Delhi District Court
Mohd. Sameed vs M/S Maple Industries on 31 January, 2012
In the Court of Sh. Manoj Kumar : Senior Civil JudgecumMetropolitan
Magistrate of New Delhi District at Patiala House Courts, New Delhi
C. C No. 5131/1/09
Unique ID No. 02403R0139542006
In the matter of:
Mohd. Sameed
Proprietor
M/s Invouge
Block6, House No. 183,
Dr. Ambedkar Nagar,
New Delhi110062
Also at:
E86, First Floor,
Saket, New Delhi. ....................Complainant
VERSUS
1. M/s Maple Industries
2. Ms. Madhu Srivastava
Partner of M/s Maple Industries
Both at:
7/17, Kalkaji Extn.,
New Delhi110019
Also at:
1. WZ/72, Near Inderpuri,
C. C. No. 5131/1/09 Page no. 1 of 16
New Delhi
2. B23, Corner, Dayanand Colony,
Lajpat Nagar, New Delhi. ..................Accused
Date of Institution : 18.03.2006
Date of Arguments: 28.01.2012
Date of Judgment : 31.01.2012
COMPLAINT UNDER SECTION 138 OF THE NEGOTIABLE
INSTRUMENTS ACT, 1881
JUDGMENT :
The present case was received by way of transfer as per the order no. 145192/01/F.3(4)/MM dated 02.01.2009 passed by the learned District JudgeI and Sessions Judge, Delhi in pursuance of order no. 25/DHC/Gaz./VI.E2(a) dated 22.10.2008 passed by the Hon'ble Delhi High Court. It shall be disposed of in compliance of the said orders.
2. This is a complaint under section 138 of the Negotiable Instruments Act, 1881 (Act 26 of 1881) made by complainant Mr. Mohd. Sameed against accused M/s Maple Industries and Ms. Madhu Srivastava stating that the complainant is proprietor of M/s Invouge having office at Block 6, House no. 183, Dr. Ambedkar Nagar, New Delhi and J2/12A, Khirki Extension, Malviya Nagar, New Delhi; that accused no.2 is one of the partners of the accused no.1 and have been dealing in export of C. C. No. 5131/1/09 Page no. 2 of 16 garments; that the accused no.2 being a partner in the accused no.1 was approached to Anitsa Sarl, 8 Rue Do Caire, 7500, Paris for the supply of garments and it was agreed between the accused and the complainant that she (sic) will act as an agent/beneficiary for both the parties to check and supervise the garments before sending a shipment; that it was also agreed that the accused would pay the professional charges of the complainant for the job of supervision; that after finalization of the deal, on account of balance payment of professional charges of the complainant, the accused no.2 being partner of the accused no.1 had issued cheque bearing number 817872 for Rs.3,32,500/ and another cheque bearing no. 817873 for Rs. 5,19,137/ both dated 01.02.2006 drawn on the Union Bank of India, Nehru Place, New Delhi; that on 08.02.2006 the cheques were presented by the complainant for encashment through his banker UTI Bank Ltd. but the same were dishonoured and returned unpaid with memo dated 10.02.2006 with remarks 'Funds insufficient'; that the complainant through his counsel sent a legal notice dated 23.02.2006 to the accused by way of registered post, courier as well as by way of UPC whereby the accused were called upon to make the payment of the cheque amount but the accused failed to do so and sent a vague reply dated 03.03.2006; that the accused no.2 being the partner in the accused no.1 has been looking after the management and day to day business of the accused no.1 and had issued the cheques in favour of the complainant. It is further stated in the complaint that the C. C. No. 5131/1/09 Page no. 3 of 16 accused have committed offence punishable under section 138 of Act 26 of 1881 for which they be summoned, tried and punished as per law.
3. The complaint was made on 18.03.2006 and on the same day having received the affidavit of the complainant alongwith some documents during his examination under section 200 of the Code of Criminal Procedure, 1973 (Cr.P.C.) my learned predecessor having taken cognizance of offence punishable under section 138 of Act 26 of 1881 passed a summoning order under section 204 of Cr.P.C. whereby both the accused were summoned to face accusation against them.
4. In pursuance of the process issued against the accused, the accused no.2 appeared before the court and admitted to bail. Subsequently, on 08.03.2007 a notice of accusation under section 251 Cr.P.C. was framed against the accused whereby the accused were charged with the commission of offence punishable under section 138 of Act 26 of 1881 in respect of cheques bearing no.817872 and 817873. The notice of accusation was read over and explained to accused no.2 Ms. Madhu Srivastava to which she did not plead guilty and claimed trial.
