Delhi District Court
Castrol India vs . Santosh Malik Cc. No. 3212/12 on 11 July, 2013
Castrol India vs. Santosh Malik CC. No. 3212/12
IN THE COURT OF MS. SWATI KATIYAR, METROPOLITAN
MAGISTRATE-05 (NI ACT), DWARKA COURTS, DELHI
CC No. 3212/12 (Old CC No. 531/4)
ID No. 02405R06302132004
M/s. Castrol India Limited
through its Senior Legal Executive
& Constituted Attorney,
Sh. Ranjan Narula, 104, Rohit House,
3, Tolstoy Marg, New Delhi-110001.
...........Complainant
Versus
1. Smt. Santosh Malik
Proprietress, M/s. Malik Automobiles
Plot no. 498, 499, Main Rohtak Road,
Mundka, Delhi-110041
ALSO AT
RZ-2A/3, Puran Nagar,
Palam Vihar, New Delhi-110087
2. Sh. Ram Mehar Malik
Plot no. 498, 499, Main Rohtak Road,
Mundka, Delhi-110041.
..................Accused Persons
Date of Institution : 03.07.1997
Offence Complained of : u/s 138 Negotiable Instruments Act, 1881
Plea of Accused : Not Guilty
Date of Reserving order : 05.07.2013
Date of Decision : 11.07.2013
Decision : Accused no. 1 is Convicted and
accused no. 2 is acquitted.
JUDGMENT
1. Complainant is a company carrying on the business of manufacturing and marketing lubricants and speciality chemicals through out the country. The present complaint was filed through Sh. Ranjan Narula, Senior Legal Executive of the Page 1 of 18 Castrol India vs. Santosh Malik CC. No. 3212/12 complainant company. Several Authorized Representatives of the complainant were substituted during the proceedings and at present, complainant is represented through Sh. Manoj Makhija.
2. Briefly stated the case of the complainant is that accused no. 2 represented to the complainant that he is the proprietor of M/s. Malik Automobiles which carries on the business of selling lubricants. Complainant accordingly appointed M/s. Malik Automobiles as their dealer for marketing the goods/ lubricants under the trade name "Castrol". It is further stated that in normal course of business, goods were supplied to M/s. Malik Automobiles on Credit against orders placed by accused no. 2.
3. Complainant states that in discharge of the liability arising from the supply of goods by the complainant to the accused on credit under invoice numbers DP 9051, 9075, 8984, 9021, 9102, 9104, 9407 and 9159, accused no. 2 had given five cheques to the complainant i.e cheque bearing no. 004241 in the sum of Rs. 1,46,891/- dated 28.01.1997 against invoice no. DP8984 and DP9021, cheque bearing no. 004247 in the sum of Rs. 2,67,721/- dated 29.01.1997 against invoice no. DP9051 and DP9075, cheque bearing no. 004248 in the sum of Rs. 3,07,044/- dated 30.01.1997 against invoice no. DP9102 and DP9104, cheque bearing no. 004250 in the sum of Rs. 3,305/- dated 31.01.1997 against invoice no. DP9159 and cheque bearing no. 004253 in the sum of Rs. 2,54,567/-
Page 2 of 18Castrol India vs. Santosh Malik CC. No. 3212/12 dated 08.02.1997 against invoice no. DP9407 (hereinafter referred to as "cheques in question").
4. Complainant states that the cheques in question were drawn by accused no. 1 as proprietress of M/s. Malik Automobiles. Complainant states that accused no. 2 had falsely represented himself as proprietor of M/s. Malik Automobiles whereas it was accused no. 1 who was the proprietor of M/s. Malik Automobiles.
5. It is stated that when the cheques in question were presented for encashment, all of them were returned unpaid vide return memos dated 03.03.1997, 04.03.1997, 05.03.1997, 05.03.1997 & 14.03.1997 with the remarks "payment stopped by the drawer" and "insufficient funds". It is further stated that the cheques in question were again deposited with the complainant bank i.e. HSBC Bank, New Delhi, for clearing on 23.04.1997 on assurance of accused no. 2 that the cheques in question would be honoured on presentation. However, it is stated that the cheques were returned unpaid vide return memo dated 24.04.1997 with remarks "payment stopped by the drawer" and "insufficient funds".
