Bangalore District Court
Logistics Private Limited A Company vs Representing The First Accused Had ... on 16 March, 2022
KABC020239252011
IN THE COURT OF THE ADDL. CHIEF METROPOLITAN
MAGISTRATE, BENGALURU CITY.
DATED THIS THE 16TH DAY OF MARCH 2022
Present: Miss.B.T.ANNAPOORNESHWARI
B.A., L.L.B., L.L.M.
XXIII ASCJ & XXI ACMM.
C.C.20035/2011
1. Sl. No. of the Case : C. C.No.20035/2011
2. The date of complaint of : 04.05.2011
commission of offence
3. Name of the : M/s. Deccan Cargo and Express
Complainant Logistics Private Limited A company
incorporated under the provisions of
the Companies Act, 1956 and having
its registered office of ambassy
Square, No.148, Infantry Road,
Bangalore 560001.
Represented by its Authorized
Signatory
Mr.K.C.Vijay
S/o K.G.Chandrashekharappa
Deputy ManagerLegal, Deccan Cargo
and Express Logistics Private Limited,
Bangalore560001 Aged abot 33
years.
(By Sri.N.Murali, Advocate.)
2 CC No.20035/2011
SCCH-25
4. Name of the Accused 1) M/s. Seven H Logistics Private
: Limited A company incorporated
under the provisions of
Companies Act, 1956 and having
its Registered office at, 150, 1st
Floor, Malleswaram Arcade, 7th
cross, Margosa Road,
Malleswaram, Bangalore
560003.
2) Gopalan Vijaykumar, Director
M/s.Seven H.Logistics Private
Limited 268, 15th main road, RMV
Extension, Bangalore560080.
3) Abishek Vijaykumar, Director,
M/s.Seven H.Logistics Private
Limited 268, 15th main road, RMV
Extension, Bangalore560080.
4) Rajni Vijaykumar, Director,
M/s.Seven H.Logistics Private
Limited 268, 15th main road, RMV
Extension, Bangalore560080.
(AS PER ORDERS IN CRL.P. 1223/2016,
OF HON'BLE H.C. COMPLAINT
QUASHED AGAINST ACCUSED NOS.2
AND 4.)
(A1 & A3 By Sri.Vivek B., Advocate.)
5. The offence complained : u/Sec.138 of Negotiable Instruments
of Act
6. Plea of the Accused : Pleaded not guilty
7. Final order : Accused Nos.1 and 3 are acquitted.
8. Date of such order : 16.03.2022
3 CC No.20035/2011
SCCH-25
JUDGMENT
This complaint is under Section 138 of N.I. Act.
2. The case of the Complainant Company in brief is that, the complainant is a company incorporated under the Companies Act 1956 and is engaged in the business of logistics and cargo management and the same is represented by its authorized signatory Mr.K.C.Vijay. In the course of its business the complainant has appointed various franchisees to associate with the Complainant's network across the country and to carry on the business. The first accused is a company incorporated under the Companies Act, 1956 and is also engaged in the business of logistics services. The 2nd to 4th accused are the Directors of the first accused and are responsible to the first accused for its business and day to day administration. During September, 2009 and 2nd to 4th accused representing the first accused had approached the complainant and offered to be a franchisee for the complainant's business. After a detailed meeting in which the accused Nos.2 to 4 had participated alongwith 4 CC No.20035/2011 SCCH-25 the representatives of the complainant, the complainant accepted the offer of the accused and decided to appoint the first accused as a National Service Participant Franchisee for various territories in and out of Bangalore. On 04.09.2009 the complainant and the first accused entered into a National Service Participant Franchisee Agreement [herein after 'NSP agreement'] to carry on the business of the complainant in Yeshwanthpur and Koramangala Territory and on 08.06.2010 for Ulsoor territory. Subsequently the complainant and the accused had entered into another NSP Agreement on 22.10.2010 for Hosur Territory to carry out the business on behalf of the complainant. As a Franchisee the first accused was entitled to receive shipping charges from the customers on behalf of the complainant and remit the same to the complainant at the agreed intervals as per the NSP agreement. The first accused was entitled fro commission for the services provided by it in terms of the said NSP agreements. The first accused was irregular in remitting the amounts that was received from the customers right from the 5 CC No.20035/2011 SCCH-25 beginning. The first accused would deliberately retain the money collected from the customers for a longer time and remit to the complainant belatedly. The complainant was regularly following up with the accused for the prompt remittance of the amount and to remit the arrears of the outstanding amount. Having regard to the serious breach of the NSP agreement he constrained to terminate the NSP agreement for the Hosur Territory vide a notice dated 25.01.2011. After that the complainant had made several reminders and followups for the payment of the outstanding amount but even after the regular followups the accused had failed to pay the outstanding amount. With no other option left the complainant has issued a letter dated 10.02.2011 to the accused for the payment of the outstanding dues informing the accused to terminate the NSP agreements entered for the other territories in case of failing to pay the outstanding amount. Immediately after the receipt of the said letter the accused had agreed to clear the entire outstanding amount and accordingly issued the cheques dated 24.3.2011 for a sum of Rs.1,87,00,000/ (Rupees 6 CC No.20035/2011 SCCH-25 One Crore Eighty Seven Lakhs only) and the cheque dated 09.04.2011 for a sum of Rs.11,00,000/ [Rupees Eleven Lakhs only] in partial discharge of its liability. The said cheques are;
Sl. Cheque Date Amount in Date of
No No. Rupees Presentation
. and
dishonour of
cheque
1. 539155 24.03.2011 50,00,000/ 24.03.2011
2. 539154 24.03.2011 50,00,000/ 24.03.2011
3. 539171 24.03.2011 50,00,000/ 24.03.2011
4. 480860 24.03.2011 4,00,000/ 24.03.2011
5. 480859 24.03.2011 4,00,000/ 24.03.2011
6. 480858 24.03.2011 4,00,000/ 24.03.2011
7. 480861 24.03.2011 5,00,000/ 24.03.2011
8. 785169 24.03.2011 5,00,000/ 24.03.2011
9. 785153 24.03.2011 15,00,000/ 24.03.2011
10 780604 09.04.2011 11,00,000/ 09.04.2011
.
Total 1,98,00,000/
However the complainant was not willing to accept part payment as the total due amount as on 24.03.2011 was Rs.4,78,16,236/ [Rupees Four Crores Sevventy Eight Lakhs Sixteen Thousand Two Hundred and Thirty Six only] but as the accused requested the complainant to accept the part payment as the remaining amount would be paid at the earliest and hence the complainant inclined to accept the part payment. The complainant as per the instructions of the accused had presented the said cheques with its banker on 24.3.2011 and much to 7 CC No.20035/2011 SCCH-25 the surprise all the cheques returned unpaid with the bank memo dated 24.03.2011 for the reasons "Insufficient Funds". The complainant having no other option has issued a demand notice dated 24.03.2011 and even after the receipt of the said notice the accused have failed and neglected to pay the cheque amount. Accordingly, the complainant has filed the Private Complaint bearing PCR No.10815/11 before this court on 04.05.2011. In the meanwhile the complainant has presented the cheque issued by the accused dated 09.04.2011 with its banker hoping that the said cheque would be honored and it also dishonoured for the reason 'Funds Insufficient' by memo dated 09.04.2011. After receipt of the cheque return memo the complainant through its counsel has issued a notice dated 28.4.2011 calling upon the accused to pay the cheque amount. On its receipt the accused given reply dated 10.05.2011 stating that it has made the payment to the complainant. However, the accused should pay a sum of Rs.4,78,16,236/ to the complainant and the amount which is paid and which is mentioned in the reply is 8 CC No.20035/2011 SCCH-25 entirely for the different transaction and the same is nothing to do with this transaction. The cheque issued by the accused is to partially discharge its liability towards the complainant. The business relationship between the complainant and the accused is documented in the NSP agreement dated 04.09.2009 and subsequent NSP agreements. Apart from the said NSP agreements the complainant and the accused have not entered into any other NSP agreements nor has there been any modification of the terms of the said NSP agreements. Under the said NSP agreement the accused had a right to collect the shipment charges from the complainant's customers and remit it to the complainant. The accused have collected consideration from the customers of the complainant but have failed to remit all the amounts collected. The first accused is a company and the second accused is the Chairman and Director of the first accused company. The third and fourth accused are also Directors of the 1 st accused company and are actively engaged in the day to day business and administration of the first accused 9 CC No.20035/2011 SCCH-25 company. The 2nd to 4th accused had actively participated in the negotiations and business discussion that culminated into the entering of the agreement dated 04.09.2009. All the accused being aware of the liability to the complainant had issued the aforesaid cheques to discharge the liability.
