TMI Blog2024 (2) TMI 1075X X X X Extracts X X X X X X X X Extracts X X X X ..... nciples laid down by the Apex Court in the case of HITEN P. DALAL VERSUS BRATINDRANATH BANERJEE [ 2001 (7) TMI 1172 - SUPREME COURT] shall come into effect, wherein it is held that the Court shall presume the liability of the drawer of the cheques for the amounts for which the cheques are drawn. It is now well settled that Section 139 of the N.I. Act introduces an exception to the general rule as to the burden of proof and shifts the onus on to the Accused. The presumption under Section 139 of the N.I. Act is a presumption of law, as distinguished from the presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the Prosecution to prove the case against the Accused beyond reasonable doubt - The burden of proof was however on the person who wanted to rebut the presumption. The presumption arrived in favour of the Applicant under Section 139 of the N.I. Act has not been rebutted successfully by the Applicant though he entered into the witness box and thus, the findings given by both the Courts below cannot be faulted with. The Revision must fail and hence, the same stands rejected. - BHARAT P. DESHPAND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the Company. Thus, for want of legal notice, the notice itself becomes unauthorizedly issued and accordingly, the complaint filed is untenable. 6. Mr. Lotlikar would further submit that the notice was not sent by Registered Post or by any courier to the Applicant, instead, the document produced on record shows that the Applicant signed the copy of such notice in acknowledgment of the notice and that too, in the office of the Company. He submits that the signature appearing on the said notice is not of the Applicant. Thus, again, the provisions of Section 138 of the N.I. Act qua the notice are not established and therefore, the offence is not complete so as to file the complaint. 7. Mr. Lotlikar would submit that the Applicant succeeded in rebutting the presumption under Section 139 of the N.I. Act and also by leading evidence. However, such an aspect has not been properly appreciated by the Courts below. He would submit that the Applicant brought on record that there was another transaction between sister Company wherein the Applicant handed over iron ore to the Company. However, such an aspect has not been properly considered to rebut the presumption. He would further sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance on the following decisions, which I would like to discuss at the relevant stage: i. A.C. Narayanan Vs. State of Maharashtra Others, (2014) 11 SCC 790; ii. TRL Krosaki Refractories Ltd. Vs. SMS Asia Private Limited Others, (2022) 7 SCC 612; iii. Sarav Investment Financial Consultancy Private Limited Another Vs. Llyods, Register of Shipping, Indian Office Staff Provident Fund Another, (2007) 14 SCC 753; iv. Amit Kumar Jaiprakash Singh Vs. Mahesh Mahadev Dabholkar Others, 2008 ALL MR (Cri) 1919; v. VPK Urban Co-operative Credit Society Ltd. Vs. Recnoddin Mohammed Others, 2010 ALL MR (Cri) 1085; vi. S.V.A. India Ltd. Vs. Natural Vitamins Pvt. Ltd. Others, 2016 ALL MR (Cri) 814; vii. Jaimin Jewellery Exports Pvt. Ltd. Others Vs. State of Maharashtra Others, 2017 ALL MR (Cri.) 2994; viii. Pattabiran Yarn Co. Erode Vs. Sangeetha Exports Others, 2015 ALL MR (Cri) 456; ix. Meera S. Chiplunkar Vs. Ashalata Rawji Kondkar Others, 2015 ALL MR (Cri.) 4721; x. Girdhari Parmanand Motiani Vs. Vinayak Bhagwan Khavnekar Others, 2016 ALL MR (Cri) 1909; xi. Candy Spirit Pvt. Ltd. Vs. Reeves Mia, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that such rebuttal is on preponderance of probabilities, however, when the Accused stepped into the witness box in defence, the burden on him was to prove conclusively that he was not guilty and not on preponderance of probabilities. Thus, Mr. Kantak would submit that in this case, when the Accused stepped into the witness box, he was supposed to prove conclusively that he was not guilty. Since he failed to discharge such burden, the findings of the Courts below cannot be faulted with. 16. Mr. Kantak would submit that the resolution is produced and the cross-examination of PW-1 convincingly proves that he was duly authorized. He would then submit that as per Section 142 of the N.I. Act, the word payee will have to be construed independently and the Company is required to prove only two ingredients i.e. filing of the complaint in writing and that the complaint is made by the payee. Thereafter, Section 200 of Cr.P.C. comes into play wherein even a Representative of the Company is entitled to prove the case of the Company. 17. Mr. Kantak would submit that in this case, only technical objections have been raised. Once there is no material dispute on the facts on merits, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccused for a period of ten years. The Company paid an advance of ₹1.20 crores to the Accused vide cheque no. 383246 dated 19.10.2007, the receipt of which was acknowledged by the Accused in the same agreement. It was specifically mentioned in the said agreement dated 19.10.2007 that an amount of ₹1.20 crores would be treated as an advance for the purchase price of the ore and the same would be adjusted/appropriated as per the proposed agreement, which the parties agreed to enter for purchase of ore for ten years. It was further agreed in the same agreement dated 19.10.2007 that in the event and for any reason, the proposed agreement for the sale of iron ore to the Company is not executed between the parties on or before 31.12.2010, then the advance of ₹1.20 crores would be treated as a loan given to the Accused, repayable by him on or before 31.01.2011 with interest at the rate of 15% per annum compounded at quarterly rest. The Accused in order to facilitate the repayment of the advance and interest thereon and since the agreement contemplated therein that in the event, if it was not possible to execute the agreement on or before 31.12.2010, the Accused issued/han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.10.2007 and also receipt of the legal notice. 