Delhi District Court
Paramount Paper Traders vs . M/S Yashi Media Works Pvt. Ltd & Anr. ... on 3 October, 2015
IN THE COURT OF BHARAT CHUGH,
METROPOLITAN MAGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.275, TIS HAZARI COURT COMPLEX, DELHI
M/S Paramount Paper Traders
VERSUS
Yashi Media Works Pvt. Ltd & Anr.
JUDGMENT
Part A - The lis at a glance A. Serial No. of the Case CC No. 613/10 B. Date of Alleged Commission of the 13.05.2009 offence C. Name of the Complainant M/S Paramount Paper Traders 3983.12m 1st Floor Jitender Paper Market, Chawri Bazar, Delhi - 110006 (Through its Partner Shri Naresh Kumar Rastogi) D. Name of Accused persons & their 1. M/S Yashi Media Works Pvt. Ltd. C/o parental&residence Shri Utkarsh Pandey, Director R/o B-553, Sarita Vihar, New Delhi-110076.
2. Mr. Utkarsh Pandey, Director of M/S Yashi Media Works Pvt.
Ltd, R/o B-553, Sarita Vihar , New Delhi-110076.
E. Offence complained of Dishonor of Cheque - culpable u/s 138 of the Negotiable Instruments Act.
F. Plea of the accused and his Pleaded not Guilty on the premise that the examination (if any) cheques in question were given in advance as security and not in discharge of a legally enforceable debt or liability. The cheques are stated to have been misused by the complainant. The accused has alternatively argued that the payment for the transaction had already been paid to the complainant, and therefore, no liability remains with Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 1 of 34 respect to the goods purchased.
G. Final Order Conviction H. Judgment reserved on 01.10.2015 I. Judgment pronounced on 03.10.2015.
Part B - A brief statement of reasons for the decision (As mandated u/s 355(i) of the Code of Criminal Procedure, 1973.) INDEX I. THE COMPLAINANT CASE II. PRELIMINARY PROCEEDINGS III. THE DEFENCE VERSION IV. LEGAL BENCHMARK V. ISSUES VI. SERVICE OF LEGAL DEMAND NOTICE VII. WHETHER THE PRESENT COMPLAINT IS VALIDLY INSTITUTED OR NOT ?
VIII. ON EXISTENCE OF LEGALLY ENFORCEABLE DEBT/LIABILITY
IX. CONCLUSION
X. APPLICATION U/S 340 CR.PC FILED BY ACCUSED AGAINST THE COMPLAINANT
I. COMPLAINANT'S CASE
1. Bereft of unnecessary details, the complainant's case is that the complainant is a partnership firm and Shri Naresh Kumar Rastogi is the partner of the said firm and doing the business of paper and Board etc under the name and style of 'M/s Paramount Papers'. It is the complainant's case that the accused no.1 company, acting through its director Accused No.2, had purchased certain quantity of paper/board from the complainant but failed to make payment of bills/dues pertaining to the goods purchased by the accused persons despite repeated demands, leading to a total debit balance of Rs.27,83,444/- as due from the accused persons and towards the complainant since more than one year, (as on the date of filing of the complaint) besides interest. After great persuasions and efforts of the complainant, the accused is stated to have issued the following cheques in favour of the complainant towards part payment of the outstanding dues :-
Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 2 of 34S.No. Cheque No. Date Bank Amount Exhibited as
1. 671360 11.12.2008 HDFC Bank 50,000/- Ex CW1/1
2. 517228 12.01.2009 Corporation Bank 50,000/- Ex CW1/2
3. 517229 13.01.2009 Corporation Bank 50,000/- Ex CW1/3
4. 933793 18.02.2009 Corporation Bank 1,00,000 Ex CW1/4
5. 933794 19.02.2009 Corporation Bank 1,00,000 Ex CW1/5
6. 933795 25.02.2009 Corporation Bank 50,000/- Ex CW1/6
7. 933796 27.02.2009 Corporation Bank 50,000/- Ex CW1/7
8. 933797 03.03.2009 Corporation Bank 50,000/- Ex CW1/8
9. 933798 05.03.2009 Corporation Bank 50,000/- Ex CW1/9
10. 933799 13.03.2009 Corporation Bank 50,000/- Ex CW1/10
11. 933800 16.03.2009 Corporation Bank 50,000/- Ex CW1/11 Total Amount 6,50,000 Table 1.1 Cheques in Question Much to the dismay of the complainant, the cheques returned dishonored for want of sufficient funds in the account of the accused vide return memos dated 13.04.2009 (Exhibited on record as Ex.CW-1/12 to Ex.CW-1/22); These Cheques form the subject matter of the present controversy.
2. This constrained the complainant to issue a legal demand notice to the complainant 24.04.2009 (Ex.CW-1/23 [postal articles Ex. CW1/24 to CW1/26]), which when went unheeded, led to the filing of the present complaint.
II.Preliminary Proceedings
3. Vide order dated 05.06.2009, the Ld.Predecessor of this court summoned only Accused No.1 M/s Yashi Media Works Pvt Ltd, and its director Accused No.2 Mr.Utkarsh Pandey, to face trial for an offence u/s 138 of the NI Act. The other accused were dropped, which order, in due course, Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 3 of 34 attained finality.
4. On 21.10.2011, the substance of accusation against the accused was read over and explained to the accused, in his individual capacity, as well as for the company and their plea of defence was recorded.
III. THE DEFENCE STORY
5. Accused No.2 Mr.Utkarsh Pandey, Director of Accused No.1 M/s Yashi Media Pvt Ltd. took a common defence in his individual capacity as well as for the Accused No.1 company. His defence, as can be culled out from his plea of defence recorded on 21.10.2011 and his statement u/s 313 of the Cr.P.C recorded on 05.06.2015, is as follows :-
(For ease of appreciation, and to narrow down the controversy, let us examine his defence by sifting the admitted from the controverted) 5.1 Admitted 5.1.1. The accused has admitted being the drawer of the cheques in question.
