Delhi District Court
4.2014 The Complainant Had Dropped ... vs . on 30 January, 2015
IN THE COURT OF SHRI PUNEET PAHWA
METROPOLITAN MAGISTRATE 01 (N.I. ACT)
PATIALA HOUSE COURTS : NEW DELHI
Windsor Speciality Resins Pvt. Ltd.
Through its Authorized Representative
Pradeep Sharma
S/o Shri Satya Pal Sharma
Registered Office at D8/2, Vasant Vihar,
New Delhi.
....................... Complainant
Vs.
1.Bellpoly Moulders Pvt. Ltd.
Through its Director Sh. Sanjiv Kapoor, Plot No.13, Udyog Vihar, Greater Noida, Distt. Gautam Budh Nagar, Uttar Pradesh201306.
2. Sanjiv Kapoor Director, Bellpoly Moulders Pvt. Ltd.
Plot No.13, Udyog Vihar, Greater Noida, Distt. Gautam Budh Nagar, Uttar Pradesh201306.
3. Anil Dhiman Manager Purchase, Bellpoly Moulders Pvt. Ltd. Plot No.13, Udyog Vihar, Greater Noida, Distt. Gautam Budh Nagar, Uttar Pradesh201306.
Case No.250/1
4. O.P. Dhyani, Accounts Manager, Bellpoly Moulders Pvt. Ltd. Plot No.13, Udyog Vihar, Greater Noida, Distt. Gautam Budh Nagar, Uttar Pradesh201306.
[PROCEEDINGS DROPPED ON 01.04.2014] .................................Accused Case Number. : 250/1 Date of Institution of Present Case. : 28.05.2012.
Offence Complained Of. : U/s 138 NI Act Plea of the Accused. : Not Guilty Arguments Heard On. : 07.01.2015. Final Order. : Convicted. Date of Judgment. : 30.01.2015 − :: JUDGMENT ::
1. Vide this judgment, I shall dispose of the present complaint filed by the complainant u/s 138 Negotiable Instrument Act, 1881 (hereinafter referred to as "N.I Act").
Case No.250/12. Initially the present complaint was filed against the four accused persons and they all were summoned. However, on 01.04.2014 the complainant had dropped proceedings against accused no.4 and accused no.4 was discharged. Accused no.1 is the company, accused no.2 has been alleged to be Director of accused no.1 and accused no.3 has been alleged as Manager (Purchase) of accused no.1.
3. In brief facts of the case are that accused no.1 had placed purchase order no. BPMPL210, dated 11.02.2012 for purchase of goods and the said goods were duly received by the accused from the complainant on 13.02.2012 alongwith invoice no.1112/0042, dated 13.02.2012 for Rs.3,98,313/. Against the above said purchase, accused no.1 had issued one PDC, bearing no.609584, dated 16.04.2012 for Rs.3,98,320/, drawn on Allahabad Bank, Vasundhra, Ghaziabad, U.P. When the said cheque was presented for encashment the same was returned back unpaid for the reasons "Exceeds Arrangement", vide returned memo dated 11.04.2012. Thereafter the complainant issued a legal demand notice dated 20.04.2012 to the accused. The said notice was duly served upon the accused through Courier, Regd. Post and through email. Despite service of notice the accused failed to pay the cheque amount within the stipulated period and replied to the legal notice vide reply dated Case No.250/1 08.05.2012. Since the accused failed to make the payment within 15 days of receipt of notice, the complainant preferred to file the present complaint against the accused persons under Section 138 N.I. Act.
4. To prove his case the complainant has relied upon the following documents: Board Resolution issued in favour of AR Sh. Pradeep Sharma Ex. CW 1/1, the cheque in question Ex. CW 1/2, bank return memo Ex. CW 1/3, legal notice Ex. CW 1/4, proof of delivery of legal notice Ex. CW 1/5A to Ex. CW 5/5D, Ex. CW 1/6 A to Ex. CW 1/6D and copy of email Ex. CW 1/7. Reply of the accused persons to legal notice Ex. CW 1/8, Copy of purchase order placed by accused through email Ex. CW 1/9, Invoice No.11 12/0042 Ex CW 1/10, Purchase orders Ex. CW 1/11A & Ex. CW 1/11B and Tax Invoices Ex. CW 1/12A & Ex. CW 1/12B.
5. In his evidence the AR has filed two affidavits i.e. Ex. CW 1/A in his presummoning evidence and Ex. CW 1/X in his post summoning evidence. He has also filed copy of Certificate of Incorporation of the complainant company Ex. CW 1/A. After his examination the CE was closed. Joint statement of the accused persons u/s 313 Cr. P.C was recorded on 01.04.2014 wherein the accused persons have denied the authority of AR of complainant to proceed with the present complaint. Accused no.3 has also denied his liability and stated that he was not responsible for day to day Case No.250/1 affairs of accused no.1. Although they have not denied the placing of purchase orders nor they have denied the receipt of goods. At the stage of framing of Notice as well as in their statement u/s 313 Cr. P.C the accused have submitted that the cheque in question was issued as certain material was purchased by them from the complainant however the said material was purchased on certain conditions and the purchase was subject to fulfillment of those conditions. They have submitted that they had informed the complainant that part of material supplied was defective and therefore they issued stop payment instructions to the banker in writing. The cheque in question was issued before they find out that the material was defective. Since the quality and quantity of the goods received by them was not as per the purchase orders, they were not liable to pay any amount to the complainant and, therefore, the cheque can not be said to have been issued in discharge of any legally recoverable debt or liability.
