Delhi District Court
Zoom Communications Ltd. vs . Triveni Media Ltd. on 4 August, 2022
IN THE COURT OF SH. SIDDHANT SIHAG, METROPOLITAN
MAGISTRATE (SOUTH) NI ACT, SAKET COURTS: NEW DELHI
CT No. 465258/16
ZOOM COMMUNICATIONS LTD. Vs. TRIVENI MEDIA LTD.
1. Complaint Case number : 465258/16
2. Name of the complainant : Sh. Mukesh Gupta
AR of complainant company
Office at 28, Saidullajab,
Saket, MB Road, New Delhi.
3. Name and address : Rajjan Gupta
of the accused AR of accused no. 1 company
M/s Triveni Media, Office at
Eros Corporate Tower, 7th Floor,
Nehru Place, New Delhi-19.
Madhur Mittal (accused no. 2)
Director of accused no. 1
company M/s Triveni Media,
Office at Eros Corporate
Tower, 7th Floor, Nehru Place,
New Delhi-19.
Sumit Mittal (accused no. 3)
Director of accused no. 1
company M/s Triveni Media,
Office at Eros Corporate
Tower, 7th Floor, Nehru Place,
New Delhi-19.
Rajkumari Mittal (accused no. 4)
Director of accused no. 1
company M/s Triveni Media,
Office at Eros Corporate Tower, 7 th
Floor, Nehru Place, New Delhi-19.
4. Offence complained : Under Section 138 of the
proved Negotiable Instruments Act,
CT No. 465258/16 1 / 42
1881.
5. Plea of the accused : Pleaded not guilty
6. Final Order : Acquittal
7. Date of institution : 11.07.2009
8. Date on which reserved : 20.07.2022
for judgment
9. Date of judgment : 04.08.2022
BRIEF STATEMENT OF FACTS FOR THE DECISION
1. Briefly, the case of the complainant is that it is a Limited Company
duly incorporated under the Companies Act, 1956 and is one of South Asia's
most fully integrated and biggest Broadcast facilities and Solutions
Company. Accused no. 1 is a company also incorporated under Companies
Act, 1956 and accused no. 2 is the authorised signatory/managing director
of accused no. 1 company in which accused no. 3 and 4 are also the other
directors. Accused persons, through an advertisement in newspapers,
indicated their requirement for setting up a Studio facility on lease. The
complainant who was possessing the necessary knowhow responded to the
advertisement and after discussions, a broad agreement was arrived at in
April 2007, for assisting the accused persons in setting up the technical
infrastructure on a wet lease (fluctuating) basis. Ultimately, Facilities
agreement was executed on 12.09.2007 and in terms of the agreement, the
equipments worth Rs. 24 crores were installed by the complainant at
accused's premises. Thereafter, additional equipments worth over Rs. 12
CT No. 465258/16 2 / 42
crores were purchased by the complainant by engaging the services of M/s
India-Sign.
By the end of February 2008, the entire equipment, as per the
requirement of accused persons, at their Noida premises, were duly installed
by the complainant and accordingly, accused persons obtained requisite
permission from Govt. of India for initiating their news channel on
14.03.2008 under the name 'Voice of India' and started the telecast of test
signals w.e.f 16.03.2008. Subsequently, four more channels were started by
the accused, using the equipments supplied by the complainant. After
repeated insistence towards the due payment by the complainant, accused
issued cheque bearing no. 273963 dt. 07.08.2008 which was dishonoured
due to 'insufficient funds', however accused no. 2 vide letter dt. 27.08.2008,
assured the complainant that payments upto and including the month of
November 2008, shall be made by 15.11.2008. Besides this, accused
persons also furnished 50 monthly PDCs starting from November 2008 till
December 2012 each for a sum of Rs. 1,12,50,000/- to the complainant.
Accused persons, despite giving assurances, did not adhere to their
promises and did not make the complete payment till 15.11.2008 and paid
only Rs. 1.40 crores instead of 7.12 crores, besides overdue interest.
Therefore, complainant presented the cheque bearing no. 077203 dt.
07.01.2009 drawn on Axis Bank Ltd. GK-1 Branch for Rs. 1,12,50,000/-
(hereinafter referred to as the "cheque in question") issued by the accused,
in discharge of its legal liability, however, the same got dishonoured and
returned unpaid with reasons "funds insufficient" vide return memo dated
08.04.2009. The cheque in question, alongwith six other cheques of
identical amounts drawn on different dates by the accused company in
CT No. 465258/16 3 / 42
favour of the complainant forms part of said 50 PDCs which has given rise
to the instant dispute alongwith six other connected matters/disputes. In
other words, a separate proceedings u/s 138 NI Act has been instituted by
the complainant for the dishonour of each of the 7 cheques. Thereafter, the
complainant sent a legal demand notice dated 25.04.2009 to the accused
persons. Despite receipt of the same, accused persons have not made
payment of the amount of cheque in question within the mandatory period
of 15 days. Hence, the complainant has moved this Court with the present
complaint under section 138 of the Negotiable Instruments Act, 1881
(hereinafter referred to as the "NI Act").
2. In his pre-summoning evidence, the AR of complainant company
examined himself as CW-1, on an affidavit being Ex. CW1/A. He further
relied upon certain documents which are as under :
a) Extracts of minutes of meeting dt. 12.05.2009 Ex. CW1/1,
b) facility agreement dt. 12.09.2007 Ex. CW1/2 ,
c) letter dt. 27.08.2008 written by accused company to complainant
company Ex. CW1/3,
d) cheque in question being Ex. CW1/4,
e) return memo dt. 08.04.2009 Ex. CW1/5,
f) office copy of legal demand notice dt. 20.04.2009 being Ex.
CW1/6,
g) postal, courier receipts and AD cards are being Ex. CW1/7 to
CW1/12,
h) installation report dt. 09.04.2008 Ex. CW1/DA (OSR),
i) copy of bill dt. 01.09.2008 raised by the complainant company
Ex. CW1/DB,
CT No. 465258/16 4 / 42
j) copy of bill dt. 06.05.2009 raised by the complainant company Ex.
CW1/DC,
k) arbitration appeal dt. 01.12.2010 Ex. CW1/DD,
l) statement of dues till 2009 Ex. CW1/DE,
m) order dt. 03.07.2009 passed by Hon'ble High Court of Delhi
Ex. CW1/DF,
n) arbitration award dt. 13.10.2016 Ex. CW1/DG,
o) copy of receiving of 50 cheques Ex. CW1/DH,
p) order dt. 18.01.20210 of Hon'ble High Court of Delhi Ex.
CW1/DI,
q) arbitrator order dated 27.01.2011 Ex. CW1/DJ,
r) arbitration order dt. 09.08.2010 Ex. CW1/DK,
s) combined monthly statement of account and invoices Ex.
CW1/DBA,
t) statement of dues on revenue account of complainat Ex. CW1/DL,
u) certified copy of statement of dues on Revenue Account till
30.09.2022.
3. Upon prima facie consideration of pre-summoning evidence, the
accused persons were summoned and upon their appearance, notice under
section 251 of the Criminal Procedure Code 1973 (hereinafter referred to as
"Cr.P.C") was framed against them, to which they pleaded not guilty and
further disclosed their defence. AR of accused no. 1 stated that the cheque
in question was never presented for payment with their banker. He further
deposed that cheque in question was given as a security and not in discharge
of any debt/liability qua which dispute was also pending disposal, before an
arbitrator. He further denied receiving any legal demand notice regarding
dishonour and payment of cheque in question.
CT No. 465258/16 5 / 42
Accused no. 2 Madhur Mittal, accused no. 3 Sumit Mittal and
accused no. 4 Rajkumari Mittal also deposed on the similar lines deposed
by AR of accused no. 1 Rajjan Gupta. Accused no. 4 further stated that she
was not incharge of day to day affairs of the company when the transaction
took place or when the cheque got dishonoured.
