Mr. Abdhesh Chaudhary, Mr. Ritik Malik, Mr. Akhil Suri, Mr. Udit Thakrar & Ms v. M/S PUNJAB FRIEGHT CARRIERS PVT. LTD. & ORS

Judgment

1. The present petitions under Section 378(4) of the Code of Criminal Procedure, 19731, seek leave to appeal against separate orders of acquittal, all of which are dated 31st October, 20192, passed by the MM, NI Act-3, Tis Hazari Courts, Delhi, in three separate Criminal complaints filed by the Petitioner under Section 138 of the Negotiable Instrument Act, 18813. The relevant details of the Criminal complaint cases are as follows: Present Crl. L.P No. CRL.L.P. CRL.L.P. CRL.L.P. Arising Complaint case No. CC No. CC No. CC No. No. of cheques in the complaint Date of order of Impugned Cumulative Amount of the cheques (INR) Allegedly Issued towards 1 3

31.10.2019 30,00,000/-

31.10.2019 80,00,000/- 14

31.10.2019 30,80,000/- Principal Amount Principal Amount Interest/profit

2. Since all the aforementioned criminal complaints stem from the same underlying transaction, and the factual matrix as well as the grounds of challenge in these appeals are substantially identical, the present leave to appeals are being decided through this common order. For ease of reference,

the evidence led by the parties is cited hereinafter based on the documents marked in CC No. 22707/2016 (impugned in CRL.L.P. 72/2020). 1 “CrPC” 2 “Impugned orders” 3 “NI Act” Signature Not Verified Digitally Signed By:NITIN KAIN Signing Date:03.02.2025 19:52:31 CRL.L.P. 72/2020 and other connected matters Page 2 of 21 FACTUAL MATRIX

3. Briefly, the essential background facts set up by the Petitioner before the Trial Court, are as follows:

3.1 The Petitioner, a registered partnership firm is represented by Authorised Representative/Partner of the firm, Mr. Bhim Sain Wadhwa, who is well conversant with the facts of the case.

3.2 The Respondent No.1 (identified as Accused no. 1 in the impugned order), M/s Punjab Freight Carriers Pvt. Ltd. and its directors, Respondents No. 2 to 6 (identified as Accused no. 2 to 6 in the impugned order) have maintained a longstanding and cordial business relationship with the Petitioner spanning over three decades. Mr. Bhim Sain Wadhwa, being engaged in the same line of business, was well acquainted with the Respondent firm.

3.3 On the basis of this established relationship, Respondents No. 2 to 6 secured the trust and confidence of Mr. Bhim Sain Wadhwa, thereby inducing and persuading him to invest in Respondent No. 1, under the assurance of receiving a fixed profit in the form of interest. Consequently, the Petitioner firm invested an aggregate amount of INR 1.10 Crores in Respondent No. 1 through transactions facilitated by Respondents No. 2 to

3.4 These investments were made from time to time on different dates and occasions, starting from 10th September, 2013 to 30th June, 2014. All of the said investments made by the Petitioner firm were duly acknowledged and confirmed by the Respondents in writing, through their Manager – i.e., Respondent No. 6, who routinely transmitted financial documents, such as Balance Sheets, Profit & Loss Accounts, D.O. accounts etc., to the Chief Signature Not Verified Digitally Signed By:NITIN KAIN Signing Date:03.02.2025 19:52:31 CRL.L.P. 72/2020 and other connected matters Page 3 of 21 Auditor of the Petitioner firm, thereby confirming the Respondent’s liability of INR 1.10 Crores to the Petitioner firm. Reliance is placed on the statement of accounts with Cover Letter dated 4th October, 2015 and Cover Letter dated 5th May, 2016, sent by Respondent No. 6 (Manager and Authorised Signatory of Respondent No. 1) to the Chief Auditor of the Petitioner firm [marked as Exhibit - CW-1/2(Colly)]. Moreover, Respondent No. 1, through one of its partners – i.e., Respondent No. 3, also provided a written acknowledgement and confirmation, the Petitioner firm, specifying that as on 19th September, 2014, a sum of INR 1,25,15,537/- was due as balance to the Partner of the Petitioner firm (marked as Exhibit - CW – 1/3).