3. After perusing the complaint with documents and sworn statement, cognizance taken and this case registered and summons issued. In response to summons issued by this court, the accused Nos.2 to 4 appeared and as accused Nos.2 and 4 preferred Crl.P., the matter stayed. Thereafter, as per the order passed by Hon'ble H.C. in Cr.P.No:1223/2016 this complaint is quashed against accused Nos.2 and 4 and accordingly this court dismissed the complaint against said accused.
4. Thereafter, this complaint is proceeded against accused Nos.1 and 3 only. The copies of prosecution/complaint papers were supplied to the accused as required under Section 207 of Cr.P.C. The 10 CC No.20035/2011 SCCH-25 substance of accusation for the alleged offence punishable under Section 138 of N.I. Act, is read over and explained to the accused in the language known to them to which they pleaded not guilty and claimed to be tried.
5. The complainant company in order to prove its case has examined its authorized signatory as PW.1 and got marked 9 documents as per Exs.P.1 to P.9 and closed their side.
6. The statement of the accused Nos.1 and 3 under Section 313 of the Cr.P.C is recorded by explaining incriminatory circumstances appearing against them. The accused have denied the entire evidence of the Complainant.
7. In support of the defence the accused Nos.1 and 3 have got examined the accused No.3 as DW.1 and got marked Exs.D.1 to D.38 and closed their side. 11 CC No.20035/2011
SCCH-25
8. Heard arguments of both sides and perused the materials on record. The counsel for the accused has filed written arguments. The counsel for complainant has relied upon the following decisions, (1) 2001 Cri.L.J. 4647 in the case of Hiten P.Dalal Vs. Bratindranath, (2) 2006 Cri.L.J. 3760 Smt.Umaswamy Vs. K.N.Ramanath, (3) Crl.A.Nos.12691270 of 2021 Sripati Singh (since deceased) Through His Son Gaurav Singh Vs. The State of Jarkhand & Anr., (4) Crl.A.No:1446 of 2021 Sunil Todi & Ors. Vs. State of Gujarat & Anr., (5) AIR 2019 S.C. 1876 Rohitbhai Jivanlal Patel Vs. State of Gujarat and Anr.. The counsel for the accused has relied upon decisions which are, (1) Bharat Barrel & Drum Manufacturing Co. Vs. Amin Chand Pyarelal, reported at (1999) 3 SCC 35 Para 12, (2) Kumar Exports v. Sharma Carpets, reported at (2009) 2 SCC 513 Paras 20,21, (3) Mallavarapu Kasiviswesvara Rao v. Thadikonda Ramulu Firm & Ors., reported at (2008) 7 SCC 655 para 17, (4) Baslingappa v. Mudibasappa reported at (2019) 5 SCC 418 Para 10, 11, 2, 23, (5) AC Narayanan v. State of Maharashtra & Anr., reported at (2014) 11 SCC 790. 12 CC No.20035/2011
SCCH-25
9. Now the points that arise for consideration of this court are:
1. Whether the Complainant company proved that, the accused Nos.1 and 3 being the Director of accused No.1 company owed to the complainant company a sum of Rs.4,78,16,236/ pursuant to a NSP agreements dated 04.09.2009 and 08.06.2010 and towards part payment of said amount issued cheque bearing Nos.780604 dated 09.04.2011 for Rs.11,00,000/, drawn on Andhra Bank, to discharge the legally recoverable debt or liability?
2. Whether Complainant proved that, they have complied the mandatory requirements of section 138 of NI Act and therefore the accused Nos.1 and 3 have committed the offence punishable under section 138 of N.I Act?
3. What order or sentence?
10. On hearing the arguments of both side and perusal of oral and documentary evidence on record, this court gives findings to the above points as under;
1) In the negative,
2) In the negative,
3) As per final order, for the following reasons; 13 CC No.20035/2011
SCCH-25 REASONS
11. Point Nos.1 and 2: These points are taken up together for the sake of convenience and to avoid repetition of facts and circumstances of the case.
12. It is the specific case of the Complainant that, accepting the offer of the accused company they decided to appoint the accused as a National Service Participant Franchisee [For short herein referred as NSP agreement] for various territories in and out of Bangalore and on 04.09.2009 and on 08.06.2010 the complainant and the first accused entered into NSP agreements to carry on the business of the complainant in Yshwanthpur and Kormangala and Ulsoor territory and subsequently entered into another NSP agreement on 22.10.2010 for Hosur Territory. The first accused was irregular in remitting the amounts that was received from the customers right from the beginning and therefore having regard to the serious breach of the NSP agreement 14 CC No.20035/2011 SCCH-25 committed by the accused they issued notice to accused on 25.1.2011 by terminating the NSP agreement for the Housr Territory. Thereafter issued letter dated 10.02.2011 to the accused for the payment of the outstanding dues and after its receipt the accused agreed to clear the entire outstanding amount and accordingly issued the cheque in question which on presentation returned by Bank on 09.04.2011 for the reason of insufficient funds and even after issuance of notice the accused have not repaid the said amount. The accused Nos.1 and 3 have denied the case of the complainant stating that they made payment of Rs.11,00,000/ which can be make out from Ex.P.8/reply notice dated 10.05.2011 of accused to Ex.P.7/legal notice.
13. In support of the case, the complainant got examined its authorized signatory as PW.1 who reiterated the averments of complaint in his examination in chief and has got marked Exs.P.1 to P.9. The Ex.P.1 is the authorization letter alongwith Board Resolution 15 CC No.20035/2011 SCCH-25 dated 23.2.2011, Ex.P.2 is the certified copy of Franchisee Agreement dated 04.09.2009, Ex.P.3 is the Termination letter dated 25.2.2011, Ex.P.4 is the copy of letter dated 10.2.2011 issued by the complainant, Ex.P.5 is the cheque in question, Ex.P.5(a) is the signature of accused, Ex.P.6 is the cheque return memo issued by Andhra Bank, Ex.P.7 is the Demand Notice dated 28.4.2011, Ex.P.8 is the reply given by accused on 10.5.2011 and Ex.P.9 is the ledger extract pertaining to the accused.
