Delhi District Court
Cc No. 622403/2016 Intec Capital Ltd. vs Rbm Developers Page No. 1/16 on 17 August, 2022
IN THE COURT OF ANKIT MITTAL,
METROPOLITAN MAGISTRATE - 04, N. I. ACT,
SOUTHEAST DISTRICT, SAKET DISTRICT COURTS, DELHI.
JUDGMENT
M/S Intec Capital Ltd.
At: 701, Manjusha Building, 57, Nehru Place, New Delhi19 ..............Complainant Versus
1. RBM Developers Pvt. Ltd.
2. Rajendra Bhushan Sharma, S/o Sh. Tek Chand Sharma Director/Authorized Signatory RBM Developers Pvt. Ltd.
Both at: H1, 315, 3rd Floor, Garg Tower, Netajji Subhash Place, Pitampura, New Delhi.
Also at: A3/701, 7th Floor, Printers Apartment,
Sector13, Rohini, New Delhi.
............Accused Persons
PS - Kalkaji
Under Section 25 of
Payment and Settlement
System Act, 2007
CNR No. DLSE020044602015
a) Sl. No. of the case : CT No. 622403/2016
b) Date of filing of complaint : 03.05.2014
c) Name of the complainant : M/S Intec Capital Ltd.
At: 701, Manjusha Building,
57, Nehru Place, New Delhi110019
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d) Name of the accused :1. RBM Developers Pvt. Ltd.
2. Rajendra Bhushan Sharma,
Director and Authorized
Signatory, RBM Developers Pvt.
Ltd.
(complaint proceedings was
abated due to his death vide
order dated 19.07.2022).
Both at: H1, 315, 3rd Floor, Garg
Tower, Netajji Subhash Place,
Pitampura, New Delhi
e) Offence complained of : Under Section 25 of Payment and
Settlement System Act, 2007
f) Plea of accused : Pleaded not guilty
g) Final order : Conviction
h) Date of such order : 17.08.2022.
BRIEF STATEMENT OF THE REASONS FOR DECISION :
1. Vide this judgment, this Court shall dispose off complaint for offence punishable Under Section 25 of Payment and Settlement System Act, 2007 filed by the complainant company through its AR Sh. Pramod Gulati, who has been authorized through board resolution dated 14.02.2013 passed by the Board of Directors of the complainant company. The board Resolution dated 14.02.2013 is Ex. CW1/1. In gist, the facts of the present case as stated in the evidence by way of affidavit of AR of the complainant company which is Ex. CW1/A is stated as under:
It is averred in the evidence by way of affidavit which is Ex. CW1/A that accused no.2 is a director and authorized signatory of the accused no.1 company and he is liable CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 2/16 for all the acts of the company. Further, it was stated that accused no. 2 being the director and authorized signatory attended all the meetings which took place between complainant company and accused no.1 company and thereafter adduced the complainant company to advance a loan of Rs.60,60,000/ to the accused no.1 for the purchase of assets. Further, it was stated in the evidence by way of affidavit that accused no. 2 signed and executed all necessary documents in favour of complainant such as Loan Agreement, undertaking, Deed of Guarantee, etc. It is also averred in the evidence by way of affidavit Ex. CW1/A that accused no.2 on behalf of accused no.1 signed and executed a loan agreement and secured a loan of Rs.60,60,000/ under a loan agreement bearing no.012/092 dated 29.05.2012. Further, it was also stated that accused persons opted for ECS system for discharge of the legal liability and accordingly signed and executed the ECS mandate for clearance of monthly EMIs towards the repayment of the said loan in favour of the complainant company. The copy of Mandate Form is exhibited as Ex. CW1/2. Thereafter, in order to discharge the legal liability, accused no.2 opted for ECS mandate and issued ECS for clearance of monthly EMIs towards the repayment of the said loan. Copy of the mandate form is Ex.CW1/2. It is further averred that when complainant company presented its request for clearance of the ECS bearing sequence no. 2053779353 of Rs.1,48,394/ given towards the discharge of the legal liability towards the repayment of the said loan for encashment with its banker HDFC Bank, New Delhi but the same could not be executed with the remark "Insufficient Balance" vide returning memo dated 01.03.2014. Copy of R7 Form is Ex.CW1/3. It is also averred that despite repeated requests by the complainant company, accused persons did not made any payment agaisnt the said dishonoured ECS and accordingly, the legal notice dated 28.03.2014 was sent to the accused persons on all last known address through speed post on CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 3/16 29.03.2014 to make payment within 15 days from date of receipt of notice and the legal demand notice has been duly served upon the accused persons on 31.03.2014. Copy of legal notice as Ex.CW1/4, Postal receipts as Ex.CW1/5 (colly) and delivery report as Ex.CW1/6 (colly). Hence, the present complaint Ex.CW1/7 was filed.
