Delhi District Court
[M.M.T.C. Ltd. & Another vs . Medchl Chemicals & on 14 November, 2011
IN THE COURT OF SH. NIPUN AWASTHI, M.M.01 (NI ACT) SOUTH,
SAKET COURTS, NEW DELHI.
CC Nos. : 81/1, 82/1, 83/1
Date of alleged commission : on or about 14.05.2005
of the offence U/s 138 NI Act
Name of the complainant : Star India Pvt Ltd.
A Company incorporated under
the Companies Act, 1956, having its
office at
205, Okhla Industrial Estate, PhaseII,
New Delhi
Name, Parentage and : 1. Zeal Infotainment
Address of the accused A 419, Ansal ChambersI,
3, Bhikaji Cama Place,
New Delhi
2. Mr. Amir Khusru
Proprietor Zeal Infotainment
A 419, Ansal ChambersI,
3, Bhikaji Cama Place,
New Delhi
Offence proved : None
Plea of the accused : The complainant has not
performed his part of the contract
in its entirety therefore the payment
of the cheques were stopped;
accordingly pleads not guilty
Final order : Acquitted.
Date of order : 14.11.2011
CC No 81/1, 82/1, 83/1 1
Judgment :
Vide this order, three complaint cases bearing No. 81/1, 82/1
and 83/1 between the same parties, in respect of the same
transaction wherein common questions of law and facts have
arisen and common evidence has been led by the parties, are
disposed of.
The present cases were instituted upon complaints by Star
India Pvt. Ltd. (henceforth complainant) alleging that Zeal
Infotainment (henceforth accused No.1), being an advertising
agency and acting through its proprietor Amir Khusro
(henceforth accused No.2) [since accused No. 1 is a sole
proprietory concern therefore, there is no separate legal identity
of accused No. 1 & 2, hence, they are collectively refer to as
'accused' hereinafter], approached the complainant for
telecast of certain advertisements of the product 'Shakti Bhog
Atta' of its (accused's) client 'M/s Shakti Bhog Foods Ltd.'. A
contract was entered into for the same and in pursuance of the
said contract the accused persons forwarded three release
orders i.,e. R.O. No. 178, 179 and 181 dated 21.06.2004, 17.06.2004 and
17.06.2004 respectively, to the complainant for telecast of above
mentioned advertisements.
Upon receiving and in pursuance of these three release
orders, the complainant telecast the advertisements for and on
behalf of accused persons as per the time schedule
incorporated in the said release orders (para4 of the
complaint). Upon the said performance of its promise, the
complainant issued and duly forwarded telecast
certificate/invoices in respect of the said telecast, to the
CC No 81/1, 82/1, 83/1 2
accused persons; the said telecast certificate/invoices were to
be the final proof of telecast and performance of its promise by
the complainant, as per the terms and conditions of the
contract between the complainant and the accused.
The accused persons, in part payment of their dues arising
out of the telecast of the advertisements and in discharge of its
legally recoverable debt handed over post dated cheques to
the complainant, which form the subject matter of these
complaints (para6 of the complaint).
When the said cheques were presented for encashment,
they were returned unpaid by the drawee bank i.e. the bankers
of the accused with reason and remarks 'Payment stopped by
the drawer'.
Upon the said dishonour, the complainant made a
demand for the cheque amount from the accused by way of
notice in writing within the statutory period provided for the
same. The accused replied the notice of demand but failed to
meet the demand. Hence, the present complaint u/s 138 N.I. Act
in respect of the offence contained therein.
The complainant adduce the following evidence (the
exhibits are refer to from CC No. 83/1 and where
additional/different documents are on record, the CC number
is mentioned thereafter)
• The testimony of Rajat Ranjan, CW1
AR of the complainant
• Certified copy of abstracts of Ex.CW1/A
the Resolution passed by Board
of Directors of complainant
CC No 81/1, 82/1, 83/1 3
authorising the representation
of Mr. Ajay K. Sharma
• Original Authority Letter Ex.CW1/B
authorising Rajat Ranjan to
represent the complainant
• Cheque No.056021 dt 25.10.2004 Ex.CW1/C
for Rs.1,45,012/ (CC No.
83/1)
• Cheque No.056018 dt 17.11.2004 for Ex.CW1/C
Rs.1,00,000/ (CC No.
