Delhi District Court
Hon'Ble Supreme Court Reported As "K. ... vs . on 23 November, 2012
IN THE COURT OF SH. ARUN GOEL, METROPOLITAN
MAGISTRATE (N.I ACT - 02), DWARKA COURTS, NEW DELHI.
INDIABULLS CREDIT SERVICES LTD COMPLAINANT
VERSUS
MOTI LAL KHANDELWAL ACCUSED
P.S:
U/s 138 Negotiable Instrument Act
1. Serial No. /CC of the case : 343/12
2. Name of the complainant :Indiabulls Credit
Services Ltd.
(Through AR)
Registered office At:
F60, Second Floor,
Malhotra Building,
Cannaught Place,
New Delhi - 110001.
Also AT:
Plot no. 23, Local
Shopping Complex,
Mayur Vihar, Phase 2,
New Delhi - 110091.
3. Date of Institution : 15.05.2007
4. Name of the accused : Moti Lal Khandelwal
S/o Sh. Gendi Lal,
F, 3/253, , Sultanpuri,
Near MCD School
New Delhi - 110041
Also At.
Moti Lal Khandelwal,
S/o Sh. Gendi lal,
CC No. 343/12 Page No. 1
Mani General School,
F, 3/253, Sultanpuri,
Near MCD School,
New Delhi - 110041.
5. Date when judgment was :05.11.2012
reserved
6. Date when judgment was :23.11.2012
pronounced
7. Offence complained of and :138 N.I Act.
proved
8. Plea of accused : Guilty
9. Final Judgment : Acquitted
JUDGMENT: Vide this separate judgment, I shall dispose off the criminal complaint filed Under Section 138 of the Negotiable Instrument against the accused namely : MOTI LAL KHANDELWAL.
BRIEF FACTS OF THE COMPLAINT ARE AS FOLLOWED:
1. The present complaint has been filed by the complainant against the accused stating it is a body incorporated under the Companies Act. It is stated that the accused approached the complainant for grant of personal loan of Rs. 25,000/ and it was sanctioned to the accused through a loan account no. S00031387 . The loan amount was disbursed to the accused through cheque drawn on HDFC Bank Ltd, Cannaught Place, New Delhi.
CC No. 343/12 Page No. 22. It is further stated that the accused at the time of sanctioning of loan promised to pay the regular EMIs. However, he failed to comply with the same and defaulted in making the payment of EMIs. Hence, a loan recall notice was issued to the accused and on receipt of the loan recall notice, the accused approached the complainant to settle the loan account and had issued a cheque bearing no. 471756 dated 15.03.2007 for the sum of Rs. 31482/ drawn on Bank of Baroda for discharge of its liability. However, when the said cheque was presented for encashment, it was dishonored vide cheque return memo dated 19.03.2007 with reasons "Account closed".
3. Thereafter, legal notice dated 04.04.2007 was issued upon the accused intimating about the dishonor of the cheque. However, despite the intimation of legal notice, accused failed to make the payment to the complainant. Thereafter, complaint under Section 138 Negotiable Act (herein after referred as "138 N.I Act") was filed before this court on 15.05.2007.
4. After filing the complaint, complainant lead Pre summoning Evidence and examined his AR as CW1 and thereafter, accused was summoned and accused appeared. After appearance of the accused , notice under Section 251 Cr.P.C was framed on 01.08.2012 in which the accused pleaded not guilty and claimed trial. Thereafter, complainant lead Post summoning evidence, In post summoning evidence, accused examined Anil Sharma as CW1, who tendered his affidavit of evidence as CW1/I , and CC No. 343/12 Page No. 3 relied upon the following documents
a) Certificate of incorporation as Ex. CW1/A.
b) Copy of Power of Attorney as Ex. CW1/B.
c) original cheque dated 15.03.2007 as Ex. CW1/C.
d) original cheque return memo dated 19.03.2007 as Ex. CW1/D.
e) legal notice dated 04.04.2007 as Ex. CW1/E.
f) UPC and postal receipts as CW1/F and CW1G respectively.
5. C.E was closed on 05.10.2012. Thereafter, statement of accused under Section 313 Cr.P.C was recorded on 05.10.2012 and all the incriminating evidence was put to him. Accused had stated that he does not want to lead D.E. Thereafter, the matter was listed for final arguments.
6. Final arguments were advanced by both the parties.
7. It is submitted on behalf of the complainant that it has duly proved the case against the accused. It is stated that the loan was granted to the accused and the same was to be repaid in regular EMIs. EMIs were not paid by the accused regularly so, the loan recall notice was issued to the accused. Thereafter, accused approached the complainant and issued a cheque in question in discharge of its legal liability and when the same was presented for encashment, it got dishonored. Thereafter, legal notice was issued demanding payment of the cheque amount. But the accused even after receipt of legal notice, failed to deposit the amount with the complainant and committed offence under Section 138 of N.I Act.