6. Accused no.3 himself stepped into the witness box and deposed as DW 1. After his examination the evidence was closed and arguments were heard.
7. The AR of the complainant was crossexamined at length by Ld. Counsel for the accused and I have gone through the entire cross Case No.250/1 examination of the AR and it can be said that no major contradictions came out from the crossexamination of the AR of complainant. In his crossexamination he has admitted that the complainant was not the manufacturer of the 'ABS' material which was ordered by the accused company and the same was imported by them from Taiwan and the said fact has not been mentioned in the complaint nor the same fact has been informed to the accused company in writing. However, the accused company had been informed about the same verbally and they were very well aware about the fact that the said product was only manufactured by a Taiwan based company and it was a branded product. They used to keep the said material in their store in advance and used to supply it to the accused company as and when orders were placed by them. The said material was supplied to the complainant company by the Taiwan based company in packed bags of 25 kg each. They did not use to open the bags and check the quality of the material lying in the bags. However, since it was a branded product and opened bag cannot be sold, so there was no question of getting it tested by them. He also admitted that they did not ascertain as to whether the packed bags contained the ABS material or any other goods before supplying the same to the accused company. He also admitted that the accused company used to place purchase orders with them by clearly mentioning the specifications of the said product in the purchase orders itself. He further submitted Case No.250/1 that they used to supply ABS material as per Grade No. ABS (PA 757 Natural) as intended by accused persons in their purchase orders and the specification was inbuilt in the above said grade number and only after that invoices were raised upon the accused persons. He also submitted that they did not use to supply the test report of the said material as required by accused company. They used to get the test report alongwith the material imported by them from Taiwan and a copy thereof used to be handed over to the accused company at the time of delivery of the product. He further submitted that they did not have any quality control over the goods manufactured by Taiwan company and supplied to the accused company. However, it was a standard trade practice of the multinational companies as per which they were not supposed to open the bag or supply the opened bag. He denied the suggestion that he was not competent to present, sign, verify or pursue with the present complaint on behalf of the complainant. He submitted that they did not take any step for collecting the rejected/unused material from the accused as they did not get any intimation from the accused company. He denied the suggestion that they had supplied substandard goods to the accused company. After his examination, CE was closed.
8. Accused no. 3 Anil Dhiman had himself stepped into the witness box and deposed that he has been working with the Case No.250/1 complainant company since 1996 and has been looking after the affairs of the purchase on behalf of the accused company. They used to place purchase orders upon the complainant company with their required specifications mentioned therein. He deposed that purchased orders were placed by the accused company with the complainant company. He drew the attention of the court on the special specifications mentioned at point A on the said purchase orders. He also pointed out the conditions mentioned at serial no. 5 & 8 which reads as follows "rejection will be replaced at vendor's cost" and "please sent all supplies with material test certificate". He further deposed that the complainant company never supplied the material test certificate alongwith the supplies. The complainant company used to supply goods in packed bags, each weighing 25 kg. He further deposed that sometimes less quantity was found in the bags and sometimes spurious goods were also supplied by the complainant company. He deposed that the complainant company never informed the accused company that they were not the manufacturer of the ABS material which was being supplied to them. He further deposed that they used to deliver PDCs to the complainant at the time of placing purchase orders. He submitted that they never purchased the ABS material except from the complainant company. He further submitted that they used to use the material supplied by the complainant in their components which were to be supplied to Case No.250/1 various electronic companies such as Samsung India Electronics India Ltd. He deposed that components which were built from the material supplied by the complainant company, were rejected by their buyers. He further deposed that their buyers used to send them rejection invoices which are Ex. DW 1/1 (colly) (placed in the other connected matter bearing CC No.248/1). The said rejection invoices have been issued to them by their various buyers viz. Samsung, LG, Supreme Industries, Aqua Mall etc. The total rejection amount comes to the tune of Rs.40,83,375.93/. and statement to that effect is Ex. DW 1/2 (placed in the other connected matter bearing CC No.248/1). They used to inform the complainant company about their rejections by their buyers from time to time. They have also debited the account of the complainant company. However, he had not brought the copy of the debit note but undertook to file the same before the Court. On the basis of statement of account and rejection invoices he deposed that the accused company had to pay an amount of Rs.4 lakh approx. He deposed that the rejected and substandard material of the complainant company was still lying in their factory unused and despite requesting the complainant company to lift the unused material, the complainant did not lift it from their factory. During his examination, the witness stated that by mistake he had filed the wrong documents and filed some more document which are Ex. DW 1/3 (placed in the other connected matter bearing CC Case No.250/1 No.248/1). On NDOH he had brought the copy of the debit notes raised by the accused company to the complainant company which are Ex. DW 1/4 (placed in the other connected matter bearing CC No.248/1). He submitted that approx. 