3.5 The Respondents undertook to pay the Petitioner firm a fixed monthly profit of INR 2,20,000 in lieu of the INR 1.10 Crores investment, with the understanding that the principal amount would be repaid in full by the end of December, 2015. However, failing to adhere to this commitment and citing alleged financial constraints, they repeatedly sought extensions. In response to the Petitioner’s persistent demands for repayment, the Respondents subsequently issued 4 cheques toward the principal amount (INR. 1.10 Crores) and an additional 14 cheques representing the fixed profit (Cumulatively amounting to INR 30.8 Lakhs), for the period from February 2015 to March 2016.

3.6 All of the aforementioned cheques bore the signatures of the Manager/Authorised Signatory – Mr. Anil Katoch (Respondent No.6). However, upon presentation, each of the four cheques was dishonoured with the notation “PAYMENT STOPPED BY DRAWER.” Despite the Petitioner firm duly informing the Respondents of the dishonour, the latter failed to Signature Not Verified Digitally Signed By:NITIN KAIN Signing Date:03.02.2025 19:52:31 CRL.L.P. 72/2020 and other connected matters Page 4 of 21 remedy the default. Consequently, the Petitioner firm issued a statutory notice dated 2nd August, 2016 under Section 138 of the Negotiable Instruments Act, and subsequently lodged a written complaint on 4th August 2016, with both the Commissioner of Police, New Delhi, and the SHO of District VI, Jalandhar, Punjab.

3.7 Following the receipt of the legal notice, Respondent No. 3, Mr. Parminder Singh Gill, personally visited the Petitioner firm on 8th August 2016 and met with Mr. Bhim Sain Wadhwa. During this meeting, Mr. Gill, on behalf of the other Respondents, assured that the cheque amounts would be remitted to the Petitioner firm within ten days. In furtherance of this assurance, Respondent No. 2 also provided a written confirmation dated 8th August, 2016 to the Petitioner firm [Exhibit marked as ‘E’].

3.8 Contrary to the foregoing assurances, the Respondents later sent an undated, false and frivolous reply, received by the Petitioner firm on 27th August, 2016 [marked as Exhibit – CW-1/10(Colly)]. In correspondence, the Respondents not only contradicted the prior written assurance but also alleged that the cheques had gone missing from their office cheque book. They further asserted that upon discovering the missing cheques, they had promptly informed their bank and issued instructions that the cheques should not be honoured if presented. Additionally, the Respondents contended that the Petitioner had never invested any sum with them, thereby negating any repayment obligation.

3.9 As a consequence of the Respondents’ failure to repay the invested amount in breach of multiple assurances, the Petitioner was compelled to initiate the present proceedings under Section 138 of the Negotiable Instruments Act. Signature Not Verified Digitally Signed By:NITIN KAIN Signing Date:03.02.2025 19:52:31 CRL.L.P. 72/2020 and other connected matters Page 5 of 21 PROCEEDINGS BEFORE THE TRIAL COURT

4. During the proceedings before the Trial Court, notices under Section 251 of CrPC were framed stating the substance of the allegations levied against the Respondents by the Petitioner firm. All of the Respondents denied their liability qua the cheques in question, specifically contending that no transactions of the alleged nature were ever undertaken with the Petitioner firm, nor were any cheques issued as a means of discharging any legal obligation.

5. Thereafter, opportunity was granted to the Respondents to cross- examine the complainant and the matters proceeded as summons cases. Subsequently, statements of the accused (Respondents), in each of the Criminal complaint case was recorded under Section 313 of CrPC on 09th August, 2017, wherein the Respondents denied their liability. Further, the Respondents stated that the evidence produced by the complainant (Petitioner herein) was incorrect and as such, they wished to lead evidence in their defence.

6. In support of their claims, the Petitioner firm examined its sole witness, the Partner of the firm - Mr. Bhim Sain Wadhwa. In defence, the Respondents examined three witnesses being - DW1 - Adil Khan, Deputy Manager, ICICI Bank Ltd., DW2 - HC Surender as a formal witness to bring on record roznamcha dated 16th November, 2017 – i.e., the complaint filed by them in terms of the theft of cheques in question, and DW3 - Anil Katoch (Respondent No. 6) the purported signatory of the cheques in issue.