4. The complainant adopted his pre-summoning evidence as post
summoning evidence also. After application of the accused under section
145 (2) of the NI Act was allowed, the AR of complainant Sh. Mukesh
Gupta was recalled for cross-examination. Complainant further examined
CW-2 Sh. Mustafiz Hussain, CW-3 Sh. Amitesh Kashyap, CW-4 Sh. Adil
Azeez and CW-5 Sh. Vivek Sharma.
CW-2 Sh. Mustafiz Hussain, Manager Axis Bank, Saket Branch
deposed that if a cheque, drawn on Axis Bank, is presented to any branch of
Axis Bank, then the same is processed 'over the counter' and does not go
through the process of clearing of cheques. He further deposed that in that
situation, in case the cheque is dishonoured, then no charges are deducted
from the account of the account holder and as such no entry is made in the
account of account holder. He further deposed that in the case of a cheque
which has to go through the process of clearing, being dishonoured, the
bank deducts charges from the account of the account holder and for the
deduction of the charges, an entry is reflected in the account statement. He
further stated that factum of dishonour of the cheque in question would not
be reflected in the account statements as the cheque was processed over the
counter being of the Axis bank itself. During his examination, the following
documents were brought on record :
CT No. 465258/16 6 / 42
a) bank account statement of complainant company from 01.11.2008-
31.05.2009 Ex. CW2/B,
b) bank account statement of acccused company from 01.11.2008-
31.05.2009 Ex. CW2/C,
c) certificate under banker Books of Evidence Ex. CW2/D and Ex.
CW2/E,
d) cheque collection policy Ex. CW2/DA,
e) RBI Policy on cheque clearance Ex. CW2/DB,
f) copy of letter dated 01.11.2010 Mark-CW2/DC.
CW-3 Sh. Amitesh Kashyap, Asst. Manager, Axis Bank brought
the account statement of accused Triveni Media Ltd. From 01.11.2008 to
31.05.2009 which is Ex. CW2/C.
CW-4 Sh. Adil Azeez, Branch Head, Axis Bank brought the
account opening form, account signatory details and statement of account of
accused company M/s Triveni Media Ltd. for the period 01.11.2008 to
31.05.2009. He also brought the customer account opening form details,
address, name and details of the authorised signatory alongwith specimen
signature maintained in the computer system of bank. He further brought
the certificate u/s 65-B of Indian Evidence Act to prove the abovesaid
documents.
CW-5 Sh. Vivek Sharma, Regional Operation Manager, Writer
Information Management Services produced the document i.e. details of
AOF Form of the accused company. He further deposed that on 18.05.2018,
he was asked for a scanned copy of details of AOF Form of the accused
company and it was informed to the bank that this particular form is not
available in the file. He further deposed that Axis Bank then asked for a
physical copy of the file in which the AOF form was supposed to be placed,
CT No. 465258/16 7 / 42
as per the information provided by Axis Bank and the file was delivered on
25.05.2018.
Thereafter, the AR of complainant closed his evidence.
5. Statement of accused persons were recorded under section 313
Cr.P.C. and in response to all the incriminating circumstances put to them,
accused no. 1 through its AR Rajjan Gupta stated that no advertisement was
given on behalf of accused no. 1 company and no equipment was installed
by the complainant. He admitted that Facility Agreement was executed
between the parties. He denied receiving the legal demand notice.
Accused no. 2 Madhur Mittal stated that cheque in question was
issued by way of security to the complainant and the said cheque was never
presented in the bank account of accused no. 1. He further stated that
complaint was filed after the period of limitation and the complainant
intentionally sent the application for condonation of delay on an incorrect
address. He further stated that the goods, as mentioned in the agreement dt.
12.09.2007 Ex. CW1/2, were never supplied by the complainant to accused
no. 1 company. The invoices raised by the complainant are forged and
fabricated. He also stated that the issue of security cheque was referred to
Ld. Arbitrator also and Ld. Arbitrator has held that the accused no. 1 is not
liable to pay any amount to the complainant, rather the complainant has to
pay approximately Rs. 5.14 crores to the accused no. 1 company.
Accused no. 3 also deposed on the similar lines as deposed by
accused no. 2, in his statement recorded under section 313 CrPC.
CT No. 465258/16 8 / 42
Accused no. 4 deposed that she does not know about the present
complaint as she was only an honorary director and does not look after the
day to day affairs of the company.
6. In defence evidence accused no. 2 Madhur Mittal got himself
examined as DW-1 and stated that he was Erstwhile Director in M/s Triveni
Media Ltd and this company was involved in launching and running of
Satellite News Channel. He further deposed that complainant approached
them stating that they are the leaders and renowned company in setting of
the channel, upon which their company getting induced by the
representation made by the complainant company, agreed to get associated
with the complainant company for supply of various equipments. He further
deposed that the Facility Agreement dt. 12.09.2007 was entered into which
is Ex. CW1/2 and the said agreement was entered into, subject to the
condition that complainant company would supply Rs. 30 crores equipment
for setting up the news channel. Complainant company did not honour the
same and did not supply the requisite equipment. He further deposed that
tentative supply of equipment has been duly admitted by complainant
company which is Ex. CW1/DC and also signed by the complainant witness
Mukesh Gupta on 08.01.2016. He further deposed that as per the Facility
Agreement, rent was fixed at the rate of 45% per annum on the equipment
supplied, which was to be paid on monthly basis, depending on the quantum
of equipment supplied per month and accordingly it could be a fluctuating
figure. He further deposed that this 45% component included various
component of services to be provided by complainant company to accused
CT No. 465258/16 9 / 42
company, however complainant company failed in providing such services
which led to dispute between the parties.
He further deposed that the said dispute was settled by Hon'ble High
Court vide order dt. 03.07.2009 which is Ex. CW1/DF. Vide the said order,
annual rent was reduced from 45% to 36% per annum and complainant
company was further directed to refund/adjust an amount of approximately
Rs. 1.73 crores to accused company. He further deposed that 50 cheques
were issued, each worth Rs. 1,12,50,000/-, after the execution of Facility
Agreement, as security cheque and in good gesture that complainant
company will supply equipment worth Rs. 30 crores at all times. He further
deposed that the value of each cheque i.e. Rs. 1,12,50,000/- was computed
on the basis of 45% of annual rent, taking future value on the committed
supply of equipment worth Rs. 30 crores. Out of the said 50 cheques, 7
cheques from part of the 7 complaints which are pending before this Court.
Further, during the pendency of trial before this Court, complainant and
accused company agreed to refer the issue of 50 cheques to Ld. Arbitrator
and Hon'ble High Court vide order dt. 18.01.2020 which is Ex. CW1/DI
where it was observed and directed that land and cheque security furnished
by the accused company shall abide by further orders to be passed by Ld.
Arbitrator.
Subsequently, Ld. Arbitrator framed the issues vide order dt.
27.01.2011 which is Ex. CW1/DJ "as to whether 50 cheques were delivered
to complainant company as security or in discharge of any debt/liability
under the Facility Agreement". Thereafter, Ld. Arbitrator vide order dt.
09.08.2010 which is Ex. CW1/DK held that all 50 cheques including the
cheque in question of the present complaint, were issued as security
CT No. 465258/16 10 / 42
cheques and not against any debt/liability under the Facility Agreement. He
further deposed that the said order has attained finality as the appeal filed
by complainant company against arbitral award dt. 09.08.2010 was
disposed off without varying the arbitral award. He further deposed that
complainant company, in collusion with the banks, obtained the
forged/fabricated returning memo as the cheques in question were never
presented for encashment. He placed on record 3 letters written by the bank
of complainant, confirming that cheques in question were never presented
and same are Mark-DW1A to DW1/C.
