Delhi District Court
Sanjeev Sharma vs . Ramesh Sharma Page 1/14 on 3 September, 2013
IN THE COURT OF SH. PAWAN SINGH RAJAWAT
METROPOLITAN MAGISTRATE-11(CENTRAL), ROOM NO. 266,
TIS HAZARI COURTS, DELHI
SH. SANJEEV SHARMA .................. Complainant
(PROPREITOR), Nand Computers &
Solutions, 97-B, Amrit Puri-B, 1st Floor,
East of Kailash, Opposite ISKON Temple,
New Delhi.
VERSUS
SCL India Pvt. Ltd. .................. Accused
2023 Bajaj House
2nd Floor, Nehru Place
New Delhi
and
Ramesh Sharma,
Director, M/s SCL India P. Ltd.
N-342, III Floor
Jalvayu Vihar
Sector 25, NOIDA, UP
also at:
C-140, Near Kothari International School,
Sector 50, NOIDA, Uttar Pradesh.
And at
F-131/1, Basement, Pragati Bhwan,
Mohammad Pur, Bhikaji Kama Place, New Delhi.
CC No. 502/01
PS- PATEL NAGAR
U/S:138 Negotiable Instrument Act
1. Serial No. of the case : 02401R1079232007
2. Date of commission of offence : 07.10.2007
3. Date of Institution : 31.10.2007
CC No. 502/1
PS- Patel Nagar
Sanjeev Sharma Vs. Ramesh Sharma Page 1/14
4. Date when judgment : 05.08.2013
was reserved
5. Date when Judgment : 03.09.2013
was pronounced
6. Offence Complained of : Section 138 Negotiable
and proved Instrument Act
7. Plea of accused : Pleaded not guilty
and claimed trial
8. Final Judgment : Accused found guilty
of offence U/s 138
Negotiable Instrument
Act and convicted for
the same.
JUDGMENT
BRIEF STATEMENT OF REASONS FOR THE DECISION OF THE CASE:
1. Briefly stated the facts of the case are that in the month of February, 2007 accused Ramesh Sharma, being director of M/s SCL India P Ltd placed an order for some Computer Laptops and other Computer peripherals with complainant who supplied the same vide bill No. 047/1 dated 06.02.2007 of Rs. 79,200/- and 048/1 dated 07.02.2007 of Rs.
2,26,000/-. It is further alleged that accused issued post dated cheques towards discharge of liability which were returned unpaid with the remarks 'Exceeds Arrangement' and despite the service of the legal notice, the accused failed to pay the cheque amount. The accused was summoned on 02.07.2007.
CC No. 502/1PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 2/14
2. On 03.01.2013 Notice u/s 251 Cr.P.C. was framed against the accused Ramesh Sharma only to which he pleaded not guilty and claimed that he did not received any legal notice and the cheques were given by him only after putting his signatures thereon and same were not filled by him. He further stated that cheques were given as security and not towards any existing liability and same were misused by the complainant and he has no legal liability towards the complainant with regard to cheque(s) in question. Initially no separate notice was served for M/s SCL India P. Ltd. Therefore, before the judgment was pronounced, after considering the broad probabilities of the case and total effect of the evidence and documents produced I was satisfied that alteration of the notice is necessary, and therefore, the notice u/s 251 Cr.P.C. was altered and same was read and explained to accused Ramesh Sharma who stated that no prejudice has been caused to him or to the company M/s SCL India Pvt. Ltd as he all along knew that the case is against M/s SCL India Pvt. Ltd and also against him being the signatory of cheque in his capacity as Director of the company.
3. COMPLAINANT'S EVIDENCE:
The complainant has examined only one witness i.e complainant himself.
3.1 CW1 is the complainant. He stated that he had filed his evidence by way of affidavit dated 27.10.2007 and at that time filed photocopy of bill No. 47 and 48 which were marked as Ex. CW1/G1 and CW1/G2 and had had filed original bill No. 47 and certified copy of bill No. 48 which is Ex.
