Delhi District Court
Ess Ess Kay Engineering Col Ltd vs . on 2 May, 2007
1
IN THE COURT OF SH. SANJIV JAIN
ADDITIONAL CHIEF METROPOLITAN MAGISTRATE
KARKARDOOMA COURTS : SHAHDARA, DELHI
ESS ESS KAY Engineering Col Ltd.
VS.
M/s Pawan Electricals
P.S. : Anand Vihar
U/S : 138 OF N.I. ACT
JUDGMENT
A) The Sl no. of the Case : 494/03
B) The Date of Commission
of offence : 31.3.03, 11.5.03 and 8.6.03
C) The Name of Complainant : Sh. Amrit Singh Chathrath Attorney M/s Ess Ess kay Engineering Col Ltd.
H-1, Vikrmaditya Tower,
Alaknanda Shopping Complex,
New Delhi - 110 0019
D) The Name and Parentage of
Accused : Yoginder Kumar Rastogi
Partner M/s Pawan Electricals
1746, Baghirath Palace
New Delhi - 110 006
E) The offence complained : 138 of Negotiable Instruments Act
F) The plea of the accused : Pleaded not guilty
G) The Fina Order : CONVICTED
H) The Date of Such Order : 28.04.2007
I) THE BRIEF STATEMENT OF REASONS FOR DECISION :- 2
1. M/s ESS ESS Kay Engineering company limited through its attorney filed a complaint against M/s Pawan Electricals and its partners alleging therein that the accused Yoginder Kumar Rastogi, Partner of M/s Pawan Electricals had purchased the electric goods from the complainant on various occasions vide several invoices. Against purchases the accused issued the cheques as per the details mentioned in Para 4 from 15.3.2003 to 8.6.2003 total amounting to Rs. 3,50,000/- with an assurance that cheques would be honoured on presentation.
2. On presentation all the cheques were dishonoured with the remarks "Exceeding Funds" vide memo dt. 13.6.2003. On 24.6.03 a legal notice of demand was sent through registered post / UPC but despite its acknowledgment the accused did not make the payment. Hence the present complaint was filed in respect of cheques 164852, 164865 and 554970 drawn on Bank of Maharashtra, Chandni Chowk and The Khattri Co-operative Urban Bank Limited, Krishna Nagar total amounting to Rs. 1,50,000/-
3. In support of the complaint the attorney of the complainant 3 tendered his affidavit reiterating the facts as alleged in the complaint. Vide order dt. 8.8.03 the cognizance of offence was taken and accused were summoned for offence punishable U/s 138 / 142 of the Negotiable Instruments Act.
4. On appearance after supplying the copies of the documents as well as the complaint a notice was served upon the accused Yoginder Kumar Rastogi, partner of M/s Pawan Electricals for offence punishable U/s 138 of Negotiable Instruments Act. He pleaded not guilty and claimed trial.
5. To prove the complaint, the attorney of the complainant examined himself by tendering his affidavit Ex. P1 reiterating the facts as alleged in the complaint. He proved the cheques Ex. Cw1/B, C and D issued by the accused in discharge of his liability towards payment of dues, return memo Ex. Cw1/E, F and G, legal notice vide Ex. Cw1/H, postal receipts of service Ex. Cw1/J, K, I and M. He also proved his attorney Ex. Cw1/A, extract of minutes Ex. Cw1/1.
6. He stated that prior to the service of legal notice a meeting 4 was held with the accused where the accused had agreed to pay the entire dues in three installments,he proved the minutes of meeting dt. 18.6.03 Ex. Cw1/N bearing the signature of the accused, ledger showing the outstanding balance Ex. P1. He stated that the accused within stipulated period did not make the payment.
7. In cross-examination he stated that he had signed the documents Ex. CW1/A before the Notary, he denied the suggestion that the cheques in question were taken by the comlaiant as an advance or that after dishonour of the cheques, the complainant has received Rs. 1,00,000/- from the accused against the cheques.
8. Accused was examined U/s 281 CrPC, he stated that he had issued the cheques as collateral security however he admitted that he had purchased the goods and had made part payment. He stated that he owes the liability.
9. In defence he tendered his affidavit wherein he stated that the complainant used to keep few blank signed cheques as collateral 5 securities which he used to present after having confirmation from him. He stated that the cheques in question had been presented without seeking instructions from him and when he made inquiry from the complainant, he tendered apology and thereafter he made payment in cash against the cheques which the complainant has concealed. He denied having received any notice. He proved on records the receipts Rw1/1 to Rw1/6 against the payments made. In cross-examination he admitted that he had received a legal notice dt. 24.6.03 and did not send any reply, he also admitted to have business terms with the complainant. He also admitted that many times the cheques issued by him were dishonoured, he also admitted his signature in Ex. Cw1/N i.e the minutes of the meeting dt. 18.6.03 admitting his liability to the extent of Rs. 11,88,907.08. He denied having sent any legal notice to the effect that complainant used to keep his blank cheque against security, he admitted that he did not file any complaint to any authority against the complainant in this regard.