5.1.2 Accused No.2 has admitted having signed the same in the capacity of Director of Accused No.1 Company.
5.1.3 Admitted continuing business relations with the complainant and having purchased material and also having issued the cheques in question to the complainant, albeit with a rider, that the cheques in question were issued as security, and not as payment or in discharge of a legally enforceable debt/liability.Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 4 of 34
5.1.4 Admitted the factum of dishonor of the cheque on account of insufficiency of funds.
5.1.5 Admitted one of the addresses appearing on the legal notice to be his correct address.
5.2. Controverted 5.2.1 Denied the cheque having been issued in discharge of a legally enforceable debt/liability. The accused has contended that the cheques in question were issued as security in the year 2007 and not 2009 as claimed by the complainant. To buttress the claim of having given the cheques much prior, the accused has relied upon encashment of cheques in the same series way back in 2008.
5.2.2 Accused has alternatively argued that, the amount claimed by the complainant has already been paid and no liability subsists on cheques in question.
5.2.3. The accused further denied having conducted any business with the complainant Mr.Naresh Kumar Rastogi, at any given point of time. He claims to have transacted with Mr.Himanshu Rastogi in the year 2007, instead. He disputes the legal capacity of Mr.Naresh Kumar Rastogi to sue on behalf of the partnership firm M/s Paramount Traders.
5.2.4 Denied having filled-in the particulars on the body of the cheque.
Claims to have issued the cheque signed in blank as security.
5.2.5 The service of legal demand notice has been denied by the accused.
Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 5 of 346. After recording of plea of defence, the Partner of the complainant was examined, cross examined and discharged as CW1. In support of his case, the accused entered the witness box himself as DW1 and reiterated his defence. In his testimony the accused reiterated that he used to know the complainant M/s Paramount Paper Traders through Mr.Himanshu Rastogi, who was stated to have been present in the court. The accused reiterated that the cheques in question were handed over to the complainant in the year 2007 as security, signed in blank. To prove the handing over of the cheques in 2007, the accused relied on Ex. CW1/A1, which is the account statement of the complainant to show encashment of previous cheques by the complainant in 2008. The accused argues that he had handed over Cheque Bearing No(s). 933790 to 933800 and Cheque Bearing No(s). 517226 to 517229 to Mr.Himansu Rastogi. He claims that out of these cheques, Cheque No. 933790 for Rs. 1,00,000/- and cheque bearing No. 517227 for Rs. 50,000/- have been honored in 2008. He also led in evidence the original Cheque Books folios prepared by him, pertaining to the issuance of cheques to Mr.Himanshu Rastogi in 2007 (Led in evidence as Ex. DW1/1 and Ex. DW1/2). He also led in evidence other cheque book folios, though not related to the cheque in question in order to substantiate the fact of maintaining these folios in the usual course of business. The accused claims that the complainant has not accounted for all the payments made by him. He has led in evidence some of the cash receipts reflecting payments made by him as Mark-A. The accused submits, that inspite of having made the entire payments, the said Mr.Himanshu Rastogi did not return the blank security cheques, stated to have been handed over to him earlier, on the pretext of them having been lost and untraceable. The accused submits that thereafter, he forgot about the cheques, until they were allegedly misused in the present case.
To sum it up, the accused had argued that the cheques were not given in discharge of a legally enforceable debt/liability. Alternatively, he has also Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 6 of 34 argued that during the course of business, the complainant also used to over-bill the accused and supply lesser goods, on account of which, his liability stands mitigated.
This, in sum and substance, is the factual exposé.
IV. LEGAL BENCHMARK
7. The factual position being thus, Now let us quickly run through the legal benchmark which is to be satisfied in order to constitute an offence under S. 138 N.I. Act :-
(i) Person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
(ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii)That cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(iv)That cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(v) The payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 7 of 34
(vi) The drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
Being cumulative, it goes without saying that it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act.
This is the legal benchmark to be satisfied in order for a prosecution u/s 138 of the N.I.Act to succeed.
V. ISSUES
8. In view of the variance in versions of each party, three questions arise for consideration :-
a) Whether the legal demand notice can be said to have been served on the accused ?;
b) Whether the complaint can be said to have been validly instituted by a legally authorized person ?;
c) Whether the cheque in question can be said to have been issued in discharge of a legally enforceable debt or liability ?
VI - SERVICE OF LEGAL DEMAND NOTICE
9. Let us first examine, the defence of non service of legal notice. The accused has denied the service of legal notice. However, he has not disputed the correctness of the first address appearing on the legal notice i.e B-553, Sarita Vihar, New Delhi, which is exactly the address on which the legal notice has been dispatched by registered post. Infact an AD card is also on record with an Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 8 of 34 acknowledgment. Furthermore, the address on the legal notice/postal articles is exactly the address on which the accused has been successfully served in this case on more occasions than one. Infact, the address mentioned by the accused on his bail bonds (furnished on 05.08.2011) is the very address on which the legal notice has been dispatched. This admission from the horse's mouth itself leaves no doubt as to the correctness of his address. The address once having been admitted to be his correct address, and the legal notice having been dispatched by Registered Post, a presumption of due service arises (See : Section 27 of the General Clauses Act and Section 114 of the Indian Evidence Act) and now it was incumbent on the accused to lead evidence to prove that the notice was not served on him. Not even an iota of evidence has been brought on record by the accused to displace the presumption of due service. A mere denial that the legal notice has not been served, would not ipso facto rebut the presumption of due service. The accused ought to have rebutted the presumption by establishing that he was not residing at the said address at the given point of time or that the notice was not served on him for any other reason, by examining the postal authorities or any other mode. In these circumstances there is no reason to doubt the service of legal notice.
Ld.Counsel for the Accused has waxed eloquent on the point that the address on the AD Card is B-553, Sarita Vihar, New Delhi, but the name mentioned alongside is not the name of the accused no.2 Utkarsh Pandey; in other words, the same has not been addressed to accused No.2 Utkarsh Pandey, but accused No.1 company Yashi Media Pvt Ltd. He argues, that at best, the legal notice can be presumed to have been served against the company but not to him individually. This, according to him, vitiates the proceedings as the sub-stratum of a valid legal notice does not remain.
This argument leaves me cold and is completely devoid of merit. It is trite law Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 9 of 34 that notice to a company or a firm is sufficient compliance of Section 138 of the NI Act, when the cheque has been issued on its behalf and not by an individual in his personal capacity. It is not the requirement of law that a legal notice, as a pre-requisite to a complaint, must be sent and served to each director of the company individually. The Hon'ble High Court of Delhi in Wg.Cdr.R.R.J Dass (Retd) v. Satya Bhamalal, 2002 VI AD (Delhi) 595, has categorically held, that there is no legal requirement of sending separate legal notice(s) to the directors of the company, where the company is the primary accused, as the law mandates the legal notice to be sent only to the drawer of the cheque, which in this case is the company.
