Delhi District Court
Cc No.24420-16 M/S Sharp Business ... vs . Ilu Electronics Pvt. Ltd. & Ors. Page 1 ... on 26 August, 2019
IN THE COURT OF MS JYOTI MAHESHWARI: MM (NI ACT) - 01
PATIALA HOUSE COURT: NEW DELHI DISTRICT : NEW DELHI
In the matter of:-
CC No: 24420/16
M/S SHARP BUSINESS SYSTEMS INDIA LTD.
having its registered office at
214-221, Ansal Tower,
38, Nehru Place, New Delhi-110019
through Its Authorized Representative
Mr. Arjun Kumar .....Complainant
Versus
1.ILU ELECTRONICS PVT. LTD.
Through its director B/B-2, Nawlakha Apartments, Bharat Mata Path, J.L. Bajaj Marg, Near Civil Lines Crossing C-Scheme, Jaipur
2. SH. S.K. SHARMA Director, ILU Electronics Pvt. Ltd.
B/B-2, Nawlakha Apartments, Bharat Mata Path, J.L. Bajaj Marg, Near Civil Lines Crossing C-Scheme, Jaipur
3. SMT. RENU SHARMA Director, ILU Electronics Pvt. Ltd.
B/B-2, Nawlakha Apartments, Bharat Mata Path, J.L. Bajaj Marg, Near Civil Lines Crossing C-Scheme, Jaipur
4. SH. RAMESHWAR PRASAD SHARMA (expired) Director, ILU Electronics Pvt. Ltd.
B/B-2, Nawlakha Apartments, Bharat Mata Path, J.L. Bajaj Marg, Near Civil Lines Crossing C-Scheme, Jaipur ........ Accused persons CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 1 of 22 Date of Institution of Complaint : 24.06.2011 Offence Complained of : u/s 138 N.I. Act.
Plea of Accused : Not Guilty.
Order reserved : 05.08.2019
Decision : A-1 : Convicted
A-2 : Convicted
A-3 : Acquitted
A-4 : Abated
Date of Decision : 26.08.2019
- : JUDGMENT : -
1. Vide this Judgment, this Court shall decide and dispose of the criminal complaint bearing CC No: 24420/16 (OLD CC No: 3258/1) titled as M/s Sharp Business Systems India Ltd. V. ILU Electronics Pvt. Ltd. & Ors. instituted under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the "NI Act") for the dishonour of a cheque of Rs. 1,36,816/- (Rupees One Lakh Thirty Six Thousand Eight Hundred and Sixteen Only) (hereinafter, "the impugned cheque"). The present complaint was instituted far back in 2011 by M/s Sharp Business Systems India Ltd. (hereinafter referred to as the "Complainant") against ILU Electronics Pvt. Ltd., S.K. Sharma, Renu Sharma and Rameshwar Prasad Sharma, being directors of ILU Electronics Pvt. Ltd. (her einafter referred to as "accused No.1", "accused No.2", "accused No.3" and "accused No.4", respectively).
2. It is to be noted that accused No. 4, Sh. Rameshwar Prasad Sharma expired on 07.01.2011 and thus, proceedings against him have already been abated. Therefore, the present case is against accused No.1 to 3 only and they shall be collectively referred to as "the accused".
CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 2 of 22Case of the complainant:
3. The complainant is a fully owned subsidiary company of Sharp Corporation, Japan. The complainant deals in sales, service and marketing of office automation products like digital printer, copier, fax, projectors, multi functional devices, etc. Being engaged in this business, the complainant supplied certain products to the accused. Since there were continuous business transactions between the two parties, a running account was maintained and the Statement of account Ex.CW1/3 maintained by the complainant qua the accused from 01.01.2010 to 12.05.2011 has been produced. The VAT invoice dated 30.11.2010 so raised by the complainant on the accused has also been produced as Ex.CW1/2.
