Delhi District Court
Abhishek Agnihotri vs . M/S. Belpatram Developers Pvt. Ltd. & ... on 8 July, 2022
IN THE COURT OF SH. PANKAJ RAI
METROPOLITAN MAGISTRATE 05 (N.I. ACT), ROUSE AVENUE
COURTS : NEW DELHI
CC No. 1975/19
Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Anr.
1. Complaint Case number : 1975/19
2 Name and address of : Abhishek Agnihotri
the complainant R/o E15, Sector Beta 1, Greator Noida, Gautam
Budh Nagar, UP - 201308.
3. Name and address of : 1. M/s. Belpatram Developers Pvt. Ltd.
the accused having office at B5, Basement Ashadeep
Building 9, Hailey Road, New Delhi.
2. Surjit Duhan @ Surjeet Singh
S/o Sh. Ishwar Singh
Director of M/s. Belpatram Developers Pvt. Ltd.
having office at B5, Basement Ashadeep
Building 9, Hailey Road, New Delhi.
R/o House No. 3360/30B, Swatantra Nagar,
Narela, Delhi40.
4. Offence complained of : Section 138 of the Negotiable Instruments Act,
1881.
5. Plea of the accused : Pleaded not guilty and claim trial.
6. Final Order : Convicted
7. Date of Institution : 04.02.2019
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8. Date of Reserving the : 23.06.2022
Judgment
9. Date of pronouncement : 08.07.2022
Judgment:
1. It is the case of the original complainant Abhishek Agnihotri that he
and accused n.o.2 were known to each other for the last many years and
therefore accused n.o.2 approached the complainant and induced him to
give a friendly loan to financially assist his company M/s. Belpatram
Developers Pvt Ltd.i.e. accused n.o.1. That on such inducement the
complainant gave a friendly loan of a sum of Rs.3,70,000/ on interest to the
accused with a promise to repay the same within a period of six months.
That the accused failed to repay the said loan within the agreed time period
and that the complainant sympathizing the economic condition of the
accused allowed further time to the accused upon the promise by accused
that the loan amount would be returned and thereafter, also given him the
cheque in question i.e. cheque bearing no. 000017 dated 15.09.2018
amounting to Rs.3,70,000/ (Ex.CW1/A) drawn on RBL Bank, Noida
Branch, under his signatures and on behalf of accused n.o.1, to the
complainant towards repayment of the said loan amount. However, vide
cheque return memo dated 06.12.2018 (Ex.CW1/B), with remarks 'funds
insufficient', the cheque in question was dishonoured. The complainant
further stated that the accused failed to repay the cheque amount despite
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due service of legal notice dated 19.12.2018 (Ex.CW1/C) which was
delivered to the accused vide speed post receipt Ex.CW1/D and its
respective tracking reports and postal return envelope i.e.
Ex.CW1/E(colly). However, no payment was made to the complainant in
stipulated date and therefore, accused deserves to be convicted for the
offence punishable under Section 138 of Negotiable Instruments Act with
respect to the cheque in question. The accused, who appeared to face the
trial subsequent to the process being served upon him, put forth a
competing version at the time of framing of notice i.e, cheque in question
Ex.CW1/A was not issued by him to the complainant for the repayment of
any loan. Rather, the complainant had taken money from his company and
that thereafter a settlement was arrived at with the complainant and that the
cheque in question was issued as a part of that settlement and that the
amount as shown in the cheque is not to be paid to the complainant. The
accused has prayed for acquittal for the offence punishable u/s.138 of N.I.
Act by claiming that cheque in question was not issued by him in favour of
the complainant for the discharge of any legally enforceable liability. The
original complainant passed away during the course of trial on 29.06.2021
and the impleadment application of his wife Ms. Meeta Agnihotri was
allowed by the court on 07.10.2021 and thereafter, she has pursued the
present case against the accused from that stage.
2. To prove her case the complainant has examined herself as CW1,
who reiterated the version of the complaint and relied upon the following
documents to prove the liability of the accused :
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(a) Ex.CW1/1 : Evidence by way of affidavit
(b) Ex.CW1/A : Original cheque in question bearing n.o.000017;
(c) Ex.CW1/B : Original Return memo dated 06.12.2018;
(d) Ex.CW1/C : Office copy of legal notice dated 19.12.2018;
(e) Ex.CW1/D : Original receipts of speed post; and
(f) Ex.CW1/E (colly) : Extract of delivery tracking report of the speed post;
3. Accused did not examine anyone in its defence and the DE was
closed on 27.05.2022. Arguments heard from both the sides. Record
perused.