14. In the crossexamination of PW.1 it is brought out that he is one in Legal Section of complainant company, ECDS system was consignment tracking software, he does not know completely as to how said ECDS system works, the ECDS system contains the fixation of amount to consignment, the consignment amount differs on the basis of agreement between their company with the customer, ECDS system software was created by their company in which all the franchisees need to do their transactions, Ex.P.27 is not 16 CC No.20035/2011 SCCH-25 the ECDS system generated, as per clauses 4.1 and 4.9 of Ex.P.2 the franchisees were to deposit the amount in advance and no credit facility available to the franchisees, the said deposits made by Franchisees will be shown in ECDS system subject to down time of the system, inspite of demand the accused used to say that they will make payments and continued transactions and hence they did give time for making payments of due of Rs.4,78,16,236/, Captain Gopinath was Chairmen and Managing Director of their company, the software problems in ECDS system were looked after by IT Department and external agencies, as per clause 30 at Ex.P.2 their company experts were to set right the problems. It is further elicited that, in Ex.P.27 all the transactions of complainant and accused were mentioned, there was no any transactions from 4.09.2009 to 27.09.2009 between them as the business was not set up and hence there is no mention of it in Ex.P.27, the due amount mentioned in his chief examination is correct, Ex.P.27 is their company document, Ex.P.27 does not bear signature of accused, 17 CC No.20035/2011 SCCH-25 Mr.Krishnan was head of Sales Department and Mr.G.K.Anantharaman was head of Finance Department, on the basis of dates on cheques he can say that the cheques were given by accused in the March 2011 to the Finance Department, they did not give any notice to accused prior to presentation of cheques to Bank. Further it is also brought out in the crossexamination that the HUB service agreement between their company and accused, for providing HUB service they have to make payment for the invoices raised by the accused, in Ex.P.27 there is only entries about NSP agreement but separate ledger account maintained in their company with regard to HUB service and they have not taken any action for alleged balance due in Rs.4,78,16,236/.
15. The Ex.P.1 is the authorization letter and Board resolution and on that basis the PW.1 lead evidence on behalf of the complainant. The Ex.P.2 is the admitted NSP agreement between the complainant and the accused and as per the claim of the complainant 18 CC No.20035/2011 SCCH-25 under the said agreement only the accused became due in payments which is denied by the accused.
16. The Ex.P.3 is the letter dated 25.01.2011 by complainant to the accused intimating termination of NSP Franchise agreement dated 22.10.2009 for Hosur and demand of credit outstanding for the rest of Bangalore territories for the reason that 'the current outstanding trend and payment history that is not in line with you contractual obligation in the current areas that is being serviced by you so far' and it is also mentioned that, '...inspite of out repeated requests and demand you have failed to provide the revised Bank Guarantee or Security deposit as required under the Circular No.001/201011 effective from 1st August 2010 issued by Deccan Cargo & Express Logistics Pvt. Ltd.', further it is mentioned that '.....your current days sales outstanding as of December 2010 is at Rs.3,83,97,868/ of which we should have received at payments of Rs.2,34,47,368/ by the 15th January which has not been forthcoming till date. We hereby demand that this payment be made on 19 CC No.20035/2011 SCCH-25 or before 28.01.2011 to avoid further repercussion and action being taken against your existing contract, which are currently in breach as a result of these outstanding'. From this Ex.P.3 the complainant did terminate the one NSP agreement and demanded for revised Bank Guarantee or Security deposit and intimated outstanding as of December 2010 is at Rs.3,83,97,868/ of which payments of Rs.2,34,47,368/ should have been received by 15th January.
17. The Ex.P.4 is the another letter written by the complainant to the accused wherein it is stated that for reconciliation of account all required details are provided by them and upon assurance the accused deposited part payment by way of cheques amounting to Rs.23.00 lakhs to their account on various dates during the month of February 2011, the two cheques issued for Rs.5.00 lacs each dishonoured for want of sufficient funds and as on 8th Feb 2011 the total amount outstanding payable by the accused was Rs.4,60,43,261/ for the sales done upto Jan 2011 and of which Rs.1,92,55,522 is long 20 CC No.20035/2011 SCCH-25 overdue and should have paid before 15.01.2011 and an amount of Rs.1,49,50,500/ will be over due by next week and the accused failed to provide the adequate security to cover the total amount outstanding payable by the accused despite several reminders and their official letter and in case of failure to take action of terminating agreements. This clearly shows that the complainant demanded adequate security to cover the outstanding.
18. The Ex.P.5 is the cheuqe of Andhra Bank dated 09.4.2011 and its contents are in handwriting and the signature of the accused No.3 is appearing on behalf of accused company. The accused has not disputed either issuance of cheques or his signature but contended that they paid the said cheque amount and there is no due at all as claimed by the complainant, which needs to be appreciated alongwith other evidence on record. The Ex.P.6 is the bank endorsement issued by Andhra Bank which is in printed format wherein the cheque number and its amount alongwith reason for 21 CC No.20035/2011 SCCH-25 dishonour mentioned as 'Insufficient funds' and it is dated 09.4.2011.
19. The Ex.P.7 is the demand letter dated 28.4.2011 issued by the complainant to the accused, wherein it is stated by the complainant company that under NSP agreement as on 23.3.2011 the accused due in a sum of Rs.4,78,16,236/ and the cheque issued towards part payment for Rs.11,00,000/ got dishonoured and demanding payment of said amount. The Ex.P.8 is the reply given by the accused admitting para 1, denying para 2 to 4 and further stated that they made payment of Rs.11,00,000/ to the complainant the details are, (1) A sum of Rs.7,00,000/ vide cheque No:780603 dated 05.4.2011 drawn on Andhra Bank, N.R. Road, Bangalore, (2) A sum of Rs.1,55,000/ vide cheque No:780605 dated 05.04.2011, drawn on Andhra Bank, N.R. Road, Bangalore, (3) A sum of Rs.2,50,000/ by way of cheque totaling to Rs.11,05,000/ and hence they are not in due of said amount.
22 CC No.20035/2011
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20. The Ex.P.9 is the ledger account from 01.04.2007 to 03.07.2013 and the total due shown therein is not tallying with the claim in the complaint and evidence of PW.1. As per the complaint and evidence of PW.1 the total due by accused is Rs.4,78,16,236/ but there is no averement or oral evidence as to how the said figure was arrived by the complainant, but the PW.1 produced the Ex.P.9 without any averment with regard to said document in the complaint or the chiefexamination affidavit of the PW.1. The PW.1 clearly deposed that he cannot understand the ledger account entries, Ex.P.9 is not ECDS system generated statement and stated that the due amount claimed in the chiefexamination is correct.
21. Prior to drawing presumption in favour of complainant as available under the Act, it is also relevant to consider the defence evidence lead by the accused as they raise contention with regard to defect in legal notice, PW.1 is not competent to lead evidence, the complainant company itself is in due under HUB service 23 CC No.20035/2011 SCCH-25 payable to accused company and nonexistence of legally recoverable debt as on presentation of cheque as the said amount already paid by the accused. The accused No.3 in support of their defence stepped into witness box and deposed in support of their defence stating that they entered into NSP agreement and also HUB services agreement with the complaint and under HUB service agreement the complainant is in due of 1.56 crores. The complainant designed, developed, maintained and operated ECDS system and it was also mentioned in NSP, said ECDS system had lot of technical issues and there were huge discrepancies in the rate captured in the ECDS system as against the rates entered into between the complainant and the end customer, they used to deposit the money in advance to the complainant, then the ECDS generated invoice would be assigned to them, inspite of several requests the technical issues and discrepancies in rates are not corrected which needs to be reconciled by 31.3.2011, the cheques were issued as security as per demand of complainant and said cheques were issued in the months of June 2010, August 2010 24 CC No.20035/2011 SCCH-25 and September 2010. Between 30.3.2011 till February 2012 as per Ex.P.27 the complainant are showing the credit of around 1.7 crores as being received either by them or having directly collected from the end customer despite assigning the said invoices to them and apart from that they given no objection to the complainant to collect an amount of 30 lakhs directly from the landlord of the Hub premises which is not reflecting in Ex.P.27. They are not liable to pay any amount to the complainant but the complainant are owe them an amount of 3.89 crore primarily comprising of 1.56 crores of Hub invoices and another 2.33 crores in pickup commissions, delivery commissions and other incentives and they sent notices in that regard and as there was no response they filed claim before Hon'ble H.C. wherein Hon'ble H.C. passed order that the OL should consider their claim. He further deposed that cheque which was allegedly dishonoured was for a sum of Rs.11,00,000/, despite the said cheque being a security cheque issued to the complainant we have made payments of Rs.7,00,000/, Rs.2,50,000/ and Rs.1,55,000/, total in 25 CC No.20035/2011 SCCH-25 to Rs.11,05,000/ in the month of April 2011 and for said payment he did issue cheques of Andhra Bank and in their reply notice dated 10.05.2011/Ex.D.38 they have informed the complainant that they paid said amount and should not proce3ed further and he also produced the payment vouchers.
