Delhi District Court
Castrol India vs . Santosh Malik Cc. No. 3213/12 on 11 July, 2013
Castrol India vs. Santosh Malik CC. No. 3213/12
IN THE COURT OF MS. SWATI KATIYAR, METROPOLITAN
MAGISTRATE-05 (NI ACT), DWARKA COURTS, DELHI
CC No. 3213/12 (Old CC No. 530/1)
ID No. 02405R06302122004
M/s. Castrol India Limited
through its Senior Legal Executive
& Constituted Attorney,
Sh. Ranjan Narula, 104, Rohit House,
3, Tolstoy Marg, New Delhi-110001.
...........Complainant
Versus
Smt. Santosh Malik
Proprietress, M/S Malik Automobiles
Plot no. 498, 499, Main Rohtak Road,
Mundka, Delhi-110041
ALSO AT
RZ-2A/3, Puran Nagar,
Palam Vihar, New Delhi-110087
..................Accused
Date of Institution : 29.04.1997
Offence Complained of : u/s 138 Negotiable Instruments Act, 1881
Plea of Accused : Not Guilty
Date of Reserving order : 05.07.2013
Date of Decision : 11.07.2013
Decision : Convicted
JUDGMENT
1. Complainant is a company carrying on the business of manufacturing and marketing lubricants and speciality chemicals through out the country. The present complaint was filed through Sh. Ranjan Narula, Senior Legal Executive of the complainant company. Several Authorized Representatives of the complainant were substituted during the proceedings and at present, complainant is represented through Sh. Manoj Page 1 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 Makhija. Accused is stated to be the proprietress of M/s. Malik Automobiles which caries on the business of selling lubricants.
2. Briefly stated the case of the complainant is that during the course of its business, complainant had supplied various grades of lubricants from time to time to the accused vide invoice no. DP 8893 dated 24.01.1997 for an amount of Rs. 89,559/-, invoice no. DP 8913 dated 25.01.1997 for an amount of Rs. 1,46,610/- and invoice no. DP 9785 dated 21.02.1997 for an amount of Rs. 1,37,831/-.
3. Complainant states that towards discharge of the liability arising from the supply of goods by the complainant to the accused on credit, accused issued three cheques to the complainant i.e cheque bearing no. 004256 in the sum of Rs. 1,37,831/- dated 21.02.1997, cheque bearing no. 004239 in the sum of Rs. 89,559/- dated 23.02.1997 and cheque bearing no. 004240 in the sum of Rs. 1,46,610/- dated 24.02.1997 (hereinafter referred to as "cheques in question").
4. Complainant states that when the cheques in question were presented for encashment, the same were returned unpaid vide return memos dated 25.02.1997 and 27.02.1997 with the remarks "payment stopped by the drawer". Complainant states that the "stop payment" instruction issued by the accused to her bank is only a cover up and the actual reason for the dishonour of the cheques is the insufficiency of funds in the account of the accused.
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5. Complainant states that a legal notice dated 10.03.1997 was also sent to the accused but despite the receipt of legal notice, accused had failed to make the payment of the dishonoured cheques to the complainant.
6. Feeling aggrieved from the conduct of the accused, complainant has filed the present complaint praying that accused be summoned, tried and punished in accordance with Section 138 of Negotiable Instruments Act.
7. In pre-summoning evidence, complainant summoned and examined concerned clerk from Punjab National Bank, Delhi Cantonment as CW1 who brought on record documents viz. Cheque return memos i.e. Ex. CW1/1 and Ex. CW1/2, certified copy of cheque return register i.e. Ex. CW1/3, certified copy of the ledger i.e. Ex. CW1/4 and letter for stop payment issued by accused being proprietor of M/S Malik Automobiles i.e. Ex. CW1/5.
8. Complainant further examined Banking Assistant from HSBC Bank as CW2 who brought on record the documents viz. certified copy of the statement of accounts i.e. Ex. CW2/1 and Ex. CW2/2 and certified copy of return debit vouchers i.e. Ex. CW2/3 and Ex. CW2/4.