He further deposed that equipment supplied by the complainant
company were defective and were returned back. He further deposed that
the complaints in question pertain to period of September 2008 to March
2009 (involving total 7 cheques). He further deposed that accused company
has maintained the relevant accounts for the entire period from the date of
execution of Facility Agreement and the same is Ex. DW1/D alongwith
certificate u/s 65B of Indian Evidence Act which is Ex. DW1/E. The
account statement of complainant company which is Ex. DW1/E, clearly
depicts that neither on month to month basis nor on composite basis, any
amount was due or payable to complainant company. Further, as per the Ex.
CW1/DC read with CW1/DF, monthly rent due was much less than the
amount stated in cheques in question. He further deposed that complainant
company has not rendered true and correct picture of its account and has not
accounted for amount already paid by the accused company to complainant
company.
He further deposed that he alongwith Sumit Mittal and Rahul
Kulshreshta were involved in day to day activity and were the signatory in
CT No. 465258/16 11 / 42
the bank account. His mother namely Smt. Rajkumari Mittal was neither
the signatory nor was involved in day to day activities of accused company.
He further deposed that on behalf of complainant company, no legal notice
was ever received against the dishonour of cheques in question and only
some envelopes were received carrying some pamphlets and due to this
reason, no reply of legal notice could be given.
He further deposed that even the cheques in question has been
stamped as "not for high value and CTS clearing" which means that
cheques had to be physically presented to drawee bank and cannot be
encashed by sending the truncated image of cheques. The cheques in
question are not even stamped by drawee bank. He further deposed that the
arbitral award dt. 13.10.2016 which is Ex. CW1/DG is also passed in his
favour, as per which, on the basis of all the invoices between the parties, it
is the complainant who is liable to pay the accused company Rs.
5,14,00,000/- (approximately). The order dt. 28.03.2016, whereby the
appeal filed by complainant company against arbitral award dt. 09.08.2010
is Mark-DW1/F. The accused company had already paid an amount of Rs.
16,00,69,436/- against the billing of Rs. 10,86,36,008/- to complainant
company. Invoices and account statements, which the complainant company
is seeking to rely upon represent inflated and fudged figures which is not
owed by the accused.
He further deposed that the complainant company has misused the
security cheques which were handed over to them in anticipation of supply
of equipment worth Rs. 30 crores which was never done by them, in
violation of Facility Agreement and its annexures, with the help of
fabricated invoices against the agreed terms and conditions. He further
CT No. 465258/16 12 / 42
deposed that due to this reason, the amounts mentioned in the invoices is
different from the amounts mentioned in the cheques in question. He further
deposed that all the cheques are for the same amount of Rs. 1,12,50,000/- as
the same were handed over prior to the supply of any equipment and due to
this reason and after a detailed enquiry alongwith recording of evidences,
the Ld. Arbitrator passed the award in their favour holding that cheques in
question were given as security.
DW-2 Sh. Lucky, Asst. Manager, Axis Bank, Nehru Place Branch
deposed that he was asked to verify the letters dt. 24.05.2012, 10.07.2014
bearing reference no. AxisB/Nehru Place/2014-15/1543 and 09.05.2018
having reference no. AxisB/Nehru Place/2018-19 issued by their branch. He
further deposed that upon checking of the records, the abovesaid letters
have been found genuinely issued and the same are authentic and signed by
Operation Head namely Rahul Rathod. He further deposed that a certificate
confirming to the genuineness of these letters issued by their branch head is
Ex. DW2/A bearing signatures of branch head alongwith seal at point-A. He
further deposed that alongwith this certificate, copies of abovesaid 3 letters
are also enclosed which are correct as per the record and the same are now
Ex. DW2/A1 to DW2/A3.
DW-3 Sh. Rajjan Gupta, authorised signatory of accused no. 1
company deposed that he had seen the statement of account Ex. DW1/D
and certificate issued u/s 65B of Indian Evidence Act Ex. DW1/E. He
further deposed that he got this statement printed from the computer of the
account branch operated by one Gautam under his supervision and as per
the directions received by him.
No other evidence was led by the accused and the same was closed.
CT No. 465258/16 13 / 42
7. Final arguments were heard for both the parties.
8. Rival submissions have been considered and record of the case has
been carefully perused.
9. It is the settled position of law that to establish the offence under
Section 138 of the NI Act against the accused, the complainant must prove
the following:
i. the accused issued a cheque on an account maintained by him with a
bank.
ii. the said cheque has been issued in discharge, in whole or in part, of
any legal debt or other liability, which is legally enforceable.
iii. the said cheque has been presented to the bank within the period of
its validity.
iv. the aforesaid cheque, when presented for encashment, was returned
unpaid/dishonoured.
v. the payee of the cheque issued a legal notice of demand to the drawer
within 30 days from the receipt of information by him from the bank
regarding the return of the cheque.
vi. the drawer of the cheque failed to make the payment within 15 days
of the receipt of aforesaid legal notice of demand.
CT No. 465258/16 14 / 42
10. In the present case, the complainant has discharged his initial burden
and has prima facie established the above ingredients of offence under
section 138 of the NI Act against the accused. It is now for the accused
persons to prove their case and rebut the presumption under section 139 of
the NI Act.
11. It is the settled law that the presumption under section 139 of the NI
Act cannot be rebutted upon a mere denial. The same can be rebutted by the
accused only by leading cogent evidence. Support is drawn from the
decision of Hon'ble Supreme Court of India cited as K.N. Beena v.
Muniyappan and Another;(2001) 8 SCC 458. Further, the presumptions
may be rebutted by the accused either by leading direct evidence or from
the case set out by the complainant himself i.e. from the averments in his
complaint, in the statutory notice and even the evidence adduced by the
complainant during the trial. The burden of proof is to be discharged by the
accused on a preponderance of probabilities. Same was held by the Hon'ble
Supreme Court in the decision of the cited as M/s Kumar Exports vs M/s
Shama Carpets; 2009 AIR (SC) 1518.
It is admitted and not in dispute that the accused persons had issued
the cheque in question to the complainant. It is also conceded by the Ld.
Counsel for the accused during final arguments that the complainant had
issued a legal notice of demand to the accused within 30 days from the
receipt of information by him from his bank branch regarding the return of
the cheque as dishonoured and the same was received and not replied to by
the accused. Similarly, it is also admitted that the accused had failed to
make the payment within 15 days of the receipt of aforesaid legal notice of
CT No. 465258/16 15 / 42
demand. He further submitted that he shall not contest the allegation that
accused no. 4 was also looking after day to day affairs of the company.
12. Before the remaining ingredients as mentioned in paragraph 9 are
discussed, it is essential, at this juncture, to address whether the proceedings
(where dispute qua cheque in question, amongst others, was also under
consideration) that have taken place before Ld. Arbitrator and it's award Ex.
CW 1/DG, are relevant and binding on the instant court or not?
Ld. Counsel for accused submits that fact in issue in the instant
proceedings had already been dealt with by the Ld. Arbitrator, and the
findings arrived at, in the said proceedings is relevant, in the instant
proceedings also. The award of Ld. Arbitrator Ex. CW1/DG was also put to
CW-1 in his cross examination, who admitted that the issue of security
cheques was referred to Ld. Arbitrator with the consent of the parties. He
further admitted that the amount claimed before the Ld. Arbitrator is
inclusive of the amount claimed in all the 7 complaint cases. It is submitted
that Section 40 to section 42 of Indian Evidence Act, makes the previous
award of the Ld. Arbitrator as relevant. Reliance is placed by the Ld.
Counsel on K.G. Premshankar vs. Insp. of Police Appeal (crl.) 935 of
2002.
Per contra, Ld. Counsel for accused submits that an appeal is already
pending before Hon'ble High Court of Delhi against award passed by Ld.
