Final Order 1

Order Details: Copy  of Judgment
Pdf Text: 1 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
Received On : 21/04/2018
Registered On : 21/04/2018
Decided On : 30/08/2025
Duration :Y-07, M-04 , D-09
IN THE COURT OF METROPOLITAN MAGISTRATE, ANDHERI (Court
No. 48), MUMBAI.
( Presided over by Y. P. Pujari )
C.C. No. 1934/SS/2018 Exh. 106
Vrijesh Corporation
Partnership Firm duly registered
Under Indian Partnership Act 1932,
bearing MSME Registration No. 2902011118,
3, Ground Floor, Dilkap Chambers, Off. Andheri Link Road,
Behind Balaji Telefilms, Andheri(West),
Mumbai.
through its partner Mr. Vrijesh Agarwal
Age : 55 years, -- Complainant
Versus
1. M/s. R. A. Fashions Pvt. Ltd.
having its office at – Office No. B-1,
405, Boomrang, Village Chandivali,
Sakinaka, Andheri(East), Mumbai-400072 -- Accused
2. Ms. Asha Ragarwal
Director of M/s. R. A. Fashions Pvt. Ltd.
having its office at – Office No. B-1,
405, Boomrang, Village Chandivali,
Sakinaka, Andheri(East), Mumbai-400072
-- 1 of 29 --
2 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
Also residing at
803, Orchid Building, Vasant Valley,
Malad(East), Mumbai – 400097 -- Accused
3. Mr. Ravindra Bisheshwar Agarwal.
Director of M/s. R. A. Fashions Pvt. Ltd.
having its office at – Office No. B-1,
405, Boomrang, Village Chandivali,
Sakinaka, Andheri(East), Mumbai-400072
Also residing at
803, Orchid Building, Vasant Valley,
Malad(East), Mumbai – 400097 -- Accused
4. Mr. Pradeep V Tulsyan.
Director of M/s. R. A. Fashions Pvt. Ltd.
having its office at – Office No. B-1,
405, Boomrang, Village Chandivali,
Sakinaka, Andheri(East), Mumbai-400072 -- Accused
5. Mr. Rohan Agarwal.
Authorized Signatory
having its office at – Office No. B-1,
405, Boomrang, Village Chandivali,
Sakinaka, Andheri(East), Mumbai-400072
Also residing at
803, Orchid Building, Vasant Valley,
Malad(East), Mumbai – 400097 -- Accused
OFFENCE PUNISHABLE UNDER SECTION 138 OF THE NEGOTIABLE
INSTRUMENTS ACT
-- 2 of 29 --
3 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
----------------------------------------------------------------------------------------
Appearance:- Adv. N. K Dayanandan for the complainant.
Adv. Mr. Minish Bohra/ Neelofer Khan for the accused.
------------------------------------------------------------------------------------------
JUDGMENT
(Delivered on 30th of August 2025)
The accused are facing trial for an offence punishable
under Section 138 of the Negotiable Instruments Act (Hereinafter
referred as “the Act” for short) for dishonor of cheques for total amount
of Rs. 16,80,000/-.
The brief facts of complainant's case are as under:
02. It is averred by the complainant that, complainant is a
partnership firm registered under the Indian Partnership Act 1932.
Complainant is one of the partner of the complainant firm and aware of
the facts of case. Accused no. 1 is a company registered under
Companies Act 1956. Accused no 2 to 4 are the directors of accused no.
1 who are directly involved in the conduct and management of accused
no. 1. Accused no 5 is a authorized signatory of accused no. 1. The
accused placed orders with complainant and as per the order of accused
complainant sold and delivered 2100 kg of linen yarn 36 lot number
1702. The goods were delivered to the accused. The tax invoice no.
003704 dated 03/11/2017 was issued for sum of Rs. 16,80,000/-
03. Complainant has further submitted that, towards the
discharge of liability, the accused issued four cheques bearing cheque
No. 675484 dated 23/01/2018 for Rs. 4,00,000/-, cheque no. 675485
dated 19/01/2018 for Rs. 4,00,000/-, cheque no. 675486 dated
15/01/2018 for Rs. 4,00,000/- and cheque No. 675488 dated
-- 3 of 29 --
4 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
26/01/2018 for Rs. 4,80,000/- drawn on Vijaya Bank, Fort branch,
Mumbai in favour of complainant. Thereafter, the complainant
deposited the above said cheques for encashment in his bank namely
Bank of India, Chakala branch, Mumbai. The same were returned
unpaid from drawee bank with endorsement 'Funds Insufficient'.
Accordingly, the Bank of India, Chakala branch, Mumbai issued memos
dated 28/02/2018. Thereafter, he contacted the accused and requested
to pay cheque amount but the accused intentionally not paid said
amount. Thereafter, he issued demand notice dated 14/03/2018 to
accused. The notice was returned as “Left”. Hence, the complainant
constrained to file present complaint.
04. After recording statement of the complainant and perusing
all documents produced on record, process came to be issued against
the accused for the above offence. In response to summons, the accused
appeared. Particulars of offence recorded below Exh. 20 which were
read over and explained to the accused in vernacular, to which they
pleaded not guilty and claimed to be tried.
05. Accused have conducted the cross-examination of the
complainant in which they have raised following defences:-
a) The complainant has not proved the transaction.
b) The complainant has not filed any document to show
that the complainant is a partnership firm and he is
its partner.
c) The contents of the cheques are filled by the
complainant.
-- 4 of 29 --
5 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
d) The complainant has not shown the transaction in the income tax
return.
e) The accused are not incharge and responsible for
the business of accused no. 1.
f) The accused are not liable to pay the cheque amount.
06. The statement of accused under Section 313 of the Code of
Criminal Procedure, 1972 (in short 'the Code') were recorded vide Exh.
79 to 82. In their statement U/s. 313 of the Code, accused have
submitted that, they have paid entire payment to the complainant. False
complaint has filed.