22. In the crossexamination of DW.1 it is elicited that, he was in entire incharge of accused company, A2 has signed on behalf of accused company on Ex.P.2, he used to look after entire affairs of the A1 company, as per Ex.P.2 they have to maintain running account deposit with the franchiser at all times and shall consistently replenish the deposit on a regular basis as and when required, they were maintaining running account deposit with the complainant, the ECDS logins and entries were supposed to reflect to both the parties but due to errors there was always discrepancies in the ECDS software, as per clause 4.1 of agreement the daily transactions of the amounts deposited by the franchisee and those which are adjusted by the franchiser will be 26 CC No.20035/2011 SCCH-25 maintained in the ECDS system provided the complainant passes the relevant entries in the ECDS software, as they have a right to raise invoice in the name of franchiser they had a right to collect the money from the consignor, as per clause 4.2 of agreement the complainant will be having lien on all amounts collected by the accused from the consignor subject to non compliance of conditions mentioned therein. It is further brought out in the crossexamination that, Ex.D.10 does not reflect the day to day transactions with the complainant company, he on several times requested the complainant to provide the ECDS statements, Ex.D.3 is email requesting the complainant to provide ECDS statement, as per Ex.D.3 they got ECDS statement but it supposed to be reconciled, he replied to Ex.P.6, as per Ex.D.5 there was meeting on 25.2.2011 regarding reconciliation of outstanding and there was email exchanges which was circulated all the persons of incharge of both the companies, as per Ex.D.5 their one of the claim was that the credit notes to the tune of Rs.91,24,577/ to be claimed by them from complainant 27 CC No.20035/2011 SCCH-25 to mismatch in the actual sales and the sales captured in ECDS, they could not act on condition No.7 of Ex.D.5 independently because it needs consent from both the parties, they have not replied to Ex.D.5 mail, there was no due at all but the complainant has to pay them, the Ex.D.6 is the correspondence made by official of Deccan to the CEO of Deccan and same was marked to them, Ex.D.11 is with regard to Hub services agreement but not with regard to credit notes, Exs.D.12 to D.28 and Ex.D.30 are also related to Hub Service agreement and not related to credit notes transactions, the Ex.D.31 is the notice issued by them after filing this complaint, he has not produced any documents refuting the Ex.D.32, the Ex.D.33 is the continued correspondence between the complainant and the accused, in Ex.D.33 there is only reference with regard to letter dated 24.3.2011 but not about Ex.D.32, Ex.D.38 is produced to show payment made by them, he partly accept the contents of Ex.D.32 only with regard to statement that Rs.1,87,00,000/ only covered by the security cheques but he does not admit and accept the due of amount 28 CC No.20035/2011 SCCH-25 mentioned therein, in Ex.P.3 there is no reference or mentioning of date on which the security cheques were issued and admits that in Ex.P.2 there is no mention or clause for giving security cheques.
23. Now by considering the above evidence lead by the parties, as per the settled law the issuance of cheques by signing itself sufficient to draw presumption in favour of the complainant and hence not it is to be appreciated that the presumption arisen in favour of complainant is rebutted by the accused or not. Prior to this, the ingredients of Section 138 of the Negotiable Instruments Act and the presumption in favour of complainant are to be looked into. Sec.138 of the N.I. Act reads thus;
"Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money 29 CC No.20035/2011 SCCH-25 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, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for [ a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both."
24. Section 139 of the Negotiable Instruments Act which is presumption needs to be drawn in favour of the complainant when he satisfies the ingredients of Section 138 of N.I. Act. Section 139 of N.I. Act reads thus;
"139. Presumption in favour of holder It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."
Therefore, the debt or other liability narrated in the above Sections has to be construed as existence of legally recoverable debt or liability so far as the accused is concerned.
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25. As per settled principles of law laid down by the Hon'ble Apex court in Rangappa vs. Sri Mohan and many other cases once the accused admitted issuance of cheque by signing itself is sufficient to draw presumption in favour of the complainant and presumption u/Sec.139 includes there is legally recoverable debt or liability unless it is rebutted as it is rebuttal presumption. In this case the accused admitted issuance of cheque by signing then the presumption is in favour of the complainant as rightly argued by the counsel for the complainant. In AIR 2019 S.C. 1983 Basalingappa V. Mudibasappa, wherein Hon'ble Supreme Court thrown light upon 'how the probable defence can be raised, what is standard of proof, discharge of burden of proof, that the presumption mandated by Section 139 of the Act is an example of a reverse onus clause .....'. Whether the said presumption is rebutted by the accused as required under law is to be looked into as it is rebuttable presumption and if the presumption is rebutted by preponderance of probabilities by leading separate evidence or with the 31 CC No.20035/2011 SCCH-25 materials placed by the complainant itself then the presumption raised in favour of the complainant stands rebutted and the burden of onus shifts again on the complainant as rightly pointed out by the counsel for the accused.
26. In order to appreciate whether there existed a legally recoverable debt or not and towards said legally recoverable debt in part payment or full payment the cheque in question issued or not, to consider these issues and arrive to conclusion the first document needs to be considered and appreciated is the NSP agreement. The NSP agreements marked at Ex.P.2 is admitted document. The clause 4.1, 4.2, 4.4, 4.7, 4.9, 12.1, 30.1 of the Ex.P.2 NSP agreement reads as under;
"4. DEPOSIT & FRANCHISEE CHARGES 4.1 Commencing from the date of this Agreement, the Franchisee shall maintain a running account Deposit with the Franchiser at all times, and shall consistently replenish the Deposit on a regular basis as and when required for the Business. The Deposit shall be setoff and/ or adjusted by the Franchiser in accordance with the terms set forth in this Agreement. The Franchisee will not be entitled to any credit facilities or an overdraw facility on 32 CC No.20035/2011 SCCH-25 the said Deposit. The daily transactions of the amounts deposited by the Franchisee and those which are adjusted by the Franchiser will be maintained in the ECDS system (subject to downtime of the system) which will be accessible to the Franchisee.
4.2On making the consignment sale, the Franchisee will raise invoice in the name of the Franchiser to the Consignor. The Franchisee has the right to collect and recover the money on behalf of the Franchiser as long as the Franchisee continues to maintain the Deposit, and the Franchiser will have no lien on the amounts collected by the Franchisee. However, in the event the Franchisee has failed to maintain the Deposit as provided in Clause 4.1 above or the Franchisee has breached any of the terms and conditions stated herein and the Manual, the Franchiser shall have the primary lien on all amounts recoverable by the Franchisee from the Consignor. 4.4 Unless the Franchiser otherwise notifies the Franchisee in writing, the Franchisee shall make all payments electronically to the following bank account:......
