Delhi District Court
Samsung India Electronics Pvt. Ltd vs Mr. Mohd. Faruqazam on 19 May, 2016
IN THE COURT OF MS. SALONI SINGH, CIVIL JUDGE - 02, PATIALA
HOUSE COURTS, NEW DELHI DISTRICT, NEW DELHI
Complaint Case no.143/14
Unique Case ID No. 02403R0070582011
Samsung India Electronics Pvt. Ltd.,
A-25, Ground Floor, Front Tower,
Mohan Co-operative Industrial Estate,
New Delhi-110044. ...Complainant
Vs.
Mr. Mohd. Faruqazam,
Proprietor:-
M/s. India Sales Agency,
Shop No. 66, Gate No.7,
Malwani Colony, Malad West,
Mumbai-400064.
Also at:-
611, Cancer Pisces,
Divya Park, Marve Road,
Malad West,
Mumbai-400064. ...Accused
Complaint under Section 138 of Negotiable Instruments Act,1881
Date of institution : 27.09.2011
Date of Reserving Judgment/Order : 28.03.2016
Date of Judgment : 19.05.2016
Judgment:-
In the present complaint, the complainant prays that the accused be
summoned under Section 138 and Section 142 of the Negotiable
CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 1/17
Instruments Act, 1881 (for short, "N.I. Act") and be tried and punished in
accordance with law for the aforesaid offence and compensation be
awarded under Section 357 of the Code of Criminal Procedure, 1973 (for
short, "CrPC").
1.The facts, as given in the complaint, are briefly stated as follows:-
(a)The complainant is a company incorporated under the Companies Act, 1956, having its registered office at A-25, Ground Floor, Front Tower, Mohan Co-operative Industrial Estate, New Delhi-110044 and is engaged in the business of manufacturing and sale of electrical and home appliances under the brand name of 'Samsung'. The complaint has been filed through Mr. Manish Aggarwal, who is the authorized attorney of the complainant company by virtue of a Power of Attorney dated 24.09.2011.
(b)The accused was appointed as the distributor/dealer of the complainant for sale of its Samsung products and at that point in time, the accused had issued a letter enclosing a cheque bearing no. 577827, drawn on Punjab National Bank, Marve Road, Malad West, Mumbai-400064 in favour of the complainant with an undertaking that, if any amount is due and payable by the accused to the complainant, the complainant shall be authorized to fill up the date and the amount remaining to be unpaid by the accused. The accused also assured to maintain sufficient balance in his account in order to honour the said cheque. It was further assured by the CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 2/17 accused that he would not stop the payment of said cheque and, if the signatory of the cheque or account is closed, the accused shall replace the cheque by providing the complainant with a new cheque either from the same bank account or from new bank account, as the case may be.
(c)Pursuant to the distributorship agreement, the accused placed several orders with the complainant for supply of various home appliances. As per the orders, the goods were supplied to the accused and accordingly invoices were raised against them. As on 22.06.2011, there was an outstanding balance of Rs. 14,88,775.47/- (Rupees Fourteen Lakh Eighty Eight Thousand Seven Hundred and Seventy Five and Forty Seven Paise Only), which the complainant requested the accused to pay and the accused failed to pay the said amount. In terms of the contract between the parties, the complainant duly filled up the said outstanding amount and the date of 22.06.2011 in the aforementioned blank cheque (hereinafter referred as, "cheque in question"), which when presented before the bank was returned unpaid on 27.07.2011 with the remarks "Exceeds Arrangement".
(d)The complainant issued a legal notice dated 17.08.2011, through their Counsel, by way of registered post AD, calling upon him to pay the said cheque amount within a period of 15 days from receipt of the notice. The accused failed to pay the cheque amount within the said period. The complainant was constrained to file the present complaint.CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 3/17
2.The present complaint was filed on 27.09.2011. On cognizance of the offence, the accused was summoned for 04.01.2012. The accused appeared before the Court on 14.02.2012 and was admitted to bail on furnishing bail bond in the sum of Rs. 50,000/- (Rupees Fifty Thousand Only) with one surety of like amount. Thereafter, notice of accusation under Section 251 of CrPC was served upon the accused on 25.04.2013, to which he pleaded not guilty and claimed trial.