4. As per the books of account maintained by the complainant (Ex.CW1/3), a sum of Rs.1,38,750/- was due and outstanding against the accused persons as on 30.04.2011. In order to liquidate the part outstanding, the accused issued a cheque bearing No.000191 dated 31.10.2010 for a sum of Rs.1,36,816/- drawn on Kotak Mahindra Bank, Krishna Towers, 57, Sarder Patel Marg, Jaipur, drawn in favour of the complainant with the undertaking that the same shall be cleared on its due date. However, the cheque was returned unpaid on presentation with the remarks "insufficient funds in account" vide return memo dated 29.04.2011. Thereafter, the complainant sent a legal notice dated 20.05.2011 (dispatched on 21.05.2011) to all the accused, intimating the accused about the dishonour of cheque and calling them to make payment of the dishonoured cheque within 15 days from the date of receipt of notice. Further, the accused No.1 to 3 also replied to the legal notice on 06.06.2011.
5. It is averred on behalf of the complainant that despite due service of legal notice and expiry of stipulated period, the accused failed to make CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 3 of 22 the payment of the dishonoured cheque and as such, accused no.1 to 4 have committed an offence u/s 138 of the Negotiable Instrument Act. Hence, the present complaint was filed by the complainant, through its AR Sh. Arjun Kumar against accused no.1 company, being the drawer of the impugned cheque and against accused No. 2 to 4, being the directors of accused no.1.
Course of trial:
6. At the stage of pre-summoning evidence, in support of the complaint, the AR of the complainant led his evidence by way of affidavit which is exhibited as Ex.CW-1/B and the complaint was exhibited as Ex.CW-1/A. The complainant also relied upon the following documents:
Sr. Exhibit/ Mark Nature of document No. 1 Ex.CW-1/1(OSR) Power of Attorney in favour of Sh. Arjun Kumar
2. Ex.CW1/2 VAT invoice dated 30.11.2010 3 Ex.CW-1/3 Statement of account dated 12.05.2011 4 Ex.CW-1/4 Original cheque dated 31.10.2010 5 Ex.CW-1/5 Return memo dated 29.04.2011 Legal Notice dated 20.05.2011 issued by the 6 Ex.CW-1/6 complainant Ex.CW-1/7 to 7 Postal receipts Ex.CW-1/10 Ex.CW-1/11 to 8 Original AD Cards.
Ex.CW-1/14
7. On the basis of the aforesaid pre-summoning evidence, all the accused were summoned. However, the presence of the accused could only be secured after issuance of NBWs against the accused. It is also pertinent to note that during execution of NBWs, HC Surender Kumar who had gone to Jaipur to execute the NBWs, was arrested while accepting a bribe of Rs.10,000/- from accused No.2 S.K. Sharma.
CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 4 of 228. Thereafter, on appearance of the accused, notice of accusation dated 18.03.2013 was served upon accused No.1 (through accused No.2) and accused No.2 under Section 251 Cr.P.C. to which the accused pleaded not guilty and claimed trial. It was contended on behalf of accused No.1 and 2 that the impugned cheque is a security cheque and it was the complainant which had to pay the outstanding amount to the accused. The notice of accusation against accused No.3 was served upon her on 01.06.2013 under Section 251 Cr.P.C., to which she pleaded not guilty and claimed trial. She also contended that she has no relation whatsoever with accused No.1 and was not related to issuance of the impugned cheque in any manner.
9. The matter was then fixed for cross-examination of the AR the complainant, Sh. Arjun Kumar, as CW-1. CW-1 adopted his pre- summoning evidence in the post-summoning evidence and thereafter, cross-examination of the AR was conducted, which was initiated on 29.04.2014. However, the cross-examination was deferred on the ground of production of certain documents by the complainant. AR of the complainant produced the Channel Partnership Agreement dated 07.08.2010 entered into between the parties, which was exhibited as Ex.CW1/agreement/07.08.2010.
10. During the cross-examination of CW-1, the complainant also moved an application under Section 311 CrPC for bringing on record certain documents which was allowed. The reply to the legal notice dated 06.06.2011 was exhibited as Ex.CW1/X-15 and signatory details of accused No.1 as available on MCA21 portal were taken on record, consequent to allowing the above application.
11. Post the conclusion of complainant evidence, statement of accused under Section 313 CrPC was recorded on 10.08.2018. Statement of accused no.1 CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 5 of 22 was also recorded through accused no.2 . The accused admitted to being in business transaction with the complainant. Accused No.2 stated that he had signed the impugned cheque but he was director of 'ILU El- tronics' and not related to accused No.1. Accused No.2 further stated that there were running accounts between the complainant and the accused, but the same were not reconciled by the complainant despite repeated requests. It was further stated that the impugned cheque was a security cheque issued by the accused and no liability towards the complainant was made out.
