Delhi District Court
M/S. Vimal Industries ... vs . on 20 January, 2020
IN THE COURT OF MS AMARDEEP KAUR
MM-03 (NI ACT): PHC: NEW DELHI
Judgment
In the matter of:
CC No.: 54563/16
M/s. Vimal Industries ........Complainant
Flat No. 1, Plot No. 7 and 8,
Community Centre, Nariana Industrial Area,
PH-I, New Delhi -28.
Vs.
M/s. General Trading and Contracting Company ..........Accused
Through Proprietor Sh. Manmohan Singh.
CB-230/C, Ring Road, Naraina, Delhi-28.
Date of Institution of Complaint 20.09.2014
Offence Complained of u/s 138 N.I. Act
Plea of Accused Not Guilty
Date of Final Arguments Heard 20.01.2020
Decision Acquittal
Date of Decision 20.01.2020
BRIEF REASONS FOR THE DECISION OF THE CASE
1.Brief facts of the case as alleged by the complainant are that the accused is proprietor of M/S General Trading and Contracting Company which was having business relations with the complainant firm. The accused issued two CC No. 54563-16 M/S Vimal Industries v. M/S General Trading and Contracting Company Page 1 of 11 cheques - cheque bearing no. 779154 dated 17.07.2014 for Rs. 6,70,000/- and cheque bearing no. 779157 dated 17.07.2014 for Rs. 6,28,691/-, both drawn on Corporation Bank, Delhi, against the purchases made from the complainant company. However, the said cheques upon presentation were returned dishonored for the reason 'funds insufficient'. Despite service of the legal demand notice dated 04.08.2014, the accused did not repay the cheque amount within the prescribed period of 15 days. Therefore, the present complaint under Section 138 of the Negotiable Instruments Act,1881 was filed.
2. The complainant filed his pre-summoning evidence as Ex CW1/1 whereby he relied upon the following documents:
a) Cheque bearing no. 779154 Ex.CW1/3
b) Cheque bearing no. 779157 Ex.CW1/4
c) Dishonor Memo dated 19.07.2014 Ex.CW1/5
d) Dishonor Memo dated 19.07.2014 Ex.CW1/6
e) Legal demand notice dated 04.08.2014 Ex.CW1/7
f) Postal receipts Ex.CW1/8 & Ex.CW1/9
g) Tracking reports Ex.CW1/10 & Ex.CW1/11
3. After perusal of material on record prima facie case was made out and cognizance was taken vide order dated 06.01.2015. Accused appeared after process under Section 82 CrPC was initiated and secured bail. Notice u/s 251 CrPC was served upon him to which he pleaded not guilty and claimed trial. In his plea of defence, the accused while admitting his signatures on the impugned cheque, denied any liability towards the complainant and alleged that the impugned cheques were given as advance payment security for business dealings with the complainant company. Further he submitted that he has not received any goods from CC No. 54563-16 M/S Vimal Industries v. M/S General Trading and Contracting Company Page 2 of 11 the complainant and despite that the complainant has misused his security cheques by presenting it for an unreasonable amount. After an application under Section 145(2) NI Act was allowed, accused was granted opportunity for cross examination of the complainant and thereafter CE was closed on 24.09.2019.
4. Statement under Section 281 read with Section 313 was recorded wherein the accused submitted that he has no legal liability towards the complainant. The complainant company has misused the security cheque given for supply of manufacturing material which was never supplied by the complainant. Therefore, he reiterated that the present complaint is false and fabricated.
5. The accused did not lead any defence evidence and therefore the matter was directly fixed for final arguments.
6. Thereafter, final arguments were advanced on behalf of both parties. Ld. Counsel for accused while placing reliance on "Basalingappa Vs Mudibasappa" (2019) 5 SCC 418 by the Hon'ble Supreme Court argued before this court that the accused has successfully rebutted the presumption against him under Section 139 of NI act by establishing a probable defence and it is clear from the evidence laid that there was no legally recoverable debt on the date of presentation of the cheque. It was further contended that the complainant has failed to place on record any material to prove that alleged goods were ever supplied to the accused. Neither any details have been furnished of the material supplied, date of such supply etc. in the complaint nor any invoices or account statement CC No. 54563-16 M/S Vimal Industries v. M/S General Trading and Contracting Company Page 3 of 11 has been furnished in support of the claim made. Instead it is the accused who has brought to light the pro-forma invoices of the alleged transaction which were never materialized as alleged by the complainant.
7. Further, ld. counsel has also disputed the competency of the AR of the complainant company to depose. He has submitted that while the complainant in the present case is M/s Vimal Industries, the affidavit of evidence of AR mentions him as a Senior Accountant/Authorized representative of M/s Bhawana Synthetics Pvt. Ltd. Also, though in his pre-summoning affidavit the AR has deposed in para 2 that he is well conversant with the facts of the case, in his cross-examination he has accepted the suggestion that he does not have any personal knowledge of the present transaction and has never dealt with the accused. It is the submission of ld. counsel for the accused that since the complainant company is admittedly facing a financial crisis since 2014-15, they have misused cheques of their vendors and suppliers including the accused's to recover their losses and filed false claims including the present case. Therefore, he submits that the present complaint be decided in favor of the accused and exemplary cost be imposed on the complainant for harassing his client.