Arbitrator. Accordingly, the said award has not attained finality. He further
submits that it is settled law that proceedings in a civil case between the
same parties are not binding on the criminal case. Reliance is placed by the
Ld. Counsel on Kishan Singh vs. Gurpal Singh Criminal Appeal No..
CT No. 465258/16 16 / 42
1500 Of 2010. He further submits that burden of proof in civil cases is
different from the burden of proof in the criminal cases. Accordingly, the
proceedings that have taken place before the Ld. Arbitrator and its finding
are not relevant in the instant proceedings.
In Kishan Singh vs. Gurpal Singh Criminal Appeal No.. 1500
Of 2010, the Hon'ble Supreme Court after considering the ratio of K.G.
Premshankar vs. Insp. of Police Appeal (crl.) 935 of 2002 , and various
others, held that:
"Thus, in view of the above, the law on the issue stands
crystallized to the effect that the findings of fact recorded by the
Civil Court do not have any bearing so far as the criminal case is
concerned and vice-versa. Standard of proof is different in civil
and criminal cases. In civil cases it is preponderance of
probabilities while in criminal cases it is proof beyond
reasonable doubt. There is neither any statutory nor any legal
principle that findings recorded by the court either in civil or
criminal proceedings shall be binding between the same parties
while dealing with the same subject matter and both the cases
have to be decided on the basis of the evidence adduced therein.
However, there may be cases where the provisions of Sections
41 to 43 of the Indian Evidence Act, 1872, dealing with the
relevance of previous Judgments in subsequent cases may be
taken into consideration."
13. In light of the aforementioned it is observed that the findings of fact
recorded by the civil court do not have any bearing in the criminal case and
vice versa. Further, the said proceedings before Ld. Arbitrator Ex. DW1/G
are also not relevant under Section 41 to 43 of indian Evidence Act, 1872.
Accordingly, it is held that the proceedings held before the ld. arbitrator Ex.
CW 1/DG are irrelevant to the instant proceedings. However, it is clarified
CT No. 465258/16 17 / 42
that so much part of the said proceedings or the evidence led therein, as has
been adopted by the mutual consent of both the parties, in the instant
proceedings, is relevant and admissible.
14. I shall now consider the remaining ingredients as mentioned in
paragraph 9 and discuss in detail as to whether the accused persons have
been able to rebut the presumption under section 139 of the NI Act on a
scale of preponderance of probabilities and if they have been able to prove
their case.
Whether the said cheque has been issued in discharge, in whole or in
part, of any legal debt or other liability, which is legally enforceable?
Ld. Counsel for accused submits that it has already been admitted in
complainant evidence that the cheque in question was a security cheque. It
is submitted by the accused that as per Facilities Agreement dt. 12.09.2007
Ex. CW1/2, it was agreed between the parties that the base cost of the
equipment to be supplied is approximately Rs. 30 crores. The rent per year
of the aforementioned equipment was fixed at 45% of the total base cost in
addition to applicable taxes. Accordingly, the annual rental value was Rs.
13.5 crores including applicable taxes, which was to be paid on monthly
basis. Accordingly, 50 monthly rental cheques of Rs. 1,12,50,000/- each for
the period of November 2008 to November 2012 were given to the
complainant. It is submitted by the counsel that the amount of Rs.
1,12,50,000/- of each cheque was calculated on the predictive value of
supply of equipment worth Rs. 30 crores. CW-1, in his cross examination,
admitted that equipment worth Rs. 30 crores was not supplied in the
relevant period. He further admitted that value of rental amount would have
CT No. 465258/16 18 / 42
increased or decreased based on the value of equipment supplied, and the
amount mentioned in the PDC was only a predictive value based on the
value of the equipment to be supplied by the complainant. In his cross
examination, CW-1 has also admitted that from September 2008 to March
2009, that is the period for which the cheques in question qua the 7
connected matters were issued, equipment worth Rs. 30 crores was not
supplied to the accused.
Ld. Counsel for accused further submits that CW-1, in his cross
examination, has admitted that no invoices were raised for all the goods
supplied till November 2012. It is submitted that as per the agreed terms
and conditions of the Facility Agreement Ex. CW1/2, the legal liability of
the accused company was supposed to arise as per the monthly rental which
was linked with the supply of equipments to be supplied by the
complainant, for which monthly invoices were supposed to be raised to
calculate the due amount towards the accused company. Since the CW-1 has
admitted that no bills/invoices were raised till November 2012 and the
instant proceedings were instituted in July 2009, it cannot be said that there
was any legally recoverable debt on the part of the complainant. It is also
submitted that on account of the aforementioned reason, the said
bills/invoices were not placed on record alongwith the complaint. The same
has also been admitted by CW-1 in his cross examination wherein CW-1
admits that "it is correct that no invoice/bill has been placed in support of
the cheques in question in 7 complaint cases".
15. Further, Ld. Counsel for complainant submits that the cheque in
question was issued as a security cheque which was contingent on the
CT No. 465258/16 19 / 42
supply of equipment worth 30 crores. It is further submitted by the Ld.
Counsel that the said equipment of 30 crores was never supplied to the
accused company and therefore it must be held that the said contingency on
which the security cheques were issued, never occurred. It is further
submitted that when a sum is payable upon happening of a certain
contingency, it does not become a debt until the said contingency has
happened. Reliance is placed by Ld. Counsel on Sunil Todi and Others
Versus State of Gujarat and Another 2021 SCC OnLine SC 1174 and
Indus Airways Pvt. Ltd. Vs Magnum Aviation Pvt. Ltd. (2014) 12 SCC
539.
It is also submitted that since the equipment worth Rs. 30 crores was
never supplied by the complainant to the accused, there was no legally
enforceable debt or liability in the discharge of which it may be said that the
cheque in question was issued.
16. Per contra, counsel for complainant submits that even though the
cheque in question was issued as a security cheque yet the complainant was
legally entitled to present the said security cheque for encashment and the
said security cheque was not meant for ornamental purposes. Complainant
was well within his right to present the said cheque in question for
encashment in case of default. In this regard, reliance is placed by Ld.
Counsel on Sripati Singh Vs. State of Jharkhand (2021) SCC Online SC
1002 and Don Ayengia vs State Of Assam & Ors (2016) 3 SCC 1.
Further, it cannot be said that the security cheques had the aforementioned
contingency as nowhere in the Facility Agreement Ex. CW1/2, has it been
CT No. 465258/16 20 / 42
stated that the cheque in question can be presented only on the liability of
Rs. 30 crores.
17. It is already admitted by CW-1, in his cross-examination, that the
cheque in question was issued as a security cheque by the accused to the
complainant. During final arguments also, counsel for the complainant
conceded to the fact that the cheque in question was issued as a security
cheque. Be that as it may, I find merit in the argument of the Ld. counsel for
the complainant that despite the fact that the cheque in question was a
security cheque yet a security cheque can also be presented for encashment,
as security cheques are neither worthless piece of paper nor are to be used
for ornamental purposes. They are required to be presented for encashment
in case the accused fails to make the payment of its dues to the complainant.
Ld. Counsel for the accused persons has submitted that even though it
cannot be disputed that a security cheque can also be presented for
encashment in case of default, however in the instant case the security
cheque was contingent on the supply of equipment worth 30 crores.
Accordingly, it could not have been presented till the time equipment worth
30 crores or more was supplied to the accused.
18. Thus, the question that arises for the consideration is whether the
contention of the counsel for the accused that the amount mentioned in the
security cheque was contingent upon supply of equipment is true or not. If
so, what shall be its effect?
CW-1, in his cross-examination, admitted that the amount mentioned
in each of the PDC was to vary on the basis of the value of the equipments
CT No. 465258/16 21 / 42
supplied by the complainant each month. He admitted that the value of the
annual rent was to increase or decrease based on the value of the equipment
supplied and that the value of PDC issued to the complainant was only a
predictive value. In the terms and conditions of the Facilities Agreement
(Ex. CW1/2) arrived at between the parties, it is recorded as follows:
""Base Cost"- It is agreed between the parties that the base cost
of all items listed in Appendix A is approximately INR 30 crores.