CC No. 343/12 Page No. 48. Ld. Counsel for the complainant further submitted that all the necessary ingredients of Section 138 NI. Act i.e cheques were issued against the legal liability and the same has been dishonored, Statutory legal notice has been issued and the payment has not been made by the accused within the prescribed period have been complied with and thus the accused is liable to be convicted under Section 138 of the N.I Act.
9. On the other hand, Ld. Counsel for the accused has denied the contention of the complainant. Ld. Counsel submits that the complainant has not been able to prove his case and complaint is liable to be dismissed on the following grounds:
a) There is no document on record to show the legal liability of the accused.
b) No legal notice has been received by the accused from the complainant.
C) The Return Memo Ex. CW1/D does not bear any stamp of the complainant bank.
d) The Power of Attorney filed on record has not been duly proved by the complainant.
10.Coming to the first contention of the accused that there is no document on record to show the legal liability of the accused.
11. Before proceedings further, it would be useful to have to have the Section 138 of N.I Act. It states as follows: "Dishonour of cheque for insufficiency, etc, of funds in the account - Where any cheque drawn by a person on an CC No. 343/12 Page No. 5 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 be extended to two years) or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this Section shall apply both 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 oe 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, of the receipt of information by him from the bank regarding the return of the cheque as unpaid ; and (c ) the drawer of such cheque fails to make the payment CC No. 343/12 Page No. 6 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."
12.The section 118 of the N.I Act further provides as follows: "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;"
13.The Section 139 of the N.I Act further provides as follows: "Presumption in favour of holder - It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability"
14.The effect of Section 118 and 139 of the N.I Act is that it has to be presumed that the cheque was issued with respect to a legal liability. In the judgment passed by the Hon'ble Supreme Court reported as "K. Bhaskaran Vs. Sankaran Vaidhyan Balan" (AIR 1999 SC 3762) while dealing with Section 118 and 139 of the N.I Act, the Hon'ble Supreme Court observed as follows: "It was observed that as the signature in the cheque is admitted to be that of the accuse , the presumption CC No. 343/12 Page No. 7 envisaged in Sec. 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharges of any debt or liability. The burden was on the accused to rebut the aforesaid presumption"
15.In the present case, the accused has not denied his signatures on the cheque. In that case, as per the provision of Section 118 read with 139 of the N.I Act, the court has to presume that the same was issued with respect to the legal liability. It is for the accused to rebut the presumption but the accused stated that the cheque in question was not issued against any legal liability. The accused has not disputed that he has taken the loan from the complainant of Rs. 25,000/ and in view of the admission of the accused as well as the presumption raised as per Section 139 of N.I Act, it was for the accused to prove that the cheque was not issued against the legal liability. The accused has only given a mere suggestion to the AR of the complainant in the cross examination stating that the cheque was not issued towards legal liability. Besides this, there is no any other document on record or any other witness to show there was no legal liability of the accused on the date of issuance of cheque. Hence this contention of the accused is not tenable.
16.Now, coming to the second contention of the accused that he has not received the legal notice issued by the complainant. The legal notice has been issued to the CC No. 343/12 Page No. 8 accused at his address i.e F, 3/253, , Sultanpuri, Near MCD School, New Delhi - 110041. The accused has been summoned on the said address and has mentioned the same address in his bail bond. The complainant has filed on record the registered envelopes, which have been addressed to the same address and the same has been received back unclaimed. Section 27 of General Clauses Act states that it has to be presumed that in case the postal envelopes is addressed to the correct address that it has been delivered. In this case, the address mentioned at the postal receipt is the correct address of the accused and in view of the presumption under Section 27 General Clauses Act, it has to be presumed that the accused was aware about the contents of the registered Postal envelope sent to him. Hence this contention of the accused is not tenable.
17.Now, coming to the third contention of the accused that bank return slip filed on record is not admissible. Section 146 of N.I Act states as follows: "Bank's Slip prima facie evidence of certain facts - The court shall, in respect of every proceeding under this chapter , on production of bank's slip or memo having thereon the official mark denoting that the cheque has been dishonored, presume the fact of dishonor of such cheque, unless and until such fact is disproved".
