[ENTITY] v. M/s [ENTITY] IN THE COURT OF MS. [ENTITY], MM (NI ACT)-01, SOUTH-EAST, SAKET COURTS, NEW DELHI [ENTITY] son of Late Sh.[ENTITY], resident of B-65, Gautam Nagar, New Delhi. . . . Complainant Vs. 1. M/s [ENTITY], Registered office : 27-B/66, Industrial Area, Hardware Chowk, Faridabad-121001. 2. Mr. [ENTITY], Director, M/s [ENTITY], House No.66, Sector-22, Faridabad (Haryana). 3. Mrs. [ENTITY], Director, M/s [ENTITY], House No.66, Sector-22, Faridabad (Haryana) 4. Mrs. [ENTITY], Director M/s [ENTITY], House No.1659, Sector-9, Faridabad (Haryana) 5. [ENTITY], Director M/s [ENTITY], House No.1659, Sector-9, Faridabad (Haryana) . . . Accused CC NO. : 1537/10 OFFENCE COMPLAINED OF : U/[SECTION] of [ACT] PLEA OF ACCUSED : Not guilty DATE OF INSTITUTION : 20.04.2005 DATE OF RESERVING ORDER : 23.06.2012 FINAL ORDER : 30.06.2012 DATE OF ORDER : Accused no. 1 and 2 convicted Accused no. 3 and 4 acquitted Accused no. 5 dropped as per order dated 23.04.2011 02406R0775872005 -1- [ENTITY] v. M/s [ENTITY] Present: Sh.[ENTITY], Counsel for the complainant alongwith complainant in person. Sh[ENTITY], Proxy counsel for the accused alongwith accused no.2 and 3 in person. Accused no.4 in person. JUDGMENT
Vide this judgment, I propose to dispose of the above titled criminal complaint u/[SECTION] of [ACT]. The brief facts of the case are as follows: -
1. That the accused are running a business under the name and style of M/s Surya Jyoti Chit Fund Co. Ltd., registered office at 27-B/66, Industrial Area, Hardware Chowk, Faridabad-121001. The accused no.2 is a Director/Authorized Signatory of the accused no.1 company and the accused no.3 and 4 are Directors and accused no.5 is the Manager of accused no.1 company and all the accused are responsible for conduct of day to day business on behalf of the accused no.1 company.
2. That in the month of February, 2002, [ENTITY], Manager of accused company contacted the complainant for the purpose of chit fund issued by the above said firm and peopl are earning good returns of the investment in the said scheme. The said [ENTITY] arranged the meeting of complainant with accused no.2 to 4, who are Directors of the accused no.1 company. During the meeting, the accused no.2 to 4 alongwith [ENTITY], Manager assured and guaranteed the repayment of the investment with huge profit made by the complainant in the chit as agreed between the complainant and accused no.2 to 4 time to time. On the basis of the above said assurances, the complainant took a chit of Rs.2,10,000/-, the amount will be paid during 30 installments and the amount will be adjusted time to time after taken the chit amount by the other person of the group. As per the scheme of the accused company, the complainant had deposited the first installment of Rs.7,000/- vide cheque no.684354 dated 9.2.2002 drawn on Central Bank of India, Green Park, New Delhi. Thereafter, the complainant further deposited 28 installments of various amounts from the period related to March, 2002 to June, 2004 in the scheme of the accused company. The complainant, thus, deposited a total amount of Rs.1,68,776/- in the [ENTITY] v. M/s [ENTITY]
accused company. All the cheques were collected by [ENTITY], Manager of the accused company from the house of the complainant.
3. That in the month of March, 2004, the complainant demanded the amount of the cheque from the Directors and [ENTITY], Manager of the accused company, but they avoided to make the payment to the complainant on one pretext or the other. The remaining installments were also deposited subsequently as agreed between the complainant and the accused company. The accused no.2 [ENTITY], Director of accused no.1 company, gave two cheques bearing nos.431262 dated 27.8.2004 for Rs.1,00,000/- and no.431263 dated 20.9.2004 for Rs.92,500/-, both drawn on State Bank of Patiala, Sector-24, Faridabad, to the complainant to discharge the full and final liability against the Directors and Manager of the accused company. Out of the said cheques, the cheque no.431262 for Rs.1 lac was got encashed.