4. Ld. Counsel for the complainant submits that the accused has not
produced any reliable evidence in the present case. He further submitted
that the accused admitted his signatures on the cheque in question. He
further argued that accused failed to prove the defence taken U/s. 251
Cr.P.C that the cheque in question was issued pursuant to any settlement
to the complainant. Ld. Counsel for the complainant further argued that
accused failed to raise any probable defence and failed to rebut the
presumption u/s 118 and 139 of Negotiable Instruments Act. Hence,
accused be convicted for the offence u/s 138 of Negotiable Instruments Act.
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5. On the other hand, Ld. Counsel for the accused in a nutshell has
argued that the cheque in question was never issued by the accused to the
complainant for the repayment of any alleged friendly loan and that the
accused never received any demand notice from the complainant and that
there are material contradictions in the case of the complainant inasmuch
as there is no mention anywhere in the complaint that the alleged loan was
advanced in the year 2015 and the manner of advancement of such loan,
either in cash or by cheque by the complainant. It is also argued that the
complainant has concealed the pendency of pending civil suit filed by the
husband of the complainant against the accused and that the accused n.o.2
only joined the accused n.o.1 on 16.06.2017 and hence it was not possible
for the accused no.2 to have taken the alleged friendly loan from the
deceased husband of substituted complainant in the year 2015 for his
company i.e. accused no.1. It is further argued that the name of accused
n.o.1 has been struck off from the records of MCA on 29.10.2019 and
therefore, accused n.o.2 be also acquitted on the ground that that main
accused company i.e accused n.o.1, is no more in existence and that there
cannot be any conviction of accused n.o.2 when the company itself is not
existing and the case of the complainant itself does not survive. Hence
accused be acquitted.
6. To make any person liable under Section 138 Negotiable Instruments
Act (hereinafter to be read as 'The Act'), the following ingredients are
required to be proved by the complainant:
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(i) Person must have drawn a cheque on an account
maintained by him in a bank for payment of a certain amount
of money to another person from out of that account;
(ii) The cheque should have been issued for the discharge,
in whole or in part, of any debt or other liability;
(iii)That cheque has been presented to the bank within a
period of three months from the date on which it is drawn or
within the period of its validity whichever is earlier;
(iv)That cheque is returned by the bank unpaid, either
because of the amount of money standing to the credit of
the account is insufficient to honour the cheque or that it
exceeds the amount arranged to be paid from that account
by an agreement made with the bank;
(v) The payee or the holder in due course of the cheque
makes a demand for the payment of the said amount of
money by giving a notice in writing, to the drawer of the
cheque, within 30 days of the receipt of information by him
from the bank regarding the return of the cheque as unpaid;
(vi) The drawer of such cheque fails to make payment of the
said amount of money to the payee or the holder in due
course of the cheque within 15 days of the receipt of the
said notice.
7. In the case in hand, the facts of issuing the cheque, signature of
accused on the cheque is not disputed. Therefore, the main question which
is to be adjudicated by this court is that whether the impugned cheque was
issued in discharge of any liability or not and whether the accused has
received the legal demand notice.
8. It is the defence of the accused that it has not received the legal
notice. This defence is without any merits in view of the settled law that
since the accused did not make the payment within 15 days of receipt of
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summons in the present case, at this stage the accused cannot contend
improper service as defence. Reliance is placed upon the judgment of the
Hon'ble Supreme Court in C.C. Alavi Haji vs. Palapetty Muhammed and
Anr. (2007) 6 SCC 555 wherein it was held that :
"17. It is also to be borne in mind that the requirement
of giving of notice is a clear departure from the rule of
criminal law, where there is no stipulation of giving of a
notice before filing a complaint. Any drawer who claims
that he did not receive the notice sent by post, can,
within 15 days of receipt of summons from the court in
respect of the complaint under Section 138 of the Act,
make payment of the cheque amount and submit to the
court that he had made payment within 15 days of
receipt of summons (by receiving a copy of complaint
with the summons) and, therefore, the complaint is
liable to be rejected. A person who does not pay within
15 days of receipt of the summons from the court along
with the copy of the complaint under Section 138 of the
Act, cannot 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 the GC Act and Section 114 of the
Evidence Act. In our view, any other interpretation of
the proviso would defeat the very object of the
legislation. As observed in Bhaskaran case [(1999) 7
SCC 510 : 1999 SCC (Cri) 1284] if the "giving of notice"
in the context of Clause (b) of the proviso was the
same as the "receipt of notice" a trickster cheque
drawer would get the premium to avoid receiving the
notice by adopting different strategies and escape from
legal consequences of Section 138 of the Act."