CW1/1 and CW1/2. During his cross examination he denied that accused is his business partner but stated that accused used to purchase goods from CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 3/14 him. He is also asked question about one incident in Agra where accused is witness to that incident but that has no reference to the present case. Complainant admitted that goods supplied to M/s SCL India P. Ltd. He also stated that he has shown all the goods sold in sales tax return and income tax return of the relevant years. He also admitted that there is no proprietor in a Pvt Ltd Company. He fails to state whether he mentioned that accused is responsible for the day to day affairs of the company but voluntarily stated that he has filed present complaint against the accused in his capacity of Director of the Company. He also stated that he had filed all the bills for which payment were due as supplied to the accused which were duly received by him. He admitted that cheques in question were post dated and handed over at the time of delivery. He also admitted that cheque were dues towards bill filed alongwith the complaint. He denied the suggestion that he entered in partnership firm with the accused and opened shop near Nehru Place. He also denied the suggestion that accused given him loan of Rs. 1.50 lacs when his child was ill. He specifically pointed out that accused signed on Ex. CW1/2 i.e bill No. 48 at point A. He denied the suggestion that signatures at point A of Ex. CW1/2 does not belongs to the accused. He denied the suggestion that he do not recall the names of his employees because no goods were delivered by him or by his employees. CW1 admitted that after dishonor of cheques, accused gave some more cheques and goods were supplied only after clearing of the cheques. He denied the suggestion that he had filed the present complaint with ill intention to grab money after filing cheques and bills which were forged. He also denied the suggestion that no goods ever received by accused and no legal notice was served upon the accused and denied the suggestion that no goods were CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 4/14 received by accused and complainant misused the blank cheques.
4. After the Complainant evidence is closed the accused was examined U/s 313 Cr.P.C r/w Section 281 Cr.P.C and all the incriminating evidence against him were put to the accused wherein he denied his liabilities and stated that complainant used his government license issued by NCCF of India and used to keep advance cheques for purchase of articles to be supplied. He also stated that he had not taken any goods from the complainant and is not liable to pay the cheque amount and he also not received Ex. CW1/1 i.e legal notice. He further stated that he want to lead evidence in his defence. Thereafter, matter was adjourned for defence evidence.
5. DEFENCE EVIDENCE:
In his defence evidence, accused has examined himself as DW1 in terms of Section 315 Cr.P.C and claimed himself as one of the Directors in the Company M/s SCL India P. Ltd. He further stated that his Company is registered with NCCF of India and he supplied goods for which orders were procured by the complainant as complainant was not registered in the said federation. He further stated that he used to issue blank cheques in favour of the complainant as security for payments from NCCF which were received in his name. He specifically stated that bills filed by complainant does not bears his signatures. He also stated that he did not received any legal notice regarding the dishonor of cheques and denied his liabilities. During his cross examination he admitted that all the cheques bears his signatures and specifically admitted that he used to deal with the complainant. He also admitted that he signed on the Ex. CW1/A2 at point B which is correction on the date of cheque. He admitted that he had not made CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 5/14 any police complaint regarding misuse of his cheques by complainant. He also admitted that he has not filed any documents pertaining to his registration with NCCF as supplier. He also admitted that no partnership agreement is filed but denied the suggestion that there is no agreement between him and complainant. He denied the suggestion that bills in question contain his signatures.
6. FINAL ARGUMENTS:
6.1 Ld counsel for the complainant has argued that the offence is proved beyond doubt as accused himself has admitted issuance of cheques. He prays for conviction.
6.2 On the other hand, Ld Counsel for the accused had argued that accused has no liability against the complainant and the cheques were given as security which are misused by the complainant. He prays for acquittal.
7. For successful prosecution of offence U/s 138 of N.I. Act, the following ingredients have to be proved by the complainant :
a) The cheque must have been issued for discharge of whole or in part of legally recoverable debt or other liability.
b) The cheque have been presented in the bank on
which it is drawn within a period of its validity.
c) The cheque should have been returned by the bank
unpaid due to reason of insufficiency of funds or that it exceed the amount arranged to be paid from that account.
d) The payee or holder in due course makes the demand of payment of the said amount of money by giving a notice in writing to the drawer of cheque within 30 days of the CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 6/14 receipt of information by him from the bank regarding the return of the cheque.
e) Lastly, the drawer of said cheque fails to make the payment to the payee or holder in due course within 15 days of receipt of said notice and the complaint is made within one month of the date on which cause of action arises under clause (c) of the proviso to the section 138 N.I. Act.
8. Whether the cheque has been issued towards discharge of legal debt/liability: Complainant has specifically mentioned in his complaint as well as in his evidence that he supplied goods against proper bills vide invoice No. 047 dated 06.02.2007 and 048 dated 07.02.2007. He denied all the suggestion towards non-existence of liability against the accused. Accused has not denied issuance of cheques but claimed that same were issued as advance towards some partnership business which complainant has specifically denied.