81/1)
• Cheque No.585400 dt 15.09.2004 Ex.CW1/C
for Rs.170,301/ (CC No.
82/1)
• Cheque No.585384 dt 30.09.2004 Ex.CW1/D
for Rs.150,000/ (CC No.
82/1)
• Cheque No.585385 dt 04.10.2004 Ex.CW1/E
for Rs.100,000/ (CC No.
82/1)
• Cheque No.585386 dt 07.10.2004 Ex.CW1/F
for Rs.137,150/ (CC No.
82/1)
• Cheque No.585397 dt 02.10.2004 Ex.CW1/G
for Rs.95,000/ (CC No.
82/1)
• Cheque No.585398 dt 05.10.2004 Ex.CW1/H
for Rs.94,145/ (CC No.
82/1)
• The Bank return Memo dt. Ex.CW1/D
28.03.2005 in respect of cheque (CC No.83/1)
No. 056021
• The Bank return Memo dt. Ex.CW1/D
28.03.2005 in respect of cheque (CC No.81/1)
No. 056018
• The Bank return Memo dt. Ex.CW1/I,
28.03.2005 in respect of cheques (CC No.82/1)
Nos. 585400, 585398, 585397, 585384,
CC No 81/1, 82/1, 83/1 4
585385, and 585386
• Report by complainant's Ex.CW1/E
banker containing details of
dishonoured cheques
• Copy of notice of demand dt. Ex.CW1/F
27.04.2004 alongwith speed post
receipts dt. 27.04.2004
• Courier receipts Ex.CW1/G
Statement of the accused was recorded on 01.10.2007
The accused adduced the following evidence in his
defence :
• The testimony of accused Ex.DW1
• Release order No. 177 Ex.DW1/1
(CC No.
82/1)
• Release order No. 178 Ex.DW1/3
(CC No.
81/1)
• Release order No. 181 Ex.DW1/3
(CC No. 81/1
Page 16 )
• Letter dt 11.01.2005 by the Ex.DW1/2
accused addressed to Sapna
Dhawan, employee of the
complainant regarding
disputed outstanding
• Letter dt. 11.01.2005 by the Ex.DW1/4
accused addressed to Sapna
Dhawan, employee of the
complainant, regarding
disputed outstanding
• Telecast certificates Ex.DW1/5
• Letter dt. 18.01.2005 by Aparna Ex.DW1/6
Sharma, employee of the
complainant addressed to the
CC No 81/1, 82/1, 83/1 5
accused regarding disputed
bills
• Letter dt. 28.01.2005 by the Ex.DW1/7
accused addressed to Sapna
Dhawan, employee of the
complainant
• Account statement of the MarkDW1/8
accused
• Letter dt 20.11.2004 by the Ex.DW1/9
accused addressed to The
Branch Manager, Punjab
National Bank issuing stop
payment instructions in respect
of the cheque
• Letter dt. 26.04.2005 by Rajat Ex.DW1/CC
Ranjan, employee of the
complaint addressed to the
accused
After taking the defence evidence and before
pronouncing the judgment, Court on its own motion invoked
the mandatory part of section 311 Cr.P.C. r/w section 91 Cr.P.C.
and called for authenticated statement of accounts of the
accused as the same were found necessary for just
determination of the case. In pursuance of the orders of the
Court, authenticated copy of statement of accounts was
provided by the bank, which is Ex.DX.
The following questions of fact (QoF), findings thereon and
reasons therefore are found necessary to dispose of the
complaint.
QoFs
1.Were the cheques issued by the accused?
CC No 81/1, 82/1, 83/1 6Finding: The cheques were issued by the accused. Reason: The original cheques are placed on record and the issuance of same is admitted by the accused.
2. Were the cheques presented by the complainant within the statutory period of six months?
Finding: The cheques were presented within the statutory period of six months.
Reason: The cheque return memo Ex.CW1/D is dt. 28.03.2005 well within the period of six months of issuance of the cheques as the earliest cheque is dated 15.09.2004. The cheques were presented after five months and ten days after the issuance of the earliest cheque.
3. Were the cheques returned unpaid if yes for what reason?
Finding: The cheques were returned unpaid for the reason and remarks "Payment Stopped by the drawer". Reason: The original bank returnmemo Ex.CW1/D dt 28.03.2005, placed on record, states so. The bank return memo is prima facie evidence of the fact of dishonour under the mandate of section 146 N.I. Act and during the trial the dishonour was admitted.