6. Complainant states that a legal notice dated 10.05.1997 was also sent to the accused but despite the receipt of legal notice, accused had failed to make the payment of the dishonoured cheques to the complainant.
Page 3 of 18Castrol India vs. Santosh Malik CC. No. 3212/12
7. Feeling aggrieved from the conduct of the accused persons, complainant has filed the present complaint praying that accused persons be summoned, tried and punished in accordance with Section 138 of Negotiable Instruments Act.
8. In pre-summoning evidence, complainant summoned and examined concerned officer from Punjab National Bank, Delhi Cantonment as CW1 who brought on record documents Ex. CW1/A i.e certified copy of statement of account, Ex. CW1/B i.e. certified copy of letter request for stop payment written by Malik Automobiles dated 25.02.1997 and Ex. CW1/C i.e. bank memo stating the reason for dishonour of cheques as payment stopped by drawer and insufficient funds in the account.
9. Complainant also examined concerned clerk from HSBC Bank as CW2 who brought on record the documents Ex. CW2/A i.e. deport form for bulk cheques, Ex. CW2/B i.e. cheque return debit voucher and Ex. CW2/C i.e. the certified copy of cheque return register.
10. Complainant further examined one Sh. Vivek Sharma, Deputy Manager (Finance) of complainant company as CW3 who relied upon the power of attorney as Ex. CW3/A, invoices no. DP-8284, 8902, 9051, 9075, 9102, 9104, 9159, 9107 as Mark-X (colly.), cheques in question as Ex. CW3/B to Ex. CW3/F, cheque return debit voucher as Ex. CW3/G dated 27.04.1997, copy of legal demand notice as Ex. CW3/H, postal Page 4 of 18 Castrol India vs. Santosh Malik CC. No. 3212/12 receipts as Ex. CW3/J and UPC as Ex. CW3/K and complaint as Ex. CW1/I.
11. Prima facie case was made out against the accused persons and they were summoned vide order dated 30.11.1998.
12. Accused no. 2 entered appearance on 04.10.1999 and accused no. 1 entered appearance on 18.01.2000 and notice was framed upon them on 25.07.2002 to which the accused no. 1 and 2 pleaded not guilty and claimed trial.
13. In post summoning evidence, Sh. Manoj Makhija, AR of the complainant entered into witness box as CW1 and tendered his evidence by way of affidavit Ex. CW1/1. CW1 relied upon his power of attorney dated 16.08.2007 as Ex. CW4/1A, copy of invoices Mark-X (Collectively) as Mark-A to Mark-H, statement of account as Mark-I, cheques Ex. CW3B to Ex. CW3/F as Ex. CW4/F, debit invoice and return memo as Ex. CW4/G, legal notice as Ex. CW4/H and postal receipts and UPC receipts as Ex. CW4/K and Ex. CW4/J respectively, complaint was relied upon as Ex. CW4/I.
14. During cross-examination, CW1 was confronted with statements of account from 01/01/1996 to 31/12/1998 and same were exhibited as Ex. CW1/X. CW1 also brought on record dealership form and dealership agreement as Ex. CW4/K (colly.). CW1 was also confronted with certified copy of Page 5 of 18 Castrol India vs. Santosh Malik CC. No. 3212/12 judgment dated 04.04.2011 passed in the civil suit between the parties i.e. Ex. CW4/X and letter dated 20.12.1996 along with credit note i.e. Ex. CW4/Y (colly.).
15. Statement of accused no. 1 and 2 under Section 313 Cr.P.C was recorded on 14.02.2013 wherein accused no. 1 and 2 expressed desire to lead evidence in defence.
