Delhi District Court
Hazi vs . Palapetty Mohd. & Anr." Reported In ... on 26 August, 2019
IN THE COURT OF PARAS DALAL,
METROPOLITAN MAGISTRATE - 04, N. I. ACT,
SOUTH-EAST DISTRICT, SAKET DISTRICT COURTS, DELHI.
JUDGMENT
Omaxe Constructions Limited ....................Complainant Versus Tatvadarshini Bandhu Pvt. Ltd. & Other ....................Accused PS - Shakarpur Under Section 138 of N. I. ACT, 1881
a) Sl. No. of the case : CT 4506/2016
b) Alleged date of commission of offence : 16.02.2006 Approx.
c) Name of the complainant : Omaxe Construction Ltd.
Through its authorized representative
Mr. Vimal Gupta
Registered Office at:
Omaxe House, 7, L.S.C.
Kalkaji, New Delhi-110019
d) Name of the accused company no.1 : Tatvadarshini Bandhu Pvt. Ltd.
Name of the accused person no.2 : Mr. Dinesh Aggarwal
Name of the accused person no.3 : Ms. Meenakshi Aggarwal
Name of the accused person no.4 : Mr. Ashok Aggarwal
Name of the accused person no.5 : Mr. Chittar Singh
Name of the accused person no.6 : Mr. Giriraj Dharam Tayal
(Proceeding abated since deceased)
Name of the accused person no.7 : Ms. Sharda Tayal
(Since Accused No.6 as per amended
memo of parties)
(Address as per Memo of Parties)
e) Offence complained of : Under Section 138 of N. I. Act, 1881
f) Plea of accused : Pleaded not guilty
g) Final order : Accused No. 1 and 2 Convicted
Accused No. 2 to 5 & 7 acquitted
Accused No.6 Proceeding abated
h) Date of such order : August 26, 2019
Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 1 of 22
BRIEF STATEMENT OF THE REASONS FOR DECISION : -
1. The present complaint for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 has been filed by the complainant Omaxe Constructions Ltd. through its Authorized Representative Mr. Vimal Gupta against accused no.1 Company Tatvadarshini Bandhu Pvt. Ltd. and six other accused alleged to be the Directors of Accused no.1 company. In gist, it is alleged in complaint that complainant company was approached by the accused company through its director Mr. Dinesh Aggarwal/ Accused no.2 that the accused company owns and possesses 115 acres of land in Village Anangpur, District Faridabad, Haryana which the accused company proposed to complainant to develop a township. Based on the proposal and further negotiations a collaboration agreement was executed Ex.CW1/3 on 04.08.2004, thereafter an addendum to the collaboration agreement was executed Ex.CW1/4 on 05.08.2004. The complainant centres its case on clause 3.1 of Ex.CW1/3 wherein it is stipulated that the accused company shall obtain necessary clearances from the Consolidation Department within 12 months, thereafter the complainant company was to obtain license from the Town Planning Commission, Panchkula. The Ex.CW1/3 further stipulated that in case the accused company failed to obtain clearance, etc. from the Consolidation Department the initial investment of the complainant company will be returned with interest of 12% per annum, on the other hand, if the complainant company failed to obtain permit from the Town Planning Commission then also initial investment of the complainant was to be returned but without any interest. The said initial investment was stipulated as Rupees Four Crores out of the total investment of Rupees Twenty Crores.
2. Based on Collaboration Agreement Ex.CW1/3 the complainant company invested Rupees Four Crores vide two cheques issued and the same were duly encashed by the accused company. The complainant further alleged that the accused however failed to obtain necessary clearance from the Consolidation Department and hence the accused was liable to return the initial investment alongwith interest @ 12% per annum. In view of the same, the PDCs given Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 2 of 22 as per the Addendum Ex.C1/4, the present two cheques Ex.CW1/5 and Ex.CW1/6 in question were presented to the bank after informing the accused company vide letter dated 26.12.2005 Ex.CW1/7, but the same were dishonoured vide return memos dt.13.01.2006 Ex.CW1/8 and Ex.CW1/9. Legal Demand notice dt. 30.01.2006 was sent within the stipulated time Ex.CW1/10 and the Ad card, UPC and courier slips are Ex.CW1/11 to Ex.CW1/36, however, accused did not make payment within statutory period of legal demand notice, hence, this complaint.
PRE-SUMMONING EVIDENCE & NOTICE
3. Pre-summoning evidence was lead by the complainant side and after hearing complainant side, all the seven accused, number 1 being company and 2 to 7 being directors were summoned vide Order dt. 09.03.2006 for offence punishable under Section 138/141 of The Negotiable Instruments Act, 1881. The complaint against accused no.6 stood abated vide Order dt. 01.05.2010 due to his demise and thereafter amended memo of parties were placed on record wherein accused no.7 was renumbered accused no.6 (however for convenience Ms. Sharda Tayal is referred to by her original status of accused no.7). After appearance of accused persons, it was ensured that copy of complaint has been supplied. Notice was put to the accused by my scholarly predecessor for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 on 10.03.2008 to which accused pleaded not guilty and claimed trial. Notice on behalf of accused no.1 company was accepted by accused no.2. Thereafter, matter was fixed for complainant's evidence and accused side was granted opportunity to cross-examine the complainant's evidence.
