Delhi District Court
Judgment Passed By Hon. Supreme Court In ... vs . on 25 October, 2012
IN THE COURT OF SHRI VINOD KUMAR MEENA, CIVIL JUDGE03,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS, NEW DELHI
COMPLAINT NO.25/1/12
SUPRA BUSINESS PVT. LTD.
Versus
NATIONAL PLYWOOD INDUSTRIES PVT. LTD. AND ORS.
Case ID No. : 02403R0995022004
CC No. : 25/1/12
Date of Institution of
the Complaint : 02.01.2004
Name and address : M/S Supra Business Pvt. Ltd
of Complainant Through Mr. Sushil Kejriwal
402,3233,Nehru Place, ND19
Name, parentage and address
of the accused :1. National Plywood Industries Ltd.
5,Fancy Lane, Kolkata700001
2. Mr. Piyush Periwal
Vice Chairman
National Plywood Industries Ltd.
5, Fancy Lane, Kolkata700001
3. Mr. Madan Lal Periwal
(Since Expired on 28.12.09 and
proceeding abated against him
vide order 07.01.2010 )
National Plywood Industries Ltd.
5, Fancy Lane, Kolkata700001
All above addressees also at:
1. 69, Desh Bandhu Gupta Road,
Paharganj, New Delhi110055
2. 12E Judge Court, Alipore,
Calcutta27.
3. Makumm Road, Tinsukia,
Assam 786125
Offence Complained of : U/s 138 of Negotiable Instruments
Act, 1881
Offence Proved : U/s 138 of Negotiable Instruments
Act, 1881
Plea of the Accused in his : Cheques undated, account seized
examination. : by Income Tax authorities, stay by
BIFR
Date of reservation
of Order : 03.10.2012
Final Order : 25.10.2012
Date of Order : 25.10.2012
Judgment
Brief Facts
1. The present complaint was filed by Sh. A. K. Chaudhary, the authorised representative of M/s Supra Business Pvt. Ltd.
2. It is the case of complainant that the complainant was induced/lured into advancing a loan of Rs. 50 Lakhs in the form of Inter Corporate Deposits vide Cheque no. 235793 dated 26.09.1996 drawn on Bank of Baroda in favour of Accused No.1 company and same was duly received by the authorised agent of the company and was carrying an interest @ 18 % per annum and the date of maturity was 25.01.1997. Accused no.1 issued two post dated cheques bearing no. 530415 and 53416 for Rs. 50 lakhs for the repayment of loan amount. The complainant had further extended the inter Corporate Deposit up to 31.03.97 and then again upto 30.06.97 on the request of accused persons. Accused company issued further new cheques. On 30.06.1997(written as 30.06.2009 in complaint due to typographical mistake) the deposit was redeemed together with accused interest by accused no.1 company. Complainant company further advanced a loan of Rs. 1 Crores in the form of Inter Corporate Deposits vide two Cheque no. 103708 dated 03.07.1997 drawn on Vyasa Bank for Rs. 50 lakhs and cheque No. 504474 dated 03.07.1997 drawn on Bank of Baroda Rs. 50 Lakhs with date of maturity of 03.01.1998 and 03.11.1997 with an interest of 16 per cent per annum. Further on the request of accused the complainant renewed the Inter Corporate Deposit and on each extension/renewal, fresh postdated cheques were being issued by the accused person. Accused persons issued three post dated cheques bearing no. 717539,717,540 and 717541 all dated 24.11.2003 for Rs. 50 Lakhs each drawn on standard Charted Bank, Netaji Subhash Road, Calcutta. The said cheques were issued for repayment of Inter corporate Deposit of Rs one crore made by complainant and the loan amount of Rs. 50 Lakhs advanced by the complainant to the accused No1 company. The complainant bonafidely presented the impugned cheques bearing no. 717539,717,540 and 717541 all dated 24.11.2003 for Rs. 50 Lakhs each drawn on standard Charted Bank, Netaji Subhash Road, Calcutta to is Bank namely Indusind Bank ltd. Nehru Place, New Delhi but all the three cheques were returned dishonoured on account Insufficiency of funds vide return memo dated 27.11.2003, received by complainant on 28.11.2003. Therefore, accused no.1,2 &3 failed to discharge their liabilities despite the service of the legal demand notice dated 05.12.03 within stipulated time. Thus the accused committed an offence U/s 138 NI Act.
Bail bond and Notice
3. The court took cognizance of the offence U/s 138 of NI Act on 08.01.2004 and issued process to all the accused. The accused no.2 Piyush Periwal appeared on 01.05.04 and was later admitted to bail in the sum of Rs. 15,000/ alongwith one surety of like amount. However, accused no.3 namely Madan Lal Periwal did not appear for several dates and sought exemptions on one pretext or other. After hearing arguments on Notice, Notice u/s 251 Cr. P.C was served upon to the accused on 01.04.2006 alleging that the impugned cheques were dishonored, to which the all the accused pleaded not guilty and claimed trial. Accused no.1 was represented through its AR Sh. Suresh Kumar Chanda and accused no. 2 and 3 were represented through their counsels and notice was also served upon them.
