Delhi District Court
Sh. Rajinder Singh vs . on 11 September, 2019
IN THE COURT OF MS AMARDEEP KAUR: MM-03 (NI ACT):
PHC: NEW DELHI
In the matter of: - CC No.: 41370-16
Sh. Rajinder Singh
R/o B-95, Greater Kailash-I
New Delhi ........Complainant
Vs.
1) Black Gravel Infracon Pvt. Ltd. & Ors.
G-9, Plot G-1, Community Center,
Vikaspuri, New Delhi 110018
Also at : Aerens Estate, Opp. Kishan Garh Road,
Behind Pocket D-III, Church Road, New Delhi
2) Sanjeev Gupta
Director of Accused no. 1
G-9, Plot No. G-1, Community Center,
Vikas Puri, New Delhi 110018
3) Manoj Gupta
Authorized Signatory of Accused no. 1
G-9, Plot G-1, Community Center,
Vikas Puri, New Delhi 110018 .............Accused
Date of Institution of Complaint : 10.09.2014
Offence Complained of : u/s 138 N.I. Act
Plea of Accused : Not Guilty
Date of Final Arguments Heard : 04.09.2019
Decision : Accused No. 1 Convicted
Accused No. 2 Acquitted
Accused no. 3 Dropped
Date of Decision : 11.09.2019
BRIEF REASONS FOR THE DECISION OF THE CASE:
1.The present case was instituted on a complaint filed by Sh. Rajinder Singh (hereinafter referred to as 'the complainant') against Black Gravel Infracon Pvt. Ltd.
41370/16 Rajinder Singh Vs Black Gravel Infracon Pvt. Ltd. & Ors. Page No. 13 of 13 (accused no. 1), alleged director namely Sh. Sanjeev Gupta (accused no. 2) and alleged authorized signatory Sh. Manoj Gupta (accused no. 3) (hereinafter referred to as 'the accused persons') u/s 138 of Negotiable Instrument Act (hereinafter referred to as 'the Act').
2. Brief facts of the case as alleged by the complainant are that the accused company is involved in real estate business and the complainant invested Rs. 95 lacs in one of their projects in Vaishali, New Delhi. However, the project was canceled due to certain reasons and the accused persons issued a cheque bearing no. 666261 dated 28.02.2014 for refund of the above investment. However, the same got dishonored. After repeated request, the accused(s) issued another cheque bearing no. 662604 dated 15.03.2014 for Rs. 95 lacs with assurance that the same will be honored. However again to the dismay of the complainant, the said cheque was returned unpaid. After assurances and negotiations, the accused persons transferred Rs.10 lacs through RTGS into the account of the complainant and issued a fresh cheque bearing no. 662701 dated 06.06.2014 for an amount of remaining Rs.85 lacs drawn on HDFC Bank. However, upon presentation this cheque as well, was returned dishonored on account of "Insufficient funds" vide cheque returning memo dated 04.07.2014. Thereafter, complainant sent legal demand notice dated 30.07.2014 through his counsel demanding payment of the above said cheque within 15 days of the notice. However, the accused(s) failed to pay the amount due within stipulated time. Hence, the present complaint.
3. Cognizance of the complaint was taken vide order dated 17.12.2014 and the accused persons appeared on warrants. The complainant submitted before this court that he does not wish to press complaint against accused no. 3, Manoj Gupta and therefore he was dropped from the array of the parties vide order dated 28.08.2018.
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4. Notice u/s 251 Cr.PC was served upon accused no. 1 company through counsel and accused no. 2 in person to which they pleaded not guilty and claimed trial.
5. In order to establish his case the complainant had filed pre summoning evidence by way of affidavit wherein he reiterated the allegations made in the complaint. He exhibited the cheque in question bearing no. 662701 drawn on HDFC BANK for Rs. 85 lacs as Ex CW1/I, Corresponding cheque returning memo as Ex CW1/J, Legal demand notice dated 30.07.2014 as Ex CW1/K and postal receipts as Ex CW1/L to CW1/N.
6. Accused was afforded opportunity to cross examine the complainant as CW1 to prove his defence. No other witnesses were sough to be examined by the complainant and therefore CE was closed vide order dated 10.01.2019.