In any event, in view of the authoritative pronouncement of the Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed and Another (2007) 6 SCC 555, the rigor of the requirement of service of legal notice has been reduced to an almost vanishing point in Section 138 NI Act jurisprudence. The Hon'ble Supreme Court while distilling the true intent behind the requirement of service of legal demand notice as a precursor to launching of prosecution, has quite categorically held that the service of summons of the court is opportunity enough for the accused to pay the cheque amount and evade prosecution, any accused who fails to pay the amount within 15 days of the service of summons, clearly cannot shield himself behind the technical defence of non service of legal notice. The relevant extract from the decision deserves to be quoted in extenso :-
"17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 10 of 34 make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation."
This further negates the objections relating to non-service of legal notice contended by the accused.
VII. WHETHER THE PRESENT COMPLAINT IS VALIDLY INSTITUTED OR NOT ?
10. It has been argued on behalf of the accused, that Mr.Naresh Rastogi (CW1), is not competent to file the present case as he has no specific authority in his favour for the prosecution of the present case. It has also been argued that the case is still born having been filed by an unauthorized person. The accused claims to have never met Mr.Naresh Kumar Rastogi, but having dealt with the said firm only through Mr.Himanshu Rastogi.
This argument does not hold good, as Mr.Naresh Rastogi, being a partner of the firm could have filed the present case in exercise of implied authority, and even sans a specific authority in that regard given by the firm. In this regard, reliance is placed on the decision in Padmavati Finance Registered v. Md.
Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 11 of 34Yosuf Ali (Criminal Appeal No. 3606/2009, Karnataka High Court, Date of Decision : 05.07.2013), wherein it was observed :-
"
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7. Learned counsel for the complainant submitted that the complainant is partnership firm. The complainant is one of the partners of the firm has permitted to file complaint against the accused under Sections 138 and 142 of the Act. The Trial Court is therefore not justified in acquitting the accused on the sole ground that the complainant was not authorized by the firm, who filed complaint under Section 138 of the Act.
8. In support of his contention, learned counsel for the complainant placed reliance on the decision in the case of M/s. M.M.T.C. Ltd. and another v. M/s. Medchl Chemicals and Pharma (P) Ltd. and another reported in AIR 2002 SC
182. Wherein, it is held that the only eligibility criterion prescribed by S. 142 is that the complaint under S. 138 must be by the payee or the holder in due course of said cheque. This criterion is satisfied as the complaint is in the name and on behalf of the appellant Company who is the payee of the cheque. Merely because complaint is signed and presented by a person, who is neither as authorised agent nor a person empowered under the Articles of Association or by any resolution of the Board to do so is no ground to quash the complaint It is open to the de jure complainant company to seek permission of the Court for sending any other person to represent the company in the Court. Thus, even presuming, that initially there was no authority, still the Company can, at any stage, rectify that defect. At a subsequent stage the Company can send a person who is competent to represent the company.
9. Relying on the above decision, learned counsel for the complainant submitted that as per the provisions of Section 142 of the Act, the complainant is a payee and it can present the complaint under Section 138 of the Act. The complainant firm is being represented by its partner, who is a payee or the holder in due course Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 12 of 34 of cheque.
10. The learned counsel for the complainant further placed reliance on another decision in the case of M/s Sarathi Leasing Finance Limited vs Sri B. Narayana Shetty reported in ILR 2006 KAR 1929.
11. In the above decision, this Court held, the Question of authorisation to such persons to file the complaint arises only if the accused takes up a specific plea that the company did not intend to prosecute him for the offence or that there is some material before the court to indicate that the complainant-company has no intention to prosecute the accused.
12. Finally he placed reliance on another decision in Sri Lakshmi Kanchana Finance Corporation v. The State of A.P. & Anr.
reported in AIR 2010 (NOC) 406 (A.P.).
Wherein, the Hon'ble High Court held that the complaint under Sections 138 and 142 of the Act can be filed by a partner of firm even if he is not specifically authorised.
13. Relying on the aforesaid decision, the learned counsel for the complainant submitted that the complaint in this instant case is filed by the partner of firm, who got treated as payee or the holder in due course of cheque. The accused has not specifically taken a plea in the Trial Court alleging that the firm did not intend to prosecute him for the offence. Therefore, contended that no authorisation is required for any partner of the firm, who lodged complaint under Section 138 of the Act. Therefore, the judgment passed by the Trial Court is liable to be set aside.
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17. Under the provisions of Section 142 of the Act, the complaint under Section 138 of the Act can be presented in writing, made by the payee or, as the case may be, the holder of due course of the cheque. Admittedly, in the instant case, the complainant is the payee, representing the appellant firm.
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Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 13 of 3419. Section 2(a) of the Indian Partnership Act, 1932 defines as follows:
"(a) an "act of a firm" means any act or omission by all the partners, or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm."
20. Section 19 of the Indian Partnership Act also reads as follows:
"19. Implied authority of partner as agent of the firm.-
(1) Subject to the provisions of section 22, the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm.
The authority of a partner to bind the firm conferred by this section is called his "implied authority".
(2) In the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to-
(a) submit a dispute relating to the business of the firm to arbitration,
(b) open a banking account on behalf of the firm in his own name,
(c) compromise or relinquish any claim or portion of a claim by the firm,
(d) withdraw a suit or proceeding filed on behalf of the firm,
(e) admit any liability in a suit or proceeding against the firm,
(f) acquire immovable property on behalf of the firm
(g) transfer immovable property belonging to the firm, or
(h) enter into partnership on behalf of the firm.
21. Section 22 of the Indian Partnership Act deals with mode of doing act to bind firm, which reads as follows:
"22. Mode of doing act to bind firm.- In order to bind a firm, an act or instrument done or executed by a partner or other person on behalf of the firm shall be done or executed in the firm name, or in any other manner expressing or implying an Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 14 of 34 intention to bind the firm".
Thus, as per the provisions which are barred under Section 19(2)(a) to (h) of the Partnership Act, any partner of the firm can file the complaint, as the definition under Section 2(a) of the Partnership Act, gives rise to a right enforceable by or against the firm.