4.7The Franchisee shall be fully responsible for collection and recovery of amounts due from the Consignor, and the Franchiser shall not be made liable for the same. The Franchisee is authorized to initiate necessary proceedings for recovery of the said dues without any recourse to the Franchiser and shall use best efforts to recover such amounts in accordance with the applicable law. The Franchisee shall not avail the services of receiving agencies for recovery of amounts due from the Consignor. 4.9The Franchisee shall at all times during the Initial Term or Renewed Term maintain adequate Deposit with the Franchiser. In case of inadequacy of the Deposit, the Franchisee shall be penalized for the same.33 CC No.20035/2011
SCCH-25 12.1 The Franchisee shall comply with the terms, conditions, covenants and undertakings to be observed and performed by the Franchisee under the Lease and without prejudice to the provisions of the Franchisee shall:........ 30.1 Any dispute or claim in law or equity arising out of this agreement or any resulting transaction, including disputes or claims involving the parties to this agreement, their officers, agents, or employees, shall be submitted to neutral, mediation prior to the commencement of arbitration, litigation, or any other proceeding before a trier of fact. The parties to the dispute or claim agree to act in good faith to participate in mediation."
27. As per the above NSP agreement the Franchisee shall maintain a running account deposit with the Franchiser at all times and shall consistently replenish the deposit on a regular basis as and when required for the business and the deposit shall be setoff and or adjusted by the Franchiser in accordance with the terms set forth in the agreement and Franchisee will not be entitled to any credit facilities or an overdraw facility on the said deposit, then in contrary to this clause 4.1 of agreement the accused did maintain the running account deposit and no credit facility needs to be given. When this being the one of the condition then 34 CC No.20035/2011 SCCH-25 there is no evidence lead by the complainant as to on what ground the credit facility that too upto 4.78 crore extended to the accused except the averment in the complaint and chief of PW.1 that the on the assurance of accused they accepted part payment by way of cheques, which cannot be accepted for the reason that the claim of the complainant is itself based on the NSPs then contrary to the stipulated clause of said NSPs there cannot be extending of credit facility to the accused.
28. Further, the case of the complainant is that cheque was issued by the accused subsequent to the complainant issuing letter dated 10.2.2011/Ex.P.4 threatening to terminate the NSP agreements in partial discharge of its liability. Further in the complaint and evidence in chief examination of PW.1 the complainant clearly stated that except NSP there are no other agreements between them and the accused. The complainant also stated and deposed that they never demanded any security deposit at any point of time. As per the PW.1 the cheque in question was issued by the 35 CC No.20035/2011 SCCH-25 accused in the month of February and March 2011. The signature on the cheque and issuance of the cheque is not disputed by the accused but the defence of the accused is that they made payment of said amount of Rs.11,00,000/ and cheque in question was issued as Security cheques to the complainant during the course of business dealings with the complainant company which never issued towards discharge of any specific debt or liability on the part of the accused company and inspite of that the complainant company proceeded to deposit the cheque without any prior notice or intimation to the accused. Looking to the case and defence as narrated above the documents needs to be appreciated to come to conclusion as to cheques were issued towards part payment of legally recoverable debt or issued as security cheques only and whether any due of payment arose or not as on the date of presentation of cheques in question. On perusal of the NSP agreements Ex.P.2 it is clear that there is no any clause for issuing security deposits but as per clause 4.1 of NSP accused to maintain a running account deposit with the 36 CC No.20035/2011 SCCH-25 complainant, the complainant not lead any evidence to prove that the accused did maintain said running account deposit and hence the issuance of cheques by the accused was to fulfill the clause 4.1 criteria and issued towards security needs to be appreciated with the other documentary evidence on record.
29. The Ex.P.3/letter dated 25.01.2011 which is termination of NSP dated 22.10.2009 for Hosur and demand of credit outstanding for the rest of Bangalore territories being served by the accused. In Ex.P.3 at para 4 it is stated as, 'We also take this opportunity to bring to your notice that inspite of our repeated requests and demand you have failed to provide the revised Bank Guarantee or security deposit as required under the Circular No.001/201011 effective from 1st August 2010 issued by Deccan Cargo & Express Logistics Pvt. Ltd.". If at all the complainant did not receive any cheques towards security then why their letter itself referring to their own circular reminded the accused 37 CC No.20035/2011 SCCH-25 about security deposit, from this it can be make out that the complainant demanded the security deposit or Bank Guarantee in the course of business transaction between them and the accused under NSPs and hence the letter referred to as security deposit means demand for security deposits from the accused and as per that the accused given cheques as security which is evidence from their own letter Ex.P.3 which itself affirms the clear defence of the accused.
30. The Ex.P.4 is the letter dated 10.02.2011 written by the complainant company to the accused. At para 3 to 5 it is stated as under;
"3. While you had assured that complete payment would be released immediately after the reconciliation and have deposited part payment by way of cheques amounting to Rs.23.00 Lacs to our account on various dates during the month of February 2011. We regret to inform you that the two cheques issued by you for a sum of Rupees Five Lacs each is dishonoured for want of sufficient funds. We were again asked to bank in after the first submission saying amount is now in bank.
4. As on 8th Feb 2011 the total amount outstanding payable by you is Rs.4,60,43,261/ for the sales done up to Jan 2011 and of which Rs.1,92,55,522/ is long overdue and should 38 CC No.20035/2011 SCCH-25 have paid before 15.01.2011 and an amount of Rs.1,49,50,500/ will be over due by next week.
5. We regret to note that your payment performance is unsatisfactory and inconsistent and further you have not kept your commitments to clear the outstanding in time, the cheque issued by you to clear the dues are dishonored for want of sufficient funds in your account on such occasions. Further, you have failed to provide the adequate security to cover the total amount outstanding payable by you despite several reminders and our official letter to you."
31. The above letter/Ex.P.4 also clearly points out that the complainant demanded for security deposit. Further, the Ex.D.32 is the letter issued by the complainant company to the accused dated 17.03.2011 and as per it also the demand for further security deposit and coverage of Rs.1,87,00,000/ with security cheque is clearly mentioned, which reads as under, "..... the total amount payable by you as on 15th March, 2011 for the sales up to Feb 2011 for all the NSP locations handled by you is Rs.4,50,44,272/ as per out books of accounts, .... Total outstanding payable Rs.4,50,44,272/ outstanding > 45 days Over due As on 15.03.2011 Rs.3,50,97,063/. As per the National Service participant's Franchisee agreement and modified by our circular extending the Credit period to 45 days, you should pay a sum of Rs.3,50,97,063/ which is overdue as per the credit policy of the company. 39 CC No.20035/2011
SCCH-25 We request you to settle the account which is over due and above 45 days immediately on receipt of this letter.
Further, as per the agreement, you should provide the Bank Guarantee/Security cheque as security to cover the credit extended to you on sales. As per our records, Rs.1,87,00,000/ only is covered by the Bank Guarantee/Security cheque and you are requested to provide the security/additional security immediately to avail the credit."
32. As per Ex.P.2 clause 4.1 as referred above it is clear that the accused is not entitled to any credit facilities, despite this clause there is no any averment in complaint or evidence as to how the credit facility extended to the accused that too for upto Rs.4.78 crores except the pleading that upon request of accused they accepted part payment but in the business relation nobody would do this in usual course and that too when the large amount is involved. The complainant has produced NSP agreement at Ex.P.2 and further produced ledger account extract at Ex.P.9 and except these documents the complainant has not produced any document to prove the alleged due amount of Rs.4,78,16,236/ and even not produced the alleged 40 CC No.20035/2011 SCCH-25 ECDS system reconciled statement to disprove the main defence of the accused that there were errors in ECDS system generated bills. The Ex.P.9 Ledger Account extract shows the period from 01.04.2007 to 02.07.2013 but it is not complete as it only contains entries from 27.09.2010 to 06.02.2012. As per complaint and chief affidavit of PW.1 the total due from accused is Rs.4,78,16,236/ but the Ex.P.9 at page 13 the due from accused shown as Rs.4,88,91,827.73 and when the same is suggested to PW.1 he clearly stated that he does not understand the ledger entries properly. If at all the total due amount stated in his chiefexamination is the correct due payable by the accused and when this is considered the total due alleged by the complainant then it does not tallies to their own document produced at Ex.P.9. Further the Ex.P.9 is not either acknowledged by the accused or signed by accused and except this Ex.P.9 no documents produced like books of accounts or bills raised or their own ECDS system statements or any other supportive documents to arrive to conclusion that said amount was due by the accused.