7. All incriminating evidence was put and the statement of both accused under Section 313 r/w Section 281 CrPC was recorded wherein the counsel representing accused no.1, admitted that cheque in question was issued on behalf of accused no. 1 company as refund of balance Rs. 85 lacs of the total Rs 95 lacs invested by the complainant but due to some financial difficulties the same got dishonored. However, accused no. 2 in his said statement, refused his role in the alleged transaction and submitted that he has neither signed the cheque nor is he a director in the company (accused no. 1) and therefore submitted that he owes no liability towards the complainant qua the impugned cheque.
8. Despite being afforded sufficient opportunity, no defence evidence was lead by accused company. Accused no.2, examined only one formal witness from Registrar of Companies as DW-1. No other witnesses were sought to be examined by accused persons and therefore DE was closed vide order dated 26.07.2019.
9. Thereafter, final arguments were advanced on behalf of both parties. Ld. counsel 41370/16 Rajinder Singh Vs Black Gravel Infracon Pvt. Ltd. & Ors. Page No. 13 of 13 for accused no.2 vehemently submitted that since the said accused is neither a director nor associated with the accused company in any manner he can not be held vicariously liable for the alleged offence under Section 138 NI Act. On the contrary, ld. counsel for complainant argued that even if it is assumed that accused no.2 was never a director in the accused company, he cannot be allowed to escape his liability towards the impugned cheque since it was him who dealt with the complainant on behalf of the company. All communications and cheques were delivered on behalf of accused company by accused no. 2 only. Again, it was accused no.2, who signed on Ex CW1/R, which is a receipt cum acknowledgement of the transaction between the parties. He has relied on the dicta laid by the honorable Supreme court in K.K. Ahuja v. V.K. Vora & Anr. (2009) 10 SCC 48 and S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr. (2005) 8 SCC 89 in support of his submissions.
10. It is also highlighted by ld counsel for complainant that in the parallel civil proceeding under Order 37 for the impugned cheque, before the Honorable High Court, accused no.2 jointly with accused company filed a common leave to defend and made clear admissions as to the genuineness of Ex CW1/R and receipt of Rs 5,00,000/- token money. Therefore, it cannot be concluded that the accused was not involved with the transaction in hand or that the accused no.2 had no association with the accused company.
11. I have considered the rival submissions in light of the evidence adduced. For an offence under Section 138 NI Act, it is essential that the cheque must have been issued in discharge of legal debt or liability by accused, on an account maintained by him with a bank and on presentation of the cheque for encashment within the period of its validity, the same must have been returned unpaid. Further, the payee of the cheque must have issued legal notice of demand within 30 days from the receipt of the information of dishonor of the cheque. And where the drawer of the cheque fails to make the payment within 15 days of the receipt of the aforesaid legal demand notice, 41370/16 Rajinder Singh Vs Black Gravel Infracon Pvt. Ltd. & Ors. Page No. 12 of 13 cause of action under section 138 NI act arises.
12. Admittedly the cheque Ex CW1/I was drawn on account of accused no. 1. The same when presented within its validity period and was returned unpaid with remarks 'Insufficient Funds' which is established by cheque return memo Ex.CW1/J. Legal notice Ex CW1/K demanding the cheque amount was dispatched within statutory period as established by the postal receipts Ex.CW1/L at the last known address of the accused persons. Though receipt of the same is disputed.
13 Now, by virtue of Section 27 of General Clauses Act and Section 114 of Indian Evidence Act, where a document is to be served by post, the same is presumed to have so effected if correct delivery address is so mentioned. Therefore, in the present case, where the accused persons have never disputed either the genuineness of the postal receipts or the address upon which the legal notice was sent as their 'correct address', it can be safely assumed that compliance of law was sufficiently made. It is also significant to mention here that the accused no.2 has mentioned the same address upon which legal notice was sent, as his own, on the bail bonds furnished before this court.
14. Further, as per the dicta laid by Hon'ble Supreme Court in C.C. Alavi Haji vs Palapetty Muhammed & Anr 2007 (3) RCR (Criminal) 185, where a person does not pay the amount in question, on receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, he cannot later contend 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 G.C. Act and Section 114 of the Evidence Act. Therefore, non- service of legal demand notice cannot be the only defence.