12. The accused expressed willingness for leading defence evidence and the application under Section 315 CrPC was allowed. However, the accused sought permission to withdraw the application and thus, based on the statement of Ld. Counsel for accused, the defence evidence was closed. The matter was fixed for final arguments.
13. Arguments were heard at length. Record has been perused and the judgments furnished on behalf of both sides were also taken on record and considered.
Arguments advanced
14. It has been argued on behalf of the complainant that all the essential ingredients of an offence under Section 138 have been fulfilled in the instant case. The presumption under Section 139 read with Section 118 of the NI Act , therefore arose in favour of the complainant and the accused has failed to rebut the same. The complainant has also argued that the accused has admitted its liability in the reply dated 06.06.2011 to the legal notice. The complainant has further averred that the accused, during course of trial, has confirmed the authenticity of the statements of account maintained by the complainant qua the accused. It is the contention of the complainant that even security cheques issued for CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 6 of 22 legally recoverable liability/debt are covered under the ambit of Section 138 of the NI Act and hence, the liability of the accused is attracted in the present case.
15. Per contra, the accused has argued the following :
(a) The present complaint is not maintainable as the present AR of the complainant, Sh. Arjun Kumar is not duly authorized.
(b) The complaint is not maintainable against the present accused, as the drawer of the impugned cheque is ILU El-Tronics Pvt. Ltd. and not accused no.1, which is ILU Electronics Pvt. Ltd. Moreover, accused no. 2 to 4 are not the directors of accused No.1 and therefore, no liability is made out against the accused arraigned in the present case.
(c) The impugned cheque was a security cheque which was misused by the complainant.
(d) Lastly, the amount mentioned in the impugned cheque i.e. Rs.
1,36,816 was not the outstanding liability on the date of issuance of cheque i.e. 31.10.2010. This is because as per the statement of account produced by the complainant (Ex.CW1/3), the liability of the accused was only Rs. 1,00,517 on the date of the cheque.
Appreciation of evidence
16. Before proceeding with the appreciation of evidence, it is first pertinent to discuss the objections raised during the course of evidence. The first set of objections arose during the cross-examination of CW-1 conducted on 12.09.2017. The questions pertained to whether the company which received and replied to the legal notice was the same company, which has been arraigned as an accused in the present case. It was objected to by the Ld. Counsel for the complainant on the ground that the same is a CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 7 of 22 matter of record. This Court finds merit in the submissions of the complainant and the objections to questions in cross-examination dated 12.09.2017 are allowed.
17. An objection was also raised in the cross-examination of the complainant dated 25.07.2018, wherein the Ld. Counsel for complainant had objected to letter dated 30.03.2012 being identified as Mark X1, on the ground that same is a photocopy. However, the same is not sustainable. The position of law on this point has been amply clarified by the Hon'ble Delhi High Court in Sudir Engineering Company vs Nitco Roadways Ltd. 1995 (34) DRJ 86 that when a document is produced in evidence and is identified as a mark or a exhibit, the same is only for identifying the documents and is not its proof, as proof of the contents of the documents must be proved and established by independent evidence. Accordingly, identifying the photocopied letter as Mark X1 which has been objected to by the Ld. Counsel for complainant, does not dispense with its proof. Therefore, the objection raised is devoid of legal merit and cannot be sustained.
18. In order to ascertain whether the accused has committed the offence under Section 138 of the NI Act, it is deemed fit to examine separately as to whether all the indispensable ingredients constituting the offence have been proved by the complainant. The offence under Section 138 of the NI Act has the following ingredients:
a) Existence of legally enforceable debt or liability and issuance of cheque in discharge of said debt or liability;
b) Dishonor of cheque in question which must have been drawn on an account maintained by the accused;
c) Service of demand notice seeking payment of cheque amount within fifteen days from the date of service;CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 8 of 22
d) Non-payment of cheque amount within fifteen days from the date of service of notice; and
e) Filing of complaint within one month from the date on which cause of action arises.
