Delhi District Court
Titled As M/S M. M. T. C. Ltd. & Anr vs . M/S Medchl Chemicals & on 27 April, 2013
IN THE COURT OF SH. GAGANDEEP JINDAL,
METROPOLITAN MAGISTRATE (NI ACT)- 12, DWARKA COURTS,
NEW DELHI
M/s Libra Finance & Carrier (P) Ltd.
Versus
Vijender
P.S : Subji Mandi
U/s : 138 Negotiable Instruments Act
1. Serial No./CC No. of the case : 2627/12
2. Name of the complainant : M/s Libra Finance & Carrier (P) Ltd.,
Having its corporate office at :
B-2, Bhargava Lane,
Boulevard Road,
Delhi-110054.
3. Date of Institution : 27.01.2006
4. Name of the accused, his : Vijender,
parentage and residence S/o Sh. Bhagwat,
R/o H. No. 338,
Asola Fateh Pur Beri,
New Delhi-110030.
5. Date when judgment was : 26.04.2013
reserved
6. Date when judgment was : 27.04.2013
pronounced
7. Offence complained of and : Offence Under Section 138 of
proved Negotiable Instruments Act
8. Plea of accused : Accused pleaded not guilty and
claimed trial
9. Final Judgment Acquitted
CC No. 2627/12 Page 1 of 14
-:J U D G M E N T:-
1. Vide this judgment, I shall decide the present complaint filed by the
complainant M/s Libra Finance & Carrier (P) Ltd. Under Section 138 of
Negotiable Instruments Act (hereinafter referred to as N.I Act) against the
accused Vijender.
2. It is alleged by the complainant in its complaint that accused had
already purchased a Truck Dumper bearing registration no. HR-38M-7752 which
was financed by the complainant. The accused had executed various loan
documents, agreement and promissory note. It is further submitted that accused
did not adhere to the financial discipline and failed to pay the agreed
installments. But after much persuasion by the complainant, accused handed
over the cheque bearing no. 414671 dated 28.12.2005 of Rs. 1,88,300/- drawn
on Syndicate Bank, Fateh Pur Beri, New Delhi in favour of the complainant which
when presented by the complainant with its banker for encashment was returned
unpaid by the Drawee Bank with the returning memo dated 31.12.2005 for the
reason "Funds Insufficient". Thereafter, the complainant served a Legal Demand
Notice dated 03.01.2006 calling the accused to make the payment of
dishonoured cheque. It is further averred that despite service accused failed to
make the payment of cheque amount demanded through Legal Notice, thereby
committing the offence Under Section 138 of N.I Act for the prosecution of which
the present complaint has been filed.
3. After considering the material on record, the cognizance of the
offence U/s 138 of N.I Act was taken and accused was summoned on
31.01.2006. The accused appeared in the court on 19.08.2008 and was admitted
to bail.
4. Notice U/s 251 Cr.P.C. was framed against the accused on
05.03.2011. At the time of framing of notice, the accused raised the defence
CC No. 2627/12 Page 2 of 14
that he had issued cheque in question in blank after signing. He further stated
that he had taken a vehicle loan, the same was stolen from Noida. He had made
a complaint about this to the complainant who assured that he will not have to
pay back the loan as the complainant will adjust the loan against the insurance
claim. He denied the receipt of legal demand notice from the complainant.
5. The complainant has examined Surender Singh as CW1. The CW 1
has filed two affidavits but he has been cross-examined on the basis of affdiavit
Ex. CW1/A filed on 20.10.2011. The affidavit of CW1 is exhibited as Ex. CW1/A,
Certified copy of Certificate of incorporation of complainant company is exhibited
as Ex. CW1/1. Certified copy of Board Resolution authorizing CW 1 is exhibited
as Ex. CW1/2A. Further original cheque in question is exhibited as Ex. CW1/3.