3.In order to substantiate their case, the complainant called upon and examined AR of the complainant, Mr. Manish Agrawal s/o, Sh. Mahendra Agrawal, as CW-1. CW-1 tendered his examination-in-chief, by way of an affidavit, Exhibit CW-1/3, and relied upon the following documents:-
(a)Copy of Power of Attorney of the complainant dated 24.09.2011, Exhibit CW-1/1;
(b)Present complaint under Section 138 of N.I.Act, Exhibit CW-1/2;
(c)Letter issued by the accused to the complainant enclosing the cheque in question, Exhibit CW-1/4;
(d)Statement of accounts of the accused for the period between 01.01.2010 and 30.06.2011, Exhibit CW-1/5;
(e)Original cheque in question dated 22.06.2011, Exhibit CW-1/6;
(f)Bank return memo dated 27.07.2011, Exhibit CW-1/7;CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 4/17
(g)Copy of legal notice dated 17.08.2011 with postal receipts and AD card, Exhibit CW-1/8 to Exhibit CW1/13 respectively; and
(h)Certificate issued under Section 65B of the Indian Evidence, 1872, Exhibit CW-1/14.
4.CW-1 was cross-examined by the Learned Counsel for the accused. No other witness was called upon and examined by the complainant. Thereafter, the complainant's evidence was closed and matter was listed for recording of statement of the accused under Section 313 CrPC, wherein all the incriminating circumstances were put to the accused, to which accused stated, inter alia, that the cheque in question was not given for deposit and the same was a security cheque and that there was no outstanding towards the complainant company and the cheque had been presented only to harass him.
5.After recording of the aforesaid statement, the matter was listed for the defence evidence. The accused moved an application under Section 315 of CrPC for leave of the Court to testify as a witness, which was allowed. Accused examined himself as DW-1 and placed on record copy of the complaint made by him before the police station Malwani, Mumbai dated 04.06.2015, Exhibit DW-1/1. DW-1 was cross-examined by Learned Counsel for complainant.
CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 5/176.No other witness was called upon and examined by the complainant or the accused. The matter was then listed for final arguments.
7.Thereafter, final arguments were advanced by the Learned Counsel for the complainant and the accused. The matter was then reserved for judgment. The submissions made on behalf of both the parties have been considered and the record of the case has been thoroughly perused. The findings of this Court are as follows:-
8.The only consideration before this Court is to determine as to whether the accused is guilty of committing an offence under Section 138 of the N.I. Act, for which the essential ingredients are as follows:- (1) The cheque was drawn by a person on an account maintained by him with a banker; (2) The cheque drawn was for payment of money to another person from out of that account in discharge, in whole or part, of any debt or other liability; (3) On presentation of the cheque, it is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank; (4) The cheque was presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (5) The payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount within thirty days of the receipt of information by him from CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 6/17 the bank regarding the return of the cheque as unpaid; and (6) The drawer of the cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course, within fifteen days of the receipt of said notice.
9.It is the case of the complainant that the cheque in question was issued by the accused as a blank signed cheque with a confirmation letter that when any amount is due and payable by the accused to the complainant, the complainant would have the authority to fill up the date and the amount on the cheque for realization of the outstanding amount. It is not in controversy between the parties that the accused was a dealer/distributor for sale of the products/home applicances of the complainant and on orders being made by the accused, the goods used to be supplied to him. Further it is not disputed by the accused that the cheque in question was issued as a blank signed cheque and was given to the complainant. It is also not disputed that the confirmation letter was given by the accused to the complainant at the time of entering into the dealership agreement and the signatures thereon are that of the accused. The original cheque in question and the confirmation letter are placed on record and proved as Exhibit CW-1/6 and Exhibit CW-1/4 respectively.