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33. The counsel for the accused contends that as per clause 4.7 of Ex.P.2 the franchisee is responsible for collection and recovery of amount from the consignors/customers but contrary to it as per Ex.P.9 the complainant collected directly approximately a sum of Rs.1.7 crores from the customers for the period from June 2011 to February 2012 and additionally the complainant collected a sum of Rs.30 lakhs being security deposit amount paid by the accused to the landowner for the services to be provided under the Hub Service Agreement and the complainant has realized the amounts in excess of the cheque value subsequent to dishonour of cheques but same has not been disclosed in the complaint and affidavit evidence. In the cross examination of PW.1 on Ex.P.9 he pleads ignorance about contents of said document stating he has no knowledge about ledger entries. Except the Ex.P.9 which is not ECDS reconciled statement as agreed by the complainant in the minutes of meeting held on 25.02.2011 regarding the reconciliation of outstanding 42 CC No.20035/2011 SCCH-25 no other supporting documents produced to prove the due of 4.78 cr. as claimed.
34. As per clause 4.1 the amount deposited by the accused and those which are adjusted by the franchiser will be maintained in the ECDS system. When the complainant based his claim of due of 4.78 cr by accused on the NSP agreements then it is the duty of the complainant to produce ECDS system generated statements which has not been produced. The counsel for the accused contends that there were lot of errors in the ECDS system which was not reconciled by the complainant inspite of requests made and assurance by them. As per evidence on record it is clear that the accused was mandated to conduct its business operations only through the software provided by the complainant known as ECDS System which was developed and utilized solely by the complainant and its franchisees. The specific defence of the accused with regard to ECDS system is that from the inception of 43 CC No.20035/2011 SCCH-25 the business operations the accused and other franchisees faced lot of technical glitches in the ECDS system employed by the complainant as there used to be several instances of billing errors as the bills raised through ECDS system were never honoured by the end customer citing price variation in the invoice as against the agreement the end customer had with the complainant and complainant failed in updating the upkeeping the ECDS system to match with the pricing as agreed by the complainant with its end customer. Further contends that the accused has on several occasions brought to the notice of the complainant the errors in the ECDS system and sought for redressal of the said errors which is evident from Exs.D.1 to D.4 which bears the evidence of the fact that the ECDS system employed by the complainant created discrepancies in the account statements and created problems while reconciling the accounts between the two companies but the PW.1 pleads ignorance of said problems faced by the accused and in view of the errors in the ECDS system and due to various other operational 44 CC No.20035/2011 SCCH-25 shortcomings on the part of the complainant the bills generated or the statements shared by the complainant company never reflected the true and correct statement of accounts between the complainant and the accused which discrepancies in the bills can be clearly established from the communications produced at Exs.D.3 and D.4. The said contentions are supported by the emails at Exs.D.1 to D.4. Further pointing on Ex.D.4 the counsel for the accused submits that it is e mail communication from Mr.S.Krishnan, Head of operations at the Complainant company he has categorically reminded all the complainant's executive to ensure proper data entry of all the shipments so as to ensure all the franchisees receive their delivery charges. Even after defence of the accused about errors in ECDS system which was not addressed by the complainant even after assurance and as per NSPs only the said ECDS system introduced to the franchisees, then also the complainant has not averred anything about this ECDS discrepancies and also not produced ECDS entries statement and not lead any evidence on this point 45 CC No.20035/2011 SCCH-25 whether said ECDS system used to operate properly or upon receipt of complaints by the accused and other franchisees is there any solution done by the complainant and the said errors were set right in ECDS system even though the complainant company is making huge claim of 4.78 cr and alleging part payment of 1.87 cr out of said 4.78 crores. Further, in the cross examination of PW.1 he admits that there was issue of ECDS system. The Ex.D.1 is the email dated 30.09.2010 sent by complainant company to accused and others, suggesting a meeting for addressing any issue as reply to the email dated 29.09.2010 addressed by the accused pointing out several issues.
35. The Ex.D.2 is the email addressed by accused to complainant requesting for appointment of expert to address the issues. Ex.D.3 email from Mr.Hemanth Jayaram of accused company to Mr.Sudarshan of complainant company dated 19.08.2010 pointing out the discrepancy from the report that either TJ sends or the report that is generated by the ECDS app which needed 46 CC No.20035/2011 SCCH-25 to crosscheck. In the same Ex.D.3 the email dated 18.08.2010 addressed by accused to Sudharsan, Hemanth Jayaram, copy to complainant, pointing out asking for revised statement pointing on the errors which ECDS team has gracefully managed to generate time and again and make false claims on accused.
36. The Ex.D.4 is the another email dated 14.08.2010 from complainant stating that, "Despite repeated reminders shipments are still found to be moving through the network without data entry. All of you in service stations, gateways and ground hubs please ensure basic details of shipments received at your locations without data entry is captured in the Rapid Data format available in the ECDS. This will ensure NSPs delivering such non data entered shipments get their delivery charges."
37. The above all email communications points out errors in the ECDS system. Further, the Ex.D.5 is the e mail dated 26.2.2011 from the complainant to the 47 CC No.20035/2011 SCCH-25 accused about minutes of the meeting dated 25.2.2011. In Ex.D.5 "Point No.1 is about Credit notes 7H claims that credit notes to the tune of Rs.91,24,577/ to claimed by them from Deccan 360 due to mismatch in the actual sales and the sales captured in ECDS..... Point No.3 Actual contract vs. Rates uploaded in EDS Hemanth and Teach, during their visit to HO, alongwith Jeyraj and Team will cross verify all rates of customers with the rates in the EDS, all wrongly updated rates to be realigned with the actual contractual rates. This exercise is must as this is the root cause for all the issues like, inflated sales figures, billing errors, manual billing, credit notes etc. As agreed this exercise to be completed by 31.03.2011 to enable correct data entry from 01.04.2011 and ensure 100% billing is done through EDS. Sales team to support the team if any discrepancy found in the contract. No manual billing for the sales done from April 2011. We need to live with the fact that, Feb and Mar bills will be manual. At point No.9, NSP payable to Deccan 7H claims that, apart from 48 CC No.20035/2011 SCCH-25 the 91 lac credit note that is under reconciliation, they have to pay around 1.1 Cr to Deccan as on 15th Feb 2011 and there is an outstanding in the market to the tune of 91 lac upto Dec 2010 (outstanding file attached herewith) and the statement of the same has been shared with Deccan HO team. At point No.10: But as per Deccan HO, the actual credit note figure will only be arrived by Jeyaraj & Team by 15.03.2011, once reconciled with facts, the final figure arrived will be taken into account towards credit note for adjustments. Apart from the credit note and outstanding in the market 1.1 CR upto Dec 2011 payable to Deccan, there is another 35 lacs to be paid by 7H to Deccan. As per TJ, this is pending octroi payable to Deccan....". As per point No.2 the time line to close the said subject was 15.3.2011 and further as per point No.3 in order to solve the ECDS errors the timeline fixed is 31.3.2011. The complainant has not lead any evidence to prove that the exercises done as discussed above and 49 CC No.20035/2011 SCCH-25 why before timeline 31.3.2011 the cheques were presented.