16. In defence evidence, accused no. 2 examined himself on Oath under Section 315 CrPC as DW1. In his examination, DW1 deposed that he was defendant No. 2 in the civil suit between the same parties for recovery bearing suit no. 77/03 with title "Castrol India Ltd vs Santosh Malik and Ram Mehar Malik", which is in respect of transactions and cheques involved in the present complaint and complaint no. 3212/12. The certified copy of statement of PW1 I. Haq was tendered as Ex. DW1/1 (running in two pages) and that of PW2 Sh. Manoj Makhija alongwith his cross examination in the abovesaid civil case as Ex. DW1/2 (collectively, running in 15 pages). DW1 deposed that a notice under order 12 Rule 8 CPC to produce documents was served on complainant i.e. Ex. DW1/3. DW1 further deposed that complainant is not a Body incorporated and the certificate filed by complainant in that civil suit was tendered as Ex. DW1/4 (collectively, running in 3 pages).
17. DW1 deposed that he applied with the complainant as a sole proprietor vide application i.e. Ex. DW1/5 and he was issued Dealership Letter dt. 17.7.1995 which is Ex. DW1/6.
Page 6 of 18Castrol India vs. Santosh Malik CC. No. 3212/12 DW2 further deposed that at the time of his application for dealership and at the time of issuance of dealership letter and later on he had no normal relations with his wife Smt. Santosh. DW1 deposed that on account of strained relations, Smt. Santosh was residing with her father at Alipur. DW1 deposed that he and accused were separate since 1993. DW1 further deposed that after discussions with the complainant, Mr. Ashok Mehta who was senior Sales Executive with the complainant dealt the whole matter with him.
18. DW1 deposed that the dealings stopped after February, 1997 because of non-payment of their commissions under different schemes. DW1 further deposed that apart from the present complaint case, complainant had also filed a civil suit for recovery. DW1 placed on record the certified copies of the statements and documents as Ex. DW1/7. DW1 tendered Ex. DW1/8 i.e. document in respect of sales from April, 1996 to June, 1996 exceeding the total sales during January, 1996 to March, 1996. DW1 deposed that under the said scheme, for every part of 2000 litres, there was an entitlement of 5 gram gold. DW1 further relied upon the document Ex. DW1/9 which is in respect of Air Conditioner gift scheme for the year 1996, sales being above 250 Kilolitre, Ex. DW1/10 which is in respect of special scheme during September, 1996 to November, 1996, Ex. DW1/11 which is in respect of details of entitlement in terms of monthly 30 % growth as per details for September, 1996, 40 % for October, 1996 and 30 % for November, 1996 Page 7 of 18 Castrol India vs. Santosh Malik CC. No. 3212/12 and total amount commission amount is reflected in Ex. DW1/12. DW1 further relied upon the document Ex. DW1/13 i.e. the details of sliding scale discount, 1996, Ex. DW1/14 i.e. the details of commission since the year 1995 to year 1997. DW1 deposed that at point A of Ex. DW1/14, there are details of prize gift of AC and at point B, is the amount of goods supplied by company which were leaked/ damaged.
19. DW1 further relied on Ex. DW1/15 which is the list of damaged/ leaking goods supplied by complainant and there was no replacement, Ex. DW1/16 which is the letter dated 20.12.1996 in respect of Special Sliding Scale discount, 1996, Ex. DW1/17 which is credit note issued by complainant to him, Ex. DW1/18 which is the complaint lodged by accused in respect of conduct of complainant and its Carrying and Forwarding (C & F) agent, Ex. DW1/19 which is the complaint to SHO by accused no. 1 against complainant and C & F agent, Ex. DW1/20 which is letter of accused no. 1 to regional sales manager of complainant dated 22.02.1997 in respect of the same subject, Ex. DW1/21 which is again a letter written by accused to the abovesaid Mr. Sidharth Chatterjee on the same subject matter.