4. In the notice under section 251 CrPC put to all the accused, the accused no.2 for himself as well as for accused company no.1 stated that the present two cheques were given as security and there was no legal debt or liability. Accused no.3 Ms. Meenakshi stated that she was not involved in day to day affairs and had no knowledge about the present transaction in question. Accused No.4 admitted that the accused company received the amount as alleged, Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 3 of 22 however, he pleaded ignorance about the terms and pinned the burden on Mr. Dinesh Aggarwal/ Accused no.2 who was handling the present transaction in question. Accused no.5 pleaded absolute ignorance about the affairs of the accused company and defended that some dispute arose between him and other directors and therefore he was kept out of the business of the accused company. Accused no.7 pleaded that she was a house wife and was involved in directorship of the accused company by his late husband/ accused no.6 who expired on 01.07.2006.
COMPLAINANT'S POST NOTICE EVIDENCE
5. Complainant examined its authorized representative as CW1, adopted affidavit of pre- summoning as his evidence reiterating almost all facts of complaint, stating all exhibits available on record and in gist in his cross-examination he deposed that on basis of assurance by the accused company through accused no.2, the collaboration agreement Ex.CW1/3 was executed. The complainant company abided by the terms of the agreement and invested Rupees Four Crores and the accused company was to obtain necessary clearance from the Consolidation Department within 12 months. However, the accused company failed and therefore the debt/ liability accrued whereby the present two cheques in question were presented and dishonoured for the reason "payment stopped by drawer". The legal demand notice was sent to all the accused however, they failed to pay the amount and therefore the present complaint was lodged. The AR of the complainant company was cross examined about his capacity to depose, wherein the witness admitted that he was deposing as per the documents and he had no personal knowledge about the transaction, neither he was present when the transaction took place nor have met any of the accused persons. The witness was cross examined at length and he admitted that he never personally met any of the accused company or have ever seen the accused persons before the present case, however, the documents were duly exhibited. The extracts of Board Meeting resolution is Ex.CW1/2 which clearly authorises CW1 to depose on behalf of the complainant company. The witness was Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 4 of 22 even cross examined about the contents of the document Ex.CW13 and Ex.CW1/4 however, the same were clearly hit by Section 91 and 92 of the Evidence Act, 1872. The witness correctly identified the execution of Ex.CW1/3 and Ex.CW1/4 by Complainant company's Joint Managing Director Mr. Sunil Goel. The complainant company also called in officials from Postal Department, Shahdara and DTDC Courier and Cargo Ltd. as CW2 and CW3 to prove Ex.CW1/11 to Ex.CW1/36, however, no records were forthcoming as the same were destroyed by the respective departments due to passage of time and as per department policies.
6. Complainant closed his post-notice evidence vide order dated 20.03.2018 and thereafter, matter was fixed for recording statement of accused. STATEMENT OF ACCUSED
7. The statement of accused was recorded under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 separately. Incriminating evidence was put to them. Accused no.2 for himself and on behalf of the accused company took the defence that the present cheques were given as security and it was the complainant company who failed to obtain necessary approval within 12 months and hence the cheques given as security meant nothing and there was not debt or liability. Accused no. 3 to 7 (except Accused 6, since deceased) reiterated their defence taken during the notice stage of pleading ignorance about the transaction in question and some of the accused pinned the liability on accused no.2 who is stated to be in charge of business of the accused company.
8. Accused was given opportunities to lead defence evidence and accused no.2 stood in the witness box and in his brief examination of chief deposed that complainant company was supposed to apply to Directorate, Town & Country Planning, Government of Haryana (Chandigarh) and get licence within 12 months. The accused further deposed that accused company was to get the NOC from Consolidation Department only if the need arises. The accused stated that there was no liability on the accused company as the complainant Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 5 of 22 company failed to even apply to the Planning Department. The accused no.2 however admitted that the complainant company made an investment of Rupees Four Crores, the accused even admitted the execution of Ex.CW1/3 and Ex.CW1/4. The accused during his cross examination admitted that the partition of the land of which 115 acres was a part, is still under the process and incomplete. The witness also admitted that they had not applied to Consolidation Department for obtaining NOC till date. Accused no.2 to 7 chose not to lead defence evidence. The defence through accused no.2 closed its evidence on 27.10.2008.
9. Final arguments from both sides heard on 04.06.2019, 07.06.2019 and 03.08.2019. Case file perused.
POINTS FOR DETERMINATION : -
10.1 Whether the complainant has been able to establish ingredients of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 beyond shadow of reasonable doubt against the accused or not?