9. Complainant also examined one Sh. Vivek Sharma, Deputy Manager (Finance) of complainant company as CW3 who placed on record his power of attorney as Ex. CW3/A, Page 3 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 cheques in question as Ex. CW3/B to Ex. CW3/D, bank memos as Ex. CW3/E and Ex. CW3/F, legal notices dated 10.03.1997 as Ex. CW3/ G and Ex. CW3/H, postal receipt as Ex. CW3/I, UPC receipt as Ex. CW3/J, reply dated 03.04.1997 as Ex. CW3/K and reply of the accused dated 16.04.1997 as Ex. CW3/L, complaint as Ex. CW3/M, debit advices as Ex. CW3/N and Ex. CW3/O. Prima facie case was made out against the accused and accused was summoned vide order dated 27.08.1999.
10. Accused entered appearance on 18.01.2000 and notice was framed upon her on 09.04.2001 to which the accused pleaded not guilty and claimed trial.
11. In post summoning evidence, Sh. I. Haq, AR of the complainant entered into witness box as CW1 and tendered his evidence by way of affidavit Ex. CW1/X and relied upon the documents Ex. CW1/2 to Ex. CW1/4. Ex. CW1/2 is the original invoice dated 24.01.1997, Ex. CW1/3 is invoice dated 25.01.1997 and Ex. CW1/4 is invoice dated 21.02.1997. However, during cross-examination, Sh. I. Haq retired from the services of the complainant and was substitued by Sh. Manoj Makhija.
12. Sh. Manoj Makhija examined himself as CW1 and tendered his affidavit by way of evidence as Ex. CW1/1. CW1 relied upon his power of attorney dated 16.08.2007 as Ex. CW4/1A, invoices Ex. CW1/2 to Ex. CW1/4, copy of statement Page 4 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 of account for the period 01/01/1996 to 31/12/98 as Mark A, Cheques Ex. CW1/5 to Ex. CW1/7 as Ex. CW4/B to Ex. CW4/D, return memos Ex. CW1/8 and Ex. CW1/9 as Ex. CW4/O and Ex. CW4/N, legal notice Ex. CW1/10 as Ex. CW4/G, postal receipts Ex. CW 1/11 as Ex. CW4/I, certificate of posting AD card Ex. CW1/12 as Ex. CW4/J and AD card Ex. CW1/13 as Ex. CW4/I, letter dated 10.03.1997 Ex. CW1/14 as Ex. CW4/G, reply of accused Ex. CW1/15 as Ex. CW4/K. The complaint was relied on as Ex. CW4/M. During cross- examination, CW1 was confronted with statements of account from 01/01/1996 to 31/12/1998 and same were exhibited as Ex. CW1/X. CW1 also brought on record dealership form and dealership agreement as Ex. CW4/K (colly.). CW1 was also confronted with certified copy of judgment dated 04.04.2011 passed in the civil suit between the parties and letter dated 20/12/1996 alongwith credit note i.e. Ex. CW4/Y (colly.).
13. Statement of accused under Section 313 Cr.P.C was recorded on 14.02.2013 wherein accused expressed desire to lead evidence in defence.
14. In Defence evidence, accused examined her husband Sh. Ram Mehar Malik as DW1 and herself as DW2. In his examination, DW1 deposed that he was defendant No. 2 in the civil suit between the same parties for recovery bearing suit no. 77/03 with title "Castrol India Ltd vs Santosh Malik and Ram Mehar Malik", which is in respect of transactions and cheques involved in the present complaint and complaint no. 3212/12.
Page 5 of 17Castrol India vs. Santosh Malik CC. No. 3213/12 The certified copy of statement of PW1 I. Haq was tendered as Ex. DW1/1 (running in two pages) and that of PW2 Sh. Manoj Makhija alongwith his cross examination in the abovesaid civil case as Ex. DW1/2 (collectively, running in 15 pages). DW1 deposed that a notice under order 12 Rule 8 CPC to produce documents was served on complainant i.e. Ex. DW1/3. DW1 further deposed that complainant is not a Body incorporated and the certificate filed by complainant in that civil suit was tendered as Ex. DW1/4 (collectively, running in 3 pages).
15. DW1 deposed that he applied with the complainant as a sole proprietor vide application i.e. Ex. DW1/5 and he was issued Dealership Letter dt. 17.7.1995 which is Ex. DW1/6. DW2 further deposed that at the time of his application for dealership and at the time of issuance of dealership letter and later on he had no normal relations with his wife Smt. Santosh. DW1 deposed that on account of strained relations, Smt. Santosh was residing with her father at Alipur. DW1 deposed that he and accused were separate since 1993. DW1 further deposed that after discussions with the complainant, Mr. Ashok Mehta who was senior Sales Executive with the complainant dealt the whole matter with him.