20. DW1 deposed that the complainant used to issue, publish and circulate list of their authorized dealers but intentionally his name was not mentioned in the list of dealers with malafide intentions. DW1 further placed on record list issued by complainant company as Ex. DW1/22 (collectively, Page 8 of 18 Castrol India vs. Santosh Malik CC. No. 3212/12 running in 3 pages) and Ex. DW1/23 i.e. the certified copy of review judgment dated 15.03.2013. DW1 further deposed that he proposes to file an appeal against the final order and decree of the civil court along with decision and amended decree on review application Ex. DW1/23. In his cross- examination, DW1 was confronted with certified copy of his statement recorded in civil proceedings i.e. Ex. DW1/X1 and DW1 admitted the contents of the same.
21. Accused no. 1 entered into the witness box as DW2 and deposed that she had never applied to the complainant for grant of any dealership nor she has availed any dealership from the complainant. DW2 further deposed that she has never placed any order with the complainant for supply of any goods nor has received any goods from the complainant. DW2 deposed that she is having strained relations with her husband and they are living separately since 1993-94. DW2 deposed that she had never issued any cheque in favour of the complainant and she does not owe any liability towards the complainant. In her cross-examination, DW2 was confronted with document Ex. DW2/X i.e. the certified copy of her statement dated 03.09.2008 recorded in civil proceedings. DW2 admitted the statement Ex. DW2/X. DW2 also admitted that the cheques in question bear her signatures. DW2 stated that she had not filled contents of the cheques and explained that blank signed cheques were kept at her shop. DW2 stated that the cheques were filled either by her or her son but she Page 9 of 18 Castrol India vs. Santosh Malik CC. No. 3212/12 had never filled any cheque for the complainant.
22. No further evidence was led by the accused no. 1 and 2 and matter was listed for final arguments.
23. Final arguments were advanced orally by Sh. Vikram Bajaj, Ld. Counsel for complainant and written submissions were filed by accused no. 1 and 2.
24. I have considered the submissions and perused the record carefully.
25. Section 138, Negotiable Instruments Act has been enacted to lend credibility to the financial transactions. The main ingredients of the offence under Section 138 Negotiable Instruments Act are:
(i) Drawing up of a cheque by the accused towards payment of an amount of money for the discharge in whole or in part of any debt or any other liability,
(ii) Return of the cheque by the bank as unpaid,
(iii) The drawer of the cheque fails to make the payment of the said amount of money within 15 days of the receipt of notice under proviso (b) to Section 138.
26. Apart from this, Section 139 Negotiable Instruments Act lays down a presumption in favour of the holder of cheque in following terms, "It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in section 138, for the discharge, in whole or Page 10 of 18 Castrol India vs. Santosh Malik CC. No. 3212/12 in part, of any debt or other liability".
27. Thus in cheque dishonor cases, what the courts have to consider is whether the ingredients of the offence enumerated in Section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 139 of the Act.
28. In the present case, complainant had alleged liability of the accused no. 1 i.e. the proprietor of M/s. Malik Automobiles, on the basis of goods supplied to the accused no. 2 vide invoices Mark-X. As per complainant, the cheques in question i.e. Ex. CW3/B to Ex. CW3/F were issued against these invoices by the accused no. 1.
29. To rebut the case of the complainant, accused no. 1 has taken a defence that she had never applied for any dealership with the complainant and thus, she has no privity of contract with complainant. Accused no. 2 on the other hand has taken a defence that though he had placed orders with the complainant and purchased the material but he was entitled to more amount than the amount claimed in the complaint to be paid by the complainant under various schemes of the complainant. Thus accused no. 2 categorically admits that the goods were received from the complainant under invoices Mark-X. Page 11 of 18 Castrol India vs. Santosh Malik CC. No. 3212/12
30. In his entire deposition, DW1 had vehemently urged about the commissions to be set off by the complainant under certain schemes but had not even once challenged invoices Mark-X. There is no averment that the goods were not supplied by the complainant under the said invoices to M/s. Malik Automobiles. It is to be borne in mind that the cheques in question are towards the payment of invoice amount and not towards any settlement which was or was not arrived at between the parties and thus, the averments raised by DW1 qua discounts and schemes are irrelevant for the determination of the present case. Once the invoices and the goods delivered thereunder are not disputed by DW1, he is precluded from denying liability towards complainant under the invoices Mark-X which form subject matter of the present case. It is also to be noted that the defence raised by the accused no. 1 is not qua the differences in payments to be made between the parties but accused no. 1 has completely denied any transaction whatsoever with the complainant. Thus, pleas relating to entitlement of DW1 under certain schemes etc. are not relevant for the present case. Even otherwise liability of accused no. 2 qua the invoices in question has already been established in the civil proceedings vide judgment dated 04.04.2011 Ex. CW4/X and from the record, it can be seen that the said judgment has not been challenged or reversed and thus has attained finality.