22. In the instant case, one of the partners of the firm lodged complaint against the accused when the cheque issued by him was dishonoured. The partner of the firm therefore has enforceable right under law on behalf of the firm or against the firm unless barred under Section 19(2) of the Partnership Act or against the bylaws of the partnership deed.
23. In the instant case learned counsel for the complainant fairly submitted that there are no specific bylaws permitting any partner of the firm to file complaint with the firm for the benefit of the firm who is the payee defined under Section 142 of the Act.
24. Even during trial, the accused had not produced any kind of evidence to prove that the firm is not intending to prosecute him for the offence under Section 138 of the Act and that the firm has no intention to prosecute him. In that view of the matter, the complainant representing the firm is competent to lodge the complaint on behalf of the firm for recovery of the amount due to the firm from the accused by invoking the provisions of Section 138 of the Act."
The ratio of the aforesaid decision squarely applies. This decision is more suited to the facts of the case, than the one relied upon by the accused (Surendranagar Mercantile Bank Coop Bank Thro' Recovery Officer v. State of Gujarat, 2013(1) DCR 178) the latter case concerned filing of a complaint by a company through it's AR, who could not prove the authorization in his favour. Meaningfully read, the case is totally distinguishable. A case filed by a representative of a company and a case filed by a partner of a partnership firm can never be equated and put on the same Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 15 of 34 footing. The position of law is different insofar as a partnership is concerned, where the partner has the inherent authority to prosecute on behalf of the firm, by the very virtue of his legal position as a 'partner', as opposed to a company where such an authority needs to be specifically vested in an individual in order for the latter to represent the company.
It is pertinent to note that, the allegation that Mr.Naresh Kumar Rastogi is not the partner of the firm, and the case has been filed without concurrence of the firm, has gone unsubstantiated. The Accused has not brought any evidence on record to substantiate that the firm did not want to prosecute him, or anything that would detract from the implied authority of Mr. Naresh Kumar Rastogi. What further adds to the conclusion is that the Accused has not denied doing business and issuing the cheques to the complainant firm M/s Paramount Traders. Therefore, the identity of the complainant firm/payee of the cheque is not in dispute at all. The only defence of the accused is that he does not know partner of the complainant/CW1 - Mr.Naresh Rastogi. He claims to have dealt with Mr.Himanshu Rastogi instead, who is the son of Mr.Naresh Rastogi. During examination in chief of the accused, as recorded on 07.05.2013, the accused, deposing as DW1, conceded that "I know the complainant M/s Paramount Paper Traders through Mr.Himanshu Rastogi, who is present in the court today." This frank disclosure is of great important for the simple reason that it manifests that the proceedings carry the imprimatur of Mr.Himanshu Rastogi and have not been filed without his active consent. When the accused has issued the cheque in favour of the partnership firm consciously, he cannot turn around to dispute its identity later on. The presence of said Mr.Himanshu Rastogi in the proceedings clearly manifests that the proceedings carry his concurrence and the argument with respect to the complaint having been filed sans legal authority does not hold good. Moreover, the factum of having conducted business with Himanshu Rastogi, does not detract from the fact that the accused could have issued the Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 16 of 34 cheque in favour of the partnership firm Paramount Traders, represented by Mr.Himanshu's father Mr.Naresh Kumar Rastogi and not Himanshu Rastogi, for a variety of reasons, which are not entirely unthinkable.
For the foregoing reasons, there is no reason to doubt the valid institution of this complaint and Mr. Naresh Kumar Rastogi's (CW1) competency to prosecute the same.
The reliance by the accused on M.Senguttuvan v. Mahadevaswamy, 2007, ILR (KAR) 2709, is also misplaced as the the factual scenario in that case was different, as M.Senguttuvan (supra) was a case of an alleged friendly loan by a money lender, which was not proved, in contradistinction to the present case which is one of supply of material/goods. In the said case, the acquittal was premised not exclusively on the fact that the person filing the complaint was not authorized, but on account of the fact that the story of friendly loan was unbelievable, which seems is the guiding factor behind the decision and as such, it's ratio. In such circumstances, the precedential value of observations relating to authority to file the case, is suspect. The decision in Padmavati Finance (supra) is far more suited to the facts of this case as the question of a partner's authority to file a complaint case sans any express authorization, arose more specifically in this case and directly formed the basis of decision.
11. The technical challenges of 'non service of legal notice' and 'invalid institution of the complainant' having been met, let us now, turn to the core issue in this case and examine 'whether the cheque in question can be said to have been issued in discharge of a legal liability or not ?' VIII. EXISTENCE OF LEGALLY ENFORCEABLE DEBT/LIABILITY
12. Before approaching that issue, let us briefly recapitulate, once again, that the Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 17 of 34 accused No.2 Utkarsh Pandey has admitted having drawn the cheque on a bank account maintained in the name of Accused No.1 company M/s Yashi Media and having signed the same. Once these facts are admitted and a factual basis is established, by virtue of Section 118(a) and Section 139 of the NI Act a presumption of the cheque having been issued in discharge of a legally sustainable liability and drawn for good consideration, arises.
Section 118 of the N.I Act provides :-
"Presumptions as to negotiable instruments:
Until the contrary is proved, the following presumptions shall be made:
(a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
Section 139 of the N.I Act further provides as follows :-
"Presumption in favour of holder - It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability"
Hence it is clear that, as per the scheme of the N.I Act, on proof of foundational facts - a presumption arises as to the cheque having been issued in discharge of a legal liability, and the burden of proof lies upon the accused to rebut the said presumption. This clearly is an instance of the rule of 'reverse onus' in action, where it is incumbent on the accused to lead what can be called 'negative evidence'. Evidence of a character, not to prove a fact affirmatively, but to lead evidence to show non existence of liability. Keeping in view, that this is a departure from the cardinal rule of 'presumption of innocence' in favour of the accused, and also keeping in mind that negative Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 18 of 34 evidence is not easy to be led by its very nature. It is now fairly settled that the accused can displace this presumption on a scale of preponderance of probabilities and the lack of consideration or a legally enforceable debt need not be proved to the hilt or beyond all reasonable doubts. The accused can either prove that the liability did not exist or make the non existence of liability so probable that a reasonable person ought under the circumstances of the case - act on the supposition that it does not exist. Simply put, the accused has to make out a fairly plausible hypothesis. This the accused can do either by leading own evidence in his defence or even by punching holes within the case of the complainant in the testing ordeal of cross examination.