4. Thereafter, the case was fixed for complainant's evidence and complainant was directed to supply copy of the affidavit and annexed documents to the accused on 22.03.07. However, matter was pre poned as per the directions of Hon. High Court to expedite the matter and same was listed on 15.12.06.
Substance of complainant's evidence and cross examination
5. According to the list of witnesses filed by the complainant in pre summoning, the complainant had wished to examine the following witnesses in his evidence:
(a) Sh. S. K. Kjriwal, Director of the Complainant;
(b) The Concerned Official of the Bank of the Accused person;
(c) Any other witness with the permission of the court.
6. CW1 S. K. Kejriwal Director of the complainant was examined on 24.01.2007 . He has stated that he was aware about the facts and circumstances of the case and duly authorised by complainant company vide resolution Ex. PW1/A. He also proved the documents Ex. PW1/1 to Ex. PW1/14 and Ex.PW1/17 to Ex. PW1/26. CW1 also proved the UPCs Ex. PW1/27 A,B C & D and the receipts of registered post vide Ex. PW1/28A &B as well as courier receipts Ex. PW1/29 A, B, C and D by which legal demand notice was dispatched.
In his crossexamination CW1 has stated that meeting of Boards of Resolution was held on 12.08.2006 and resolution Ex. PW1/A bear the signature of Mr.P. R. Kejriwal. He also admitted that in meeting of Board of Resolution other matters were also discussed apart from the present case and as per the resolution, he was only authorised to attend proceedings in the Court . He denied that the Board of Resolution was forged and fabricated document or that no meeting took place on 12.08.06. CW1 further stated that his affidavit Ex. PW1/B was signed by him at the office of M/S Tiku and Tiku Advocates. He further stated that he had no personal knowledge regarding transaction in question. He also could not recall as to who had filed and signed the present complaint. CW1 also stated that impugned cheques were given to them on 20.07.2000 and same were handed over to his father; however, he had not seen the cheques. He was also unable to tell whether the date 24.11.03 mentioned on three cheque and other filled up part on cheques were of same pen and hand writing or not.
CW1 in his further cross examination stated it to be incorrect that when the cheques were given/handed over to them were undated and the dates were filled by them. He also stated that complainant did nothing with the mortgage flat given by the accused persons for repayment of the loan and had not made any entry/noting on the ledger regarding the handing owner of cheques on 20.07.2000 by the accused. He further stated that no chques of interest were handed over alongwith the three cheques. CW1 also stated that Mr. Piyush Peirwal had met with Mr. P.R. Kjriwal for the ICDs; however, he was not present at that time and no record of any meeting between them was maintained in their office regarding the inducement alleged to be made by the accused. He further told that complainant had again sanction a loan for sum of Rs 50 Lakhs on the assurance that the condition of the accused company would improve and they would repay the entire loan amount. He stated it to be wrong that there were some other transaction/business between the complainant company and the accused. He did not have any knowledge about the bank account of the accused company being attached by the Income Tax authority and had not received letter Ex. P1 dated 20.202003 sent by the accused and UPC receipt vide Ex. P2. CW1 also denied the suggestion that he along with bank official conspired against the accused to get the cheques dishonoured on the grounds of insufficient funds. He also denied that he was not duly authorised to depose in the present case or that present case was filed only to harass the accused persons as the cheque in question were only given as a security and never for the discharge of the liability due. He denied that he was deposing falsely.
7. CW2 Sh. Lal Saheb Mishra, clerk from Standard Chartered Bank deposed that he had seen the impugned cheque Ex. PW1/4 to Ex. PW/6 bearing no. 717539, 717540,717541 amounting to Rs. 50 Lacs each issued by the accused which were returned unpaid due to insufficient funds. He has proved the certified statement of account of accused company vide Ex. CW2/A. In his cross examination he had stated that he had no knowledge whether the income Tax Department, in the month of February 2003, had ordered the attachment of the bank account of the accused company.
8. Thereafter, no other witness or document was produced in complainant's evidence. Hence, the same was closed vide order dated 24.03.08 and the matter was listed for statement of the accused U/s 313 Cr. P.C. Substance of statement of accused recorded U/s 313 Cr. P.C.