16. DW1 deposed that the dealings stopped after February, 1997 because of non-payment of their commissions under different schemes. DW1 further deposed that apart from the present complaint case, complainant had also filed a civil suit for recovery. DW1 placed on record the certified copies of the Page 6 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 statements and documents as Ex. DW1/7. DW1 tendered Ex. DW1/8 i.e. document in respect of sales from April, 1996 to June, 1996 exceeding the total sales during January, 1996 to March, 1996. DW1 deposed that under the said scheme, for every part of 2000 litres, there was an entitlement of 5 gram gold. DW1 further relied upon the document Ex. DW1/9 which is in respect of Air Conditioner gift scheme for the year 1996, sales being above 250 Kilolitre, Ex. DW1/10 which is in respect of special scheme during September, 1996 to November, 1996, Ex. DW1/11 which is in respect of details of entitlement in terms of monthly 30 % growth as per details for September, 1996, 40 % for October, 1996 and 30 % for November, 1996 and total amount commission amount is reflected in Ex. DW1/12. DW1 further relied upon the document Ex. DW1/13 i.e. the details of sliding scale discount, 1996, Ex. DW1/14 i.e. the details of commission since the year 1995 to year 1997. DW1 deposed that at point A of Ex. DW1/14, there are details of prize gift of AC and at point B, is the amount of goods supplied by company which were leaked/ damaged.
17. DW1 further relied on Ex. DW1/15 which is the list of damaged/ leaking goods supplied by complainant and there was no replacement, Ex. DW1/16 which is the letter dated 20.12.1996 in respect of Special Sliding Scale discount, 1996, Ex. DW1/17 which is credit note issued by complainant to him, Ex. DW1/18 which is the complaint lodged by accused in respect of conduct of complainant and its Carrying and Page 7 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 Forwarding (C & F) agent, Ex. DW1/19 which is the complaint to SHO by accused no. 1 against complainant and C & F agent, Ex. DW1/20 which is letter of accused no. 1 to regional sales manager of complainant dated 22.02.1997 in respect of the same subject, Ex. DW1/21 which is again a letter written by accused to the abovesaid Mr. Sidharth Chatterjee on the same subject matter.
18. DW1 deposed that the complainant used to issue, publish and circulate list of their authorized dealers but intentionally his name was not mentioned in the list of dealers with malafide intentions. DW1 further placed on record list issued by complainant company as Ex. DW1/22 (collectively, running in 3 pages) and Ex. DW1/23 i.e. the certified copy of review judgment dated 15.03.2013. DW1 further deposed that he proposes to file an appeal against the final order and decree of the civil court along with decision and amended decree on review application Ex. DW1/23. In his cross- examination, DW1 was confronted with certified copy of his statement recorded in civil proceedings i.e. Ex. DW1/X1 and DW1 admitted the contents of the same.
19. Accused entered into the witness box as DW2 and deposed that she had never applied to the complainant for grant of any dealership nor she has availed any dealership from the complainant. DW2 further deposed that she has never placed any order with the complainant for supply of any goods nor has received any goods from the complainant. DW2 Page 8 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 deposed that she is having strained relations with her husband and they are living separately since 1993-94. DW2 deposed that she had never issued any cheque in favour of the complainant and she does not owe any liability towards the complainant. In her cross-examination, DW2 was confronted with document Ex. DW2/X i.e. the certified copy of her statement dated 03.09.2008 recorded in civil proceedings. DW2 admitted the statement Ex. DW2/X. DW2 also admitted that the cheques in question bear her signatures. DW2 stated that she had not filled contents of the cheques and explained that blank signed cheques were kept at her shop. DW2 stated that the cheques were filled either by her or her son but she had never filled any cheque for the complainant.
20. No further evidence was led by the accused and matter was listed for final arguments.
21. Final arguments were advanced orally by Sh. Vikram Bajaj, Ld. Counsel for complainant and written submissions were filed by Sh. Praveen Solanki, Ld. counsel for accused.
22. I have considered the submissions and perused the record carefully.
23. Section 138, Negotiable Instruments Act has been enacted to lend credibility to the financial transactions. The main ingredients of the offence under Section 138 Negotiable Instruments Act are:
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(i) Drawing up of a cheque by the accused towards payment of an amount of money for the discharge in whole or in part of any debt or any other liability,
(ii) Return of the cheque by the bank as unpaid,
(iii) The drawer of the cheque fails to make the payment of the said amount of money within 15 days of the receipt of notice under proviso (b) to Section 138.