While adjudging whether in a case the presumption of consideration has been rebutted, it becomes important to underscore that a mere denial of liability or vague defence of blank cheque as security, cannot be taken at the mere ipse dixit of the accused. The accused has to come forth with a convincing defence that appeals to common sense & basic rationality. Needless to state, that if on a bare denial of liability - the presumption is taken to be rebutted, that would defeat the legislative intention of having a presumption in the first place. The reverse onus clause has been introduced to further the legislative objective of improving the credibility of negotiable instruments, which has taken a huge beating in the recent times. The presumption that a person would not normally hand over a signed cheque to another unless the same is for a liability has to be respected and given its full play. Only in a case where the accused comes up with a convincing defence to counter liability, that the presumption can be stated to have been rebutted, lest the statutory intent as adumbrated above would be the direct casualty. In that light, let us proceed to examine the defence of the accused and answer whether the same is a plausible one. In this exercise of analysis of evidence, we would at all occasions, juxtapose the conduct of the accused with that of the hypothetical reasonable man and see how he fares.
Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 19 of 3413. On a careful analysis of evidence on record, I am of the opinion, that the accused has not succeeded in rebutting the presumption of liability. It would be apt to remind ourselves that Accused No.2 Utkarsh Pandey has admitted having signed the cheque and the same having been drawn on the bank account of accused No.1 company. As regards the filling-in of particulars on the body of the cheque, the accused, in his application u/s 145(2) of the NI Act, plea of defence recorded u/s 251 of the Cr.P.C on 21.10.2011 and also while deposing as DW1, had maintained, that he had given the cheques signed in blank to the complainant as security. However, in stark contrast to this, whilst under cross examination as DW1, he has conceded that the cheques must have been filled in by either one Mr.Kapil Tiwari (who used to work as an account manager with the accused, or another Assistant in the Accounts department). The relevant excerpts from his cross examination dated 09.04.2015, is reproduced as follows :-
"At this stage, the attention of the witness is drawn to the cheques in question Ex. CW1/1 to Ex. CW1/11 and he is asked :-
Q. All the cheques in question bear your signatures ?
A. Yes.
At this stage, the attention of the witness is drawn to Ex. DW1/1 and Ex. DW1/2 I.e Cheque Book Counterfoil/Index of Cheques issued from chequebook and he is asked :-
Q. In whose handwriting the words Paramount Paper are written at Point A to A on Ex. DW1/1 and Point B to B on Ex. DW1/2 ?
A. There were two persons in the account department. One person is Mr.Kapil Tiwari - Accounts Manager who was there in 2004-2008 and second person was holding the designation of Astt. Accounts (as there were four assistants from 2004-2007 therefore as to who exactly was there I cannot tell) either of them must have filled the counterfoils and also the cheques in question. I usually used to sign the cheques only, and these people used to fill in the details"Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 20 of 34
It is clear from the above that the earlier claim of the accused that the cheques were given signed in blank was a mere eye-wash. This is clear from the above categoric admission. It deserves mention, that this is in harmony with the consistent case of the complainant. CW1 while under cross examination (30.08.2012) had categorically deposed to the effect that :-
"The body of the cheques in question which contains the name of the payee, date and the words in figure had been filled by accountant of accused No.1, but cheques in question have been handed over to me by Utrkarsh Pandey."
The fact that the cheque was filled in with a specific amount, raises an inference that the cheque was not issued as a security but in discharge of a legally enforceable debt or liability that had become crystallized, otherwise there would not have been an occasion for the accused to give cheques of specific amounts.
14. Another factor that supports this conclusion is the fact that the accused gave no less than 11 cheques to the complainant. It is does not stand to reason as to why the accused would give as many as 11 cheques for the purpose security, when even one cheque given in blank would suffice for the purposes of security. The handing over of a multitude of cheques, all filled-in, raises an inference of the cheques having been given in discharge of a monetary liability, presumably repayable over a period of time. This flexibility in payment may have been given to the accused in view of his subsisting financial difficulties, which would be demonstrated in the later parts of the judgment.
15. Moreover, if the story of 'blank cheques' is true, what stopped the complainant from presenting the cheques for an amount of Rs. 27 lacs, which, as per the complainant is the total outstanding against the accused. Why would Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 21 of 34 the complainant present the 11 cheques, for a total amount of Rs. 6,50,000/- i.e an amount much lesser than his own claim against the accused.
16. Ld.Counsel for the Accused has argued that cheques which are part of the same series (as the cheques in question) having been encashed in 2008, renders probable the theory of cheques having been given prior in point time. The accused has also argued that the complainant while under cross examination as CW1 has deposed "the cheques in question has been handed over to me by the accused Utkarsh Pandey in the year 2009. Again said cheques were received in 2007. Again said cheques were received in 2008". He says that these vacillations render probable his defence of having given the cheque earlier in point of time and not in 2009. This contention, though attractive at first blush, does not advance the case of the accused, and even if it is assumed, for the sake of argument, that the cheques were given prior in point of time, that by itself would not strip the present case of its legal validity.
This argument of cheques being security cheque, and therefore, beyond the pale of Section 138 of the NI Act is also devoid of merit, and for more reasons than one. Firstly - The accused has brought no material on record to prove the handing over of the cheque as security. Nothing could be elicited from the complainant in his cross examination, which could throw doubt on his case. The complainant has stuck to his guns, even in the testing waters of cross examination and there is no reason to disbelieve the same as the accused has failed to discharge his onus on this count. As regards the different years stated by the complainant as year of handing over of the cheques, the same is of feeble value to the accused. It deserves mention that the complainant deposed in the court after a considerable period of time and possibility cannot be ruled out of him not remembering the correct date, which is understandable having regard to his age. There are bound to be some discrepancies in oral testimony. Human memory is not infallible. The fallibility of human memory is further compounded by the grim dynamics of the court, which has a confounding Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 22 of 34 influence on witnesses. The testimony of CW1, otherwise, has been found consistent in all material respects. This apparent discrepancy, in any event, is not too germane as the witness finally did concede that the cheques were given in 2008. This is corroborated by the encashment of two of the cheques from the same series in 2008. The handing over of post dated cheques in 2008, encashable over a period of time running into 2009, is not incompatible with the complainant's story, leave alone fatal. The cheques were issued for a purpose, that is, as an assurance of payment for the complainant. When the payment has not been realized, there is no reason why the cheques could not have been banked.