07. Heard Ld. Advocate N. K Dayanandan for complainant and
Ld. Advocate Neelofar Khan for accused and also perused and
considered the written notes of argument filed by complainant at Exh.
100.
08. From perusal of complaint, record and defence of the
accused, following points arise for my determination. I have recorded
my finding and reasons thereon as under:
Sr. No. Points Findings.
1. Does the complainant prove that cheque No.
675484 (Exh.31), cheque no. 675485
(Exh.32), cheque no. 675486 (Exh.33) and
cheque no. 675488 (Exh.34) were drawn by
accused for legally recoverable debt or other
liability?
Yes.
2.
Does the complainant prove that the said
cheques returned unpaid for the reason Yes.
-- 5 of 29 --
6 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
“Funds Insufficient”?
3.
Does the complainant prove that he had issued
demand notice to the accused within
limitation demanding cheque amount?
No.
4.
Does complainant prove that the accused
failed to pay cheque amount to complainant
within statutory limit?
No.
5.
Whether the accused have committed an
offence punishable under Section 138 of the
Negotiable Instruments Act ?
No.
6. What order? Accused are
acquitted.
09. In order to prove his case, the complainant has filed
evidence affidavit of Mr. Vrijesh Agarwal as a (C.W.1) at Exh. 22.
Complainant has also filed additional evidence affidavit of Mr. Vrijesh
Agarwal at Exh. 68. The complainant also placed his reliance upon
following documents:
Description of documents Exhibit numbers
Printout of MSME registration along with
certificate u/s 65(B) of Evidence Act.
Exh. 26
Authority letter Exh. 27
Original sales order along with certificate u/s
65(B) of Evidence Act.
Exh. 28
Original tax invoice Exh. 29
Lorry receipt Exh. 30
Original cheques Exh. 31 to 34
Cheque returned memos Exh. 35 and 38
Office copy of demand notice Exh. 39
Postal receipts Exh. 40 to 47
A. D. Card Exh. 48 to 51
Returned envelope Exh. 52 to 54
Bank statement alongwith seal and signature Exh. 55
-- 6 of 29 --
7 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
of the bank of complainant corporation
Registration deed of the partnership firm Exh. 71 and 72
Office copy of letter dated 20/07/2015
issued by Chartered accountant of
complainant company
Exh. 73
Partnership cum admission deed of Vrijesh
Corporation
Exh. 74
REASONS
As to Point No.1:-
10. In order to prove the allegation leveled against the
accused, the complainant has filed evidence affidavit of Mr. Vrijesh
Agarwal as a (C.W.1) at Exh. 22. As per his evidence, complainant is a
partnership firm registered under the Indian Partnership Act 1932.
Complainant is one of the partner of the complainant firm and aware of
the facts of case. Accused no.1 is a company registered under
Companies Act 1956. Accused no 2 to 4 are the directors of accused no.
1 who are directly involved in the conduct and management of accused
no.1. Accused no 5 is a authorized signatory of accused no. 1. The
accused placed orders with him and as per the order of accused, he has
sold and delivered 2100 kg of linen yarn 36 lot number 1702. The
goods were delivered to the accused. The tax invoice no. 003704 dated
03/11/2017 was issued for sum of Rs. 16,80,000/-
11. It has further came in his evidence that, towards the
discharge of liability, the accused issued four cheques bearing cheque
No. 675484 dated 23/01/2018 for Rs. 4,00,000/-, cheque no. 675485
dated 19/01/2018 for Rs. 4,00,000/-, cheque no. 675486 dated
15/01/2018 for Rs. 4,00,000/- and cheque No. 675488 dated
26/01/2018 for Rs. 4,80,000/- drawn on Vijaya Bank, Fort branch,
-- 7 of 29 --
8 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
Mumbai in his favour. Thereafter, he deposited the above said cheques
for encashment in his bank namely Bank of India, Chakala branch,
Mumbai. The same were returned unpaid from drawee bank with
endorsement 'Funds Insufficient'.
12. The accused have conducted the cross-examination of the
complainant. In their cross-examination, the accused have raised
defences that,
a) The complainant has not proved the transaction.
b) The complainant has not filed any document to show
that the complainant is a partnership firm and he is
its partner.
c) The contents of the cheques are filled by the
complainant.
d) The complainant has not shown the transaction in
the income tax return.
e) The accused are not incharge and responsible for
the business of accused no. 1.
f) The accused are not liable to pay the cheque amount.
13. Before adverting towards of the merit of case, it is necessary
to deal with some legal principle regarding presumptions contemplated
in Section 118 and 139 of the Act and standards of proof for its
establishment or also for rebuttal. The Hon'ble Supreme Court of India
in
T. Vasanta Kumar v/s. Vijay Kumar (2015) 8 SCC 378 has held that,
“the presumption mandated by Section 139 includes a presumption that
there exists a legally enforceable debt or liability. This is of course in
-- 8 of 29 --
9 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
the nature of a rebuttable presumption and it is open to the accused to
raise a defence wherein the existence of a legally enforceable debt or
liability can be contested. However, there can be no doubt that there is
an initial presumption which favours the respondent complainant”.
14. The Hon’ble Supreme Court of India in the case Rangappa
V. Mohan reported in AIR 2010 SC 1898, has held that, “the
presumption mandated by Section 139 of the Act does indeed include
the existence of legally enforceable debt or liability.
” In the present
case, the accused have not sent reply to the demand notice of the
complainant. The accused have conducted the cross-examination of the
complainant. I have minutely perused the cross-examination of the
complainant and it seems that, the accused have not denied the
issuance of cheques nor denied their signature on the cheques. Accused
have admitted the signature on the cheques as it is not denied by the
accused. Therefore, it can be gathered that, accused have not
challenged the signature from cheques (Exh. 31 to 34). This shows that,
the signature of accused from cheques (Exh. 31 to 34) is not in dispute.
Therefore, the presumptions under Section 118 and 139 of the Act are
raised in favor of complainant.