24. Apart from this, Section 139 Negotiable Instruments Act lays down a presumption in favour of the holder of cheque in following terms, "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".
25. Thus in cheque dishonor cases, what the courts have to consider is whether the ingredients of the offence enumerated in Section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 139 of the Act.
26. In the present case, complainant had alleged liability of the accused i.e. the proprietor of M/s. Malik Automobiles, on the basis of goods supplied to the accused vide invoices Ex. CW1/2 to Ex. CW1/4. As per complainant, the cheques in question i.e. Ex. CW3/B to Ex. CW3/D (Ex. CW4/B to Ex. CW4/D) were issued against these invoices by the accused.
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27. To rebut the case of the complainant, accused has taken a defence that she had never applied for any dealership with the complainant and thus, she has no privity of contract with complainant. Accused, however, has examined her husband Sh. Ram Mehar Malik as DW1 who had admitted business relations with the complainant. DW1 in his examination states, "I applied with the complainant as a sole proprietor vide application Ex. DW1/5. I was issued Dealership letter dt. 17.7.1995 which is Ex. DW1/6...". Thus, it is apparent that husband of the accused had business relations with the complainant.
28. In his entire deposition, the husband of the accused had vehemently urged about the commissions to be set off by the complainant under certain schemes but had not even once challenged invoices Ex. CW1/2 to Ex. CW1/4. There is no averment that the goods were not supplied by the complainant under the said invoices to M/s. Malik Automobiles. It is to be borne in mind that the cheques in question are towards the payment of invoice amount and not towards any settlement which was or was not arrived at between the parties and thus, the averments raised by DW1 qua discounts and schemes are irrelevant for the determination of the present case. Once the invoices and the goods delivered thereunder are not disputed by DW1, he is precluded from denying liability towards complainant under the invoices Ex. CW1/2 to Ex. CW1/4 which form subject matter of the present case. It is also to be noted that the defence raised by the accused is not qua the Page 11 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 differences in payments to be made between the parties but accused has completely denied any transaction whatsoever with the complainant. Thus, pleas relating to entitlement of DW1 under certain schemes etc. are not relevant for the present case.
29. Coming further, it is an admitted position that accused is the sole proprietor of M/s. Malik Automobiles. Accused had admitted this fact in her statement Ex. DW2/X and otherwise also, there is no dispute qua the same. DW1 had also admitted in his statement Ex. DW1/X viz. that he has no concern with M/s. Malik Automobiles. Relevant extract of DW1 is reproduced as follows, " ...The sales tax certificate was applied by my wife who is defendant no.1 and the sole proprietor of M/s. Malik Automobiles. I have no connection whatsoever with firm M/s. Malik Automobiles....." . It is also to be seen that invoices Ex. CW1/2 to Ex. CW1/4 are in the name of M/s. Malik Automobiles of which accused is the sole proprietor and thus, accused cannot brush off her liability by saying that she has no concern with the transaction in hand. Had it been otherwise, it is inexplicable as to why the accused had not taken any action against her husband for misusing her firm name and incurring liability thereon.
30. Accused states that she was having strained relations with her husband since 1993-94, however, apart from oral testimony on record, there is no evidence to prove strained relations between the accused and her husband. If the Page 12 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 relations were actually so strained, accused would have definitely taken legal action against her husband for misusing her firm name and for dealing with the complainant. But the accused has not taken any such steps fuelling the inference that she is raising false pleas to evade her liability. Further, if the accused was actually having strained relations with her husband, it is inexplicable as to why her husband would depose in her support in the present case. Be that as it may, once the complainant has proved business relations with M/s. Malik Automobiles and supply of goods under invoices Ex. CW1/2 to Ex. CW1/4 to the said firm, liability of accused being sole proprietor of M/s. Malik Automobiles can be taken to be established on record.