The second reason why the defence of security ought not to succeed is, that even if it is assumed for the sake of argument, that the cheques in question were given as security, that would not absolve the accused from legal liability. The obvious intention of the parties is presentation of these cheques, in case payment is not forthcoming from the accused otherwise. A security that does not secure is not even worth the paper it is on. It is no longer res integra that legal consequences flow out of a (so-called) security cheque too. In this regard, reliance is placed on the Hon'ble Delhi High Court decision in Credential Leasing & Credits Ltd. vs Shruti Investments & Anr (2015 SCC OnLine Del 10061) wherein it has been held :-
"
5. In Suresh Chandra Goyal v. Amit Singhal, Crl. Ap- peal Nos. 601/2015 decided on 14.05.2015, this Court had occasion to consider the defence of "security cheque". In that case the complainant invested monies, from time to time, in the business of the accused. A sum of Rs. 3 Lakhs was outstanding after accounting for the monies returned by the accused. The accused entered into a MOU for repayment of the said outstanding amount in 6 monthly instalments of Rs. 50,000/- each. The accused issued six security cheques of Rs. 50,000/-, which were to be returned upon payment of the corre- sponding instalment. While three instalments were ad-
Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 23 of 34mittedly received by the complainant, he claimed that the remaining three were not paid. The corresponding se- curity cheques were banked; dishonoured upon presenta- tion, and; after issuance of statutory notice, the com- plaint under Section 138 NI Act filed due to non-pay- ment. This Court, inter alia, observed as follows:
"28. 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. The ex- pression "security cheque" is not a statutorily de- fined expression in the NI Act. The NI Act does not per se carve out an exception in respect of a 'secu- rity cheque' to say that a complaint in respect of such a cheque would not be maintainable. There can be mirade situations in which the cheque is- sued by the accused may be called as security cheque, or may have been issued by way of a secu- rity, i.e to provide an assurance or comfort to the drawee, that in case of failure of the primary con- sideration on the due date, or on the happening (or not happening) of a contingency, the security may be enforced. While in some situations, the dishonor of such a cheque may attract the penal provisions contained in Section 138 of the Act, in others it may not."
16. This Court analysed the meaning of the word "secu- rity" and the question as to what does the issuance of a security cheque entail, and, if there is no specific agree- ment touching upon the said aspect, what would the rights and obligations of the parties qua a security cheque, in case the primary obligation to secure which the security cheque was given, is not discharged. The relevant extract reads as follows:
"57. ..... ..... ..... The Black's Law Dictionary (6th edition), inter alia, defines "security" to mean:
"Protection; assurance; Indemnification. The term is usually applied to an obligation, pledge, mortgage, deposit, lien, etc., given by a debtor in order to assure the payment or performance of his debt, by furnishing the creditor with a resource to be used in case of failure in the principal obligation. Collateral given by debtor to secure loan. Document that indicates evidence of indebtedness. The name is also sometimes given to one who becomes surety or guarantor for another".
(Emphasis supplied)
58. Similarly, the word "security" is defined in the Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 24 of 34 Shorter Oxford English Dictionary (5th edition), inter alia, to mean:
"Property etc. deposited or pledged by or on behalf of a person as a guarantee of the fulfillment of an obligation (as an appearance in court or the payment of a debt) and liable to forfeit in the event of default". (Emphasis supplied)
59. Thus, when one party gives a security to the other, implicit in the said transaction is the understanding that in case of failure of the principal obligation, the security may be enforced.
60. In V.K Ashokan v. CCE, (2009) 14 SCC 85, the Supreme Court observed that:
"The term "security" signifies that which makes secure or certain. It makes the money more assured in its payment or more readily recoverable as distinguished from, as for example, a mere IOU, which is only evidence of a debt, and the word is not confined to a document which gives a charge on specific property, but includes personal securities for money. (See Chetumal Bulchand v. Noorbhoy Jafeerji, AIR 1928 Sind 89). It is a word of general import signifying an assurance".
61. Thus, in my view, it makes no difference whether, or not, there is an express understanding between the parties that the security may be enforced in the event of failure of the debtor to pay the debt or discharge other liability on the due date. Even if there is no such express agreement, the mere fact that the debtor has given a security in the form of a post dated cheque or a cur- rent cheque with the agreement that it is a security for fulfill- ment of an obligation to be discharged on a future date itself, is sufficient to read into the arrangement, an agreement that in case of failure of the debtor to make payment on the due date, the security cheque may be presented for payment, i.e for re- covery of the due debt. If that were not so, there would be no purpose of obtaining a security cheque from the debtor. A secu- rity cheque is issued by the debtor so that the same may be pre- sented for payment. Otherwise, it would not be a security cheque."
This decision goes on to show that the defence of 'security cheque' cannot be the panacea for all cheque bounce prosecutions and fails to help the accused in the presence of overwhelming evidence as to liability. It was further held in this decision :-
"24. As noticed above, in Indus Airways (supra) the Supreme Court was considering the fact situation where-Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 25 of 34
in the purchase order was not executed with supply of the contracted goods and, thus, the cheque issued by the purchaser towards advance payment was held as not covered by Section 138 of NI Act. But what happens, where the purchaser while placing the purchase order is- sues in advance a post-dated cheque; goods/ services are supplied in terms of the contract, and; the post-dated cheque upon presentation on the due date gets dishon- oured. The Supreme Court was not dealing with such a fact situation. Could it be said that, because there was no pre-existing or pre-determined debt or other liability on the date of issue of the cheque by the purchaser (as the goods/ services were supplied only after the issuance of the post-dated cheque), a complaint under Section 138 NI Act would not lie?
25. In my view, it would defeat the object of Section 138 NI Act to hold that the seller/ service provider can- not enforce his right conferred by Section 138 NI Act in such a situation, as it would encourage dishonest buyers to evade their penal liability. It would erode the efficacy and credibility of commercial transactions undertaken on the basis of post-dated cheques, or cheques issued to- wards advance payment, with a credit period. The view of the Supreme Court in Indus Airways (supra) does not appear to take out from the scope of Section 138 NI Act cases of this nature, as what fell for examination was a fact situation where the advance cheque had been issued along with the purchase order, and the supply of goods was not made for whatever reason.
