Delhi District Court
) M/S Shoreline Infrastructure ... vs The State on 11 October, 2021
IN THE COURT OF SH. SUMIT DASS: ADDITIONAL SESSIONS
JUDGE-04 & SPECIAL JUDGE (NDPS) SOUTH EAST: SAKET
COURTS: NEW DELHI
IN THE MATTER :
Criminal Appeal No.212/18
1) M/s Shoreline Infrastructure Developers Ltd.
209, Om Chambers
123, August Kranti Marg
Kemps Corner,
Mumbai - 400036.
2) Mr. Ajay Khemka
Director
M/s Shoreline Infrastructure Developers Ltd.
6th floor, Sagar Villa,
38, Warden Road,
Mumbai - 400026. .....Appellants
Versus
1. The State
2. M/s Apollo International Limited
M-4, Surya Mansion, Kaushalya Park
Hauz Khas, New Delhi-110016
Corporate office at
Apollo House, 7, Institutional Area
Sector-32, Gurgaon -123001
Through its authorized representative/
Senior Secretarial
Officer/Power of attorney holder
CA No.208/18, 209/18 and 212/18 Page no. 1 of 58
Mr. Pradeep Chugh s/o Sh. Suresh Chugh ....... Respondents
Criminal Appeal No.208/18
Mrs. Rekha Khemka
Director
M/s Shoreline Infrastructure Developers Ltd.
6th floor, Sagar Villa,
38, Warden Road,
Mumbai - 400026 ..... Appellant
Versus
1. The State
2. M/s Apollo International Limited
M-4, Surya Mansion, Kaushalya Park
Hauz Khas, New Delhi-110016
Corporate office at
Apollo House, 7, Institutional Area
Sector-32, Gurgaon -123001
Through its authorized representative/
Senior Secretarial
Officer/Power of attorney holder
Mr. Pradeep Chugh s/o Sh. Suresh Chugh ....... Respondents
Criminal Appeal No.208/18
Mr. D.Chokhani
Director
M/s Shoreline Infrastructure Developers Ltd.
E-402, Samta Nagar, Kandivili (East)
Mumbai - 400101 ........ Appellant
Versus
CA No.208/18, 209/18 and 212/18 Page no. 2 of 58
1. The State
2. M/s Apollo International Limited
M-4, Surya Mansion, Kaushalya Park
Hauz Khas, New Delhi-110016
Corporate office at
Apollo House, 7, Institutional Area
Sector-32, Gurgaon -123001
Through its authorized representative/
Senior Secretarial
Officer/Power of attorney holder
Mr. Pradeep Chugh s/o Sh. Suresh Chugh ....... Respondents
Judgment reserved - 04.10.2021
Date of pronouncement - 11.10.2021
ORDER
1. The appellants - i) M/s Shoreline Infrastructure Developers Ltd. through its representative Ashwani Khemka, ii) Rekha Khemka and
iii) D.Chokhani are aggrieved of the judgment dated 02.04.2018 and the follow up/ consequent order on sentence dated 03.04.2018 passed by Ms. Manisha Tripathi, Ld. M.M. - 03, New Delhi in case titled as "M/s Apollo International Ltd. v/s M/s Shoreline Infrastructure Developers Ltd. & Ors." whereby and whereunder the Ld. M.M. was pleased to convict the accused persons namely :
i) M/s Shoreline Infrastructure Developers Ltd.
ii) Ajay Khemka,
iii) Rekha Khemka and
iv) D.Chokhani CA No.208/18, 209/18 and 212/18 Page no. 3 of 58 for the offence U/s 138 of Negotiable Instrument Act, 1881 [in short N.I.Act].
1.1 In terms of order dated 03.04.2018 which was the order on the point of sentence, the convicts individually were directed to pay a fine of Rs. 43,50,000/- each within a period of 30 days thereof. Qua the convicts Ajay Khemka, Rekha Khemka and D.Chokhani in addition to the fine - in default thereof they were directed to undergo simple imprisonment for a period of six months.
1.2. During the pendency of the present appeals Ajay Khemka, convict no.2 or the appellant no.2 expired and the proceedings qua him stood abated. Viz a viz the company i.e M/s Shoreline Infrastructure Developers Ltd. there was a representation to continue with the appeal and Ashwini Khemka had filed the resolution on behalf of the company to prosecute the appeal Thus, as on date the appeal is being prosecuted by all the parties. Even otherwise the appeal emanates from a common judgment and hence the appeals have to be disposed of inasmuch as there is an element of fine imposed.
2. Arguments in extenso were addressed by Sh. A.S.Kulshrestha and Manish Srivastava, Ld. Counsel for appellants. On behalf of respondent Sh. Shyam Murjani and Arun Batta, Advocates had addressed their arguments. Written submissions were also filed.
3. All the appeals emanate from a common judgment dated CA No.208/18, 209/18 and 212/18 Page no. 4 of 58 02.04.2018 hence, all the appeals are being disposed off together.
3.1 For the sake of convenience the parties shall be referred to as their nomenclature before the Ld. Trial Court - the respondent herein shall be denoted as the "complainant company" whereas the appellants shall be referred to as 'accused persons or the appellants".
In addition thereto I shall deal with the arguments of the appellants jointly rather than segregating the same on individual lines inasmuch as appellants D.Chokhani and Rekha Khemka have addressed their arguments contending that apart from the other defences they had additional pleas as they were not the participants in the active running of the company M/s Shoreline Infrastructure Developers Ltd. and the company was being exclusively run by Ajay Khemka [since deceased]. In other words they contended that they cannot be vicariously held liable and additionally the fact that the company was being run by Ajay Khemka who had on all material times engaged with the complainant company and the entire transaction/bargain was with him.
3.2 Ld. M.M. in her order dated 02.04.2018 had neatly delineated the factual matrix and the list of documents which were proved during the course of long drawn trial. I need not to repeat the same but I am extracting the same for the sake of convenience as here under :
1. By way of this order I shall decide the present case CA No.208/18, 209/18 and 212/18 Page no. 5 of 58 instituted on a complaint filed by Apollo International Ltd. (hereinafter referred to as 'the complainant') through its AR Sh. Pradeep Chugh against Shoreline Infrastructure Developers Ltd. (hereinafter referred to as 'the accused no.1'), Sh. Ajay Khemka (hereinafter referred to as 'the accused no.2'), Ms. Rekha Khemka (hereinafter referred to as 'the accused no.3'), Sh. D. Chokhani (hereinafter referred to as 'the accused no.4') and Sh. Sushil Sharma (hereinafter referred to as 'the accused no.5') u/s 138 of Negotiable Instrument Act (hereinafter referred to as 'the Act').
2. Brief facts of the case as alleged by the complainant are that the complainant company, being desirous of setting up a Container Freight Station (hereinafter referred to as 'CFS') near JNPT Port in the state of Maharashtra, approached the accused no.1 in or about September/October 2005 for acquiring 60 acres of contiguous land in Raigarh District of Maharashtra.
Having understood the need of the complainant, the accused persons agreed to acquire the land for complainant at Urban Taluka District, Raigarh, Maharashtra along with all the requisite permission, sanctions etc, for establishment of CFS and also represented to the complainant that it has already entered into an understanding with the individual owners of the plot of the land at Village Dhasakoshi in the said area covering 60 acres of contiguous lands which were suitable for establishing CFS. Relying upon representations and assurances of the accused persons, the complainant entered into Memorandum of Understanding dated 22.11.2005 (hereinafter referred to as 'MOU') with the accused company, whereby it was agreed that the accused company would acquire contiguous land ad measuring 60 acres at village Dhasakhoshi, Taluka Urban, District Raigarh as per terms and conditions mentioned therein. CA No.208/18, 209/18 and 212/18 Page no. 6 of 58
3. In terms of the said MOU, on the day of the execution of MOU, payment of Rs. 87,00,000/ (5 % of the total consideration for 60 acres of land) was made by the complainant to the accused no.1 as earnest money deposit vide cheque no. 582475 dated 24.11.2005 drawn on ICICI Bank Ltd, Gurgaon Branch, Haryana and the accused no.1 issued an undated cheque bearing no. 502592 in the sum of Rs. 87,00,000/ drawn on Bank of Baroda, Bhulabhia Desai Road Branch, Mumbai, in favour of complainant alongwith the promissory note for the same amount under its covering letter dated 22.11.2005, being amount towards performance guarantee.
4. After the execution of MOU, on 08.02.2006, the complainant paid Rs.37,70,000/ (towards RA Bill No.1 dated 02.02.2006 raised by accused no.1, being 10 % of the amount payable on production of copies of Agreement to sale of 13 acres of land on approval of the said RA bill by advocates Kanga & Co.) and Rs. 1,18,500/ towards deposit for electricity connection to be obtained from MSEB. Further, on 16.05.2006, the complainant paid Rs.41,85,570/(towards RA Bill3 dated 11.03.2006 raised by accused no.1, being 10 % of the amount payable on production of copies of agreement to sale for 14.433 acres of land on approval of the said bill by by advocates Kanga & Co. on 12.05.2006).
