Delhi District Court
M/S Yes Bank vs . A. R. Industries Pvt. Ltd. on 1 November, 2011
1
CC No. 80/11
IN THE COURT OF MS. GURMOHINA KAUR :
METROPOLITAN MAGISTRATE:SPECIAL COURT13,
DWARKA COURTS : NEW DELHI.
C. NO.80/11
M/s Yes Bank Vs. A. R. Industries Pvt. Ltd.
1. Complaint Case No. : 80/11
2. Name of the complainant : M/s Yes Bank, A42,
Vishal Enclave, Opposite
TDI Mall, New
Delhi110027
Also at : 48, Nyaya Marg,
Chanakya Puri, New
Delhi110021
3. Name of the accused and his : 1. A.R. Industries Pvt.
parentage and residence Ltd., 14/5, Mathura Road,
Faridabad, Haryana121003
2. Sh. Subhash Aggarwal,
Director, M/s A.R. Industries
Pvt. Ltd., C1/66,
Safdarjung Development
Area, New Delhi110016
4. Offence complained of or proved: U/s 138 of the
Negotiable Instrument Act,
1881
5. Plea of the accused : Pleaded not guilty
2
CC No. 80/11
6. Final Order : Both the Accused are
acquitted
7. Date of Order : 01.11.2011
BRIEF FACTS OF THE CASE
1. The brief facts of the case are that the Complainant is a bank, incorporated as a company under the Companies Act, 1956, registered under the Banking Regulation Act, 1949 and having its registered office at Delhi. Mr. Pushpinder Singh is the Authorized Representative of the Complainant company who was substituted in the present complaint vide order dated 25.03.2011 and he has been authorized to represent the complainant company in terms of Power of Attorney executed on 28.10.2010.
2. It is stated in the complaint that a loan facility was granted by the complainant bank to the accused company and copy of the loan agreement was duly signed by the accused No. 2 for and on behalf of accused no. 1 company. It is also stated that the accused no. 2 was the Director of the accused no. 1 Company and was incharge of the day to day affairs of the accused no. 1 Company and in consideration to absolve the liability arising out of the said loan, the accused issued two cheques bearing no. 595329 dated 15.10.2009 & 595330 dated 15.11.2009 for an amount of Rs.1,08,457/ each and both drawn on State Bank of India, SBI, Faridabad121001 i.e. Ex.CW1/C & Ex.CW1/D and when the said cheque were presented for encashment were returned back with remark 'Drawer's signature differs' vide cheque return memos dated 30.03.2010 i.e. Ex. CW1/E & Ex.CW1/F. A legal demand notice which is Ex. CW1/G dated 16.04.2010 was sent 3 CC No. 80/11 by the complainant bank through its lawyer which was duly served on the accused vide postal and courier receipts dated 16.04.2010 which are Ex.CW1/H (Colly) & Ex.CW1/I and that the accused failed to make the payment within the statutory period of 15 days and hence this criminal complaint was filed by the complainant.
3. Upon service of B/W, the accused no. 2 put his appearance before the court on 07.02.2011. Notice was framed against the accused no. 2 on 25.03.2011 to which he pleaded not guilty and claimed trial. EVIDENCE
4. To support its case, the complainant company examined CW1 Mr. Pushpinder Singh, AR of the Complainant company on 01.06.2011 and thereafter on 06.07.2011.
5. CW1 tendered his evidence by way of affidavit and reiterated the contents of the complaint and relied upon the documents filed at the stage of presummoning evidence. During the crossexamination of CW1 by the Ld. Counsels for the accused no. 2, CW1 stated that the loan agreement Ex.CW1/D was executed between the parties on 29.05.2007 and PDCs were taken from the accused company in lieu of the loan taken by the accused company. The CW1 also stated that he would have to verify whether the cheques in question were given by the accused at the time of execution of the loan agreement and stated that he was not aware whether the loan account of the accused company was foreclosed at the time of filing the present complaint. With respect to the notice of demand Mark X which was placed on record by the accused no. 2, CW1 stated that it is incorrect that the cheques in question were misused by the complainant bank for filing 4 CC No. 80/11 the present complaint as the bank had already raised consolidated demands of outstanding amount.
6. CW1 further stated that both the cheques in question were presented together for encashment for the first time. CW1 also denied the suggestion that the loan agreement was terminated and that consolidated demand was raised by the complainant bank. CW1, however, stated that there is no clause in the loan agreement authorizing the bank to present the cheques in question dated October 2009 & November 2009 in the month of March 2010. CW1 also stated that he has to verify whether the cheques in question were presented after the foreclosure/termination of the loan agreement. CW1, however, stated that the legal demand notice were sent to the accused through the postal department.