9. The evidence of the complainant was put to all the three accused and their statement recorded U/s. 313 Cr. PC on 26.08.08 in which they admitted that they had taken certain advances from the complainant and in discharge of their liability towards the loan they had issued three cheques bearing no. 717539,717,540 and 717541 all dated 24.11.2003 for Rs. 50 Lakhs each drawn on standard Charted Bank, Netaji Subhash Road, Calcutta vide Ex. PW1/1 to Ex. PW1/3. They also admitted that they had executed the receipt Ex. PW1/7 to Ex. PW1/9 and Ex. PW1/11 and Ex. PW1/12 and thereafter executed demand promissory note Ex. Pw1/13 and Ex. PW/14. Both the accused have admitted that the cheques were dishonored; however, same were not dishonoured due to insufficient funds rather the same were dishonoured as their accounts were seized by the Income Tax Department. They has also stated that the impugned cheques were undated and same were given as secondary security and property papers were given as the primary security. In the meanwhile it was intimated to the Court that accused no.3 Madan Lal Periwal had expired on 28.12.2009; death certificate of accused no.3 Madan Lal Periwal was placed on record. Accordingly, the proceedings against accused no.3 were abated vide order dated 07.01.2010. Thereafter , both the accused i.e accused no.1 and 2 preferred to lead defence evidence.
Substance of Defence Evidence
10. On 26.06.2012 accused has produce Sh. Lal Shah Mishra, clerk from the Standard Charted Bank, ITO who was examined as DW 1. DW1 provided the certified copy of cheques bearing no. 717539,717,540 and 717541 all dated 24.11.2003 vide Ex. DW1/1 to Ex. DW1/3 and their respective return memos vide Ex. DW1/4 to Ex. DW1/6. He has also produced the statement of accounts of accused company pertaining to A/C no. 32405039984 and a/c No. 3220 506957 vide Ex. DW1/7 to Ex. DW1/8 respectively. He has also proved the certified copy of the letter dated 11.06.2004, 07.02.2003 vide Ex. DW1/9 and Ex. DW1/10 respectively. DW1 also placed on record the certified copy of Lien/Holder code/Input form vide Ex. DW1/11.
On 26.06.2012 itself , ld. Counsel for accused also filed the certified copy of letter dated 04.02.2003 along with a letter received from Deputy Commissioner, Income Tax, Circle6 Kolkatta under RTI, 2005 and same was exhibited as Ex. C1. Thereafter, defence evidence was closed and and matter was list for final arguments Defence pleaded by the accused
11. From the cross examination of the complainant and the statement of the accused recorded U/s 313 Cr. P.C and after going through the defence evidence, it appears that the accused in his defence pleaded the following defences:
A. The accounts on which the cheques were withdrawn were seized by the income tax department and the accused could not deposit the amount in the impugned bank account in due time.
B. The accused no.1 company was sick and was referred toBIFR and there was a stay on any Court proceedings by the BIFR.
C. The impugned cheques were undated cheques.
D. The cheques were secondary security and property papers were given as primary security.
E. The Court does not have the territorial jurisdiction.
F. CW1 has no authority to lead evidence.
Judgment and Reasons
12. Final arguments of both the parties were heard at length on 03.10.2012 and later on clarifications were sought.
13. Before moving ahead with the facts enumerated by the complainant and the defence raised by the accused, it becomes inevitable to discuss legal provisions regarding the dishonour of cheques. It has been observed by the Hon'ble Supreme Court in Rangappa v Sri Mohan1, that ordinarily in cheque bouncing cases, what the courts have to consider is whether the ingredients of the offence enumerated in Section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 139 of the Act. It was further observed that the test to be applied in cases U/s 138 NI Act is one of preponderance of probabilities, which has been held in various other case law as well. For the purpose of reaching a decision in the present matter, it is thus important to first decide whether the complainant has been able to fulfill the ingredients as enumerated under section 138 NI Act and if yes, then decide if the accused has been able to rebut the statutory presumption contemplated by Section 139 of NI Act.
14. Further in M/s Kumar Exports v. M/s Sharma Carpets 2 it has been observed as follows: The accused in a trial U/s 138 NI Act 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 or debt is so probable that a prudent man ought to suppose that no consideration or debt existed. To rebut the statutory presumption the accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial.
The essential ingredients which need be proved for constituting the offence under Section 138 NI Act were discussed in the case Jugesh Sehgal v. Shamsher Singh Gogi3. In view of the judgment and also the provisions U/s 138 NI Act, an offence U/s 138 NI Act is committed when a person draws a cheque 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, and that cheque is returned by the bank unpaid due to "insufficient funds" or "exceeds arrangements" or any 1 2010 Cri. L.J. 2871 2 AIR 2011 SC 1518 3 2009 (9) SCALE 455 other such reasons. Further, as per proviso to Section 138 NI Act, the drawer shall be liable only if;
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 validity, whichever is earlier;
B) the holder of the cheque makes a demand for the payment of the cheque amount by giving a legal notice to the drawer within 30 days of receipt of information by him from the bank regarding dishonor;
C) the drawer of the cheque fails to make the payment to the drawee within 15 days from receipt of legal notice.
