Delhi District Court
Cc No.: 628738/16 vs . on 24 July, 2018
IN THE COURT OF MS SWATI GUPTA: MM03 (NI ACT)
SOUTH EAST: SAKET COURT: NEW DELHI
In the matter of:
CC NO.: 628738/16
M/s International Marketing Services
Prop. G. S. Chadha
Villa No.92, (GF) Block V,
Eros Garden, Suraj Kund Road,
Faridabad121009 ............ Complainant
Vs.
Anjali V Imarti
Proprietor of M/s Vasan Global
House No. 1381, Sector37,
Noida
......Accused
Date of Institution of Complaint : 18.10.2012
Offence Complained of : u/s 138 N.I. Act
Plea of Accused : Not Guilty
Order reserved : 16.07.2018
Decision : Acquitted
Date of Decision : 24.07.2018
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:JUDGMENT:
1.The present complaint u/s 138 Negotiable Instrument Act, 1881 (hereinafter referred to as the "NI Act") has been filed by M/s International Marketing Services , a proprietorship concern of Sh. G S Chadha (hereinafter referred to as the "Complainant") against Ms. Anjali V. Imarti, proprietor of M/s Vasan Global (hereinafter refer to as the "accused").
Case of the complainant
2. The aforesaid complaint has been filed in respect of one cheque bearing no. 861572 dated 25.06.2012 in the sum of Rs. 3,03,05,365/ (rupees three crore three lakhs five thousand and three hundred sixty five only), drawn on Andhra Bank, Noida Branch, UP, from the account of M/s Vasan Global, in favour of the complainant. As per the averments made in the complaint, the complainant is a consultancy firm providing intermediary services and consultation in respect of raising of funds for various projects. The accused No.1 is stated to be proprietor of M/s Vasan Global, which entity is in turn stated to be an associated of M/s Gold Crown Group Global Pvt. Ltd. As per the case of the complainant, the cheque in question was issued by accused no.1 as consultation fees/commission under the agreement dated 23.04.2012 which is project funding agreement between M/s Gold Crown Group Global Pvt Ltd and Mr. Frank Nilsson in respect of funding of a project. It is further averred in the complaint that the said cheque was presented for payment by complainant on 17.09.2012 but the same was CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.2 of 16 returned unpaid with the remarks "funds insufficient" vide return memo dated 19.09.2012. Thereafter, the complainant got accused served with a legal demand notice dated 25.09.2012 claiming the amount of the aforesaid dishonored cheque. It is lastly averred that the accused has failed to pay the amount of cheque in question to the complainant despite service of legal notice. Consequently, the accused has committed an offence u/s 138 of the Negotiable Instrument Act. Hence, the present complaint is filed by the complainant against the accused.
Course of trial
3. On the basis of presummoning evidence led by the complainant, the accused was summoned. Thereafter, on the appearance of the accused, notice of accusation was given to her u/s 251 Cr.P.C. to which she pleaded not guilty and claimed trial. Her plea of defence was also recorded. In its post summoning evidence, the complainant examined CW1 Gurdev S. Chadha, the complainant herein. Accused was also permitted to cross examine the complainant. After the post summoning evidence was closed by complainant, statement of accused was recorded u/s 313 CrPC wherein all the incriminating evidence was put to the accused and the accused claimed innocence. Thereafter, the accused chose to examine herself as DW1 in her defence evidence. The accused did not examine any other witness and the trial was concluded and matter was listed for final arguments. Counsel for the complainant and accused have filed their respective written submissions. Final arguments were also addressed by both the parties.
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4. I have heard the learned counsel for the complainant and learned counsel for the accused and also carefully gone through the record.
Finding of the Court
5. Allegations against the accused are that she issued a cheque bearing number 861572 dated 25.06.2012 in the sum of Rs. 3,03,05,635/ drawn on Aandhra Bank, Noida branch, U.P. to the complainant in discharge of her legally enforceable debt and liability towards the complainant and that the said cheque has been dishonoured and despite the issuance of legal notice to her, she has failed to pay the cheque amount to the complainant.
6. Now, in order to determine criminal liability of accused under any penal provision, it is first and foremost to look at the relevant provision. Section 138 of NI Act for which the accused was tried reads as follows: "Section 138. Dishonour of cheque for insufficiency, etc., of funds in the accounts Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that 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 that 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 extend to two year", or with CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.4 of 16 fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder in due course of the cheque, as the case may be, 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 thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and
(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section,"debt or other liability"
means a legally enforceable debt or other liability."