Question of Law Upon this finding a question of law arises that if a cheque is dishonoured for issuing 'Stop payment instructions', would a complaint u/s 138 N.I. Act be maintainable?
CC No 81/1, 82/1, 83/1 7Answer Yes Reason Section 138 and 139 of the N.I. Act were enacted in view of the fact that cheques were issued for payment of admitted liability. If a complaint under Section 138 NI Act is taken to be nonmaintainable on the ground that the cheque was dishonoured due to stop payment instructions then, this interpretation would defeat the very purpose for which these provisions were enacted, as, a dishonest drawer would get the cheque dishonoured by issuing instructions to the bank for stop payment.
To exonerate the accuseddrawer from indictment under section 138 N.I. Act, if he has issued stop payment instructions to his bankers, it is essential that
i) there must be funds in the accounts in the accuseddrawer, and
ii) there must be reason for stopping the payment, which can be manifold including that there was no existing debt/liability at the time of presentation of cheque for encashment.
The burden of proving the above condition lies on the accused.
[M.M.T.C. Ltd. & Another Vs. Medchl Chemicals & CC No 81/1, 82/1, 83/1 8 Pharma (P) Ltd., AIR 2002 Supreme Court 182, Goa Plast (P) Ltd. Vs Chico Ursula D'Souza, AIR 2004 Supreme Court 408]
4. Was a demand for the cheque amount made by the complainant by way of a notice in writing to the accused within the statutory period of thirty days? Finding: Yes, the complainant made a demand to the accused for the cheque amount by way of notice in writing.
Reason: The copy of original notice (Ex. CW1/F ) is placed on record and it bears the date 27.04.2005. Since the cheque was dishonoured on 28.03.2005, the limitation to send the notice would end on or about 29.04.2005. So, the demand was made within the statutory period of 30 days. The receipt of notice is admitted by the accused.
5. Did the accused fail to meet the demand within statutory period of 15 days after the receipt of the notice by him?
Finding: The accused failed to make the payment within 15 days.
Reason: This being a negative fact cannot be proved by leading evidence on part of the complainant. Since there is no proof of payment being made by the accused it is inferred that the payment was never made after the demand. The accused issued stop payment instructions to the bank and denied the existence of his liability as the CC No 81/1, 82/1, 83/1 9 contract between the accused and the complainant was not performed by the complainant in its entirety. So it can be reasonably inferred that the payment was not made after the notice of demand was made.
6. Was the complaint made within the statutory period of 30 days since the failure of the accused to meet the demand by way of notice?
Finding: Yes the complaint was made within the period of thirty days Reason: The cause of action arose 15 days after the service of notice. The notice dated 27.04.2005, was received by the accused on 28.04.2005 as evident from the AD card annexed with the postal receipt so the cause of action would arise 15 days after 28.04.2005 i.e. on or about 14.05.2005.
So the limitation for making the complaint would end on 15.06.2005. The complaint was made on 02.06.2005 as evident from the endorsement of the ACMM on the face of the complaint.
Upon these findings, the ingredients of the offence u/s 138 N.I. Act are made out and it was on the accused to rebut the presumption u/s 139 N.I. Act, which lays down a rule of evidence by way of a mandatory presumption in favour of the complainant to the import that the complainant (holder of a cheque) received the cheque for the discharge, in whole or impart, of any debt or other liability.
CC No 81/1, 82/1, 83/1 10Plea of accused :
In his statement u/s 313 Cr.P.C. the accused explained the issuance of stop payment instructions by him on the ground that the complainant had not fullfilled all the terms and conditions of the agreement/contract. Therefore, owing to the fact that the complainant had failed to perform its promise in its entirety, the accused was not liable to perform his promise under the contract.
PoD7 Is there evidence sufficient to rebut the statutory conclusion that the said cheques were issued towards the discharge of any liability or debt, and that, is the defence of accused made out?
