Delhi District Court
Cited As "Malwa Cotton & Spinning Mills vs Virsa Singh Sidhu on 23 September, 2013
IN THE COURT OF SH. LALIT KUMAR: JUDGE SMALL CAUSE
COURT - CUM -ADDL. SENIOR CIVIL JUDGE - CUM -GUARDIAN
JUDGE - CUM - METROPOLITAN MAGISTRATE (NEW DELHI
DISTRICT) PATIALA HOUSE COURTS: NEW DELHI
CC No: 661C/09
U/s 138 Negotiable Instruments Act
PS Lajpat Nagar
Champ Enterprises
(Through its attorney Sh. Bhagwati Prasad Mishra)
At E-8, Lajpat Nagar-III,
New Delhi. ..... Complainant
VERSUS
M/s K.K. Kohli & Brothers Pvt. Ltd.
Through it's Directors:
1. Sh. Krishan Kumar Kohli
2. Smt. Radha Kohli W/o Sh. Krishan Kumar Kohli,
At 14/5, Milestone, Mathura Road,
Faridabad (Haryana) ..... Accused
COMPLAINT U/s 138 OF NEGOTIABLE INSTRUMENTS ACT, 1881
Date of institution of the case : 01.09.2006
Date of Judgment : 23.09.2013
Final Order : Convicted
JUDGMENT:-
Complainant had filed the present complaint case u/s 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "N. I. Act") against the accused persons.
CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 1 of 192. Brief facts necessary for just adjudication of the present case as stated in the present complaint are that the complainant Champ Enterprises is a proprietorship concern being run by Sh. P.K. Gupta having its office at E-8, Lajpat Nagar-III, New Delhi and he has filed the present complaint through his attorney Sh. Bhagwati Prasad Mishra who has been duly authorised vide special power of attorney dated 01.09.2006. Complainant is engaged in the business of distributors and dealers of textile chemicals and the accused are engaged in the business of processing and dying of fabrics and for the said purpose accused were purchasing textile chemicals from the complainant for the last several years. The complainant after receiving the orders from the accused sent the textile chemicals under the various invoices to the accused which were duly received by the accused and for which the complainant has not received the payment to the tune of Rs. 20 lacs till date. In discharge of part liability of Rs. 20 lacs, the accused issued the cheques as mentioned in para 7 & 8 of the complaint. While handing over the above mentioned cheques to the complainant, accused assured him that the same would be encashed by his bank as and when same be presented and for the remaining amount, the accused promised to repay after some time. Complainant presented the said cheques for encashment to his bank but same were returned unpaid with the remarks as "Exceeds Arrangement" and "Accounts Frozen" vide bank return memos dated 07.07.2006, 08.07.2006, 10.07.2006, 11.07.2006 and 13.07.2006 respectively. Thereafter, complainant immediately contact the accused on phone several times but the accused avoided talking to the CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 2 of 19 complainant on one pretext or the other, therefore, complainant sent a legal notice dated 18.07.2006 to the accused informing about dishonouring of the cheques which was duly received by the accused but the accused has failed to make the payment to the complainant and on 11.08.2006 the accused sent a reply to the complainant's legal notice whereby he acknowledges his liability to pay the above said amount to the complainant and asks for some time from the complainant but till date no payment has been made by the accused. Hence, the present complaint.
3. The complainant had led its pre-summoning evidence and examined Sh. Bhagwati Prasad Mishra, Attorney as CW-1. Evidence by way of affidavit of AR for the complainant had been filed wherein he reiterated and reaffirmed the contents of the present complaint.
4. CW-1 in his testimony had relied upon documents i.e. original cheques Ex. CW1/1 to Ex.CW1/63, original bank return memo Ex. CW1/64 to Ex.CVW1/126, original receipt Ex. CW1/27, original A.D. Card Ex. CW1/128, copy of legal notice mark A and reply of accused Ex. CW1/129.