15. The Hon'ble Supreme Court of India in case of
M.S.
Narayan Menon @ Mani V/s. State of Kerala and another (Appeal (Cri.)
1012 of 1999 decided on 04/07/2006) has laid down the rules
regarding the standards of proof for establishment of case as well as of
rebuttal of defence in the case filed under Section 138 of the Act. The
Hon'ble Supreme Court of India has observed that
“It is not necessary for the defendant to
disprove the existence of consideration by way of direct
-- 9 of 29 --
10 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
evidence. The standard of proof evidently is pre-
ponderance of probabilities. Inference of pre-ponderance of
probabilities can be drawn not only from the materials on
records but also by reference to the circumstances upon
which he relies. Presumption drawn under a statute has
only an evidentiary value. Presumptions are raised in terms
of the Evidence Act. Presumption drawn in respect of one
fact may be an evidence even for the purpose of drawing
presumption under another.”
16. The Hon'ble Supreme Court of India in case of Sumeti VIJ
V/s. M/s. Paramount Tech Fab, Criminal Appeal No(s) 292 of 2021,
(Arising out of SLP (Crl.) No (s). 8498 of 2019), in which the decision
of Rohitbhai Jivanlal Patel V/s. State of Gujarat and Another, 4 (2019)
18 SCC 106 is discussed and wherein it has laid down the procedure as
to how the accused can rebut the presumption under Section118 and
139 of the Act,
“The accused in a trial under Section 138 of the Act has
two options. He can either show that consideration and
debt did not exist or that under the particular circumstances
of the case the non-existence of consideration and debt is so
probable that a prudent man ought to suppose that no
consideration and debt existed. To rebut the statutory
presumptions an accused is not expected to prove his
defence beyond reasonable doubt as is expected of the
complainant in a criminal trial. The accused may adduce
direct evidence to prove that the note in question was not
supported by consideration and that there was no debt or
liability to be discharged by him. However, the court need
not insist in every case that the accused should disprove the
non-existence of consideration and debt by leading direct
evidence because the existence of negative evidence is
neither possible nor contemplated. At the same time, it is
clear that bare denial of the passing of the consideration
and existence of debt, apparently would not serve the
purpose of the accused. Something which is probable has to
be brought on record for getting the burden of proof shifted
to the complainant. To disprove the presumptions, the
accused should bring on record such facts and
-- 10 of 29 --
11 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
circumstances, upon consideration of which, the court may
either believe that the consideration and debt did not exist
or their non-existence was so probable that a prudent man
would under the circumstances of the case, act upon the
plea that they did not exist. Apart from adducing direct
evidence to prove that the note in question was not
supported by consideration or that he had not incurred any
debt or liability, the accused may also rely upon
circumstantial evidence and if the circumstances so relied
upon are compelling, the burden may likewise shift again
on to the complainant. The accused may also rely upon
presumptions of fact, for instance, those mentioned in
Section 114 of the Evidence Act to rebut the presumptions
arising under Sections 118 and 139 of the Act. The accused
has also an option to prove the non-existence of
consideration and debt or liability either by letting in
evidence or in some clear and exceptional cases, from the
case set out by the complainant, that is, the averments in
the complaint, the case set out in the statutory notice and
evidence adduced by the complainant during the trial. Once
such rebuttal evidence is adduced and accepted by the
court, having regard to all the circumstances of the case
and the preponderance of probabilities, the evidential
burden shifts back to the complainant and, thereafter, the
presumptions under Sections 118 and 139 of the Act will
not again come to the complainant's rescue”.
17. The Hon'ble Bombay High Court in the case of
Vishnu Vs.
State of Maharashtra (Cri. Rev. Application No. 176/2015 decided on
24/01/2019) observed that,
“There cannot be any manner of dispute with
the proposition that once the presumption arising under
Section 118 read with Section 139 of the Act is raised, it can
be rebutted by the accused on preponderance of probability
at the trial. This can be done on the basis of cross-
examination of the complainant and his witnesses, if any,
and/or by leading independent defence evidence.”
18
. As accused have not challenged thier signature on the
cheques (Exh. 31 to 34), the presumptions under Section118 and 139 of
-- 11 of 29 --
12 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
the Act are raised in favor of complainant. Therefore, in view of the
observations given in case of Rangappa V/s. Sri Mohan (Cited Supra),
the accused have to raise a probable defence which creates doubts
about the existence of a legally enforceable debt or liability and the
prosecution can fail. It also makes clear that, mere denial is not
sufficient to rebut the presumption which is raised in favor of
complainant. As observed in the case of
Vishnu Vs. State of Maharashtra
(cited supra), accused has many modes to bring on record his defence
e.g. by replying upon notice, complaint, complainant's evidence and
also by mode of cross examination, her own testimony or of other
witnesses, if cross examined and also through statement of accused
recorded under Section 313 of the Code. In the present case, the
accused have conducted the cross-examination of complainant wherein
they raised defences that:-
a) The complainant has not proved the transaction.
b) The complainant has not filed any document to show
that the complainant is a partnership firm and he is
its partner.
c) The contents of the cheques are filled by the
complainant.
d) The complainant has not shown the transaction in
the income tax return.
e) The accused are not incharge and responsible for
the business of accused no. 1.
f) The accused are not liable to pay the cheque
amount.
-- 12 of 29 --
13 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
The statement of accused under Section 313 of the Code is recorded
wherein they submitted that, they have paid entire payment to the
complainant. False complaint has filed.
19. So far as the first defence of the accused is concerned, Ld.
advocate for the accused has submitted that the complainant has not
proved the transaction. I have perused the documents filed on record by
the complainant and it seemed that the complainant has filed the sale
order alongwith certificate under Section 65(B) of Indian Evidence Act
at Exh. 28, also filed Tax Invoice and lorry Receipt at Exh. 29 and 30.