4. That the other cheque bearing no.431263 dated 20.9.2004 amounting to Rs.92,500/-
drawn on State Bank of Patiala, Sector-24, Faridabad, which is Ex.CW1/2, was presented by the complainant for encashment in his banker i.e. Central Bank of India, Branch at Green Park, New Delhi, but the same was returned back as unpaid vide cheque returning memo dated 2.3.2005 with the remarks "Exceeds Arrangements". The said memo dated 2.3.2005 is Ex.CW1/3. Thereafter, the complainant sent a legal notice dated 11.3.2005 to all the accused by registered post and UPC. The copy of legal notice is Ex.CW1/4, postal receipts are Ex.CW1/5 and UPC receipts are Ex.CW1/6. The notice sent to accused no.1 to 3 were duly served upon the said accused vide A.D. cards, which are Ex.CW1/7 to Ex.CW1/9, whereas, the registered cover of the legal notice sent to accused no.4 and [ENTITY] were returned back and the same are Ex.CW1/10 and Ex.CW1/11. The 21 receipts of the payments made by the complainant to the accused company are Ex.CW1/12 (colly). The accused failed to make the payment of the amount of cheque in question to the complainant within the stipulated period of the said legal demand notice and therefore, the complainant has filed the present complaint against the accused, which is Ex.CW1/1.
[ENTITY] v. M/s [ENTITY]
5. Accordingly, the summoning order was passed against all the accused on 06.05.2005.
Accused no.5 was, however, was dropped from the complaint vide a detailed order dated 23.04.2010. The notice under [SECTION] [ACT] was served upon the other accused i.e. accused no.1 to 4 on 23.4.2010, to which the accused pleaded not guilty and claimed trial.
6. In the post summoning evidence, the complainant did not file any affidavit and the pre-
summoning evidence by way of affidavit was being read for the purpose of post- summoning evidence. Complainant was cross-examined on the said affidavit by the respective counsels for the accused. In his cross-examination, the complainant stated that he knows accused no. 2 and 3 since the year 2002 and had met them a number of times. It was also stated that when accused no. 3 was introduced to him, he was told that she is the Director of accused no. 1 company. He stated that the cheques were handed over to him in August and September, 2004. He denied having any knowledge of the resignation of accused no. 3 from the accused no. 1 company, prior to the handing over of the cheques. Moreover, the complainant stated in his cross examination by counsel for accused no. 4 that he had met the said accused no.4 for the first time after his cheques were dishonoured. He also stated that he met accused no. 4 at at her residence and that he had not met her prior to the said meeting. He also denied any knowledge about the resignation of accused no. 4 from the accused no. 1 company, prior to handing over of the cheques.
7. Further, the complainant admitted in his cross-examination that he had paid 28 installments in respect of the chit fund. He also filed receipts of 20 installments paid by him, which are Ex. CW1/12 (colly.). He further stated that the amount paid by him as per the said receipts is Rs. 1,68,000/-. He also mentioned in his statement that he had presented the cheque in question only after accused no. 2 asked him to present the same. The complainant then denied all other suggestions of the counsel for the accused, which were put to test the veracity of his statements.
8. Thereafter, the statements of the accused no. 2, 3 and 4 under [SECTION] [ACT] were recorded. The accused no. 2 in his statement said that the cheque in question was not [ENTITY] v. M/s [ENTITY]
issued for any legally enforceable debt or liability but was issued in due course of the chit fund, which was conducted by the company. He further stated that the complainant being a member of the chit group had voluntarily subscribed to it and had made contributions accordingly. He further stated that there was no loan given by the complainant and the accused no. 1 company did not incur any debt against the complainant. He then stated that the cheque in question was given to the complainant as a matter of practice and that the company used to issue the post dated cheques to the successful bidders, which were to be presented only when all the bidders contribute their shares and the company received the whole amount from all the members. He further stated that the complainant had presented the cheque in question without any approval from the accused company. He further alleged that a number of members, including the present complainant had not given their contributions to the accused company at the time of presentment of the cheque. He further stated that the complainant was required to pay 30 installments but he had defaulted in payment of the same, and therefore the cheque had got dishonoured.