5. Thereafter accused were summoned vide order dated 24.01.2007 and on being served, notice u/s 251 Cr.P.C. for the offence u/s 138 N.I. Act was given to accused persons on 26.03.2012 to which they pleaded not guilty and claimed trial. They also stated that the cheques have been tempered with and the goods supplied were not CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 3 of 19 upto the specifications regarding which the information was provided to the complainant company. They further taken the stand that against certain cheques the payments were already made and which have been filed by the complainant to take advantage of the accused company by holding the cheques. Accused no.2 Smt. Radha Kohli was not the active director of the company and she has not made any order for any goods or had signed any cheque for any payment.
6. The complainant has come forward to prove his case and lead his evidence by way of affidavit and deposed similar line as mentioned in complaint, as CW1. In his cross examination, CW1 stated that he was working in the complainant company as accountant since 1998 and complainant company was doing business with the accused company since 2004-05. Prior to that there was no business dealing between the complainant and accused. He denied that accused used to give them advance cheques for the goods to be supplied to them. Again said the payments schedule used to be 60-90 days after the delivery of the goods demanded. However, admitted that if sometime any material supplied was not up to the standard they used to change the material as per the specifications asked. He did not know whether the company M/s K.K. Kohli & Brothers was closed in the year 2006. Complainant company used to receive telephonic orders for the supply of material and goods and even sometimes they used to receive written orders. The complainant did not receive any purchase orders specifically signed by accused Ms. Radha Kohli however the purchase order placed by the accused company were ordinarily signed by the CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 4 of 19 purchase director of the accused company. He admitted that the said cheques were not signed by the accused Radha Kohli. The change of date and amount in cheques no. 104817, 104818, 104819, 104820, 105246, 105247, 105248, 105249, 105250, 105263, 105331, 107243, 113885, 113886, 113887, 113894 and 114311 was done by the authorised officer of the accused company and the same was done when an employee of the accused company went with the said cheques, however admitted that the said changes were not carried out in his presence. He denied that the complainant company supplied defective goods to the accused company and the defective goods were not replaced even after request being made by accused company and therefore the cheques were not encashed. It is stated that complainant company was not aware about seizure of account of accused company by the Income Tax Authority in the year 2006. He denied that despite being aware of said fact, complainant intentionally presented these cheques. He denied that the complainant did not owe any sum in view of the cheques given to the complainant company as they had received the sum due on the same after the delivery of the goods. It is further denied that the cutting on the cheques and alteration of dates made on the cheques were just an attempt by the complainant company to create a cause of action against the accused company. It is further denied that complainant has intentionally altered the dates from year 2005-06. It is denied that he was deposing falsely. Thereafter, complainant evidence was closed.
7. Separate statement of accused persons were recorded u/s CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 5 of 19 313 Cr.P.C. wherein they denied the allegations against them and rebutted the complainant evidence against them. It was also stated by the accused persons that they have received notice only in respect of five cheques amounting to Rs. 75,000/- however the complainant did not accept the said Rs. 75,000/-. They did not receive any notice with regard to the remaining cheques. However the said notice dated 18.07.2006 was replied by them through their counsel on dated 11.08.2006 and same is Ex.CW1/129. The cheques have been tempered with and the goods supplied were not upto the specifications regarding which the information was provided to the complainant company. Against certain cheques, the payments were already made and which have been filed by the complainant to take advantage of the defendant company by holding the cheques. They have not received any legal notice with regard to the present complaint and that the notice they received was with regard to five cheques only amounting to Rs.75,000/- which they were ready to pay but the complainant company did not accept the same. The complainant company has intentionally altered the dates on the cheques to create a wrong cause of action against the accused company. They have already paid the sum for the goods received as it was a payment cycle to which they had adhered. There was nothing due on them for the present cheques on which they present complaint has been filed. Accused no.2 has not made any order for supply of any goods to the complainant company and had not even signed any cheque towards any payment to the complainant company as she was not the active director of the accused company.
CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 6 of 198. Accused persons in their defence had examined themselves as DW1 and DW2.
9. DW1 Smt. Radha Kohli stated that though she was the director in M/s K.K. Kohli & Brothers Pvt. Ltd. but she was not looking after day to day work of the company. She had not placed any order to the complainant company nor has signed any cheque to the complainant company towards any payment. She was not aware of any dispute with the complainant company with regards to any outstanding payments and stated that she is housewife.