9. Complainant has proved the sending of demand notice to the
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accused and it is not the case of the accused that the address as
mentioned in the demand notice was never the address of the accused or
that it was false / incorrect. The complainant has proved that demand notice
has been validly sent on behalf of the complainant. Even otherwise in the
light of above noted legal position, since the accused has not made the
payment to the complainant within 15 days of receipt of summons from the
Court and since the legal notice was posted at the address of the accused
then the burden to prove that accused did not receive it lies upon the
accused, which they have not discharged by leading cogent evidence.
10. In a case under Negotiable Instrument Act, the complainant need not
to prove the existence of liability as once these facts that the cheque in
question belongs to the accused and the signature on the cheque in
question are of the accused are established, a presumption of the cheque
having been issued in discharge of a legally sustainable liability and drawn
for good consideration, arises by virtue of Section 118 (a) and Section
139 of the NI Act. Once the Section 139 of NI Act comes into picture, the
court presumes that the cheque was issued in discharge, in whole or in
part, of any debt or their liability. At this stage, with the help of the
presumption under Section 139 of the Act, the case of the complainant
stand proved.
11. When the presumption is raised in favor of the complainant, the
burden shifts upon the accused to disprove the case of the complainant by
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rebutting the presumption raised in favour of the complainant. Being the
rule of reverse onus, it is the duty on the accused to prove that he does not
owe any liability towards the complainant. The accused can displace this
presumption on the scale of preponderance of probabilities and the lack of
consideration or a legally enforceable debt need not be proved beyond all
reasonable doubts. The accused has to make out a fairly plausible defence
which is acceptable to the court. This the accused can do either by leading
own evidence in his defence, or by raising doubt on the material/evidence
brought on the record by the complainant.
12. Reliance is placed upon the judgment of Apex Court in case title
"Rangappa Vs. Sri Mohan" (2010) 11 SCC 441 wherein it has been held
that by virtue of Section 139 of N.I. Act there exists a presumption in favour
of the holder of a cheque that the same has been issued for discharge of
any debt or other liability, but the said presumption is only an evidentiary
burden imposed upon the accused, and the accused can rebut presumption
u/s. 139 N.I. Act. The standard of proof for doing so is that of
preponderance of probabilities. Elaborating further, Apex Court held that
Section 139 of the Act is an example of a reverse onus and the test of
proportionality should guide the construction and interpretation of reverse
onus clauses on the defendantaccused and the defendant accused
cannot be expected to discharge an unduly high standard of proof. In
paragraph Nos. 27 and 28, following was laid down:
"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
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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 defendantaccused cannot be
expected to discharge an unduly high standard
of 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
doubts 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."
13. In the backdrop of the legal position enunciated above, it is to be
examined whether the accused, on a scale of preponderance of
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probabilities, has led evidence sufficient to discredit the case of the
complainant so as to shift the onus placed upon him to the complainant. As
held by the Hon'ble Supreme Court of India in Kumar Exports vs Sharma
Carpets (2009) 2 SCC 513, the accused can either prove the nonexistence
of consideration and debt by direct evidence, or by bringing on record such
facts and circumstances, upon consideration of which, the court may either
believe that the consideration and debt did not exist or their non existence
was so probable that a prudent man may act upon the plea that they did not
exist. If this Court comes to the conclusion that the accused has not been
able to rebut the presumptions raised against him, by failing to bring on
record direct evidence or by even failing to sufficiently perforate the case of
the complainant, the complainant is entitled to a decision in his favour. In
paragraph Nos. 18 to 20, following has been laid down:
"18. Applying the definition of the word "proved"
in Section 3 of the Evidence Act to the
provisions of Sections 118 and 139 of the Act, it
becomes evident that in a trial under Section
138 of the Act a presumption will have to be
made that every negotiable instrument was
made or drawn for consideration and that it was
executed for discharge of debt or liability once
the execution of negotiable instrument is either
proved or admitted. As soon as the complainant
discharges the burden to prove that the
instrument, say a note, was executed by the
accused, the rules of presumptions under
Sections 118 and 139 of the Act help him shift
the burden on the accused. The presumptions
will live, exist and survive and shall end only
when the contrary is proved by the accused,
that is, the cheque was not issued for
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consideration and in discharge of any debt or
liability. A presumption is not in itself evidence,
but only makes a prima facie case for a party
for whose benefit it exists.