The cheque returning memo is exhibited as Ex. CW1/4. Banker's Information Slip
is exhibited as Ex. CW1/5. Legal notice is exhibited as Ex. CW1/6. Postal
receipt is exhibited as Ex. CW1/7 and AD Card is exhibited as Ex. CW1/8.
During the cross-examination, the CW 1 has relied upon the lease agreement
executed between the complainant and accused Ex. CW1/9. CW 1 was
discharged after cross-examination.
6. No other witness was examined by complainant.
7. The accused was examined U/s 313 Cr.P.C. and all the incriminating
evidence were put to the accused. In his statement the accused admitted that he
had financed the truck no. HR-38M-7752 from the complainant and also admitted
his signatures on the agreement Ex. CW1/9. He submitted that cheque in
question question was given to the complainant at the time of loan taken by him
and further submitted that he had put his signatures on it and other contents on
the same were not filled by him. The accused denied the receipt of legal
demand notice.
CC No. 2627/12 Page 3 of 14
8. The accused has examined himself U/s 315 Cr.P.C as DW 1 and
relied upon his voter I-card Ex. DW1/A. DW 1 was not cross-examined by the
complainant despite various opportunities.
9. Final Arguments on behalf of the both the parties heard.
10. From the arguments of both the parties, following questions for
consideration has arisen :-
QA. Whether the present case has been filed by properly
authorized person on behalf of complainant or not ?
QB. Whether the accused has issued cheque in question to
discharge his liability against the loan taken by him from
the complainant ?
QC. Whether the accused has received the Legal Demand
Notice or not ?
11. Question No. A :
The Ld. Counsel for the complainant had argued that the present
complaint is filed by Sh. Surender Singh who is duly authorized by the
complainant vide Board Resolution and relied upon the judgment in the case
titled as M/S M. M. T. C. LTD. & ANR Vs. M/S MEDCHL CHEMICALS &
PHARMA P. LTD. & ANR. Special Leave Petition (crl.) 289-290 of 2000 and
Standard Chartered Bank vs Mr. R. Vinay Kumar Bhasin 98 (2002) DLT 308 .
On the other hand, Ld. Counsel for the accused has argued that no
board resolution has been filed in favour of Sh. Surender Singh, CW 1 because
Ex. CW1/2A is mere a photocopy and has not been proved according to
provisions of law. It is further submitted that despite categorical cross-
examination of CW 1, AR for the complainant, the complainant has failed to ratify
the authority of CW 1. It is further argued that complainant has failed to prove
the authority of Sh. Surender Singh to institute and pursuing the present
CC No. 2627/12 Page 4 of 14
complaint. Therefore, the present complaint is not maintainable.
12. To prove his authority, Sh. Surender Singh in his evidence by way of
affidavit Ex. CW1/A has stated that he has been authorized by the complainant
company by Power of Attorney Ex. CW1/2A. Perusal of file reveals that Ex.
CW1/2A is Board Resolution passed by the complainant company in favour of
Sh. Surender Singh. The testimony of CW 1 is contradictory to the document i.e.
Ex. CW1/2A relied upon by him. The complainant has also filed power of
attorney but the same is not exhibited. Therefore, I will consider both the
documents to decide the authority of CW 1.
13. Firstly, I will consider the validity of Power of Attorney. Perusal of the
power of attorney dated 26.02.2009 allegedly shows that the said power of
attorney has been executed by Libra Finance & Carriers Pvt. Ltd. in favour of Sh.
Surender Singh. The said power of attorney do not mention anything about the
board resolution and the name of person who has been authorised by the board
to execute the said power of attorney on behalf of the company.
14. In the judgments relied upon the complainant, it is held that
no court can decline to take cognizance on the sole ground that the complainant
was not competent to file the complaint. If any special statute prescribes
offences and makes any special provision for taking cognizance of such offences
under the statute, then the complainant requesting the Magistrate to take
cognizance of the offence must satisfy the eligibility criterion prescribed by the
statute. The cognizance of the complaint cannot be denied mere on defect in the
authority of the person who had filed the complaint on behalf of the complainant.