250 staff members were working during the year 201112 with the accused company and he was aware of all departments of the accused company. He further deposed that he was aware of each and every transaction of the company related to the material received by the company from time to time and the payment obligations of the accused company towards the company who supplied the material to the accused company. He deposed that they used to purchase raw material of different grades from different companies and prepare plastic components for their buyers and dispatch the same from time to time. He further deposed that raw material supplied to them used to be consumed within 12 days, however sometimes they used to consume the raw material in more than 15 days also but the same depends upon the requirement of their customers. He deposed that the raw material was first supplied to IQC Department and after testing it the same was transferred to other department. He deposed that in the whole process, the Purchase Department did not deal with the material personally but if there used to be any requirement of any information regarding quality of material then other department used to inform the Purchase Department. He further stated that they used to purchase raw material Case No.250/1 mentioned above from other companies also viz. Bhansali Engineering, Reliance Industries, Supreme Petro Chem etc. He further submitted that they used to receive complaints relating to sub standard raw material, supplied by companies other than the complainant company and they used to inform the concerned supplier relating to substandard raw material and also collecting the raw material from their store and subsequently they used to issue Debit Note to the said supplier. He further deposed that according to him the material was supplied by the complainant company to the accused company within 2 7 days from the date of purchase order. He further deposed that they had supplied the components prepared from raw material supplied by the complainant company to various companies viz. Samsung, Aqua Mall, Supreme Industries Etc. To a specific question he deposed that they must have supplied the components prepared by raw material of the complainant after 15 days, 30 days or might be after 1 ½ month from the date of the receipt of the material. He further deposed that they had received rejection invoices from their customers from 2008 to till July 2012. He further deposed that as soon as they received the complaints of substandard quality of raw material of the complainant from their customers, they had immediately informed the complainant company through telephone but not through any other mode. He further deposed that being Purchase Manager of the accused company he Case No.250/1 only dealt with the matters relating to purchase. He further deposed that Mr. G.P. Dubey who was head of Store Department of the accused company had received the goods supplied by the complainant company. He was not aware about the other documents supplied by the complainant company alongwith the goods supplied to the accused company. He stated that against the three purchase orders placed by the accused company, the complainant company had supplied around 250 bags of raw material of grade PA 757 and out of the supplied bags he had seen two bags in open condition and 8 bags in sealed condition. He submitted that their buyers did not mention in the rejection invoices filed by him before the court about the grade of raw material by which the components were prepared by them as he was aware that the complainant company had supplied the raw material of grade PA 757. He could not say that the components rejected by their buyers as per rejection invoices were the components which were actually prepared by the raw material of grade PA 757 supplied by the complainant company. He could not tell exactly as to whether raw material supplied by companies other than the complainant company was also used for preparation of components which were rejected by their buyers. He deposed that he never informed the complainant company either through writing or through email about the substandard quality of material supplied by them.
He admitted the contents of email Ex. CW 1/14 (kept in other Case No.250/1 connected matter bearing CC No.249/1). He deposed that they had exchanged their conversation through this email relating to the supply and status of payment. He admitted that the complainant was asked by their M.D. Sh. Sanjiv Kapoor not to present the cheque as some factoring arrangements, of their company with some other bank were going on. He deposed that their MD wanted to make payment but due to factoring arrangement could not make the payment to the complainant company. He was not aware that the accused company, during the pendency of the complaint, had issued four cheques to the complainant company for honoring their commitment against the purchase of material from the complainant company. He deposed that three cheques, details of which are as follows Cheque no. 610262 for an amount of Rs.94,705/, 610264, dated 06.07.2012, for an amount of Rs.1,00,000/ and 610266, dated 10.08.2012, for an amount of Rs.1,00,000/, had been issued by accused no.2 Sh. Sanjiv Kapoor in favour of the complainant company. He further deposed that all the abovesaid cheques were mentioned in the emails exchanged between them which are Ex. CW 1/15 to Ex. CW 1/17, alongwith their dishonour memos Ex. CW 1/18 to Ex. CW 1/20 (in other connected matters). He deposed that he was not present in person when the raw material was supplied by the complainant company to the accused company alongwith necessary documents because this was the duty of the Store Manager to receive the Case No.250/1 material. He further deposed that he had not personally checked the raw material supplied by the complainant company to the accused company alongwith Material Test Certificate or not. He feigned ignorance about the weight of the bags of raw material supplied by the complainant company to the accused company since he was not personally present at the time of delivery of goods and issuance of cheques.