7. The law as regards the said offence is fairly well settled. In order to constitute an offence u/s 138 NI Act, following ingredients and requirements are required to be proved and fulfilled:
(i) A cheque is drawn by a person on an account maintained by him with a banker;
(ii) The said cheque is drawn for payment of any amount of money to another person for the discharge, in whole or in part, of any debt or other liability ("debt or other liability", being a legally enforceable debt or other liability);
(iii) The said cheque is returned unpaid by the bank either for the reason of 'insufficient funds' or for reason of 'exceeds arrangement';
(iv) The said cheque must be presented within 3 months or within the CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.5 of 16 period of validity, whichever is earlier;
(v) A notice regarding the dishonour of the cheque and demanding the payment of the amount of the cheque in question is given by the payee to the drawer of the cheque within 30 days of the receipt of information regarding dishonour of cheque;
(vi) The drawer of the cheque has failed to make the payment of the cheque within 15 days of the receipt of the said notice.
8. The complainant has proved on record the original cheque as Ex.CW/A1. The fact that the cheque in question Ex. CW/A1 bears the signature of the accused and has been drawn on an account maintained by the accused in the name of M/s Vasan Global as its proprietor have not been disputed by the accused at any stage of the proceedings. The original return memo is proved on record as Ex.CW/A2 and Ex.CW/A3. It is also unrebutted that the reason for return of cheque in question as unpaid by the bank on 19.09.2012 was insufficiency of funds. It has also never been the case of the accused that there were sufficient funds in the bank account of accused to honour the cheque in question. The complainant has also proved on record legal notice as Ex.CW/A4 and proof of dispatch of legal notice as Ex.CW/A5. The receipt of said legal notice is not denied by the accused. In fact, the accused had also replied to the legal notice vide her reply dated 10.10.2012 which is proved on record as Ex.CW/A6. There is also no dispute as to the fact that the amount of cheque in question remained unpaid even after the expiry of 15 days from the date of service of notice and the CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.6 of 16 same is unpaid till date.
9. Apart from all the above ingredients, there is another very important ingredient of the offence u/s. 138 NI Act viz. the cheque in question must have been drawn for the discharge, in whole or in part, of any legally enforceable debt or other liability. The accused in the present case has vehemently disputed her liability towards the complainant and the fact that the cheque in question was issued in discharge of any legally enforceable liability or debt. Before embarking on the appreciation of material on record to determine whether or not the cheque in question was issued for legally recoverable debt or other liability, it is pertinent to take a look Section 118 & Section 139 of NI Act which are as follows.
"Section 118: Presumptions as to negotiable instruments: Until the contrary is proved, the following presumptions 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, indorsed, negotiated or transferred for consideration.
" xxxxxxxx xxxxxxx xxxxxxxx".
"Section 139. Presumption in favour of holderIt 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, or any debt or other liability."
10. Now, there is no gainsaying that once the issuance of cheque is admitted by the accused/drawer, the presumption u/s. 139 of the NI Act comes into CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.7 of 16 play. As per the said s. 139 NI Act, it shall be presumed that the issuance of cheque was for the discharge, in whole or in part, of debt or other liability. The effect of the presumption has been explained in a catena of judgments, including the judgments of the Hon'ble Supreme Court passed in Rangappa vs. Mohan reported in AIR 2010 SC 1898 and Bharat Barrel & Drum Mfg. Co. vs. Amin Chand Pyarelal reported in 1999 (3) SCC 35. It has been held time and again that the said presumption is a rebuttable one and its only effect is to shift the initial burden of proof on the accused. It is also well settled that in order to rebut the presumption and shift back the burden of proof on the complainant, the accused is only required to raise a probable defence and he cannot be expected to discharge an unduly high standard of proof i.e. standard of proof for rebutting the presumption raised u/s. 139 NI Act is "preponderance of probabilities". It is also well settled that the accused can rebut the said presumption either directly or by bringing on record preponderance of probabilities by reference to the circumstances upon which he relies. The accused, for this purpose, is also entitled under law to rely upon all the evidence led in the case including that of the complainant as well. It is also trite that S. 139 NI Act is an example of reverse onus clause and the accused cannot be expected to disprove the existence of legally recoverable debt or liability by direct evidence. Infact, it is also conceivable that in some cases, the accused may not need to adduce evidence of his/her own. However, at the same time it is also to be remembered that bare denial of the existence of legally enforceable debt or other liability cannot be said to CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.8 of 16 be sufficient to rebut the presumption and something which is probable has to be brought on record to shift the onus back to the complainant.