5. In support of his case the complainant got examined himself as CW1 and during his examination in chief tendered his affidavit Ex. C1 alongwith documents Ex. CW1/A to Ex. CW1/E, Ex. CW1/X and Ex. CW1/Y. The witness was cross examined on behalf of the accused and thereafter, evidence on behalf of the complainant was closed and accused C. C. No. 5131/1/09 Page no. 4 of 16 no. 2 Ms. Madhu Srivastava was examined under section 313 of Cr.P.C.
6. During her examination under section 313 Cr.P.C. the accused no.2 admitted that the complainant is the proprietor of M/s Invogue whereas she is one of the partners in accused no.1 M/s Maple Industries. During her examination under section 313 Cr.P.C. the accused no.2 denied that cheques ex. CW1/A and Ex. CW1/B were drawn by her in favour of the complainant for discharging any legally enforceable debt or liability and stated that both the cheques were given by her to the complainant as security. The accused no.2 further stated that the complainant used to place orders with her firm to supply manufactured garments for export. The accused no.2 further stated that the complainant used to have rates from her firm settled in US dollars whereas he used to further sell the goods to the buyers and in turn used to charge from them in Euros. The accused no.2 further stated that in the transaction between the complainant and his buyers the invoices were issued in the name of her firm M/s Maple Industries. The accused no.2 further stated that to secure the difference money between the rates of Dollars and Euro, the cheques were issued and handed over by her to the complainant. The accused no.2 admitted that cheques Ex. CW1/A and Ex. CW1/B were presented for encashment and returned unpaid and added that at the request of the complainant her firm had got prepared garments worth about 37600.75 Euros and in preparation of the goods the accused no.1 had spent all its capital and had also taken money from the C. C. No. 5131/1/09 Page no. 5 of 16 market. The accused no.2 further stated that after shipment of the goods and receipt of payment from the buyers the payment was to be made to the complainant and the said fact was mentioned on the back of cheques Ex. CW1/A and Ex. CW1/B. The accused no.2 further stated that after preparation of the goods, a shipment of goods worth 13273 Euros was sent and remaining goods could not be sent to the buyers as the complainant did not permit for shipment. The accused no.2 further stated that the goods worth 24324.75 Euros could not be sent to the buyer due to the refusal of the complainant in permitting to shipment the same. The accused no.2 further stated that since payment against Letter of Credit (LC) number 010870800933500 was not received by her, therefore, the complainant was not entitled to receive any money from her. The accused no.2 further stated that she had contacted the complainant on several occasions for permission to shipment the goods but the complainant ignored to pay any heed to her requests. The accused no.2 admitted having received the notice dated 23.02.2006 from the complainant and further stated that the said notice was replied by her. The accused also admitted having not made any payment to the complainant after receiving notice dated 23.02.2006 and expressed her desire to lead evidence on behalf of the accused.
7. In defence of the accused persons, the accused no.2 having made application under section 315 of Cr.P.C. came in the witness box and gave evidence in disproof of charge against herself and the accused no.1.
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8. I have heard counsel for the parties and gone through the material on record carefully.
9. Having drawn my attention on the testimony of CW1 Sh. Mohd. Sameed and documents Ex. CW1/A to Ex. CW1/E, Ex. CW1/X and Ex. CW1/Y it is submitted by counsel for the complainant that to discharge their liability towards the complainant the accused no.1 through the accused no.2 had drawn cheques Ex. CW1/A and Ex. CW1/B in favour of the complainant and when the said two cheques were presented by the complainant for encashment the same returned unpaid alongwith memo Ex. CW1/C due to insufficient funds in the account of the accused no.1. It is further submitted by counsel for the complainant that a notice dated 23.02.2006 was served by the complainant upon the accused whereby they were called upon to make payment against both the cheques within fifteen days of the receipt of the notice but the accused having received the notice did not make payment and therefore, accused no.1 is liable under section 138 of Act 26 of 1881 whereas the accused no.2 is liable under section 141 of Act 26 of 1881.
10. Per contra, having drawn my attention on the testimony of DW1 Smt. Madhu Srivastava, CW1 Sh. Mohd. Sameed, cheques Ex. CW1/A and Ex. CW1/B, documents Ex. DW1/E and Ex. DW1/F it is submitted by counsel for the accused that cheques Ex. CW1/A and Ex. CW1/B were not drawn to discharge any legally enforceable debt or C. C. No. 5131/1/09 Page no. 7 of 16 liability and therefore, no offence punishable under section 138 of Act 26 of 1881 is made out in respect of the same. It is further submitted by counsel for the accused that the cheques were to be encashed only after realization of proceeds pertaining to LC no. 01087/0800933500 and since the proceeds pertaining to the said LC could not be realized due to the acts and omissions of the complainant, therefore, the complainant was neither entitled to present the cheques nor to receive money against the same. It is further submitted by counsel for the accused that by letter dated 16.02.2006, a copy of which is Ex. DW1/F, the complainant was called upon to return the cheques but the complainant with mala fide intention did not return the same.