31. Coming to the next aspect of the issuance of cheques in question, accused has flatly denied that the cheques were issued by her in favour of the complainant. As per accused, the cheques were kept as blank signed cheques at her office and the same have been misused by her husband. Now, once again there is no evidence on record to prove such averments of the accused. First of all, accused had failed to take any action against her husband for misusing her cheques. Secondly, perusal of the cheques show that the same have been filled in the same ink, thus, leading to inference that the same were filled at the same time. Particularly, cheque Ex. CW3/B shows that the same bears a correction in date and that correction has been signed by the accused. If the cheque Page 13 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 was actually misused by the husband of the accused, accused would have never had an occasion to sign on the correction on the top of the cheque. Furthermore, accused in her deposition states that the cheques were filled either by her or by her son and in the statement recorded as Ex.DW2/X, accused states that her cheque book used to be with her children who used to make the payments to different parties on the already signed cheques under intimation to her. Accused had also admitted in the said statement that she used to put the date, name, amount etc. before signing the cheque. Thus, no part of the statement of accused proves that the cheques in question have been misused by her husband, rather it establishes that the cheques in question were issued by the accused herself and that she is raising vague pleas to escape liability.
32. Further, the accused had admittedly issued instructions to her bank to stop the payment of the cheques in question. Accused has not brought on record the letter given to bank for stopping the payment of cheques in question. However, the said letter has been brought on record by complainant as Ex. CW1/5. A perusal of the said letter shows that the same has been signed by the accused and bears complete details of the cheques, their dates and exact amounts. Now, one may ask that if the cheques were misused and accused had no knowledge about them, then how come she has mentioned the exact details of the cheques in her letter to the bank. Further, in the said letter accused had stated the reason for stopping the Page 14 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 payment of cheques to be dispute qua settlement of amounts with the complainant. There is no averment that the cheques have been misused by the husband of the accused. Accused has also failed to bring on record any evidence that she had sufficient funds in her account to honour the cheques in question.
33. It is also to be noted that DW1 had admitted in his statement Ex. DW1/X that the cheques in question were signed by accused and were given to the plaintiff towards payment of the goods supplied to M/s. Malik Automobiles.
34. Further, even if it is presumed that accused had no direct dealings with the complainant, still there is no bar on the accused for issuing cheques towards discharge of liability of her husband. In Alexander v. Joseph Chacko, II (1994) 1 Crimes 388 (Kerala); M. Vaidyanathan Deepika Milk Marketing v. M/s. Dodla Dairy Ltd, 2000 (1) Crimes 291 (Madras) and Gopi v. Sudershan, II (2003) CCR 375 (Kerala), it has been clearly laid down that cheque can be issued towards discharge of liability of another person.
35. Thus, in view of the entire observations made above, it stands established that the cheques in question were indeed issued by the accused towards discharge of liability in favour of the complainant.
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36. Coming to the next ingredient of the offence i.e. return of the cheque as unpaid by the bank, there is no dispute qua the same. Rather accused had admitted that she had herself issued instructions for stopping the payment of the cheques in question which resulted in the cheques being returned unpaid. Thus, the second ingredient also stands established.
37. The last ingredient is qua the service of legal notice upon the accused and failure of the accused to make the payment of cheque amount within 15 days of receipt thereof. Though, accused had denied receipt of legal notice Ex. CW3/G, there is no dispute that accused had replied to the legal notice vide reply Ex. CW3/L. The said reply has been mentioned by the accused in her written synopsis as well. Even otherwise, it is not in dispute that the accused has been served through process of the Court and once it is so, the decision of Hon'ble Supreme Court in C.C. Alvi Haji V. Palapetty Muhammed & Anr. 2007 STPL(DC) 952 SC would also be applicable wherein Hon'ble Apex Court has held that even if the accused didn't receive the legal demand notice he can pay the cheque amount within 15 days of service of summons from the court but if he fails, he can't contend that he has not received the legal demand notice.
38. Thus, in view of the entire observations made above, it is held that the complainant has been able to establish all the ingredients of offence under Section 138 Negotiable Instruments Act and the accused has failed to raise any Page 16 of 17 Castrol India vs. Santosh Malik CC. No. 3213/12 probable defence to rebut the presumption under Section 139 Negotiable Instruments Act in favour of the complainant.
39. Accordingly, accused stands convicted of the offence punishable under Section 138 Negotiable Instruments Act.
Announced in Open Court 11.07.2013 (SWATI KATIYAR) METROPOLITAN MAGISTRATE-05 NEGOTIABLE INSTRUMENTS ACT DWARKA COURTS, NEW DELHI 11.07.2013 Page 17 of 17