5. It is alleged that during the course of acquisition, it came to the knowledge of the complainant that the land of Village Dhaskoshi was under reservation and had already been alloted to MMSEZ (Maha Mumbai Special Economic Zone) on 16.06.2005, much prior to the execution of MOU. It is further alleged that upon being confronted by the complainant, the accused admitted the same and subsequently offered alternate land in village Vahal, Taluka Panvel, District Raigarh, in lieu of land at CA No.208/18, 209/18 and 212/18 Page no. 7 of 58 village Dhasakhoshi and represented that proposed land was fit for the purpose of making of CFS. Upon such representation of the accused no.1, an Addendum dated 05.06.2006 was executed between the parties, whereby, it was agreed that the accused would now acquire contiguous land aggregating 60 acres at village Vahal in lieu of land at Dhasakoshi, and all other terms of MOU dated 22.11.2005 remained same.
6. It is further alleged that as per the addendum the accused no.1 was now required to acquire the land at Vahal by 31.08.2006, but having been deceived before, complainant itself made enquiries including from CIDCO and came to know that the land of village Vahal offered by accused at all material times were under single ownership of CIDCO, and the said land thus could not have been acquired for setting up of CFS. It is further alleged that upon being confronted the accused persons admitted that they were not in a position to obtain land with all requisite permissions at Vahal also.
7. It is further alleged that under these circumstances, having failed in performance, in a meeting between the parties held on 20.11.206, accused no.1 offered another alternate land at Panvel Taluka, if the same was acceptable to the complainant, otherwise the accused no.1 agreed to refund the amount paid by the complainant to the accused in terms of the MOU. The complainant declined the said offer of alternate land made by the accused no.1 and demanded refund of the amount paid to it i.e., Rs.1,68,25,980/ (Rs. 87,00,000/ + Rs. 37,70,000/ + Rs. 1,18,500/ + Rs. 42,37,480/) by complainant. A letter in this regard was issued by the complainant to accused on 20.11.2006 but the accused failed to refund the aforesaid amount received by it from the complainant.
8. It is further alleged that the complainant thereafter CA No.208/18, 209/18 and 212/18 Page no. 8 of 58 through its advocate's notice dated 29.11.2006 terminated the MOU and the addendum and called upon to the accused company to refund the amount of Rs. 1,68,25,480/ alongwith interest and also informed the accused company that the subject cheque of Rs. 87,00,000/ which was issued by the accused company towards performance guarantee under MOU was forthwith being encashed. Vide letter dated 01.12.2006 the accused replied to the complainant's notice dated 29.11.2006 denying the allegations therein.
9. It is further alleged that since the accused company had failed in its performance and refund of payment made by complainant to it, the complainant dated the subject cheque as 30.11.2006 and presented for encashment through its banker State Bank of Mysore, Nehru Place, New Delhi. Upon presentation, the said cheque was dishonoured and returned by the bankers vide memo dated 07.12.2006 with the remark 'Payment Stopped by drawer'. Thereafter, the complainant issued legal demand notice dated 20.12.2006 to the accused company and its directors demanding the payment of the dishonoured cheque within statutory period. However, despite the service of legal demand notice the accused persons failed to comply with the same and replied to the said notice falsely denying all allegations and contentions raised therein. Hence, the present complaint.
10. After perusal of material on record prima facie case was made out and therefore the accused persons were summoned and notice u/s 251 Cr.PC was served upon them to which they pleaded not guilty and claimed trial.
11. In order to establish its case the complainant through its AR had filed evidence by way of affidavit Ex.CW1/A wherein the AR reiterated the allegations made CA No.208/18, 209/18 and 212/18 Page no. 9 of 58 in the complaint. He relied on and exhibited following documents:
Sl. Particulars Ex. No.
No.
1 Certified copy of Power of Attorney Ex.PW1/1
dated 04.01.2017 in favour of Sh.
Pradeep Chugh
2 Certified copy of Power of Attorney Ex.PW1/2
dated 16.12.2009 in favour of Sh.
Rakesh Gupta
3 Certified copy of Board Resolution Ex.PW1/3
dated 24.09.99 in favour of Sh. Rakesh
Gupta
4 Copy of Memorandum of Ex.PW1/4
Understanding dated 22.11.2005
5 Copy of letter of accused company Ex.PW1/5
dated 22.11.2005
6 Copy of letter of Application to Ex.PW1/6
Development Commissioner for
permission for Dhasakhoshi dated
24.01.2006
7 Copy of letter/application to CIDCO Ex.PW1/7
for permission for Dhasakhoshi dated
30.01.2006
8 Copy of letter of accused sending RA1 Ex.PW1/8
Bill dated 02.02.2006
9 Copy of letter of accused sending RA2 Ex.PW1/9
Bill dated 02.02.2006
10 Copy of letter of Development Ex.PW1/10 Commissioner (Industries) Mumbai declining permission for Dhasakhoshi CA No.208/18, 209/18 and 212/18 Page no. 10 of 58 dated 03.03.2006 11 Copy of order of Development Ex.PW1/11 Commissioner (Industries), Mumbai reserving land at Dhasakhoshi for SEZ dated 16.05.2005 12 Copy of letter of accused for form of Ex.PW1/12 mega Project dated 04.03.06 13 Copy of letter of accused sending RA3 Ex.PW1/13 Bill dated 11.03.2006 14 Copy of Land Acquisition Notification Ex.PW1/14 contained in news paper dated 01.06.2006 15 Copy of Addendum dated 05.06.06 Ex.PW1/15 16 Copy of letter of complainant dated Ex.PW1/16 20.11.2006 17 Copy of letter of complainant dated Ex.PW1/17 29.11.2006 18 Copy of letter of accused dated Ex.PW1/18 01.12.2006 19 Copy of letter of complainant advocate Ex.PW1/19 dated 02.12.2006 20 Original dishonoured cheque no. Ex.PW1/20 502592 dated 30.11.2006 for Rs.
87,00,000/ drawn by accused company on Bank of Baroda Bhulabhai Desai Road Branch, Mumbai in favour of complainant 21 Original Dishonour Memo dated Ex.PW1/21 07.12.2006 of Bank of Baroda, Bhulabhai Desai Raod Branch, Mumbai returning the above cheque CA No.208/18, 209/18 and 212/18 Page no. 11 of 58 with remarks "Payment Stopped by Drawer"
22 Original Debit Advise dated 11.12.2006 Ex.PW1/22 of State Bank of Mysore Nehru Place, New Delhi of complainant informing dishonour of above cheque 23 Office copy of Statutory Notice under Ex.PW1/23 Section 138 NI Act of complainant advocate dated 20.12.2006 24 Original postal registration receipts Ex.PW1/24 RPAD No. 001556 to 001560 dated A to 24 E 21.12.2006 issued from Marol Naka Post Office, Mumbai 25 Original AD Cards w.r.t the accused 1 Ex.PW1/25 3 showing service of Statutory Notice A to 25 D on 23.12.006 and Original returned envelope of Accused no. 4 26 Copy of letter of accused advocate Ex.PW1/26 dated 03.11.2007 27 Copy of reply of Statutory Notice of Ex.PW1/27 accused advocate dated 05.01.2007 28 Copy of letters of complainant advocate Ex.PW1/28 dated 27.01.2007, 27.01.2007 and A to 28C 01.02.2007 respectively 29 Copy of letter of accused no.5 advocate Ex.PW dated 11.01.2007 1/29
12. The complainant also examined Sh. Parmanand Dashrath Nikumbh, Additional chief and land survey Officer, CIDCO, New Mumbai, as CW2 who produced and proved copy of notification dated 22.05.1971 issued by Govt. of Maharashtra Gazzet as Ex. CW2/A (by which notice for acquisition of survey no. 337/10, 332/3A, CA No.208/18, 209/18 and 212/18 Page no. 12 of 58 332/3B, 333/7, 333/8, 333/9, 336/3, 332/5, 332/6, 337/15, 356/2, 357/13, 369/2, 356/3, 337/14, 337/13, 357/10, 333/6, 337/16, 338/10, 332/4, 333/4, 334/1, 334/13, 335/2, 335/6, 336/11, 337/11, 338/3, 352/4, 337/6, 338/12, 336/13, 334/20, 336/4, 336/15, 355/4, 338/13 334/7, 334/15 and 352/2 u/s 6 of Land Acquisition Act was issued.) and deposed that land acquired u/s. 6 of Land acquisition act remains under ownership of CIDCO and no permission for sale of such land is granted.
13. The complainant also examined Sh. Abhay Suresh Pradhan, Chief Manager, Bank of Broda Bhulabhai Desai Road branch, Mumbai as CW3 who proved authorization letter issued by Asst. General Manager in his favour to depose as Ex.CW3/1, Statement of bank account of accused company w.e.f 01.11.2006 to 31.12.2006 as Ex.CW3/2 and stop payment instruction issued by the accused company in respect of subject cheque vide letter dated 01.12.2006 as Ex.CW3/3.