19. The use of the phrase "until the contrary is
proved" in Section 118 of the Act and use of the
words "unless the contrary is proved" in Section
139 of the Act read with definitions of "may
presume" and "shall presume" as given in
Section 4 of the Evidence Act, makes it at once
clear that presumptions to be raised under both
the provisions are rebuttable. When a
presumption is rebuttable, it only points out that
the party on whom lies the duty of going
forward with evidence, on the fact presumed
and when that party has produced evidence
fairly and reasonably tending to show that the
real fact is not as presumed, the purpose of the
presumption is over.
20. .....The accused may adduce direct
evidence to prove that the note in question was
not supported by consideration and that there
was no debt or liability to be discharged by him.
However, the court need not insist in every
case that the accused should disprove the non
existence of consideration and debt by leading
direct evidence because the existence of
negative evidence is neither possible nor
contemplated. At the same time, it is clear that
bare denial of the passing of the consideration
and existence of debt, apparently would not
serve the purpose of the accused. Something
which is probable has to be brought on record
for getting the burden of proof shifted to the
complainant. To disprove the presumptions, the
accused should bring on record such facts and
circumstances, upon consideration of which,
the court may either believe that the
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consideration and debt did not exist or their
nonexistence was so probable that a prudent
man would under the circumstances of the
case, act upon the plea that they did not
exist....."
14. Coming to the crossexamination of the complainant i.e. CW1, she
deposed that the sum of Rs, 3,70,000/ was advanced by her deceased
husband by way of cash to the accused. She has admitted that she has no
knowledge regarding the exact date when the said amount was advanced
and that it was not advanced in her presence and that she came to know
about this loan transaction from her deceased husband who was the
original complainant in the present case. She also admitted that there is no
receipt or written agreement to show the above said loan transaction. She
had denied the suggestion of Ld. Counsel for the accused that it was her
deceased husband who has suggested a space of 5000 square feet @ Rs.
74 per square feet to the accused in connection with a land deal. She had
also stated that there is no other pending civil suit pertaining to the cheque
in question and that the amount of cheque in question was not claimed by
her in the civil suit whose plaint is exhibited as Ex. CW1/DX1. It is also
stated by her that she had no knowledge regarding the factum of name of
accused company being struck of on 29.10.2019. She had also denied the
suggestion that the dealing took place only between her deceased husband
and one Gargi Bhati and not with accused no.2. She had also denied the
suggestion of Ld. Counsel for the accused that accused no.2 had no liability
qua the cheque in question. She had also stated that she has no knowledge
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as to whether the accused no.2 was associated with the accused company
in the year 2015 or not.
15. Accused has crossexamined the complainant at length and has also
argued on the lines that the accused had no liability towards the
complainant. Simply, alleging that the accused has no liability towards the
complainant company, is only a bald assertion and accused could have
independently proved this fact, but no cogent evidence has been brought
on record regarding this. Moreover, there is no statutory requirement for
execution of loan agreement / document before giving any amount as loan.
The Ld. Counsel for the accused has argued that at one place the
complainant during her cross examination on 22.04.2022 had stated that
the loan was advanced by her husband in the year 2015 by way of cheque
and on the other hand at another place she had stated the said amount was
advanced by way of cash by her husband. The contention of Ld. Counsel
for the accused that the above material contradictions in the testimony of
the complainant itself makes the entire case of advancement of any alleged
loan by the original deceased complainant to the accused as doubtful would
have been relevant had the onus was upon the complainant to prove the
facts of the case like a civil suit. However, the present proceedings are not
a civil proceeding for recovery of money by the complainant. The present
case is of a strict liabiliyt of offence for dishonour of cheque. The
presumption U/s. 139 of NI Act has already been stacked up against the
accused. Reliance is also placed upon the decision of Apex Court in Rohit
C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
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Bhai Jeevan Lal Patel Vs. State of Gujarat 2019 SCC OnLine SC 389
wherein it was held as follows:
".....The observations of the Trial Court that there was
no documentary evidence to show the source of
funds with the respondent to advance the loan, or that
the respondent did not record the transaction in the form of receipt of even kachcha notes, or that there were inconsistencies in the statement of the complainant and his witness, or that the witness of the complaint was more in know of facts etc. would have been relevant if the matter was to be examined with reference to the onus on the complaint to prove his case beyond reasonable doubt. These considerations and observations do not stand in conformity with the presumption existing in favour of the complainant by virtue of Sections 118 and 139 of the NI Act. Needless to reiterate that the result of such presumption is that existence of a legally enforceable debt is to be presumed in favour of the complainant. When such a presumption is drawn, the factors relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the accused has been able to rebut the presumption or not....."