The base cost shall consist of FOB price+ Freight +Transit
Insurance + 1% Landing charges on the total of the above +
applicable customs duty on the total of the above. The base cost
shall also include any demurrage charges at the customs and cost
of training and installation.
...
"RENTAL: The total Annual Rental value is Rs.13,50,00,000/- (Rs.13.50 crores) + applicable taxes. This rental per year is based on 45% of the total base cost + applicable taxes which at present is limited to service tax totalling 12.36% of rental value. Any reduction or increase shall be only in case the final base cost is less or more than INR 30 crores."
From the aforementioned, it is established that the amount mentioned in the cheque in question was contingent upon supply of equipment worth 30 crores.
19. The next question that arises for consideration is that if the amount mentioned in cheque in question was contingent upon supply of equipment worth 30 crores, then what shall be the effect if the said contingency doesn't take place i.e. equipment worth 30 crores is not supplied?
CT No. 465258/16 22 / 42It has been held by the Hon'ble Supreme Court of India in Sunil Todi and Others Versus State of Gujarat and Another 2021 SCC OnLine SC 1174 that:
"21. Drawing the distinction between civil and criminal liability, it was observed that if there is a breach in the condition of advance payment, it would not incur criminal liability under Section 138 of the NI Act since there is no legally enforceable debt or liability at the time when the cheque was drawn. The Court held that if at the time when a contract is entered into, the purchaser has to pay an advance and there was a breach of that condition, the purchaser may have to make good the loss to the seller, but this would not occasion a criminal liability under Section 138. The issuance of a cheque towards advance payment at the time of the execution of the contract would not - in the view which has adopted in Indus Airways - be considered as a subsisting liability so as to attract an offence under Section 138 upon the dishonor of the cheque.
29. The explanation to Section 138 of the NI Act provides that 'debt or any other liability' means a legally enforceable debt or other liability. The proviso to Section 138 stipulates that the cheque must be presented to the bank within a period of six months from the date on which it is drawn or within its period of validity. Therefore, a cheque given as a gift and not for the satisfaction of a debt or other liability, would not attract the penal consequences of the provision in the event of its being returned for insufficiency of funds. Aiyar's Judicial Dictionary defines debt as follows: "Debt is a pecuniary liability. A sum payable or recoverable by action in respect of money demand." Lindey L.J in Webb v. Strention defined debt as "... a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in praesenti, solvendum in futuro."
The definition was adopted by this Court in Keshoram Industries v. CWT. Justice Mookerjee writing for a Full Bench of the Calcutta High Court in Banchharam Majumdar v. Adyanath Bhattacharjee adopted the definition provided by the Supreme Court of California in People v. Arguello:
CT No. 465258/16 23 / 42"Standing alone, the word 'debt' is as applicable to a sum of money which has been promised at a future day as to a sum now due and payable. If we wish to distinguish between the two, we say of the former that it is a debt owing, and of the latter that it is a debt due. In other words, debts are of two kinds : solvendum in praesenti and solvendum in future ... A sum of money which is certainly and in all events payable is a debt, without regard to the fact whether it be payable now or at a future time. A sum payable upon a contingency, however, is not a debt or does not become a debt until the contingency has happened."
30. Thus, the term debt also includes a sum of money promised to be paid on a future day by reason of a present obligation. A post-dated cheque issued after the debt has been incurred would be covered by the definition of 'debt'. However, if the sum payable depends on a contingent event, then it takes the color of a debt only after the contingency has occurred."
20. In light of the aforementioned, it is observed that sum payable upon a contingency is not a debt or does not become a debt until the contingency has happened. Therefore, in the instant case, the cheque in question was a security cheque payable upon a contingency, that is, supply of equipment worth 30 crores and the said cheque in question can take the colour of a debt only when the said contingency has occurred. If the said contingency has not occurred, that is, equipment worth Rs. 30 crores has not been supplied by the complainant to the accused, then the cheque in question cannot be said to be given in discharge of any debt.
21. I shall now discuss whether the equipment worth Rs. 30 crores was supplied to the accused or not which shall eventually answer the question, if the cheque in question were issued in discharge of any legal liability or not.
CT No. 465258/16 24 / 42Ld. Counsel for the accused submits that Ex. CW1/DB does not reflect the true liability of the complainant as it does not relate to the relevant period. As per the admission of CW-1, the instant complaints pertain to the period starting from 01.09.2008 to 01.04.2009, however the said Ex. pertains to the period starting from 01.10.2008 to 31.05.2009. Thus, Ex. CW1/DB does not include the liability and payment made in September 2008 and includes 2 months extra liability of April 2009 and May 2009. Ex. CW1/DB reflects highly inflated invoices for the month of October 2008, November 2008 and May 2009. It is submitted by Ld. counsel that CW-1 in his cross-examination has admitted monthly rental for October 2008 at Rs. 91,13,780/- and Novermber 2008 at Rs. 67,90,097 (@45% rate) whereas as per CW 1/DB the said invoices are for Rs. 1,55,87,590 and 1,07,98,479 respectively.
It is further submitted that CW-1 admitted that the accused company had also made a payment of Rs. 5 crores on 03. 02. 2009 and Rs. 1.5 crores on 16.02.2209. Further, payment made by the accused company to the complainant for a sum of Rs. 1.73 crores (1,73,28,763/-) on 01.01.2009, is also admitted by CW-1, which is not reflected in Ex. CW 1/DB. Also, opening balance/outstanding amount shown in Ex. CW 1/DB as on 01. 10. 2008 reflects an outstanding amount of Rs. 5,00,32,395/- whereas as per cross-examination of CW 1 the said balance was Rs. 1,48,11,325/-. The same is also reflected as the opening balance in Ex. CW-1/DBA. Accordingly, it is submitted by Ld. Counsel that Ex. CW 1/DB presents forged and fabricated entries. Further, as per the complaint, the total liability of the accused was Rs. 5.72 crores (Rs. 7.12 crores minus the amount admitted to be received i.e. 1.4 crores). The legal notice sent by CT No. 465258/16 25 / 42 complainant also stated the total liability of the complainant as Rs. 5.72 crores whereas as per Ex. CW 1/DB, it is reflected as Rs. 8,14,99,913. Further, it is submitted that there is also a difference of amount of Rs. 62,06,064/- in Ex. CW-1/DB and Ex. CW-1/DBA.
Ld. Counsel for the complainant submits that CW-1 has stated in his cross-examination that the invoices in question included the equipment supplied by the complainant company as well as satellite equipment supplied by the complainant to the accused company which was procured from M/s India Sign company. Counsel for complainant submits that accused is misleading the court by not including the aforementioned amount of satellite equipment procured from M/s India Sign company in its calculations. Further, it is submitted by the counsel for the complainant that the difference of amount of Rs. 62,06,064/- in Ex. CW 1/DB and Ex. CW 1/DBA is on account of the fact that Ex. CW 1/DBA includes the amount of Rs. 62,06,064/- which is TDS for which the complainant company had given credit in their Ledger account Ex. CW1/DB, which shows the balance amount of Rs. 8,14,,99,913/-. Ex. CW 1/DBA reflects the figure without the adjustment of aforementioned TDS, as it was prepared on the specific direction of the court during the arbitration proceedings, to show amounts received from the accused were adjusted against which particular invoices. Further, as the cheques in question were presented till May 2009, thus the invoices raised till May 2009 were relevant for the purpose of determining the debt. It is also submitted that the amount of Rs. 6.5 crores received from the accused company on 05.02.2009 and 18.02.2009 was initially posted in Triveni Media Advance Account, however a sum of Rs. 3.5 crore was returned to the sister concern of the accused company that is M/s Triveni CT No. 465258/16 26 / 42 Infrastructure Development Company Ltd. and the remaining amount of Rs. 3 crores finds mention in Ex. CW 1/DB.