Finding : Yes The A.R. of the complainant, Rajat Ranjan, who deposed as CW1, has deposed to the effect that the transaction between the complainant and the accused, for the telecast of advertisements for the clients of the accused, was entered into in the following manner
1. Firstly, there was a deal between them (complainant and accused);
2 Secondly, there were release orders in terms of the deal, and
3. The cheques for the payment were provided by the accused alongwith the releaseorders.
Thereafter it was deposed by CW1 that -
● 'we complied with the time schedule prescribed CC No 81/1, 82/1, 83/1 11 in the releaseorder completely.' ● '....some dispute was raised by the accused No.1 and 2.' ● 'As per the deal everything was carried out.' ● 'The release order was different from the deal' By crossexamining the complainant witness i.e. the AR of the complainant, the accused has successfully raised a probable defence that there was difference between the release order and the deal and that there might be a variance in the telecast of advertisements according to the prescribed timeschedule as agreed between the complainant and the accused. This because, at one point of time CW1 deposed that the release order was complied with while at the other he deposed that, the deal was complied with, at the same time admitting that the deal and the relaseorders were at variance. Therefore, it raises a serious and reasonable doubt as to whether the complainant complied with the release order or with the so called deal.
It is further admitted by the A.R. of the complainant that a dispute was also raised by the accused as to the telecast of the advertisements according to the agreed timeschedule.
A serious doubt is also raised on the intent of the complainant by the fact that the complainant had not relied upon the deal, the release orders nor the telecast certificates in its evidence.
The accused thus succeeded in raising a probable defence of breach of contract on part of the complainant, by CC No 81/1, 82/1, 83/1 12 preponderance of probabilities, and has thus rebutted the presumption raised in favour of the complainant under the mandate of section 139 N.I Act.
It was thereafter incumbent on the complainant to prove its cased beyond shadow of doubt, in which it failed.
Upon the above discussion a question arises as to what were the agreed terms of telecast between the complainant and the accused i.e. in what terms was the contract between them?
The accused led defence evidence and brought on record the original deal, the release order, the communications between the complainant and the accused in respect of the dispute as to the telecast schedule adopted by the complainant, the stop payment instructions issued by the accused to its bankers and the telecast certificates issued in respect of the release orders.
Upon the perusal of the deal (Ex DW1/6) [the said deal is an enclosure with Ex.DW1/6] and the release order (Ex DW1/3) it is evident that the following Commercial Entitlement on StarNews Star Savera 06001000 hrs (MonSun) for 2280 seconds which is contained in the deal, is missing from the release order No. 181 Ex.DW1/3, but there has been telecast of advertisements on the said time schedule by the complainant as evident from the telecast certificates(Ex DW1/5) produced by the accused.
The said/observed deviation is noted below:
CC No 81/1, 82/1, 83/1 13Alleged Invoice AIR Time Reason for breach breach No. (S.No.)
1. 22689401 07:43:30 RO 181 contains the time schedule as 0080 to 1000 hr., RODP for the period from 23.06.2004 to 06.09.2004 whereas the said AIR time is not within 0080 to 1000 hr.
2. 22708301 07:43:27 do
3. 07:51:03 do
4. 07:14:27 do
5. 07:42:08 do
6. 07:23:54 do
7. 22325003 07:12:25 do
8. 07:41:25 do
9. 07:52:58 do
10. 07:53:35 do
11. 07:14:03 do
12. 07:50:59 do
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19. 07:41:46 do
20. 07:23:16 do
21. 07:53:53 do
22. 07:13:49 do
23. 07:23:23 do CC No 81/1, 82/1, 83/1 14
24. 07:52:50 do
25. 07:45:11 do
26. 22144007 07:13:46 do
27. 07:13:00 do
28. 07:43:00 do
29. 07:24:40 do
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31. 07:12:58 do
32. 07:25:50 do
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37. 07:47:05 do
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42. 22143801 Not do covered by complaint :
pertaining to RO177
43. 21987401 07:11:11 do
44. 07:27:46 do
45. 07:11:27 do
46. 07:25:23 do
47. 07:11:18 do
48. 07:55:07 do
49. 07:42:46 do
50. 07:31:38 do CC No 81/1, 82/1, 83/1 15
51. 07:29:32 do
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60. 21886403 07:28:40 do
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62. 07:12:27 do The perusal of deal clearly indicates, that this so called deal is nothing but a proposal on part of the complainant, whereby it is proposed by the complainant that the commercial entitlements as contained in the deal (so called) are available with the complainant for purpose of telecasting any advertisement on behalf of the accused. The said nature of the deal (so called) can be conclusively determined from the first of the terms and conditions contained in this deal (so called)which is reproduced below : ' . The above proposal shall be subject to the STAR TV Terms & Conditions' The said nature of the deal (so called) is further evident from the fact that the first line of the address to the accused reads as : 'Please find below a package for Shakti Bhog on STAR News' CC No 81/1, 82/1, 83/1 16 The above two line are clear indicative of the fact that by this deal (so called), the complainant is proposing particular time slots to the accused which are available for the telecast of advertisements of the clients of the accused, if the accused so desires.
