheques at his company office for business transactions. They have been misused". Thus, he knew from start that company cheque containing his signatures for business transactions have been misused but he did not file any complaint regarding the same to the police or any other authority. He also did not sent any information regarding the same to the bank. 12.7 He has only belatedly filed a complaint against accused no. 2 and complainant for cheating and forgery of his promissory notes after receiving summons from this court. Perusal of action taken report Mark A also reveals that Accused no. 3 alleges that accused no. 2 and complainant are threatening him to pay Rs. 95 lacs which complainant has transferred in the account of the company. Here again it is again clear that amount of Rs. 95 lacs has come into the account of the company. Thus , there has been no fraud committed with accused no. 3. His share has not been transferred. Rather he admits the consideration has been paid to accused no. 1 company instead of him. Thus, the Digitally signed by Rahul Rahul Jain CC No. 15518/20 Date:
Jain 2023.11.03 15:50:15 +0530 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 company should return the consideration back. ( Even if his version is presumed to be true).
12.8 Accused no. 3 could not prove this defence but himself admits that amount of Rs. 95 lacs was transferred in the account of accused no.1 company but he seems to suggest that there was a deal between him and the complainant where the complainant was to purchase his and his wife's share and the complainant instead of transferring money in its account for the deal transferred the money in the account of the company. Even if this is a grievance of accused no. 3, this is nowhere a probable defence in relation to the present transaction as he admits that amount has been received by the company. 12.9 Accused no. 3 also took a defence that he was not responsible for day to day affairs of the company and thus he cannot be made vicariously liable u/s 141 N.I Act. It is pertinent to note that accused no. 3 was himself a signatory to the cheque. He has not led any evidence to prove he was not responsible for day to day affairs of the company. He has just made a bald averment that he was only responsible for sales and marketing department. He has even signed the promissory note on behalf of the company. This shows that he was handling the day to day affairs of the company.
12.10 As regards as to his defence of misuse of his blank security cheques, accused no 3 has not proved the same as no evidence has been produced in respect to the misuse of the cheque. He has not filed any complaint for the misuse of his cheque. He has not filed any complaint against the accused no. 2 for alleged misuse of company cheques.
In view of the above discussion, defense raised by the accused are untenable. FINAL CONCLUSION
13. It stands established on record in the form of evidence of the complainant given vide affidavit, documents exhibited in evidence, admission(s) Digitally signed by CC No. 15518/20 Rahul Rahul Date:
Jain Jain 2023.11.03 15:50:20 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26 +0530 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 provided friendly loan to the accused persons and accused persons issued cheque in question for discharge of their liability, cheque got dishonored on presentment, complainant served legal demand notice upon accused persons demanding the cheque amount in question, however, accused persons failed to make the said payment within statutory period despite service. So, all the ingredients of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 stands established on record. The defence(s) raised by accused persons side is/are not tenable/sustainable as per above discussions.
FINAL ORDER
14. In view of the aforementioned facts and circumstances, this Court is of the opinion that complainant has duly proved its case against the accused persons for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 beyond shadow of any reasonable doubt. Accordingly, accused no.1 M/s Track Cargo Ltd. Pvt. Ltd., accused no. 2 Swaraj Kumar Mohanty, and accused no. 3 Sarvinder Singh stand convicted for offence punishable under Section 138 of The Negotiable Instruments Act, 1881.
Digitally signed by Announced in the open Court Rahul Rahul Jain Date:
Jain 2023.11.03 on November 03, 2023.
15:50:26 +0530 (RAHUL JAIN) MM (NI) ACT-04, DWARKA COURTS NEW DELHI CC No. 15518/20 M/S TRACK CARGO PVT. LTD. VS. M/S AERO MARINE LOGISTICS PVT. LTD. Page No. 26 of 26