11. The material on record in the present case has to be appreciated in light of the aforesaid legal position. In the facts and circumstances the present case, the following facts are duly admitted by both the parties and there is no dispute as to the said facts:
a) That there was a Confidential Project Funding Agreement dated 23.04.2012 (Ex.CW/A5) between M/s Gold Crown Group Global Pvt. Ltd. and Mr. Frank Nilsson for funding a project whereunder Mr. Frank Nilsson was the project owner and M/s Gold Crown Group Global Pvt. Ltd was the project funder. Under the said agreement the project funder had agreed to provide funds to the tune of US dollar 115 million to the project owner. It is further admitted that a Fee Protection Agreement and Pay Order For Introducing Parties was also executed on 23.04.2012 (Ex.CW1/D5) by the project funder in terms of the aforesaid agreement and under the said agreement, a cheque bearing no.861568 dated 25.06.2012 was issued by accused to the complainant in the sum of US dollar 5,75,000 as consultation fees.
b) That the cheque in question was issued by accused to the complainant as a replacement of the aforesaid cheque for US dollar 575000.
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c) That the complainant was one of the parties which introduced the project funder and project owner
d) That the agreement could not be fulfilled by the parties and no project funding was in fact carried out under the said agreement. The failure of the funding agreement is not in dispute, though the reason for failure of funding is being attributed by both the sides on each other. It may be noted at this stage itself that as the present case is a complaint u/s 138 NI Act, it is not relevant as to who had defaulted in the performance of the contract but the short point to be decided by this court is whether or not the cheque in question was issued in discharge of legally enforceable debt or other liability.
12. Both the parties in the present case have led their respective evidence to prove the failure of the other side in the performance of the agreement Ex.CW/A5. However at the time of arguments, it is rightfully conceded by counsels for both the sides that in the present complaint, it is not relevant as to which party was defaulting party. Accordingly, it has been vehemently argued by Ld. Counsel for complainant that the cheque in question was issued to the complainant as a part of his consultation fee under the said agreement and the same was liable to be encashed irrespective of whether the project funding under the said agreement took place or not. On the other hand, the Ld. Counsel for accused has vehemently argued that the cheque in CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.10 of 16 question was issued to the accused as advance security cheque which was meant to be encashed only if the project funding was carried out.
13. The relevant clause of Confidential Project Funding Agreement is reproduced hereunder for the sake of ready reference: "3. The Project funder will arrange necessary financial instruments (BG/SBLC/CD/SKR) to provide collateral support to generate the required funding of US$ 115,000,000 (US$ 115 Million.). The Client agreed to pay the bank charges (8% + 2% Consultants Fees + 1% Administrative charges of the funds requirement) for US$ 115,000,000 (US$ 115 Million). 1% (admin charges) will be taken from the first tranche of payout of loan. This will be a Bank to Bank Transaction. The Lender Bank will send a Post Dated bank endorsed Cheque scanned copy by E Mail and Original to be sent to Mr. G S Chadha by Courier with the validity date of 35 days (giving allowance for delivery by courier) as a guarantee for the refund of payment received in the event of nonconsummation of the transaction by the Project funder (emphasis supplied). The Project Owner transfers 8% (Eight Percent) towards cost of SBLC and 2% (Two Percent) towards fees to the intermediaries/beneficiaries into the Lenders Bank account. If the Project Funder fails for any reason to arrange the project funding within 30 days the Client can present the cheque for refund of 10% after 35 days.
Attached scanned copy of Cheque No. 861567 dated 25th June 2012 for US$ 11,500,000 (US$ 11.5 Million) drawn on Andhra Bank, Noida (NCR), New Delhi, India. ORIGINAL to be sent by courier.
ENFORSEMENT AT THE BACK OF THE CHEQUE This Cheque for US$ 11,500,000 (US$ 11.5 Million) is valid for encashment after 25/05/2012, if the Project Funder fails to consummate the TRANSACTION CODE : FR/GCGG/2012/1. If successfully concluded it will be cancelled and returned by courier CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.11 of 16 within 24 (Twenty four) banking hours to Mr G S Chadha."
14. Perusal of aforesaid clauses shows that as per the agreement between the parties the project owner had agreed to bear the bank charges to the tune of 8%, consultant fees to the tune of 2% and administrative charges to the tune of 1% in respect of proposed funding of US dollar 115 million. In respect of said charges, there were following important conditions in the agreement to be simultaneously fulfilled by the project owner and project funder:
a) The project owner was to transfer 8% towards cost of SBLC and 2% towards fees to the intermediaries / beneficiaries into the lenders bank account, and
b) The lender bank was to issue a post dated bank endorsed cheque as a guarantee for the refund of payment received in the event of non consummation of the transaction by the project funder. The project owner was entitled to encash the said cheque in case the project funder failed to arrange the project funding within 30 days. The said cheque was to be valid for encashment after 25.05.2012 i.e. after a period of 30 days from the date of the agreement. In the event of successful conclusion of the transaction, the said cheque was to be cancelled and returned.