The fact that advertisements were not booked at and with the dispatch of the (so called) deal by the complainant is evident from the sixth conditions contained in the (so called) deal which say : 'In accordance with SIPL's policy booking commitments are noncancellable.' The said clause cannot be construed to be operative and rational if the advertisements were booked alongwith the deal because in such a case it would become a one sided contract as there would be no acceptance of the proposal. This would be an absurd conclusion to draw. Therefore, the rationale behind this term could only be that once the accused accepts the said proposal (the so called deal) and books any time slot as proposed by the complainant through the deal (so called) then such booking commitment would be noncancellable.
Therefore, it is evident that the deal (so called) is a proposal on part of the complainant and the issuance of release order is acceptance of the said proposal on part of the accused.
CC No 81/1, 82/1, 83/1 17Thus, the proposal (the so called deal) on part of the complainant could not be said to have been accepted by the accused, as in order to convert a proposal into a promise the acceptance must be absolute and unqualified (as per the mandate of section 7 of Indian Contract Act 1872) and in the present case the release order, which was supposed to be in the nature of acceptance of the proposal (so called deal) was not containing the time slot, Star Savera 06001000 hrs (MondaySunday) for 2280, though the said was contained in the deal. Therefore, the said release order was not an absolute acceptance rather it was in the nature of a counter proposal by the accused.
It is evident from record that the complainant accepted the release orders i.e. the counter proposal because
1. the cheques accompanied the release orders and were accepted by the complainant. The said acceptance of cheques would amount to the acceptance of this counter proposal under the mandate of section 8 of Indian Contract Act, 1872, which reads as follows : 'Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal is an acceptance of the proposal.'
2. the complainant failed to raise any objection as to the variance between his proposal i.e. the (so called) deal and the release order upon noticing the same. Rather the complainant proceeded with the telecast of CC No 81/1, 82/1, 83/1 18 advertisement of clients of the accused upon receiving the release order. The said performance of conditions of the release orders tentamounts acceptance of the said release orders and entering into a new contract wherein the release order was the proposal and it was converted into a promise and a consecutive contract upon the telecast of advertisements by the complainant.
Since the cheques were accepted by the complainant at the time of receipt of the release order and according to the version of the complainant there was a variance between the release order and the deal, and no intimation/communication of such variance was ever made to the accused after the receipt of the same or even after lapse of reasonable time and the complainant proceeded with the telecast activity, it can be undoubtedly inferred from the conduct of the complainant that the complainant accepted the release orders and the original proposal in form of the deal lapsed.
There were various communications between the complainant and the accused, after the telecast of advertisements by the complainant as regards this dispute as also admitted by the complainant.
It is proved that the activity was carried out by the complainant in respect of the release order issued by the accused but it is also proved that the release order was not complied with in its entirety and that there was a partial breach of contract on part of the complainant therefore the liability of the accused upon the cheques which form the subject matter of this complaint should stand proportionately reduced under CC No 81/1, 82/1, 83/1 19 the mandate of section 44 of the N.I Act. To what extent that liability should be reduced and what should be the liability of the accused is for the civil court to decide upon merits and cannot be so done by a court exercising criminal jurisdiction, considering the partial breach of contract by the complainant.
The accused in the present case has failed to prove/show that he had sufficient balance in his account at the time of issuance and presentation of the cheques to honour the same. But given the fact that the cheques were post dated and were not presented on the date of there issuance and the complainant had six months time to present the same for payment according to its sweet will , it can not be expected from the accused to maintain the plateau of balance to honour the cheques as and when they were to be presented for payment, anytime during the statutory period, more so, when he had sufficient and valid grounds to stop the payment thereof.
Accordingly the accused is acquitted for the offence U/s 138 N.I Act Announced in (NIPUN AWASTHI) open court today Metropolitan Magistrate (01), 14.11.2011 South, NI Act New Delhi CC No 81/1, 82/1, 83/1 20