38. The Ex.D.5 is the email communication for having convened a meeting at the insistence of the accused between all the top executive of the complainant company and the accused company on 25.2.2011. The discussions and the decisions taken during the said meeting is recorded vide email dated 26.2.2011 (Ex.D.5) from Mr.Niranjan Kumar, Associate Vice President, Sales of the Complainant company and concerned top executive of the complainant and accused company. During the said meeting all the issues were discussed and executives undertook to take certain corrective measures in order for smooth continuation of the business as referred above. The complainant has not shown as to said corrective measures of reconciliation and setting the ECDS system errors upright was completed as assured by them and also not proved or it is not the case of the complainant that after completion of said exercises as addressed in Ex.D.5 only after 50 CC No.20035/2011 SCCH-25 arriving to correct figure of due amount payable by accused then as the accused did not repay even after demand and issued the cheques which got bounced and there exists legally recoverable debt or liability.
39. As per the evidence on record the accused did not issue cheques towards part repayment of outstanding due as alleged by the complainant but the cheques were handed over as security as demanded by the complainant which is evident from the very letters produced by the complainant at Exs.P.3 and P.4 and Ex.D.32 itself. The Ex.D.37 is the bank statement of the accused maintained with the SBI and it clearly reveals that the cheque bearing Nos.785152 and 78554/55 were deposited and honoured between 17.06.2010 to 22.06.2010, whereas the Ex.P.15 (C.C.20034/11) cheque bearing No:785153 is dated 24.3.2011. Further, the Bank statement clearly reveals that the cheques bearing No:785168 and 785170 were presented to the bank between the dates 23.06.2010 to 07.07.2010, whereas Ex.P.14 (C.C.20034/11) i.e. the cheque bearing 51 CC No.20035/2011 SCCH-25 No:785169 dated 24.3.2011 and from this it shows that Exs.P.14 and P.15 (C.C.20034/11) were handed over to the complainant as security cheques only.
40. In this case the specific defence of the accused is that they repaid the alleged amount of Rs.11,00,000/ and produced the Ex.D.38 i.e. office copy of reply notice dated 10.05.2011 alongwith three vouchers and acknowledgement for having served said notice. The Ex.D.38 clearly affirm the defence of the accused that they made payment. Except suggestion to DW.1 that the vouchers produced at Ex.D.38 are not related to Ex.P.5 cheque nothing worth elicited to disprove the contention of the accused that they made payment of said amount and the said Ex.P.5 also being continuation cheque of other cheques in question in C.C.20034/2011.
41. Further, as per the letters of communication referred above only the cheques were issued towards security. The complainant clearly denied that the cheques were issued towards security but submits that 52 CC No.20035/2011 SCCH-25 they were issued towards part payment of due which has not been proved by the complainant. During the course of arguments the counsel for the complainant argued that even security cheques issued towards repayment of an amount with a time period being stipulated for repayment and if such cheques presented after the loan becomes due the Section 138 NI Act is attracted and relied upon decision of Hon'ble S.C. in Sripati Singh (since deceased) Through His Son Gaurav Singh Vs. The State of Jharkhand & Anr., and decision of our High Court in 2006 CRI.L.J.3760 in the case of Smt.Umaswamy Vs. K.N.Ramanath. I have perused the said decisions but the facts and circumstances of that case and this case are different and hence they are not applicable to this case. To attract Section 138 NI Act the legally recoverable debt should arise before presenting the security cheques which is not arisen in this case as discussed above still reconciliation of differences in entries and errors in ECDS system was not addressed and no final conclusion arrived with regard to actual due and as per the Ex.D.5 itself the due of 1.1 CR was in the 53 CC No.20035/2011 SCCH-25 market and as rightly pointed out by the counsel for the accused it is collected by the complainant from the customers directly as per Ex.P.9 itself. The other decisions relied upon by the counsel for the complainant are with regard to drawing presumption in favour of holder. As already discussed above the presumption is rebuttable one and by leading defence evidence the accused rebutted the presumption available to the complainant by raising a probable defence and proved his defence with preponderance of probabilities and the onus shifted on the complainant to prove the existence of legally recoverable debt. When the accused clearly denied about existence of due and proved his defence as contended in his reply by leading evidence that pending correction of the errors in ECDS system without any reasons the complainant without their knowledge presented cheques, then the complainant should have lead evidence to discharge onus shifted on them by producing the reconciliation done by them and the documents for having solved ECDS errors as discussed in the meeting held between the two companies 54 CC No.20035/2011 SCCH-25 (complainant and accused) on 25.2.2011, which has not been done by the complainant for the reasons best known to them.
42. Further, as per the complaint the cheques issued towards part payment only and the total due is around 4,78,16,236/ but the complainant has not lead any evidence to show as to what action they took for recovery of rest of due, no doubt that does not bear anything on this complaint but still to prove their claim to be correct this exercise is also aids to support their claim. Further as rightly pointed out by the accused the complainant suppressed the material facts as the complainant did not disclose about HUB service agreement dated 23.10.2009/Ex.D.36 even though it is related to NSP agreements and the complainant is due under said HUB service payable to the accused. The complainant did not plead about HUB service agreement even though it is part of NSP agreements and as the cheques are stated to relating said NSPs the non disclosure of HUB service agreement is not much 55 CC No.20035/2011 SCCH-25 material but even then the complainant in his complaint and evidence clearly stated that there is no other agreements between them and the accused which is nothing but suppressing the material facts even though the HUB service exists between the complainant and the accused and from this the conduct of the complainant to be looked that only to suit his claim suppressed the material facts. The accused has produced HUB service agreements and invoices, ledger accounts to support his defence that the complainant company itself is in due under said agreement and they are not in due. The said documents are not appreciated to consider whether the complainant is in due or not as the scope of this complaint is limited and based on NSP only.
43. The counsel for the accused contends that the PW.1 is not a competent witness either to file the case or to depose before this court on behalf of the complainant as on the deposition of PW.1 itself it is clear that he was working in the legal department of the complainant company as Deputy ManagerLegal, he does not have 56 CC No.20035/2011 SCCH-25 any personal knowledge of the transactions between the complainant and the accused company and also he does not have any knowledge with regard to the transaction between the parties and the correspondences exchanged between the parties prior to filing of this complaint. The counsel in support of said contention relied upon the decision of full bench of the Hon'ble Supreme Court in AC Narayan Vs. State of Mharashtra and another reported in (2010) 11 SCC 790, wherein it is held, 'Power of Attorney holder can depose on oath before the court in order to prove the contents of the complaint only if such power of attorney has witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions'. At para 30, 33.2 and 33.3, the Hon'ble Court stressed on the aspect that if the witness does not have the personal knowledge of the transaction, then he cannot be examined as a witness in the said case. Therefore, as the said decision is squarely applicable to this case and prayed for dismissal of the complaint on this ground also. The complainant's counsel submitted that the PW.1 being 57 CC No.20035/2011 SCCH-25 then official did give evidence on the basis of documents and deposed about the transactions and hence he is competent to give evidence. I have perused the decision relied upon by the counsel for the accused and upon appreciation of evidence of PW.1 as he pleaded ignorance for several main issues and points, this court is of the view that the PW.1 is not competent to depose on behalf of the complainant and the decision relied upon by the counsel for the accused referred above is aptly applicable to the present case.
44. The counsel for the accused contends that there is defect in notice issued as per Ex.P.7 as it does not specify the details of the cheque that was presented and later dishonoured. As per proviso (b) to Section 138 of the NI Act, the demand has to be made for the cheque amount and as per Ex.P.7 the complainant made demand of cheque amount is sufficient compliance of Section 138 proviso (b) and there is no material defect in the legal notice.
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45. As discussed above the counsel for the accused further contends that the complainant is itself due under Hub service agreement and produced documents in that regard. No doubt the complainant did not aver about said agreement but as this is not a civil suit to claim set off or counter claim and as the purview of this complaint is limited, hence even if the complainant is due in any sum or not it is for the accused to proceed in accordance with law and as per the direction of Hon'ble H.C. given in Company Application No:1140/2014 and hence the said HUB service agreement needs no much appreciation in the present complaint.