9. The accused no. 3 in her statement under [SECTION] [ACT] said that she ceased to be the Director of the accused no. 1 company and to that effect, a Form No. 32 was submitted in the Office of the Registrar of Companies on 22.09.2004. She further stated that she had no knowledge of any transaction between the complainant and the accused no. 1 company and she never dealt with the complainant at any point of time.
10. Similarly, the accused no. 4 also stated in her statement that she ceased to be the Director of the accused no. 1 company after she had missed three consecutive meetings of the Board of Directors without leave of the Board in the financial year 1998-99. She also stated that she later on resigned from the position of the Director of the accused no. 1 company w.e.f. 05.10.2004. She too denied any acquaintance with the complainant or that she ever transacted with him. She, thus denied her liability in the present complaint and submitted that she is also not the signatory of the cheque in question.
[ENTITY] v. M/s [ENTITY]
11. The accused no. 2 and 3 filed a list of three witnesses in their defence, out of which only two witnesses were examined as DW-1 and DW-2. The accused no. 4, on the other hand, moved an application under [SECTION] [ACT] for examining herself in her defence, which was allowed.
12. DW-1 [ENTITY] was examined in support of defence of accused no. 2 and 3. the said defence witness stated that he was also the member of Surya Jyoti Chit Fund Pvt. Ltd. (accused no. 1). In his examination-in-chief, he discussed the procedure followed by the Chit Fund Co. He stated that the process of bidding by the accused no. 1 company was managed by one Mr. [ENTITY] and Mr. [ENTITY]. It was further stated that the member who used to be a successful bidder was given post dated cheques and was told that when the collection of all the members is made, thereafter the cheque are to be presented. It was further stated that if there was any default by any member or if any member leaves the place, then the loss used to be shared amongst all the members. The money used to be paid to the successful members as per the collection made from the other members. The witness also stated in his statement that generally he used to get his amount.
13. In the cross-examination, the witness categorically denied all the suggestions made to contradict him. He also denied having any knowledge of the transaction between the complainant and the accused. The witness also denied the suggestion that the bid amount used to be collected first in advance before the bidding and only thereafter, the cheque for payment to successful members used to be issued. This statement of the DW-1 clearly shows that the cheques for payment to the successful members used to be made prior to the collection of the entire chit amount from the members. The complainant herein clearly falls under the said category, as the complainant had argued that the cheque in question was given after he had successfully won the highest bid of the chit fund. Thus, in other words, the cheques for payment of bid amount were issued before the entire bid amount was collected.
[ENTITY] v. M/s [ENTITY]
14. The DW-2 [ENTITY] was brought as a defence witness from the Registrar of Companies to prove that accused no. 3 [ENTITY] had already resigned from the accused no. 1 company at the time of issuance of the cheque. The said witness filed Form No. 32 of Surya Jyoti Chit Fund as Ex. DW2/1 (OSR) which clearly shows that the accused no. 3 had resigned the accused no. 1 company with effect from 01.09.2004. In the cross examination, the said witness however stated that their office had received the form filed by the accused company on 22.09.2004.
15. DW-3 was the accused no. 4 Mrs. [ENTITY], who was examined as a defence witness under [SECTION] [ACT] The said witness stated that she had never visited the accused no. 1 company after the year 1998. She further stated that the accused no. 1 company had sent her notice to attend the Board Meetings 2-3 times, but she had failed to attend the meetings despite such notices after the year 1998. She further stated that she had later resigned from the accused no. 1 company on 25.10.2004. She also stated that she had not signed any balance sheet from the year 1999 to 2004. The DW-3 also exhibited her resignation as Ex. DW3/1(OSR). The postal receipts of the said letter were exhibited as Ex. DW3/2 (colly.) (OSR). DW-3 also filed the balance sheets of the accused no. 1 company between the year 31st March, 2000 to 2003 as Ex. DW3/3 to Ex. DW3/6 (OSR).
16. I have perused the entire material on record and heard the submissions of the rival parties.
Ld. Counsel for the accused no. 2 and 3 also filed written submissions in support of his arguments. I have perused the said written submissions. Ld. Counsels for the accused also quoted certain authorities in their support. I have perused the said judgments, which are on record.