7. Complainant Evidence was thereafter closed on 06.07.2011.
8. The statement of the accused no. 2 under Section 313 of Cr.P.C. was thereafter recorded on 22.07.2011 wherein he stated that the loan was taken by the accused company M/s A.R. Industries Pvt. Ltd. and that the cheques in question were issued as post dated EMI cheques on behalf of the accused company. He further stated that he did not receive any legal notice and that he has no personal liability in the present complaint and also the cheque in question were presented for encashment after the termination of the loan agreement and that there is no legal liability against these cheques in question.
9. Thereafter, the matter was fixed for D.E. on 19.08.2011. The accused person submitted that he does not wish to lead D.E. and thereafter, both the parties lead their final arguments on 21.09.2011. 5 CC No. 80/11 ARGUMENTS
10. During final arguments, Ld. Counsel for Complainant bank submitted that all the necessary ingredients of Section 138 of the Negotiable Instruments Act had been fulfilled. Ld. Counsel further argued that the cheques in question were issued by the accused no. 2 as monthly installments towards the loan availed by the accused no. 1 M/s A.R. Industries Pvt. Ltd. and that he was incharge of the accused company at the date of issuance of cheques in question and was therefore liable in view of the provisions of Section 141 of N.I. Act. Ld. Counsel for the complainant argued that the accused no. 2 was the signatory of the cheuqes in question and was therefore, liable.
11. On the other hand Ld. Counsel for the accused no. 2 argued that the accused no. 2 had signed the cheques in question as the Director of the accused company and that the cheques in question were handed over to the complainant bank at the time when the accused company availed the loan from the complainant bank as monthly installments and that after the handing over the aforesaid cheques the accused no. 2 was not in control over the aforesaid cheques question and that they were presented without any knowledge or intimation from the complainant bank. It was further argued that the cheques in question were presented for encahsement after the termination of the loan agreement and hence, there was no outstanding liability against the accused no. 2 on the date of presentation of the cheques in question. It was further argued that the loan agreement was terminated by the complainant bank and a demand for consolidated payment was raised by them on 16.12.2008 vide notice Mark X and by virtue of the aforesaid notice there was no liability of the accused no. 2 and this 6 CC No. 80/11 also finds corroboration by the contents of the notice Mark X which states that the unused PDCs would not be presented for encahsement and that would be returned back on closure of the loan account. Another arguments raised by the Ld. Defence Counsel that the cheques in question were returned back on the ground of signatures differs. However, no material witness has been placed on record to show that the signatures of the accused no. 2 on the cheuqes in question were different from those present in various documents signed by the accused no. 2 himself.
SECTION 138 NEGOTIABLE INSTRUMENTS ACT
12. This court has heard the arguments on both the sides and have carefully gone through the record. On the basis of the facts and arguments placed before the court, two main issues are to be decided as hereunder: i. Whether the legal demand notice was served to the accused persons?
ii. Whether there was legally enforceable liability outstanding against the accused persons as on the date of presentation of the cheques in question?
13. It is now pertinent to go through Section 138 of Negotiable Instruments Act.
138. Dishonour of cheque for insufficiency, etc., of funds in the accounts Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for"a term which may extend to two 7 CC No. 80/11 year", or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque,"within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and
(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability.
14. It is pertinent to mention section 139 and Section 118 of the Negotiable Instruments Act which are as follows:
"Section 139. Presumption in favour of holder It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."
"Section 118. Presumption of Negotiable Instruments of consideration Unless the contrary is proved, the following presumptions shall be made
(a) of considerationthat every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;8 CC No. 80/11
(b) as to date that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance that every accepted bill of exchange was accepted within a reasonable time after its date its date and before its maturity;
(d) as to time of transfer. that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of endorsements that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stampsthat a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been contained from its lawful owner, or form any person in lawful custody thereof, by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."
15. Section 139 of the Negotiable Instruments Act lays down that it shall be presumed, unless contrary is proved that the holder of the cheque received the cheque of the nature stated in section 138 for the discharge of a debt or liability.
ISSUE NO. 1 : Whether the legal demand notice was served to the accused persons?
16. It is pertinent to mention Section 27 of the General Clauses Act wherein a presumption of service is drawn in if a notice is sent at the correct address of the accused. Section 27 of the General Clauses Act, 1897 deals with the presumption of deemed service. The Section Reads as under: 9 CC No. 80/11 "Where any (Central Act) or Regulation made after the commencement of this Act authorizes of requires any document to be served by post, where the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing prepaying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post".
17. The legal demand notice was sent by the complainant bank through postal department vide postal and courier receipts dated 16.04.2010 to all the accused.
18. With respect to the accused no. 2, the main contention is that no postal witness has been placed before the court to prove the delivery report placed on record. It is stated that no legal notice was ever served upon the accused no. 2 and that no acknowledgment card has been placed on record to prove the same by the complainant bank.