15. It is apparent from the aforesaid clauses that while the project owner was required to transfer funds to the lender bank in respect of banking charges and consultants fees, however the same was refundable to the project CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.12 of 16 owner in the event of non consummation i.e. failure of the transaction. It is further to be noted that under the agreement, the 2% consultants fees was to be borne by the project owner and the responsibility of the project funder was only to the extent of issuing post dated cheques to beneficiaries for payment of the same, within 20 days. In this regard, it is useful to refer to clause 7.11 which is as follows: "7.11 Commission and Fee: PROJECT OWNER will be remit two (2%) for fees / commission but it shall be the responsibility of the PROJECT FUNDER to issue post dated cheques to beneficiaries for payment within twenty ( 20) days."
16. Thus, cumulative reading of the clauses of Agreement dated 23.04.2012, Ex.CW/A1, implies that in the event of failure of transaction, the project owner was entitled to refund of 2% consultants fees remitted by it and in order to guarantee the said refund, a post dated cheque was to be issued by lender bank in favour of Project Owner. Thus, as the Project Owner himself was liable for refund of 2% consultants fees in the event of nonconsummation of transaction, then there is no reason to impose the said consultant fees on the project funder whose responsibility was only to ensure timely payment of the same but not to bear the same. Thus, from the terms and conditions of the agreement it is clear that the consultant fees was only to be paid in the event of successful completion of the transaction and not in the event of failure of the same.
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17. Strong reliance has been placed by the Ld. Counsel for complainant on the Fee Protection Agreement and Pay Order For Introducing Parties (Ex.CW1/D5) to contend that the project funder had executed an irrevocable and unconditional guarantee for payment of consultation fees, under which the original cheque of US dollar 575000 was also issued to the complainant and subsequently replaced with the cheque in question. Thus it is contended that the cheque in question was liable to be encashed irrespective of the success or failure of the funding transaction. However, it must be noted that the said Fee Protection Agreement was a part of the Confidential Project Funding Agreement and the same cannot over ride the funding agreement. In this regard it is also useful to refer to clause 2.1 of the agreement which provides as follows: " 2.1 The project funder issues and delivers fully signed agreement with full banking coordinates together with passport copy non solicitation statement and irrevocable Fee Protection Agreement Project. Project funder issues post dated cheques towards 2% (two percent) fess to beneficiaries".
18. Thus, from the abovesaid clause it is clear that the irrevocable Fee Protection Agreement Project was executed under the confidential project funding agreement and was a part and parcel of the same. Further, the commission of two percent was to be remitted by the project owner and project funder was only liable to issue post dated CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.14 of 16 cheques to beneficiaries for payment within 20 days. In the absence of any commission remitted by the project owner, the project funder cannot be saddled with the liability of the commission of two percent to be paid to the beneficiaries under the said agreements. It is further noted that though there is a categorical recital in the Fee Protection Agreement that it would remain valid and enforceable for the full term/contract of the contract and shall apply to all renewals, extensions or any new agreements between the parties to funding agreement but there is no unambiguous, certain, clear and categorical recital in the entire agreement to the effect that irrespective of the success or failure of the funding transaction, the beneficiaries under the fee protection agreement shall be entitled for the consultation fees of 2%.
19. In view of the aforesaid facts and circumstances, I am of the considered opinion that the accused has been able to bring forth sufficient material on record to prove that the cheque in question was not issued in discharge of any legally recoverable debt or other liability. Accordingly, it cannot be said that the complainant has proved its case beyond reasonable doubt and the complainant is not entitled to the benefit of presumption u/s 139 NI Act.
20. Resultantly, the accused is acquitted for the alleged offence u/s 138 of the N.I.Act.
A copy of this judgment be placed on the official website of the District Court.
CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.15 of 16 Announced in the open court today on 24.07.2018.
Judgment contains Sixteen (16) signed pages. Digitally signed by SWATI SWATI GUPTA GUPTA Date:
2018.07.25 22:30:03 +0530 Announced in the open (SWATI GUPTA) Court on 24.07.2018 MM03 (NI ACT) SOUTH EAST, SAKET COURTS, NEW DELHI CC NO.: 622619/16 International Marketing Vs. Anjali V Imparti Page No.16 of 16