17. At the outset, it is pertinent to mention the law in respect of [SECTION] of [ACT]. In order to determine the question whether offence punishable under [SECTION] of the Act is made out against the accused, it is necessary to prove all the following ingredients:
i. There is legally enforceable liability / debt.
[ENTITY] v. M/s [ENTITY]
ii. The drawer of the cheques issued the cheques to satisfy part or whole of the debt or other liability.
iii. The cheques so issued have been returned due to insufficiency of funds or exceeds arrangement.
iv. Payment not made by the accused despite service of the legal demand notice.
18. Moreover, the [ACT] also raises certain presumptions in favour of the holder in due course of a negotiable instrument. As per [SECTION] of the said Act, "Until the contrary is proved, the following presumptions shall be made:-
(a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;"
19. [SECTION] of the Act stipulates and as under:
"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] for the discharge, in whole or in part, or any debt or other liability."
20. Under the light of these provisions and the provisions of the Law of Evidence, I have examined the evidence placed on record on behalf of both the parties. It is clear from the evidence and arguments led by the accused that the cheque in question were given in advance towards the bid amount which the complainant had successfully won. Now the moot question which arises is 'whether the said cheques are given in discharge of a legally enforceable debt or liability', or in other words, 'whether the payment of bid amount is a debt or liability upon the accused'.
21. Ld. Counsel for accused no. 1,2 and 3 argued that according to the bidding process, the chit fund company does not incur any debt upon itself in respect of the subscribers of the chit fund. It was argued that the members / subscribers contribute a sum of money and it is the said money collected from the members which is distributed amongst the members. It [ENTITY] v. M/s [ENTITY]
was argued that since no money ever came into the possession of the chit fund and since the company was only playing the limited role of collecting money from the members and distributing the same to the successful bidders, therefore, no debt arises against the company and the company does not become accountable to pay its members and no liability can be enforced against the company.
22. The accused no. 2 argued in his defence that the complainant was supposed to pay 30 installments in respect of the chit subscribed by him. However, the complainant has admittedly paid only 28 installments. It was further argued that as per the receipts filed by the complainant on record, only 20 installments have been paid, which were for a total sum of Rs. 1,12,390/-. It was also argued that the total amount of 30 installments comes to a total of Rs. 1,75,766/-, while the complainant has stated in his complaint that he has paid a sum of Rs. 1,68,032/- till the month of May, 2004 towards 28 installments. It was, thus, argued that if the complainant has not paid his complete bidding amount, that is, 30 installments, he cannot expect that he shall be paid full amount without paying his full contribution.
23. Ld. Counsel for accused no.1 & 2 also argued that the complainant has failed to show any liability against the accused company. It was also submitted that the calculation of 20 receipts as filed by the complainant (Ex. CW1/12) comes to Rs. 1,12,390, out of which the complainant has admitted that he has been paid a sum of Rs. 1 lakh by the accused company, and therefore, the liability only remains to the extent of Rs. 12,390/-. It was, thus, argued that the cheque in question was not towards any liability incurred by the accused no. 1 company and the complainant has not been able to show any legally enforceable debt against the company. Now, the submissions of the Ld. Counsel for the accused no. 1, 2 and 3 clearly appear to be contradictory. While at one place the accused has disputed the existence of any liability against them for the cheque in question, on the other hand, they have admitted that they had discharged their part liability to the extent of Rs. 1 lakh against the complainant and since the complainant had proved the payment of [ENTITY] v. M/s [ENTITY]
only 20 installments as per the receipts filed by him, thus, their liability to the amount of the cheque in question is denied. These arguments are inherently contradictory. It is also clear from the said arguments that the accused have not categorically denied the liability against the complainant for the amounts paid by him, but they only dispute the amount mentioned in the cheque in question. The complainant had infact submitted in his arguments that he had paid 28 installments in total, but no receipt was issued by the chit fund company after 20 installments. Accordingly, he did not pay the 29th and the 30th installments, as the cheque in question given by the accused company was also dishonoured. This argument of the complainant was not rebutted by the accused company anywhere on record. The complainant, on the other hand, stated that the amount of Rs. 1,92,500/- which was agreed to be paid the accused company was the final settlement amount which was worked out between him and the accused after deducting the amount of two unpaid installments. The accused company, as observed earlier, had already admitted the issuance of two cheques for Rs. 1 lakh and Rs. 92,500, out of which the first cheque for Rs. 1 lakh was encashed and the other cheque is the cheque in question. Therefore, the accused company cannot now take up the defence that they are not liable to pay the amount of cheque in question as the said amount cannot be derived from the receipts of the 20 installments which have been filed on record.