15. Therefore, essentials of Section 138 NI Act stands satisfied and a presumption 41370/16 Rajinder Singh Vs Black Gravel Infracon Pvt. Ltd. & Ors. Page No. 13 of 13 under Section 139 r/w Section 118 of NI Act arises in favor of complainant, for the accused to rebut either by discrediting the veracity of material relied upon by the complainant through cross- examination or by leading positive evidence to probablise his defence on the touchstone of preponderance of probabilities as provided by the three Judge bench of the Honorable Supreme Court in Rangappa Vs Sri Mohan (2010) 11 SCC 441.
16. Now I shall examine the liability of each accused in light of the evidence adduced by the parties.
Liability of accused no. 1, Black Gravel Infracon Pvt Ltd.
17. Where the accused in a complaint under u/s 138 NI is a company, the scope of its liability is discussed under Section 141 of NI Act wherein the company upon whose account the cheque is drawn is laid as the primary accused and directors etc fulfilling the criterion mentioned in Section 141(1) & (2) are held vicariously liable for such offence, since a company works and operated through its human resource only.
18. Now in the present case, the cheque Ex CW1/I is clearly drawn on account of the company and since the reason of dishonor indicated by the return memo dated 04.07.2014 (Ex CW1/J) is "Insufficient Funds" and not signature mismatch etc, it can be presumed that the impugned cheque was signed by some person authorized by the company to operate its bank account.
19. It is the case of the complainant that he had invested Rs. 95,00,000/- in one of the real estate projects of accused no.1 through a cheque bearing no. 875563 drawn on Indian Overseas Bank in favour of the accused company. But later when the company decided to abandon the project, refund was made to the complainant first through Cheque bearing 41370/16 Rajinder Singh Vs Black Gravel Infracon Pvt. Ltd. & Ors. Page No. 12 of 13 no. 662601 drawn on HDFC Bank Rs. 95,00,000/-dated 28.02.2014 which got dishonored, then through cheque bearing no. 662604 drawn on HDFC Bank for Rs. 95,00,000/- dated 15.03.2014 which again got dishonored and then finally Rs. 10,00,000/- through RTGS in account of complainant and remaining Rs 85,00,000/- through the cheque Ex CW1/1 dated 06.06.2014. The complainant has also relied upon documents Ex CW1/ C, Ex CW1/H & Ex CW1/R wherein the alleged transaction between the parties has been impressed. Now though the copies of the cheques issued prior to the impungned cheque are photocopies, which are not admissible in law, the complainant has made averments to this effect on oath in his pre-summoning evidence. Ld. Counsel for accused no.1 has posed no questions or made any suggestions to dispute the veracity of the same. Now, where due opportunity has been granted to a party and he fails to discredit his testimony through effective cross-examination and also does not utilize such occasion to confront the witness with his suggested version, it has to be assumed that he has accepted truth of such testimony. Therefore, it can be established that the version of the complainant to this extent is admitted by the accused company.
20. Now further, the complainant has relied upon certain documents i.e. Ex CW1/ C and Ex CW1/H wherein the accused company has acknowledged its dues towards the complainant and assured that his payment will be made in due time. The same are prepared on the letterhead of the company and are stated to be signed by its authorized signatory. In the cross examination of complainant as CW1, although ld counsel for accused no.1 has made a suggestion that the said documents (Ex CW1/ C and Ex CW1/H) are fordged and fabricated and were not signed by the authorized representative or signatory of the company, no other independent evidence or documentary proof has been advanced to conclusively prove its averments.
21. Further no suggestion of any alternate theory has been offered either in defence or put as suggestion to the complainant in his cross examination as to why and in what 41370/16 Rajinder Singh Vs Black Gravel Infracon Pvt. Ltd. & Ors. Page No. 13 of 13 circumstances did a cheque of the accused company landed in the hands of the present complainant. It is not the case that the impugned cheque was lost or was misused by some of its employee or that the complainant obtained it deceitfully from some third person to whom it was issued. No 'stop payment' instructions were ever issued to the banker nor any civil or criminal action regarding the cheque were initiated by the accused no.1 against the present complainant.