In her cross examination she stated that she was not aware about the work of the company and she has not signed the cheque. Her husband was operating a processing unit and closed the said company in the year 2006. At that time, she was the director but all the work of the said company was operated by her husband. She was not aware about the process of the resignation from the company. She was not aware about the Form 32, which was with regards to the Companies Act. She further stated that she was appearing in the court for the last four dates but not aware about the outstanding payment of the company.
10. DW2 K.K. Kohli stated that his company was dealing in Textile processing and they were buying chemicals from the complainant. They were dealing for the last 3-4 years and his company was closed on 31.05.2006. The cheques for which the complainant has CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 7 of 19 filed the present case were given to the him along with order in advance or post dated cheques. The complainant has presented these cheques in the year 2006 which were relating to the period 2005 on which the dates have been altered and he has not made any alteration in the cheques. The cheques were against the defective goods supplied by the complainant and the goods were duly returned but cheques were not taken back as a faith being an old supplier. In some cheques, there was no alteration but were of the year 2005 even there was no alteration / cutting and were presented after gap of one year. They owe them only Rs. 75,000/- being the amount of five cheques returned by his bank i.e. ICICI Bank which was returned due to the reason that his account was frozen by the bank due to overdue i the account. They have received notice for these five cheques only. Even the during the period of which, the complainant is claiming they have supplied them goods for about 2.5 lacs for which all payment was made except the above mentioned five cheques. His company was closed in the year 2006 and he does not have any records at present with regards to above mentioned cheques and supplies.
In his cross examination, DW2 stated that the business / transactions was started with the complainant in the year 2002 / 2003. They purchased the textiles chemical from the company to which complainant issued the invoices. They used to make payments along with order by issuing post dated cheques and presently they did not have any records regarding the UTI cheques. He further stated that at the time of receiving the supply, they used to check the material and if CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 8 of 19 the material was found OK then they accepted the same otherwise same was returned. At that time they did not have any records as to how many times they had returned the goods to the complainant as defective. He did not remember as to how many cheques were mentioned in the legal notice Ex.DW2/A dated 18.07.2006 but the present case is with regard to the same and he gave reply Ex.DW2/B dated 11.08.2006 to the legal notice of complainant and at the time of replying the legal notice, his company was closed. He did not remember as to when the notice of this court was received by him. He further stated that in the year 2008 approximately, the sales tax authorities seized his machinery etc. The cheques in question were issued in the year 2005. They used to debit the cheques when it was cleared from the bank and also entered in the books of accounts at that time. They have informed the complainant orally for closure of the factory / company in the year 2006. He did not remember the legal notice of the complainant except that. He admitted that they have not given any reply of the specific five cheques as it was a general letter which was issued to all their creditors. He denied that they are deposing falsely. Thereafter, accused have closed their defence evidence.
11. This court heard the final arguments advanced on behalf of the parties and carefully perused the entire record including the testimonies on record as well as also gone through the case law cited by both the sides.
CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 9 of 1912. Ld. Counsel for the complainant also relied upon judgment cited as "Malwa Cotton & Spinning Mills Vs Virsa Singh Sidhu (2008) 17 SCC 147; "Karthikeva Vs. Sarabhai Vs. TVS Net Technologies Ltd. Crl.O.P. No. 20185, 20186 and 20489 of 2010 dated 28.03.2011, High Court of Chennai; "Manjula Vs. M/s Colgate Palmolive (India) on 12 October, 2006" Madras High Court whereas Ld. Counsel for the accused also relied upon the judgment cited as 1998 Cr.L.J. 4330 Kerela High Court - KV Muhammad Kunhi Vs P. Janardhan; 1997 Cr.L.J. 2122 Madras High Court "M/s. Pritostick & another Vs. M.L. Oswal; 1998 BC 581 Madras High Court "K. Govind Raj Vs. Ashwin Barai"; III[2006] BC 482 Delhi High Court - BPDL Investment Pvt. Ltd. Vs. Maple Leaf Trading - Section 87 N.I. Act; 2002 Cr.L.J. 203 (S.C.) "Veera Exports Vs. T. Kalavathy"; 2012[2] 283, "Rajesh Kumar Sharma Vs. State of Jharkhand and another"; 2005 Crl. L.J. 1237 Kerala High Court"
Ramchandran Vs. K. Dimeshan-a; 2012(2) DCR 219 Bikash Chakrborty & oth. V/s Reliance Structures (P) Ltd.; AIR 2007 SC 912 Saroj Kumar Poddar Vs State (NCT of Delhi) Anr.; Hanuman Ram Vs. State of Rajasthan VIII [2008] SLT 600, SC; Narain Vs. State of Punjab AIR 1959 SC 484;
13. Section 138 of the N.I. Act has prescribed the punishment for the offence of Dishonour of Cheque. Following facts are required to be proved to successfully prosecute the drawer for an offence under Section 138 of the Act:-
(a) that the cheque was drawn for CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 10 of 19 payment of an amount of money for discharge of a debt / liability and the cheque was dishonoured;
(b) that the cheque was presented within the prescribed period;
(c) that the payee made a demand for payment of the money by giving a notice in writing to the drawer within the stipulated period;
(d) that the drawer failed to make the payment within 15 days of the receipt of the notice.
(e) that the complaint case should have been filed within one month from the date of receipt of legal notice.
It was held by Hon'ble Supreme Court of India in case titled as M/s Dalmia Cement (Bharat) Ltd. V. M/s. Galaxy Traders and Agencies Ltd., (2001(1) R.C.R. (Criminal) 646) that:-
"The Act was enacted and Section 138 thereof incorporated with a specified object of making a special provision by incorporating a strict liability so far as the cheque, a negotiable instrument, is concerned. The law relating to negotiable instrument is the law of commercial world legislated to facilitate the activities in trade and commerce making provision of giving sanctity to the instruments of credit which could be deemed to be convertible into money and easily passable from one person to another. In the absence of such instruments, including a cheque, the trade and commerce activities, in the present-day world, are likely to be adversely affected as it is impracticable for the trading community to carry on with it the bulk of the currency in force. The negotiable CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 11 of 19 instruments are in fact the instruments of credit being convertible on account of legality of being negotiated and are easily passable from one hand to another. To achieve the objectives of the Act, the legislature has, in its wisdom, thought it proper to make such provisions in the Act, for conferring such privileges to the mercantile instruments contemplated under it and provide special penalties and procedure in case the obligations under the instruments are not discharged. The laws relating to the Act are, therefore, required to be interpreted in the light of the objects intended to be achieved by it despite there being deviations from the general law and the procedure provided for the redressal of the grievances to the litigants. Efforts to defeat the objectives of law by resorting to innovative measures and methods are to be discouraged, lest it may affect the commercial and mercantile activities in a smooth and healthy manner, ultimately affecting the economy of the country".
14. Section 6 of the N.I. Act has prescribed the definition of cheque and cheque is Negotiable Instrument within the meaning of section 13 of the Act. Section 30 of the N.I. Act talks about the liability of the drawer.
15. Section 118 of the N.I. Act talks about presumptions as to consideration, date, time of acceptance, time of transfer, order of endorsement, stamps and holder in due course. Section 139 of the N.I. Act talks about presumption in favour of holder.
CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 12 of 1916. Section 139 of the N.I. Act deals with presumption of law in favour of the holder of the cheque. It provides that unless the contrary is proved, it shall be presumed that the holder of a cheque received the cheque for the discharge, in whole or in part, or any debt or other liability. It is a rebuttable presumption of law and the burden of proving that a cheque has not been issued for a debt or liability is on the accused.
17. The presumptions u/s 118 and 139 of the N.I. Act are rebuttable and burden is on the accused to rebut the presumption which can be discharged by the accused by preponderance of probabilities. It is well settled law that presumptions u/s 118 and 139 of the N.I. Act have to be rebutted by cogent evidence and mere plausible explanation is not enough.