14. All three complainant witnesses were cross examined and discharged and complainant evidence was closed. thereafter statements of accused persons u/s. 313 Cr.P.C. were recorded wherein the accused no.1 and 2 denied the liability to repay the subject cheque and stated that despite being well aware of the fact vide letter dated
08.02.2006 that land at Dashakoshi was being acquired by CIDCO for the propose MMSEZ, the complainant itself kept pursuing the purchase of land in hope of getting permission for CFS under Mega Project and on the instructions of the complainant the accused had aggregated total 78 Acres at Dashakoshi and 16 Acres at Vahal, which was much more than the agreed 50 acres and therefore the complainant was not entitled to any refund. Accused no. 3 stated that she was a housewife and merely a formal director. She claimed ignorance about the transaction stating that she was not involved in day to CA No.208/18, 209/18 and 212/18 Page no. 13 of 58 day affairs of the accused company. Accused no. 4 claimed that he had left the accused company in July 2006 and was not a director in the accused company at the time of presentation and dishonour of the subject cheque. Accuse no. 5 claimed that he had resigned from the directorship of the accused company in the year 2005 and therefore had no liability in respect of the dishonoured cheque.
15. Accused no.2 Ajay Khemka (also representing accused company) and accused no.5 Sushil Kumar Sharma led evidence in their defence by tendering their evidence by way of affidavit reiterating their defence on oath. DW1 relied on following documents:
Sl. Particulars Ex. No.
No.
1 V P Thakur's letter addressed to Ajay Ex.DW1/A
Khemka dated 29.09.2005
2 Memorandum of understanding dated Ex. DW1/B
22.11.2005 between accused company
and complainant company for
aggregation of land in the village
Dhashakoshi
3 Memorandum of understanding dated Ex. DW
30.11.2005 between accused company 1/C and V P Thakur 4 Loan confirmation certificate from Ex. DW CIDCO dated 08.02.2006 addressed to 1/D complainant company at Andheri Mumbai 5 Application dated 24.11.2005 by the Ex. DW accused company to the town planning 1/E officer for Zonal confirmation certificate along with the money receipt CA No.208/18, 209/18 and 212/18 Page no. 14 of 58 6 Application dated 26.12.2005 made by Ex. DW the complainant to the industry 1/F department, Government of Maharashtra 7 Letter dated 26.12.2005, 29.12.2005, Ex. DW 30.12.2005 and 31.12.2005 addressed 1/G (colly) by department of industries, Government of Maharashtra to complainant company Letter dated 05.01.2006 addressed to Ex. DW the National Institute of ocean 1/H (colly) technology by the complainant and response letter dated 12.01.2006 from National Institute of ocean Technology 9 Letter dated 24.01.2006 addressed to Ex. DW 1/I MSEDCL by the complainant company 10 Application made by the complainant Ex. DW1/J company to the Directorate of industries, Government of Maharashtra under section 63 (i) of the Bombay tenancy and agricultural lands act 1948, dated 24.01.2006 11 RA bill number 1 dated 02.02.2006, Ex. DW1/K for Rs. 37,70,000 for 13 acres of land (colly) at Dhashakoshi, list of landowners, Survey numbers and acres detail, addressed by accused company to M/s Kanga and company under the subject title 'submission of RA bill no. 4 as 10% payment' 12 RA Bill No. 2 dated 02.02.2006 Ex.DW 1/L Annexure 1copy of the pay order challan with regard to the payment made to MSCDCL CA No.208/18, 209/18 and 212/18 Page no. 15 of 58 13 Letter dated 03.03.2006 from director Ex.DW1/M of industries Government of Maharashtra along with English translated copy of same 14 Letter dated 04.03.2006 from accused Ex.DW1/N company to complaint company 15 RA Bill No. 3 dated 11.03.2006 for Ex.DW1/O Rs.42,37,480/ for 14.612 acres of land at the Dhashakoshi, list of land owners, survey numbers and acres details, addressed by accused company to M/s Kanga and company and letters dated 12.05.2006 and 15.05.2006 addressed by Kanga and company to complainant company i.E., 10% payment instructions of RA Bill No. 3 of Dashakoshi 16 Complainant company letter dated Ex.DW1/P 27.03.2006 addressed to Chief Minister of Maharashtra (request of Mega project) 17 Complainant company letter dated Ex.DW1/Q 12.04.2006 addressed to the chairman, sea king Infrastructure Limited, the promoter company of MMSSEZ 18 Application dated 12.04.2006 made to Ex. DW1/R the additional town planning officer by the complainant under Section 44 of the Maharashtra regional town planning act, 1966 along with enclosures 19 Permission of CFS in the village Ex. DW1/S Dasakoshi dated 11.05.2006 from CA No.208/18, 209/18 and 212/18 Page no. 16 of 58 Ministry of Commerce and industries New Delhi 20 Notification of CIDCO dated Ex.DW1/T 10.02.2005 21 Section 4 notice of Government of Ex.DW1/U Maharashtra 22 Email dated 31.05.2006 addressed by Ex.DW1/V Sameer Kulkarni to the complainant company's Sh. Dinesh, captain Anand 23 Email dated 01.06.2006 addressed by Ex.DW1/W captain Kapil Anand to Mr Ajay Khemka under the subject titled "Re:
Project Dhashakoshi Further strategies"
24 Addendum of memorandum of Ex.DW1/X understanding dated 05.06.2006 between accused company and complainant company for aggregation of land in the village Vahal 25 Email dated 29.06.2006 addressed by Ex.DW1/Y captain Kapil Anand to Mr Ajay Khemka under the subject titled " RE:
project vahalFurther strategies"
26 Email dated 27.06.2006 addressed by Ex.DW1/Z Mr Ajay Khemka to captain Kapil Anand under the subject titled "project Dhasakoshi" and trailing emails dated 27.06.2006 addressed by Mr Ajay Khemka to captain Kapil Anand and 29.06.2006 addressed by captain Kapil Anand to Mr Ajay Khemka under the subject titled "project Dhashakoshi"
CA No.208/18, 209/18 and 212/18 Page no. 17 of 58 27 RA Bill No. 1 vahal dated 28.06.2006 Ex.DW1/A with regard to land aggregated at A(colly) Vahal for Rs. 36,01,800 for 12.42 acres of land at Vahal, list of land owners, survey numbers and acres detail and letter dated 22.06.2006 address by Kanga and company to complainant company i.E., 10% payment instructions of RA Bill no.1 of village Vahal along with covering letter dated 18.01.2012 28 Sample of 7/12 extract and sale deed Ex.DW1/A regarding sale registration at village B Vahal 29 RA Bill number 1 (revised) dated Ex.DW1/A 24.07.2006 with regard to land C aggregated at Vahal for Rs. 43,26,220 for 14.92 acres of land at Vahal, list of land owners, survey numbers and letters addressed by accused company to M/s Kanga and company under the subjects titled "submission of RA Bill No. 1 (revised) as 10% payment against MOU
30 Email dated 19.08.2006 addressed by Ex.DW1/A Mr Sameer Kulkarni to captain Kapil D Anand under the subject titled "
Dhashakoshi status as on 19.08.2006"
31 Email dated 21.08.2006 addressed by Ex.DW1/A captain Kapil Anand, chief operating E officer of the complainant to the representatives of accused company instructing to aggregate the lands other than those falling within 500 m CA No.208/18, 209/18 and 212/18 Page no. 18 of 58 of Gowthan 32 Letter dated 17.08.2006 from Ex.DW1/A industries and energy and Labour F Department addressed to complainant company 33 Minutes of the meeting dated Ex.DW1/A 21.08.2006 between the complaint G company and accused company 34 Email dated 4.06.2006 from Mr Ajay Ex.DW1/A Khemka to captain Kapil Anand under H the subject titled "Acquisition" and reply of Capt. Anand, officer of complaint company to accused company vide email dated 06.09.2006 35 RA Bill No.4 dated 12.09.2006 for Rs. Ex.DW1/A 1,04,34,490 for 35.963 acres of land at I (colly) Dhashakoshi, list of landowners, Survey numbers and acres detail, letter dated 12.09.2006 addressed by accused company to M/s Kanga and company under the subject titled "Submission of RA Bill No. 4 as 10% payment against 'agreement to sale' deeds 36 RA Bill No.5 dated 12.09.2006 for Rs. Ex.DW1/AJ 46,40,000 for 16 acres of land at (colly) Dhashakoshi, list of landowners, Survey numbers and acres detail, letter dated 12.09.2006 addressed by accused company to M/s Kanga and company under the subject titled "Submission of RA Bill No. 5 as 10% payment against MOU CA No.208/18, 209/18 and 212/18 Page no. 19 of 58 37 Kangra and company's letter dated Ex.DW1/A 05.03.2012 addressed to accused K company i.e., confirmation of various RA Bills of village Dhasakoshi and Vahal 38 Email dated 22.11.2006 from captain Ex.DW1/A Anand to Ajay Khemka L 39 Reply dated 03.01.2007 address by the Ex.DW1/A accused company's advocates to the M complainant's advocate's notice dated 29.11.2006 40 Letter dated 22.11.2005 from accused Ex.DW1/A company to complainant company i.e., N performance guarantee cheque along with promissory note 41 Stop payment letter dated 01.12.2006 Ex.DW1/A from accused company to Bank of O Baroda, Mumbai along with RTGS advice and bank statement 42 Complainant's advocate notice dated Ex.DW1/A 29.11.2006 addressed to accused P company
16. During the cross examination of the DW1 following documents were put to him by the complainant:
30 Copy of the Bill no. 4 and Bill no. 5 Mark X1 both dated 12.09.2006 filed by accused & in Arbitration proceedings bearing Mark Y1 acknowledgement by Kanga & Co dated 13.06.2006 31 Copy of 7/12 extract of land survey no. DW1/X1 48 of Dhasakhoshi against which CA No.208/18, 209/18 and 212/18 Page no. 20 of 58 accused claimed and received payment under RA Bill3 dated 11.03.2006 (brought on record during cross of accused no. 2 on 17.12.003 as the land parcel under survey no. 48 under "Gurcharan" means land use for cattle grazing) and not in name of Usha Vinayak Thakur
17. DW2 relied on following documents:
1 Resignation letter dated 28.11.2004 Ex. DW2/A 2 Appointment letter dated 01.12.2004 Ex. DW2/B 3 Certified Copy of Form 32 of accused Ex. DW2/C company 4 Annual Return of the accused Ex. DW2/D company 5 Reply to Legal demand notice Ex.PW1/29
3.3. In addition to the aforesaid facts I may note herein that notice U/s 251 Cr.PC was framed against the accused persons on 30.09.2009. The cheque was returned as dishonoured on account of "payment stopped by drawer" and cheque was bearing no. 502592 dated 30.11.2006 for Rs. 87 lacs drawn on Bank of Baroda, Mumbai.