APPEARANCE OF ACCUSED & NOTICE
2. Presummoning evidence was led by the complainant side and after hearing complainant side, accused was summoned for offence punishable under Section 25 of Payment & Settlement System Act, 2007. After appearance of accused, it was ensured that copy of complaint has been supplied. Notice was framed against the accused company for offence punishable under Section 25 of Payment & Settlement System Act, 2007 on 14.01.2015 in which it pleaded not guilty and claimed trial. Accused company stated in its defence recorded u/s 251 Cr.P.C that it has already deposited 25% margin money with the complainant and its machinery is lying with the complainant. COMPLAINANT'S EVIDENCE
3. During the trial, complainant has led the oral and documentary evidence against the accused to prove its case beyond reasonable doubt. The following evidence are as under:
Oral Evidence CW1/AR Sh. Pramod Gulati Documentary Evidence Ex. CW1/1 Copy of board resolution dated 14.02.2013.
Ex. CW1/2 Copy of the Mandate Form.
Ex. CW1/3 Copy of R7 Form.
Ex. CW1/4 Copy of Legal Notice dated 28.03.2014.
Ex. CW1/5 Postal receipts dated 29.03.2014.
(colly)
Ex. CW1/6 Delivery reports dated 31.03.2014.
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(colly)
Ex. CW1/7 Complaint.
Ex. CW1/A Evidence by way of affidavit of CW1.
Complainant stepped in witness box as CW1 adopted his affidavit of pre summoning as his evidence reiterating almost all facts of complaint, stating all exhibits available on record.
4. Complainant evidence was closed vide order dated 25.03.2015 and thereafter, matter was fixed for recording statement of accused.
STATEMENT OF ACCUSED
5. The statement of accused company was recorded under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 on 03.06.2015. Incriminating evidence was put to it and same was denied. In recording of statement of accused company, it opted to lead the defence evidence, however, despite giving several opportunities, accused did not lead any defence evidence, therefore, the same was closed vide order dated 14.05.2018.
6. In the present case, complaint has arrayed two accused persons one is a company and another is a director/authorized signatory ie. Rajender Bhushan Sharma. It was the accused no. 2 who represented the accused no. 1 in the present matter. It is pertinent to mention here that though the averments of the present complaint relates to three accused persons ie. one is company and other two are its directors, however, from the perusal of the record it is clear that present complaint has been filed against accused RBM Developers Pvt. Ltd and its director Rajender Bhushan. Importantly, there are 05 other connected matters between the same parties, therefore, it is possible that complaint was filed in cyclostyle manner and due to inadvertent error in the pleadings of the CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 5/16 complaint accused no. 3 was mentioned though it is apparent from the memo of parties, notice under Section 251 Cr.P.C, u/s 313 Cr.P.C and daily orders of case file that the present complaint was filed against the aforementioned two accused persons only.
7. On 11.03.2022, it was mentioned by the Ld. Counsel for the complainant that the accused Rajender Bhushan has expired and vide order dated 19.07.2022 proceedings qua accused Rajender Bhushan was abated due to his death.