Perusal of these documents it seem that the complainant has filed the
tax invoice and lorry receipt to show and prove that the goods were sold
and delivered to the accused. I have perused the cross-examination of
complainant but nothing has been brought on record by the accused to
show that the goods were not sold nor delivered. Further I have perused
the decision of Hon’ble Supreme Court of India in Rangappa’s Case
(cited supra). Perusal of the cited decision it seem that once the
signature on the cheque is admitted by the accused then the
presumption under Section 118 and 139 of N.I. Act arises in favour of
complainant and the burden is lies on accused to rebut the said
presumption.
20. Ld. advocate for the accused has submitted that the
complainant came with a case that the complainant is a partnership
firm and present complaint is filed through one of its partner but the
complainant has not filed any document on record to show and prove
the said fact. I have perused the record and evidence of the complainant
and it seem that the complainant has filed registration deed of
partnership firm at Exh. 71 and 72 and also filed the letter dated
-- 13 of 29 --
14 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
20/07/2015 issued by Chartered Accountant of complainant firm at
Exh. 73 and also filed partnership cum admission deed of Vrijesh
Corporation at Exh. 74. Further the complainant has also filed authority
letter at Exh. 27. Perusal of all these documents it seem that the
complainant has filed the documents on record to show and prove that
the complainant is a partnership firm and the present complainant is its
partner.
21. I have perused Section 69 of Indian Partnership Act, 1932.
Section 69 of the Act reads as follows:-
“69. Effect of non-registration.—
(1)No suit to enforce a right arising from a contract or conferred by this Act
shall be instituted in any court by or on behalf of any person suing as a
partner in a firm against the firm or any person alleged to be or to have been
a partner in the firm unless the firm is registered and the person suing is or
has been shown in the Register of Firms as a partner in the firm.
(2)No suit to enforce a right arising from a contract shall be instituted in any
Court by or on behalf of a firm against any third party unless the firm is
registered and the persons suing are or have been shown in the Register of
Firms as partners in the firm.
(3)The provisions of sub-sections (1) and (2) shall apply also to a claim of set-
off or other proceeding to enforce a right arising from a contract, but shall not
affect,—
(a)the enforcement of any right to sue for the dissolution of a firm or for
accounts of a dissolved firm, or any right or power to realise the property of a
dissolved firm, or
(b)the powers of an official assignee, receiver or Court under the Presidency-
towns Insolvency Act, 1909 (3 of 1909) or the Provincial Insolvency Act, 1920
(5 of 1920) to realise the property of an insolvent partner.
(4)This section shall not apply,—
(a)to firms or to partners in firms which have no place of business in the
territories to which this Act extends, or whose places of business in the said
territories, are situated in areas to which, by notification under section 56,
this Chapter does not apply, or
(b)to any suit or claim of set-off not exceeding one hundred rupees in value
which, in the Presidency-towns, is not of a kind specified in section 19 of the
Presidency Small Cause Courts Act, 1882 (5 of 1882), or, outside the
-- 14 of 29 --
15 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
Presidency-towns, is not of a kind specified in the Second Schedule to the
Provincial Small Cause Courts Act, 1887 (9 of 1887), or to any proceeding in
execution or other proceeding incidental to or arising from any such suit or
claim.”
Perusal of the above provisions, it makes clear that it is not
mandatory to register the partnership firm and therefore, even though it
is mentioned in the complaint that it is a registered firm but no
document is filed on record, then also it does not makes any difference.
Therefore, it makes clear that unregistered partnership firm is also legal
one. The complainant has submitted that, the complainant firm is a
partnership firm.
22. Ld. advocate for the accused has submitted that the
contents of the cheque were filled by the complainant and therefore the
cheques are not valid. I have perused the decision of Hon’ble Supreme
Court of India in Birsingh V/s. Mukesh Kumar, 2019 (4) SCC 197 has
held that, “the cheque duly signed and voluntarily made over the payee,
was in discharge of debt or liability arise irrespective of whether cheque
was post dated or blank cheque for filing by payer or any other person,
in absence of evidence of undue influence or coercion.” Therefore,
considering the above cited decision, it seems that, once the signature
on the cheque is admitted by the drawer, then it is irrespective whether
cheque was given blank for filing by payer or any other person. In the
case in hand, it is not the case of complainant that the undue influence
or coercion was used by the complainant. Therefore, though the name
of the payee or other things are filled by the payee, then also it doesn’t
make any effect.
-- 15 of 29 --
16 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
23. Ld. Advocate for the accused submitted that, the
complainant did not submit income-tax return on record and therefore,
he submitted that, the transaction amount has not been shown by the
complainant in income-tax return and therefore unaccountable amount
cannot be recovered. I have perused the decision of Hon’ble Bombay
High Court, Nagpur Bench in Prakash Madhukarrao Desai Versus
Dattatraya Sheshrao Desai in Criminal Appeal No. 795/2018 decided on
19.08.2023. In the cited decision the following question was under
consideration,
“Whether in case the transaction, is not reflected in the Books of
account and/or the Income Tax Returns of the holder of the cheque in due
course and thus is in violation to the provisions of Section 269-SS of the
Income Tax Act, 1961 whether such a transaction, can be held to be “a legally
enforceable debt” and can be permitted to be enforced, by institution of
proceedings under Section 138 of the Negotiable Instruments Act ?”