Insofar as the plea recorded at that point of time it was merely a plea of "not pleading guilty and claiming trial".
CA No.208/18, 209/18 and 212/18 Page no. 21 of 58 3.4 Thereafter, evidence commenced and evidence of PW-1 Pradeep Chugh was recorded on 13.10.2010. Infact his cross examination is merely of two pages only. CW-2 Parmanand Dashrath Nikumbh was examined on 28.05.2011. Abhay Suresh Pradhan CW-3 was examined on 15.09.2011 whereafter complainant's evidence was closed.
3.5 Statement U/s 313 Cr.PC was recorded on 20.10.2011. Viz a viz statement of Ajay Khemka he had stated as hereunder :
"It is correct. I had instructed my lawyer to reply on behalf of everyone. On 08.02.2006 CIDCO wrote a letter to the complainant and informed them that the land intended to be purchased, was to be acquired for MMSEZ. Even thereafter, the payment of first installment of 10% was made by the complainant. On 24.02.2006 they applied for permission of CFS in Delhi without informing us. We received this information by making an application under RTI Act. They were themselves making an attempt to purchase that land as it was critical to their business. They did not make the payment of bill raised in March till May 2006. Only after they had received permission for CFS from Central Govt. they decided to take risk to acquire this land and made the payment of a bill of March 2006. We had a meeting with the complainant wherein Director of the complainant namely Kapil Aggarwal said that they were ready to take the risk and consider the same as sink money. Thereafter we aggregated 78 acres in total in village Dasakoshi and 16 acres in village Vahal totaling 94 acres. This acquisition of CA No.208/18, 209/18 and 212/18 Page no. 22 of 58 land was much more than the performance requirement of 50 acres. From May till November the complainant did not make any payment. We acted upon the mandate of the complainant and thus, we were not entitled to refund any money or forfeit the performance security guarantee."
3.6 DW-1 Ajay Khemka examination in chief commenced. He was partly cross examined on 16.05.2012 and on 04.06.2012. Again on 07.01.2013 and 08.05.2013, 23.07.2013, 24.07.2013, 08.10.2013, 16.12.2013, 17.12.2013 and on 22.04.2014. I have quoted the dates to underscore the aspect that the criminal case was proceedings parallely to the arbitration case which had also commenced in Mumbai.
4. In terms of impugned order Ld. M.M. had convicted the accused persons for the offence U/s 138 of N.I. Act. Ld. M.M. had predicated her finding on guilt by taking note of the submissions under the following head :
i) there was a misrepresentation on the part of the accused persons at the time of entering of the agreement.
ii) failure of due diligence on the part of the accused persons.
iii) failure to aggregate land.
iv) time being the essence of the contract.
4.1. Around aforesaid points the arguments were advanced.
Subsequently as seen in para 20 of the judgment the statutory law was reproduced i.e. Section 138 of N.I. Act. I am just highlighting one CA No.208/18, 209/18 and 212/18 Page no. 23 of 58 aspect i.e. the explanation which reads that for the purpose of this section "debt or other liability" means legally enforceable debt or other liability. Subsequent thereto the Ld. Trial Court relied upon Suresh Chandra Goyal v/s Amit Singhal (Cr.Appeal No. 601/2015) and S.Satya Narain Rao v/s Indian Renewable Energy Development Agency Ltd AIR 2016 SC 4363 to conclude that the security cheque or the cheque which was given to the complainant earlier - qua the said cheque there was a legally enforceable liability on the date of the presentment of the cheque which formed the backbone of discussion of the Ld. Trial Court. In simpler words it was concluded by the Ld. Trial Court that on the date of presentment of cheque there was a legally enforceable liability and the security cheque, if appropriated towards the said head would become a valid instrument or would become a cheque qua which an offence U/s 138 N.I.Act is maintainable.
5. Admittedly there was one arbitration proceeding which was initiated parallelly interse the complainant and the accused no.1 company. The said proceedings were concluded much earlier and an award was passed by the sole arbitrator Hon'ble Justice V.P.Tipnis (retired). The award was given on 25.05.2015. The award was also a part of judicial record however the Ld. Trial Court proceeded not to take the said award into consideration while passing the impugned judgment. The award in pith and substance is an award wherein the claim of the claimant company - the complainant herein seeking recovery of the sums/ monies from the accused company was rejected in toto. The Ld. Arbitrator observed that insofar as the contract is CA No.208/18, 209/18 and 212/18 Page no. 24 of 58 concerned time was not the essence of the contract and secondly the respondents cannot be hauled up for breach of the agreement including the original agreement and the addendum agreement. The issues which were settled in the said case I am quoting the same as hereunder:
1. Whether the claimant proves that it was on the basis of misrepresentation and/or fraud that the respondent induced the claimant to execute the said MOU and/or part with monies?
2. Whether the respondent proves that the respondent informed about any impediments to the claimant after the execution of the MOU dated 22.11.2005, as alleged in paragraph 15 of the Written Statement?
3. Whether the respondent proves that despite the knowledge of the acquisition of the subject lands for MMSEZ, the respondent continued to comply with the terms of MOU at the instance of the claimant?
4. Whether the respondent proves that in view of the conduct of the claimant the time limit for acquisition of subject lands by the respondent as stipulated in the MOU was waived?
5. Whether the claimant proves that the claimant approached the Government of Maharashtra for permission for a Mega Project Status for their CFS project at the instance of the respondent?
6. Whether the respondent proves that the claimant made an application for permission for the development CA No.208/18, 209/18 and 212/18 Page no. 25 of 58 to CIDCO for the ands at Dhasakoshi?
7. Whether the respondent proves that in or around July 2006 the claimant informed the respondent that they were no longer interested in acquiring lands at Vahal and instructed the respondent to go back to aggregation of land at Dhasakoshi?
8. Whether the claimant proves that the respondent has failed and neglected to perform its obligations under the said MOU and /or its addendum and/or otherwise irrevocably breached and violated its obligation as alleged in paragraph 8 of the statement of claim?
9. Whether the respondent proves that the claimant has failed and neglected to perform the obligation under the said MOU and/ or its addendum?
10.Whether the claimant proves that the respondent practices and perpetrated fraud upon the claimant by making misrepresentation with regard to the alternate lands as covered under the addendum as alleged by the claimant?
11.Whether the respondent proves that the respondent had procured pieces and parcels of land aggregating to 94.4359 acres in terms MOU and/ or addendum?
12.Whether the claimant proves that the said MOU and/ or its addendum have been illegally and validly terminated?
13.Whether the claimant proves that the claimant is entitled to the claims and reliefs prayed for in the CA No.208/18, 209/18 and 212/18 Page no. 26 of 58 statement of claim?
14.Whether the respondent proves that the respondent is entitled to the claims and reliefs prayed for in the Counter Claim?
5.1 The said issue reveals the gamut of the controversy involved or the expanse of the controversy which was the subject matter before the Ld. Arbitrator.
5.2 The finding/answers of the Ld. Arbitrator upon the said issues are also relevant. I am quoting as here under :-
ISSUES ANSWERS/FINDNGS 1.Whether the claimant 33.29 In view of the aforesaid discussion, proves that it was on the it is held that the claimant has failed to basis of misrepresentation prove that it was on the basis of and/ or fraud that the misrepresentation and/or fraud that the respondent induced the Respondent induced the Claimant to claimant to execute the said execute the said MOU and/or part with MOU and/or part with monies. The issue No.1 is answered monies? accordingly. 2. Whether the respondent 36 So far as Issue No. 2 is concerned, it is proves that the respondent raised on the basis of the pleadings in informed about any paragraph 15 of the Written Statement. impediments to the claimant Respondent Witness No. 1 Shri Ajay after the execution of the Khemka in his Affidavit of Evidence in MOU dated 22.11.2005, as paragraphs 6 and 7 has stated that on alleged in paragraph 15 of physical measurements of the land it was the Written Statement? observed that part of the identified lands
fell within 500 meters of Gaothan area and therefore could not be used for CFS. The CA No.208/18, 209/18 and 212/18 Page no. 27 of 58 witness further stated that he intimated the Claimants accordingly. Thereupon the Claimants instructed to proceed with the aggregation of lands other than those falling within 500 meters of Goathan. In support, Respondent has relied upon letter dated 24th November 2005 for obtaining Zonal Confirmation Certificate and the fact that the said Application contains different survey numbers than the original MOU.