Page 12 of 18Castrol India vs. Santosh Malik CC. No. 3212/12
31. Coming further, it is an admitted position that accused no. 1 is the sole proprietor of M/s. Malik Automobiles. Accused no. 1 had admitted this fact in her statement Ex. DW2/X and otherwise also, there is no dispute qua the same. DW1 had also admitted in his statement Ex. DW1/X viz. that he has no concern with M/s. Malik Automobiles. Relevant extract of DW1 is reproduced as follows, " ...The sales tax certificate was applied by my wife who is defendant no.1 and the sole proprietor of M/s. Malik Automobiles. I have no connection whatsoever with firm M/s. Malik Automobiles....." . It is also to be seen that invoices Mark-X are in the name of M/s. Malik Automobiles of which accused no. 1 is the sole proprietor and thus, accused no. 1 cannot brush off her liability by saying that she has no concern with the transaction in hand. Had it been otherwise, it is inexplicable as to why the accused no. 1 had not taken any action against accused no. 2 for misusing her firm name and incurring liability thereon.
32. Accused no. 1 states that she was having strained relations with accused no. 2 since 1993-94, however, apart from oral testimony on record, there is no evidence to prove strained relations between the accused no. 1 and 2. If the relations were actually so strained, accused no. 1 would have definitely taken legal action against accused no. 2 for misusing her firm name and for dealing with the complainant. But the accused no. 1 has not taken any such steps fuelling the inference that she is raising false pleas to evade her liability.
Page 13 of 18Castrol India vs. Santosh Malik CC. No. 3212/12 Be that as it may, once the complainant has proved business relations with M/s. Malik Automobiles and supply of goods under invoices Mark-X to the said firm, liability of accused no. 1 being sole proprietor of M/s. Malik Automobiles can be taken to be established on record.
33. Coming to the next aspect of the issuance of cheques in question, accused no. 1 has flatly denied that the cheques were issued by her in favour of the complainant. As per accused no. 1, the cheques were kept as blank signed cheques at her office and the same have been misused by accused no. 2. Now, once again there is no evidence on record to prove such averments of the accused no. 1. First of all, accused no. 1 had failed to take any action against her husband for misusing her cheques. Secondly, perusal of the cheques show that the same have been filled in the same ink, thus, leading to inference that the same were filled at the same time. Furthermore, accused no. 1 in her deposition states that the cheques were filled either by her or by her son and in the statement recorded as Ex. DW2/X, accused no. 1 states that her cheque book used to be with her children who used to make the payments to different parties on the already signed cheques under intimation to her. Accused no. 1 had also admitted in the said statement that she used to put the date, name, amount etc. before signing the cheque. Thus, no part of the statement of accused no. 1 proves that the cheques in question have been misused by her husband, rather it Page 14 of 18 Castrol India vs. Santosh Malik CC. No. 3212/12 establishes that the cheques in question were issued by the accused no. 1 herself and that she is raising vague pleas to escape liability.
34. Further, the accused no. 1 had admittedly issued instructions to her bank to stop the payment of the cheques in question. However, perusal of return memo dated 24.07.1997 shows that the cheques were returned not only due to stop payment instructions but also the funds in the account of accused no. 1 were insufficient to honour the cheques in question. Moreover, accused no. 1 has not brought on record the letter given to bank for stopping the payment of cheques in question. However, the said letter has been brought on record by complainant as Ex. CW1/B. A perusal of the said letter shows that the same has been signed by the accused no. 1 and bears complete details of the cheques, their dates and exact amounts. Now, one may ask that if the cheques were misused and accused no. 1 had no knowledge about them, then how come she has mentioned the exact details of the cheques in her letter to the bank. Further, in the said letter accused no. 1 had stated the reason for stopping the payment of cheques to be dispute qua settlement of amounts with the complainant. There is no averment that the cheques have been misused by accused no. 2. Accused no. 1 has also failed to bring on record any evidence that she had sufficient funds in her account to honour the cheques in question.