22. CW-1, in his cross-examination, admits that there is a difference in the total amount of the cheques in question and the total amount in the bills raised however he qualified the aforementioned statement by stating that he is talking about the bill amount based on the equipments supplied to the accused. CW-1 testified that the cheques in question Ex. CW1/4 were given against total outstanding amount and not with regards to any particular month or invoice. He further stated that the cheques in question were raised for 01.09.2008 to 01.04.2009. In his cross-examination, CW-1 also admitted that an amount of rupees 4, 15, 00, 000/-was paid by the accused company from October 2008 till March 2009. It is also admitted that the accused company had also made a payment of Rs. 5 crores on 03. 02. 2009 and Rs. 1.5 crores on 16.02.2009. CW-1 had also admitted to a payment made by the accused company to the complainant for a sum of Rs. 1.73 crores (1,73,28,763/-) on 01.01.2009 which is not reflected in Ex. CW1/DB.
23. Further, there is force in the contention of the Ld. Counsel for the accused that Ex. CW1/DB does not reflect the true liability of the complainant as it does not relate to the relevant period which as per the admission of CW 1, pertains to period from 01.09.2008 to 01.04.2009. On the other hand, Ex. CW1/DB pertains to the period starting from 01.10.2008 to 31.05.2009, accordingly it does not include the liability and payment made in September 2008 and includes 2 months extra liability of April 2009 and May 2009.
CT No. 465258/16 27 / 4224. Further, in his cross-examination, CW-1 admitted that the details of amount for the month of October 2008 is Rs.91,13,780/- for equipments supplied up to the month of October 2008 @ 45%. The details of amount for the month of November 2008 is Rs.68,37,919/- for equipments supplied up to the month of November 2008 @ 45%. The details of amount for the month of December 2008 is Rs. 68,37,919/- for equipment supplied up to the month of December 2008 @ 45%. Details for the month of Jan-2009 is Rs.69,26,309/- plus service taxes for the equipment supplied for the month of January,2009. Details for the month of February,2009 is Rs. 69,26,309/- plus service taxes for the equipment supplied for the month of February,2009. Details for the month of March.2009 is Rs.69,26,309/- plus service taxes for the equipment supplied for the month of March-2009.
25. From the perusal of the aforementioned, it is clear that the cheque amount of each month was more than the monthly rental of the equipment supplied by the complainant. It is the case of the complainant that in addition to the aforementioned monthly rental, the accused company was also liable to pay monthly rental for the equipment procured from M/s India Sign and services which reflects the true rental amount and accordingly the invoices were raised against the accused company. However, there is nothing on record to support the aforementioned contention of the complainant that complainant procured satellite equipment from M/s. India sign and supplied the said equipment to the accused company.
CT No. 465258/16 28 / 4226. CW-1, in his cross examination, has admitted that he has not placed any document on record indicating the services given by M/s India Sign from whom the complainant allegedly procured the additional equipments worth Rs.12 crores. He further admitted that, of all the invoices placed on record by the complainant, there is not even a single document which even mentions the name of M/s India Sign. In such a scenario, it is beyond comprehension as to how it can be held that the complainant had procured additional satellite equipment from M/s India Sign and supplied the same to the accused company. It must also be observed that said services/satellite equipement which is allegedly sourced from M/s India Sign by the complainant for the accused company, do not find any mention in Ex. CW 1/2 i.e. Facilities Agreement also.
27. Further, CW-1 also admitted that complainant was not authrosied to purchase or hire any satellite equipment from any other entity, as the complainant was not having any license from the Ministry of Information and Broadcasting, Government of India, for that purpose. In such a scenario, even if it is assumed that the complainant did procure any such satellite equipment from M/s India Sign to be supplied to the accused company, then the same would have been sans any license; the benefit of which can, in no way, be granted to the complainant. Accordingly, the contention of the counsel for the complainant that the accused company was also liable for the satellite equipment procured from M/s India Sign, if at all true, needs to be discarded.
CT No. 465258/16 29 / 4228. Further, it is also the contention of the Ld. Counsel for the accused that a sum of Rs. 3.5 crore was returned to the sister concern of the accused company, that is, M/s Triveni Infrastructure Development Company Ltd. However, it remains unexplained as to why and for what purpose, the complainant had made a payment of Rs. 3.5 crores to the sister concern of the accused company instead of the accused company itself. I do not find merit in the submission of the counsel for the complainant that the said repayment must be adjusted while calculating the legal liability of the accused company. There is nothing on record to reflect as to why the said payment was made to the sister concern of the accused company and if the complainant company had consented that the said payment was to be adjusted towards the legal liability of the accused company itself.
29. To sum up, in his cross-examination, CW-1 has also admitted that an amount of Rs. 4,15,00,000/-was paid by the accused company from October 2008 till March 2009. CW-1 had also admitted to a payment made by the accused company to the complainant for a sum of Rs. 1.73 crores (1,73,28,763/-) on 01.01.2009 which was not shown or given the credit for, in CW1/DB. It is also admitted that the accused company had also made a payment of Rs. 5 crores on 03.02.2009 and Rs. 1.5 crores on 16.02.2009.
Thus, from the perusal of the record, it is clear that the accused company had made a total payment of Rs. 12,38,28,763/- to the complainant in the relevant period, i.e., from 01.09.2008 to 01.04.2009. CW-1, in his cross-examination, has submitted that the total outstanding amount as on 01.04.2009 was Rs. 8,00,35,815. The same figure is also reflected as outstanding amount as on 01.04.2009 in Ex. CW 1/DBA. In CT No. 465258/16 30 / 42 such a scenario, even if the figure of outstanding liability of Rs. 8,00,35,815, as contended by the complainant and also reflected in Ex. Cw- 1/DBA, is taken to be true, yet the amount paid by the accused company to the complainant is much more than the contended outstanding amount of Rs. 8,00,35,815.
30. Further, Ld. Counsel for the complainant has also submitted that the accused has not replied to the legal notice sent by the complainant to the accused, despite receiving the same and as such it is evident that the accused had failed to avail the first opportunity available to him to put forth his defence. The said omission of the accused forms ground of raising an adverse presumption against the accused. Further, the accused chose to maintain complete silence as to its ledger account statement, books of account, stock register, receipt of invoices, etc. and in the absence of any explanation qua the same, it can be safely presumed u/s 114(g) of Indian Evidence Act that the defense taken by the accused is false and is liable to be rejected. Further, it is submitted that if the aforementioned documents would have been produced by the accused, same would have falsified the defense of the accused. In this regard, reliance is placed by Ld. Counsel on Bir Singh Vs. Mukesh Kumar, Crl. Appeal No.230/231/2019 dated 06.02.2019, Rohitbhai Jivanlal Patel Vs. State of Gujarat & Anr. (2019) 18 SCC 106 and Sriram Industrial Enterprises Ltd vs Mehak Singh & Ors, (2007) 4 SCC 94 and Tomaso Bruno vs State of UP, (2015) 7 SCC
178. CT No. 465258/16 31 / 42
31. There is merit in the argument of the Ld. Counsel that the fact that the accused did not reply to the legal notice and chose not to bring any relevant documents of his own company to disprove the allegation, can very well raise a presumption against the accused. However, the said presumption and the consequent shifting of onus on the accused already stands statutorily placed in favour of the complainant as per Section 118 read with Section 139 of the NI Act, wherein it is for the accused to prove his innocence and rebut the said presumtion. The said presumption cannot be extended to such an extent that even when the accused has proved his case on the scale of preponderance of probabilities, still he shall face the wrath of adverse presumption. As has been held vide a catena of judgments, the said presumption can be rebutted by the accused either by leading direct evidence or from the case set out by the complainant himself. Qua the instant issue, accused has chosen to mainly rebut the said presumption from the case set out by complainant itself. I do not see any reason why accused should be held liable for doing so. In such a scenario and in light of the aforementioned discussion, it is held that the accused has successfully proved his defence and rebutted the aforementioned presumption qua the instant issue in consideration.