Although there is no direct evidence regarding any communication in this regard, the Respondent has relied upon material on record which indicates that such impediment was noticed after the execution of the MOU. As a matter of fact in the cross examination of Witness Mr. Khemka, a question was put email of August 2008, that as the Claimants had paid substantial monies to the Respondent against First Three Running Account Bills and as there was no way getting the same back and as the representation made by the Respondent regarding Vahal land also turned out to be false, the Claimant had no alternative buy to accept whatever land the Respondent was able to acquire, cannot be accepted at all. These are all submissions of the learned Tribunal. Under the circumstances though Respondent has not proved that the Respondent informed about the impediments to the Claimants exactly as alleged in paragraph 15 of the Written Statement, the material on record does CA No.208/18, 209/18 and 212/18 Page no. 28 of 58 indicate that the Claimant was aware of the said impediment. Issue No. 2 is answered accordingly.
3. Whether the respondent 34 On the basis of the aforesaid discussion proves that despite the it is held that the Respondent has proved knowledge of the that despite the knowledge of the acquisition of the subject acquisition of the subject land for lands for MMSEZ, the MMSEZ, the Respondent continued to respondent continued to comply with the terms of the MOU at the comply with the terms of instance of the claimant and the Issue No. MOU at the instance of the 3 is answered accordingly. claimant?
4. Whether the respondent 37. Accordingly it is held that the proves that in view of the Respondent has proved that in view of the conduct of the claimant the conduct of the Claimant the time limit for time limit for acquisition of the acquisition of subject lands by the subject lands by the Respondent as stipulated in the MOU was respondent as stipulated in waived. Issue No. 4 is answered the MOU was waived? accordingly.
5.Whether the claimant 35 On the basis of the discussion herein proves that the claimant above, it is held that the Claimant has approached the Government failed to prove that the Claimant of Maharashtra for approached Government of Maharashtra permission for a Mega for permission for a Mega Project Status Project Status for their CFS for their CFS project at the instance of the project at the instance of the Respondent. Issue No. 5 is answered respondent? accordingly.
6.Whether the respondent 38 On the basis of the aforesaid discussion proves that the claimant it is held that the Respondent has proved made an application for that the Claimant made application for permission for the permission for the development to CIDCO development to CIDCO for for the lands at Dhasakoshi. Issue No. 6 is the ands at Dhasakoshi? answered accordingly.
7. Whether the respondent 39 Under the circumstances on the basis CA No.208/18, 209/18 and 212/18 Page no. 29 of 58 proves that in or around of the conduct of the Claimant revealed by July 2006 the claimant these emails, it is clear that after execution informed the respondent of the Addendum, Claimant were not that they were no longer interested in Vahal land and gave interested in acquiring lands instructions to the Respondent to continue at Vahal and instructed the to aggregate lands at Dhasakoshi. Even respondent to go back to though there are no written instructions in aggregation of land at this behalf the aforesaid conduct of the Dhasakoshi? Claimant revealed by several emails proves that such instructions were given by the Claimant to the Respondent. Issue No. 7 is answered accordingly.
8.Whether the claimant 53 Therefore this submission of the proves that the respondent Advocate for the claimant also fails. Thus, has failed and neglected to the claimant has failed to prove that perform its obligations respondent has failed and neglected to under the said MOU and /or perform its obligations under the said its addendum and/or MOU and/or Addendum or otherwise otherwise irrevocably irrevocably breached and violated its breached and violated its obligations as alleged in paragraph 8 of the obligation as alleged in Statement of Claim. The issue No. 8 is paragraph 8 of the answered accordingly. statement of claim?
9.Whether the respondent 54 As such it cannot be held that there is proves that the claimant has any breach, it requires to be mentioned that failed and neglected to Claimant has promptly made payment of perform the obligation Rs. 87,00,000/ as earnest money and also under the said MOU and/ or paid amounts for RA Bill No. 1, RA Bill its addendum? No. 2 and RA Bill No. 3 after approval by their Advocates and therefore the Respondent has failed to prove that the Claimant has failed and neglected to perform its obligation under the said MOU and/or the said Addendum. The issue No.9 CA No.208/18, 209/18 and 212/18 Page no. 30 of 58 is answered accordingly.
10.Whether the claimant 40.8 In the circumstances, it is held that proves that the respondent the Claimant has failed to prove that practices and perpetrated Respondent practiced and perpetrated fraud upon the claimant by fraud upon the Claimant by making making misrepresentation misrepresentation with regard to the with regard to the alternate alternate land as covered under the lands as covered under the Addendum as alleged by the Claimant. addendum as alleged by the Issue No. 10 is answered accordingly. claimant?
11.Whether the respondent Assuming for the sake of argument that proves that the respondent respondent has furnished the documents in had procured pieces and support of various bills, unless they are parcels of land aggregating verified and approved by Advocates and to 94.4359 acres in terms solicitors of the claimant, not only the bills MOU and/ or addendum? don't become payable but also the very aggregation cannot be held to be proved. In view of this, it is held that the only aggregation proved by the respondent is maximum of area covered by RA bill no.1, and RA bill no. 3. Thus, the respondent has failed to prove the issue and the issue no.11 is answered accordingly.
12.Whether the claimant 56.2 Under the circumstances, Claimant proves that the said MOU has failed to prove that said MOU and/or and/ or its addendum have its Addendum have been legally and been illegally and validly validly terminated. The Issue No. 12 is terminated? decided accordingly.
13.Whether the claimant 58 Following Final Award is made: proves that the claimant is entitled to the claims and (i) All claims made by the Claimant reliefs prayed for in the in the Statement of Claim, statement of claim? excepting claim for refund of amount of Rs. 1,18,500/ are CA No.208/18, 209/18 and 212/18 Page no. 31 of 58 rejected.
(ii) All claims made by the Respondent in the Counter Claim Statement are rejected.
(iii) The claim for refund of amount of Rs. 1,18,500/ by the Claimant is granted and the Respondent is directed to pay the Claimant an amount of Rs.1,18,500/ (Rupees One Lakh Eighteen Thousand Five Hundred only) along with interest at the rate of 18% per annum from 1st April, 2006 till the date of the Award and thereafter interest at the rate of 18% per annum on Rs.1,18,500/ (Rupees One Lakh Eighteen Thousand Five Hundred only) till payment and/or realization.
(iv) Parties shall bear their respective costs of the arbitral proceedings.
6. Thus, before the impugned judgment was passed the arbitration proceedings were concluded and had resulted in award wherein the claims of the claimant company - the complainant herein were rejected in toto. I may hasten to add that the said award is under challenge before the Hon'ble High Court U/s 34 of the Arbitration and Conciliation Act 1996. In fact as informed to the Court the findings have been challenged by either side.
6.1 The first point for consideration to my mind is to whether CA No.208/18, 209/18 and 212/18 Page no. 32 of 58 the said arbitration proceedings which were carried out at the instance of the parties inasmuch as being the agreed mode of settlement of dispute is binding or otherwise has any bearing on the present proceedings. I again reiterate that the Ld. Arbitrator has rejected the claim of the claimant to the extent by observing that the contract was not entered into by any fraudulent inducement or otherwise and neither time was the essence of the contract.
6.2 Ld. Trial Court had chosen to altogether eschew the said findings and proceeded to deal with the complaint on a stand-alone basis and thereupon returned the finding of guilt. In this regard I may note herein that the first salvo was fired by the complainant inasmuch notice dated 29.11.2006 - Ex. DW1/AP was served through Advocate Godfrey W.Pimenta. I am just highlighting that in para 23 of the said notice the complainant alleged that on account of failure to perform the terms of the MOU dated 22.11.2005 and the addendum dated 05.06.2006 has resulted in a loss of Rs. 1,94,07,480/- which is due and payable. In following para no.24 it was stated that the cheque "furnished to my client vide a cheque no. 582475 dated 22.11.2005 drawn on ICICI bank ltd. Gurgaon branch for a sum of Rs. 87 lacs as a guarantee towards performance under the MOU is hereby forthwith being encashed by my client for the reasons more particularly stated herein above for the breaches committed by you of the terms and conditions of the MOU"
CA No.208/18, 209/18 and 212/18 Page no. 33 of 58
6.3. In following para 25 it was stated that since disputes had arisen between the parties regarding the MOU and addendum it was also a notice for invocation of arbitration clause no.17 of the MOU and the complainant company wish to propose the name of Mrs. K.K.Baam, Retired Judge of the Bombay High Court as act as sole arbitrator.
6.4 Relevant to note herein that in para 24 there is a mention of cheque no. 582475 dated 22.11.2005 which was given as performance guarantee which was being sought to be presented. The said notice does not speak of the cheque bearing no. 502592 drawn on Bank of Baroda, Mumbai - the cheque in question which bears the date as 30.11.2006.
First of all I note herein that primacy was accorded to the arbitration proceedings and the complainant also wish to commence the same and thereafter appropriate the cheque towards breach of the agreement or towards the loss sustained on account of the non performance of the agreement. Hence, the parties had visualized arbitration being the agreed mode for resolution of their grievances/ for adjudication of the liability.