18.Perusal of the Section reveals that in case the bank slip is filed in the court, having the official mark thereupon, it has to be presumed that the cheque has been dishonored. The postal receipt Ex. CW1/D bears the signatures of the bank CC No. 343/12 Page No. 9 official and in view of the presumption under Section 146 of N.I Act it has to be presumed to be correct. This contention of the accused is not tenable.
19.Coming to the fourth contention of the accused. The accused has stated that the complainant has failed to prove the power of attorney authorizing the AR to institute and prosecute the complainant. It would be useful to mention that initially the compliant was filed by Naresh Kumar Tomar and during the proceeding of the case he was substituted by Sh Anil sharma. Before proceeding further, it will be relevant to consider the law laid down by the higher courts in this regard. In Smt. Kamla Rani And Ors. vs Texmaco Ltd., AIR 2007 Delhi 147, Hon'ble High court of Delhi held that:
"Authentication by a notary public is a solemn act performed by the notary public whose duty is to ensure that the executant is the person before him and is identified to his satisfaction. Once a document is authenticated by a notary public, it will be presumed that the document was duly executed and was in order. The use of the expression 'shall presume' shows that the section is mandatory and the court has to presume that all necessary requirements for the proper execution of the power of attorney were duly fulfilled before the notary public. As observed in AIR 1984 363 E.C. & E. Co. Ltd. v. CC. No. 864/12 Page no. 3/9 J.E. Works, if 2 conditions are satisfied, firstly the power of attorney being executed before a notary public and secondly it being CC No. 343/12 Page No. 10 authenticated by a notary public, a presumption would arise under Section 85 about the executant of the power of attorney."
20.In Birla Dlw Ltd. vs Prem Engineering Works, 77 (1999) DLT 171 Hon'ble High court of Delhi held that: "We have perused the Power of Attorney on record as well as the evidence recorded in support thereof. The original Power of Attorney is stated to be executed by Shri M.D. Poddar in the presence of one Shri G.K. Sureka. It is based on a Resolution of the Board of Directors dated 14.7.1981. Appellant has neither produced on record the Resolution of the Board of Directors which authorised Shri M.D. Poddar to execute the Power of Attorney, nor Shri M.D. Poddar or Shri G.K. Sureka appeared as witnesses to prove the execution of the said Power of Attorney. Mr. Saraogi, on behalf of the plaintiff, in his statement, did not depose anything about either being familiar with the signatures of Shri Poddar or the said Power of Attorney having been executed by Shri Poddar in his presence. The Power of Attorney was routinely tendered in evidence and exhibited. The question that comes up for consideration is whether a presumption of its due execution and validity can be raised under Section 85 of the Indian Evidence Act? A Division Bench of this Court had occasion to consider this aspect in Electric Construction & Equipment Co. Ltd. Vs. Jagjit Works (supra). The Division Bench observed as CC No. 343/12 Page No. 11 under :
"It is useful to note that Section 85 raises a presumption about the execution of a POA provided two conditions are satisfied. Firstly, it must be executed before a Notary Public and secondly. It must be authenticated by him . In this case, there is no authentication at all. There is no statement of facts by the Notary Public regarding the manner of execution or the persons executing the document. If reference is made to the judgments cited before us, the contrast is striking. In the case of the City Bank, the authentication made by the Notary Public in New York covers nearly two printed pages of the Report and quotes extensively the circumstances in which the General POA was executed. Similarly, in the case of the National & Grindlays Bank Ltd., the authentication shows that the seal of the Bank was impressed on the POA in the presence of the Notary and the same was the genuine CC. No. 864/12 Page no. 4/9 seal of the Bank. Thus, it was the authentication that proved both the execution as well as the due authentication of POA and, therefore, satisfied the test laid down in Sec. 85 of the Evidence Act."
In Syndicate Bank Vs. M/s. S.A. Trading Corpn. & Ors. (supra), a Division Bench of this Court while dealing with the question of proof of Power of Attorney, where presumption under Section 85 of the Evidence Act could not be raised, observed as under :
"In case the person who has conferred the Power of CC No. 343/12 Page No. 12 Attorney has not got it executed, so as to enable him to raise the presumption which may be raised in terms of Section 85 of the Evidence Act, then he is left with no option, but to prove the same in accordance with law. This is done by proving the resolution of the Board of Directors of the company, which gives its officers power to grant Power of Attorney to persons the company considers worthy of it, and also prove the factual execution of the Power of Attorney by the empowered officer or officers. This proof has to be tendered in Court by proving the passing of the resolution by the company in accordance with sections 193 and 194 of the Companies Act, 1956."