24. Moreover, the accused could also not show to the satisfaction of the court as to why the two cheques, one for a sum of Rs. 1 lakh, which was duly encashed, and another for a sum of Rs. 92,500/-, which is the cheque in question, were given to the complainant in the first place itself. Now, it is the case of the complainant that the cheque in question and the other cheque for Rs. 1 lakh were given to him after a settlement between him and the accused was arrived at as the accused had failed to pay the bid amount to the complainant, who had successfully won the bid. The complainant had also alleged that since he had already paid 28 installments, therefore, the settlement was arrived for a total sum of Rs. 1,92,500/-, which was after deducting the amount of 2 installments which were unpaid. The accused, on the other hand, never disputed the fact that the complainant was the [ENTITY] v. M/s [ENTITY]
successful bidder. It was also nowhere denied by the accused that they had issued two cheques for Rs. 1 lakh and Rs. 92,500 (the cheque in question) to the complainant. The only defence taken was that the said cheques were given as a post dated cheques and the same were to be encashed after payment of all installments. As already observed, no sufficient evidence was led to prove the said understanding between the parties. Moreoever, in view of the fact that the issuance of the cheques was never disputed, the accused now cannot take the defence that the cheques were not issued in discharge of any legally enforceable debt or liability. The fact that the accused admitted that the complainant was a successful bidder, itself leads to a presumption of a liability upon the accused company as this is the sole purpose of the chit fund company, that is, to pay a lump sum amount to the successful subscriber as and when he wins the highest bid and the subscriber in turn repays the amount in fixed installments. Thus, in a way, the chit fund company gives an assurance that the successful bidder shall be paid the bid amount. The primary liability is that of the chit fund company. Therefore, in the present complaint as well, it was the primary duty of the accused company to pay the chit amount to the complainant. The accused company cannot now take the defence that the payment of the chit amount was subject to the payment of all the installments by the complainant. Once the chit fund company has defaulted in payment of the chit amount to the prized subscriber, it cannot expect a corresponding obligation to be fulfilled, that is, all the installments due upon the subscriber will be paid. The primary obligation of the chit fund company itself led to frustration of the agreement between the parties.
25. Further, it was argued that the accused company does not incur any liability as the chit fund subscriptions are not any loan advanced to the company and, therefore, the company has not incurred any debt or liability to pay to the members. It was, however, admitted by the accused no. 2 in his statement under [SECTION] [ACT] that the cheque in question was given as a matter of practice to the successful bidders, which were to be encashed after all the members have made their contributions. Now, the fact regarding the complainant being a successful bidder was also admitted by the accused no. 2 in the [ENTITY] v. M/s [ENTITY]
course of his arguments. The accused no. 2 failed to adduce any documentary evidence to show that there was any such policy of the accused no. 1 company to issue post dated cheques to the successful bidders as a matter of practice. DW-1, who was examined in the support of accused no. 1, 2 and 3 had also supported the said contention of accused no. 2 but in the cross-examination he had denied any knowledge of the transaction between the complainant and the accused. Thus, no sufficient evidence was led by the accused to prove the post dated cheques were given to the complainant, which were to be encashed after all the installments were paid by the complainant. There was no agreement or any kind of understanding between the parties to that effect.
26. Under ordinary trade practices, a chit fund company usually executes an agreement or a bond with the subscribers. A security bond is also executed by the subscriber whereby the subscriber undertakes to pay the future installments as they became due. The aim and objective of a "chit fund" was elaborately discussed by Hon'ble Karnataka High Court in [PRECEDENT]. the Court observed:
"At the inception, it started with periodical deposit (contribution) of foodgrains in fixed measures with a trustee and received back when a sufficiently large quantity was collected. Amongst subscribers, the need was determined by casting lots; names drawn on chit as in the case of a lottery. That is how it is branded as "chit".