8. Further, the matter was pending at the stage of final arguments since, 04.10.2018 and despite giving several opportunities same was not being addressed by the accused persons rather accused persons stopped appearing in the matter afterwards and consequently, coercive steps were ordered against the accused persons for the securing of the presence of the accused. Thereafter, on 11.03.2022, it was mentioned by the Ld. Counsel for the complainant that the accused Rajender Bhushan has expired, consequently, court notices were issued to the accused company for its appearance, however, despite giving several opportunities, none appeared on behalf of the accused company. Hence, final arguments were heard ex parte against the accused company u/s 305(4) Cr.P.C on 28.07.2022.
9. Case file perused.
INGREDIENTS OF OFFENCE AND DISCUSSION
10. Before dwelling into the facts of the present case, it would be apposite to discuss the legal standards required to be met by both sides. In order to establish the offence under Section 25 of Payment & Settlement System Act, 2007, the prosecution must fulfill all the essential ingredients of the offence. It is relevant here to quote the relevant Section here which has been defined as under:
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Section 25 Dishonour of Electronic Funds Transfer for insufficiency, etc., of funds in the account.
(1) Where an electronic funds transfer initiated by a person from an account maintained by him cannot be executed on the ground that the amount of money standing to the credit of that account is insufficient to honour the transfer instruction or that it exceeds the amount arranged to be paid from that account by an agreement made with a bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the electronic funds transfer, or with both: Provided that nothing contained in this section shall apply unless
(a) the electronic funds transfer was initiated for payment of any amount of money to another person for the discharge, in whole or in part, of any debt on other liability;
(b) the electronic funds transfer was initiated in accordance with the relevant procedural guidelines issued by the system provider;
(c) the beneficiary makes a demand for the payment of the said amount of money by giving a notice in writing to the person initiating the electronic funds transfer within thirty days of the receipt of information by him from the bank concerned regarding the dishonour of the electronic funds transfer; and
(d) the person initiating the electronic funds transfer fails to make the payment of the said money to the beneficiary within fifteen days of the receipt of the said notice. (2) It shall be presumed, unless the contrary is proved, that the electronic funds transfer was initiated for the discharge, in whole or in part, of any debt or other liability. CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 7/16 (3) It shall not be a defence in a prosecution for an offence under subsection (1) that the person, who initiated the electronic funds transfer through an instruction, authorization, order or agreement, did not have reason to believe at the time of such instruction, authorization, order or agreement that the credit of his account is insufficient to effect the electronic funds transfer.
(4) The Court shall, in respect of every proceeding under this section, on production of a communication from the bank denoting the dishonour of electronic funds transfer, presume the fact of dishonour of such electronic funds transfer, unless and until such fact is disproved.
(5) The provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of electronic funds transfer to the extent the circumstances admit. Explanation.For the purpose of this section,debt or other liabilitymeans a legally enforceable debt or other liability, as the case may be.
11. Further, the term "electronic funds transfer" have been defined u/s 2(C) of Payment and Settlement System Act, 2007 which is reproduced as under:
S. 2 (c) : "electronic funds transfer" means any transfer of funds which is initiated by a person by way of instruction, authorization or order to a bank to debit or credit an account maintained with that bank through electronic means and includes point of sale transfers; automated teller machine transactions, direct deposits or withdrawal of funds, transfers initiated by telephone, internet and, card payment.
12. It is pertinent to note that Section 25(5) attracts the applicability of Chapter XVII of the Negotiable Instruments Act, 1881 to the dishonouring of an electronic funds transfer. Section 138 of the NI Act expressively provides provisions concerning the penalization of dishonoured cheques. Both these sections make the dishonouring of CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 8/16 electronic funds and cheques an offence punishable with imprisonment, a fine or both. The prime difference between the two is that in the case of the former, the dishonour, which is the subject matter of the offence, is of electronic funds transfer rather than of a cheque.
13. In this regard I would like to rely upon a judgment of Hon'ble Delhi High Court In the case of Ritu Jain Vs. The State Through Standing Counsel & Anr. in Crl. M. C No. 555/2016 date of decision 12.03.2019, wherein it was held that by virtue of Section 25(5) of the Payments and Settlement Act, the provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of an electronic funds transfer to the extent the circumstances admit. Therefore, when Section 25 of the Payment and Settlement Act is invoked, Section 138 of the NI Act is also applicable as the case may be.