19. On a careful analysis of the judicial record, it is seen that legal demand notice were sent at the correct addresses of the accused persons within a stipulated time period. Further the Internet delivery report with respect to legal demand notice sent to the accused no. 2 through courier clearly shows the status as delivered on 17.04.2010. 10 CC No. 80/11 Also, returned envelop has been placed on record wherein it has been stated that the accused no. 1 has refused to received the aforesaid notice.
20. Also in view of provisions 138 N.I. Act and Section 27 General Clauses Act, prima facie, presumption of service is raised in favour of accused persons and that it was the duty of the accused no. 2 to examine any postal witness or any other person in order to rebut the aforesaid presumption. However, no evidence was lead on behalf of the accused no. 2 in this respect and only some questions were put during the crossexamination of AR. It is seen that the legal demand notice was never sent by the AR personally but was sent through the counsel or attorney of the complainant. Also, the address mentioned of all the accused are correct and nothing has come on record to show that any of the accused persons does not reside at the address stated in the legal demand notice as well as the complaint. It is also seen that the bail bonds filled in by the accused no. 2 bears the same address as that mentioned in the legal demand notice as well as complaint. The accused no. 2 has not examined any part or no document has been placed on record to show that the address mentioned in the complaint is wrong. Further, nothing has been placed on record by the accused no. 2 to rebut the presumption raised by virtue of Section 27 General Clauses Act. In view of the aforesaid facts, the issue is decided in favour of the complainant and presumption of valid service is made out against all the accused persons.
11CC No. 80/11 ISSUE NO. 2 : Whether there was legally enforceable liability outstanding against the accused persons as on the date of presentation of the cheques in question?
21. It is the case of the complainant that the accused company had taken a loan from the complainant bank and had issued the cheques in question towards the monthly installments of the same. Accused no. 2 is the signatory of the cheques in question being the Director of the accused company at the time issuance of cheques in question. It is an admitted fact that the accused company availed the loan facility from the complainant bank. However, Ld. Defence Counsel has alleged that the cheques in question were presented after the termination of the loan agreement. Ld. Defence Counsel has stated that the complainant bank had revoked and terminated the loan agreement vide notice dated 16.12.2008 and that there was no legally enforceable debt by virtue of Section 138 of N.I. Act as the complainant bank has misused the cheques in question after the termination of the loan agreement. It is further submitted that the complainant bank has suppressed the material facts.
22. It is admitted fact that the cheques in question were issued by the accused company towards EMI, however, the same were post dated cheques. It is also seen that during the cross examination the CW1 has stated that he would have to verify if the present cheques were presented after foreclosure/termination of the loan agreement and after initiation of the legal proceedings before the DRT. However, it is to be seen that the CW1 never verified the aforesaid facts nor any 12 CC No. 80/11 document or witness was placed on record to prove or disprove the aforesaid fact.
23. It is important to mention that the presumptions raised by virtue of Section 118 and 139 of the N.I. Act in favour of the complainant that the cheques in question were issued for a valid consideration is rebutable. In the opinion of the court, once an agreement between the parties is terminated, then the unused cheques which were issued by virtue of the agreement cannot be used later on as the terms of the agreement become unenforceable.
24. In the present complaint the cheques in question were issued initially towards the EMI of the loan and for legally enforceable liability, however, once the complainant terminated the loan agreement by virtue of notice Mark X dated 16.12.2008 and raised the consolidated demand, the liability of the accused at the time of presentation of the cheques in question does not remain the same. Also, it is to be seen that the Mark X placed on record by the Ld. Counsel for defence has neither been disputed nor denied by the complainant. Also, the complainant has not placed on record any document to show or to prove that the EMIs payable under the loan agreement are still valid and enforceable even after the complainant bank has itself terminated the loan agreement. Therefore, by virtue of the aforesaid facts and discussions, the presumptions raised by virtue of Section 139 and 118 of N.I. Act have been rebutted by the accused and that this court is of the opinion that there was no legally liability against the accused persons as on the date of presentation of cheques in 13 CC No. 80/11 question. Accordingly, this issue is decided in favour of the accused no. 2 and against the complainant bank.
FINAL ORDER
25. In view of the aforesaid facts and discussions, this court is of the opinion that the complainant has not been able to prove its case against the accused persons beyond reasonable doubts. Hence, the accused no. 1(Accused company), - M/s A.R. Industries Pvt. Ltd. & Accused No. 2 - Mr. Subhash Aggarwal are hereby acquitted for an offence U/s 138 N.I. Act.
26. Bail bond, if any, stands cancelled. Surety, if any, stands discharged. Endorsements, if any, be also cancelled.
27. File be consigned to Record Room.
Announced in the Open Court
on 1st November 2011 (GURMOHINA KAUR)
METROPOLITAN MAGISTRATE
DWARKA COURT:NEW DELHI