6.5 Secondly as mentioned herein above in the first notice there is a reference to the cheque being of ICICI bank. The said aspect was sought to be treated as an error in the follow up notice dated 20.12.2006 i.e. Ex. PW1/23 and it was reiterated that the cheque in question was infact the cheque drawn on Bank of Baroda, Mumbai. It CA No.208/18, 209/18 and 212/18 Page no. 34 of 58 needs to be noted that the said error has to be seen in the gamut of the fact that the agreement had a validity of only 4 months 9 days inasmuch as it was executed on 22.11.2005 and had to end on 31.03.2006. Issuance of a cheque after 30.03.2006 has to be viewed with suspicion. It also needs to be noted that the initial agreement i.e. dated 22.11.2005 Ex. PW1/4 there is no reference to the said cheque. The cheque was infact given vide Ex. PW1/5 and was undated.
6.6 In the event if the time was essence of the contract as alleged by the complainant and not extended by them and the cheque was given as performance of the contract, it could not have been dated much after the said date fixed for performance either 31.03.2006 or as per the date on the addendum i.e. 31.08.2006. The complainant could not have sailed in two boats and contend that time was the essence of the contract and later on present the cheque on 30.11.2006 by inserting the date thereon.
6.7 Reverting again to the moot question i.e. the weightage which is to be given to the findings of the Ld. Arbitrator in the given proceedings - the interplay thereof qua the said aspect one view which is manifested in terms of the judgment of Radhey Shyam Kejriwal v/s State of Bengal Indian Kanoon http://indiankanoon.org/doc/1591163/ 5 supports the accused persons inasmuch as the Ld. Arbitrator has given an award which is adverse to the complainant herein. Adding to the same as mentioned earlier initiation of arbitration proceeding was CA No.208/18, 209/18 and 212/18 Page no. 35 of 58 the first demand in terms of notice dated 29.11.2006 sent by the complainant through its Advocate Godfrey W.Pimenta.
6.8. As such to my mind the explanation to Section 138 N.I.Act i.e. the word "legally enforceable debt" now has to be construed accordingly to incorporate the outcome of the Arbitration. Once there is an adjudication by the competent Court on same material facts unless and until there are valid reasons to conclude otherwise the said findings cannot be given a complete go by as done by the Ld. Trial Court i.e. by eschewing altogether the same.
6.9 Having said that there is also a view that the findings of criminal and civil cases both have to be given separately and the findings of the Civil Court cannot be binding on criminal Courts. In fact Ld. Counsel for the complainant had relied upon Kishan Singh (d) through LRs v/s Gurpal Singh and Ors. Reported in AIR 3624. The Hon'ble Apex Court had observed as hereunder :
"Thus in view of the above the law on the issue stands crystallized to the effect that the findings of the fact recorded by the Civil Court do not have any bearing so far as criminal case is concerned and vice versa. Standard of proof is different in civil and criminal cases. In civil cases it is preponderance of probabilities while in criminal cases it is beyond reasonable doubt. There is neither any statutory nor any legal principle that findings recorded by the Court either in civil or criminal proceedings shall be CA No.208/18, 209/18 and 212/18 Page no. 36 of 58 binding between the same parties while dealing with the same subject matter and both the cases have to be decided on the basis of the evidence adduced therein. However, there may be cases where the provisions of Sections 41 to 43 of the Indian Evidence Act, 1872, dealing with the relevance of previous judgments in subsequent cases may be taken into consideration."
7. Hence, in my opinion it would be apt if the evidence led in the criminal case is considered on a stand alone basis without taking note of the award or the findings therein.
8. Now even if I exclude the reasoning penned down in the preceding paragraph there are number of reasons which I shall set forth in subsequent paragraphs whereby the judgment under challenge - of conviction requires to be set aside.
In order to lend finality I am independently evaluating the evidence led in the case. Broadly the dispute in the present appeals boils down to two questions -
a) whether time was the essence of the contract and
b) whether the terms of the contract were violated by the appellants.
8.1. Insofar as point no.a (supra) Ld. M.M. had returned the findings in favour of the complainant observing that time was the essence of the contract. Secondly she had concluded that the CA No.208/18, 209/18 and 212/18 Page no. 37 of 58 performance of the contract had become void and the appellants were to hand over/ return the consideration which flowed to them.
8.2 It is but apparent that the terms of the initial contract between the parties, which is the basic document mandated that the respondent would conclude the transaction i.e. acquisition of land by 31.03.2006 at village Dhasakoshi. It is also a matter of fact that insofar as the second running bill (RA bill) is concerned the same was cleared on 16.05.2006 - after the stipulated date for performance of the agreement. In the teeth of such an categoric admission by the complainant themselves that the running bill was cleared by them after 31.03.2006 or much after the period of 120 days fixed for acquisition of land was over, it itself suggests that the time line inserted in the contract stood waived by the complainant company itself. It also needs to be noted that the second bill was delayed for more than two months by the complainant. There is no justification for releasing the payment after 31.03.2006 except the fact that the complainant treated the contract as subsisting and waived of the time line of 31.03.2006. There cannot be any other construction. The payment was made by the complainant. They had parted with the money for acquisition of land in Dhasakoshi. The making of payment after 31.03.2006 is also material for the reason that this payment was made knowing well the implication/status of the remaining acquisition of land/ the status of the project at Dhasakoshi.
8.3 As mentioned earlier the cheque in question was dated 30.11.2006. The complainant owes an explanation as to why they had CA No.208/18, 209/18 and 212/18 Page no. 38 of 58 not promptly issued the notices after 31.03.2006 or latest immediately after 31.08.2006. There was no need to wait till November 2006. Secondly looking through the prism of the legal notices which were exchanged between the parties in reply to the legal notice/ a sort of rejoinder on behalf of the complainant sent through Godfrey W.Pimenta. in para no.26 the complainant had stated as here under :
"My client state that it is true that upon execution of said addendum dated 05.06.2006 your client commenced aggregation of land at Vahal and raised a running account bill on July 25,2006 towards payment of 10% against agreement for sale for 14 acres of land at Vahal @ Rs. 2,90,000/ per acre aggregating to Rs. 43,26,260. My client states that since the said lands were not in accordance with the terms and conditions of the said addendum my client is justified in not making the payments in respect thereof. My client states that they had opted for Vahal land on your client's categorical representation and assurances that the land at Vahal were free from any acquisition by any governmental agency. My client states that it was then only that my client opted for land at Vahal and entered the said addendum dated 05.06.2006. My client states that the plots which your client acquired for my client were all scattered over an area of 200 acres with even expressway running through them."
8.4 Now in respect of Vahal land also there is an admission that aggregation of land was commenced and running bills were raised CA No.208/18, 209/18 and 212/18 Page no. 39 of 58 however the same were not cleared. Necessarily the onus is upon the complainant to state as why such lands were not in accordance with the terms and conditions of the contract.
8.5 Reason for the same as attributed by the accused persons is that the complainant company was interested at the land at Dhasakoshi and was also trying to have the status of a Mega Project for which the complainant company was communicating with the Govt. authorities/ concerned statutory authorities. The same was to exclude the project from the MMSEZ which was to be proposed at Dhasakoshi and as a backup only to have land, in eventuality of not able to get land at Dhasakoshi the lands at Vahal had to be acquired. The land at Dhasakoshi was being sought for vigorously by the complainant.
8.6 Now on this particular aspect there is an admission in the legal notice itself inasmuch as in Ex. PW1/28 in response to the reply received from the accused persons which is dated 27.01.2006 in para no.19 it is stated as here under :
"With reference to paragraph 17 of your letter under reply, my client vehemently denies that thereafter n order to avoid the acquisitions of lands at Dhasakoshi for the purposes of MMSEZ, my client applied for grant of 'Mega Project' status to the above proposed CFS and approached the State Government for requisite permissions under the Bombay Tenancy and Agricultural Lands Act, 1948 for purchasing of the above lands at CA No.208/18, 209/18 and 212/18 Page no. 40 of 58 Dhasakoshi. My client states that though they applied to the authorities concerned for the various permission, but under said Memorandum of Understanding dated 22nd November 2005 the basic and the prime responsibility was always on the part of your clients for which purpose my client had executed the necessary Power of Attorney in favour of your clients, authorizing your clients to file the necessary applications and procure all permissions for the said purpose. My client further states that whatever my client did was always at the advice of your clients and my client merely acted as a facilitator to assist your clients in procuring the requisite approvals, sanctions and permissions for putting up a CFS by my client. My client vehemently denies that in that regard my client met the Chief Secretary and Chief Minister of Maharashtra. My client further vehemently denies that my client informed your clients that my client was assured that necessary permissions would be granted to my client and the lands at Dhasakoshi would be excluded from the lands to be acquired for the purposes of MMSEZ. My client further vehemently denies that accordingly, my client instructed your clients to proceed with the aggregation of land at Dhasakoshi. My client states that it is true that on or around 11th May 2006 my client received a clearance from the Ministry of Commerce & Industry, New Delhi to set up the proposed CFS. My client states that the grant such approval by Ministry of Commerce & Industry, New Delhi has no relation of whatsoever nature to the procurement of the land by your clients under the CA No.208/18, 209/18 and 212/18 Page no. 41 of 58 terms of the said Memorandum of Understanding dated 22nd November 2005 and your clients by making the said statement are trying to sideline the main issue of acquisition of the land by them. My client states that in any event my client had sought the approval of the Ministry of Commerce & Industry, New Delhi much earlier."