16. As far as testimony of complainant is concerned, the complainant has been able to stand the rigours of crossexamination and no major contradiction has surfaced. Although the complainant have deposed that she had no knowledge regarding the exact date on which the loan was advanced by her deceased husband and that it was not advanced in her presence but, it does not cast a serious doubt on the case of the C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 15/31complainant against the accused. The original complainant i.e. deceased husband of CW1 was an army officer and there is nothing on record which suggests he does not have the financial capacity to extend the loan in question. CW1 had categorically deposed during her cross examination that accused no.2 approached her decesed husband and visited their house and that it was accused no.2 who had handed over the cheque in question to her deceased husband and that accused no.2 also informed him that the said cheque be not deposited in the bank as accused no.2 was not having sufficient funds in bank account at that time. A perusal of cheque in question shows that it belongs to the account of accused no.1 and has been issued by accused no.2. Even the accused at the time of recording of his statement U/s. 313 Cr.P.C has admitted that the cheque in question bears his signatures and that it was handed over by him to the deceased complainant Abhishek Agnihotri at his home. Accused has not been able to cast any doubt on the version of the complainant or to bring into notice any material contradictions in the evidence of complainant on this aspect.
17. In view of the provision of section 139 of NI Act r/w Section 118 NI Act thereof, the Court had to presume that cheque has been issued for discharging debt or liability. The said presumption which is rebuttable could be rebutted by accused by proving the contrary. The accused had to prove by cogent evidence that there was no debt or liability. For shifting the burden, accused has to prove its defence by preponderance of probabilities whereas he has failed to do so. Something which is probable has to be C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 16/31brought on record for getting the burden of proof shifted to the complainant. Without rebutting the presumption, the onus to prove his case will not shift to complainant. The evidence of complainant can't be considered till the accused raises a probable defence in his favour. Although accused can rely on the evidence brought on record by the complainant to rebut the presumption however in the present case, there is nothing in the cross examination which is in favour of accused.
18. Even if no document is filed on record by the complainant to show the manner in which the friendly loan was advanced to the accused, it is not fatal for the case of the complainant. Also, filing of bank statement etc. is not relevant in criminal case filed under section 138 NI Act as held by Apex Court in Rohit Bhai Jeevan Lal Patel (supra). So, there is no major inconsistency or discrepancies in the evidence of complainant which helps the accused on this count.
19. It is a settled law that casting a doubt on the complainant's case merely on account of trivial inconsistencies is of no assistance to the accused as there is no need to go into evidence of complainant and it can't be considered until accused discharges its primary burden under section 139 of NI Act. Also, it must be remembered that once the presumption u/s 139 NI Act is drawn the complainant need not prove its case beyond reasonable doubt by leading further evidences etc., till accused discharges its burden as has been held by Apex Court in Rohit Bhai Jeevan Lal Patel C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 17/31Vs. State of Gujarat 2019 SCC OnLine SC 389. Apex court held in para 17 of the Rohit Bhai Jeevan Lal (supra):
"17. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the Trial Court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accusedappellant. The aspect relevant for consideration had been as to whether the accusedappellant has brought on record such facts/material/circumstances which could be of a reasonably probable defence."
20. It is also argued by Ld. Counsel for the accused that going by the averments made in the complaint, the said averments makes it clear that accused no.1 had never approached the complainant for any alleged loan and therefore accused no.1 cannot be held liable for any alleged loan given by complainant to accused no.2 in his personal capacity. The said contention lacks merits in view of the settled law that the cheque can be issued by the drawer not only for discharging its personal liability but in discharge of liability of any other person also as is clear from the language C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 18/31employed in Section 138 NI Act. Reliance is placed upon the judgment of Hon'ble Delhi High Court in The Jammu and Kashmir Bank V. Abhishek Mittal, Crl. A. No. 294/2011, decided on 26.5.2011 wherein it was held that:
"10. The language employed in Section 138 of the Act makes it ample clear that this Section does not confine its operation to the cases where cheque had been issued by a person in favour of other in discharge of his own personal debt or other liability. Section 138 of the Act is attracted in relation to cheque issued by a person to another for discharge of any debt or other liability. The explanation further specifies that such debt or other liability shall be legally enforceable. This Section provides for discharge of debt or other liability by a person even if it is a debt or other liability of another.