In Baker Oil Tools (India) Pvt. Ltd. vs Baker Hughes Ltd. & Anr, RFA No 583/2004, decided on 03.06.2011, Hon'ble High Court of Delhi held that:
"It is well settled that under section 291 of the Companies Act except where express provision is made that the powers of a company in respect of a particular matter are to be exercised by the company general meeting, in all other cases the board of directors are entitled to exercise all its powers. Individual directors have such powers only as are vested in them by the memorandum and articles. It is true that ordinarily the court will not unsuit a person on account of technicalities. However, the question of authority to institute a suit on behalf of a company is not CC No. 343/12 Page No. 13 a technical matter. It has farreaching effects. It often affects the policy and finances of the company. Thus , unless a power to institute a suit is specifically conferred on a particular director, he has no authority to institute a suit on behalf of the company. Needless to say such a power can be conferred by the board of directors only by passing a resolution in that regard..... CC. No. 864/12 Page no. 5/9 . The plaintiff has not placed on record any resolution passed by the company authorising Shri G. Jhajharia to institute the suit. Shri G. Jhajharia did not come forward to make a statement that he was in a position to depose to the facts of the case. In the plaint signed by him, he claims to be a principal officer and director, but there is no evidence on record to indicate that he had the authority to institute the suit. The memorandum and articles of association of the plaintiff company are also not placed on record. Even after the suit was instituted by Shri G. Jhajharia, no resolution was passed by the company ratifying this action. No such decision of the board of directors is placed on record in the present case. The plaintiff has examined Shri Ashok Kumar Jhajharia. He has placed on record, exhibit PW2/1, which is the resolution of the board of directors reappointing Shri G. Jhajharia as the director but this resolution does not empower Shri G. Jhajharia as a director to institute the present suit. Shri Ashok Kumar Jhajharia has stated that he was handling CC No. 343/12 Page No. 14 the daytoday management of the plaintiff company including the insurance part of it. He, however, does not state that Mr. G. Jhajharia was handling the daytoday management or was in charge of the insurance claim."
From the law laid down by the Hon'ble High Court of Delhi it is clear that in order to draw a presumption U/s 85 Evidence Act, the Power of Attorney is required to be authenticated by the Notary Public. The purpose of authentication is to ensure that the Notary Public satisfies himself regarding the identity of the executor as well as to the fact that the said person is executant of the Power of Attorney.
21.From the law laid down by the Hon'ble High Court of Delhi it is clear that in order to draw a presumption U/s 85 Evidence Act, the Power of Attorney is required to be authenticated by the Notary Public. The purpose of authentication is to ensure that the Notary Public satisfies himself regarding the identity of the executor as well as to the fact that the said person is executant of the Power of Attorney. In present case Power of Attorney Ex CW1/B1 in favour of Sh. Sh Anil sharma as well as previous AR Sh Naresh Kumar Tomar is not authenticated by the Notary Public as per law. There is no statement of facts by Notary Public regarding the manner of execution or the persons executing the document. In these circumstances, presumption U/s 85 Evidence Act do not attract and the onus was on the CC No. 343/12 Page No. 15 complainant to prove the due execution of the Power of Attorney. Thus in absence of the presumption under section 85 of the evidence act , the witness was required to prove the Power of Attorney. But the witness CW1 has not in his chief as well as the cross examination has identified the signature of the person executing power attorney in his favour. The complainant has also not filed on record the minutes of board resolution despite specific question being put to him in the cross examination. The complainant has also not examined the person who had executed the power of attorney in favour of the AR. In absence of all these, it can be said that the complainant has failed to power the attorney in favour of the AR thus failing to prove the authority to institute and prosecute the present case .
22.Hence, as the complainant has failed to show the authority of Sh. Naresh Kumar Tomar and Sh. Anil Sharma to institute and prosecute the present complaint as per law, therefore the present complaint is not maintainable as the objections as to validity to file and prosecute the complaint goes to the root of the matter. The complainant has failed to bring on record any board resolution despite categorical cross examination of the accused and also failed to ratify the acts of Sh. Naresh Kumar Tomar and Sh. Anil Sharma. Accordingly the complaint is not maintainable in the eyes of law and is accordingly dismissed. The CC No. 343/12 Page No. 16 accused is acquitted.
23.Bail bond stands cancelled and Surety if any, stands discharged. Endorsement on documents of surety, if any be cancelled. Original documents of surety, if any be returned against proper identification and acknowledgment.
File be consigned to record room as per law.
ANNOUNCED IN THE OPEN
COURT ON 23.11.2012
All the pages from 1 to 17 are (ARUN GOEL)
signed by me. METROPOLITAN MAGISTRATE
NI. ACT 02
DWARKA COURTS,NEW DELHI
CC No. 343/12 Page No. 17