9. Ld. Counsel for the complainant has argued that the case of the complainant has been sufficiently proved beyond all reasonable doubt whereas the accused has failed to rebut the presumptions raised against him and, therefore, the accused is liable to be convicted u/s 138 N.I. Act. He further argued that if there was any defect in the goods then why the accused did not inform the complainant about the same and it is only after they received legal demand notice they have raised issue of spurious quality of goods for the first time but before that not even a single voice was raised by the accused persons regarding substandard quality of material supplied by the complainant. Ld. Counsel for the complainant has also brought to the notice of the court the four cheques issued by the accused company during pendency of the present complaint and total amount of those four cheques is exactly equal to the cheques which are subject matter of one of the three connected complaints pending between them. Ld. Case No.250/1 Counsel has further argued that rejection invoices filed by the accused company can not be relied upon as they were prior in time to the tax invoices produced by the complainant and therefore it shows that the rejection invoices do not pertain to the goods manufactured from the raw material supplied by the complainant company. Moreover the accused has not disputed the purchase orders and delivery of goods and issuance of cheques. Return of the cheques unpaid has been proved by the complainant and service of legal demand notice has also been proved as the accused had themselves replied to the legal demand notice and, therefore, all the essential ingredients of Section 138 of N.I. Act have been proved and the accused persons have failed to show as to why they are not liable to be convicted. Ld. Counsel for complainant further argued that as per the very case of the accused persons it can be said that the spurious quality of the goods must have come to the notice of the accused persons within 1520 days of supply of material as can be seen from the rejection invoices then why the accused persons had entered into subsequent transactions with the complainant and placed further orders for supply of goods. They had even issued cheques to the complainant on the basis of goods supplied on subsequent purchase orders and they have never raised the issue of defective goods during those transactions. They had never raised the issue of defective goods in the emails transacted between the accused and the complainant Case No.250/1 and in fact DW 1 had himself admitted the contents of the emails transacted between the parties which are on record. This fact contradicts the defence of the accused and thus it can be said that the presumptions raised against them have not been rebutted by the accused persons.
10. On the other hand Ld. Counsel for the accused has argued that the present complaint is not maintainable per se as the cheque in question has been issued in the name of the complainant and therefore the complainant company is the payee and as per Section 138 N.I. Act only the payee or holder in due course can institute the complaint under Section 138 of N.I. Act. The AR has not proved that he was the holder in the due course and, therefore, the present complaint is liable to be dismissed on this ground only. Moreover the holder in due course must establish that he is filing the complaint in the capacity of holder in due course. Ld. Counsel for the accused has further argued that the complaint lacks in material particulars and it does not disclose the essential ingredients of Section 138 N.I. Act and therefore the complaint is not maintainable. It nowhere discloses that the AR is authorized to file the present complaint on behalf of the complainant and there is no mentioning of the Board Resolution in the complaint and therefore the Board Resolution can not be proved. Moreover there is no specific averments against the accused Case No.250/1 persons. The complaint mentions about only one purchase order whereas the complainant is relying on three purchase orders. Since two purchase orders are not part of the pleadings, therefore, they can not be relied upon. Moreover complaint nowhere talks about the legally enforceable debt or liability and it only talks about the purchase and moreover it talks about issuance of cheque and not drawing of cheque which is an essential ingredient for an offence u/s 138 N.I. Act. Merely admission about issuance of cheque does not constitute the offene. The cheque is only a mode of payment and it in itself does not constitute the liability and therefore the complainant has to prove existence of liability which is not a matter of presumption. The existence of debt or liability is to be proved by bringing positive evidence on record and the complainant has not filed statement of accounts or any other document to show existence of any debt or liability. The presumptions envisaged under N.I. Act are in respect of the cheque and not in respect of any debt or liability. So far as the issuance of substandard quality of goods is concerned, Ld. Counsel for the accused has argued that accused persons have raised plausible defence of substandard quality of goods and the very fact that PDCs were issued shows that the payment was subject to acceptance of goods and now it is upon the complainant to prove that the goods supplied were not of substandard quality. Moreover in the reply to the legal demand notice this issue was raised by the Case No.250/1 accused but the complainant did not take any step after receiving the reply. On these grounds Ld. Counsel for the accused has argued that the accused persons have been able to rebut the presumptions raised against them and hence they are entitled to be acquitted. Ld. Counsel for the accused has relied upon the following case laws: 1) EPC Industries Ltd. Vs. State of Maharashtra 2009 Cr LJ (NOC) 467 (BOM); (2)Roy Joseph Creado & Ors. Vs. SK. Tamisuddin & Ors 2008 Crl. L.J. 1509; (3) Milind Shripad Chandurkar Vs. Kalim M. Khan & Anr AIR 2011 SC 1588; (4) Shrimathi Vs. Renuka 2010 Crl. L.J. 372; (5) Ravi Kumar & Anr. Vs. R. Ramalingam 200591) Crime 423; (6) Santhi C. Santhi Bhavan Vs. Mary Sherly & Anr AIR 2011 (NOC) 425(KER.); (7) Kamalammal Vs. C.K. Mohanan & Anr 2007 Crl. L.J. 3124; (8) Uplanche Mallikarjun & Ors. Vs. Rat Kanti Vimala & Anr. 1997 Crl. L.J. 4237; (9) M/s Keygten Global Ltd. Vs. M/s Mahav Impex & Anr. 2006 Crl. L.J. 3413; and (10) Madan Lal Sawhney Vs. Satpal Gupta 2009(1) Crimes 186(J&K).