8.7. In this regard there are certain correspondences which reveal that the complainant company had tried to get the Mega Project Status and also sought for intervention of the Govt. authority for the project at Dhasakoshi. In fact the letters were addressed to the State Govt. as well as to M/s Sea King Infrastructure. In fact even till August 2006 the application of the complainant for grant of Mega Project Status was pending. I am quoting the said correspondences in this regard.
Date : 3rd March, 2006 No. BD/land/SD/293/2006 C 699, Directorate of Industries, New Administrative building opposite Mantralaya, Mumbai 400032 To M/s. Apollo International Ltd.
603, Center Point, J.B. Nagar Andheri Kurla Road, Andheri (East) Mumbai400059.
Sub.: Permission for purchase of Land exceeding 10 Hectares forbonafide use for industrial purpose under Section 631(A)(2) of Bombay Tenancy and CA No.208/18, 209/18 and 212/18 Page no. 42 of 58 Agricultural Act, 1948 (1994 Amendment.
Ref.: Your letter dated 24.01.2006.
Sir, With reference to your letter in respect of the above subject, you are informed that the Mumbai Integrated S.E.Z. Ltd. has already been given permission vide permission order dated 16.06.2005 to purchase land for development of Special Economic Zone in the village in which you have applied for permission to purchase land. Therefore, no permission can be granted again to purchase the said land which may please be noted.
Yours faithfully, P.V. Satam) Deputy Director, Industries (Land) for Development Commissioner (Indust.) True translation in English of Marathi Document (N.M. Ganguli) 8.8 It is but apparent that the company vide the aforesaid letter was informed that the land was already earmarked for the MMSEZ and permission cannot be granted to the complainant, still knowing well the complainant company pursued the matter and sent a letter dated 27.03.2006 Ex. DW1/P addressed to the Chief Minister, Govt. of Maharashtra Mantralaya, Mumbai. I am extracting some part of the lettr CA No.208/18, 209/18 and 212/18 Page no. 43 of 58 which reads as under :
Dated: 27th March, 2006 To The Honorable Chief Minister, Government of Maharashtra, Mantralaya, Mumbai.
Sub.: To accord Mega Project status and given N/A clearance for setting up a Mega project of Container Freight Station (CFS) at VillageDhasakhoshi, TalukaUran, Dist. Raigadh.
To implement the said project, we have applied to the Development Commissioner (industries) for giving permission for waiver of agricultural ceiling above 10 Ha, for setting up of CFS at Village Dhasakhosi, TalukaUran, Dist. Raigadh and understand that the said land falls under the proposed M.M.S.E.Z. being developed over 25,000 acres, hence your approval is requested for exclusion of the said land from MMSEZ project.............
We, therefore, request you sir to kindly favour us by excluding this area from the proposed MMSEZ and allow us th N/A permission by waiver of agricultural land ceiling beyond 10 Ha, for setting up the CFS as stated above which will contribute extensively to employment and revenue generation for the state and has very low gestation period.
Sir, by allowing Mega Project Status, kindly also give us the following concessions available to Mega Project namely.
CA No.208/18, 209/18 and 212/18 Page no. 44 of 58
1. To waive earth work royalty.
2. To provide access road to the site from PWD/irrigation Dept.
3. To waive development charges of CIDCO.
4. To provide 50% waiver of electricity duty.
5. To give 50% concession in Stamp Duty.
This letter was sent by Apollo International and on the letter pad of the company.
8.9 Similarly there is a letter addressed to the Chairman, Seaking Infrastructure Ltd. Dated 12.04.2006 Ex. DW-1/Q. Similar request was made that the land which the company has is in one corner and will be of no use of SEZ hence, the claimant requested for a NOC for deleting their area from the MMSEZ and allow to establish a CFS over 85 acres which will provide employment to over 110 people and give impetus to economic activity in the region.
8.10 There is a letter addressed to the complainant company for setting up a CFS at village Dhasakoshi which reads as under :
Udyog Bhawan, New Delhi, Dated the 11th May, 2006 To The Managing Director M/s Apollo International Ltd.
New Delhi.
Sub.: Setting up a CFS at Village Dhasa Khosi.
Sir, CA No.208/18, 209/18 and 212/18 Page no. 45 of 58 I am directed to refer to your application dated 24.02.2006 on the above subject and to that the Government has approved your proposal for setting up a Container Freight Station Village Dhasa Khosi for handling import and export cargo. The approval is subject to the following terms and conditions:
a) The Letter of Intent holder shall take adequate steps to create proper infrastructure keeping in view the indicative norms given in Parts A & B of the Guidelines for setting up Inland container Depots/Container Freight Stations (ICDs/CFSs) within a period of one year from the date of issue of this letter.
b) Necessary bond and guarantees, as required, would be executed with the concerned Commissioner of Customs and Central Excise.
c) The approval would be subject to cancellation in the event of violation of the Customs and other laws of the land and Rules.
d) A quarterly progress report of the implementation shall be sent to the Ministry of Commerce.
e) The working of the CFS will be open to review by the Inter Ministerial Committee.
f) Formalities in respect of acquisition/possession of the land shall be completed within 60 days and intimated to the M/o Commerce, failing which the approval granted would be automatically cancelled.
Please acknowledge receipt of this letter.
Yours faithfully, (Anju Sharma) Director CA No.208/18, 209/18 and 212/18 Page no. 46 of 58 8.11 That being scenario the payment of the bills of Dhasakoshi land on 16.05.2006 after the date agreed i.e 31.03.2006 is not accidental or co-incidental but it reveals that the complainant company was trying to secure land parcel and also statutory/govt. permission to have a foot hold at Dhasakoshi. Under said circumstances it also cannot be said that they were unaware of the land acquisition of MMSEZ at village Dhasakoshi. In fact Dhasakoshi land or project therein was being pursued vigorously by the complainant company even post 31.03.2006 and it is not merely that on account of acquisition of land the company had retracted or could not pursue the project. In this regard there is also a letter dated 17.08.2006 addressed to the complainant company by D.A. Kulkarni, Under-Secretary to Govt. Ex. DW1/AF wherein it is stated that the request to accord Mega Project Status is under scrutiny.
8.12. The observation of the Ld Trial Court that the land at Dhasakoshi could not be acquired for the reason that it was acquired land is completely misplaced. Rather the correct observation to my mind is that complainant lost/ was outbidded for his project at Dhasakoshi as the said land which it was hopeful for getting, could not be released to him however, for the same no fault can be attributed to the respondents inasmuch as whatever little traction on ground the complainant company had was because of the ground efforts of the Appellants. Further relevant to note that in the letter which they have CA No.208/18, 209/18 and 212/18 Page no. 47 of 58 sent to Sea King infrastructure the complainant company itself had claimed that they have 85 acres of land for establishment of CFS.
8.13 Thus, the time being the essence of the contract was never adhered to by the complainant and was waived.
9. It is but apparent that the bargain/transaction interse the companies was ought to be continued inasmuch as the land at Vahal was sought to be acquired by way of an addendum agreement. The time line for the same was 31.08.2006. Now viz a viz the said land it is also the matter of record that one RA bill of Rs. 43 lacs odd was raised. I have already quoted that viz a viz said land which was sought to be acquired the said bill was not approved for the purposes of disbursal by Kanga & company for the reasons best known to the complainant. The said bill was dated July 25,2006. The total amount payable was Rs. 43,26,220/- Once such a categoric admission comes in the reply to the legal notice the onus shifts back upon the complainant as to why said bill was not cleared notwithstanding the fact that the contract was in subsistence. It is also not the case of the complainant that at any point of time they were not interested in acquisition of land at Vahal or in any manner not interested in pursuing the transaction further. In simpler words what is more apparent is the fact that the claimant was more interested in the land at Dhasakoshi and not at Vahal. May be future prospectus of Dhasakoshi land were more or for any other like reason but the complainant seems not very much inclined for the land at Vahal which only appears to be a sort of back-up agreement. Another aspect CA No.208/18, 209/18 and 212/18 Page no. 48 of 58 which I could gather from the record of Ld. Arbitrator is that the complainant through another subsidiary company of its i.e. M/s Apollo Logic Solution had got the land at village Sumanta, Distt. Raigad for its project at a higher price. However viz a viz the said aspect nothing has been stated by the complainant company in the present case. Thus what is more probable is the fact that the complainant company was only interested in getting the land at Dhasakoshi for which it had tried hard however the land at Vahal or Panvel was never in contemplation notwithstanding the fact that agreement was entered into with the appellants.
10. In view of the aforesaid discussion in my opinion the broad edifice of the complainant case falls. Once time is not the essence of the contract and the other fact that the complainant was trying for a Mega Project Status which it could not get the entire judgment perse is liable to be set aside. At the cost of reiteration on the date of presentment of the cheque the complainant has no legally enforceable debt which could have been the consideration for the cheque. Reliance in this regard can be made to the judgment of M/s Indus Airways P. Ltd. V/s Magnum Aviation P. ltd. reported in Indian Kanoon- http://indiankanoon.org/doc/77590271.