10.2 Final order.
APPRECIATION OF FACTS/CONTENTIONS/ANALYSIS & FINDINGS
11. To bring home conviction for offence punishable under Section 138 of The Negotiable Instruments Act, 1881, the complainant is obliged to prove : -
(a) The cheque(s) was/were drawn/issued by the accused person(s) to the complainant on an account maintained by him/her/them/it with the bank for discharge, in whole or in part, of any debt or liability.
(b) The cheques(s) was/were presented to the bank within a period of six months or within period of its/their validity.
(c) The cheque(s) so presented for encashment was/were dishonored.
Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 6 of 22
(d) The payee/complainant of the cheque(s) issued a Legal Demand Notice within 30 days from the receipt of information from the bank regarding dishonourment of the cheque(s).
(e) The drawer of the cheque(s) failed to make the payment within 15 days of receipt of afore-said Legal Demand Notice.
(f) The complaint was presented within 30 days after the expiry of above 15 days.
UNDISPUTED/UNCONTROVERTED FACTS
12. At the outset, it is pertinent to mention herein that it is not in dispute that cheque in question belongs to the accused, it bears signature of accused no.2 on behalf of accused company, it was drawn on an account maintained by the accused with the bank and cheque in question was dishonoured as alleged. So, there is no need of discussion qua said ingredients and same can be regarded as being duly proved on record and being non-controverted. It is also not controverted that the complainant company made the investment of Rupees Four Crores by way of cheques. The accused has also not disputed the genuineness of Ex.CW1/3 and Ex.CW1/4. Therefore, no discussion is required qua above facts being non-controverted. CONTENTIONS QUA LEGAL DEMAND NOTICE 13.1(a) The first major contention which has been raised by accused in this matter is that accused has not received any legal demand notice, therefore, ingredients of offence punishable under Section 138 of The Negotiable Instruments Act, 1881 are not complete, hence accused should be acquitted in this matter.
13.1(b) Per contra, it is contention of the complainant side that the legal demand notice was sent to all the accused persons and the accused no.1 company on their correct address, therefore, accused should be held guilty in this matter.
13.2 Submissions of both sides considered.
Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 7 of 22 This Court sees no substance in this defence of accused side. It is not the case of accused side that legal demand notice was not sent vide postal receipt(s) available on record on his correct address. Once, it is not disputed and proved on record that the legal demand notice was sent to correct address of the accused then the defence of the accused side that accused side has not received any legal demand notice is no defence in the eyes of law in view of the judgment passed by Hon'ble Supreme Court of India in matter of "C. C. Alavi Hazi Vs. Palapetty Mohd. & Anr." reported in (2007) 6 Supreme Court Cases 555. In said judgment, Hon'ble Supreme Court of India has held that : -
"Any drawer who claims that he did not received the notice sent by post, can, within 15 days of receipt of summons from the court in respect of complaint Under Section 138 of the Act, make the payment of the cheque amount and submit to the court that he had made the payment within 15 days of the receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complainant is liable to be rejected. A person who does not pay within 15 days of receipt of summons from the court along-with the copy of complaint Under Section 138 of the Act, can not 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 G. C. Act and 114 of the Evidence Act."
In this case, since, the accused side has not made payment of cheque(s) amount in question within 15 days of the receipt of summons of this Court, therefore, in the light of above-said judgment and discussions, this Court is of the opinion that defence of the accused side that he has not received any legal demand notice is without any force and is hereby rejected.
13.3 The accused no.2 has relied on as many as five judgments of Rahul Builders v. Arihant Fertilizers and Chemicals and Another, (2008) 2SCC 321; Suman Sethi v. Ajay K. Churiwal & Anr., (2000) 2 SCC 380; K.R. Indira v. Dr. G. Adinarayana, (2003) 8 SCC 300; Ratnagiri Cements Pvt. Ltd. v. Rao "N" Sons Modern Appliances, (2012) 2 ALD (Cri) 912; M/s. Mishra and Mishra v. State of Jharkhand & Ors., 2017 SCC Online Jhar 2044 to support its argument that the notice Ex.CW1/7 was defective as it did not clearly state the exact amount in the cheque. The said contention is baseless as Ex.CW1/7 is only a notice served by the complainant on the accused side prior to deposit of two cheques in question. The cause of action is based on two cheques against which the legal demand notice was issued informing about the dishonour and affording opportunity to the accused side to make Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 8 of 22 payment as per Ex.CW1/10. The said legal demand notice dated 30.01.2006 carries all the details of the cheque, calls all the accused to make the payment within the stipulated period and the said notice was duly sent to all the accused persons and company. Therefore, in confirmity with the three cases namely Rahul Builders (Supra), Suman Sethi (Supra) and K.R. Indira (Supra) relied above cited by the counsel for accused no.1 and 2, the legal demand notice was duly served on all the accused.