19. It is undisputed that the complainant supplied certain products to the accused in the course of business transaction and a running account was maintained by the complainant in this regard. The same has been produced as Ex.CW1/3. In the case at hand, issuance of the impugned cheque (Ex. CW1/4) by the accused, its presentation in the bank for encashment and dishonor of the impugned cheque due to the reason "insufficient funds in account" is not disputed and is a matter of record proved by the return memos dated 29.04.2011 which is Ex. CW1/5 as well the entry dated 29.04.2011 in the statement of account Ex. CW1/3 wherein the impugned cheque amount is credited and debited from the account, after dishonour. It, thus is a matter of record and it has been proved that the cheque was presented within its validity period (which was six months, in 2011) and dishonoured by the banker of the accused. It is also not disputed that the impugned cheque was issued by the accused and was drawn on the bank account of the accused as accused No.2 has admitted his signature on the impugned cheque, both at the time of reply to legal notice as well as in the Notice put to him under Section 251 CrPC. As regards the delivery of legal notice, the legal notice was sent by registered A.D. to all the accused which was received back duly delivered vide Ex.CW1/11 to Ex.CW1/14. Moreover, a reply to the legal notice dated 06.06.2011 was also sent by the accused and therefore, service of legal notice cannot be denied.
20. Therefore, the presentation of cheque, its dishonorment and service of legal demand notice is not under question. In fact, accused No.2 has not denied his signature on the cheque. Thus, the complainant has CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 9 of 22 successfully shown enough evidence to raise presumption under Section 139 NI Act read with Section 118 of the NI Act.
21. Now the moot question which remains to be determined is whether the accused has successfully rebutted the presumption so raised by the complainant. Section 139 NI Act read with Section 118, NI Act creates a rebuttable presumption in favour of the complainant. According to Section 118 NI Act, until the contrary is proved, it shall be presumed inter alia that every negotiable instrument was made, drawn, accepted or endorsed for consideration. It is also presumed that, consideration is present in every negotiable instrument until the contrary is proved.
22. There is no gainsaying that once the issuance of cheque is admitted by the accused/drawer, the presumption under Section 139 of the NI Act comes into play. As per the said Section 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 in, Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16, Rangappa vs. Sri Mohan (2010) 11 SCC 441 and more recently, in the case of Rohitbhai Jivanlal Patel v. State of Gujarat & Anr (Crl. Appeal No. 508/19 dated 15.03.2019). 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 under Section 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 CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 10 of 22 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.
23. It is also trite that the accused cannot, in all circumstances be expected to disprove the existence of legally recoverable debt or liability by direct evidence. In fact, 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 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. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist.
24. Keeping in mind the basic principles discussed above, this Court shall now proceed to examine if the accused has been able to successfully rebut the presumption under Section 139, NI Act read with Section 118 NI Act.
25. Coming to the first contention raised by the accused, the accused has submitted that the present complaint is not maintainable as the AR of the complainant is not duly authorized. The accused has made two-fold submission in this regard: (a) first, the AR of the complainant has represented himself to be the Manager, Finance and Company Secretary of the complainant company in his evidence by way of affidavit, despite him being employed as Zonal Account Executive in the complainant company. The accused has further submitted that (b) no minutes of the CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 11 of 22 Board Resolution were produced by which Sh. Sunil Kumar Sinha was authorized to delegate power to Sh. Alok Seth and/or Sh. Arjun Kumar to pursue the present complaint has been placed on record. Both these contentions on behalf of the accused are answered in the negative.
26. Firstly, it came to light during the cross-examination of CW-1 Arjun Kumar on 25.07.2018 that the designation of CW-1 was incorrectly mentioned in his evidence by way of affidavit dated 24.06.2011. However, CW-1 has cogently explained as to how his post was incorrectly mentioned. CW-1 has stated that at the time of institution, the present complaint was to be instituted by Sh. Alok Seth, who is the Company Secretary and Manager Finance. However, at the time of filing of the present complaint, Mr. Alok Seth fell ill and instead, the complaint was filed through CW-1. Therefore, CW-1 has deposed that the error in mentioning his designation on the evidence affidavit was inadvertent and occurred due to the concerned person Mr. Alok Seth falling ill. This Court is inclined to accept the explanation rendered by CW-1, more so, in light of the fact that Ex. CW-1/1, Power of Attorney clearly confers power both on CW-1 as well as Sh. Alok Seth to institute and pursue the present complaint. Thus, a valid Power of Attorney exists in favour of CW-1 and merely because of an inadvertent error pertaining to the designation of CW-1, his due authority to represent the complainant in the present case and proceed with it does not disappear or get extinguished.