Thus, it must be held that there was no legally enforceable debt in discharge of which the cheque in question was issued.
32. I shall now discuss whether the said cheque has been presented to the bank and if the aforesaid cheque, when presented for encashment, was returned unpaid/dishonoured.
CT No. 465258/16 32 / 42Counsel for accused submits that accused company holds it account at Axis Bank, the then branch at E-64, GK-1, New Delhi which also finds mention on the cheque in question Ex. CW1/4. It is contended that the term 'the bank' referred to in Clause (a) to the proviso to section 138 NI Act means the drawee bank on which the cheque is drawn and not the bank where the cheque is presented for collection, including the bank of the payee, in whose favour the cheque is issued. Accordingly, the drawee bank would be the bank where the accused company held its account and not the branch of the bank of the complainant company which was only a processing branch. It is further submitted that the cheque in question also carries a stamp "not for high value and CTS clearing". The said cheque does not carry any endorsement stating "payable at par".
It is submitted that CW-2, in his evidence has testified that the term CTS clearing means that the scanned image of cheque is sent for the purpose of clearing. As per the stamp on the cheque, it means that if the cheque is presented for high value, then only basis of physical cheque same is to be processed. If the cheque in question was falling under the category of not high value cheque, then the cheque was supposed to be sent physically for the purpose of clearance. Even otherwise, CW-2 testified that the bank does not have any document to establish that the cheque in question was ever presented even over the counter.
Counsel for complainant further submits that even if the cheque is treated to be one as 'payable at par' nevertheless the non home branch is still required to verify from home branch of the drawee as to whether or not there was any impediment in encashment of the cheque drawn at home CT No. 465258/16 33 / 42 branch as the amount of cheque would anyway be required to be debited from the account of accused, maintained at his home branch. Reliance is placed by counsel on Shri Ishar Alloy Steels Ltd. Vs. Jayaswals NECO Ltd SLP (crl.) 3854 of 2000, Merck Ltd.and Ors Vs Radha Nath Nandi C.R.R. 3950 of 2016, Ahuja Nandkishore Dongra Vs State of Maharashtra & Anr 2006 SCC Online Bom 1298, Aditya Promoters Ltd Vs S.Karthikeyan 2014 SCC Online Del 7442, Smt.Sangita w/o Ajay Shah Vs Judicial Magistrate,First Class. 2015 SCC Online Bom 273, Shroff Publisher & Distributors Pvt Ltd & Ors Vs Springer India Pvt Ltd Shroff Publisher & Distributors Pvt Ltd & Ors Vs Springer In- dia Pvt Ltd 2007(98) DRJ 398 (VIMP), Bosten Beverages Pvt Ltd Vs Kingston Beverages 2014 SCC Online Del 7233.
Counsel for accused submits that DW-2, is the witness from the drawee home branch and Ex. DW2/A, DW2/A1 to DW2/A3 prove that cheque in question was never presented for the purpose of encashment with the home branch of the accused company. Counsel further submits that accused had also instructed its bank to stop payment of the cheque in question Ex. DW2/A2. Accordingly, had the cheques been presented for 'inward clearing' of the home branch of accused company, then the same would have reflected the status stop payment instead of 'funds insufficient'.
Per contra, counsel for complainant submits that the reliance placed by the accused on aforementioned judgments is misplaced as in the aforementioned judgments, the Court has explained that since the ultimate dishonour of the cheque is by the home branch of the drawer of the cheque, as such the jurisdiction to try the case shall lie with the court where the home branch of the drawer of the cheque is located. The said judgments do CT No. 465258/16 34 / 42 not deal with a scenario where the cheque does not reach the drawee branch because of the reason that the holder of the cheque also has an account in the same bank but with a different branch. On account of computerisation (CBS system), once such cheque is presented with any branch of the same bank, the banker can verify the details over the system and process the cheque. Further, CW-2 has testified that since the cheques were to be encashed via 'over the counter' encashment and were not to be processed through 'clearing process', it was duly presented by the complainant at its bank i.e. Axis Bank, Saket Branch. CW-2 further testified that since it was not a clearing cheque, as such no charges are levied for the dishonour of cheque, nor are any entries reflected in the bank account of the accused or the complainant. He further submits that on account of technological advancement and computerisation, the world of banking has seen a dramatic change necessitating new rules and procedure adopted by the banks. Counsel for the complainant further submits that no document has been brought on record by the accused to show as to when the 'stop payment' instructions were given to its bank by the accused and the same cannot be relied upon.
33. For the purpose of clarity, I shall address the arguments of the Ld. Counsels in 2 parts. CW-2, in his testimony, has stated that the cheque in question was presented at the Saket branch of the Axis Bank and since it was the same bank, i.e. Axis Bank, accordingly the said cheque was to be encashed via 'over the counter' process and was not required to be processed through the 'clearing' process. He further testified that in such a scenario, if the cheque gets dishonoured, then no charges are deducted from CT No. 465258/16 35 / 42 the account of the account holder and as such no entry is made in the account of the account holder. This is the reason why dishonour of cheque in question would not be reflected in the account statements Ex. CW-2/B and Ex. CW-2/C, as the cheque was processed over the counter. He further stated that the cheques presented over-the-counter are not always stamped.
34. CW-2 was also shown Ex. CW-2/DA which is Cheque Collection Policy of Axis Bank and states about levy of charges when the cheque gets dishonoured on account of fault of the customer. On being questioned if there is any exception to the aforementioned rules set forth by Ex. CW- 2/DA, CW-2 stated that the aforementioned rules pertain to clearing cheques and not to over the counter transactions. It was stated by the witness that for the same reason the cheque in question is not branded with the bank special crossing stamp.
The witness admitted that he is not aware of any particular circular or rules of Axis Bank to support his testimony qua 'over the counter' transfer, however he deposed that the same is the standard banking procedure. On being questioned if he can bring any such circular or rules of Axis Bank to support his testimony after consultation with his bank, the witness denied that he could bring any such circular or rules. No such rules or circular was ever brought on record by CW-2 or any other complainant witness.
35. It is essential to observe that despite stating that the standard banking procedure for 'over the counter' cheque transactions is different from the rules pertaining to Cheque Collection Policy set forth in Ex. CW2/DA, neither the aforementioned witness nor any other witness of the CT No. 465258/16 36 / 42 complainant has been able to bring on record any set of rules or regulations to support the testimony of CW-2. The said omission casts a serious doubt on the creditworthiness of the aforementioned witness i.e. CW-2. Even the cheque return memo, Ex. CW1/5 is not supported by any corresponding bank record maintained with the bank. CW-2 in this regard, had stated that since it was 'over the counter' cheque transaction, no record of any such return memo having been issued by the bank, is maintained with the bank. Even though Section 146 of NI Act raises a presumption qua the correctness of the said return memo, yet the said presumption has been successfully rebutted by the accused in the cross examination of CW-2, on account of the aforementioned reasons. In such a scenario, it was for the complainant to prove that the testimony of CW-2, qua different practice being followed for 'over the counter' cheque transactions, was creditworthy and supported by some relevant rule, policy or circular. Except for the testimony of the aforesaid witness and the cheque return memo Ex. CW-1/5, there is nothing on record to prove that the process adopted for the alleged 'over the counter' cheque transactions is in variance with the Cheque Collection Policy Ex.CW-2/DA. Counsel for the complainant has not been able to file any relevant rule, procedure or legal precedent to support his contention. Sans any relevant rule, procedure or legal precedent, I find it inevitable to hold that the contention of the Ld. Counsel for the complainant that new banking procedures have been adopted for over-the-counter cheque transactions, cannot be held to be proved. In such a scenario, the testimony of the aforesaid witness, unsupported by any other evidence other than Ex. CW- 1/5, cannot be taken as gospel truth. This is more so, considering the fact that the cheque in question was stamped with remarks "not for high-value and CTS clearing". Thus, it must be held that the accused has, qua the CT No. 465258/16 37 / 42 aforementioned aspect, successfully rebutted the presumption placed against it.