In one of the judgments relied upon the complainant i.e. M/S M. M. T.
C. LTD. & ANR Vs. M/S MEDCHL CHEMICALS & PHARMA P. LTD. & ANR.
Special Leave Petition (crl.) 289-290 of 2000, the Apex Court has observed
that :
CC No. 2627/12 Page 5 of 14
"Thus, even presuming, that initially there was no authority, still the Company
can, at any stage, rectify that defect. At a subsequent stage the Company can
send a person who is competent to represent the company. The complaints could
thus not have been quashed on this ground. "
15. Despite categorical cross examination of the alleged AR for the
complainant on this aspect, the said AR of the complainant has failed to ratify the
authority given to him and to place board resolution on record to prove the
authority of the person who had executed the power of attorney. The
complainant has also failed to bring any articles of association of the company
showing that Sh. Harjit Singh, alleged director, has been authorized to execute
the power of attorney and neither Sh. Harjit Singh has come to witness box to
prove the authority in his favour. The court cannot ignore the mandate of Section
291, Companies Act, 1956 which directs that the power of companies shall be
either exercised in general meetings or by Board of directors. The power of
attorney dated 26.02.2009 is devoid of any mention regarding the board
resolution which authorises Sh. Harjit Singh to execute power of attorney and
authorise Sh. Surender Singh to file the present complaint case and in absence
of any ratification by the complainant. Therefore, the power of attorney dated
26.02.2009 cannot be construed to be valid in the eyes of law. Further, the
complainant has not obtained leave of the court to lead secondary evidence in
respect of said power of attorney. In these circumstances, it is clear that the said
power of attorney has not been proved according to law. (Reference : Birla Dlw
Ltd. vs Prem Engineering Works, 77 (1999) DLT 171 and Baker Oil Tools
(India) Pvt. Ltd. vs Baker Hughes Ltd. & Anr, RFA No. 583/2004, decided on
03.06.2011)
16. Now, I will consider the validity of board resolution Ex. CW1/2A. The
CW 1 has relied upon the Board Resolution Ex. CW1/2A to prove his authority.
During his cross-examination, CW 1 has stated that
CC No. 2627/12 Page 6 of 14
"I have not filed the minutes of meeting by which I have been
authorized to depose in the present case. Though I have not filed on record any
document to show that the Director of the complainant have authority to appoint
me as a AR in the present case, I can file the said document, if required. There
is no seal of complainant company on document Ex. CW1/2A."
As per Section 194 of Companies Act, 1956, Minutes of Meeting kept
in accordance with the provisions of Section 193 shall be evidence of the
proceedings recorded therein. The CW 1 has neither filed the Minutes of the
Meeting in which the said Board Resolution was passed nor produced the
original Board Resolution.
17. In view of the above discussion, the complainant has failed to prove
the authority of Sh. Surender Singh to file and prosecute the present complaint.
18. Question No. B :
Ld. Counsel for the complainant has argued that accused executed
Lease Agreement Ex. CW1/9 and in order to discharge his liability, he had issued
the cheque in question Ex. CW1/3 which got dishonoured on its presentation. It
is further argued that accused has failed to prove his plea of defence that cheque
in question was given for security purpose.
On the other hand, the plea of the defence of the accused is that he
had taken a vehicle loan from the complainant and given four blank signed
cheques for security purpose at the time of loan and cheque in question is one of
those four cheques. Ld. Counsel for the accused has argued that cheque in
question was not issued by the accused to discharge his liability.
19. Under Section 118, unless contrary is proved, it is to be presumed that
Negotiable Instruments (including the cheque) had being made or drawn for
consideration. Under Section 139, the court has to presume unless the contrary
was proved, that the holder of the cheque received the cheque for discharge, in
whole or in part of a debit or liability. Thus, in complainants U/s 138 of N.I Act,
CC No. 2627/12 Page 7 of 14
the court has to presume the cheque had been issued for a debit or liability.