14. Hence, once the accused admitted he has issued ECS Mandate, it relates to the accused is proved an initial presumption as contemplated u/s. 139 of Negotiable Instruments Act has to be raised by the court in favor of the Complainant. Sec. 139 of the Negotiable Instrument Act contemplates that it shall be presumed unless contrary is proved that the holder of the ECS received the nature referred to in the Sec.138 of NI act and sec 25 of payment and settlement act for the discharge of the whole or in part any debt or liability. The presumption referred to u/s 138 of Negotiable Instruments Act is mandatory presumption and in general presumption.
15. Since provisions of Sec.25(1) and 25(2) of Payment and Settlement Systems Act, 2007 r/w explanation are similar to the provisions of Secs.138 and 139 of N.I. Act, it is just and proper to consider principle of law laid down in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 9/16 Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarize the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
16. The presumptions raised under Section 118(b) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to establish a CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 10/16 probable defence on the standard of preponderance of probabilities to prove that either there was no legally enforceable debt or other liability.
17. That the perusal of Section 25 of the Payment and settlement Systems Act shows that one of the basic ingredients of the offence under Section 25 of the aforementioned Act is that the electronics funds transfer is initiated by the accused out of the account maintained by him with a bank for payment of any amount of money to another person for the discharge, in whole or in part, of any debt or other liability, in accordance with the relevant procedural guidelines issued by the system provider. In other words not only the ECS mandate must be signed by the accused but also it should be initiated in accordance with relevant guidelines issued by system provider.
18. On going through the material available on record, it is the specific case of the complainant company is that, the accused persons took the loan of Rs. 60,60,000/ for the purpose of the purchase of assets which was to be repaid with interest by way of sixty monthly installments of Rs.1,48,394/ by way of ECS system, however, the accused has utterly failed and neglected to regularize the loan account as when complainant company presented its request for clearance of ECS, same was dishonoured with "Insufficient Balance" which is Ex. CW1/3.
Admittedly, the ECS in question has not been disputed about initiated Electronic Fund Transfer by the accused company, therefore, the presumptions u/s 139 and u/s 118 of NI Act has to be drawn as held by the Hon'ble Supreme Court of India in Rangappa Vs. Sri Mohan (Supra) in the present case as well.
19. Primarily, the defence taken by the accused company in its statement u/s 313 Cr.P.C was that firstly, it has not received the legal demand notice and secondly the accused company admitted that there is an outstanding dues remaining to be paid by it, CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 11/16 however, it took the limited defence that it had already deposited the 25% margin money with the complainant and same be adjusted towards the loan as well as the machinery which is lying with the complainant should also be sold and adjusted in the loan amount.
20. The first contention of the accused company that it has not received the legal demand notice is frivolous in nature as the address mentioned on the legal demand notice which was served upon the accused company has not been disputed in the cross examination of the complainant. Moreover, it has been settled by the Hon'ble Apex Court in the Judgment reported as, C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555 that an accused who claims that he did not receive the legal notice, can, within 15 days of receipt of summons from the court, make payment of the cheque amount, and an accused who does not make such payment cannot 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 General Clauses Act and Section 114 of the Evidence Act. Hence, in the light of well settled as enunciated by the landmark judgment of C.C. Alavi Haji v. Palapetty Muhammed (supra) the defence of accused in the given situation is immaterial and devoid of any merit.
21. The second contention of the accused company was that the 25% of the margin money deposited by it with the complainant company as well as the sale proceeds of the machinery of the accused lying with the complainant on which loan was financed should also be raised and same be adjusted, thereafter, the accused company is willing to pay the remaining amount which was stated by the accused company in its defence recorded u/s 313 Cr.P.C.