9. At this stage it is also necessary to see the effect of statutory presumptions under section 118 (a) and section 139 Negotiable Instruments Act in order to judge the legal and factual merit of case. In M/s. Kumar Exports Vs. M/s. Sharma Carpets, 2009(1) R.C.R.(Criminal) 478, the Apex Court examined the scope and ambit of presumptions u/s 118 and Section 139 of NI Act and held;
"Under Section 138 of the Act the accused has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 7/14 consideration and debt existed.......'. '........The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue".
10. The rebuttal of presumption does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man". Moreover, the accused has admitted in his statement u/s 313 CrPC r/w 281 CrPC that he had issued the cheque.
11. Since the cheque belongs to a company, it is necessary that effect of section 141 of negotiable instruments Act which provides for offence u/s 138 NI Act by Companies creating vicarious liability of person who was either incharge of and was responsible for the business of company or any other person who is director or officer of company with whose connivance or neglect the company issued the cheque must be seen.
12. In S.M.S. Pharmaceuticals Ltd. v/s Neeta Bhalla AIR 2005 SC 3512 Supreme Court held that it is necessary to specifically aver in a CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 8/14 complaint under section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company and without this averment being made in a complaint, the requirements of Section 141 can not be said to be satisfied. Supreme Court also held that Managing Director or Joint Managing Director or signatory of cheque by virtue of the office they hold are deemed to be in charge of and responsible for the conduct of business of the company and thus covered under section 141 and they have to prove this innocence during trial. Court is of the opinion that there is no universal rule that a director of a company is in charge of its every day affairs.
13. In K.K. Ahuja vs V.K. Vora & Anr decided on on 6 July, 2009 Supreme court while considering various provisions of companies Act dealt with categories of three types of persons who could be roped in for commission of offence U/s 138 NI Act in case of companies under section 141 of N.I. Act and subject to what conditions and at last summed up the findings as under;
(i) If the accused is the Managing Director or a Joint managing Director , it is not necessary to make an averment in the complaint that he is in charge of , and is responsible to the company, for the conduct of the business of the company. This is because the prefix 'Managing ' to the word 'Director' makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company.
(ii) In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 9/14 responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence . The very fact that the dishonoured cheque was signed by him on behalf of the company , would give rise to responsibility under sub Section (2) of Section 141.
(iii) In case of Directors, Secretary or Manager (as defined in section 2 (24) of the Companies Act, or a person referred to in clause (e) and (f) of section 5 of Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company for the conduct of the business is necessary to bring the case u/s 141 (1) of Negotiable Instruments Act.
14. In National Small Industries Corp. Ltd. Vs Harmeet Singh Paintal 2010 II AD (SC) 606, the above position of K.K Ahuja (Supra) was reaffirmed.
15. In the present case, the cheque was signed by Ramesh Sharma in his capacity as Director of M/s SCL India P Ltd and he has not denied his signature. He has also not claimed that he was not the Director responsible for the conduct of the business of the company. This shows that accused Ramesh Sharma being Director of M/s SCL India P. Ltd is the author of the cheques issued towards discharge of liability of the company. Moreover, during cross examination, CW1 specifically stated that he filed the present complaint against the accused being Director of accused Company. Moreover, after perusing the averments in the complaint, only one inference can be drawn that the accused Ramesh Sharma is responsible for affairs of accused Company. In the circumstances, I am satisfied that accused has CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 10/14 failed in rebutting the presumption u/s 118 and 139 of Negotiable Instruments Act and onus has now shifted upon the accused to show that cheque in question was either without consideration or he himself was not vicariously liable to pay the dishonor amount in question. In fact the complainant proved the cheques in question against the accused Company and Ramesh Sharma being Director.
16. The cheque was presented in the bank within the period of its validity: The cheque(s) which is exhibited CW-1/A1 to CW1/A3 bears dates of 19.02.2007 and 20.07.2007 and were returned on 24.08.2007, this was not at all disputed by the accused. Therefore, the same taken to be presented within the period of limitation of six months and this ingredient of the offence is clearly established.
17. The cheque was returned unpaid by the bank due to reason of insufficiency of funds: The cheque was dishonoured vide returning memo dated 24.08.2007 which are Ex-CW1/B1 to CW1/B3 due to 'Exceeds Arrangement' in the account of the accused.
Section 146 N.I. Act mandates that :
"The court shall ,in respect of every proceeding under this chapter ,on production of bank's slip or memo having thereon the official mark denoting that the cheque has been dishonored, presume the fact of dishonor of such cheque ,unless and until such fact is disproved."