However, this presumption is rebuttable.
20. Section 118 and 139 of N.I. Act, have been dealt with in cantena of
judicial pronouncements by the Hon'ble Supreme Court. And it would be
sufficient to refer to the following judgments in this regard.
In " K. Bhaskaran Vs. Sankaran Vaidhyan Balan" (AIR 1999 SC
3762), it was observed that as the signature in the cheque is admitted to be that
of the accused, the presumption envisaged in Sec.118 of the Act can legally be
inferred that the cheque was made or drawn for consideration on the date which
the cheque bears. Section 139 of the Act enjoins on the Court to presume that
the holder of the cheque received it for the discharges of any debt or liability.
The burden was on the accused to rebut the aforesaid presumption.
Thus, the effect of these presumptions is to place the evidential
burden on the Accused of proving that the cheque was not received by the
complainant towards the discharge of any liability.
21. In this regard it is fruitful to refer to the ratio of the judgment in "M. S.
Narayana Menon v. State of Kerala" (AIR 2006 S C 3366) and "Krishna
Janardhan Bhat Vs. Dattatraya G.Hegde" (2008 A.I.R. (SC) 1325 ), on the
point that it is not necessary that the rebuttal is always essentially by leading
separate contrary evidence and it would suffice if the accused can demonstrate
from the cross-examination of the complainant that the burden to prove contrary
is discharged. So far as presumption as to issuance of cheque for consideration
and in discharge of debt, the accused need not disprove the complainant case in
its entirety. He can discharge his burden on the preponderance of probabilities
through direct or circumstantial evidence for which he can rely on evidence
adduced by the complainant.
22. In view of the above-mentioned of Judgment of Hon'ble Supreme
CC No. 2627/12 Page 8 of 14
Court of India in M. S. Narayana Menon v. State of Kerala, the argument of the
Ld. Counsel for the complainant that accused has not come into witness box to
prove his plea of defence holds no ground because the accused can rebut the
presumption U/s 118 & 139 N.I Act from the cross-examination of complainant's
witnesses.
23. To prove the fact that cheque in question was given for security
purpose for the loan taken by accused and not issued to discharge his liability,
accused has relied upon cross-examination of CW 1 as well as his own
testimony on oath as DW 1.
CW 1 in his cross-examination dated 20.10.2011 has stated that " I
contacted the accused for repayment after which he had issued the cheque in question and
communication documents with the accused can be filed by me." CW in his further cross-
examination dated 19.05.2012 has stated that "I cannot say whether the accused had
given the cheque in favour of Libra Finance Ltd. and not in favour Libra Finance and Carrier
Private Ltd. Vol. stated I had received the cheque in question duly filled." He further stated
that "I do not know to whom the accused handed over the cheque in question as I was not
present at that time. I cannot tell when the accused had given the cheque in question to the
complainant company. "
In view of the above testimony of CW 1, the complainant has failed to
prove when the cheque in question was given to the complainant company and
to whom the same was handed over.
24. The CW 1 has relied upon the loan agreement Ex. CW1/9. As per Ex.
CW1/9, the transaction between the complainant and accused had been given a
number i.e. LC-250. During cross-examination, CW 1 was confronted with the
notice Ex. CW1/D1 received by the accused sent by the complainant company.
In document Ex. CW1/D1, it is mentioned that the accused had availed a Hire
Purchase Facility in respect of agreement no. LC-250. In discharge of his
liability, the accused had issued a cheque no. 414673 dated
CC No. 2627/12 Page 9 of 14
21.06.2011 of Rs. 5,96,000/- which got dishonoured vide returning memo dated
11.07.2011 for the reason "Account is Inoperative". The Ld. Counsel for the
accused has argued that the complainant is still misusing the cheque even after
six years of filing the present case because the cheque no. 414673 is one of the
four cheques given by the accused at the time of taking the loan from the
complainant in the year 2003.