27. The second contention of the accused that no minutes book were produced also does not merit consideration. This question was first raised during the cross-examination of CW-1 conducted on 24.09.2014, but has been sufficiently responded to. This is so because, a certified copy of the minutes of the board resolution dated 11.04.2000 by which Sh. Sunil Kumar Sinha was authorized to appoint Sh. Alok Seth and Sh.
CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 12 of 22Arjun Kumar (CW-1) was duly produced by the complainant on 13.12.2015. Moreover, the Hon'ble Supreme Court, in its decision in A C Narayanan & ors v. State of Maharashtra AIR 2014 SC 630 has categorically held that filing of complaint petition under Section 138 of the NI Act through power of attorney is perfectly legal and competent. On the basis of the foregoing discussion, this Court holds that Sh. Arjun Kumar (CW-1) was duly authorized to institute and pursue the present complaint on behalf of the complainant.
28. Now coming to the second contention of the accused, it is hinged on the ground that ILU Electronics and ILU El-Tronics are different entities. It is submitted that the accused, who have entered appearance before the Court, are representing ILU El-Tronics, being its directors but have nothing to do with the accused arraigned in the present case, as the accused is not ILU El-Tronics but ILU Electronics. On this ground, the accused have sought rejection of the case of the complainant. Shakespeare's famous quote, "What's in a name? that which we call a rose by any other name would smell as sweet " assumes relevance here as, according to the accused, the omission of two letters ('ec') and inclusion of a hyphen (-) in the name of accused has made the present case, one of arraigning a similar seeming and sounding but different and wrong accused. It is submitted that as per Ex.CW-1/4, the drawer of the present cheque is ILU El-Tronics Pvt. Ltd., whereas the accused in the present case is ILU Electronics Pvt. Ltd. This defence, although rather sui-generis is still not worthy of being entertained.
29. It needs to be seen that in their reply to the legal notice dated 06.06.2011, the accused have never taken the defence that these are different entities and the present accused have been wrongly summoned. Furthermore, in the Notice served upon the accused under Section 251 CrPC, the accused did not take this ground even then. This defence is taken up belatedly by CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 13 of 22 the accused and crops up for the first time in the cross-examination of the complainant dated 08.03.2016. It has been contended on behalf of the complainant that the question of identity of the accused cannot be raised at this belated stage. Moreover, the testimony of CW-1, in this regard, has withstood the test of cross-examination. CW-1 in his testimony has clearly deposed that this difference in the name is only a spelling and typographical error and in essence, both ILU El-Tronics and ILU Electronics are the same companies. Additionally, CW-1 has also deposed that if they weren't the same companies, then the accused have not been able to explain as to why, how and under what circumstances, ILU El-Tronics replied to the legal notice dated 20.05.2011 sent to them. The accused has not been able to furnish any cogent or even a probable explanation in this regard.
30. This Court is inclined to accept the contention of the complainant that the identity of the accused cannot be disputed at this belated stage of the proceedings. This is more so, when the accused have accepted legal notice sent to them and replied to the legal notice without even hinting at the possibility of these entities being different. On the contrary, the accused have accepted that there are certain outstanding payments to the tune of Rs. 19,500 to be made to the complainant. The defence of the accused that they have been wrongly arraigned is only an afterthought and cannot be entertained. Therefore, this Court holds that both ILU El- tronics Pvt. Ltd. and ILU Electronics is one and the same entity only and the difference is merely a spelling/typographical error which is not relevant to the present proceedings.
31. The Court will now deal with the defence of security cheque resorted to by the accused. The accused, in their reply dated 06.06.2011 as well as the Notice served upon accused No.1 (through accused No.2) and accused No.2 under Section 251, CrPC, have taken the plea that the impugned CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 14 of 22 cheque was a security cheque, which was misused by the complainant and that the accused does not have any liability to the complainant qua the impugned cheque. The accused have reiterated the same in their Statements recorded under Section 313, CrPC.