10. I have considered the arguments advanced by Ld counsel for the parties and have gone through the evidence on record. 6
11. During course of arguments an objection was taken on behalf of the accused that the complainant did not place on record the Power of Attorney. Only a resolution was filed authorising the attorney to file the complaint. Ld Counsel for the complainant stated that the very objection was taken when the accused had moved an application for discharge and Ld Predecessor of this Court vide order dt. 27.9.04 giving reference of a case M/s MMTC Ltd Vs. M/s Medchl Chemicals & Pharma (P) Ltd 2002(1) RCR (Criminal) 319 held that even if there is some irregularity in the authorization, the same is curable and the accused can be prosecuted. The above case law also finds mention that the complaint can be made by an official of the company in the name of and on behalf of company. The concerned officer may not have the authority initially, the company can rectify the defect subsequently filing of the complaint. In the present case company has given special power of attorney Ex. Pw1/A in favour of Sh. Amrit Singh Chatarath Manager on 6.10.2004 thus rectified the defect.
12. It is an admitted case of the parties that a meeting was held on 18.6.2003 which was attended by both the parties wherein the 7 accused had admitted his liability to the extent of Rs. 11,88,907.08. He had also given the schedule of payments. It is not the case of the accused that he had not issued the cheques Ex. Cw1/B ,C and D and that he had not received legal notice dt 24.6.2003 Ex. Cw1/H. The record shows that the cheques on presentation were dishonoured with the remarks "Exceeding Funds". In the instant case the accused did not respond to the legal notice nor made the payment within the stipulated time. Though the accused in his defence took the plea that the aforesaid cheques were against collateral securities but the accused is not in possession of any document to show that the aforesaid cheques were issued as blank as collateral security. When he was asked whether he had lodged any report to the authority against the complainant, he replied in negative. The document Ex. Cw1/N is contrary to the defence of the accused. It is not in dispute that the accused had business dealings with the complainant and had to clear his liabilities in terms of the agreement Ex. Cw1/N. The accused stated that he had made some payment by cheque and cash vide receipts Ex. Rw1/1 to Rw1/6 but he did not produce statement of accounts in this regard moreover from the receipts it cannot be inferred that the 8 payment was made against the aforesaid cheques.
13. The Act was enacted and Section 138 thereof was incorporated with a specified object of making a special provision by incorporating a strict liability so far as the cheque, negotiable instrument, is concerned. The law relating to negotiable instrument is the law of commercial work legislated to facilitate the activities in trade and commerce making provision of giving sanctity to the instruments of credit which could be deemed to be convertible into money and easily passable from one person to another. In the absence of such instruments, including a cheque, the trade and commerce activities, the present day world, are likely to be adversely affected as it is impracticable for the trading community to carry on with the bulk of the currency in force. The negotiable instruments are in fact the instruments of credit being convertible on account of legality of being negotiated and are easily passable from one hand to another. To achieve the objectives of the Act, the legislature has, in its wisdom, thought it proper to make such provisions in the Act for conferring such privileges to the mercantile instruments contemplated under it and provide special penalties and procedure in case the 9 obligations under the instruments are not discharged. The laws relating to the Act are, therefore, required to be interpreted in the light of the objects intended to be achieved by it despite there being deviations from the general law and the procedure provided for the redressal of the grievances to the litigants. Efforts to defeat the objectives of law by resorting to innovative measures and methods are to be discouraged lest it may affect the commercial and mercantile activities in a smooth and healthy manner ultimately affecting the economy of the country.
14. As per Section 118 of N.I. Act, unless the contrary was proved, it is to be presumed that negotiable instruments including a cheque has been made or drawn for consideration. Under Section 139 of N.I. Act the court has to presume that the holder of the cheque received the cheque for discharge in whole or in part of a debt or liability. Thus in complaints under Section 138 of N.I. Act the court has to presume that the cheques had been issued for a debt or liability.
15. Further as per Section 91 & 92 of Evidence Act, the agreement excludes the oral arguments. It was held in the case 10 K. Bhaskaran Nair V. Habeed Mohammed AIR 2002 Ker 308 (DB). :-
Section 92 only excludes oral evidence to vary the terms of the written contract, and has no reference to the question whether the parties had agreed to contract on the terms set forth in the document. So also Section 91 only excludes oral evidence as to the terms of the written contract. Oral evidence is admissible, therefore, to show that a document executed by a person was never intended to operate as an agreement, but was brought into existence solely for the purpose of creating evidence about some other matter.
16. It was held in Goa Plast (P) Ltd. V. Chico Ursula D'souza 2003 (3) JCC (NI) 305 Supra :-
" that the object and the ingredients under the provisions, in particular, Section 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of commercial transactions, it was 11 noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Undoubtedly dishonour of a cheque by the Bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious set back. The Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a Civil Court is a long drawn matter and an unscrupulous drawer normally takes various pleas to defat the genuine claim of the payee."
Sections 138 and 139 of N.I. Act were enacted to create an element of credibility and dependability which provide criminal remedy of penalty if the ingredients of the Sections are satisfied.