This contention of the Ld. Counsel for the accused holds ground
because the cheque in question bears the number 414671 and the cheque
mentioned in the document Ex. CW1/D1 bearing no.414673 i.e. of same series.
The testimony of DW 1 that he had given four blank signed cheques including
the cheque in question for security purpose remained unrebutted as he was not
cross-examined by the complainant despite the opportunities were given. In
view of this above-mentioned evidence, this court is of considered opinion that
accused is able to rebutt presumption in favour of the complainant and has
raised the probable defence that the cheque in question was not issued to
discharge his liability towards the loan agreement no. LC-250.
25. Since complainant is a private registered company and must be
maintaining its books of account, therefore, it was incumbent upon it to have filed
its books of account in support of its claim. The complainant has not filed any
statement of account on record to prove the outstanding amount against the
accused. Although, it is true that for prosecution under section 138 of N.I Act,
complainant is not obliged to prove the original consideration as it is expected in
a suit for recovery of money but when execution of the cheque and debt or
liability is disputed by the accused and existence of the account book/papers has
been admitted by the complainant, then calling of the same becomes no need to
file any loan documents in view of the presumption under section 139 of N.I Act
still complainant could have failed statement of account of the accused which
CC No. 2627/12 Page 10 of 14
could evince as to what was the amount of installment, how many installments
have been paid by the accused and how much amount is outstanding against
him. To give teeth to my observation, I would like to refer to a judgment in
Murugan Financiers v. P.V. Perumal, 2006 Cr LJ 269 (Mad) wherein the order
acquitting the accused was upheld on the finding that since the complainant
being a finance company has not produced books of account in support of claim,
complainant has not proved debt or legally enforceable liability satisfactorily.
26. Also in the recent case of M/s Goodwill Hire Purchase v. Daljit
Singh alias Jangi, 2011 (1) RCR Civil 132 (P & H), it was held :
"....The complainant has neither placed nor proved on record the alleged hire
purchase agreement nor any statement of account relating to alleged hire
purchase transaction and as such in absence of any documentary proof, it could
not be presumed or established that the accused-respondent ever entered into
any hire purchase agreement with him. Even no statement of account was produced by the complainant to show the liability of the accused and nothing was shown in the Income-Tax Record, inspite of the fact that complainant firm is Income-Tax Assessee and no bank record was produced on file from which it could be inferred that the amount paid to the accused was withdrawn from any bank. Moreover, the complainant failed to prove on record that there was no legally enforceable debt of the accused, there was no liability of the accused to make payment of the alleged amount to the complainant and presumption Under Section 139 of the Act stands rebutted......"
27. So, in view of the aforementioned judgments, it is clear that the complainant being a private registered company ought to have produced statement of account in support of its claim. It is pertinent to mention that in cross- examination of CW1, when he was asked as to the liability of the accused to the tune of cheque in question, he simply stated that the cheque in question CC No. 2627/12 Page 11 of 14 only pertains to outstanding amount. But the witness has failed to prove that outstanding amount on the basis of any documentary evidence.
Moreover, when the complainant being a private registered company must be maintaining books of account in its day-to-day business activities, so there should not be any impediment to produce the books of account and withholding of such material document would oblige the court to draw an adverse inference against the complainant. Hence, I am inclined to raise adverse presumption against the complainant U/s 114 (g) of Evidence Act which says that that court can raise adverse presumption, if evidence which could be and is not produced would, if produced, be unfavourable to the person withholds it.
28. No statement of accounts had been produced by the complainant to prove that the liability was to the extent of cheque amount and no reasons had been suggested at all as to why the statement of accounts was not produced. The penal provision U/s 138 of N.I Act could be reflected only when the complainant proves that the cheque in question was issued ".....for discharge in whole or in part of any debt or other liability....". The debt or legal enforceable liability is not satisfactorily proved by the complainant.