13.4 The legal demand notice however vide its paragraph 5 states that "...the addressee no.2 to 4 are incharge of and responsible for the conduct of the day to day affairs of addressee no.1...". The said fact however does not make the whole legal demand notice defective. As per the judgments cited, it is established that the notice has to be read as a whole and the notice will fall short if it fails to specify the details of the cheque, the amount (including exact brake-up, if other incidental amounts are sought) and the person liable to pay. The complainant has specified the exact amount and even the nature of debt/ liability. The notice was sent to each of the accused persons and there exists a presumption in favour of the complainant as per Section 27 of the General Clauses Act as well as the judgment of C. C. Alavi Hazi (Supra). As to the content of para 5 of the legal demand notice, the same has been discussed in para 16.3 onwards (infra) of this judgment.
CONTENTIONS QUA CAPACITY OF CW1 TO DEPOSE 14.1 It has vehemently been argued by all the accused persons that CW1 is not authorized to depose on behalf of the complainant company. Attention is drawn to Ex.CW1/DA, the minutes of Meeting of the Board of Directors of the Complainant company held on 30.01.2006 wherein it was resolved that Mr. Vipul Gupta/CW1 "... is authorised to sign, execute, file necessary applications, complaints, affidavits, suit ..." It is "resolved further that Mr. Vimul Gupta, ... is authorised to do all such lawful acts, deeds and things as may be necessary from time to time in this regard". It is clear from the minutes that CW1 was Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 9 of 22 duly authorised to file affidavit including evidence by way of affidavit and further to defend the said averments made in the affidavit during his cross examination. 14.2 The accused side has even challenged the deposition of CW1 on another ground that the said witness Mr. Vimul Gupta was from accounts department, he wasn't witness to any of the fact surrounding the present transaction and he has deposed only on the basis of documents available on record.
14.3 For the argument above, attention is first drawn to the judgment passed by the Full Bench of the Hon'ble Supreme Court in A.C. Narayan v. State of Maharashtra (2014) 11 SCC 790 wherein Para 33.2 it was held that "...the power of attorney holder can depose and verify on oath before the court in order to prove the contents of the complainant. However, the power of attorney holder must have witnesses the transaction as an agent of the payee/ holder in due course or possess due knowledge regarding the said transactions"
(Emphasis supplied). Due knowledge can be gathered by witnessing the transaction or by documents which are placed on record and duly proved, however, due knowledge cannot be gathered from hearsay. Hearsay would run contrary to the scheme of Evidence Act, 1872. In the present case, the complainant witness CW1 deposed that he had not personally witnessed the transaction in question, Ex.CW1/3 and Ex.CW1/4 were not executed in his presence and he was not personally known to any of the accused persons. However, CW1 stood by his testimony that he was deposing based on whatever documents were available on record. He based his knowledge after reading Ex.CW1/3 and Ex.CW1/4 which clearly shows money advanced by the complainant company to the accused company by way of cheques. The whole transaction of advancing of amount and execution of documents have not been denied by the accused side.
14.4 The Hon'ble Supreme Court in National Small Industries Corporation Ltd. v.
Harmeet Singh Paintal and Ors., (2010) 3 SCC 330 held as under -
"...13. Resultantly, when in a complaint in regard to dishonour of a cheque issued in favour of a company or corporation, for the purpose of section 142 NI Act, the company will be the complainant, and for purposes of section 200 of the Code, its employee who represents the company or corporation, will be the de facto complainant. In such a complaint, the de 16 jure complainant, namely, the company or corporation will remain Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 10 of 22 the same but the de facto complainant (employee) representing such de jure complainant can change, from time to time..."
14.5 Resultantly, the complainant is not duty bound to appoint only the Director or Managing Director as its authorized representative to depose in each and every case. The complainant company can appoint any of its employee and the said employee is empowered to depose based on his personal knowledge, if any or due knowledge, which can be gathered from documents placed on record and proved in accordance with law. 14.6 There is therefore no ground to declare CW1 as a witness incompetent to depose. CW1 being duly authorised by the complainant company and his knowledge based on the documentary evidence is sufficient for proving the case of the complainant company. CONTENTIONS QUA LEGALLY RECOVERABLE DEBT/LIABILITY 15.1 At the very onset it is clarified that in both Ex.CW1/3 and Ex.CW1/4 "owners" means accused company and "developers" means complainant company. The real controversy surrounding the present transaction in question is the interpretation of Clause 3 - Approvals in Ex.CW1/3. Sub-clause 3.1 casts a duty upon the accused company to get all the clearances in respect of the land under the Agreement from the concerned Consolidation Department within 12 months from signing of the said Agreement. Sub-clause 3.2 thereafter casts a duty on the complainant company to make all efforts to obtain approval of conversion of land use to residential followed By LOI and Licence of Anandvan at the earliest. The above two sub- clause further incorporate that if the accused company failed to obtain approval, the initial investment of Rupees Four crores was to be returned within interest @ 12% per annum. However, if the complainant company would fail to obtain sanctions, license, etc. then the agreement was terminable at the discretion of the complainant company and the invested money was to be returned without any interest.