11. I have heard the arguments advanced by both sides, and have also perused the case file.
12. Bare perusal of Section 138 of the NI Act clarifies that five Case No.250/1 essential ingredients for completing the offence under Section 138 of the Act are as below--
i) Drawing of the cheque in discharge of legally recoverable debt,
ii) Presentation of the cheque with the bank,
iii) Returning of the cheque unpaid by the drawee bank,
iv) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, and
v) Failure of the drawer to make payment within 15 days of the receipt of the notice.
13. It is pertinent to mention here that there are two presumptions of law as mandated by the Negotiable Instruments Act. According to Section 118 (a) of the Act, it shall be presumed that every negotiable instrument was made or drawn for consideration. By virtue of this clause, the Court is obliged to presume that the promissory note was made for consideration or until the contrary is proved. In Mallavarapu Kasivisweswara Rao Vs. Thadikonda Ramulu Firm and Others AIR 2008 SC 2898 it was held as under: "... ... ... The bare denial of the passing of the consideration apparently does not appear to be any defence.
Case No.250/1Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its nonexistence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist...."
14. According to Section 139 of NI Act "it shall be presumed, unless the contrary is proved that the holder of a cheque received the cheque for discharge in whole or in part, of any debt or other liability." Under Section 139 NI Act there is a legal presumption that the cheque was issued for discharging a liability and that presumption can be rebutted only by the person who drew the cheque. This presumption can be rebutted by the accused by adducing evidence. So the burden of proof is on the accused.
15. In Hiten P. Dalal Vs. Bratindranath Banerjee AIR 2010 SC 1898 it was held as under: "The words 'unless the contrary is proved' which occur in this provision (Section 139) make it clear that the presumption has to be rebutted by 'proof' and not by a Case No.250/1 bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted......".
16. Now to bring home the guilt of the accused it is to be seen as to whether the above said five essential ingredients have been proved by the complainant or not and whether the accused persons have been able to rebut the presumptions raised against them u/s 118 & 139 of N.I. Act or not. It is the case of the complainant that the accused had placed orders upon the complainant for supply of certain material namely ABS (PA757 NATURAL) which the complainant had duly supplied, however, the accused had failed to make the payment of the said material. It is only against the said purchase order the accused had issued PDC for Rs.5,31,084/, which is the subject matter of the present complaint.
17. So far as the abovesaid five ingredients for the offence u/s 138 N.I. Act are concerned, the same have been proved by the Case No.250/1 complainant. Firstly the accused persons have not disputed the issuance of the cheque nor they have disputed that the material was not supplied to them. Presentation of the cheque for encashment and return of the same unpaid by the drawee bank has also been proved and the same has not been denied by the accused persons. The legal demand notice has also been served upon the accused persons and in fact the accused persons had duly replied to the legal demand notice and the accused persons had failed to make the payment within 15 days of receipt of the legal demand notice.
18. The basic defence of the accused persons is that the material supplied by the complainant was of sub standard quality. However, the accused persons have failed to bring any evidence on record to show that the material supplied by the complainant was of sub standard quality. From the very beginning the accused persons were aware that the complainant was not the manufacturer of the said material as this fact has been clearly mentioned on the Tax Invoices raised by the complainant. Moreover it was also in the knowledge of the accused that the material was imported from Taiwan in sealed bags and the complainant was not allowed to open those sealed bags and the same were to be supplied to the buyers in sealed bags only. Therefore, there was no occasion for the complainant to verify the quality of the material supplied. The material supplied was Case No.250/1 according to the specifications mentioned in the purchase orders and even if it is presumed for a moment that the material did not match with the specifications provided by the accused then why the accused did not raise any issue of substandard quality of the material and why he did not return back the material to the complainant. It appears that it is only when legal demand notice was served upon the accused persons they raised the issue of substandard quality of the material, before that the accused had never disputed the quality of material supplied by the complainant. In fact the accused had sufficient time to inspect the goods as the goods were supplied within 23 days of placing the purchase order and the accused had ample time to inspect the goods before using the same in manufacturing of components. The entire crossexamination of DW 1 Anil Dhiman shows that they had sufficient time to inspect the goods as the material was consumed within a period of 12 or 15 days maximum. Going by the deposition of DW 1 it can be said that had the material was of substandard quality, the accused would have come to know about the same within 1520 days of supply of goods or at the maximum one month of the supply of the goods. However, the issue of substandard goods was raised only in the month of May, 2012, that too when the legal demand notice was served upon the accused. So far as rejected invoices placed on record by the accused persons are concerned, the same can not be relied upon as most of the documents are dated prior Case No.250/1 to the date of supply of material by the complainant company. Moreover none of the material pertains to the ABS material which was supplied by the complainant company i.e. none of the rejected invoices