8. No arguments were lead on behalf of complainant despite due opportunity.
9. I have considered the rival submissions.
10. Now, for an offence under Section 138 NI Act it is essential that the cheque CC No. 54563-16 M/S Vimal Industries v. M/S General Trading and Contracting Company Page 4 of 11 must have been issued in discharge of legal debt or liability by the accused on an account maintained by him with a bank and on presentation of such cheque for encashment within its period of validity, the cheque must have been returned unpaid. The payee of the cheque must have issued legal notice of demand within 30 days from the receipt of the information by him from the bank regarding such dishonor and where the drawer of the cheque fails to make the payment within 15 days of the receipt of the aforesaid legal demand notice, cause of action under Section 138 NI Act arises.
11. Admittedly, the said cheques Ex.CW1/3 & Ex.CW1/4 were drawn upon the account of the accused and the signatures thereon are admitted. It was presented to the bank within its validity period and was returned dishonored on account of 'Funds Insufficient" vide return memo Ex.CW1/5 & Ex.CW1/6. Legal demand notice dated 04.08.2014 Ex.CW1/7 demanding the cheque amount was dispatched within statutory period as established by postal receipts Ex.CW1/8 & Ex.CW1/9. Internet generated Delivery report Ex.CW1/10 & Ex.CW1/11 have been placed on record. The service of the said notice has not been disputed by the accused.
12. Therefore, essentials of Section 138 NI Act stand prima facie satisfied and a presumption under Section 139 read with Section 118 of NI Act arises in favor of complainant, for the accused to rebut either by discrediting the veracity of material relied upon by the complainant or by leading positive evidence to probablise his defence on the touchstone of preponderance of probabilities as provided by the three Judge bench of the Honorable Supreme Court in Rangappa Vs Sri Mohan (2010) 11 SCC 441.
CC No. 54563-16 M/S Vimal Industries v. M/S General Trading and Contracting Company Page 5 of 1113. I shall now deal with the defences put forth by the accused in light of the evidence available on record.
1. Defence of defective representation of AR a. It is the submission of ld. counsel for the accused that the AR of the complainant company in his pre-summoning affidavit dated 25.09.2014 (Ex CW1/A) which was also relied by him at the stage of post-summoning, he has mentioned himself as an authorized representative of M/S Bawana Synthetics Pvt Ltd. which as per his own testimony as CW1 is a distinct firm than the present complainant, therefore he submits that the authority of the AR is defective and he is not competent to depose.
b. Now a company, firm or association cannot by itself enter the witness box to depose in regards to its complaint, and therefore an authorized representative is ordinarily designated to pursue such matters on its behalf. The scope of a Power of Attorney Holder or an authorized representative has been discussed by the Honorable Apex court in A.C. Narayanan vs. State of Maharashtra 2013 (11) SCALE 360 wherein it was held as follows:
"26) While holding that there is no serious conflict between the decisions in MMTC (supra) and Janki Vashdeo Bhojwani (supra), we clarify the position and answer the questions in the following manner:
(i) Filing of complaint petition under Section 138 of N.I Act through power of attorney is perfectly legal and competent.
(ii) The Power of Attorney holder can depose and verify on oath before the Court in order to prove the contents of the complaint.CC No. 54563-16 M/S Vimal Industries v. M/S General Trading and Contracting Company Page 6 of 11
However, the power of attorney holder must have witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions.
(iii) It is required by the complainant to make specific assertion as to the knowledge of the power of attorney holder in the said transaction explicitly in the complaint and the power of attorney holder who has no knowledge regarding the transactions cannot be examined as a witness in the case.
(iv) In the light of section 145 of N.I Act, it is open to the Magistrate to rely upon the verification in the form of affidavit filed by the complainant in support of the complaint under Section 138 of the N.I Act and the Magistrate is neither mandatorily obliged to call upon the complainant to remain present before the Court, nor to examine the complainant of his witness upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the N.I. Act.
(v) The functions under the general power of attorney cannot be delegated to another person without specific clause permitting the same in the power of attorney. Nevertheless, the general power of attorney itself can be cancelled and be given to another person."
c. Thus clearly the requirement of law is that firstly, the authorized representative or the POA holder has to be duly authorized to represent the original complainant i.e. the partnership firm in the instant case and secondly, such representative should have either witnessed the transaction in question as an agent of the complainant or should possess due knowledge regarding the said transaction to be able to testify the facts of it upon oath in a court of law. He should also accordingly make such assertion in his pre-summoning affidavit as well.