15.2 It is because of said clause 3 that an Addendum Ex.CW1/4 was signed between the parties, which clarifies that the present two cheques were given as security post-dated and Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 11 of 22 it was clearly mentioned in clause 2 of the Addendum that if "developers" fails to obtain necessary approval from the Competent Authority within 12 months, the "developers" shall deposit the PDCs. There is apparent mistake in Ex.CW1/4 in clause 2, the second word should be read as "owners", since the two PDCs in question were handed over by the accused company to the complainant company, if in the first line as well as third line of clause 2 of Ex.CW1/4 is read as "developers", the same would be absurd. However, if "developers" in line 2 of clause 2 is read as "owners", the clause makes complete sense. Therefore, vide Addendum Ex.CW1/4 both the parties resolved that if the accused company failed to obtain necessary approvals from the competent authority, the complainant company was authorised to deposit the two PDCs, as they are subject matter of the present complaint. The figure appearing in the two cheques are even in conformity with the clause 3 of Ex.CW1/3 wherein the initial investment of Rupees Four Crores were to be returned vide PDC bearing number 882031 Ex.CW1/5 and interest @ 12% which would be Rupees Forty Eight Lakhs was to be returned vide PDC bearing number 882032 Ex.CW1/6.
15.3 The complainant company has also led in evidence on Ex.CW1/7 a purported written intimation sent by them to the accused company dated 26.12.2005 before presentation to the bank of the present cheques in question. However, no postal receipt or proof of sending or even delivery of the said letter to the accused company was proved. The said letter is thus disproved. And since it is only a self-serving document and the same is hit by section 21 of the Evidence Act, 1872. The same cannot be allowed to be proved by the complainant company unless some proof of sending the said letter or delivery proof is adduced in evidence.
15.4 The defence of the accused no.1 and 2 has been that there was no requirement of any clearance from the Consolidation Department and it was only if need be arise. However, Sub-clause 3.1 carries no such optional term. The words used in the sub-clause 3.1 are affirmative and not substituted. The sub-clause specifically says that the accused company "shall get all the clearances" in respect of the land under Agreement from the concerned Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 12 of 22 consolidation department. It is also to be seen that a greater stress was laid on the said term so much so that if the accused company was to fail in obtaining necessary clearances, the accused company was to return the investment of complainant company with interest @ 12% per annum. Further during the deposition, the accused no.2 admitted that they never applied to consolidation department.
15.5 The deposition of the accused no.2 is contrary to the documentary evidence available on record, which runs contrary to the cardinal principles of law of evidence that 'documentary evidence bars oral evidence'. Even if substance is given to the contention of the accused side that no such approval was required from concerned consolidation department, the accused side could have altered the terms of sub-clause 3.1 or could have mention the same in the Addendum Ex.CW1/4. The accused side also could have made communication to the complainant company that no approval was required from the concerned consolidation department and therefore, the complainant company shall proceed with fulfilling their obligation under clause 3.2.
15.6 Ex.CW1/5 to Ex.CW1/36 i.e. original dishonoured cheques, original return memos, copy of legal demand notice and AD Card, UPC and courier slips, which are essential to fulfil the ingredients of Section 138 and 139 of the Negotiable Instruments Act stands duly exhibited. The complaint is then supported by presumptions under section 118 and 139 Negotiable Instruments Act, 1881. Section 118 (a) of The Negotiable Instruments Act, 1881 provides as under : -
"Section 118. Presumption as to negotiable instruments.- Until the contrary is proved, the following presumption 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, was indorsed, negotiated or transferred for consideration;........."
Section 139 of The Negotiable Instruments Act, 1881 provides as under :-
"Section 139 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."
In matter of "Krishna Janardhan Bhat Vs. Dattatraya G. Hegde" (2008) 4 SCC 54, Hon'ble Supreme Court of India has observed : -
Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 13 of 22 "32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the accused and that of the prosecution in a criminal case is different."
"34. Furthermore, whereas prosecution must prove the guilty of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of the accused is 'preponderance of probabilities'. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies."
In matter of "Mallavarapu Kasivisweswara Rao Vs. Thadikonda Ramulu Firm" (2008) 7 SCC 655, Hon'ble Supreme Court of India (though it was a civil matter related to promissory note, but is relevant to refer herein) has held : -
"17. Under Section 118 (a) of the Negotiable Instruments Act, the court is obliged to pre- sume, until the contrary is proved, that the promissory note was made for consideration. It is also a settled position that the initial burden in this regard lies on the defendant to prove the non-existence of consideration by brining on record such facts and circumstances which would lead the court to believe the non-existence of the consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal."
In matter of "Bharat Barrel & Drum Mfg. Co. V. Amin Chand Payrelal"
(1999) 3 SCC 35, Hon'ble Supreme Court of India (though it was also a civil matter related to promissory note, but is relevant to refer herein) has held : -
"12. Upon consideration of various judgments as noted hereinabove, 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 non-existence 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 bur- den 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 reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under the 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 non-ex - istence 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 contem - plated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration appar- ently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the cir - cumstances of the case, shall act upon the plea that it did not exist."