7. Briefly stated, the case of the Respondents before the Trial Court was as follows:

7.1 There was no transaction as alleged between the parties. The Signature Not Verified Digitally Signed By:NITIN KAIN Signing Date:03.02.2025 19:52:31 CRL.L.P. 72/2020 and other connected matters Page 6 of 21 Petitioner has not established their financial capacity to make such a large investment in the Respondent No. 1 company. The ITR filed by the Petitioner firm for FY 2016-2017 indicates that during FY 2013-14, the Petitioner firm was incurring a loss of over INR 2 Crores. However, the Petitioner alleges that during the same period of time – i.e., from 10th September, 2013 to 30th June, 2014 (FY 2013-14 and FY 2014-15), they made the alleged investment of INR 1.10 Crores in the Respondent company. The Petitioner has also not examined any other witness apart from Mr. Bhim Sain Wadhwa to show that there existed a liability of the Respondents towards the Petitioner firm.

7.2 There is no document on record to show that any such investment was ever made by the Petitioner firm in the Respondent company. The statement of accounts [Exhibit CW-1/2(Colly)] which is heavily relied upon by the Petitioner firm to establish that a liability existed, has not been proved by them and thus, the document cannot be considered as a piece of evidence. Purportedly, the said statements of accounts as well as the cheques in question were signed by Respondent No. 6, however, while the signatures on the cheques are admitted, the signatures on the statements of accounts are denied. Additionally, the signatures on these documents do not match.

7.3 The execution of the purported written acknowledgement dated 8th August, 2016 [Exhibit marked as ‘E’] is suspicious, since the Legal Notice issued by the Petitioner was itself received via postal receipt on 8th August, 2016 in Jalandhar. Thus, it is not possible for Respondent No. 3, who is a resident of Jalandhar, to have reached the office premises of the Petitioner firm situated in Delhi, on the same day and give the aforementioned written acknowledgement. Signature Not Verified Digitally Signed By:NITIN KAIN Signing Date:03.02.2025 19:52:31 CRL.L.P. 72/2020 and other connected matters Page 7 of 21

7.4 There is no averment in the complaint as to the mode of payment for the alleged investment of INR 1.10 Crores made by the Petitioner firm. Even assuming that there was an investment to this effect, since Respondent No. 1 company is a Private Limited company, such an alleged investment would not be legally tenable in view of Section 73 of the Companies Act, 2013.

7.5 Rather, the cheques in question were lost/missing from their office, due to which the Respondents promptly issued directions to their bank to stop payment qua the missing cheques. The Respondents were shocked when the missing cheques were presented by the Petitioner for the purported liability of INR 1.10 Crores. Recognising that the missing cheques were being unlawfully misused by the Petitioner firm, a police compliant dated 16th November, 2017 was also filed by them regarding theft of the same.

8. After careful consideration of the evidence led by the parties, the Trial Court held that even though the signature on the subject cheques was admitted by Respondent No. 6 (Authorised agent of Respondent No. 1) and this admission lent credence to the presumption under Section 118(a) read with Section 139 of the NI Act; the Respondents’ successfully rebutted the said presumption. Respondents established that there was no receipt of the investment or loan as alleged by the Petitioners and such investment or loan amount of INR 1.10 Crores was not even shown in the ITR return of the Petitioner firm. Moreover, with respect to the 14 cheques issued towards interest/profit on the alleged investment, the Trial Court held that since the foundational claim of an initial investment of INR 1.10 crores was not established, the question of discharging any liability towards returns or profit on such an investment did not arise. Thus, the Cort concluded that the Respondents have raised a probable defence that the cheques in question Signature Not Verified Digitally Signed By:NITIN KAIN Signing Date:03.02.2025 19:52:31 CRL.L.P. 72/2020 and other connected matters Page 8 of 21 were misplaced or stolen from their office, thereby rebutting presumption under Section 139 of the NI Act. SUBMISSIONS OF THE PARTIES IN THE PRESENT LEAVE TO APPEAL

9. Aggrieved by the impugned decision of the Trial Court, Counsel for the Petitioner argues that the Trial Court erred in its factual and legal analysis, particularly in light of established precedents under Section 138 of the Negotiable Instruments Act. He advances the following contentions to challenge the impugned order:

9.1 The parties are well-known to each other and had a relationship for the last 30-35 years, during which the Petitioner firm rendered transportation services to Respondent No. 1. Over time, significant dues remained unsettled, culminating in an outstanding amount of INR 1.10 Crores owed to the Petitioner firm by Respondent No. 1. The parties had mutually agreed to treat this amount as an investment by the Petitioner, to be repaid with a fixed profit. The cheques in question, issued to discharge of the Respondents liability, bear signatures that have been acknowledged as genuine by the authorized signatory, Respondent No. 6. Consequently, a legal presumption in favour of the Petitioner arises under Section 118(a) read with Section 139 of the NI Act.