d. Now, in the case in hand, the complaint is supported by copy of the CC No. 54563-16 M/S Vimal Industries v. M/S General Trading and Contracting Company Page 7 of 11 partnership deed dated 30.12.2004 (Ex CW1/1(OSR)) of the complainant company mentioning Sh. Satish Batra as one of the partners of the complainant partnership firm and the said partner has duly executed a special power of attorney dated 13.09.2014 (Ex CW1/2) in favor of the AR Sh. Pushpender Chauhan, authorizing him to represent and prosecute the present complainant. Further, in para 2 of the said affidavit (EX CW1/A), the AR has given a sworn deposition that he is well conversant with the facts of the case.
e. In such circumstances, the discrepancy as pointed out by ld. counsel for the accused seems more like an inadvertent error made during drafting of the said affidavit and therefore, cannot be said to have any bearing upon the authorization of the AR. Thus the AR seems duly authorized.
f. With respect to the knowledge of the AR, though he has mentioned in his evidence by way of affidavit that he is well conversant with the facts of the case, in his cross examination dated 24.09.2019, he has submitted on oath that he has no personal knowledge and he has never dealt with the accused and it was one Mr. Deepak, working as a marketing executive with complainant firm, who used to deal with the present accused. Even otherwise, he has neither furnished any details in his evidence by way of affidavit nor has deposed as to what were the subject goods, what was the quantity thereof, how and when exactly were they delivered or that how exactly was the liability of the accused qua the impugned cheques was calculated. Further, no record has been tendered by him in evidence regarding the subject CC No. 54563-16 M/S Vimal Industries v. M/S General Trading and Contracting Company Page 8 of 11 transaction to even prima face prove acquired knowledge. Thus in such circumstances, I am inclined to hold that the AR of the complainant company did not possess the requisite knowledge regarding the said transaction. Accordingly, the present claim filed by the complainant firm is bound to be dismissed on this ground alone. Nevertheless, I shall also decide the case on its merits.
2. Defence of no legal liability a. The accused has consistently submitted before this court, first in his plea of defence to the notice framed under section 251 CrPC, then in his application u/s 145 (2) NI Act and statement of accused recorded under section 313 read with 281(1) of CrPC that he has no liability towards the complainant company since the cheques were given as security cum advance payment against purchase order for certain material, however he has never received the said goods/material till date. Therefore, he submits that the cheques were without any liability on the date of its presentation. In light of the defence so enumerated, it is therefore pivotal for this court to determine if the complainant has successfully established advancing the alleged material to the accused proprietorship concern herein.
b. Perusal of complaint filed shows that same provides no details whatsoever of transaction between the parties, only indeterminate submissions have been laid therein. No details of the material supplied, its quantity, mode of transportation, date of supply, person who supplied, invoice numbers, details of such invoices or calculation of liability etc. have been furnished in the complaint which are the CC No. 54563-16 M/S Vimal Industries v. M/S General Trading and Contracting Company Page 9 of 11 very basic details that any manufacturer (the complainant firm in the instant case) can be expected to maintain in its records. In fact, no document has been placed before this court to support that goods were ever supplied to the accused, there are only bare averments. Even in the cross examination, the AR of the complainant company (CW1) could not depose as to the date or time when the material was delivered. All he submitted was that goods were supplied to the accused sometime in April 2014. Inability of the AR to depose to this effect makes his knowledge about the present transaction and thus his ability to depose as a witness questionable which has already been discussed by this court.
c. Again, though the AR has submitted that the goods supplied to the accused were an interstate transfer from Himachal Pradesh to Delhi at the office of the accused, he has not placed on record even a single document including e-way bill, transit taxes, tolls, transportation authority permit, insurance etc. supporting any such transportation of goods, to support his claim and rebut the defence lead by the accused.
d. Further, the AR of the complainant company has himself deposed in his cross-examination that it was the practice of the complainant company at the relevant time period that they used to take advance cheques as security at the time of receiving a purchase order and raising a performa invoice, which provides details of goods to be supplied and its estimated price etc. This statement of the AR itself fortifies adds substance to the claim of the accused that the cheques were taken as advance payment for goods ordered before its delivery, CC No. 54563-16 M/S Vimal Industries v. M/S General Trading and Contracting Company Page 10 of 11 at the time of issuance of pro-forma invoices, which too have been placed on record by the accused only and that the goods/materials qua the same were never really supplied to him.
e. Now the complainant firm is a large conglomerate and can therefore be expected to maintain rigorous records of all its dealers and vendors including the present accused. Therefore, inability of the complainant to place on record any evidence to prove delivery of alleged goods/materials has made its present claim doubtful.
f. It is an established law that whereas the accused only needs to set up a probable defence, the complainant has to prove his case beyond reasonable doubt. The complainant therefore has to stand on its own legs and prove its case independently and cannot insist for the accused to lead negative evidence. Therefore, where the complainant has not been able to place any evidence to prove the liability qua which the impugned cheques were presented, it can be said that the accused has successfully raised a probable defence by casting a strong doubt upon the case of the complainant.
14. In view of the above discussion, therefore, accused Manmohan Singh, Proprietor, M/S General Trading and Contracting Company stands acquitted of the offence punishable under section 138 of Negotiable Instruments Act.
Announced in Open Court (AMARDEEP KAUR)
on 20th of January, 2020 MM(NI)-03/NDD/PHC
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