The Hon’ble Bombay High Court, Bench at Nagpur has held that,
“ It can thus be said that the validity of Section 269-SS of the Act of 1961
having been upheld in Assistant Director, Inspection Investigation (supra),
breach thereof being subjected to penalty under Section 271-D with a further
provision for waiving the penalty under Section 273-B of the Act of 1961, it
will have to be held that such transaction in violation of Section 269-SS of
the Act of 1961 at the behest of the drawer of a cheque cannot be treated as
null and void. Similar is the case when there is an omission of any entry
relevant for computation of total income of such person to evade tax liability
under Section 271-AAD of the Act of 1961. Such person, assuming him to be
the payee/holder in due course, is liable to be visited by penalty as
prescribed. Such act is not treated to be statutorily void. We may in this
context refer to paragraph 4 of the decision in M/s Gujarat Travancore
Agency, Cochin (supra) wherein reference has been made to the following
statement in Corpus Juris Secundum, Volume 85 page 580, paragraph 1023 ”
“A penalty imposed for a tax delinquency is a civil obligation, remedial and
coercive in its nature, and is far different from the penalty for a crime or a
fine or forfeiture provided as punishment for the violation of a criminal penal
laws.” Further, in Atul Mohan Bindal (supra), the penalty referred to in
Section 271(1)(c) of the Act of 1961 has been referred to as a civil liability
and not one which is criminal or quasi-criminal in nature. Thus, in the light
of statutory presumption under Sections 118 and 139 of the Act of 1881, it
-- 16 of 29 --
17 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
would be for the accused to rebut such presumption in the light of what has
been held in Rangappa (supra).
In view of the aforesaid discussion, it is held that a transaction not
reflected in the books of accounts and/or Income Tax returns of the holder of
the cheque in due course can be permitted to be enforced by instituting
proceedings under Section 138 of the Act of 1881 in view of the presumption
under Section 139 of the Act of 1881 that such cheque was issued by the
drawer for the discharge of any debt or other liability, execution of the cheque
being admitted. Violation of Sections 269-SS and/or Section 271-AAD of the
Act of 1961 would not render the transaction unenforceable under Section
138 of the Act of 1881. The decisions in Krishna P. Morajkar, Bipin Mathurdas
Thakkar and Pushpa Sanchalal Kothari (supra) lay down the correct position
and are thus affirmed. The decision in Sanjay Mishra (supra) with utmost
respect stands overruled.”
Perusal of cited decision, it seems that, the amount is not shown
in the income-tax return, then also the said amount can be recovered.
24. Accused has submitted that, the accused no. 3 has already
resigned from the accused no. 1 company and therefore he is not liable
for the payment of cheque amount nor Section 141 of N.I. Act is
applicable to him. He has placed reliance on the decision of Hon’ble
Supreme Court of India in S.M.S. Pharmaceuticals Ltd. V/s. Neeta
Bhalla and Another, 2005 (8) SCC 89. It has held that, “ It is necessary
to averred that, at the time of offence was committed the person
accused was incharge of and responsible for conduct of business of the
company. Without this averment being made in the complaint, the
requirement of Section 141 cannot be said to be satisfied.”
I have perused the decision of Hon’ble Supreme Court of
India in S.P. Mani And Mohan Dairy vs Dr. Snehalatha Elangovan,
CRIMINAL APPEAL NO.1586 OF 2022 (ARISING OUT OF SPECIAL
LEAVE APPEAL (CRIMINAL) NO. 9811 OF 2021), decided on 16
September, 2022. It has held that,
“47. Our final conclusions may be summarised as under: a.) The
-- 17 of 29 --
18 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
primary responsibility of the complainant is to make specific
averments in the complaint so as to make the accused vicariously
liable. For fastening the criminal liability, there is no legal
requirement for the complainant to show that the accused partner
of the firm was aware about each and every transaction. On the
other hand, the first proviso to sub-section (1) of Section 141 of
the Act clearly lays down that if the accused is able to prove to the
satisfaction of the Court that the offence was committed without
his/her knowledge or he/she had exercised due diligence to
prevent the commission of such offence, he/she will not be liable of
punishment.
b.) The complainant is supposed to know only generally as to who
were in charge of the affairs of the company or firm, as the case
may be. The other administrative matters would be within the
special knowledge of the company or the firm and those who are
in charge of it. In such circumstances, the complainant is expected
to allege that the persons named in the complaint are in charge of
the affairs of the company/firm. It is only the Directors of the
company or the partners of the firm, as the case may be, who have
the special knowledge about the role they had played in the
company or the partners in a firm to show before the court that at
the relevant point of time they were not in charge of the affairs of
the company. Advertence to Section 138 and Section 141
respectively of the NI ACT shows that on the other elements of an
offence under Section 138 being satisfied, the burden is on the
Board of Directors or the officers in charge of the affairs of the
company/partners of a firm to show that they were not liable to be
convicted. The existence of any special circumstance that makes
them not liable is something that is peculiarly within their
knowledge and it is for them to establish at the trial to show that
at the relevant time they were not in charge of the affairs of the
company or the firm.
c.) Needless to say, the final judgement and order would depend
on the evidence adduced. Criminal liability is attracted only on
those, who at the time of commission of the offence, were in
charge of and were responsible for the conduct of the business of
the firm. But vicarious criminal liability can be inferred against the
partners of a firm when it is specifically averred in the complaint
about the status of the partners ‘qua’ the firm. This would make
them liable to face the prosecution but it does not lead to
automatic conviction. Hence, they are not adversely prejudiced if
they are eventually found to be not guilty, as a necessary
consequence thereof would be acquittal.
d.) If any Director wants the process to be quashed by filing a
petition under Section 482 of the Code on the ground that only a
-- 18 of 29 --
19 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
bald averment is made in the complaint and that he/she is really
not concerned with the issuance of the cheque, he/she must in
order to persuade the High Court to quash the process either
furnish some sterling incontrovertible material or acceptable
circumstances to substantiate his/her contention. He/she must
make out a case that making him/her stand the trial would be an
abuse of process of Court.”
I have also perused the decision of Hon’ble Supreme Court of India in
HDFC Bank Ltd. V/s. State of Maharashtra, Criminal Appeal No. ____
of 2025, (@ SPL Leave Petition (CRL) No. 6964 of 2024). It has held
that,
“38. As was rightly held therein, the administrative role of each director
would be within the special knowledge of the company or the director
of the firm and it is for them to establish that they were not in charge of
the affairs of the company. In view of this, the contention of the learned
counsel for the respondent No.2 that the specific role attributed to the
directors should be set out in the complaint does not merit acceptance.