In matter also relied on by the counsel for the accused no.2 of "Rangappa Vs. Sri Mohan" (2010) 11 SCC 441 which is a Full Bench Decision, Hon'ble Supreme Court of India while discussing above said provisions, judgments and other case law on the point has held : -
"26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To the extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 14 of 22 on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant".
"27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard or proof."
"28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
15.7 So, precisely there is initial presumption of legally enforceable debt or liability against the accused side, but same is rebuttable. The standard of proof for rebuttal is preponderance of probabilities. Accused side can lead evidence in defence, even can rely on materials submitted by complainant and can rely upon circumstances also to show non- existence of consideration or it being improbable and need not adduce evidence of his own for the same.
15.8 The entire facts of the complainant being admitted and supported by documentary evidence, there is absolutely no defence available to the accused side. In view of the discussion above, there already exists a presumption in favour of the complainant and the accused has not been able to rebut the same even by any probable defence. The complainant company as per Ex.CW1/3 made the investment and as per clause 3 of the Collaboration Agreement, the accused company handed over the present cheques in question on 05.08.2004 as per the Addendum Ex.CW1/4. The cheques were post-dated of 04.08.2005, so as on the date appearing on the cheques, the accused company was to return the invested amount alongwith interest component. The said amount is equivalent to the amount of the two cheques in question i.e. Rupees Four Crores Forty Eight Lakhs only. 15.9 The defence of the accused that the present cheques were security also does not hold water. The law is clear in regards to post-dated security cheques that as on the date of Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 15 of 22 cheques if there is any existing debt or liability the cheques given as post-dated cheques can also attract the provisions of section 138 of the Negotiable Instruments Act, 1881. The Hon'ble High Court of Delhi in Suresh Chandra Goyal v. Amit Singhal, Crl.L.P. 706/2014, decided on 14-5-2015 held vide para 61 that-
"...the mere fact that the debtor has given a security in the form of a post dated cheque or a current cheque with the agreement that it is a security for fulfillment 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 recovery of the due debt. If that were not so, there would be no purpose of obtaining a security cheque from the debtor. A security cheque is issued by the debtor so that the same may be presented for payment..."
15.10 The two judgments relied on by the accused no.2 on Bodapati Naga Krsihna Gandhi v. Sri Ilapakurthi Sri Ramullu And Ors., 2007 Cri.LJ (AP) 2978 and K.S. Ramachander Rao v. State of AP and Anr., 2005 (2) ALD 572 are inconsequential in the present case, as both the judgment rendered legal the filing and prosecution of criminal complaint through a power of attorney holder. The said cases are based on entirely different facts.
15.11 The counsel for the accused no.2 has also relied on the landmark judgment of the Hon'ble Supreme Court of India rendered in Central Inland Water Transport Corporation Limited & Anr. v. Brojo Nath Ganguly & Anr., (1986) 3 SCC 156 to plead that Unconscionable terms in contract are void wherein the party to the agreement has no other option but to sign or to lose everything. The case relied is entirely on different facts and circumstances altogether. Therein the employees were made to sign letters of employment as per the wishes of the employer or to get a meagre compensation. The present case at hand is entirely different. Admittedly, the accused company itself approached the complainant company for a collaboration agreement. The agreement involved about 25% initial investment on part of the complainant and rest to be made after necessary clearances and approvals. The initial investment which was about Rupees Four Crores was made which is not by any means Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 16 of 22 an earnest money or meagre token amount. Both the parties consciously signed the agreement which stipulated that on failure of the accused company in getting clearance the accused was entitled to return of earnest money with interest which was only 12%. And if the accused company failed to get licences, etc. within stipulated period, the earnest money was to be returned without any interest. From the face of it there is nothing unconscionable in the agreement. The initial investment was received by the accused company and same was not used to construct any structure and the same was only sought to prove the bonafide intention of the complainant company. Also since the transaction was commercial in nature, the interest charged was also not exorbitant. The collaboration agreement as well as the addendum was consciously signed by the accused company. Even until the present case, no communication or steps were taken by the accused company to complain to the opposite side that the contract was unconscionable on their part. It is not the case of any of the accused that the collaboration agreement or the addendum in question was signed during any pressure or coercion. It has been established on the other hand, that the accused company itself approached the complainant with the business proposal.