show that the material which was rejected by the buyers of the accused was manufactured with the material supplied by the complainant company only. Further, DW 1 was not aware of the complete facts of the case. He himself admitted that being the Purchase Manager of the accused company he only dealt with the matters related to the purchase of the accused company. He did not receive the goods personally and it was received by one Mr. G.P. Dubey who was head of the Store Department of the accused company. He was not aware about the other documents supplied by the complainant company alongwith goods. He further submitted that in total 250 bags were supplied by the complainant company however he had only seen 10 bags out of those 250 bags. Moreover even out of those 10 bags only 2 bags were opened for consumption of moulding purposes and remaining 8 bags were in sealed condition. He further submitted that in the rejected invoices there was no mentioning of the grade of raw material by which the components were prepared by the accused company. He also deposed that he could not say that the components which were rejected by their buyers were actually prepared by the raw material PA 757 which was supplied by the complainant company. He did not deny the Case No.250/1 possibility that raw material supplied by other companies might have also been used for preparation of components supplied to their buyers, who had rejected their goods. He again said that he had never informed the complainant company about the substandard quality of material supplied by them. He identified the email Ex. CW 1/14 (in connected matter bearing CC No.249/1) exchanged between the complainant and Managing Director of the accused company admitting that due to factoring arrangement the payment could not be made. This email was exchanged on 10.08.2012 i.e. after the supply of material by the complainant to the accused. It is not understandable as to why no objection regarding substandard quality of material was raised by this email and if there was any issue regarding quality of material then why the Managing Director of the accused company agreed to make the payment to the complainant company. It is also on record that even during the pendency of one of the three complaints, the accused issued four cheques to the complainant company for honouring the payment against the material supplied by the complainant company. Out of those four cheques, three were of Rs.1,00,000/ each and one cheque was of Rs.94,705/. Out of these cheques, one cheque for Rs.1,00,000/ was honoured whereas three cheques were dishonoured and all these three cheques were mentioned in the email exchanged between the parties. These three cheques are also on record and exhibited as Ex. CW 1/15, Ex.
Case No.250/1CW 1/16 & Ex. CW 1/17 and their return memos are Ex. CW 1/18, Ex. CW 1/19 and Ex. CW 1/20. From the above evidence put forth by the complainant, it appears that the accused persons are merely raising a false defence to avoid their liability.
19. So far as contention of Ld. Counsel for the accused that the presumptions u/s 118 & 139 of N.I. Act are only with respect to the cheque and not with respect to debt or liability and the complainant has to prove existence of debt or liability before the application of such presumptions u/s 118 & 139 of N.I. Act, is concerned, this contention is not sustainable as in the present case the complainant has been able to prove existence of debt / liability upon the accused persons. Purchase orders are on record and the Tax Invoices are also on record which have been proved by the complainant and in fact the same have not been disputed by the accused persons. The accused persons have never disputed that the material was not supplied to them.
20. Ld. Counsel for the accused has further argued that the accused persons have been able to raise a plausible defence regarding sub standard quality of goods and it is now upon the complainant to prove that the material supplied was not of substandard quality. This contention of Ld. Counsel for the accused is also not sustainable in Case No.250/1 the eyes of law. Section 106 of Indian Evidence Act provides that when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. In the present complaint it is on record that the material was supplied by the complainant to the accused in sealed bag and as per the international trade practice the complainant was not supposed to open those bags and verify the material quality supplied by him. Since the material was received by the accused in sealed bags and the same was opened by the accused himself, the burden of proving substandard quality of the material was upon the accused and not upon the complainant. The accused has failed to discharge this burden as he has not brought on record anything to show that the material supplied by the complainant company was of substandard quality. By merely placing on record rejected invoices is not sufficient to prove that the material supplied by the complainant was of substandard quality. Most of the invoices filed by the accused were dated prior in time to the actual supply of material by the complainant company. Moreover it is also not clear as to whether the rejected invoices pertain to the goods actually manufactured by the raw material supplied by the complainant only.
21. Regarding the supply of substandard quality of goods, it would be appropriate to refer certain provisions of Sale of Goods Act 1930 at this stage. Section 13(2), 15, 23, 24, 41 &7 42 of Sale of Case No.250/1 Goods Act are reproduced hereunder:
"Section 13(2): Where a contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect.
Section 15: Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description; and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods correspond with the sample if the goods do not also correspond with the description.
Section 23 Sale of unascertained goods and appropriation(1) where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by Case No.250/1 the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made (2) Delivery to carrier. Where, in pursuance of th contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.