15. On perusal of the file it is seen that the cheques bearing no. 717539,71,540 and 717541 were issued on 24.11.2003 for Rs. 50,00,000/ each and were dishonored on 27.11.2003 i.e presented within the period of validity; legal notice dt. 05.12.2003 sent on 08.12.2003 i.e., within 30 days of receipt of return memo; and complaint filed on 2.01.2004, i.e. within 30 days of sending of legal notice and 15 days of nonreceipt of payment thereafter. Thus the complainant has filed sufficient evidence to raise the presumption u/s 139 NI Act.
16. The issue is whether the accused has been able to rebut the presumption U/s 139 NI Act. In order to answer this question, it is important to see the cross examination of the complainant and defence of the accused.
17. The documents filed by the complainant and the accused have been carefully perused. After going through all the records placed in the case file by both the parties, evidence adduced by both the parties and after hearing the submissions of both the parties, it came to the fore that the accused is relying on the following defences.
A. The accounts on which the cheques were withdrawn were seized by the income tax department and the accused could not deposit the amount in the impugned bank account in due time.
B. The accused no.1 company was sick and was referred to BIFR and there was a stay on any Court proceedings by the BIFR.
C. The impugned cheques were undated cheques.
D. The cheques were secondary security and property papers were given as primary security.
E. The Court does not have the territorial jurisdiction.
F. CW1 has no authority to lead evidence.
18. To reach to the conclusion in this case, the Court is discussing and deciding each of the above mentioned defence, after hearing the submissions of both the parties and after going through relevant case laws.
19. On defence No.A taken by the accused i.e the accounts on which the cheques were withdrawn were seized by the income tax department and the accused could not deposit the amount in the impugned bank account in due time.
It is submitted by Ld. Counsel for the accused that the impugned cheque were got dishonoured due to the fact that the bank account bearing number 3225069057 was seized by the income tax authorities. The accused have also placed on record a letter dated 4.2.2003 issued by Income Tax Authorities to Standard Chartered Bank to remit a sum of Rs. 2,44,20,934/ on the account of accused no. 1 (Ex.C1). The accused had produced one Sh. Lal Shah Mishra clerk from Standard Charted Bank ITO Delhi as DW1 on 26.06.2012. DW1 filed the documents which are exhibited as DW1/1 to Ex. DW1/11. The documents exhibited as DW1/7 and Ex. DW1/8 pertains to the statement of accounts and DW1/8 is specifically pertains to the accounts in question.
A perusal to the said account on page 1 shows that on 7th February 2003 the account balance was reduced to nil. Subsequent pages of the account show that the account is not seized but is operational as each month some amount is credited to the account on account of interest from some fixed deposit. DW1 also filed a letter dated 7.2.2003 written by Standard Chartered Bank to the Income Tax Officer confirming receipt of Ex.C1 and remitting some amount amount(Ex.DW1/11). The perusal of all the documents, it revealed that this state of affair continued till November 2003 and thereafter when the cheques were presented by the complainant. Hence, a perusal of the account statement of the account of Accused No.1 makes it quite clear that the account were operational and functional and the bank account of accused was never seized; only directions were issued to the bank to remit sum to the tune of Rs.2,44,20,934/.
Further perusal of the statement of accounts made amply clear that the impugned bank account does not contain sufficient funds to honour the cheques and even the memo of return dated 27.11.2003 also reveals that the cheques were dishonoured due to insufficiency of funds and not to any other reason.
Ld. Counsel for complainant has brought into notice the judgment passed by Hon. Supreme Court in Hiten P. Dalal Vs. Bratindranath Banerjee4. wherein Para 40 of the judgment the Hon'ble Supreme Court rejected the arguments of the accused that no offence under section 138 had been committed as the accused could not have paid within the period of 15 days after receipt of the notice as all his properties stood attached.
The relevant para reads as under:
" 40. The argument of the appellant before the Special Court that no offence under Section 138 had in fact been committed because he could not have paid within the period of 15 days after receipt of the notice even if he wanted to , was rightly rejected. The appellant's submission was based on the fact that he had been notified by the Custodian under Section 3 of the Act and all his properties had consequently stood attached. But, as observed by the learned Special Court, the Special Court had before it a number of applications by a number of parties asking for permission to fulfil their obligations under contracts. In some cases the Court had
4. (2001) 6 SCC 16 granted them. There was nothing which prevented the appellant from applying to the Special Court for permission to fulfil his obligations or to pay off his debts under the cheques Exts. B,C,D and E. No attempt had been made by the appellant to make any payment towards the dishonoured cheques..."
Ld. Counsel for complainant also brought into the notice of the Court the observations made by Hon. Supreme Court in Rangappa Vs. Sri Mohan5 in the context of whether Section 138 NI Act would be applicable in post dated cheque on account of stop payment instruction, the Hon'ble Supreme Court upheld the following observations from an earlier case ( Goaplast (P) ltd. V Chico Ursula D'Souza):
The relevant para reads as under:
"This presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of postdated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of one's own wrong."