15.12 The counsel for accused no.1 and 2 has also relied on Rule 3 of the Haryana Development and Regulation of Urban Areas Act, 1975 to defend that nowhere in the procedure laid down for applying of license for conversion of land use it is stipulated that there has to be a requirement of clearance from the consolidation department. The accused no.1 and 2 have contended that the clearance from the consolidation department was only if there was need so arise and there was no impediment on the complainant company to apply for conversion, licenses, etc. However, the collaboration agreement expresses otherwise, nowhere has the requirement of clearance from consolidation department been made optional or conditional. As discussed before, the accused side is barred by law from deposing against the written document as envisaged by the Rules of Evidence. Moreover, the Rule 3 itself starts with "... Any owner desiring to convert his land..." (emphasis supplied). The rules allows any owner to apply for conversion and in the present case, the complainant company was the Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 17 of 22 developers and the collaboration agreement itself stated that the accused company was the owner of the extent of land in question in the dealings between the parties. In light of the above, it is not clear as to how the complainant company merely being a developer without the ownership over the extent of land could have applied for conversion, licences, etc. 15.13 Finally, the contention of the accused no.2 is negated wherein reliance placed on M/s. Indus Airways Pt. Ltd. & Ors. v. M/s. Magnum Aviation Pvt. Ltd and Anr., (2014) 12 SCC 539 is totally unfounded. The facts are entirely different wherein a post-dated cheque was given against supply of goods, which however were cancelled and as on the date of cheque no debt subsisted. In the present case, it is based on fulfilling the terms of collaboration agreement and addendum. The same never stood cancelled. The addendum signed by the parties also rebuts the reliance on the judgment of Balaji Seafoods Exports (India) Ltd. v. Mac Industries Ltd., 1999(1) RCR (Criminal) 683. The two cheques in question in the present case were already duly filled and signed, however in the Balaji Case the cheque was proved to have been given as blank and not a post-dated cheque. 15.14 Finally the counsel for the accused no.2 has relied on Sampelly Satyanarayana Rao v. IREDA (2016) 10 SCC 548, however, on a clear reading of this judgment helps the case of the complainant. Vide paras 10-12 of the above said judgment the Hon'ble Supreme Court clearly distinguished the judgment rendered in Indus Airways (supra) and further held that if the debt falls due on the date of the cheque, even the post-dated cheque undoubtedly represent the outstanding liability for the purposes of Section 138 Negotiable Instrument Act, 1881. In view of the above, the collaboration agreement clearly empowered the complainant company to present the two cheques on the date so mentioned and the amount when calculated is the exact amount against the principal and the interest @12% as agreed between the parties.
CONTENTION QUA VICARIOUS LIABILITY OF DIRECTORS 16.1 Baring accused no.2, all the accused no.3 to 7 (excluding accused 6 since deceased) have argued that the complainant has not pleaded any fact to implead any of the Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 18 of 22 accused no.3 to 7 as directors responsible for day to day affairs of the company at the time the offence was committed and were in charge of the conduct the business of the company. 16.2 Accused no. 3 to 7 have placed their reliance on the testimony of CW1 wherein he admits that he has never met the accused persons and whatever he has deposed was on the basis of the documents. The CW1 was not present when the documents were executed and he does not know as to who all were present during the entire transaction in question. 16.3 The accused no. 5 and 7 have further placed reliance on the legal demand notice dated 30.01.2006 wherein para 5, the legal notice avers that addressee no. 2 to 4 (corresponding to accused persons 2 to 4) are incharge of and responsible for the conduct of day to day affairs.
16.4 The accused no.3 to 7 have argued in defence the law laid down in National Small Industries Corporation Ltd. v. Harmeet Singh Paintal and Ors., (2010) 3 SCC 330 wherein it was held that there is no presumption of vicarious liability against the directors. The complainant is duty bound to plead and prove that the director was incharge of business of the company and had the knowledge about the transaction in question. The burden will then shift on the accused person to prove that he was not responsible for the business of the company or that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.
16.5 In view of the law laid down and considering the deposition of CW1 it is clear that CW1 was not present when the agreement and addendum in question were executed. CW1 neither met any of the accused persons nor could he identify any the accused persons. The reliance placed by accused no.5 and 7 on the legal demand notice is also well founded. The accused no. 3, 4, 5 and 7 therefore, cannot be held to be vicariously liable for the offence under section 141 of the Act.
16.6 National Small Industries Corporation Ltd. (supra) however, further states that no specific averment is required against the accused who was the Managing Director/ Joint Managing Director of the accused company or who is signatory of the cheque, they by Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 19 of 22 virtue of their position are vicariously liable for the offence punishable under section 138 read with 141 of the Negotiable Instruments Act, 1881.
16.7 The accused no.2 during his oral arguments raised an academic question that the notice put to him under section 251 of the Code of Criminal Procedure, 1973 did not incorporate Section 141 of the Negotiable Instruments Act, 1881. The issue raised being academic have since been taken care of the provisions of the Code of Criminal Procedure, 1973. Section 251 CrPC itself states that the substance of the accusation must clearly be stated and further section 464 of the Code states that no error in framing charge will hold findings of the Court unless the accused proves that the error lead to failure of justice. No such averment was made to prove any failure of justice. On the contrary, the CW1 was cross examined at length by the accused no.2, CW1 was even recalled for further cross examination as application under section 311 CrPC filed by the accused side was allowed. All the incriminating evidence under section 313/281 CrPC were put to the accused no.2 to which he pleaded his defence and even stepped in the witness box in terms of Section 315 CrPC.