10.The accused, however, alleges that the complainant did not have any authority to fill up the date and the amount on the cheque in question CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 7/17 without his consent. It is important here to reproduce the contents of the confirmation letter, Exhibit CW-1/4, which has been relied upon by the complainant to prove that they had been authorized by the accused to fill up the cheque with the date and the amount, as may be due and payable by the accused. The contents thereof are reproduced below:-
"I hereby confirm that in the evnt of any amount due and payable by me to Samsung India Electronics Pvt Ltd. remaining unpaid, Samsung India Electronics Pvt Ltd, shall be authorized to fill up the date and such amount on the cheques as remains unpaid by me. I further assure Samsung India Electronics Pvt Ltd that I shall keep sufficient balance in my account to honour the above stated cheque(s). I further undertake not to stop the payment of the said cheque (s). In case I change the signatory and/or close the account, I undertake to replace the aforesaid cheques (s) by providing Samsung India Electronics Pvt Ltd. with new cheque(s) either from the same account or from the new account which I may open, as the case may be."
11.Having admitted his signatures on the said letter, Exhibit CW-1/4, and having admitted to have issued the said letter, the onus certainly shifts on the accused to show that he had not given either express or implied authority to the complainant to fill up the details on the cheque for realization of any unpaid amount. The accused has nowhere averred in his CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 8/17 evidence (examination-in-chief) that despite having signed the letter, he had not read it contents or that he was compelled (by force/coercion or influence of any kind) to sign the said letter at the instance of the complainant. It is also not the case of the accused that the letter is fabricated. The defence that the accused seems to have taken is that he does not understand or know english. The accused denies knowing the contents of the said letter at the time of signing the same. He denies to have read all contracts generally entered into by him with other companies and he has stated that he signs the contracts on the basis of trust. It seems improbable for a businessman dealing with similar kind of contracts and companies on a regular basis for past several years and having a turnover of more than 10,000,000/- (Rupees Ten Crores Only) to not understand and have a fair idea of the contracts/deals he transacts and that he would seek legal advice, where needed. Further the question of trust develops between two contracting parties over a period of time of continuous and satisfactory relationship and when each of the parties are aware of the manner of working of the other. The accused admits to having paid his other business partners by way of cheques (blank at times). The accused appears to understand the nature of the commercial transactions and the general modalities of payment adopted by the suppliers etc. By handing over a blank cheque to the complainant, the accused cannot be said to be unaware of its purpose and intent. The transactions between the complainant and the accused continued for a period of around one year. If CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 9/17 the version of the accused is to be believed that he was not aware of the contents of the confirmation, it is not explained as to why had the accused signed and handed over the said letter to the complainant at the first place. It is not the case of unequal bargaining power between the parties, whereby the accused had no other option but to sign the letter or enter into a distributorship agreement with the complainant. Further since the accused has taken the defence that the cheque was given as security, what was the purpose of that security is not explained. Normally in commercial transactions between two parties (both of whom are in the same business), cheque/bills of exchange are an accepted mode of exchange and payment. Any party giving a blank cheque to the other party does understand the implications of it.
12.The plea that the accused did not know the contents of Exhibit CW-1/4 has not been corroborated or proved with any other evidence. With the experience of the accused in the same business line, the version of the accused is not believable. The complainant seems to have proved the said letter. It can be said that the complainant had express/implied authority of the accused to fill up the date and amount on the cheque and present the same for realization of the amount remaining outstanding.
13.Undisputedly the cheque in question was executed by the accused and the particulars therein were filled up with his consent by the complainant, CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 10/17 which gives rise to the legal presumptions under Section 139 and Section 118 of the N.I. Act that, unless contrary is proved, the holder of a cheque received the cheque of the nature referred to in Section 138 of the said Act for the discharge, in whole or in part, of any debt or other liability and the same was made or drawn for a consideration. The dishonour of the cheque in question has been shown with the aid of the bank returning memo dated dated 27.07.2011, Exhibit CW-1/7, which shows that the cheque in question was returned for reasons, "Exceeds Arrangement". The complainant avers that they sent a legal notice dated 17.08.2011 to the accused calling upon him to make payment of the cheque amount within a period of 15 days from receipt thereof. The said legal notice is stated to have been sent by way of registered post AD/speed post and courier. The legal notice, the postal receipts and an acknowleged AD card are Exhibit CW-1/8 and Exhibit CW-1/13 respectively.