18. In order to bring home conviction the complainant has to show on record an unbroken chain of events leading to commission of actual offence. Further, it is the duty of the complainant to prove its case subject to provisions of N.I. Act and in such a manner so as to bring it outside the pale of any reasonable doubt.
19. In the present case, it is the stand of the accused persons that the cheques in question have been tempered with and the goods supplied were not upto the specifications regarding which the information was provided to the complainant company. Against certain cheques the payments were already made and which have been filed CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 13 of 19 by the complainant to take advantage of the accused company by holding the cheques. Accused no.2 Smt. Radha Kohli was not the active director of the company and she has not made any order for any goods or had signed any cheque for any payment.
Ld. Counsel for the accused submitted that as the 63 cheques do not from the part of same transaction as the complainant has filed the bills and invoices of all the cheques of different date of business this cannot be deemed as part of the same single transactions. But they are all distinct and separate transactions, and not more than 3 cheques could have been clubbed together in the complaint. He further submitted that present complaint is also in violation and contravention of provisions of Section 87 NI Act wherein it is specifically stipulated: A material alteration of negotiable instrument renders the same void and he relied upon judgments reported as 1997 Cr.L.J. 2122 Madras High Court "M/s Pritostick & anr. Vs. M.L. Oswal; 1998 BC 581 Madras High Court " K. Govind Raj Vs. Ashwin Barai".
This court is not agree with the contention of the Ld. Counsel for the accused because this contention has been answered by the Division Bench of Hon'ble Madras High Court in case titled as "Manjula Vs. M/s Colgate Palmolive (India) wherein it has been held that the 16 cheques were drawn on different dates and they were for different amounts, but they were presented together for payment and were dishonoured and a single notice was sent by the complainant to the drawer. The general rule is that every distinct offence of which a CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 14 of 19 person is accused, there shall be separate charge and every such charge shall be tried separately. As observed by the Division Bench of the Kerala High Court in 1996(3) Crimes 283 (cited supra), Section 219 Cr.P.C is an exception to the general rule. As stated earlier, even though different cheques were given on different dates, the presentation of all those cheques formed the same transaction. Further, the demand was also made by the complainant on the dishonouring of the cheques by giving one lawyer's notice and not several demands for the payment of the dishonoured cheques. In those circumstances, we are of the view that the partitioner / accused herein may be charged and tried at one trial for several such offences, because, the series of acts are so inter-linked or inter-connected. The very object of Section 219 is to prevent miscarriage of justice by clubbing together a number of offences and making it impossible for the accused to defend them. Sections 219 and 220 Cr.P.C lay down different and distinct exception to the general rule contemplated under Section 218 Cr.P.C in framing charges. We are of the view that the number of three offences underlined in Section 219 of the Code cannot control Section 220(1) of the Code.
20. It is pertinent to mention that the complainant is engaged in the business of distributors and dealer of textile chemicals and accused are engaged in the business of dying of fabrics and were purchasing textile chemicals from the complainant and number of invoices were issued by the complainant in this regard in the name of accused persons and in discharge of part liability of Rs. 20 lcas, the accused issued 63 cheques in the name of complainant with the CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 15 of 19 assurance that same would be encashed on presentation but same were dishonoured. The legal notice was sent to the accused but they failed to make the above said payment.
In his cross examination, CW1 stated that accused person never given any advance cheques for the goods supply to the complainant and the payment of the invoices were made after schedule of 60-90 days after the delivery of the goods demanded by the accused and if some time any material supplied was not up to the standard, accused used to change the material as per the specification of complainant. Therefore, it seems that accused was availing credit facility of 2-3 months from the complainant. Further, it may be seen that complainant was not aware about seizure of account of accused company by Sale Tax Authority in the year 2008 which is proved by the admission of accused as they never informed about the same in their reply Ex. DW2/B and in his cross examination dated 26.11.2012 that they orally informed to the complainant about the same but failed to produce any document on record in support of his contention whereas DW2 (accused no.2 Radha Kohli) admitted that sale tax authority has seized the machinery etc of the company in the year 2008. Further, accused no.2 Radha Kohli has taken a stand that she was not an active director of the accused company. However, perusal of record shows that she had replied the legal notice sent by the complainant as a director of company. Moreover, she failed to produce any document on record to show that she was not an active member in the accused company. She has not filed any documents regarding the proof of resignation of her company as a director and she submitted that she CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 16 of 19 never filed the form 32 for the resignation. Even no question has been asked in cross of CW1 about the accused no.2 Radha Kohli regarding her not being active directer nor any suggestion has been made to this effect by the accused.