11. I have given my thoughtful consideration to the submissions made on behalf of the parties.
12. From the testimony of CW1 Sh. Mohd. Sameed, statement of accused Smt. Madhu Srivastava and documents Ex. CW1/A and Ex. CW1/B it has been proved that documents purporting to be cheques Ex. CW1/A and Ex. CW1/B bearing no. 817872 and 817873 respectively were drawn by the accused no. 2 in favour of the complainant on bank account maintained in the name of the accused no. 1 on the Union Bank of India and both the cheques have been signed by accused no. 2 Smt. Madhu Srivastava.
13. From the testimony of CW1 Sh. Mohd. Sameed, statement of C. C. No. 5131/1/09 Page no. 8 of 16 accused Smt. Madhu Srivastava and document Ex. CW1/C it has also been proved that cheques Ex. CW1/A and Ex. CW1/B were presented by the complainant for encashment before the banker of the accused and both the cheques returned unpaid alongwith memo Ex. CW1/C dated 10.02.2006 due to insufficient funds in the account of the accused no. 1.
14. From the testimony of CW1 Sh. Mohd. Sameed, statement of accused Smt. Madhu Srivastava and document Ex. CW1/D it has also been proved that after return of cheques Ex. CW1/A and Ex. CW1/B as dishonoured a demand notice dated 23.02.2006, a copy of which is Ex. CW1/D, was sent by the complainant to the accused whereby the accused were called upon to pay the cheque amount within fifteen days of the receipt of the notice and the said notice was received by the accused.
15. From the testimony of CW1 Sh. Mohd. Sameed and the statement of accused Smt. Madhu Srivastava it has also been proved that despite receipt of the notice dated 23.02.2006, a copy of which is Ex. CW1/D, the accused did not make payment of the cheque amount to the complainant within fifteen days of the receipt of the notice.
16. The defence of the accused is that although cheques Ex. CW1/A and Ex. CW1/B were handed over by her to the complainant but simultaneously condition was put by writing on the reverse of cheques Ex. CW1/A and Ex. CW1/B that, "this cheque will be encashed only after C. C. No. 5131/1/09 Page no. 9 of 16 realization of proceeds pertaining to LC no. 01087/0800933500". As per the testimony of DW1 Smt. Madhu Srivastava prior to the consignment involved in this case Mr. Mohd. Sameed never demanded any cheque towards his remuneration but in this case as the amount involved was big for both the parties, therefore, before LC was given by the complainant to the accused, the complainant alongwith one Aarti came to the accused and in the meeting between them he had shown the accused no. 2 the differential in the amounts between US Dollar and the Euros and asked her that she should hand over cheque of that amount. DW1 Smt. Madhu Srivastava further deposed that the complainant asked for post dated cheques and insisted that if the cheques were not handed over then he would stop the production. DW1 Smt. Madhu Srivastava further deposed that on mutual understanding she had given cheques Ex. CW1/A and Ex. CW1/B to the complainant and as a safeguard with the mutual understanding with the complainant she made noting on the back of cheques to the effect that the cheques would be encashed only after realisation of proceeds pertaining to the Letter of Credit. It has also been deposed by DW1 Smt. Madhu Srivastava that the consignment was to be sent of Euro 37,600.75 but due to the acts of the complainant the consignment of Euro 13,276 only was sent and rest of the material, which was prepared by the accused, could not be sent as the complainant did not permit the shipment.
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17. During his cross examination as CW1, the complainant denied that cheques Ex. CW1/A and Ex. CW1/B were given by the accused no.2 as security; and that he would have become entitled to encash the cheques only after successful completion of the order and the receipt of the payment under the LC by the accused no.1.
18. It is noteworthy that both the cheques namely, Ex. CW1/A and Ex. CW1/B have been produced before this court by the complainant himself and were tendered by him during his examination in chief. Cheques Ex. CW1/A and Ex. CW1/B are having written on the reverse of them that the respective cheque would be encashed only after realisation of proceeds pertaining to LC no. 01087/0800933500.