It was mainly founded on mutual help (co-operative basis) and as a sort of savings by making contributions in installments and advancing the pooled savings to the members with facilities of repayment in installments. Gradually it shifted to financial assistance with growing importance of commerce and industries. Under the later device/scheme, every subscriber has to pay a fixed subscription in regular installments. The pooled money is auctioned after defraying the expenses, if any, and the person prepared to offer the highest discount will be declared as the prized subscriber; the discount would be distributed would be equal to the number of [ENTITY] v. M/s [ENTITY]
installments, so that every member is assured of an opportunity of getting the pooled money. The prized subscriber is required to furnish security or execute bonds for prompt payment of the remaining installments till the last man gets his chance of getting the pooled money, so that the stakeholder may be in a position to pay the pooled money to the successful bidder in succeeding installments. "Chit" is thus described as a mutual recurring deposit scheme under which every member is entitled to receive the prized amount as loan from the chit-fund except for the last prized winner. These are the essential features of the business of "chit scheme"
although there are any number of variants. (emphasis supplied)".
In the present complaint, the accused company never produced any document to show the terms upon which the chit was subscribed for and the security bond, if any, was taken from the subscriber. In the absence of evidence of any such term, the accused company cannot take the plea that they are not liable for the amount due to the subscriber, or that the subscriber was required to encash the cheque in question after payment of all the installments.
27. Further, the accused no. 2, being the Director of the accused no. 1 company and being actively involved in the affairs of the company is also liable for the cheque in question in view of the provision of [SECTION] of [ACT]. As regards accused no. 3, it was argued that she had resigned from the accused no. 1 company with effect from 01.09.2004. A Form 32 was also furnished with the Registrar of Companies in that respect. The said accused examined DW-2 in support of this submissions. The DW-2 Sh. [ENTITY], a Senior Technical Assistant from the office of the Registrar of Companies filed the photocopy of Form No. 32, which is Ex. DW2/1 (OSR). It is clearly evident from the said document that even though the document was filed and received by Registrar of Companies on 22.09.2004, however, the resignation was made effective from 01.09.2004. In view of the said documentary evidence, it is deemed that the accused no. 3 had already resigned on the date of issuance of the cheque in question, that is, on 20.09.2004. Ld. Counsel for the accused no.4 also quoted the judgments in support of his arguments [ENTITY] v. M/s [ENTITY]
namely [PRECEDENT] and [PRECEDENT], which support his submissions. Thus, clearly no liability can be attributed to the accused no. 3 [ENTITY] in respect of the cheque in question, in view of the Proviso to [SECTION] [ACT].
28. Also, as regards accused no. 4 [ENTITY], she had also averred that she had ceased to be the Director of the accused no. 1 company as she had failed to attend 3 meetings of the Board of Directors in the year 1998-99, without the leave of the Board. She also stated that later on, she resigned from the position of the Director of the accused no. 1 comapny with effect from 25.10.2004. She examined herself in her own defence and adduced her resignation letter dated 25.10.2004 in evidence which is Ex. DW3/1 (OSR), and the postal receipts vide which it has been dispatched as DW3/2 (colly.) (OSR). She also furnished balance sheets of the accused no. 1 company between the period 2003-2006 as Ex. DW3/3 to DW3/6 (OSR). As per the cross-examination of the complainant by the counsel for accused no. 4 as well, it was stated by the complainant that he has met the accused no. 4 for the first time after the dishonour of the cheque in question and that the said meeting had taken place at the residence of the accused no. 4. It is clear from this statement of the complainant, that the accused no.4 was never involved in the transaction which took place between the complainant and the accused company. He had also never met the accused prior to visiting her at her residence after the dishonour of the cheque in question. Thus, it is clear that accused cannot be said to be an active Director of the accused no. 1 company. Moreover, the resignation letter of accused no. 4 dated 25.10.2004 also remains unrebutted. It is also clear from the balance sheets furnished by accused no. 4, that the same have been signed by only accused no. 2 [ENTITY] in his capacity as Chairman/Director of the accused no. 1 company. Thus, the accused no. 4 has clearly proved that she was neither responsible for the affairs of the accused no. 1 company and was nor aware of the transaction between the accused no.1 company and the complainant.