14.In view of the above, the onus of proof shifts on the accused to rebut the said presumptions arisen in favour of the complainant under Section 118 and Section 139 of the N.I. Act. The standard to rebut these presumptions evidently is preponderance of probabilities, which can be drawn on the basis of circumstances or sufficient material on record or by leading of cogent evidence that the cheques in question was not issued in discharge of a legally enforceable debt or was without consideration.
CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 11/1715.The defence of the accused is that the cheque in question was given as security to the complainant. A security in common parlance would suggest an assurance or safety. Security means "anything that makes the money more assured in its payment or more readily recoverable and may range from a mere personal bond or promissory note or guarantee, or even a mere pledge of something of no intrinsic value, to a mortgage of property from out of which money can be realised1". A security does not suggest a non-committal attitude but has a positive overtone of faith and sureness of payment. Similar defences taken by an accused in cases of complaints under Section 138 of the N.I. Act that the cheque was given as a security cheque is a misunderstood defence. In such cases, the accused has to show that at the time the cheque in question was issued/delivered to the complainant or presented for encashment, it was not in discharge of an existing debt or liability. This defence which is generally taken in cases filed under Section 138 of the N.I. Act has been explained in decisions of various High Courts. Reference in this regard is being made to two recent decisions of the Hon'ble High of Delhi in Suresh Chandra Goyal v. Amit Singhal., Crl A. No. 601 of 2015 decided on 14.05.2015 and Credential Leasing & Credits Ltd., v. Shruti Investments & Ors., Crl. L.P. No. 558 of 2014 decided on 29.06.2015. Paragraph no. 28 of the said decision in Credentials Leasing (supra) is reproduced below:-
1Palai Central Bank v. Jacob P. Cherian, AIR 1963 Ker 128, cited in P. Ramanatha Aiyer, The Law Lexicon, Justice Y.V. Chandrachud, Reprint 2004, page no. 1738-1739.CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 12/17
"28. In my view, therefore, the scope of Section 138 NI Act would cover cases where the ascertained and crystallised debt or other liability exists on the date that the cheque is presented, and not only to case where the debt or other liability exists on the date on which it was delivered to the seller as a post-dated cheque, or as a current cheque with credit period. The liability, though, should be in relation to the transaction in respect whereof the cheque is given, and cannot relate to some other independent liability. If, on the date that the cheque is presented, the ascertained and crystallised debt or other liability relatable to the dishonoured cheque exists, the dishonor of the cheque would invite action under Section 138 NI Act. There could be situations where, for example, an issue may be raised with regard to the quality, quantity, deficiency, specifications, etc. of the goods/services supplied, or accounting. It would have to be examined on a case to case basis, whether an ascertained or crystallised debt or other liability exists, which could be enforced by resort to Section 138 NI Act, or not."
16.It is to be considered now as to whether accused has been able to raise a probable defence by either deflating the complainant's case and/or leading positive evidence either by picking holes in the case of the complainant and/ or by positively leading defence evidence with regard to the claim of the complainant as to the existence of an ascertained or crystallized debt or liability. The case of the accused is that, during the transactions between CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 13/17 the parties, some of the products supplied by the complainant were defective and that there was some outstanding amount payable to the accused on account of the schemes/price difference in price etc., which had been intimated by the accused to the complainant vide letters dated 24.02.2012 and 20.01.2011. Both the said letters have been placed on record as Exhibit CW-1/D1 (Colly). Both these letters were put to the witness CW-1 during his cross-examination, which were admitted to have been received by the complainant. CW-1 has also admitted that an amount of Rs. 1,95,000/- (Rupees One Lakh and Ninety Five Thousand Only) was outstanding on the part of the complainant towards the accused. It must be noted here that both the said letters were sent to the complainant company on 01.03.2012 by way of post (the postal receipts are on record with the said letter), which is after the institution of the present complaint.