Reliance has been placed on National Small Industries Corporation
Limited vs. Harmeet Singh Paintal and Another, (2010) 3 SCC 330
by the learned counsel for the respondent No.2 in support of the
proposition canvassed. We are unable to countenance the said
submission. If the learned counsel by the said submission seeks to
contend that the complainant in a Section 138 complaint is obliged to
plead administrative matters which are especially within the knowledge
of the company and the directors, then he is completely wrong in the
understanding of the ingredients of Section 141 . As held in K. K. Ahuja
(supra) and reiterated in S. P. Mani (supra), the complainant is
supposed to know only generally as to who are in charge of the affairs
of the company. Harmeet Singh Paintal (supra) when it holds in para 22
that “further, in order to fasten the vicarious liability in accordance with
Section 141 , the averment as to the role of the Directors concerned
should be specific. The description should be clear and there should be
some unambiguous allegations as how the Directors concerned were
alleged to be in charge of and were responsible for the conduct of the
affairs of the company” should be understood to only mean vis-à-vis the
transaction concerning the issue of the cheque, in question, which are
within the knowledge of the complainant. K. K. Ahuja (supra) where it
holds that “in the case of a Director, secretary or manager [as defined in
Section 2 (24) of the Companies Act] or a person referred to in clauses
(e) and (f) of Section 5 of the Companies Act, an averment in the
complaint that he was in charge of, and was responsible to the company,
for the conduct of the business of the company is necessary to bring the
-- 19 of 29 --
20 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
case under Section 141 (1) of the Act. No further averment would be
necessary in the complaint, though some particulars will be desirable.
They can also be made liable under Section 141 (2) by making
necessary averments relating to consent and connivance or negligence,
in the complaint, to bring the matter under that sub-section” sets out
the correct legal position. A harmonious reading of the judgments in K.
K. Ahuja (supra), Harmeet Singh Paintal (supra) and S. P. Mani (supra)
brings out the position that there is no obligation on the complainant to
plead in the complaint as to matters within the special knowledge of the
company or the directors or firm about the specific role attributed to
them in the company.”
In the case in hand, It is the defence of the accused that, accused
no. 2, 4 and 5 are not the person in charge and responsible for the
business of the accused no. 1. The suggestion was put to the
complainant in his cross-examination that, accused no. 2, 4 and 5 are
not the person in charge and responsible for the business of the accused
no. 1 but the complainant has denied the said suggestion. The
complainant has deposed that, the accused no. 1 is private limited
company and accused no. 2 to 4 are its directors and they are
responsible for day-to-day affairs and conduct of the accused no. 1.
They are responsible for the act of accused no. 1. Accused no. 5 is the
authorized signatory of accused no. 1. Therefore, it seems that, accused
no. 2 to 4 are responsible to the conduct of the business of the accused
no.1.
25. As I discussed above the accused have not brought on
record any material by way of cross-examination or in the statement of
313 of the Code. Therefore, it becomes clear that the accused have
utterly failed to rebut the presumption raised under Section 118 & 139
of the Act. Therefore, I hold that the complainant has duly proved that
accused have issued the subject cheques from the account of accused
-- 20 of 29 --
21 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
no. 1 in favour of the complainant towards the legally enforceable debt.
Hence, point No. 1 is answered in the “affirmative”.
As to Point No. 2:-
26. As per contentions and evidence of complainant, the
cheque No. 675484 (Exh.31), cheque no. 675485 (Exh.32), cheque no.
675486 (Exh.33) and cheque no. 675488 (Exh.34) were presented for
encashment. However, the cheques were returned with remark as
'Funds Insufficient’. In support of said contentions, the complainant
produced the cheque return memos (Exh. 35 to 38). I have perused
Section 146 of the Negotiable Instruments Act;
“
The Court shall, in respect of every proceeding
under this Chapter, on production of bank's slip or memo
having thereon the official mark denoting that the cheque
has been dishonored, presume the fact of dishonor of
such cheque, unless and until such fact is disproved”.
27. So, as per the aforesaid provision, the bank memos (Exh.
35 to 38), are having presumptive value as per Section 146 of the N.I
Act. Admittedly, the said presumption is rebuttable. However, nothing is
brought on record by the accused to rebut the presumption in respect of
bank memos (Exh. 35 to 38). After perusal of said memos, it is seen
that the cheque No. 675484 (Exh.31), cheque no. 675485 (Exh.32),
cheque no. 675486 (Exh.33) and cheque no. 675488 (Exh.34) were
dishonored for reason 'Funds Insufficient’. However, nothing is brought
by the accused on record to show their bonafide as well as also to show
that at the relevant time, the amount mentioned in the cheques was
pending in their account. Hence, no hurdle to held that the cheques
were dishonored with reason 'funds insufficient’. Consequently, point
No. 2 is answered in the “affirmative”.
-- 21 of 29 --
22 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
As to Point Nos. 3 and 4 :-
28. As per evidence of (C.W.1), after dishonor of cheques
(Exh. 31 to 34), he issued demand notice dated 14/03/2018 (Exh.39).
The complainant has filed postal receipts at Exh. 40 to 47 and A. D.
Cards at Exh. 48 to 51 and also filed returned envelopes at Exh. 52 to
54 to show that, the notices were returned ‘Left’. In support of said
contention, the complainant produced demand notice dated
14/03/2018 (Exh. 39) and returned envelopes (Exh. 52 to 54). Upon
perusal of demand notice (Exh. 39), postal receipts (Exh. 40 to 47) and
postal A.D. cards (Exh. 48 to 51), it is seen that, the complainant issued
demand notice on 14/03/2018 to the accused and same was served.
The demand notice was sent on the following address :-
To,
1. M/s. R. A. Fashions Pvt. Ltd.
Office No. B-1, 405, Boomrang, Village Chandivali,
Sakinaka, Andheri(East), Mumbai-400072
2. Ms. Asha R. Agarwal
Director R. A. Fashions Pvt. Ltd.