32. The Hon'ble Delhi High Court in Suresh Chandra Goyal v. Amit Singhal (CRL.L.P. 706/2014, dated 14.05.2015) has stipulated that there is no magic in the word "security cheque", such that, the moment the accused claims that the dishonoured cheque (in respect whereof a complaint under Section 138 of the Act is preferred) was given as a "security cheque", the Magistrate would acquit the accused. It is to be noted that whenever a cheque is issued, it is presumed to be issued in discharge of liability on part of the accused, though the liability may be an existing liability or a liability which would crystallize in future. If that were not so, there would be no purpose of obtaining a security cheque from the debtor. A security cheque is issued by the debtor so that the same may be presented for payment as and when the apprehended liability arises. Otherwise, it would not be a security cheque. Therefore, if a cheque is issued to secure any future liability arising towards the payee of the cheque for the purpose of which the cheque was issued by the drawer, the drawer cannot raise the defence that the cheque was issued for security purposes.
33. Further, the Hon'ble Delhi High Court in Credential Leasing & Credits Ltd. Vs. Shruti Investments 223 (2015) DLT 343 has held the following in context of security cheques:
" 27. Thus, the "debt or other liability" has to be a legally enforceable debt or other liability. Neither the main provision of Section 138, nor the explanation suggest that the debt or other liability should be in existence on the date of issuance of the cheque, i.e. on the date of its delivery to the drawee or someone on his behalf or, on CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 15 of 22 the date that the cheque bears. The only reference to time in the Section, is the point of time when the cheque is returned unpaid by the drawers bank.
28. In my view, therefore, the scope of Section 138 NI Act would cover cases where the ascertained and crystallised debt or other liability exists on the date that the cheque is presented, and not only to case where the debt or other liability exists on the date on which it was delivered to the seller as a post-dated cheque, or as a current cheque with credit period. (emphasis supplied). The liability, though, should be in relation to the transaction in respect whereof the cheque is given, and cannot relate to some other independent liability. If, on the date that the cheque is presented, the ascertained and crystallised debt or other liability relatable to the dishonoured cheque exists, the dishonor of the cheque would invite action under Section 138 NI Act."
34. Thus, a post-dated cheque issued for security purpose is a well- recognized mode of payment and covered within the ambit of Section 138 of the NI Act. The complainant, through its statement of account dated 12.05.2011 (Ex.CW1/3) has shown that on the date of presentment of cheque i.e. 29.04.2011, the accused had to make an outstanding payment of Rs.1,38,750. The burden, then, was on the accused to prove that there was no outstanding liability on the date, the cheque was presented. However, the accused have failed to discharge the burden again. The accused have merely denied the case of the complainant and stated in the Notice under Section 251, CrPC as well as in the Section 313, CrPC statement, that the complainant owes some amount to the accused. However, the same is merely a bald averment, not supported by any evidence in this regard. Moreover, the accused have failed to produce any books of account as alleged to be maintained by them qua the complainant. Therefore, the contention of the accused that the impugned cheque was a security cheque and the accused did not have any liability towards the complainant is also hereby rejected.
CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 16 of 2235. The last defence raised by the accused is on the ground that the amount mentioned in the impugned cheque i.e. Rs. 1,36,816 was not the outstanding liability on the date of issuance of cheque i.e. 31.10.2010. The accused has contended that on the date of issuance of cheque i.e. 31.10.2010, the accused only had an outstanding of Rs. 1,00,517 as per Ex.CW1/3 itself. Therefore, the outstanding of Rs. 1,36,816 is not made out. Moreover, in the reply to the legal notice dated 06.06.2011, the accused has stated that as per the books of accounts maintained by the accused, the accused only had an outstanding of Rs. 19,500 towards the complainant. The amount of liability, as alleged by the accused, has also differed at various stages of the case. Moreover, even these contentions of the accused deserve to be negated. This is so because, the accused has admitted that the impugned cheque was a post-dated cheque issued for security purpose. In Credential Leasing & Credits Ltd. (supra) as well as Suresh Chandra Goyal (supra) judgments referred above, it has been categorically held that in case of security cheque, what needs to be seen is the liability existing on the date of presentment of cheque and not the date when the impugned cheque was issued. In the present case, on the date of presentment of cheque, the liability mentioned in the cheque amount was clearly made out as per Ex. CW1/3. Further, the accused has failed to bring forth any books of account maintained by him/it to lend credence to its assertion.