Page 15 of 18Castrol India vs. Santosh Malik CC. No. 3212/12
35. It is also to be noted that DW1 had admitted in his statement Ex. DW1/X that the cheques in question were signed by accused no. 1 and were given to the plaintiff towards payment of the goods supplied to M/s. Malik Automobiles.
36. Further, even if it is presumed that accused no. 1 had no direct dealings with the complainant, still there is no bar on the accused no. 1 for issuing cheques towards discharge of liability of accused no. 2. In Alexander v. Joseph Chacko, II (1994) 1 Crimes 388 (Kerala); M. Vaidyanathan Deepika Milk Marketing v. M/s. Dodla Dairy Ltd, 2000 (1) Crimes 291 (Madras) and Gopi v. Sudershan, II (2003) CCR 375 (Kerala), it has been clearly laid down that cheque can be issued towards discharge of liability of another person.
37. Thus, in view of the entire observations made above, it stands established that the cheques in question were indeed issued by the accused no. 1 towards discharge of liability in favour of the complainant.
38. Coming to the next ingredient of the offence i.e. return of the cheque as unpaid by the bank, there is no dispute qua the same. Rather accused no. 1 had admitted that she had herself issued instructions for stopping the payment of the cheques in question which resulted in the cheques being returned unpaid. Thus, the second ingredient also stands established.
Page 16 of 18Castrol India vs. Santosh Malik CC. No. 3212/12
39. The last ingredient is qua the service of legal notice upon the accused persons and failure of the accused no. 1 to make the payment of cheque amount within 15 days of receipt thereof.
40. Now, so far as this ingredient is concerned, accused no. 1 states that she has not been served with the legal notice. However, perusal of the bail bond furnished by accused no. 1 on 18.01.2000 shows that the same address on which the legal notice was sent vide postal receipt Ex. CW3/J and UPC receipt Ex. CW3/K. The documents Ex. CW3/J and Ex. CW3/K are sufficient proof of sending the notice to the accused persons. It is a settled proposition of law that a notice properly addressed, prepaid and posted by registered post shall be deemed to be served upon the respondent unless the contrary is proved.
41. Furthermore, it is not in dispute that the accused persons have been served through process of the Court and once it is so, the decision of Hon'ble Supreme Court in C.C. Alvi Haji V. Palapetty Muhammed & Anr. 2007 STPL(DC) 952 SC would also be applicable wherein Hon'ble Apex Court has held that even if the accused didn't receive the legal demand notice he can pay the cheque amount within 15 days of service of summons from the court but if he fails, he can't contend that he has not received the legal demand notice.
42. Thus, in view of the entire observations made above, it is held that the complainant has been able to establish all the Page 17 of 18 Castrol India vs. Santosh Malik CC. No. 3212/12 ingredients of offence under Section 138 Negotiable Instruments Act and the accused no. 1 has failed to raise any probable defence to rebut the presumption under Section 139 Negotiable Instruments Act in favour of the complainant.
43. Accordingly, accused no. 1 stands convicted of the offence punishable under Section 138 Negotiable Instruments Act. However, since accused no. 2 had not issued the cheques in question in favour of the complainant, therefore, he cannot be held liable under Section 138 Negotiable Instruments Act. Accused no. 2 thus stands acquitted of the offence punishable under Section 138 Negotiable Instruments Act.
Announced in Open Court 11.07.2013 (SWATI KATIYAR) METROPOLITAN MAGISTRATE-05 NEGOTIABLE INSTRUMENTS ACT DWARKA COURTS, NEW DELHI 11.07.2013 Page 18 of 18