11. In ICDS Ltd. Vs. Beena Shabeer & Another (2002) 6 SCC 426, cheque issued by the guarantor to discharge the debt of principal borrower was in question. High Court held that being a cheque from the guarantor it could not be said to have been issued for the purpose of discharging any debt or liability. Supreme Court while reversing this finding held as under:
"10. The language, however, has been rather specific as regards the intent of the legislature. The commencement of the section stands with the words "Where any cheque". The above noted three words are of extreme significance, in particular, by reason of the use of the word "any" the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.Page No. 19/31
event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment.
11. The issue as regards the coextensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act, neither the same calls for any discussion therein. The language of the statute depicts the intent of the lawmakers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act. "Any cheque" and "other liability" are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. Any contra interpretation would defeat the intent of the legislature".
21. Therefore, on the basis of above noted judgment, the legal position is clear that the words "any" and "other liability" used in the Section 138 NI Act are significant in the sense that if a cheque is issued by a person to discharge any debt or other liability of another person it would attract the penal consequences under Section 138 of the Act. It is not necessary that the cheque in question must have been issued in order to discharge the personal liability of the drawer only. In the instant case, the cheque in question was issued on behalf of accused no.1 and it bears the signatures of accused no.2. Even if for the sake of arguments, the above contentions of Ld. Counsel for the accused is assumed to be true that nobody has approached the deceased complainant on behalf of accused no.1 for the C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 20/31alleged loan as averred in the complaint and that it appears that the alleged loan was advanced to accused no.2 in his personal capacity, however, since the cheque in question was issued on behalf of accused no.1, it cannot escape the liability upon the dishonour of such cheque in the light of above noted legal position that the cheque can be issued by the drawer in discharge of the liability of others as well.
22. It is next contented by Ld. Counsel for the accused that since the name of accused company i.e. accused no.1 has already been struck of by MCA on 29.10.2019 in terms of document Ex. CW1/DX2 (Colly), this ipso facto should result in the acquittal of the accused no.2 in view of the fact that since the accused company is no more in existence from the said date, the accused no.2 be also acquitted from the offence U/s. 138 NI Act as there is no company accused existing any more.
In order to appreciate the above contension of Ld. Counsel for the accused, the relevant provisions of Companies Act 2013 are also to be noted.
23. Section 248(5) of Companies Act, 2013 deals with the effect of removal of company's name from the Register. It provides as follows: "At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand dissolved."
C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 21/31In terms of above provision, where name of the company is struck off from the Register by the RoC and a notice is published in the Official Gazette, then the company is dissolved on the date of publication of such notice.
24. Further, section 248(9) of the Companies Act, 2013 gives power to national company law tribunal for winding up a company whose name has been struck off by the RoC from the Register. Since in case of striking off, a company is dissolved without following the process of winding up, a question arises for consideration as to what happens to the assets and liabilities of the company whose name has been struck off from the Register by the RoC. In this respect, section 248(6) of the Companies Act, 2013 states as under:
"(6) The Registrar, before passing an order under subsection (5), shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company:
Provided that notwithstanding the undertakings referred to in this subsection, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies."
25. Also, section 250 of the Companies Act, 2013 provides that a C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 22/31company shall not be deemed to be dissolved for the purposes of realizing amount that were due to it on the date of dissolution and for the payment of the liabilities or discharge of liabilities which were subsisting on the date of dissolution. Section 250 of the Companies Act, 2013 is reproduced hereunder for ease of reference:
"Where a company stands dissolved under section 248 of the Act, it shall on and from the date mentioned in the notice under subsection (5) of that section cease to operate as a company and the certificate of incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company."
26. At this stage, the provision of Section 248(7) of Companies Act, 2013 are also to be noted wherein it is provided as follows -
"The Liability, if any, of every Director, Manager or other officer who was exercising any power of management, and of Every Member of the company dissolved under subsection (5), shall continue and may be enforced as if the company had not been dissolved."
In terms of section 248(7) of the Companies Act, 2013 the liabilities of members, directors, managers and officers of the company continues even after dissolution of the company under this section and these liabilities are enforceable against them as if the company was never dissolved.
C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 23/3127. Combined reading of Section 248 (6), (7) and section 250 of Companies Act, 2013 makes it crystal clear that even after the Strike off of Company, its Directors are liable for liabilities or obligations of the Company. The strike off provisions enables the ROC to weed out companies incorporated for siphoning off the funds, nonoperating companies. Also, these provisions enable the management to close companies which are no longer required by filing an application with the ROC. Dissolution of the company in terms of above provisions does not result in cessation of liabilities of members, directors, managers as discussed above. Their liabilities continue even after dissolution. A company dissolved under section 248 can be revived within twenty years by the relevant bench of national company law tribunal having territorial jurisdiction on the company, if the same is found reasonable by it. Therefore, the contention of Ld. Counsel for the accused that accused no.2 be exempted from liability U/s. 138 NI Act upon striking off of name of accused no.1 is without any substance.