The aforementioned contention of the accused company is more of admission in nature rather than the defence as accused company was willing to pay the remaining CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 12/16 loan amount, however, it has no where proved that why the liability arising in the present complaint which was filed on the dishonour of ECS mandate is not maintainable.
22. It is relevant to mention here the judgment passed by The Hon'ble Supreme Court of India in the case of Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 wherein it has been observed 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 the 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 consideration and 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. The Apex Court further held that in a trial under Section 138 of the Act the accused has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumption an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. 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 that by CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 13/16 leading direct evidence because the existence of negative evidence is entirely possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of that, 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 presumption the accused should bring 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 would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on the complainant.
23. Adverting to the facts of the case, it is clear that the accused company has not disputed that accused has issued ECS mandate ie. Ex. CW1/2 issued to its banker for processing the payment request raised by the complainant. This fact is also clear from admission of the accused from its notice framed u/s 251 Cr.P.C as well as from its statement recorded u/s 313 Cr.P.C.
24. Further, I have gone through the cross examination and I do not find any material reason to disbelieve the testimony of complainant. Minor discrepancies, even if in existence, can never be given much importance so as to throw out the entire version of a witness. Nothing came out in the crossexamination to disprove the case of the complainant. In view of the above, it is held that there is nothing in the crossexamination of the complainant which can impeach his credit or tend to show that accused has rebutted CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 14/16 the presumption of law available in favour of complainant.
25. Moreover, no defence evidence be it oral or documentary was led by the accused company in order for rebutting the presumption raised in favour of the complainant. The sole defence of the accused that the margin money of 25% should be adjusted in the loan amount was frivolous in nature as the present complaint was filed on the basis of the dishonourment of ECS mandate of monthly EMI. Interestingly, it appears that accused is oblivious of the fact that the present complaint is qua the EMI not of entire loan amount, hence, accused company has failed to rebut the statutory presumptions which was raised in favour of the complainant u/s 139 as well as 118 of N. I. Act. CONCLUSION
26. In view of my above discussion, I am of considered opinion that the accused company has utterly failed to rebut the statutory presumption in favour of the complainant. Unless and until the accused rebuts the statutory presumption with convincing and cogent evidence, burden cannot be shifted on the complainant. The statutory presumption under Section 25 (2) of the Payment and Settlement Systems Act, 2007 r/w Sec.138 of Negotiable Instruments Act has remained unrebutted and it can be said that the evidence on record is sufficient to accept the case of the complainant that the accused had issued ECS mandate in question towards discharge of legally enforceable debt and the complainant has proved all the requirements of under Section 25 (2) of the Payment and Settlement Systems Act, 2007 r/w Sec.138 of Negotiable Instruments Act, so as to constitute the offence against the accused RBM Developers Pvt. Ltd.
The accused company has miserably failed to rebut the said presumption by raising a probable defence. The defence of the accused company that there was no legal liability is not proved, even on the standard of preponderance of probabilities. Moreover, CC No. 622403/2016 Intec Capital Ltd. Vs RBM Developers Page No. 15/16 the Hon'ble Supreme Court in the case of Lakshmi Dyechem v. State of Gujarat (2012) 13 SCC 375, has held as under, "Therefore, if the accused is able to establish a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is inconceivable that in some cases the accused may not need to adduce the evidence of his/her own. If, however, the accused/drawer of a cheque in question neither raises a probable defence nor able to contest existence of a legally enforceable debt or liability, obviously statutory presumption under Section 139 of the NI Act regarding commission of the offence comes into play if the same is not rebutted with regard to the materials submitted by the complainant."
In light of the aforementioned discussion, the complainant has successfully proved all the essential ingredients of Section 25 of Payment & Settlement System Act, 2007 read with Section 138 N. I. Act. Accordingly, accused company R. B.M Developers Pvt. Ltd. is held guilty for committing the offence under Section 25 of Payment & Settlement System Act, 2007 is hereby convicted.
Let the copy of the judgment be given dasti to convict company free of cost.
Announced in the open Court (ANKIT MITTAL)
on 17.08.2022 M.M.04/N.I.Act/SouthEast,Saket/Delhi
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