26. The Explanation to Section 138 NI Act reads:
"Explanation -For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability."
27. Thus, the "debt or other liability" has to be a legally enforceable debt or other liability. Neither the main pro- vision 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 de- livery to the drawee or someone on his behalf or, on the date that the cheque bears. The only reference to time in the Section, is the point of time when the cheque is re- turned 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 Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 26 of 34 cheque, or as a current cheque with credit period. The liability, though, should be in relation to the transac- tion 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 crys- tallised debt or other liability relatable to the dishon- oured cheque exists, the dishonor of the cheque would invite action under Section 138 NI Act"
This sets all doubts at rest that even if it is assumed for the sake of argument that the cheques were given initially as security, the same would not help the accused as the time for ascertaining the existence of legal liability is the date of presentation of the cheques and not the date of handing over.
17. The version of the cheques being security cheques also does not appear to be probable in view of the conduct of the accused, which has been quite unnatural. His conduct falls way too short of the conduct of a reasonable man of even elementary prudence, in his shoes. In this case, even if it is believed that the complainant was keeping as many as 11 cheques of the accused with them without any legal liability on the accused, despite business having been discontinued, what stopped the accused from seeking return of his cheques. It is undisputed that, the accused did not give any notice or file any complaint against the complainant with respect to alleged non return of cheques or insufficient supply of goods or overcharging. He did not raise a demur even on the presentation of the cheques and their dishonor. Any man of ordinary prudence would also have approached his bankers for stoppage of payment on the cheques. It does not stand to reason as to why did the accused not seek his cheques back or file any complaint with respect to the same. This is most unnatural since it was not a matter of one or two cheques, but 11 cheques. The farcical defence of 'having forgotten about the cheques' could have behoved an illiterate rustic, but not the accused, who is a man of commerce and heading a company. The defence of having forgotten about 11 cheques lying with the complainant, is a cock and bull story and totally unworthy of belief.Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 27 of 34
And it doesn't stop here, It has already been demonstrated in para 4 above that legal notice was validly served on the accused, the non reply to the legal notice is also a circumstance that is to be marshaled against the accused. Nothing rankles the human heart as injustice. The silence of the accused in such circumstances reeks of culpability and an adverse inference deserves to be drawn against him.
18. Similarly, the defence of the accused to the effect of mitigation of liability on account of inferior goods/lesser than stipulated supply and overcharging, have also gone unsubstantiated. The accused has failed to prove even a single complaint to the complainant in that regard, throughout the course of business. This raises an inference of his defence being moonshine.
19. What really adds the final touch of believability to the complainant's story is the fact that, the accused who was earlier into this business, ran into financial rough weather and failed to keep up to his financial commitments. This is fortified by his candid admission in his cross examination to the effect that he has already wound up his business and has had strained relations with his ex-accounts manager and also his CA on account of not having been able to pay their fees. All this raises an inference of the accused not having been able to make good his financial commitments towards the complainant too.
20. It also deserves mention, that the accused, throughout his deposition, has harped on the fact that he never personally engaged in dealings with the complainant, but through his ex-accountant Mr.Kapil Tiwari, who is also stated to have issued the cheques to the complainant. The accused ought to have examined said Mr.Kapil Tiwari in his evidence in order to disprove the allegations of the complainant, whose evidence would have thrown a great deal of light on the facts of the case. The non examination of Mr.Kapil Tiwari raises an inference of suppression of evidence. It is fair to assume in these Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 28 of 34 circumstances, that if the said Mr.Kapil Tiwari had entered the witness box, his evidence ought to have gone against the accused. This is another factor to be considered against the accused.
21. During the course of Arguments, Ld.Counsel for the Accused has placed reliance on Krishna Janardhan Bhat v. Dattatraya G. Hegde - 2008(1) Crimes 227 (SC); Kamla S. v. Vidhyadharan M.J. & Anr. (2007) 5 SCC 264; K.Prakashan v. P.K.Surenderan, (2008) 1 SCC 258.
Unfortunately for the accused, none of these decisions, on a meaningful reading, advance the case of the accused in any manner as the factual matrix in which the cases came to be decided is completely different. It needs no gainsaying that no judicial decision is an euclid's theorem or a statute, and every judicial decision has to be read secundum subjectum materiam, i.e in the background of its facts and circumstances. A minute factual difference makes a lot of difference as far as precedential effect of a decision is concerned. This should suffice for the purposes of this judgment. However since every decision is an endeavor to utmost objectivity, the above decisions are being analyzed and distinguished as follows :-
i) The ratio in the case of Krishna Janardhan Bhat (supra) is not applicable.
This concerned an alleged friendly loan, the grant of which was in grave doubt. The accused in that case had promptly replied to the legal notice of the complainant, objecting emphatically as to the misuse of the cheque, whereas in the present case - the accused remained mum in response to the legal notice, which in the overall circumstances of the case seems like silence of culpability.
ii)The reliance on K'Prakashan v. P.K.Surenderan (supra) is misplaced, insofar as the said case also concerned an alleged frie ndly loan, and the financial prowess of the complainant was suspect on the facts of the case, which help the accused rebut the presumption. This is in complete contrast with the present case.
Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 29 of 34iii)Similarly, the facts in Kamala S. (supra) are totally different; In that case, the accused was able to probablise his defence of security and the complainant made some damning admissions in the cross examination relating to receipt of amount. This is in contrast to the present case.
22. It has also been argued by the accused, as a last ditch effort, that there were two legal notices sent by the complainant in this case, whereas only one has been filed, which renders his case maintainable. To buttress this argument, reliance is placed on Kothai Finance v. Chinnasamy, 2004 (2) BC 179.
This argument is also wholly misconceived for the reason that : firstly, it has not been proved on record positively that more than one notices were sent by the complainant. If there was more than one legal notice, the accused ought to have led and proved the same in evidence, which has not been done. Hence this allegation has gone unsubstantiated. Having said that, even if it is assumed for the sake of argument, that there was more than one notice, that would not, by itself, vitiate the proceedings, since the legal notice available on record Ex. CW1/23 has been issued within 30 days of dishonor of the cheque. This distinguishes the case at hand from the precedent so strenuously relied upon by the complainant Kothai Finance (supra), as in the latter case the second notice was sent with a view to renew limitation, whereas if reckoned from the first notice, the case was barred by limitation. It is not the case of the accused that the complainant has sought to colorably avoid limitation by sending more than one notices. On the basis of legal notice filed on record, the complaint is within limitation and this argument fails to advance the case of the accused.