46. As discussed above, the complainant has not reconciled the accounts and credit notes and completed exercise of correcting errors crept in ECDS system, hence no legally recoverable debt arisen as on the presentation of the alleged cheques in question which were given by the accused towards security which is evident from the letters of communication made by the complainant and accused company and the evidence on 59 CC No.20035/2011 SCCH-25 record as the said due is outstanding in the market only. Further, as per the specific defence the accused has proved that the claim of the cheque amount is already paid by them as per Ex.D.38 details and hence there is no legally recoverable debt. The counsel for the accused relied above the decisions referred above on the point that the presumption available are rebuttable one and said decisions are aptly applicable and supports the defene of the accused. Therefore, upon appreciating the evidence on record as discussed above this court holds that the accused has rebutted the presumptions available to the complainant by proving that there does no exist legally recoverable debt or liability as claimed by the complainant and the PW.1 is not competent to depose about the transactions between the complainant and the accused. The complainant has failed to prove that the cheque in question was issued towards discharge of legally debt or liability and hence no offence is made out u/Sec.138 of NI Act and accordingly, these points are answered in the negative.
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47. Point No.3: For the reasons and discussions made above and findings given to above point Nos.1 and 2, this court is of the opinion that the Accused Nos.1 and 3 are to be acquitted for the offence punishable under section 138 of NI Act. Accordingly I proceed to pass the following:
ORDER By exercising the powers conferred u/Sec. 255(1) of Cr.P.C the Accused Nos.1 and 3 are hereby acquitted of the offence punishable under section 138 of Negotiable Instruments Act.
The bail bonds of the accused and surety shall be in force till the appeal period is over.
(Typed by me directly on the laptop, computerized by the Stenographer, then corrected, signed and then pronounced in open court on this the 16th day of March 2022.) (Miss. B.T.ANNAPOORNESHWARI) XXI Addl.C.M.M & XXIII ASCJ, Bangalore.
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SCCH-25 ANNEXURE Witnesses examined on behalf of the Complainant:
PW.1 : Sri.K.C.Vijay Witnesses examined on behalf of the Accused:
DW.1: Sri.Abhishek Vijaykumar Documents marked on behalf of the Complainant:
Ex.P.1: Authorization letter alongwith Board Resolution dated 23.2.2011 Ex.P.2: Certified copy of Franchisee Agreement dated 04.09.2009 Ex.P.3: Termination letter dated 25.2.2011, Ex.P.4: Copy of letter dated 10.2.2011 issued by the complainant Ex.P.5: Cheque in question Ex.P.5(a): Signature of accused Ex.P.6: Cheque return memo issued by Andhra Bank Ex.P.7: Demand Notice dated 28.4.2011 Ex.P.8: Reply given by accused on 10.5.2011 Ex.P.9: Ledger extract.62 CC No.20035/2011
SCCH-25 Documents marked on behalf of the Accused:
Ex.D.1: Email exchanges between 29.9.2010 and 30.09.2010 Ex.D.2: Email exchange from 25.03.2011 to 26.03.2011 Ex.D.3: Email exchange from 17.08.2010 to 19.08.2010 Ex.D.4: Email exchange dated 14.08.2010 Ex.D.5: Email exchange dated 26.02.2011 Ex.D.6: Email exchange dated 29.04.2011 Ex.D.7: Email exchange from 28.03.2011 to 31.03.2011 Ex.D.8: Certificate u/Sec.65B(4) of Evidence Act Ex.D.9: Certificate dated 22.4.2014 issued by C.A. Ex.D.10: True copy of Ledger account maintained by the accused from 30.4.2010 to 31.3.2011 (1 page) Ex.D.11: True copy of ledger account maintained by the accused company for the period from 04.12.2009 to 10.9.2011 (one page) Ex.D.12: Certified copy of invoice dated 4.12.2009 raised by accused company to the complainant company (2 pages) Ex.D.13: Certified copy of invoice dated 7.1.2010 raised by accused company to the complainant company (4 pages) Ex.D.14: Certified copy of invoice dated 7.2.2010 raised by accused company to the complainant company (4 pages) 63 CC No.20035/2011 SCCH-25 Ex.D.15: Certified copy of invoice dated 7.3.2010 raised by accused company to the complainant company (4 pages) Ex.D.16: Certified copy of invoice dated 31.3.2010 raised by accused company to the complainant company (2 pages) Ex.D.17: Certified copy of invoice dated 10.5.2010 raised by accused company to the complainant company (4 pages) Ex.D.18: Certified copy of invoice dated 10.6.2010 raised by accused company to the complainant company (4 pages) Ex.D.19: Certified copy of invoice dated 10.7.2010 raised by accused company to the complainant company (4 pages) Ex.D.20: Certified copy of invoice dated 10.08.2010 raised by accused company to the complainant company (4 pages) Ex.D.21: Certified copy of invoice dated 10.9.2010 raised by accused company to the complainant company (4 pages) Ex.D.22: Certified copy of invoice dated 11.10.2010 raised by accused company to the complainant company (4 pages) Ex.D.23: Certified copy of invoice dated 20.11.2010 raised by accused company to the complainant company (4 pages) Ex.D.24: Certified copy of invoice dated 13.12.2010 raised by accused company to the complainant company (4 pages) Ex.D.25: Certified copy of invoice dated 18.1.2011 raised by accused company to the complainant company (4 pages) 64 CC No.20035/2011 SCCH-25 Ex.D.26: Certified copy of invoice dated 09.1.2011 raised by accused company to the complainant company (4 pages) Ex.D.27: Certified copy of invoice dated 15.3.2011 raised by accused company to the complainant company (4 pages) Ex.D.28: Certified copy of invoice dated 11.4.2011 raised by accused company to the complainant company (3 pages) Ex.D.29: Certificate u/Sec.65B of Evidence Act for Exs.D.10 to D.11 Ex.D.30: Certified copy of notice dated 27.3.2014 issued by accused company to the co mplainant company (2 pages) Ex.D.31: Certified copy of Notice dated 27.3.2014 issued by accused company to the complainant company (2 pages) Ex.D.32: Certified copy of letter dated 17.3.2011 issued by complainant company to accused company Ex.D.33: Certified copy of Letter dated 05.04.2011 issued by accused company to complainant company Ex.D.34: Certified copy of Letter dated 28.07.2011 issued by complainant company to accused company Ex.D.35: Certified copy of order passed by Hon'ble H.C. in C.A.No:1140/2014 in C.P.Nos.143/2011 c/w.193/2011 Ex.D.36: Hub Service agreement dated 23.10.2009 between complainant company and accused company (40 pages) Ex.D.37: Certified copy of Bank Account statement of accused company maintained in SBI (42 65 CC No.20035/2011 SCCH-25 pages, 3 unnumbered pages in between said pages) Ex.D.38: Office copy of reply notice dated 10.05.2011 alongwith three vouchers and acknowledgement for having served said notice.
(Miss. B.T.ANNAPOORNESHWARI) XXI Addl.C.M.M & XXIII ASCJ, Bangalore.
66 CC No.20035/2011
SCCH-25 16.03.2022 JUDGMENT PRONOUNCED IN OPEN COURT VIDE SEPARATE ORDER ORDER By exercising the powers conferred u/Sec. 255(1) of Cr.P.C the Accused Nos.1 and 3 are hereby acquitted of the offence punishable under section 138 of Negotiable Instruments Act.
The bail bonds of the accused and surety shall be in force till the appeal period is over.
XXI A.C.M.M. & XXIII ASCJ Bangalore