Office No. B-1, 405, Boomrang, Village Chandivali,
Sakinaka, Andheri(East), Mumbai-400072
And residing at
803, Orchid Building, Vasant Valley,
Malad(East), Mumbai – 400097
3. Mr. Ravindra Bisheshwar Agarwal
Director R. A. Fashions Pvt. Ltd.
Office No. B-1, 405, Boomrang, Village Chandivali,
Sakinaka, Andheri(East), Mumbai-400072
And residing at
-- 22 of 29 --
23 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
803, Orchid Building, Vasant Valley,
Malad(East), Mumbai – 400097
4. Mr. Pradeep V. Tulsyan
Director M/s. R. A. Fashions Pvt. Ltd.
Office No. B-1, 405, Boomrang, Village Chandivali,
Sakinaka, Andheri(East), Mumbai-400072
5. Mr. Rohan Agarwal
Authorized Signatory
Office No. B-1, 405, Boomrang, Village Chandivali,
Sakinaka, Andheri(East), Mumbai-400072
And residing at
803, Orchid Building, Vasant Valley,
Malad(East), Mumbai – 400097
29. Ld. advocate for the accused has submitted that the
demand notice was not sent on the address of the accused at Bangalore
which is mentioned on the tax invoice and sales order. I have perused
the cross-examination of complainant wherein he admitted that the
demand notice was not sent on the address of the accused at Bangalore
which is mentioned on tax invoice and sales order. Ld. Advocate for the
complainant has submitted that the demand notice was sent to the
accused at Andheri. It is his submission that the notices were delivered
to the accused as per the postal A. D. card filed at Exh. 48 to 51. It
seems from the postal A.D. cards the notices were issued at the address
of Andheri. As per the postal A.D. cards filed at Exh. 48 to 51 it seems
that the demand notice was served on the accused.
30. Ld. Advocate for the accused submitted that as per the case
-- 23 of 29 --
24 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
of complainant the cheques were dishonored on 28/02/2018 and the
demand notice was sent on 14/03/2018. As per the case of complainant
the accused has repaid Rs. 5,50,000/- by RTGS on 28/03/2018 and Rs.
2,50,000/- by RTGS earlier on 01/03/2018 after dishonour of cheque
and before sending of notice. It is the submission of Ld. advocate for the
accused that the complainant has not disclosed this fact while sending
demand notice at Exh. 39. It is the submission of Ld. Advocate for the
accused that the demand notice was sent for the entire cheques amount.
31. I have perused the demand notice filed at Exh. 39 and
perusal of it seem that the complainant did not disclose the fact that he
has received Rs. 2,50,000/- by RTGS earlier on 01/03/2018 after
dishonour of cheque and before sending of demand notice. It seems
from the demand notice filed at Exh. 39 that the complainant had asked
to the accused to pay total cheque amount of Rs. 16,80,000/-. Ld.
Advocate for the complainant submitted that the complainant has
disclosed this fact in the complaint and demand notice. On the contrary,
Ld. Advocate for the accused submitted that the demand notice is
defective one because the complainant had asked for the entire cheques
amount though he had received Rs. 2,50,000/- before sending of
demand notice. He has placed reliance on the decision of Hon’ble
Gujarat High Court in Shree Corporation V/s. Anilbhai Puranbhai
Bansal -Director for & Behalf of, 2018 (2) GujLH 105: 2018 ACD 1002.
It has held that, “acknowledgment of part payment by the complainant
and demand in notice for aggregate amount and not for amount which
was due and payable. Once part payment received by complainant,
cheque in question no longer remain one for payment of money for
discharge in whole or in part of any debt or other liability. It is held
that, criminal proceedings initiated by complainant deserve to be
-- 24 of 29 --
25 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
quashed. ” He has also placed reliance on the decision of Hon’ble
Supreme Court of India in M/s. Rahul Builders V/s. M/s. Arihant
Fertilizers & Chemicals & Anr., Criminal Appeal No. 525 of 2005,
decided on 02/11/2007. It has held that, “Accused issued a cheque of
Rs. One Lakh and cheque was dishonoured. Notice was sent to the
accused demanding whole of the outstanding amount of Rs. 8,72 lakhs.
No demand of Rs. One Lakh made in the notice and Notice is not valid.
Complaint quashed.” I have perused the decision of Hon’ble Bombay
High Court in the case of Sai Auto Agencies V/.s Hemant Ambadas
Bajad, Criminal Appeal No. 382/2022 decided on 19/08/2022. It has
been held in para no. 20.3 that,
“ 20.3. In case any part amounts are received post the dishonor, but
prior to the notice of demand, the course contemplated by Section 56
of the N.I. Act, not being available, the prudent course would be to
secure a fresh negotiable instrument for the balance and present it for
realisation. However, many a times that does not happen, leaving the
payee/holder of the cheque with the original cheque. Such part
payment, at times, could also be mischievous with the intent to
thwart the initiation of legal proceedings on the basis of the original
cheque. In such an eventuality it would be appropriate if the receipt
of the part amounts, post dishonor, is acknowledged in the notice of
demand under Section 138 (b) of the N.I. Act, and a demand for the
balance is made and base the complaint thereupon, coupled with the
original cheque, for otherwise, the intent of the Legislature behind
enacting Section 138 of the N.I. Act, would stand frustrated, if such
mischief's are permitted. [for intent and purpose 45 CRI.