IX. CONCLUSION
23. The conduct of the accused as outlined above; his utter failure to substantiate the defence of repayment or alternatively; deficiency of goods, and the feebleness of the security defence, all render his defence implausible and Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 30 of 34 unworthy of credence. In these circumstances, it is clear that the accused has failed to put up a plausible defence and resultantly the presumption of legal liability u/s 118 & 139 of the NI Act has remained unrebutted. The complainant has fulfilled the basic ingredients of Section 138 of the NI Act, as a result of which, the Accused No.1 Company Yashi Media Works (P) Ltd. And Accused No.2 Mr.Utkarsh Pandey stand convicted for offence u/s 138 r/w Section 141 of the NI Act .
Let them be heard on the question of quantum of sentence separately.
Let a copy of this judgment be given to the convict free of cost.
X. APPLICATION U/S 340 CR.PC FILED BY ACCUSED SEEKING INITIATION OF PROCEEDINGS FOR PERJURY AGAINST THE COMPLAINANT
24. Before parting, It is also pertinent to pen down the fate of an application u/s 340 Cr.P.C filed by the accused seeking initiation of perjury proceedings against the complainant (CW1). The mainstay of the application is that CW1 had made false statements, while under cross examination relating to the time of handing over the cheques, and in particular, the following extract :-
Excerpts from cross examination dated 30.08.2012 "the cheques in question has been handed over to me by the accused Utkarsh Pandey in the year 2009. Again said cheques were received in 2007. Again said the cheques were received in 2008"
In addition to the above, the complainant is alleged to have perjured himself w.r.t the filling-in of the cheques :-
Excerpts from cross examination dated 30.08.2012 "The body of the cheques in question which contains the name of the payee, date and the words in figure had been filled by accountant of accused No.1, but cheques in question have been handed over to me by Utrkarsh Pandey."Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 31 of 34
This was followed by another statement to the effect :-
"I do not know whether the handwriting on the body of the cheques in respect of the name of the payee, date, amount was in writing of the accountant of accused No.1 or by me or by my employee or by the accused Utkarsh Pandey"
On account of these statements, proceedings for perjury are sought to be initiated against CW1.
Per contra, in his reply to the application u/s 340 of CrP.C, the complainant has argued that CW1 has not made any false statements before the court. The statement having been recorded in court after approximately five years, CW1 is stated to have got confused & blurry in his recollection of the said event.
Submissions heard on this point. It is clear that there is an apparent incongruity between the statements relating to time of handing over of the cheques. However, it is trite that every case of contradictory stands ought not to result into proceedings for perjury. The court cannot be unmindful of the fact that there as a huge time gap between the transaction and the recording of the complainant's statement in the court. Regard may also be had to his relatively advanced age. It is not totally unthinkable that the witness may have got confused in the testing ordeal of cross examination and over-awed by the grim dynamics of the court. Court cannot shut its eyes to the fact that the witness box is often a intimidating place for a witness and a witness may fumble while deposing. Furthermore, there has to be preponderating larger interest of administration of justice that warrants initiation of action for perjury. Especially in a case where contradictions are within the same deposition (continuing cross examination in this case) and the statement that is is allegedly false occurs first and the witness eventually turned out to speak the truth towards the end of his deposition. In such a case it would not be in Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 32 of 34 the interests of justice, that the witness is punished for having spoken the truth in the end. The opportunity or 'locus paenitentiae' is available with the witness to realize the incorrectness of his and come around eventually & tell the truth in the same case; This acts a mitigating factor.
As regards the second alleged false statement relating to the filling-in of the cheques, it has to be borne in mind that this alleged contradiction has come out during cross examination of the complainant and on suggestion given by the Ld.Counsel for the Accused. In cross examinations often complexly worded suggestions are made to the witnesses, who are laymen, who are hard pressed to understand the implications and meaning of the questions put to them and answer recklessly. They are totally unaccustomed and often over-awed by the dynamics of the court room and often end up saying something that they don't mean. The possibility of that being the case herein, cannot be ruled out.
In any event, it should not be forgotten that the accused himself, throughout his defence claimed that the cheques were given in blank, however, later came around to the fact that the same must have been filled-in either by of his accountants. The accused similarly after adopting a patently false stand earlier, eventually came around to the truth and conceded the factum of having given the cheques to the complainant duly filled-in. In these circumstances, it does not lie in the mouth of the accused to accuse the complainant of perjury when his own statements have been contradictory. The court is desisting from the initiating perjury proceedings against him, for the same reason i.e because of the fact that he eventually came around to the truth. Therefore no case is made out for action u/s 340 of the Cr.P.C against either complainant or the accused.
It deserves being underscored that the purpose of proceedings u/s 340 of the Cr.P.C, is not to assuage the feelings of retribution or personal vendetta that the parties may, and often do have, against each other. It is trite law that proceedings for perjury should not be initiated lightly. The idea is to protect Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 33 of 34 the purity of administration of justice and to prevent the fountain of justice from being polluted by people deposing falsely; Such proceedings are to be initiated, only where the most egregious & willful perjury or fraud on the court is made out, which if allowed to go unpunished, would incentivise a culture of falsehood with impunity. It is in those cases that the imperative need for protection of the integrity of the system demands that proceedings for perjury are initiated. I am quite convinced that this is not one such case for the reasons spelt out above. In this case, where both the parties have in some way or the other contradicted their cases, perhaps with a view to bolster them, no public interest would be served by burdening the magisterial courts, whose dockets are already clogged with more cases than they can handle, with another complaint in which each party tried to give a certain spin to their case to bolster it, which is not uncommon, though reprehensible all the same.
For the foregoing reasons, and to give a quietus to this extremely protracted and long standing litigation, the application u/s 340 Cr.P.C filed by the accused is dismissed and no perjury proceedings are initiated against either accused or the complainant.
A copy of this order be placed on the official website of the District Court.
Judgment contains 34 signed pages.
(BHARAT CHUGH) MM-(NI Act)-Central-01/THC/Delhi 03.10.2015 Paramount Paper Traders Vs. M/S Yashi Media Works Pvt. Ltd & Anr. Page 34 of 34