[ENTITY] v. M/s [ENTITY]
Thus, liability for the cheque in question cannot be attributed to accused no. 4 also, in view of the Proviso to [SECTION] of [ACT].
29. Further, there was no rebuttal as to the non-receipt of the legal demand notice by the accused. Now, the perusal of the record shows that the A.D. Cards of the legal demand notice issued to the accused no. 1, 2 and 3 were duly served upon the said accused. As regards the other accused, that is accused no. 4 and 5, the notice was returned as unserved with the noting "Baar Baar Ittela Dene Par Praptkarta Nahi Mila".
30. According to the provisions of [SECTION] of the [ACT] provide that the burden of proof of the facts rests on the party who substantially asserts it and not on the party who denies it. In fact, burden of proof means that a party has to prove an allegation before he is entitled to a judgment in his favour. [SECTION] provides that burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any special law that the proof of that fact shall lie on any particular person. The provision of [SECTION] amplifies the general rule of [SECTION] that the burden of proof lies on the person who asserts the affirmative of the facts in issue. In the present case as well, the onus was upon the accused to establish that he had already repaid the loan amount to the complainant or that the notice was not served upon him, but no cogent evidence was brought by the accused to prove the same.
31. Thus, the accused no. 1 company (represented by accused no. 2) and accused no. 2 could not lead any evidence to rebut the liability in the present complaint. The deposition of the defence witnesses did not bring out any evidence in support of the said accused and the statement of the said witnesses was fraught with ambiguities. The documentary evidence led by the accused no. 2 also fell short of any rebuttal in support of the depositions of the accused. The entire story of the accused no.2 appeared to be an afterthought. The accused no. 2 being an active Director of the accused no.1 company, was responsible for the day to day affairs of the company and, thus, his liability is assumed under [SECTION] of [ACT]. Moreover, the evidence filed by the complainant has [ENTITY] v. M/s [ENTITY]
sufficiently proved the liability of the accused no. 1 and 2 in the present case. On the other hand, the accused no. 3 and 4 have been able to prove that they were not only oblivious to the transaction between the complainant and the accused no.1 company, but also that they were not the Directors of the accused no. 1 company and were not responsible for any of the affairs of the said company at the time of the issuance of the cheque in question. Thus, the accused no. 3 and 4 have been able take the benefit of the Proviso to [SECTION] of the [ACT].
32. As held in various caselaws, the standard of proof on the part of the accused and that of the prosecution is different in a criminal. Whereas, prosecution must prove the guilt of the accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of the accused is 'preponderance of probabilities'. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he/she relies (cited from, [PRECEDENT]. Moreover, in the decision of [PRECEDENT], after analysing various judgments, the Apex Court observed that the position of law which emerges is that once execution of the promissory note is admitted, the presumption under [SECTION] would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant (or the accused) can prove the non-existence of a consideration by raising a probable defence. Furthermore, in the recent judgment of Hon'ble Supreme Court in [PRECEDENT] (decision dated 07.05.2010), after analysing the law laid down in previous judgments, it was held that the presumption mandated by [SECTION] of the Act does indeed include the existence of a legally enforceable debt or liability. This is a rebuttable presumption, even though this initial presumption lies in favour of the complainant. If the accused is able to raise a probable defence which creates doubt about the existence of a legally enforceable debt or liability, prosecution can fail.
33. Thus, the accused no. 1 and 2 were not able to sufficiently rebut the presumption lying in favour of the complainant. In view of the material on record, submissions of the Counsel [ENTITY] v. M/s [ENTITY]
for both sides, the admission of issuance of the cheque in question by the accused no.2 as well as the prima facie evidence of the dishonour of the cheque in question for the reason "Exceeds Arrangement", the non-rebuttal of the receipt of the demand notice and, above all, the presumption of the law lying in favour of the complainant, I am of the considered view that the the ingredients for offence under [SECTION] of [ACT] stands proved and the complainant has proved its case beyond reasonable doubt as against the accused no. 1 and 2. Accused no. 1 and 2 have clearly failed to rebut the presumption of law. Apart from not raising a probable defence, the said accused were also not able to satisfactorily contest the existence of a legally enforceable debt or liability. I, therefore, hold accused no. 1 Surya Jyoti Chit Fund Co. and accused no. 2 [ENTITY], guilty of the offence under [SECTION] of [ACT]. Accused no. 1 and 2 are convicted. However, in view of the observations already made above, and in view of the Proviso to [SECTION] of [ACT], Accused no. 3 and 4 are acquitted.