28. A perusal of record shows that it is an admitted position in terms of Ex. CW1/DX2 (Colly) as filed on record by Ld. Counsel for the accused that the name of the accused company got struck off by MCA only on 29.10.2019 and the accused company was in existance not only on the date which was mentioned in the cheque in question but also on the date of its dishonour and the date on which the demand notice was sent by the complainant and even on the date of filing of present complaint. It is a settled law that in a complaint instituted under section 138 of N.I. Act, the C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 24/31'offence' lies not in the dishonor of cheque but in the nonpayment of the amount by the accused within the prescribed statutory time period upon the service of demand notice in this regard from the complainant. Reliance is placed upon the decision of Delhi High Court in the case of Jwala Devi Enterprises P. Ltd. vs Fadi El Jaouni 2018 SCC OnLine Del 10030 wherein it was held that:
"6. It is clear from the plain reading of the above quoted provision and is now also well settled that the offence under Section 138 of the Negotiable Instruments Act does not stand constituted merely upon dishonor of a cheque. The dishonor of a cheque which had been issued by the person (who is sought to be prosecuted) in favour of the complainant must be followed by a notice of demand within the stipulated period. It is the nonpayment of the amount of the cheque within the statutory period after service of the notice of demand which constitutes the offence that is punishable under the aforementioned provision of law."
29. In the instant case, there is ample evidnece on record which shows that the accused company was in existence on the date of commission of offence. The offence got constituted and cause of action accrued in favour of the complainant for filing the present complaint after the nonpayment of the amount as mentioned in the legal demand notice Ex. CW1/C dated 14.12.2018 within 15 days by the accused. It is the nonpayment by the accused within 15 days thereafter upon the receipt of demand notice which constitutes the offence in the present case and it is an admitted position that the accused company was in existence during that point of time and C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 25/31hence the accused cannot escape from the liability arising on account of dishonourment of cheque in question.
30. Even otherwise there is no substance in the contention of Ld. Counsel for the accused that the accused is to be acquitted only on the ground that the accused company has already been struck off in view of the fact that if this interpretation is permitted several mischiefs may result and it will provide an escape route to the company accused in the cases pertaining to the dishonor of cheque and there will be automatic acquittal of all the accused involved in all such cases upon mere striking off name of the accused company and which will eventually defeat the purpose of behind the enactment of provisions of NI Act. The accused company cannot be permitted to take the advantage of its own wrong. It is settled proposition of law that the interpretation of the provisions of a statute has to be such which prevents mischief. Any interpretation which defeats the purpose of the statute must be strictly eschewed. The rule is also known as 'purposive construction' or 'mischief rule'. It is a cardinal rule of interpretation as laid down in famous Heydon's case [(1584) 3 Co Rep 7a : 76 ER 637] According to the mischief rule, while interpreting a statute, the problem or mischief that the statute was designed to remedy should first be identified and then a construction that suppresses the problem and advances the remedy should be adopted. In other words, the rule then directs that the courts must adopt that construction which shall suppress the mischief and advance the remedy. The provisions of Section 138 NI Act were enacted by C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 26/31the legislature to curb the mischief of cheque dishonour and to promote faith in the commercial transactions. In the light of this objective behind the provisions, the contention of Ld. Counsel for the accused is de hors the spirit and essence of NI Act and is accordingly rejected.
31. Moreover, none has stepped into witness box to led defence evidence on behalf of the accused. It is well settled that the statement of accused under S. 251 Cr. P.C. or under S.313 Cr. P.C. is not the evidence of the accused and it cannot be read as part of evidence. The accused has an option to examine himself as a witness. Where the accused does not examine himself as a witness, his statement under S. 251 Cr. P.C. or 313 Cr. P.C. cannot be read as evidence of the accused and it has to be looked into only as an explanation of the incriminating circumstance and not as evidence. Mere pleading not guilty and stating that the cheques were issued pursuant to some settlement, would not amount to rebutting the presumption raised under Section 139 of N.I. Act. If mere statement under Section 313 Cr. P.C. or under Section 251 Cr. P.C. of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/ prosecution, then every accused has to be acquitted. In order to rebut the presumption under Section 139 of N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. Reliance is placed upon judgment of Delhi High Court in V. S. Yadav v. Reena, 172 (2010) DLT 561.