19. The above reasoning of the Delhi High Court is clearly flawed inasmuch as it failed to keep inmind the fine distinction between civil liability and criminal liability under Section 138 of the N.I.Act. If at the time of entering into a contract, CA No.208/18, 209/18 and 212/18 Page no. 49 of 58 it is one of the conditions of the contract that the purchaser has to pay the amount in advance and there is breach of such condition then purchaser may have to make good the loss that might have occasioned to the seller but that does not create a criminal liability under Section 138. For a criminal liability to be made out under Section 138, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque. We are unable to accept the view of the Delhi High Court that the issuance of cheque towards advance payment at the time of signing such contract has to be considered as subsisting liability and dishonour of such cheque amounts to an offence under Section 138 of the N.I. Act. The Delhi High Court has traveled beyond the scope of Section 138 of the N.I. Act by holding that the purpose of enacting Section 138 of the N.I. Act would stand defeated if after placing orders and giving advance payments, the instructions for stop payments are issued and orders are cancelled. In what we have discussed above, if a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusion either because of its cancellation or otherwise and material or goods for which purchase order was placed is not supplied by the supplier, in our considered view, the cheque cannot be said to have been drawn for an existing debt or liability.
Said judgment squarely applied herein. The cheque herein CA No.208/18, 209/18 and 212/18 Page no. 50 of 58 was given as an advance cheque for performance of the contract but no liability was there on the date of presentment of the cheque in view of the preceding discussion.
10.1 The second limb of the arguments of Ld. Counsel for the appellants/accused persons predicated on the reasoning that the testimony of the prime witness PW Pradeep Chugh is bereft of any merit for the reason that he could not be a witness to facts - had deposed merely on the strength of Power of Attorney which too was extended on yearly basis. On this aspect strong emphasis was made on the judgment passed by Hon'ble Apex Court - A.C.Narayanan v/s State of Maharashtra reported in Manu/SC/0075/2015, para no.15 of which was strongly relied upon. In continuation of the said judgment strong reliance was made on the judgment of Padmavathy & Anr. v/s State of NCT of Delhi reported in 2017(3) JCC N.I. 181. Furthermore it was contended that the Power of Attorney wherewith Pradeep Chugh was prosecuting the complaint of the complainant was being extended on yearly basis which itself shows that the company had no confidence in him.
10.2 In rebuttal Ld. Counsel for complainant herein submitted that no infirmity can be pointed out to the testimony of PW Pradeep Chugh. The said testimony has been duly accepted to be a valid testimony by the Ld. M.M. and there is no palpable reason to disagree with the said findings. Furthermore by and large the entire case is based on documents and if those documents are seen in the light of the CA No.208/18, 209/18 and 212/18 Page no. 51 of 58 testimony of witness and his cross examination the same would reveal that the witness had due knowledge of the entire transaction.
10.3 This point i.e. deposition of PW Pradeep Chugh can be looked from two different angles:
i) the competence of Pradeep Chugh to depose on the strength of the Power of Attorney;
ii) the legal impact or effect of his testimony in the light of totality of acts for the reason that the transaction implicitly was being done through various channels.
10.4 Insofar as point no.(i) is concerned admittedly from the record it is apparent that this witness was cross examined minimally by the Ld. Counsel for the accused persons. In fact his cross examination is barely of two pages. Nothing has been brought out from his cross examination which would completely discredit his testimony.
10.5 Insofar as point no.(ii) is concerned the overall transaction is manifested by way of ample documentary evidence. It is not a case where the complainant had only deposed on the strength of the Power of Attorney rather there is a plethora of documentary evidence, extensive cross examination of DW-1 which all throws light on the transaction. That being scenario on this particular aspect I find no umbrage to reject the evidence led by CW Pradeep Chugh.
11. Now the accused persons have discharged the burden CA No.208/18, 209/18 and 212/18 Page no. 52 of 58 which was casted upon them and they have been able to probabalize that they had done their part - fulfilled the contractual obligations and were not at fault insofar as the complainant failing to get the land at Dhasakoshi. In this regard I may rely upon the judgment of Krishna Janardhan Bhatt v/s Dattaraya G. Hegde reported in Indiankanoon. org/doc/673245. Reliance is made on the ----
24. In Bharat Barrel & Drum Manufacturing Company v. Amin Chand Payrelal [(1999) 3 SCC 35] interpreting Section 118(a) of the Act, this Court opined: Krishna Janardhan Bhat vs Dattatraya G. Hegde on 11 January, 2008 Indian Kanoon http://indiankanoon.org/doc/673245/ 6 #Upon consideration of various judgments as noted herein above, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the nonexistence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by CA No.208/18, 209/18 and 212/18 Page no. 53 of 58 reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the nonexistence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt[Emphasis supplied]
25. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is #preponderance of probabilities#. Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies.
26. A statutory presumption has an evidentiary value. The question as to whether the presumption whether stood rebutted or not, must, therefore, be determined keeping in view the other evidences on record. For the said purpose, stepping into the witness box by the appellant is not imperative. In a case of this nature, where the chances of false implication cannot be ruled out, CA No.208/18, 209/18 and 212/18 Page no. 54 of 58 the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration.
27. In M.S. Narayana Menon Alias Mani v. State of Kerala and Another [(2006) 6 SCC 39], it was held that once the accused is found to discharge his initial burden, it shifts to the complainant.
28. Four cheques, according to the accused, appear to have been drawn on the same day. The counterfoil of the cheque book, according to the appellant, was in the handwriting of R.G. Bhat wherein it was shown that apart from other payments, a sum of Rs. 1500/ was withdrawn on a self drawn cheque. The courts below proceeded to hold that the defence raised by the appellant has not been proved, which, in our opinion, is not correct. He did not know that the said cheque had not been encashed. He replied to the notice thinking that one of the cheque has been misused. There is nothing on record to show that he knew that one of the cheques was still with R.G. Bhat.
29. Disputes and differences between him and R.G. Bhat stood established by admission of the respondent himself. Similar industry was being run by R.G. Bhat although he was acting as the constituted attorney of the appellant. According to the appellant, R.G. Bhat had cheated him. Counterfoil showed that not more than Rs. 20,000/ had ever been withdrawn from that bank at a time. The courts were required to draw an inference as to the probability of the CA No.208/18, 209/18 and 212/18 Page no. 55 of 58 complainants advancing a sum of Rs. 1.5 lakhs on mere asking and that too without keeping any documentary proof. Even there was no witness. The purported story that the appellant would himself come forward to return the amount by a cheque knowing fully well that he did not have any sufficient funds is difficult to believe.
30. In K. Prakashan v. P.K. Surenderan [2007 (12) SCALE 96], this Court following M.S. Narayana Menon (supra) opined:
2. The Act raises two presumptions; firstly, in regard to the passing of consideration as contained in Section 118 (a) therein and, secondly, a presumption that the holder of cheque receiving the same of the nature referred to in Section 139 discharged in whole or in part any debt or other liability.
Presumptions both under Sections 118
(a) and 139 are rebuttable in nature. Having regard to the definition of terms #proved# and #disproved# as contained in Section 3 of the Evidence Act as also the nature of the said burden upon the prosecution vis`vis an accused it is not necessary that the accused must step into the witness box to discharge the burden of proof in terms of the aforementioned provision.
13. It is furthermore not in doubt or dispute that whereas the standard of proof so far as the prosecution is concerned is proof of guilt beyond all reasonable doubt; the one on the accused is only mere preponderance of probability.# In John K. John v. Tom Varghese & Anr. [JT 2007 (13) SC 222], this Court held:
CA No.208/18, 209/18 and 212/18 Page no. 56 of 58 The High Court was entitled to take notice of the conduct of the parties. It has been found by the High Court as of fact that the complainant did not approach the court with clean hands. His conduct was not that of a prudent man. Why no instrument was executed although a huge sum of money was allegedly paid to the respondent was a relevant question which could be posed in the matter. It was open to the High Court to draw its own conclusion therein. Not only no document had been executed, even no interest had been charged. It would be absurd to form an opinion that despite knowing that the respondent even was not in a position to discharge his burden to pay installments in respect of the prized amount, an advance would be made to him and that too even after institution of three civil suits. The amount advanced even did not carry any interest. If in a situation of this nature, the High Court has arrived at a finding that the respondent has discharged his burden of proof cast on him under Section 139 of the Act, no exception thereto can be taken.
12. That being the legal position the accused persons have been able to discharge their defence by preponderance of probabilities on the basis of the material available on record. It is not a case where the accused persons had contracted to aggregate land and later on the said contract became void but actually on the basis of the record the correct position is that the complainant could not get the permissions for acquisition of land at Dhasakoshi village and later on changed stands and pleaded fraud; misrepresentation and breach of contractual CA No.208/18, 209/18 and 212/18 Page no. 57 of 58 obligations and tried to shift back the blame upon the accused persons for its botched project
13. In view of the aforesaid discussions the appeals deserve to be accepted/allowed. The judgment dt. 02.04.2018 and the order on sentence dated 03.04.2018 are set aside. The accused persons are acquitted. Their bail bonds/ surety bonds stand discharged. Security or amount deposited in terms of the orders of this Court be returned back to the appellants. Appeal file be consigned to Record Room. TCR be returned back alongwith copy of the order.
Pronounced in the open Court (SUMIT DASS) on 11.10.2021 ASJ-04 + Spl. Judge (NDPS) South East District, Saket Court, New Delhi CA No.208/18, 209/18 and 212/18 Page no. 58 of 58