36. Moreover, during the cross-examination of CW-1, the accused has produced a letter dated 12.07.2016 (Ex.CW1/D1) issued by the complainant, wherein the complainant has stated that the accused has an outstanding of Rs. 60,266 only. CW-1 in his cross-examination dated 12.09.2017 has admitted the contents of Ex.CW1/D1. The accused has relied on the above document to show that the amount of liability mentioned in the impugned cheque does not get attracted. However, the same still does not aid the defence so raised by the accused. What needs CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 17 of 22 to be seen in context of a complaint under Section 138, NI Act is whether, on the date of presentment of cheque, the accused had any liability towards the complainant. A letter which is issued more than 5 years after the present complaint was instituted by the complainant, does not help the accused' contention that on the date, when the cheque was presented in the bank, the liability mentioned in the impugned cheque was not made out. It was incumbent on the accused to present a contemporaneous document or any document to show that on 29.04.2011, the liability of Rs. 1,36,816 was not attracted. The accused has failed to do so, through the cross-examination of CW-1 and thus, failed to dislodge the presumption raised in favour of the complainant.
37. The accused in the cross-examination of CW-1 has also attempted to bring to light that Ex.CW1/3 i.e. the statement of account does not bear the signature of any person. However, it is not the requirement of law that the statement of account which is a print out obtained from the computer system must necessarily be signed. Furthermore, the accused has also tried to highlight that the certificate under Section 65-B of the Evidence Act produced in support of Ex.CW 1/3 does not bear any date or mention any place where it was prepared. The mentioning of date and place on the certificate so issued is desirable but absence of the same does not render it invalid. The Court is well within its powers to take the Certificate into account and rely upon the electronic record produced along with the certificate under Section 65-B of the Evidence Act, 1872. Moreover, the accused have failed to file any books of accounts/ statement of account to rebut the statement of account so produced by the complainant. Accordingly, the contention of the accused that the liability mentioned in the impugned cheque i.e. Rs. 1,36,816 is not attracted, stands dismissed.
38. Accused No.2 has taken contradictory stands on whether he has filled CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 18 of 22 the details on the impugned cheque. In his reply to the legal notice dated 06.06.2011, the accused has specifically stated, that the impugned cheque was not filled by the accused and the amount on the impugned cheque was also not filled up by any of the accused. On the other hand, in the Notice under Section 251, CrPC, the accused has stated that accused No.2 filled up the impugned cheque. Even if the version of the accused in its reply dated 06.06.2011, that the cheque was not filled by the accused, is to be believed, the same will not be of any help to the accused. The clear position of law was enunciated in the recent judgment of the Hon'ble Supreme Court in Bir Singh vs. Mukesh Kumar (Crl. Appeal No. 230- 231/189, dated 06.02.2019), wherein it was held that if a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This, by itself, does not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. The Court further went on to hold that even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt. Therefore, in the absence of any cogent evidence on the part of accused to disprove the liability, the above argument also does not help the accused. Moreover, if it is the case of the accused that accused No.2 has filled the present cheque including the details, then the submission of the accused, that the accused is not liable for the amount mentioned on the impugned cheque, does not deserve any indulgence of this Court.
39. The accused has also stated in the Notice under Section 251, CrPC that the cheque was issued on 31.08.2010, even two months prior to the date mentioned on the cheque. However, a post-dated cheque assumes the character of a cheque only from the date mentioned on the cheque and CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 19 of 22 till that date, it only remains a bill of exchange. (Anil Kumar Sawhney vs. Gulshan Rai [ 1993 (4) SCC 424] ).Therefore, the relevant date is only the date which the cheque bears and the limitation period is to be computed from this date and not from the date, when the cheque was issued or handed over.