22. The only lacunae pointed by ld counsel for accused no.1 in case of the complainant is that the name of project as averred by the complainant in his complaint "Leela Homes"
is not mentioned in the documents Ex CW1/ C and Ex CW1/H). In my considered opinion, it is not a very major shortcoming in the narration of the complainant and cannot be said to have demolished the entire credibility of his case.
23. Therefore, in such circumstances, I have no doubt in holding that accused no.1 has miserably failed to rebut the presumption against it and therefore, accused no.1 Black Gravel Infracon Pvt Ltd. is convicted of the offence under Section 138 NI Act qua the impugned cheque.
Liability of accused no. 2, Sanjeev Aeren.
24. It is alleged by the complainant in his complaint that accused no.2, Sanjeev Aeren being the director of the accused company Black Gravel Infracon Pvt Ltd. was in control and was responsible of its day-to-day affairs and therefore vicariously liable for the offence under Section 138 NI Act. It is further alleged that it was accused no.2 only, who through a property dealer namely Manmohan Singh, induced the complainant to invest in the real estate project "Leela Homes" of the company. All the cheques for refund of the investment including the one in question (Ex CW1/I) in the present complaint and 41370/16 Rajinder Singh Vs Black Gravel Infracon Pvt. Ltd. & Ors. Page No. 12 of 13 documents Ex CW1/ C and Ex CW1/H were alleged by handed over to the complainant by accused no.1 through the middleman Manmohan Singh. Therefore, it is argued that accused no.2 Sanjeev Aeren, was wholly involved in the affairs of the accused company and is consequently liable for the dishonor of the impugned cheque.
25 The scope of vicarious liability as laid under Section 141 NI act has been widely discussed in the judgments of the Honorable Supreme court relied upon by Ld Counsel for complainant i.e. K.K. Ahuja v. V.K. Vora & Anr. (2009) 10 SCC 48 and S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr. (2005) 8 SCC 89. A conjoint reading of the guidelines laid in the above two judgments it emerges, that when a cheque issued by a company (incorporated under the Companies Act, 1956) is dishonoured, in addition to the company, the following persons are deemed to be guilty of the offence under Section 138 NI act:
(i) every person who at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company;
(ii) any Director, Manager, Secretary or other officer of the company with whose consent and connivance, the offence under section 138 has been committed; and
(iii) any Director, Manager, Secretary or other officer of the company whose negligence resulted in the offence under section 138 of Act, being committed by the company.
While liability of persons in the first category arises under sub-section (1) of Section 141, the liability of persons mentioned in categories (ii) and (iii) arises under sub-section (2). Further, it was held in K. K. Ahuja (supra), that a person owing to his designation is considered responsible for the conduct of the company if he is a Director, Promoter, Manager, Secretary or other such person as defined in sub section (e) to (g) of Section 5 of the Companies Act.
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26. The scheme of the Act, therefore is, that a person who is responsible to the company for the conduct of the business of the company and who is in charge of business of the company is vicariously liable by reason only of his fulfilling the requirements of sub- section (1). But if the person responsible to the company for the conduct of business of the company, was not in charge of the conduct of the business of the company, then he can be made liable only if the offence was committed with his consent or connivance or as a result of his negligence.
27. In the instant case, accused no.2 has consistently submitted before this court, first in his notice and then again in his statement under section 313 r/w section 281(1) CrPC that he was never the director in the accused company nor was he involved in the control or management of the affairs of the company. Record from the Registrar of companies brought by the summoned witness DW1 also corroborate with his testimony. Thus submission of accused no.2 that he was never the director in the company stands proved.
28. Further there is nothing on record to show that accused no. 2 was a manager, or secretary or that he was involved or was associated with accused no.1 (company), in any capacity as mentioned in Sub Section (e) to (g) of Section 5 of the Companies Act.
29. Again, it is apparent from the record that accused no.2 is neither the signatory of the cheque in question (Ex CW1/I) nor has he signed any of the other cheques issued prior to this by the company (accused no.1) for repayment of the investment amount. Further accused no.2 has also not affixed his signatures on the documents Ex CW1/C and Ex CW1/H.