17.It is to be examined now as to whether the complainant had knowledge of their said liability of Rs. 1,95,000/- before presenting the cheque in question and whether this amount had been adjusted or not in their ledger accounts or in the cheque amount. During the cross-examination of CW-1, he was also confronted with another document, placed on record as Exhibit CW-1/D2, which he admits was issued by the complainant to the accused. He further clarified his statement stating that the said document, Exhibit CW-1/D2, was a copy issued by the dealer/accused to the complainant company mentioning their pending claims.
CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 14/1718.This document, Exhibit CW-1/D2, appears to have been issued in January 2011 by the accused to the complainant mentioning therein that the balance of Rs. 16,50,083.47/- as on 31.12.2013 in the books of accounts of the complainant was not in agreement with the books of the accused. The said document then details the reasons for the difference in both the books of accounts of the accused and that of the complainant. It mentions an outstanding amount of Rs. 1,26,300/-, Rs. 8,000/-, Rs. 5,000/- and Rs. 56,100/-, for the period of April, 2009, March, 2009, January, 2010 and October 2009 respectively, towards secondary scheme, price difference, DVD supply and scratch card. The total of the said claims comes to Rs. 1,95,400/-. CW-1 has admitted that an amount of Rs. 1,95,000/- was their liability towards the accused and that the said amount had not been adjusted in the cheque amount. CW-1 has also admitted that the amount of Rs. 1,95,000/- has till date not been credited. There remains no dispute that, as on the date the cheque in question was presented, an amount of Rs. 1,95,000/- was outstanding towards the accused and the said amount was not adjusted to the alleged balance of Rs. 14,88,775.47/- as on 23.06.2011. It is not the case of the complainant that the said amount of Rs. 1,95,000/- has been reflected in their ledger account, Exhibit CW-1/5, however, the same was not credited (for whatever reason). The case of the complainant is that it was only after the reconciliation and settlement of the accounts on 23.06.2011 that the accounts, Exhibit CW-1/5, were CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 15/17 closed. It is not shown by the complainant that the amount of their admitted liability of Rs. 1,95,000/- was adjusted in the accounts Exhibit CW-1/5. Further if the said amount had been adjusted by the complainant, the entry showing adjustments (of Rs. 1,26,300/-, Rs. 8,000/-, Rs. 5,000/- and Rs. 56,100/-) should have been made in the account statements Exhibit CW-1/5. The complainant has not shown any such entry in the said account statements towards adjustment of the claims of the accused. It is also not the case of the complainant that the said amounts of Rs. 1,26,300/-, Rs. 8,000/-, Rs. 5,000/- and Rs. 56,100/- included claims of the year 2009 and had not been accepted by the complainant. No such document has been produced by the complainant to show that they had not accepted the claim of around Rs. 1,95,000/-, which had raised by the accused in the letter, Exhibit CW-1/D2, and thereafter, the accused had not raised any objection to their non-acceptance of the claims of the accused.
19.Having admitted the liability of Rs. 1,95,000/- towards the accused as on 22.06.2011 and having admittedly not credited the said amount and having not reflected it in the ledger account (as maintained by the complainant company) certainly raises a doubt on the veracity of the ledger account, Exhibit CW-1/5, and the claim of the complainant for a sum of Rs. 14,88,775.47/-. The onus on the accused is to only show a probable defence and a doubt on the credibility of the case of the CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 16/17 complainant. Therefore, it can be stated that the said entire amount of Rs. 14,88,775.47/- had not accrued to the complainant on the date of presentation of the cheque in question.
20.In light of the aforesaid findings, this Court is of the view that the complainant has been unable to prove beyond all reasonable doubt the ingredients of the offence under Section 138 of the N.I. Act. Accordingly, the accused is not held guilty of the offence under Section 138 of the N.I. Act and is hereby acquitted.
Pronounced in Open Court
today May 19, 2016 (SALONI SINGH)
Civil Judge-02/PHC/NEW DELHI
19.05.2016
CC No.143/14 Samsung India Electronic Pvt Ltd., v. Mohd. Faruqazam Page No. 17/17