It is also pertinent to mention here the observations made by the Hon. High Court of Delhi in Deen Dayal Kayan V S. M. C Global Securities ltd6. ; the relevant para reads as under:
"...4. Learned Counsel for the petitioner submitted that the Income Tax Department had seized and blocked the account in question vide order dated 28th February, 2008. It is also submitted that the cheques in question were posted dated cheques and were given as a security. Copy of the order passed by the Income Tax Department has not been placed on record. The petitioner has not stated the reason
5. (2010) 11 SCC 441 6171 [(2010) Delhi Law Times 447] and cause why the said order was passed.
Mere issue of an attachment order without disclosure and statement why it was passed, will not justify invocation of inherent power of the Court. Whether or not attachment of seizure or block order was justified and valid is another aspect. In the petitions it is also not stated whether the alleged order passed by the Income Tax Department was withdrawn, if so, on which date.
After hearing the submissions of both the parties and after going through the above mentioned observations and judgments by the Hon. Supreme Court and Hon. High Court, the Court is of the opinion that an attachment of bank account brought about by the accused by their own acts or negligence cannot offer any protection or goby under Section 138 of NI Act. The accused cannot take advantage of their own wrong or inaction. Though, it is made clear by going through the above mentioned observations that the bank of account of the accused was operational at the impugned time, Even, if it was in operational or attached due to his misdeeds, he cannot escape the liability under provisions of section 138 of N. I. Act, as a sufficient time of 15 days was granted to the accused to pay the dishonoured cheque amount as the legal liability has not been denied by the accused. Accordingly, the defence i.e the accounts on which the cheques were withdrawn were seized by the income tax department and the accused could not deposit the amount in the impugned bank account in due time, is not sustained.
20. On Defence no.B i.e the accused no.1 company was sick and was referred to BIFR and there was a stay on any Court proceedings by the BIFR.
It is submitted by Ld. Counsel for accused that the accused no.1 company was sick and was referred to BIFR and there was a stay on any Court proceedings by the BIFR. To this it is submitted by Ld. Counsel for complainant that this contention was raised before the Court earlier also and the same was rejected by Court vide order dated 07.01.2010. Ld. Counsel also brought into notice the judgment passed by Hon. Supreme Court titled as Kusum Ingots & Alloys Ltd. Vs. Pennar Peterson Securities Ltd7. and BSI Ltd. Vs. Gifts Holdings
7.AIR 2000 SC 954 Pvt. Ltd. & Anr8. wherein Hon'ble Supreme Court clearly lay down that proceedings under Section 138 of N I Act are not barred on account of a company being declared sick under (SICA) Sick Industrial Company Act. The relevant para reads as under: "15... The section only deals with proceedings for recovery of money or for enforcement of any security of a guarantee in respect of any loans or advance granted to the company and a proceedings for winding up of the company.
The section does not refer to any criminal proceedings... we held that the pendency of proceeding under S. 22 (1)SICA alone is not sufficient to get absolved from the liability under S.138 of NI Act...
18. In Our considered view S.22 SIC does not create any legal impediment for instituting and proceeding with a criminal case on allegations of an offence under S.138 of the NI Act against a company of its Directors..."
After hearing the submissions and after going through the above observations made by Hon. Supreme Court of India, the Court is of considered view that proceedings under section 138 N. I. Act are not barred by section of Section 22 of SICA Act. So, this defence i.e the accused no.1 company was sick and was referred to BIFR and there was a stay on any Court proceedings by the BIFR is also not sustained in the eyes of law.
21. On Defence C i.e the impugned cheques were undated cheques.
It is submitted by Ld. Counsel for accused that the impugned cheques were undated cheques and the accused is not liable against the non encashment of the said cheques. To this it is submitted by Ld. Counsel for complainant that ld. Counsel for accused has made no attempt to prove the above mentioned facts and same was raised only by suggestion to CW1. It is further submitted by ld. Counsel for complainant that the cheques were not undated and the date was
8. (2000) 2SCC 737 already mentioned in the cheques. It is further submitted by the ld. Counsel for complainant that it is settled law as per section 20 of Negotiable Instrument Act that when a blank cheque is signed and handed over, it means that the person signing it has given an implied authority to the holder to fill it. Section 20 reads as under: "... 20. Inchoate stamped instrument Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in 15 [India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in capacity in which he signed the same, to any holder in due course for such amount: provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder..."
Ld. Counsel also brought into notice judgment passed by Hon. High Court of Delhi in Mojj Engineering Systems Ltd and other Vs. A B Sugars Ltd9. . The relevant para reads as under: "...7. Even otherwise, prima facie, it was the petitioners who had handed over the undated cheque for a certain amount to the respondent in terms of a contract between the parties.
Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorisd the complainant to enter an appropriate date on it. In Young v. Grote, (1827)4 bing.253, it was held that when a blank cheque is signed and handed over, it means the person signing it has
9. { 154 (2008) Delhi Law Times 579} given an implied authority to any subsequent holder to fill it up. Similarly, in Scholfield V. Lord Londesborough, (18951899) All ER 282, it was held that whoever signs a cheque or accepts a bill in blank, and then puts in into circulation, must necessarily intend that either the person to whom he gives it, or some future holder, shall fill up the blank which he has left. This common law doctrine was also affirmed by Justice Macnaghten in Griffiths V Dalton, (1940)2 KB 264, where it ws held that the drawer of an undated cheque gives a prima facie authority to fill in the date. This aspect has also been incorporated in Section 20 of the Negotiable Instruments Act, which deals with Inchate Stamped Instruments... while discussing the scope of Section 20 held that by reason of this provision, a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorised to complete the incomplete negotiable instrument..."
After going through the above observations, the Court found that it has not been specifically proved by the Ld. Counsel for the accused that the impugned cheques were blank. Even, if it is proved that the cheques were undated cheques, it would be of no help to the accused as the cheques were duly signed by the accused and as per section 20 the holder of a cheque has all the authority to fill the details. Accordingly, this defence i.e also not sustained i.e the impugned cheques were undated cheques.
22. On Defence D i.e is the cheques were secondary security and property papers were given as primary security.
It is submitted by Ld. Counsel for accused that the cheques were given as secondary security to discharge their legal liability and original property papers for flat in Jaipur were given as primary security. To this it is submitted by ld. Counsel for complainant that the second loan of Rs. 50,00,000/ was only purported to be secured by the mortgage by deposit of original property paper for flat in Jaipur and further submitted that instead of original title papers only original agreement dated 14.08.1996 w.r.t the impugned property were purported to have been deposited; and this cannot be termed as titled papers. Ld. Counsel for complainant further submitted that as per information received the mortgager has sold the property and had produced certified copy to this effect. Submissions heard.
After hearing submissions of both the parties and after going through all the documents specially the copy of the document marked as Mark A, it came to the notice that the original title deed have admittedly not been deposited by the accused with the complainant . Moreover, it has also not been denied that the mortgager has already executed a sale deed w.r.t alleged mortgage property on 20.07.2005 against the third party. Moreover, the alleged mortgage was at the most only to secure one loan of Rs. 50,00,000/ so the point raised as above will not absolve the accused from the liability under section 138 of Negotiable Instrument Act. Accordingly,this defence i.e the cheques were secondary security and property papers were given as primary security is also not sustained.
23. On defence no. E i.e is the Court does not have the territorial jurisdiction.
It is submitted by Ld. Counsel for the accused that the accused are based in Kolkatta and mere issue of notice from Delhi will not confer jurisdiction on criminal Courts located at Delhi. Ld. Counsel for accused relied on the Judgment passed by Harman Electronics (P) ltd. Vs. National Panasonic India (P) Ltd. 10 To this it is submitted by Ld. Counsel for complainant that the above contention has no merits, cause of action has arisen within the territorial jurisdiction of this Hon'ble Court. Intercorporate deposit and loan was given to the accused in Delhi from the account of the complainant, based in Delhi. It is brought into notice by the Ld. Counsel for the complainant that receipts EXPW1/7 dated 26.9.1996 issued by the accused No.1, which clearly states that a sum of Rs.50 lakhs was received vide cheque dated 25.9.1996 through the accused Delhi office. He further submitted that the accused No.1 has his office in Delhi at 69, Desh Bandhu Gupta Road, Paharganj, Delhi as is clear from receipt dated 26.9.1996 ExPW1/17. The AR of Accused No.1 Mr. Suresh Kumar Chandak in his statement under Section 313 Cr.P.C. also clearly states in reply to question no.3 as he stays in Delhi.
10. [156 (2009) DLT 160 (SC)] Payments were received by the accused from the complainant in Delhi. In the earlier transaction between the parties all payments were received by the accused in Delhi. For the present transaction also some interest was paid by the accused to the complainant in Delhi.
It is further submitted by the Ld. Counsel for complainant that impugned three cheques in question of Rs.50 lacs each were also presented by the complainant with their banker in Nehru Place, New Delhi and the return memo was also received by the accused from their bankers in Delhi. The legal notice under Section 138 of NI Act was issued from Delhi and the amount was payable/ receivables by the complainant company in Delhi.
Ld. Counsel for complainant also drawn the attention of the Court to the judgment of the Hon. High Court of Delhi titled as Religare Finvest Ltd. Vs. State And Anr 11. The Hon'ble High Court of Delhi, while taking into account the earlier judgment of the Hon'ble Supreme Court including of Harnam Electricals Pvt. Ltd. and A. Bhaskar, held as follows.
