The judgment emphasizes the need to establish a legally enforceable debt and the burden of proof on the accused to contest the existence of a debt or liability under Section 138 of the NI Act.

ASHUTOSH KUMAR, J.

1. The present revision petition has been preferred by M/s. Varun Capital Services Ltd through its Managing Director, Rajneesh Gupta, assailing the judgment of acquittal dated 19.09.2012 passed by learned ACMM, East, Karkardooma Courts, Delhi.

2. The petitioner company is a public limited company which is in the business of sale and purchase of shares and commodities on behalf of their clients. The aforesaid company is registered with NSE (Capital Market & F&O Segment).

3. The respondent is a registered client of the petitioner company. The petitioner company had been transacting in sale and purchase of shares in F&O (Derivates Segment) on behalf of the respondent for quite some time. The case of the petitioner is that despite fall in prices in the market, the respondent repeatedly requested the company not to “square up” his account and was asked to continue as well keep intact some of the transactions which were entered into. As a result of such instructions by the respondent, the petitioner company (complainant) suffered loses to the tune of Rs.4,57,563.69/-.

4. In order to discharge the said liability, the respondent is alleged to have issued two cheques bearing Nos.002510 dated 12.07.2007 for an amount of Rs.1 lakh and another bearing No.002511 dated 10.07.2007 for an amount of Rs.2 lakhs. Both the aforesaid cheques were drawn on State Bank of India, Anaj Mandi branch, Shahdara, Delhi (Ex.CW1/5 & 6). On presentation of those cheques by the petitioner company to its banker, the same were returned dishonoured as there were insufficient funds in the account of the respondent. The return memos from the bank are dated 13.07.2007 and 21.07.2007 (Ex.CW1/7 & 8).

5. A demand notice dated 26.07.2007 (Ex.CW1/11) was served upon the respondent. The amount was not paid by the respondent and, therefore, a complaint was lodged by the petitioner under Section 138 of the N.I Act before the competent Court.

6. Rajneesh Gupta, Managing Director of M/s.Varun Capital Services Ltd (Petitioner Company) tendered his evidence by way of affidavit and was also examined as PW-1. During trial he has stated that the respondent repeatedly requested the company not to square up the account. However, in cross examination, he has stated that the respondent did not give him any written instructions not to square up his account or keep intact his transactions.

7. According to the testimony of PW-1, “security margin” amount is normally collected from the client on the very next day when the account of such client shows negative or adverse balance. Security margin is also obtained in advance. It was stated by him that the respondent was not informed in writing about the losses suffered by the company. The respondent was only provided with the contract notes. It was denied by PW-1 that the cheques in question were given by the respondent as security for margins with the understanding that the cheques would be encashed only after the receipt of the consent of the accused in case the margin money was found to be short.

8. The respondent (DW-1) tendered his examination-in-chief by way of affidavit (Ex.DW-1/A). During his cross examination, it was stated by him that he used to give instructions on telephone to the company to deal in shares on his behalf. One Vinod Kumar used to confirm about the finalization of the deals on his behalf. He never received any contract notes and did not have any personal knowledge about whether he was required to make any complaint either to the broker/complainant company or NSE or SEBI. The respondent has denied of there being any outstanding dues as against the company. He had never authorized or consented to such cheques being deposited in the bank. The respondent, during trial, made a grievance of the fact that the complainant company failed to place on record certified/true copies of its balance sheet from the office of ROC for the relevant year which could have showed that the respondent was a debtor