17. It was held in Hiten Dalal's case III (2001)ccr 43 (SC) "The words ..... 'unless the contrary is proved' which occur in this provision make it clear that 12 the presumption has to be rebutted by "proof" and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provisions cannot be said to be rebutted....."
18. After going through the complaint and documents I find that the complainant had business dealings with the accused. The accused had issued the cheques in discharge of his liabilities. The cheques on presentations were dishounoured with the remarks "Exceeding Funds". Despite legal notice the accused did not make the payment within the stipulated period nor responded to the notice. The complaint is within limitation.
19. In view of the above settled provisions of law and keeping in mind the objects of legislation and to promote faith in all commercial transactions, I do not find any reason for accepting the contentions raised by the accused that there was no legally 13 recoverable dues. The present case is well covered under the provision of section 138 of N.I. Act. I am of the considered opinion that the complainant has proved his case and has brought home all the ingredients of offence punishable U/s 138 of Negotiable Instruments Act against the accused. I therefore convict the accused of the offence punishable U/s 138 of Negotiable Instruments Act.
ANNOUNCED IN THE OPEN COURT ON 28.04.2007 (SANJIV JAIN) Addl. Chief Metropolitan Magistrate Karkardooma Courts : Shahdara.
14IN THE COURT OF SH. SANJIV JAIN ADDITIONAL CHIEF METROPOLITAN MAGISTRATE KARKARDOOMA COURTS : SHAHDARA, DELHI ESS ESS KAY Engineering Col Ltd.
VS.
M/s Pawan Electricals P.S. : Anand Vihar CC no. 494/03 U/S : 138 OF N.I. ACT ORDER ON SENTENCE Vide separate judgment accused Yoginder Kumar Rastogi Partner of M/s Pawan Electricals has been convicted of offence punishable U/s 138 of Negotiable Instruments Act.
I have heard Ld counsel for the convict on point of sentence. Convict is aged about 67 years and has a business of electric goods and has three children. Marriage of his son is fixed for 14.5.07. Ld counsel states that due to financial setback in the business he could not pay the dues to the complainant, though he does not have any malafide intention in discharging his liability Ld counsel for the complainant on the contrary has argued that accused himself had executed the agreement admitting his liabilities of Rs. 11,88,907/- Complainant has also filed a suit for recovery which is pending trial and despite demand and legal notice the convict did not make the payment. Ld counsel states that if the dues would have been paid in the year 2003 it would have been double by now and in these circumstances the accused does not deserve any sympathy.
15
I have given my thoughtful consideration to the rival contentions of the parties and perused the file.
In the instant case accused has been facing trial for about four years, he does not has any criminal antecedents and is a businessman.
It was held in the Apex Court in Suganthi Suresh Kumar Vs. Jagdeeshan 2002 (1) jcc 315 :-
"that if the amounts had been paid to the complainant, there perhaps would have been justification for imposing a flee bite sentence as had been chosen by the trial court, but in a case where the amount covered by the cheque remained unpaid it should be the look out of the trial magistrate that sentence under Section 138 should be of such a nature as to give proper effect to the object of the legislation. No drawer of the cheque can be allowed to take dishonour of the cheque issued by him light heartedly.
The very object of the enactment of the provisions like 138 of the Act would stand defeated if the sentence is of the nature passed by trial Magistrate.
It is relevant to mention that in the case (supra) the total amount covered by the cheques was Rs. 4,50,000/- and the trial 16 court passed the sentence of imprisonment till rising of the Court and a fine of Rs. 5,000/- The Apex Court set aside the order of the trial court observing that the provisions for compensation under Section 357(3) CrPC., should have been invoked by the trial court.
It was held in the case of Pankajbhai Nagjibhai & Anr. Vs. State of Gujrat & Anr 2001 (1) JCC (SC) 82 :-
"that any amount can be awarded as compensation by the Ist class Magistrate under Section 357 CrPC. "He after imposing imprisonment can grant compensation for the victim. It was observed that while fixing the quantum of compensation, the Magistrate has to consider what should be the reasonable amount of compensation payable to the complaint".
The Negotiable Instruments Act was enacted and Section 138 thereof was incorporated with a specified object of making a special provision by incorporating a strict liability so far as the cheque is concerned. Efforts to defeat the objectives of law by resorting to innovative measures and methods are to be discouraged lest it may affect the commercial and mercantile activities in a smooth and healthy manner ultimately affecting the economy of the country. Primarily the object is to promote the efficacy of the banking operation and to ensure credibility in business transactions.
Having regards to the above said proposition of law, in the 17 totality of circumstances and the fact that large sum of the complainant was blocked I do not consider it a fit case to release the convict on probation.
Keeping in view the objectives of the legislations, in these circumstances I sentence the convict to go simple imprisonment till rising of the Court and to pay compensation in the sum of Rs. 2,00,000/- to the complainant which will be recovered as a fine in default to go simple imprisonment for a period of one year. In addition convict is also directed to pay Rs. 5000/- to the State.
File be consigned to record room.
ANNOUNCED IN THE OPEN COURT ON 02.05.2007 (SANJIV JAIN) Addl. Chief Metropolitan Magistrate Karkardooma Courts : Shahdara.