17. Before concluding it is important to state that the counsel for accused no.2 have cited a set of seven judgments on the same point that finding of the fact recorded by the civil court do not have any bearing so far as the criminal case is concerned and vice versa. The seven cases which are Kishan Singh (Dead) through LRs, (2010) 8 SCC 775; K.G. Premshanker v. Inspector of Police and Anr., Appeal (Crl.) 935 of 2002; Sh. Vishnu Dutt Sharma v. Smt. Daya Sapra, Civil Appeal 3238 of 2009; Narinder Kumar Gulati & Ors. v. State of Punjab and Ors., Crl. Misc M-18226 of 2015 (Hon'ble High Court of Punjab and Haryana at Chandigarh); Subhash Motwani & Anr. v. M/s. Frankfinn Management Consultants, Crl. M.C. No. 3686/2009 (Hon'ble High Court of Delhi at New Delhi); Haradhan Bhowmik v. State Govt. of NCT Delhi, W.P. (Crl.) 3046 of 2015 (Hon'ble High Court of Delhi at New Delhi); Naridner Kumar Gulati & Ors. v. State of Punjab & Ors., Crl. Misc. M-18226 of 2015 dated 17.12.2015 (Hon'ble High Court of Punjab and Haryana Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 20 of 22 at Chandigarh); and Vipul Gupta & Ors. v. State & Ors., 2018(168)DRJ193. However, there is no need to discuss the point laid down in the above cases since at no point has the complainant rested its case on the proceedings of the civil court between the parties. Neither the civil case has been pleaded or contended during the argument to prove the present case. Moreover, the cases pertaining to cheque bouncing stands on different facts and circumstances than any other litigation. There are requirements of Section 138, 139 and 141 supported by presumptions under Section 118, 139 and 146. Moreover, certain defences are not permitted by Section 140 of the Negotiable Instruments Act, 1881 (as amended by Amendment Act, 1988, and further amended till date). The present case stands proved as per the requirement of the provisions of law and the case law laid down by the Hon'ble High Courts and the Hon'ble Supreme Court of India.
FINAL CONCLUSION
18. It stands established on record in the form of evidence of the complainant given vide affidavit (which can be read in evidence at all stages as per judgment of "Rajesh Agarwal Vs. State & Anr." 171 (2010) DELHI LAW TIMES 51), documents exhibited in evidence, admission of accused during notice/accusations explained to him and statement of accused recorded under Section 313 of The Code of Criminal Procedure, 1973 read with Section 281 of The Code of Criminal Procedure, 1973 that complainant paid to the accused side a sum of Rupees Four Crores in August 2004, accused issued post-dated cheques in question for discharge of their liability, cheque got dishonored on presentment, complainant served legal demand notice upon accused demanding the cheque amount in question, however, accused failed to make the said payment within statutory period despite service. The accused no.1 Tatvadarshini Bandhu Pvt. Ltd. is guilty of the offence and the accused no.2 Mr. Dinesh Aggarwal was in charge of, and was responsible to, the company for the conduct of the business of the company, the same has not been rebutted by the accused during the entire trial. So, all the ingredients of offence punishable under Section 138 read with Section 141 of Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 21 of 22 The Negotiable Instruments Act, 1881 stands established on record. The complainant company has however failed to prove vicarious liability of accused no.3, 4, 5 and 7 and therefore they are acquitted of charges under section 138 read with 141 of the Negotiable Instruments Act, 1881.
FINAL ORDER
19. In view of the aforementioned facts and circumstances, this Court is of the opinion that complainant has duly proved its case against the accused for offence punishable under Section 138 of The Negotiable Instruments Act, 1881 beyond shadow of any reasonable doubt. Accordingly, accused no.1 Tatvadarshini Bandhu Pvt. Ltd. is convicted for offence punishable under Section 138 of the Negotiable Instruments Act, 1881. And the management of the accused no.1 was being carried out by the accused no.2 Mr. Dinesh Aggarwal, even the Ex.CW1/3, Ex.CW1/4, Ex.CW1/5 and Ex.CW1/6 bears his signature. Accordingly accused no.2 namely Mr. Dinesh Aggarwal director/authorized signatory of accused no.1 stands convicted being director/ authorised signatory of the present cheque in question for offence punishable under Section 138 read with Section 141 of The Negotiable Instruments Act, 1881. The accused no. 3 Ms. Meenakshi Aggarwal, accused no.4 Mr. Ashok Aggarwal, accused no.5 Mr. Chittar Singh and accused no.7 Ms. Sharda Tayal stands acquitted of all charges.
Digitally signed
Announced in the open Court
PARAS by PARAS
DALAL
on August 26, 2019. DALAL Date: 2019.08.27
16:17:59 +0530
(PARAS DALAL)
M.M.-04/N.I.Act/South-East,
Saket/Delhi/26.08.2019
Omaxe Construction Ltd. v. Tatvadarshini Bandhu Pvt. Ltd. & Ors. 22 of 22