Section 24: Goods sent approval or "on sale or return".When goods are delivered to the buyer on approval or "on sale or return" or other similar terms, the property therein passes to the buyer
(a) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction;
(b) if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time Case No.250/1 has been fixed, on the expiration of a reasonable time.
Section 41: Buyer's right of examining the goods(1) Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.
(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.
Section 42: Acceptance: The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.
Case No.250/122. After going through the abovequoted provisions of Sale of Goods Act, 1930 and, after carefully pursuing the record of the present complaint, it can be said that the accused had accepted the goods as he did not rejected the goods when the same were supplied to him. He had sufficient time to inspect the goods but he did not indicate his rejection to the complainant within reasonable time. Sub clause (b) of Section 24 of Sale of Goods Act referred above clearly provides that when goods are delivered to the buyers on approval or "on sale or return" or other similar terms, the property therein passes to the buyer if he does not signify his approval or acceptance to the seller but retains the goods without giving rejection notice within the fixed time for returning the goods, and, if no time has been fixed, on the expiration of a reasonable time. In the present complaint the accused persons had not signified their rejections to the complainant and in fact they had accepted the goods / material and used the material for the purpose of manufacturing its products. Moreover they even not signified their rejections after expiration of reasonable time. Therefore, it can be presumed that they had accepted the goods. From the facts of the case it can not be said that sufficient time was not given to the accused to inspect the goods/material. The material / goods was in the custody of the accused and they were using it for the purpose of manufacturing its products and they had never raised the issue of substandard quality of material until service of legal Case No.250/1 demand notice. Therefore it can be presumed that they had accepted the goods and it is only when legal demand notice was served upon them, they made hue and cry about quality of the goods.
23. In Lohmann Rausher Gmbh Vs. Medisphere Marketing Pvt. Ltd. 117(2004) DLT 95 and Svenska Handelsbanken Vs. M/s Indian Charge Chrome and Ors AIR 1994 SC 626, it has been held that if defendant did not reject goods within reasonable time, he would be deemed to have accepted goods. Long gap after which goods were ostensibly rejected on promise that they were defective/substandard is clearly fatal in context of statutory law.
24. Ld. Counsel for the accused has also raised certain technical issues regarding maintainability of the present complaint on the ground that since AR was not the holder in due course of the cheque in question therefore he can not file the present complaint. Moreover he has also raised the issue of non mentioning in the complaint the documents on which he is relying upon, which is not allowed. He has also argued that the Board Resolution has not been mentioned in the complaint therefore the same also can not be proved. These contentions of Ld. Counsel for the accused are also not sustainable as the present complaint has not been filed by the AR of the complainant in his own name. The present complaint has been filed Case No.250/1 in the name of the complainant company which is the payee of the cheque, through its authorized representative. Therefore, the present complaint has been filed by the payee itself and not by any other person. Since the company is not a natural person it has to engage or authorize a natural person to pursue the case on its behalf. Therefore the contention that the present complaint has not been filed by the payee or the holder in due course is not sustainable. Since the present complaint is supported by Board Resolution, duly executed by the complainant company which is mentioned in Memo of Parties filed alongwith the complaint, which is a part of the complaint itself, therefore, the contention that Board Resolution can not be proved is also not sustainable.
25. I have gone through the entire case law referred to by Ld. Counsel for the accused but none of the case law referred to by the accused comes to the assistance of the accused as facts of those case law are materially different from the facts of the present case. Reasons for non applicability of the case law in the present case are as under:
26. In EPC Industries Ltd. Vs. State of Maharashtra (supra) the complaint was filed on behalf of the company by its AR there being no authorization from the complainant company, which is not Case No.250/1 the case in the present complaint. In Roy Joseph Creado & Ors. Vs. SK. Tamisuddin & Ors (supra) the complaint was filed by Special Power of Attorney holder of a deceased person, whereas, in the present case the complaint has been filed by the company through its AR. In Milind Shripad Chandurkar Vs. Kalim M. Khan & Anr (supra) the complaint was filed on behalf of a proprietorship concern where no document was filed to show that the complainant was the sole proprietor of the firm. In Shrimathi Vs. Renuka 2010 (supra) a friendly loan was granted by the complainant to the accused, which is not the case in the present complaint. In Ravi Kumar & Anr. Vs. R. Ramalingam (supra) the complaint was filed by Power of Attorney (POA) however the POA was not able to bring on record that he was holder in due course. Whereas in the present case the complaint has been filed by the payee itself and not by the holder in due course. In C. Santhi Bhavan Vs. Mary Sherly & Anr and Kamalammal Vs. C.K. Mohanan & Anr (supra) issuance of cheque was disputed by the accused persons. But this is not the case in the present complaint. In Uplanche Mallikarjun & Ors. Vs. Rat Kanti Vimala & Anr (supra) there was no averment that the cheque was issued in discharge of any legally enforceable debt or liability. Whereas in the present complaint it has been clearly mentioned as to in discharge of what liability the cheque in question was issued. In M/s Keygten Global Ltd. Vs. M/s Mahav Impex & Case No.250/1 Anr. (supra) the goods supplied by the complainant were found defective and the accused had in fact returned the goods. But in the present case the goods were not returned back by the accused and in fact they were apparently used by the accused for the purpose of manufacturing its products. In Madan Lal Sawhney Vs. Satpal (supra), the complainant failed to bring on record to show as to in discharge of what liability the cheque was issued. However, in the present case is quite clear as to in discharge of what liability the cheque in question was issued.