36. The next question to be dealt with, is whether the cheque in question was presented for encashment at the branch of the concerned bank where the accused company maintained its account that is Axis Bank, GK-I, New Delhi. In this regard, DW-2 was examined who brought on record, letters from the concerned bank branch Ex. DW2/A, Ex. DW2/A1, Ex. DW2/A2, Ex. DW2/A3 and Ex. DW2/A4. The said documents, record that the account of the accused company was closed on 09/12/2010 and that the cheque in question has not been presented to the concerned bank branch that is Axis Bank, GK-I, New Delhi. Ex. DW-2/A2 is a document which also records that the instructions of 'stop payment' were given by the accused company to his bank branch. It is one of the contentions of the counsel for the accused that, had the cheque in question been presented to the bank branch of the accused company, the same would have reflected "stop payment" status in the return memo and not "funds insufficient". I do not find any merit in the said contention of the Ld. Counsel for the accused, as Ex. DW2/A2 does not mention the date when the stop payment instructions were issued by the accused company to it's bank branch. However, it must be observed that there is nothing in the cross examination of DW-2 to discredit his testimony that the cheque in question was never presented for encashment at the aforementioned branch of Axis Bank. In light of the aforementioned, it is held that the cheque was never presented for encashment at the aforementioned branch of Axis Bank where the accused company maintained its account.
CT No. 465258/16 38 / 4237. Now I shall proceed to the 2 nd part of the argument of the counsels as to whether the cheque in question must have been presented to the drawee bank on which the cheque was drawn or it could have been presented to any other bank. It has been held by Hon'ble High Court of Delhi in Aditya Promoters Ltd Vs S.Karthikeyan 2014 SCC Online Del 7442 as under:
"15. There is another reason due to which the contention raised on behalf of petitioner/ complainant cannot be sustained. The cheque amount is supposed to be paid from the account of accused/ respondents maintained at home branch of drawee bank. It is merely as a result of computerization of all the branches of bank, facility has been provided for encashment of cheques payable at par at any branch irrespective of the fact that account holder was not having bank account in the branch where the cheque is presented. Merely because the cheque has been presented at non-home of drawee bank, it does not in any manner, become the drawee bank for the obvious reason that before encashing the cheque payable at par, the non-home branch is still required to verify from home branch of the drawee branch as to whether or not there was any impediment in encashment of the cheque drawn at home branch. Even otherwise, in the event of encashment, the amount of cheque would be required to be debited in the account of the accused maintained at home branch as the amount was only payable by the home branch of drawee bank. Therefore, the presentation of cheque at non-home branch of drawee bank being the cheque which is payable at par/ multi- city cheque, will not change the character of drawee bank"
It has been held by Hon'ble High Court of Calcutta in Merck Ltd.and Ors Vs Radha Nath Nandi C.R.R. 3950 of 2016 that;
"5. ....Hence, condition precedent for attracting penal liability under the aforesaid provision is that the cheque must be presented for encashment to the drawer bank.....CT No. 465258/16 39 / 42
6. .... the cheque and the return memo reinforces the aforesaid contention that the cheque had been returned by the bank of the opposite party, as aforesaid, without presenting the same for clearance before the bank of the petitioner.....
7. On the other hand, the cheque had been returned to the opposite party by his own banker with the aforesaid endorsement. If a cheque is returned by the banker of the opposite party without presenting the same before the bank on which it is drawn for encashment, the question of dishonour of the cheque due to insufficiency of funds in the drawee's account shall not rise at all. I am of the opinion that since the cheque had not been presented for clearance with the banker of the petitioner the question of dishonour due to insufficiency of funds in the account of the petitioner did not arise."
38. Further, in Shri Ishar Alloy Steels Ltd. Vs. Jayaswals NECO Ltd SLP (crl.) 3854 of 2000, it has been held that meaning of 'The Bank' as mentioned in clause (a) of the Proviso to Section 138 of the Negotiable Instrument Act, 1881 has to be understood in the context that :
"The Bank" referred to in clause (a) to the proviso to Section 138 of the Act would mean the Drawee Bank on which the cheque is drawn and not all banks where the cheque is presented for collection including the bank of the payee, in whose favour the cheque is issued."
Further, Hon'ble High Court in Ahuja Nandkishore Dongra Vs State of Maharashtra & Anr. 2006 SCC Online Bom 1298 had held as under :
"18. Practice of presenting a cheque to payee's or holder's own banker does not make such banker "the drawee". Such a banker merely undertakes to present the cheque on behalf of the holder to the drawee bank for clearance. Such a banker acts as agent of CT No. 465258/16 40 / 42 holder and not agent of the drawee bank. This can be clear from the fact that it is the holder who has to bear the expenses in clearing the cheque and not the drawee bank. Even between different branches of the same bank, branch at which holder has an account does not become agent of the drawee branch for accepting the cheque unless the cheque is one marked as payable "at par" at all branches of the bank."
In Smt. Sangita w/o Ajay Shah Vs Judicial Magistrate,First Class. 2015 SCC Online Bom 273 it was held as under;
"7. ......At this juncture, it must be understood that there is a difference between processing of cheque for the purpose of making payment and giving nod or approval to the processing branch for payment. The branch which processes the cheque in the sense obtains approval for payment of the branch where funds are actually and physically held and makes the payment can only be called as the processing or facilitator branch. Such branch cannot be called as the "dawee" within the meaning of Section 7, N. I. Act, which defines the term "drawee" as the person directed under the bill of exchange or cheque by it's maker to pay. Such a direction can be given and is given only to the branch where the account is actually opened and maintained and funds are physically held. If this were not true, there would be no need to seek transfer of funds by processing branch to it from the branch where the drawer of the cheque has maintained a physical account"
39. Ld. Counsel for the complainant has submitted that the reliance placed by the counsel for the accused on the aforementioned judgements is misplaced as the aforementioned judgements and the observations passed therein are with respect to determining the territorial jurisdiction of the Court before which, the trial for the dishonour of cheque, can take place. I do not find merit in the contention of the complainant that the definition of the "drawee bank" for the purposes of determining the territorial CT No. 465258/16 41 / 42 jurisdiction is different from its definition for determining whether the cheque in question has been presented with the bank, within the meaning of section 138(a) of the Negotiable Instruments Act. Once it has been held by the various Superior Courts that if a cheque is returned by the banker of the complainant without presenting the same before the bank on which it is drawn for encashment, the question of dishonour of the cheque shall not arise; there is no possibility for this Court to take a diferent view qua the same. Accordingly, it is held that the cheque in question has not been presented with the bank account within the meaning of section 138(a) of the negotiable instruments act.
40. In view of the above analysis, it is concluded that the accused have been successful in rebutting the mandatory presumptions under section 118(a) and 139 of the NI Act and have successfully proved their defence on a preponderance of probabilities, while the complainant has failed in proving his case beyond reasonable doubt.
41. Accordingly, all the accused persons are acquitted of the offence under section 138 of the Negotiable Instruments Act, 1881.
Digitally
signed by
SIDDHANT
SIDDHANT SIHAG
SIHAG Date:
2022.08.04
17:24:47
+0530
Pronounced in the open (SIDDHANT SIHAG)
court on 04.08.2022 MM-04/NI Act/South/Saket
New Delhi
This judgment contains 42 signed pages.
CT No. 465258/16 42 / 42