25. With this factual background, the concurrent findings of both the Courts below and the contentions raised in these proceedings are required to be looked into. 26. The learned Magistrate in its judgment dated 03.05.2019, framed two points. Point Nos. 1 and 2 read thus: 1. Whether the offence under Section 138 of N.I. Act has been proved beyond all reasonable doubt ? 2. What Order ? 27. After considering the discussions and evidence produced before it, the learned Magistrate found that the Accused is guilty of the offence punishable under Section 138 of the N.I. Act and accordingly, after hearing the Accused, passed a sentence of simple imprisonment for a period of one year and to pay a fine of ₹2 crores and in default to suffer imprisonment for a period of 180 days. The fine was directed to be paid to the Complainant as compensation in terms of Section 357 (1)(b) of Cr.P.C. 28. In Appeal, the learned Additional Sessions Judge framed only one point for determination, which reads thus: Whether the judgment and order passed by the Trial Court is without considering the material on record and is cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence, showing the reasonable possibility of the non-existence of the presumed fact. However, the guilt may be established by recourse to presumption in law and presumptions in facts. The burden of proof was however on the person who wanted to rebut the presumption. 33. In the case of M/s Laxmi Dyechem Vs. State of Gujarat Others, (2012) 13 SCC 375 , the Apex Court reiterated that in view of Section 139 of the N.I. Act, it has to be presumed that a cheque was issued in discharge of a debt or other liability. However, such presumption could be rebutted by adducing evidence. The burden of proof is on the person, who wants to rebut such presumption. However, this presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of a post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the N.I. Act. 34. In the present case, the agreement executed between the parties dated 19.10.2007 clearly shows that two post-dated cheques, both dated 31.01.2011, were issued i.e. one for the principal amount whereas the second for the interest. 35. In Kumar Exports Vs. Sharma Carpets, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence as well as arguments of both sides are available before the Judicial Officer. Hence, framing of correct points for determination taking into consideration the contentions of both sides including the presumption available, is a need of hour. If the point for determination is framed correctly, the approach of the Court in discussing it will be certainly different. 40. In the present matter, the learned Magistrate as well as the first Appellate Court ought to have framed the points for determination accurately. Since the signatures on the cheques are admitted by the Accused, the Court was duty-bound to draw the presumption under Section 139 of the N.I. Act. Accordingly, the first point for determination ought to have been properly framed considering the presumption in mind. The points for determination in this case were whether the Accused succeeds in rebutting the presumption under Section 139 of the N.I. Act ? and if so, whether the Complainant succeeds in proving the case that the cheque was issued towards legally enforceable debt, beyond all reasonable doubt ? 41. In the case of Tanveer Khatim Vs. Oscar Vaz Another, 2022 SCC OnLine Bom 5742, this Court has observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous order being passed. 57. Einstein had famously said: If I had an hour to solve a problem, I'd spend 55 minutes thinking about the problem and 5 minutes thinking about solutions. Exaggerated as it may sound, he is believed to have suggested that quality of the solution one generates is directly proportionate to one's ability to identify the problem. A well-defined problem often contains its own solution within it. 58. Drawing from Einstein's quote, if the issue had been properly framed after careful thought and application of judicial mind, and the onus correctly fixed, perhaps, the outcome at trial would have been very different and this litigation might not have travelled all the way up to this Court. 43. Considering the observations of the Apex Court as above, the importance of framing of points for determination is only by way of careful thought, application of judicial mind and fixing the onus correctly. In this case, both the Courts below failed to frame points for determination correctly as discussed above. However, the finding will have to be considered on its own merits as to whether only because points were not properly frame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons pertaining to the notice to be given to the drawer, have been formulated and incorporated in Clauses (b) and (c) of the proviso to Section 138 of the N.I. Act with specifications. Though the purpose of Section 138 of the N.I. Act is to punish the unscrupulous drawer of the cheque, it also protects the honest drawer of the cheque from unnecessary prosecution and with a view to give him an opportunity to make amends on receipt of the notice. The purpose of such notice is to avoid unnecessary hardship to an honest drawer. Thus, the observance of stipulations quoted in Clause (b) and its aftermath in Clause (c) being a pre-condition for invoking Section 138 of the N.I. Act, by giving notice to the drawer before filing a complaint under Section 138 of the N.I. Act, is a mandatory requirement. If the drawer fails to make payment of the amount mentioned in the cheque within the stipulated period from the date of receipt of the notice, the offence stands completed and the Complainant is entitled to file a complaint. 