18. In present complaint, CW1 proved in his examination in chief the bank returning memo dated 24.08.2007 as Ex. CW-1/2 to establish the factum of dishonour of cheque issued by the accused. Dishonor is admitted and accused has not paid the cheques in question and claimed that CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 11/14 security cheques given towards some partnership were misused. No evidence has been brought by accused of existence of such a partnership firm. Further the accused did not lead any evidence to the contrary. As such, the complainant discharged his part of burden of proving the background facts so that presumption u/s 146 N.I. Act can be raised and accused failed in rebutting the said presumption and consequently did not disprove the fact as mandated by law, that the cheque in question was dishonored. As such the complainant has also proved this ingredient of the offence under consideration against the accused.
19. The payeee makes a demand within 30 days of the receipt of dishonoured cheque: At the time of framing of notice U/s 251 Cr.P.C as well as in his statement U/s 313 r/w 281 Cr.P.C, accused stated that he has not received the legal notice. Complainant has specifically averred in his complaint that he has sent legal notice dated 19.09.2007 by registered post as well as UPC to the registered office as well as the address of accused. The legal notice sent by registered post at residential address was returned with the report that "bar bar jane par nahi mila". The legal notice sent through UPC did not received back. In D. Vinod Shivappa vs. Nanda Belliappa AIR SC 2006 SC 2179, it was held that when notice was sent at last known correct address then endorsement "addressee always absent during delivery time, hence returned to sender" on unserved registered envelope deemed to be served and cause of action still arises. The present case is squarely covered by the judgement. Hence, it is presumed to be served upon the accused. The legal notice was also sent through UPC and presumption U/s 27 of General Clauses Act goes in favour of the complainant. Therefore, this ingredient of the offence also stands CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 12/14 established against the accused
20. The accused failed to make the payment towards dishonoured cheque within 15 days of the receipt of legal notice: In his post summoning evidence, complainant has specifically mentioned that accused has not paid the dishonoured cheque amount. The accused has also not claimed that payment was made and the only line of defence is of cheques in question being given as security of a partnership firm. Accused claims that cheques in question were given during partnership with complainant but no documentary or oral proof apart from his testimony is brought to claim the said partnership. Not a single transaction of such partnership firm has been shown. He has not filed any documents showing that he is registered supplier of NCCF. The accused denied the signatures on bills in question but he accused choose not to pray for sending the said bills for examining by handwriting expert to falsify the averments of the complainant regarding the signatures on the said bills.
21. Ld. Counsel for the accused had also argued that complainant has wrongly mentioned the designation of Ramesh Sharma as proprietor of M/s SCL India P Ltd and therefore, he has no liability as there cannot be a proprietor in a private limited company.
22. I am of the opinion that defect in title and name of parties is not much of consequence if the contents of the complaint discloses what complainant wants to say and what relief he is claiming. My opinion is fortified by the judgement of Hon'ble Bombay High Court in the matter of Suresh Srinivasan vs. State of Maharashtra 1999 (1) Crime 161 wherein it was held that technical defects could not be permitted to defeat the purpose of prosecution. Despite availing opportunity to lead defence CC No. 502/1 PS- Patel Nagar Sanjeev Sharma Vs. Ramesh Sharma Page 13/14 evidence, accused fails to brought on record absence of any liability towards the complainant. Accused has not claimed that some other Directors were responsible for the conduct of business of the Company. On the contrary, accused admitted issuance of chequs. No suggestion been put to the complainant's witness that their is no liability of M/s SCL India P. Ltd. Complainant produced original bills and claimed non-payment against them. But accused miserably failed in disproving the same.
23. In view of the evidence on record, I am satisfied that the complainant has proved beyond reasonable doubts that the accused issued cheque for discharge of liability of M/s SCL India P. Ltd which got dishonored and despite receipt of legal notice, accused failed to pay the cheque amount and therefore, committed the offence U/s 138 of Negotiable Instruments Act, 1881 and vicariously liable to pay the dishonored amount. Hence, accused are convicted for the offence under Sec. 138 Negotiable Instruments Act, 1881. Copy of judgment be given free of cost to the convict.
Put up for arguments on sentencing on 07.09.2013 at 2pm.
ANNOUNCED IN THE OPEN (PAWAN SINGH RAJAWAT)
COURT ON 03.09.2013 METROPOLITAN MAGISTRATE-11
(CENTRAL), TIS HAZARI COURTS,
DELHI.
CC No. 502/1
PS- Patel Nagar
Sanjeev Sharma Vs. Ramesh Sharma Page 14/14