FINAL ORDER
27. In the end it can be said that the complainant has proved beyond all reasonable doubt the guilt of the accused persons whereas the accused persons have failed to rebut the presumptions raised against them. Accordingly, accused no. 1,2 & 3 are hereby convicted for the offence u/s 138 of N.I. Act.
Announced in the open Court on 30th January, 2015 (PUNEET PAHWA) MM (NI ACT1) PATIALA HOUSE COURTS NEW DELHI Case No.250/1 METROPOLITAN MAGISTRATE 01 (N.I. ACT) PATIALA HOUSE COURTS : NEW DELHI CC No.250/1 Windsor Speciality Resins Pvt. Ltd.
Through its Authorized Representative Pradeep Sharma S/o Shri Satya Pal Sharma Registered Office at D8/2, Vasant Vihar, New Delhi.
....................... Complainant Vs.
1. Bellpoly Moulders Pvt. Ltd.
Through its Director Sh. Sanjiv Kapoor, Plot No.13, Udyog Vihar, Greater Noida, Distt. Gautam Budh Nagar, Uttar Pradesh201306.
2. Sanjiv Kapoor Director, Bellpoly Moulders Pvt. Ltd.
Plot No.13, Udyog Vihar, Greater Noida, Distt. Gautam Budh Nagar, Uttar Pradesh201306.
3. Anil Dhiman Manager Purchase, Bellpoly Moulders Pvt. Ltd. Plot No.13, Udyog Vihar, Greater Noida, Distt. Gautam Budh Nagar, Uttar Pradesh201306.
Case No.250/14. O.P. Dhyani, Accounts Manager, Bellpoly Moulders Pvt. Ltd. Plot No.13, Udyog Vihar, Greater Noida, Distt. Gautam Budh Nagar, Uttar Pradesh201306.
[PROCEEDINGS DROPPED ON 01.04.2014] .................................Accused ORDER ON SENTENCE Present: Sh. Nittin Soni, Ld. Counsel for complainant alongwith AR of complainant.
Sh. M.K. Gautam, Ld. Counsel for convict no.1,2 & 3 alongwith convicts in person.
Arguments on quantum of sentence heard.
Ld. Counsel for the complainant has argued that maximum punishment be awarded to the convicts so that a right message may be conveyed to the society that a cheque can not be issued in a casual manner and once the cheque is issued, the drawer of the cheque i.e. the convict herein, must honour his commitment. Ld. Counsel for the complainant further argued that there were business dealings between the parties and the convicts have never come forward to settle the matter with the complainant and it is only when the notice was served, issue of substandard quality of material was raised.
On the the other hand Ld. Counsel for the convicts has argued Case No.250/1 that the convicts had genuine defence regarding substandard quality of material supplied and they have never raised this issue just for the sake of contesting the case. In the very beginning itself the convicts had offered to pay ₹4.5 lakh to the complainant, which was the actual amount due to the complainant and the convicts were also ready to return back the defective material which was supplied to them. Moreover the convicts have never tried to delay the matter and it was their genuine belief that there was defect in the material supplied and only because of that they had contested the present case and they have never shown any casual approach so far as the present complaint is concerned. Further convict no.3 is just an employee of accused no.1 and accused no.2 has taken sole responsibility so far as the present complaint is concerned. Moreover the convicts are still ready to pay ₹4.5 lakh to the complainant i.e. the actual amount due to be paid to the complainant and, they are also ready to return the defective material.
Arguments heard and file perused.
In the facts and circumstance of the case and also in view of the fact that there were business dealings between the parties and also the fact that convicts believed that they had genuine defence in their favour, this court is not inclined to give punishment of imprisonment to the convicts in the present case. However, so as to properly compensate the complainant, the convict no.1,2 & 3 are hereby sentenced to pay total fine of ₹4,98,320/ i.e. the cheque amount + ₹1,00,000/ additional as compensation (cheque amount ₹3,98,320/ + ₹1,00,000= ₹4,98,320/) , Case No.250/1 to the complainant, which is to be equally paid by the three convicts as compensation within one month from today and, in case of default in payment of compensation to the complainant, the convicts shall be liable to undergo Simple Imprisonment for Two month. Copy of judgment and order on sentence be given to the convicts free of cost.
File be consigned to record room after due compliance.
Announced in the open Court on 31st January, 2015 (PUNEET PAHWA) MM (N.I ACT1),PHC,NEW DELHI Case No.250/1