C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 27/3132. Even the defence as raised by the accused does not inspire confidence in as much as during the stage of notice framing under Section 251 Cr.P.C the accused has stated that the complainant had taken money from his company and that a settlement was reached with the complainant and that the present cheque has been issued as part of that settlement and that the amount as shown in the cheque is not be paid to the complainant. However, at the stage of statement of accused under Section 313 Cr.P.C the accused has altogether improvised his version and brought up a new story wherein he has stated that the original deceased complainant was actually been involved in a property deal and that the accused was looking out for a business space and in this regard the deceased complainant was approached since he was in a position to get them the deal as the desired properties belonged to his friend and that the deceased complainant had told that he can arrange this deal at a concessional rate to the accused and that the cheque in question was given to the deceased complainant as an advance cheque for the purpose of finalization of this deal and is meant to be encashed only when the deal gets materialized and that due to certain reasons, the deal could not get ahead and was eventually cancelled and that thereafter the accused had communicated with the complainant and demanded the return of cheque in question from the deceased complainant who told that he will return the cheque to the company and that accused no.2 should not be worried about this. Therefore, the defence of the accused himself is inconsistent, contradictory and does not inspire any confidence. Even no cogent evidence was led to prove the above mentioned stand of the accused.
C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 28/3133. In light of the above findings, accused No. 1 is held guilty of committing offence under section 138 of the NI Act.
34. Now, we proceed to assess the criminal liability of accused no. 2 in commission of the present offence. He has admitted his signatures on the cheque in question in the reply to notice under section 251 Cr.P.C. He did not disclose any credible defence in reply to notice under section 251 Cr.P.C. He has failed to demolish the case of the complainant in the cross examination of CW1. Mere nonmentioning of pendency of civil suit filed by deceased original complainant against the accused is not fatal for the case of the complainant as the present case is for dishonour of cheque in question which is a separate offence U/s. 138 NI Act. Moreover, as accused no. 2 has not stepped even in the witness box either, he has grossly failed to rebut the mandatory presumptions against him under section 118(a) and section 139 of the NI Act, even on a preponderance of probabilities. Thus, commission of offence under section 138 of the NI Act stands duly proved qua accused no. 2. Further, it is the undisputed fact that accused no. 2 was the signatory of the impugned cheque. Therefore, in light of the settled position of law, accused no. 2 is also vicariously liable for commission of the present offence by virtue of his office and the deeming provision of section 141 of the NI Act. Even in his statement under section 313, Cr.P.C., the accused no.2 has mentioned a contradictory defence which is in clear variance with the defence stated by him at the time of framing of notice U/s. 251 Cr.P.C. The statement made C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 29/31by the accused in his examination under section 313 Cr.P.C. is not on oath and is not substantive evidence. At best, it may be an explanation of the incriminating circumstances against the accused but it is devoid of any presumption as to its truthfulness. Same was held in the decision of Hon'ble High Court of Delhi in V.S. Yadav vs. Reena (supra). No evidence at all has been led by accused no. 2 to prove the facts stated by him. He did not cross examine the complainant thoroughly or himself depose as a witness or lead any other evidence to prove his defence. Thus, the bald averments of accused no. 2 that too during his examination under section 313 Cr.P.C. is not compliant with the standard of proof required for establishing such facts and does not help accused no. 2 to escape his criminal liability under section 138 of the NI Act, which otherwise stands duly proved.
35. In view of the foregoing analysis, accused no. 2, Surjit Duhan @ Surjeet Singh is also held guilty of committing offence under section 138 of the NI Act.
36. In light of the aforementioned discussion, the complainant has successfully proved all the essential ingredients of section 138 of the NI act and consequently, both, accused no.1, M/s. Belpatram Developers Pvt. Ltd. and accused no. 2, Surjit Duhan @ Surjeet Singh are hereby convicted of the offence under section 138 of the Negotiable Instruments Act, 1881.
37. Let the convict be separately heard for the quantum of sentence.
C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
Page No. 30/3138. Let a copy of this judgment be given to the convict free of cost.
Announced in open Court on 08th Day of July, 2022 (PANKAJ RAI) Metropolitan Magistrate05, NI Act RAC/New Delhi/08.07.2022 C.C. No. 1975/19 Abhishek Agnihotri Vs. M/s. Belpatram Developers Pvt. Ltd. & Ors.
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