The relevant para reads as under: "...9 The aforesaid judgment thus clarifies that the five essential ingredients for completing the offence under Section 138 of Act are as below:
(i) Drawing of the cheque,
(ii) Presentation of the cheque with the bank.
(iii) Returning of the cheque unpaid by the drawee bank.
(iv) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, and
(v) Failure of the drawer to make payment within 15 days of the receipt of the notice.
10. The aforesaid judgment was echoed by the Supreme Court in the case of Smt. Shamshad Begum 9 supra), wherein, it was reiterated that:
"8. It is not necessary the above five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at five different localities. But concatenation of all the above five is sine
11. 173 (2010) DLT 185 qua non for completion of the offence under section 138 of the Act...
...16 It is clear from the provision itself that an offence under Section 138 would not be completed with the dishonor of the cheque.
Rather, it attains completion only with the failure of the drawer to pay the cheque amount within the expiry of the fifteen days after the legal notice is served upon the drawer of the cheque/s whose cheque/s have been dishonoured. As noted above, the offence under Section 138 of the Act can be completed only with the concatenation of a number of acts, the acts being, drawing of the cheque, presentation of the cheque with the bank, returning of the cheque unpaid by the drawee bank, giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, and failure of the drawer to make payment within 15 days of the receipt of the notice. It is not essential that all the acts should be committed at the same locality. It is quite possible that all the five acts are perpetrated in five different localities. In such a situation, any one of the Courts exercising jurisdiction in one of the five localities can become the place of trail for the offence under Section 138 of the Act. At the stage of entertaining a complaint under Section 138 of the Act, the Court is only required to arrive at a prima facie opinion as to the territorial jurisdiction, on the basis of the averments made therein, without launching into a fact finding mission as to their correctness or otherwise.
17.Hence, the contention of the Counsel for the respondent that nonpayment of cheque amount under Section 142(b) of the Act alone can give rise to a cause of action for an offence under Section 138 of the Act and it is the "cause of action ", which has to be seen and not "the act", is found to be untenable and turned down. The five acts mentioned in the aforesaid judicial dicta were clearly spelt out and the Supreme court further clarified that each of those five acts could be done in five different localities. This would naturally mean that the act of presenting of the cheque by the complainant where he is situated, could be in a different city from where the accused and his banker is situated...."
Submissions of both the parties have been heard on the point of territorial jurisdiction and all the relevant judgment as mentioned above has been gone through; a perusal of the complaint discloses that complainant is based and carrying on his business from New Delhi. The cheque were deposited for realisation of amount here in Delhi, the return memo was received herein Delhi, the knowledge of dishonour of said cheque to the complaint accrued at Delhi registered office, statutory notice of demand was sent from Delhi and accordingly the cause of action for filing the complaint arose to the complainant within the jurisdiction of this Court and accused failed to make the payment of cheque in dispute to the complainant within 15 days of receipt of the notice. Thus, it is clear that the complaint has not invoked the jurisdiction of the Court in Delhi,solely on the basis that the statutory notice of the payment,which was sent from Delhi. They have stated other grounds/facts for filing the complaint in Delhi. In these circumstances and after hearing the submissions and going through the judgment passed by Hon. High Court of Delhi titled as Religare Finvest Ltd. Vs. State And Anr.which was passed after taking in to account the earlier judgement of the Hon'ble Supreme Court including of Harnam Electricals Pvt. Ltd. and A. Bhaskar, the Court is inclined to accept the plea of the complainant and prima faice found that Court has territorial jurisdiction to try the present complaint. Accordingly, the above mentioned defence raised by Ld. Counsel for accused is not accepted as not sustainable.
24. On Defence no. F i.e CW1 has no authority to lead evidence It is submitted by Ld. Counsel for accused that the CW1 has no authority to depose as he was having no resolution of Boards of Directors of the Company permitting him to depose. To this it is submitted by Ld. Counsel for the complainant that there is no provisions in the companies Act or evidence Act which requires a witness to appear on behalf of the company to depose must have a Resolution of Boards of Directors of the company permitting him to depose Ld. Counsel for complainant brought into notice the observations made by justice Valmiki J Mehta in RFA Nos. 180/2004, 235/2004 and 239/2004, the relevant para reads as under:
"...10. One other argument urged on behalf of the appellant was that the witness who deposed on behalf of the defendant no.1/respondent no.1 company was not authorised by any board resolution to give evidence. This argument is misconceived in as much as evidence of a person is governed by the Evidence Act 1872 and any person who is aware of the facts of the case and whose evidence would be a relevant evidence in terms of Evidence Act, 1872, is competent to depose. A witness can depose as per facts in his knowledge or as per records.