30. Ex CW1/R is the only document relied upon by the complainant that is alleged to bear signatures of accused no.2. This court has closely examined the said document Ex 41370/16 Rajinder Singh Vs Black Gravel Infracon Pvt. Ltd. & Ors. Page No. 12 of 13 CW1/R which is nothing more than some scribbles on a piece of paper and cannot be in any manner be held to be a contract or an acknowledgement etc.. The writings on the same are vague and incomprehensible and therefore no definite meaning can be assigned to them. The same bears no proper registration or stamp fee. The only alleged witness Sh. Manmohan Singh Dua has never been examined on oath to prove its execution. Further, despite that the document is alleged to have been executed on 02.09.2013, no mention of its existence has been made by the complainant in his compliant which was instituted almost one year thereafter on 10.09.2014. It was only sought to be placed on record at the stage of post summoning. In such circumstance the said documents has to be dealt with all the more caution and scrutiny.
31. This court has exercised powers conferred under section 73 of Indian Evidence Act. On comparison of the signatures of accused no.2 as affixed by him in court on his notice u/s 251 CrPC and his statement of defence under section 313 r/w Section 281(1) CrPC, with that as borne by document Ex CW1/R, this court is prima facie of the opinion that the same belong to the accused no.2. However, in absence of any official stamp, seal or even the name of the company Black Gravel Infracon Pvt Ltd., on the document Ex CW1/R, this court finds it difficult to hold accused no.2 signed the same on behalf of the company (accused no.1) and not in any personal capacity.
32. Again, though it is alleged by the complainant that accused no. 2, represented himself as a person in charge and responsible for the conduct of affairs of accused company and all communications reading the impugned transaction were made by him through a property dealer namely Manmohan Singh, nothing has been placed on record to prove the same except bare averments. The only alleged witness and the most pivotal one, the property dealer Manmohan Singh, who as per the complainant has also handwritten and outlined their transaction between on Ex CW1/R and is also a witness to document 41370/16 Rajinder Singh Vs Black Gravel Infracon Pvt. Ltd. & Ors. Page No. 13 of 13 Ex CW 1/C has never been brought to the stand to testify in support of the contentions made in the compliant.
33. Now, where the records show that accused no.2 was never a director in the accused company, the complainant was duty bound to adduce cogent evidence before this court as to, in what capacity and in what role did accused no.2 represent, if it all he did, accused no.1 (company) to be held vicariously liable for the offence under Section 138 NI Act. No employee card or any visiting card or screenshot of company website mentioning his association etc has been placed before this court. Further no other email, letter or text communication between the complainant and accused no.2 has been brought to light. Not even a single telephonic record has been annexed. No details of any meeting, its venue, date etc between the two has been shared. All contentions made in the complainant are vague since no specific role has been assigned to each of the accused especially to accused no.2.
34. In such circumstances even if, it is assumed to be true that the though accused no.2 was never associated with company accused no.1, he represented himself to be a director etc, duly incharge of its operation to the complainant, no remedy against him will lie under the provisions of Negotiable Instrument Act even though he might be liable for an action U/S 420 IPC or a civil liability for holding out. There is no provision in Negotiable Instruments Act to hold vicariously liable a partner or director by holding out or by estoppel etc.
35. Now only because the accused filed a joint leave to defend in a parallel summary suit for the same cheque or if the accused has hired services of the same lawyer as that of the company, it cannot be said that he is associated with the company (accused no.1) in a position wherein he is responsible and in charge of the day to day affairs of the company, to allow this court to fasten constructive vicarious liability under Section 141 NI Act. The 41370/16 Rajinder Singh Vs Black Gravel Infracon Pvt. Ltd. & Ors. Page No. 12 of 13 provisions of criminal law need to be interpreted strictly and such liability cannot be affixed on mere inference without any conclusive proof.
36. In view of reasons discussed above, this court of of the opinion that accused no.2, Sanjeev Aeren, has successfully established a probable defence and rebutted the presumption against him under Section 139 r/w Section 118 NI Act. Accordingly, accused no. 2, Sanjeev Aeren is acquitted of the offence punishable u/s 138 Negotiable Instruments Act.
37. The copy of the judgment be given free of cost to AR of the convict company.
Announced in Open Court
on 11.09.2019 (AMARDEEP KAUR)
MM-03/NDD/PHC
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