19. During his examination in chief the complainant as CW1 has not given any explanation as to how and under what circumstances the writing on the reverse of cheques Ex. CW1/A and Ex. CW1/B came into existence. During the crossexamination of CW1 Sh. Mohd. Sameed his attention was drawn on the writing on the reverse of both the cheques still no explanation was given by the witness during his crossexamination or by way of reexamination as to under what circumstances the writing, in the hand writing of the accused no. 2, was written on both the cheques. During his cross examination CW1 Sh. Mohd. Sameed simply stated that he was not aware of the writing on the back of the cheques. During the cross examination of DW1 Smt. Madhu Srivastava the complainant sought to C. C. No. 5131/1/09 Page no. 11 of 16 make a case that the writing on the reverse of cheques Ex. CW1/A and Ex. CW1/B was never within his knowledge; and that the same was concealed by the accused no. 2 at the time of the handing over of both the cheques to the complainant by placing the cheques in an envelop and by showing only front side of cheques Ex. CW1/A and Ex. CW1/B. This explanation of the complainant does not inspire confidence of the court. The court believes the testimony of DW1 Smt. Madhu Srivastava that the writing on the reverse of cheques Ex. CW1/A and Ex. CW1/B was in existence when both the cheques were handed over by the accused no. 2 to the complainant and the same was within the knowledge of the complainant. The court also believes the version of DW1 Smt. Madhu Srivastava that the writing on the reverse of cheques Ex. CW1/A and Ex. CW1/B must have been put to safeguard the interest of the accused to not to put any financial burden on them unless and until the amount against the letter of credit, whereunder Euros 37,600.75 was to be received by the accused from the complainant, was received.
20. Now in the face of the writing on the reverse of cheques Ex. CW1/A and Ex. CW1/B the question arise as to what is the consequence of such writing?
21. As per the provisions of section 138 of Act 26 of 1881 the offence under the said section is committed if a cheque is drawn by a person on an account maintained by him with a banker for payment of any C. C. No. 5131/1/09 Page no. 12 of 16 amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank.
22. The term 'cheque' has been defined in section 6 of Act 26 of 1881. As per section 6, a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. From a reading of section 6 of Act 26 of 1881 it can be discerned that every cheque is a bill of exchange.
23. Expression 'bill of exchange' has been defined in section 5 of Act 26 of 1881 which says that a bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.
24. From a reading of the definition of the bill of exchange it can be discerned that such bill of exchange, which may also be a cheque if drawn on specified banker, must contain an unconditional order to pay to a certain person. The corollary of the definition of bill of exchange contained in section 5 of Act 26 of 1881 is that if the instrument contains an C. C. No. 5131/1/09 Page no. 13 of 16 conditional order then the instrument cannot be treated as a bill of exchange.
25. Paragraph no. 2 of section 5 of Act 26 of 1881 says that a promise or order to pay is not "conditional" within the meaning of section 5 and section 4, by reason of the time for payment of the amount or any installment thereof being expressed to be on the lapse of certain period after the occurrence of specified event which according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain.
26. In the case in hand, in the considered opinion of the court, the writing on the reverse of cheques Ex. CW1/A and Ex. CW1/B is significant and makes payment by the banker of the accused to the complainant conditional to be paid only in the event after realisation of proceeds pertaining to LC no. 01087/0800933500. Such condition imposed by the accused, according to the ordinary expectation of mankind, is not certain to happen so much so the buyer of the goods as well as the complainant by his conduct by not approving the goods of the accused could have created the situation wherein the payment against the LC could not be made by the banker who had to make payment against the said LC. The court is of the considered view that in the face of the writing on the reverse of the cheques Ex. CW1/A and Ex. CW1/B the cheques contained conditional order to banker the Union Bank of India and thus, the cheques ceased to become C. C. No. 5131/1/09 Page no. 14 of 16 cheque within the definition of section 6 of Act 26 of 1881 in respect of which no offence can be made out.
27. Even if it is taken to be proved that Ex. CW1/A and Ex. CW1/B never ceased to be cheques and remained so, still as per the understanding between the parties the payment against the same could not be made unless and until the accused received entire payment of Euro 37,600.75 under the letter of credit. It is admitted case of the complainant in his letter Ex. DW1/F that goods worth Euro 13,276 only were exported and remaining goods could not be sent to the buyer in France. In these circumstances since the condition mentioned on cheques Ex. CW1/A and Ex. CW1/B was not fulfilled and the accused did not receive the amount against the LC no. 01087/0800933500 therefore, the cheques are to be treated as cheques given as security whereupon no liability to pay can be held to be arisen against the accused persons.
28. In view of above discussion in the light of the evidence led by the parties this court is of the view that the complainant has failed to prove all the ingredients of offence punishable under section 138 of Act 26 of 1881 in respect of cheques Ex. CW1/A and Ex. CW1/B against the accused persons. Both the accused are not found guilty of having committed offence punishable under section 138 of Act 26 of 1881 in respect of cheques Ex. CW1/A and Ex. CW1/B. Accused Maple Industries and Smt. Madhu Srivastava are acquitted of accusation under section 138 of Act 26 of 1881 C. C. No. 5131/1/09 Page no. 15 of 16 in respect of both the cheques. File be sent to records.
Announced in the open court (Manoj Kumar)
on this 31 day of January, 2012
st
Senior Civil Judgecum
Metropolitan Magistrate
New Delhi: 31.01.2012
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