50. It must be borne in mind that the Court should not have an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt from disputing about the receipt of such notice, which I would like to consider at a later stage, the main contention is regarding non-compliance of the notice by the payee. At this stage, even for the sake of argument, if it is accepted that the notice is not issued by the payee, whether the complaint filed under Section 138 of the N.I. Act could be thrown out with such technical defects. In C.C. Alavi Haji (supra), the Apex Court after considering the various aspects with regard to the notice and presumption as well as relying upon the decision in the case of D. Vinod Shivappa Vs. Nanda Belliappa, (2006) 6 SCC 456, observed in paragraphs 16 and 17 as under: 16. As noticed above, the entire purpose of requiring a notice is to give an opportunity to the drawer to pay the cheque amount within 15 days of service of notice and thereby free himself from the penal consequences of Section 138. In Vinod Shivappa (supra) this Court observed: One can also conceive of cases where a well- intentioned drawer may have inadvertently missed to make necessary arrangements for reasons beyond his control, even though he genuinely intended to honour the cheque drawn by him. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by the Accused or that the notice is not issued by the payee, the Accused had an opportunity after the receipt of the summons from the Court to make the payment of the cheque amount and submit that the complaint is liable to be rejected. The Apex Court specifically observed that a person, who does not pay within 15 days from the receipt of summons from the Court, cannot obviously contend that there was no proper service of notice as required under Section 138 of the N.I. Act. The Apex Court further observed that any other interpretation of the proviso would defeat the very object of the legislation since the Act provides only the giving of notice, which is distinct and separate from the receipt of the notice. 56. Thus, in the present matter, even if the contention of the Applicant is accepted that there was no notice by the payee, which is otherwise not established and that he did not receive such notice, which is again not otherwise established, on receipt of summons from the Trial Court, he could have paid the amount mentioned in the cheques and then claimed for dismissal of the complaint. Once he fails to do the above act, he cannot be allowed to contend that there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), (a) no court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque; (b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138: [Provided that the cognizance of a complaint may be taken by the court after the prescribed period, if the complainant satisfies the court that he had sufficient cause for not making a complaint within such period.] (c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under Section 138. [(2) The offence under Section 138 shall be inquired into and tried only by a court within whose local jurisdiction, (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or (b) if the cheque is presented for payment by the payee or holder in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oA. 65. Only during cross-examination, this fact was brought to light and thereafter, PW-1 was re-examined and at that stage, he produced the resolution passed by the Board of Directors in its meeting dated 22.03.2011, thereby authorizing Francisco Lume Pereira, the Director of the Company to sign, declare, verify and/or affirm all complaints, pleadings, applications, affidavits and papers in all matters of the Company in case of dispute between it and the Accused. A certified true copy of such resolution duly signed by the Managing Director along with the minutes of the meeting were placed on record. 66. The first contention is that the complaint shows that Francisco Lume Pereira is a duly constituted Attorney and therefore, he ought to have produced the PoA, which cannot be accepted. The main purpose of authorization to any Officer of the Company could be even by issuing a resolution of the Board of Directors or by issuing the PoA. Only because the cause title of the complaint shows that the Company is represented by its duly constituted Attorney, cannot be stretched to the effect that the complaint could have been entertained only if the PoA is produced. The broader meanin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge regarding the transactions cannot be examined as a witness in the case. (iv) In the light of Section 145 of the NI Act, it is open to the Magistrate to rely upon the verification in the form of affidavit filed by the complainant in support of the complaint under Section 138 of the NI Act and the Magistrate is neither mandatorily obliged to call upon the complainant to remain present before the Court, nor to examine the complainant of his witness upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the NI Act. (v) The functions under the general power of attorney cannot be delegated to another person without specific clause permitting the same in the power of attorney. Nevertheless, the general power of attorney itself can be cancelled and be given to another person. 