21. It may be further seen that during the examination, DW2 stated that the cheques were given against the defective goods supplied by the complainant and the goods were duly returned but cheques were not taken back as a faith being an old supplier, However, he failed to produce any record regarding return of defective goods. Further accused admitted that he does not have any records with regards to above mentioned cheques and supplies.
22. It is evident from the record that cheques were never demanded by the accused from the complainant. It may be seen that DW2 stated that cheques were in possession of the complainant despite the entire payment being made, however, this fact was not mentioned in any of the pleadings of the litigations. Moreover no police complaint with regard to the non-return of the cheques was ever made. Even after being summoned by the court, in the year 2006, no complaint to police or court with regard to the misuse of the cheques in question was ever made by the accused persons which clearly reflects that defence plea raised by the accused are false and imaginary. Further signatures on the cheques were not denied by any of the accused nor any suggestion regarding false signature on the cheque were put to the complainant's witness during examination. Apart from CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 17 of 19 it, no evidence on record to prove that the signatures of accused on the cheques in question are false. Further no opinion of any handwriting expert has been sought by the accused persons to prove their defence. Admittedly no complaint has ever been filed in respect of the alteration in amount and date of cheques in question, therefore allegation pertaining to the alteration of the date and amount on the cheques in question is not substantial and untenable without the evidence of any handwriting expert on the matter. Mere alleging that the amount and date on the cheques are forged without any proof by way of evidence on record does not discharge the burden of proof on part of the accused persons. It seems that plea taken by the accused is self destructive and is not tenable in as much as if the complainant had been given so many cheques, nothing prevented the complainant from banking the said cheques. Moreover, in their statement recorded u/s 313 Cr.P.C., accused admitted that cheques in question belongs to them. Apart from it, it is admitted by the accused that against certain cheques the payments were already made and which have been filed by the complainant to take advantage of the accused company by holding the cheques.
23. Further accused has taken the stand that the complainant has misused the cheques in question. This stand of the accused persons cannot be accepted as they have failed to prove their contention as they have not even approached any police station, official or the court of justice for any complaint against the alleged act. The accused have also not intimated the said fact with his banker and CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 18 of 19 the payment of the cheques in question was not stopped with the said alleged reason. Therefore, said stand taken by accused is an after thought and not helping to the accused.
24. Since, CW-1 in his evidence by way of affidavit categorically and elaborately described as to how offence u/s 138 of the N.I. Act had been committed by the accused persons. The complainant has duly proved on record the cheques, returning memos and legal notice. In the cross-examination of CW-1, no material inconsistency has been surfaced except some minor ones which are but natural. The present complaint of the complainant is well within the period of limitation as prescribed in the N.I. Act. Therefore, in view of the aforesaid discussion, this court is of considered opinion that the complainant has successful in establishing its case against the accused persons beyond reasonable doubt.
25. Hence, in view of the aforesaid back ground, this court is held that accused Krishan Kumar Kohli and Smt. Radha Kohli have committed the offence punishable under Section 138 of the Negotiable Instruments Act. Accordingly, I hold accused Krishan Kumar Kohli and Smt. Radha Kohli guilty for the offence punishable u/s 138 Negotiable Instruments Act. Let she be heard on the point of sentence.
Announced in the open court (LALIT KUMAR)
on 23.09.2013 JSCC/ASCJ/GJ/ MM
(This judgment contains nineteen pages New Delhi District,PHC,
and each page bears my signatures) New Delhi
CC No. 661C/09 Champ Enterp. V. K.K. Kohli Page 19 of 19