APPEAL.382-2022 JUDGMENT.odt of Section 138 of the N.I. Act [see
Electronics Trade & Technology Development Corpn. Ltd.,
Secunderabad Vs. Indian Technologists & Engineers
(Electronics) (P) Ltd. and another (1996) 2 SCC 739; Dalmia
Cement (Bharat) Ltd. Vs. Galaxy Traders & Agencies Ltd. and
others (2001) 6 SCC 463 (para 3); Goa Plast (P) Ltd. Vs. Chico
Ursula D'souza (2004) 2 SCC 235; Indian Bank Association and
others Vs. Union of India and others (2014) 5 SCC 590 and
Sicagen India Limited Vs. Mahindra Vadineni and others (2019)
4 SCC 271]. 20.4. In case part payment/s is made after the filing of
the complaint, since the offence already stands completed in terms of
Section 138 (c) of the N.I. Act, [see : Indian Bank Association para
18 (supra)] and the proceedings have to go on, it would be
-- 25 of 29 --
26 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
appropriate, in case of conviction, for the learned Special Court, to
direct compensation payable after taking into consideration, amounts
received by the payee/holder of the cheque, till that time [which is
what has been done by the learned Magistrate in the instant matter].
20.5. The source of repayment, either full or in part, though Section
138 (c) of the N.I. Act, uses the expression 'drawer of such cheque',
should be immaterial, for the reason that what is necessary, is for the
amount of the cheque, in full or in part, to come into the coffers of
the complainant, in discharge of the legal debt or liability, as the
entire purpose is recovery of money, maybe through enforcement by
way of legal proceedings.”
32. Perusal of cited decision it seems that the complainant has
to disclose the fact of receiving of payment by him in the notice. In the
case in hand the cheques were dishonoured on 28/02/2018, the notice
was sent on 14/03/2018 and as per the case as well as evidence of
complainant he had received Rs. 2,50,000/- earlier on 01/03/2018
after dishonor of cheque before sending the notice. The complainant did
not disclose the fact of receiving of amount of Rs. 2,50,000/- in the
demand notice.
33. I have also perused the cross-examination of complainant
wherein the complainant has admitted that in his affidavit of evidence
he has not mentioned about an amount of Rs. 3,00,000/- received by
him from the accused on 14/08/2018 though evidence affidavit is filed
in the month of February 2022. He also admitted that after filing of this
case 2 part payments were received from the accused and he has
admitted it by giving reply to the application filed under Section 294 of
Cr.P.C. He admitted that before filing of evidence affidavit he has
received Rs. 8,00,000/- from the accused. He further admitted that after
filing of this complaint he has received 11 lakh from the accused in
three installment. It seems from the record that before sending of
demand notice he had received Rs. 2,50,000/- from the accused but this
-- 26 of 29 --
27 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
fact is not mentioned in the demand notice, further he has received Rs.
3,00,000/- from the accused on 14/08/2018 before filing of evidence
affidavit but this fact is not disclosed by the complainant in his evidence
affidavit. Therefore it seem that there is material suppression of facts
from the complainant. Therefore the facts of the M/s. Sai Auto Agencies
case (cited Supra) and the facts of the case in hand are same.
34. Therefore though the complainant had issued demand
notice to the accused and as per the postal AD card filed at Exh. 48 to
51, the demand notice was served on the accused but non disclosing of
above discussed amounts the notice becomes defective. So, point Nos. 3
and 4 are answered in the “negative”.
As to Point No.5 :
35. The notice (Exh. 39) was sent on 14/03/2018 and so, it is
seen to be issued within 30 days of alleged dishonor of cheques (Exh.
31 and 34). Therefore, the accused has to pay cheque amount within
fifteen days from 15/03/2018 but accused failed to pay it. Therefore,
the cause of action for this complaint was arose on 31/03/2018. The
complainant has to filed complaint within one month from the day of
cause of action. The complaint was filed on 21/04/2018. Therefore, the
complaint is seen to be filed within limitation. Though the complaint is
filed within limitation, but while discussing point no. 3 and 4 I hold
that, the complainant has failed to prove the essential ingredients of the
offence punishable u/s 138 of the Act. As already discussed in earlier
points, it becomes clear that, the demand notice is defective as the
amount paid by the accused before sending of demand notice is not
disclosed in the demand notice. Further the complainant did not
disclose the amount received by him from the accused before filing of
-- 27 of 29 --
28 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
evidence affidavit and the said amount is not disclosed in the evidence
affidavit. Therefore, the complainant has failed to prove that, the
accused have committed an offence punishable u/s 138 of the Act.
Consequently, point No. 5 is answered in the “negative”.
As to Point No.6:
36. In view of entire evidence of the complainant, he has failed
to prove that, accused have committed an offence punishable u/s 138 of
the Act. Ld. Advocate for the accused submitted that, accused are
entitled for acquittal. Consequently, point No. 3 to 5 are answered in
the “Negative”. Resultantly, following order is passed:
ORDER
1. The accused 2) Ms. Asha Ragarwal 3) Mr. Ravindra
Bisheshwar Agarwal 4) Mr. Pradeep V. Tulsyan –
Directors of accused No. 1 M/s. R. A. Fashions Pvt.
Ltd. and 5) Mr. Rohan Agarwal -Authorized Signatory
of accused No. 1 M/s. R. A. Fashions Pvt. Ltd. are
hereby acquitted under Section 255 (1) of the
Criminal Procedure Code, 1973 for an offence
punishable under Section 138 of the Negotiable
Instrument Act,1881.
2. The bail bonds of accused stands canceled.
3. Muddemal being an original cheque and bank memo,
be returned to the complainant after appeal period is
over.
-- 28 of 29 --
29 C. C. NO. 1934/SS/2018
CNR No. : MHMM19-004977-2018
4. Accused are hereby directed to furnish personal
bonds of Rs. 15,000/- each and surety of like amount
to appear before Hon'ble Appellate Court, in case of
appeal filed by the prosecution, according to Section
437-A of the Code of Criminal Procedure, 1973.
(Dictated & Pronounced in the open court)
Mumbai (Y. P. Pujari )
Date:- 30/08/2025 Metropolitan Magistrate
48th Court, Andheri, Mumbai.
Dictated On : 30/08/2025
Typed On : 30/08/2025
Signed On : 30/08/2025
-- 29 of 29 --