There is no provision in the Companies Act, 1956 or in the Evidence Act, 1872 which requires that a witness who appears on behalf of the company can only depose if there is a resolution of the Board of Directors of the company permitting him to depose on behalf of the company. This argument of the appellant is therefore rejected..."
After going through the above observations made by the Hon. High Court of Delhi, it is clear that any person who is aware of the fact can lead evidence as witness as per facts to his knowledge or as per records. There is no curtailment either in Companies Act or Evidence Act which require a witness who is appearing on behalf of a company to have a Resolution of Board of Directors of the Company to depose. Accordingly, the plea of the accused that CW1 is not a competent witness to depose as he does not have Resolution of Board of Directors to depose, is not sustainable. Accordingly the evidence lead by CW1 is valid in the eyes of law and can be read to come to a conclusion.
25. On considering the entire evidence and after keeping in mind the above mentioned discussions, there is no doubt that the impugned cheques were issued in lieu of business transactions between the complainant and the accused. The complainant has also been able to show that the cheques were issued in lieu of a legally enforceable debt. The accused has categorically admitted the fact of the dishonour of the cheque, receipt of the legal notice and even the loan transaction has not been denied by the accused; all the defences that have been taken by the accused has not been proved as discussed above. It is amply clear after the above mentioned discussion the cheques were issued against the repayment of the loan amount which was taken by the accused. The payment was to be made by way of impugned cheque and liability is the legally enforceable liability. On preponderance of probabilities, the accused has not been able to rebut the presumption under section 139 of Negotiable Instruments Act.
26. In the considered opinion of the Court, in view of the legal provisions and case law discussed, both the accused i.e accused no.1 and 2 are held guilty for the offence u/s 138 NI Act and are accordingly, convicted.
Announced in open Court (Vinod Kumar Meena)
on 25th October,2012 Civil Judge03/NDD
PHC/New Delhi
IN THE COURT OF SHRI VINOD KUMAR MEENA, CIVIL JUDGE 03,NEW DELHI DISTRICT, PATIALA HOUSE COURTS, NEW DELHI CC. No. 25/1/12 UNIQUE ID No. 02403R0995022004 M/S Supra Business Pvt. Ltd 02,3233,Nehru Place, ND19 Versus
1. National Plywood Industries Ltd.
5,Fancy Lane, Kolkata700001
2. Mr. Piyush Periwal Vice Chairman National Plywood Industries Ltd.
5, Fancy Lane, Kolkata700001
3. Mr. Madan Lal Periwal (Since Expired on 28.12.09 and proceeding abated against him vide order 07.01.2010 ) National Plywood Industries Ltd.
5, Fancy Lane, Kolkata700001 ORDER ON SENTENCE 25.10.2012 Present: Sh. L. M. Asthana Ld. Counsel for complainant along with AR for complainant.
Ld. Counsel for convicts along with convict/accused No.2 and AR for convict/ accused No.1 Ld. Counsel for complainant states that the accused persons have not adhered to their commitment of repaying the money. They should be punished as per law. He further states that the prescribed punishment is for a term of two years and the fine is double the amount of impugned cheque.
On the other hand, Ld. Counsel for convicts states that the convicts are the sole bread earner of their respective families and are suffering financial crises, as the matter of the accused company is pending before BIFR. He further states that he has approached the complainant but the complainant is not willing to settle the matter.
Submissions heard.
..cont..
2 Almost 1617 years have elapsed since the loan was taken from the complainant and the same has yet not been repaid.
Keeping in view this conduct of the accused persons/convicts, no leniency ought to be granted to him.
Considering, the abovesaid submissions and keeping in view the terms of judgment pronounced, the liability of the convict would be equivalent to the total amount as mentioned in the cheque in question i.e Rs.1,50,00,000/. This amount should be returned to the complainant along with loss of interest that he has suffered. Calculating at a simple rate of interest @9 per cent per annum, the amount of interest come to approximately Rs. 20,00,000/. It is true that the object of Section 138 N. I. Act is to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instrument. It may also be noted that when this offence was inserted in the statute in 1988, it provided for imprisonment upto one year which was revised to two years following the amendment to the Act in 2002, which makes it quite evident that the legislative intent to provide a strong criminal remedy in order to deter the worryingly high incidence of dishonour of cheques. In the present case, this faith has been breached and warrants imposition of imprisonment and payment of compensation. Accordingly, the convict/accused no.2 Piyush Periwal is hereby sentence to simple imprisonment for a period of nine months and convicts/ accused no.1 i.e company along with accused no.2 Piyush Periwal are sentenced, jointly and severally, to pay a compensation of Rs. 1,75,00,000/ to the complainant within nine months from today, i.e on or before 24.07.2013, in default the convict will undergo Simple Imprisonment for a period of four months Copy of this order on sentence be given dasti to Ld. Counsel for convicts.
(Vinod Kumar Meena) CJ03/ NDD/PHC/New Delhi/25.10.2012