9.2 The Petitioner has adduced sufficient evidence to prove the existence of the liability of INR 1.10 crores against the Respondents: (a) Exhibit CW1/2 (Colly), which contains the statement of accounts transmitted by Respondent No. 6 to the Petitioner’s Chief Auditor; (b) Exhibit CW1/3, a written acknowledgment from the Respondents confirming the investment; and (c) Exhibit ‘E’, a written acknowledgment by Respondent No. 3, Mr. Signature Not Verified Digitally Signed By:NITIN KAIN Signing Date:03.02.2025 19:52:31 CRL.L.P. 72/2020 and other connected matters Page 9 of 21 Parminder Singh Gill, expressly admitting the investments made by the Petitioner.

9.3 The fact that the cheques were signed by an authorized representative of the Respondents is undisputed. The Trial Court erred in concluding that the statutory presumption under Section 118(a) read with Section 139 of the NI Act had been rebutted.

9.4 Mala fide intent of Respondent is clearly evident, which has been ignored by the Trial Court. Prior to issuing the cheques, the Respondents had dispatched a letter dated 7th April 2016 to their bank, alleging that the cheques had been misplaced and instructing the bank to stop payment. Moreover, the Court failed to reconcile the Respondents’ contradictory submissions. On one hand, during cross-examination, Respondent No. 6, Mr. Anil Katoch, conceded the genuineness of the signatures on the cheques; on the other, the Respondents’ reply to the legal notice [Exhibit CW-1/10 (Colly)], received on 27th August 2016, alleges forgery by Mr. Bhim Sain Wadhwa. Furthermore, the police complaint regarding the alleged theft of the cheques was lodged by Respondent No. 6 only on 16th November 2017 — several months after the alleged misplacement — and was not actively prosecuted. The testimony of DW-2, Mr. HC Surender, in support of the police complaint is vague, suggesting that the complaint was a mere afterthought, contrived to furnish a frivolous defence.

9.5 The Trial Court has failed to consider these discrepancies in the story of the Respondents’ account regarding the alleged theft of the cheques. By placing undue reliance on Respondents’ narrative, the Trial Court has wrongly shifted the onus of proof on Petitioner and placed heavy burden on them to prove the debt, which is contrary to the law on this issue, as held by Signature Not Verified Digitally Signed By:NITIN KAIN Signing Date:03.02.2025 19:52:31 CRL.L.P. 72/2020 and other connected matters Page 10 of 21 the Supreme Court in Kalamani Tex and Another v. P. Balasubramanian4, Rohitbhai Jivanlal Patel v. State of Gujarat5 and Pavan Diliprao Dike v. Vishal NarendraBhai Parmar6.

9.6 Admittedly, the Partner of the Petitioner firm, Mr. Bhim Sian Wadhwa was a Director in Respondent No. 1 company from the year 1999 to 2007. The continued good relations of the parties were due to the fact that the Petitioner firm owned 16 trucks that were being used in the operations of the Respondent company. This fact has been admitted by Respondent No. 6 in his cross examination dated 06th March, 2019. Respondent No. 6 - Anil Kotach, has also admitted in his testimony that during the time when Mr. Bhim Sain Wadhwa was a Director of Respondent No. 1 from 1997 to 2007, there were no complaints of missing or stolen cheques, which indicates that the story of theft/ stolen cheques is not reliable and is concocted.

9.7 As regards the contention that the loan/investment amount were not reflected in the ITR returns of the Petitioner firm, the Trial Court has overlooked a catena of judgements holding that there is no mandatory requirement under Section 138 of the Negotiable Instruments Act to record debts, loans, or investments in IT returns. Instead, the Court improperly relied on the deposition of Mr. Bhim Sain Wadhwa (examined as CW-1), who merely stated that the Respondent company had been shown as a debtor in the IT returns. ANALYSIS:

10. The Court has considered the aforenoted contentions of the parties and perused the record. This matter arises from complaints under Section