29. Question No. C :
It is alleged by Ld. Counsel for accused that accused had not received the Legal Notice Ex. CW1/6. To prove the delivery of Legal Notice Ex. CW1/6, the complainant has filed on record the Postal Receipt and AD Card Ex. CW1/7 and Ex. CW1/8 respectively.
Moreover, the Hon'ble Supreme Court of India in case titled as C.C. Alavi Haji v. Palapetty Muhammed Jain. J (2007) 6 SCC has held that :-
"It is, thus, trite to say that where the payee dispatches the notice by registered post with correct address of the drawer of the cheque, the principle incorporated in Section 27 of the GC Act would be attracted; the requirement of Clause (b) of proviso to Section 138 of the Act stands complied with and cause of CC No. 2627/12 Page 12 of 14 action to file a complaint arises on the expiry of the period prescribed in Clause
(c) of the said proviso for payment by the drawer of the cheque.
Nevertheless, it would be without prejudice to the right of the drawer to show that the had no knowledge that the notice was brought to his address."
It is further observed that "It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of criminal law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that the did not receive the notice sent by post, can, within 15 days of the receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of the receipt of the summons from the court along with the copy of the complaint under Section 138 of the Act, cannot obviously content that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the GC Act and Section 114 of the Evidence Act."
The accused in his testimony as DW 1 has stated that his correct address is 362, Village Asola, New Delhi as mentioned on Voter ID Card Ex. DW1/A but the said Voter ID Card bears the date 18.05.2007 while the legal demand notice Ex. CW1/6 was sent on 06.01.2006 i.e. much prior to the date mentioned on the aforementioned Voter ID Card. Moreover, the summons sent by this court to the accused at the same address as mentioned in the legal demand notice received back with the report dated 25.03.2006 "Today on 25.03.2006 after reaching the given address, I inquired about Vijender, a boy on the spot told himself as son of Vijender. He told that his father is not at home and neither received the summons nor tell his name." The same summons also contains the report dated 09.04.2006 "Today i.e. 09.04.2006 after reaching at the given address I inquired about Vijender, then I found a lady on the spot who descried herself as his relative and orally stated that Vijender is doing Transport Business. He used to go early in the morning and came late in the night. I am his relative and cannot receive the summons."
CC No. 2627/12 Page 13 of 14In view of the aforesaid reports, it is clear that accused was residing at the given address till 09.04.2006. The complainant has sent the legal demand notice through registered post at the correct address, therefore, in view of the aforesaid judgment of C.C. Alavi Haji & Section-27, General Clauses Act, it can be safely presumed that the legal demand notice Ex. CW1/6 was served upon the accused.
Conclusion :
30. In the facts and circumstances of the present case, on appreciation of the evidence and on the basis of material on record, I hold that complainant has failed to prove the authority of Sh. Surender Singh to file the present complaint, therefore, the present complaint is liable to be dismissed on this ground. I further hold that accused is able to adduce the rebuttal evidence that he had given the cheque in question for security against the loan taken by him and not to discharge his liability to the loan transaction executed between him and complainant. Hence, in such a scenario, the burden shift back to the complainant to prove that cheque in question was issued by the accused to discharge his liability to the loan transaction executed between him and Complainant which the complainant has failed to discharge.
31. Therefore, no offence U/s 138 of N.I Act is made out against the accused. Hence, accused Vijender stands acquitted.
ANNOUNCED IN THE OPEN COURT ON 27.04.2013 All the pages from 1 to 14 are signed by me. (GAGANDEEP JINDAL) METROPOLITAN MAGISTRATE (NI ACT) - 12, DWARKA COURTS,NEW DELHI.
CC No. 2627/12 Page 14 of 14 CC No. 2627/12 Page 15 of 14