40. The accused has also brought forth, through the cross-examination of CW-1 dated 25.07.2018 as well as the statement under Section 313, CrPC that the accounts of the accused may not have been reconciled by the complainant. The accused in their statements under Section 313, CrPC have stated that despite requests, the complainant did not reconcile the account of the accused. However, in such circumstances, it was incumbent on the accused to produce the accounts maintained by the accused, especially when it has claimed that the liability is not made out as per the books of account maintained by the accused. In the absence of any cogent evidence or document in this regard, there is no reason for this Court to believe in the bare denials and bald averments of the accused and cast doubt on the evidence brought on record by the complainant.
41. In the instant case, the onus was on the accused to dislodge the presumption raised in favour of the complainant. However, the accused has not led any positive evidence in this regard. The accused has attempted to establish its defence, only through the cross-examination of CW-1 or its statement under Section 313, CrPC. This Court is of the opinion that the grounds of defence set up by the accused are neither definitive nor consistent with their innocence. It was the sole burden and duty of accused to prove absence of liability by raising a ''probable'' defence. However, the accused has failed to discharge its onus. Except for making bare averments, accused has not led any cogent evidence which could be termed as a probable defence. It is pertinent to note that CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 20 of 22 though the accused have taken multiple defences, but as discussed above, none of them have raised a probable defence in favour of the accused.
42. Having established the guilt of the accused, the question now pertains to the specific liability of the accused persons. Accused No. 1, ILU Electronics Pvt. Ltd. is the drawer of the impugned cheque and is being represented by accused No.2 in the present proceedings. The Notice under Section 251, CrPC and Statement of accused No.1 under Section 313, CrPC, have been framed through accused No.2 and accused No.2 has also in his statement (without oath) dated 10.07.2019 stated that he is representing accused No.1 in the present proceedings. Accused No.2 to 4 have been arraigned as directors responsible for and in-charge of day-to- day affairs of the company. It is to be noted that accused No. 4, Sh. Rameshwar Prasad Sharma expired on 07.01.2011 and thus, proceedings against him have already been abated.
43. As regards the liability of accused No.2 S.K. Sharma, it is to be noted that accused No. 2 has admitted in the Notice under Section 251, CrPC that he signed the impugned cheque. Moreover, he is the Director of accused No.1 and the same is evident from the signatory details available on the MCA21 Portal produced by the complainant as well as his signature on the Channel Partnership Agreement dated 07.08.2010, being the director of accused No.1. Therefore, accused No.2 is liable for the offence under Section 138 NI Act, being the signatory of the impugned cheque and being the Director of accused No.1.
44. The averments against accused No.3 in the complaint are limited to the ground that she is the Director of accused No.1 and is responsible for day-to-day affairs of accused No.1. However, no specific averment is made against accused No.3. Moreover, even in the Notice served to her CC No.24420-16 M/s Sharp Business Systems India Ltd. Vs. ILU Electronics Pvt. Ltd. & Ors. Page 21 of 22 under Section 251, CrPC, she has denied any role with respect to the impugned cheque as well as the transactions between the complainant and the accused. Moreover, she has also stated that she has no concern with accused No.1. The Hon'ble Delhi High Court in its decision in Dev Sareen Vs. D.C.M. Financial Limited (2008) 2 ALT (Crl) 18 has clearly stipulated that in order to fasten vicarious liability in accordance with Section 141 of the NI Act, the averments as to the role of specific director should be specific. The Court has also stipulated that the description should be clear and there should be some unambiguous allegations as to how the concerned directors were alleged to be incharge of the conduct and affairs of the company. In the absence of specific averments against accused No.3 and any evidence on record which clarifies her role in the present case, no ground is made out for conviction of accused No.3.
45. In view of the aforementioned observations, this Court is of the opinion that the complainant has successfully proved all the essential ingredients of Section 138 of the Act. The accused has failed to rebut the presumption raised in favour of the complainant. Accordingly, accused No.1 ILU Electronics Pvt. Ltd. is hereby convicted of the offence punishable under Section 138 of the Act. Accused No.2 S.K. Sharma, being the director of accused No.1 and signatory of the impugned cheque, is convicted of the offence under Section 138 of the Act. Accused No.3 Smt. Renu Sharma is hereby acquitted of the offence under Section 138 of the Act.
46. A PDF copy of the Judgment be uploaded on the website of the District Court.
Announced in Open Court (JYOTI MAHESHWARI)
on 26th August, 2019 Metropolitan Magistrate (NI Act-01)
Patiala House Court , New Delhi
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