70. The present matter is not in connection with executing a PoA in favour of the agent to represent the Company. Mr. Francisco Lume Pereira is admittedly one of the Directors of the Company and by a resolution passed by the Board of Directors, he was authorized to represent the Company. Thus, such contentions will not help the Applicant in any manner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorisation and knowledge can only be an issue for trial. (Emphasis supplied) 72. In the case of Samrat Shipping Co. Pvt. Ltd. (supra), the Apex Court has observed that a Company can file a complaint only through a human agency. The person who represents a Company can present a complaint claiming that he is an authorized representative of the Company, needs to be prima facie accepted at the time when such a complaint was presented. If at the time of evidence, the Accused disputes the authority of the human agency/ individual to present the complaint, an opportunity should have been given to the Complainant to prove the same and such opportunity needs to be given only when the trial commences. The dismissal of the complaint at the threshold on the premise that the individual has not produced a certified copy of the resolution appears to be too hasty an action. Thus, the matter in hand squarely shows that when an objection was raised by the Accused about the authority of Francisco Lume Pereira, he was allowed to produce a resolution to that effect and rightly so accepted by the Courts below. 73. In Credentials Finance Limited (supra), this Court observed that a Manager o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rning principles in respect of a corporate entity which seeks to file the complaint, an elucidation can be found in the judgment of this Court in Associated Cement Co. Ltd. Vs. Keshavanand [(1998) 1 SCC 687]. If a complaint was made in the name of the Company, it is necessary that a natural person represents such a juristic person in the court and the court looks upon the natural person for all practical purposes. It is in this context that observations were made that the body corporate is a de jure complainant while the human being is a de facto complainant to represent the former in the court proceedings. Thus, no Magistrate could insist that the particular person whose statement was taken on oath alone can continue to represent the Company till the end of the proceedings. Not only that, even if there was initially no authority the Company can at any stage rectify that defect by sending a competent person. The aforesaid judgment was also taken note of in a subsequent judgment of this Court in MMTC Ltd. (supra). (Emphasis supplied) 78. Thus, even if there is any defect in the cause title or in connection with any authorization, such technical defects could be cured b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is claimed that it is an agreement for the advancement of a loan by the Company without any resolution. It is claimed that such an agreement is barred because the Company is not having a license to lend money. 84. The Applicant/Accused took all sorts of defence right from the start of denial of such agreement dated 19.10.2007. The evidence of the Complainant which has been appreciated by the Courts below clearly goes to show that PW-1, Mr. Francisco Lume Pereira produced the agreement dated 19.10.2007 at Exhibit-9 and was cross-examined on it in detail. PW-1, Francisco Lume Pereira is one of the signatories to the said agreement being the Director. In his affidavit in evidence, he claimed that the Accused approached the Company somewhere in 2007 with an offer that he has a sole Proprietary concern, namely, MMC Commodities and in a position to supply iron ore to the Complainant-Company. Accordingly, the agreement was executed between the Company and Accused, which is duly signed by Mr. Francisco Lume Pereira for and on behalf of the Complainant-Company, the Accused for himself as well as on behalf of the MMC Commodities, which he represented as a sole proprietary concern, in pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has already received from the Complainant-Company by way of advance. Even otherwise, presumption under Section 139 of the N.I. Act gets more support from such conduct of Accused, than rebutting it. 88. During cross-examination (on internal page 8) the Accused disclosed thus: I have received Rs. 1.2 crores or more from the complainant with regards to the mining business. I add and say it has no connection with regards to the subject matter. 89. The above statements of the Accused though admit that he received an amount of ₹1.20 crores from the Complainant- Company, he tried to explain that the said amount had no connection with the subject matter, unsuccessfully, as no other material has been placed on record to show that there was any agreement or transaction between the Complainant-Company and the Accused towards any other business or supply of ore. 90. A specific question was then put to the Accused which reads thus: Q. Shown to the witness Exbt. C-8 and attention of the witness is drawn to clause (1) at page 3 of the document and the witness is asked whether the sum of Rs. 1.20 crores mentioned therein is what is admittedly received by you ? ..... X X X X Extracts X X X X X X X X Extracts X X X X
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