Pronounced in open court. (Ms. [ENTITY]) Dated: 30.06.2012 [ACT]. [ENTITY] v. M/s [ENTITY] IN THE COURT OF MS. [ENTITY], MM (NI ACT)-01, SOUTH-EAST, SAKET COURTS, NEW DELHI [ENTITY] son of Late Sh.[ENTITY], resident of B-65, Gautam Nagar, New Delhi. . . . Complainant Vs. 1. M/s [ENTITY], Registered office : 27-B/66, Industrial Area, Hardware Chowk, Faridabad-121001. 2. Mr. [ENTITY], Director, M/s [ENTITY], House No.66, Sector-22, Faridabad (Haryana). 3. Mrs. [ENTITY], Director, M/s [ENTITY], House No.66, Sector-22, Faridabad (Haryana) 4. Mrs. [ENTITY], Director M/s [ENTITY], House No.1659, Sector-9, Faridabad (Haryana) 5. [ENTITY], Director M/s [ENTITY], House No.1659, Sector-9, Faridabad (Haryana) . . . Accused ORDER ON SENTENCE Date: 30.06.2012 Present: Sh.[ENTITY], Counsel for the complainant alongwith complainant in person.
Sh.[ENTITY], Proxy Counsel for the convict [ENTITY] alongwith convict [ENTITY] in person.
[ENTITY] v. M/s [ENTITY]
Accused o. 1 Surya Jyoti Chit Fund Co. and Accused no. 2 [ENTITY] have been convicted for the offence punishable u/[SECTION] of [ACT] vide judgment dated 30.04.2012. I have heard Ld. Counsel for complainant as well as Ld. Counsel for the accused on the sentencing of the accused.
Ld. Counsel for the accused no.2 submits that the accused is now ready to settle the matter with the complainant and he is willing to make the payment of a sum of Rs. 1,50,000/- towards full and final liability of the accused in the present case. Ld. Counsel for the accused, therefore, prays that considering the age of the accused, his family background, his socio-economic status and the fact that the accused is now ready for settlement, a lenient view may be taken towards the accused and he be released on minimum fine only.
Ld. Counsel for the complainant has argued that great inconvenience and harassment has been suffered by the complainant in contesting the present complaint. A lot of expense has been suffered by the complainant in terms of money and time. It is, however, submitted that in view of the fact that the accused is now ready to settle the matter, the complainant has no objection to the same and the complainant is ready to settle the matter with the accused and ready to receive a total sum of Rs.1,50,000/- as full and final settlement amount.
I have perused the record of this case and after considering the submissions of both the counsels, I am of the view that keeping in mind the age of the accused no.2, his family background, the nature of the offence, facts of the present case and the fact that the accused no.2 is now ready to settle the matter, a lenient view is being taken against accused no.2 and he alongwith accused no. 1 company is being sentenced to a composite fine of Rs.1,50,000/- only, and the entire fine shall be paid as compensation to the complainant. In default of payment of compensation, accused shall be liable to undergo a simple imprisonment for a period of two months.
Accused no.2 had stated that he can make the payment of compensation amount to the complainant only in five installments. The complainant has not objected to grant of time to the accused. The accused is directed to make the payment of compensation of Rs.1,50,000/- to [ENTITY] v. M/s [ENTITY]
the complainant in agreed installments, that is, first installment of Rs. 50,000/- and remaining four installments of Rs. 25,000/- each . The sentence of the accused is suspended till payment of all the installments and the bail bonds of the accused are kept intact until then.
Copy of this order as well as the copy of judgment be given to the accused immediately, free of cost.
Pronounced in open court. (MS. [ENTITY]) Dated: 30.06.2012 [ACT].