Bangalore District Court
Sri. Vinod Kumar Singhal vs No. 423/3 on 8 November, 2019
1
IN THE COURT OF XIV ADDL. CHIEF METROPOLITAN
MAGISTRATE, MAYO HALL, BENGALURU
DATED THIS THE 8th DAY OF NOVEMBER, 2019
PRESENT
Sri. K. GURUPRASAD, B.A., LL.B (Spl.)
XIV ADDL. C.M.M., BENGALURU
CASE NO C.C. NO.52687/2019
Shri Lakshmi Steel Suppliers
Proprietor
COMPLAINANT Sri. Vinod Kumar Singhal,
Reptd by it's Authorized GPA Holder
Sri. Vittal TGR -
Manager, Credit Control,
No.305, 3rd Floor, 901, "Pride Hulkul", Lalbagh
Road, Bengaluru - 560 027.
1. M/s. SRM Traders
ACCUSED No. 423/3, Co-operative Nagar,
Trichy Road, Near Co-operative Bank,
Dindigul - 624005, Tamil Nadu.
2. Mr. M. Manikandan -
Partner
M/s. SRM Traders
No. 423/3, Co-operative Nagar,
Trichy Road, Near Co-operative Bank,
Dindigul - 624005,
Tamil Nadu.
2
And also R/at ;
Mr. M. Manikandan
S/o. Mohana Sundaram,
No.25/10, 2nd Street, GTN Road, Thiru Nagar,
Balakrishna Puram, Dindigul - 624005,
Tamil Nadu.
3. Mrs. Balamani
Partner
M/s. SRM Traders
No. 423/3, Co-operative Nagar, Trichy Road,
Near Co-operative Bank, Dindigul - 624005,
Tamil Nadu.
And also R/at
Mrs. Balamani
W/o. Mohana Sundaram,
No.25/10, 2nd Street, GTN Road, Thiru Nagar,
Balakrishna Puram, Dindigul - 624005,
Tamil Nadu.
OFFENCE U/s.138 of Negotiable Instruments Act
PLEA OF THE
ACCUSED Pleaded not guilty
FINAL ORDER Accused are convicted
(K. GURUPRASAD)
XIV ADDL. C.M.M., BENGALURU
3
JUDGMENT
The present complaint is filed under Sec.200 Cr.PC for the offence punishable under Section 138 r/w 141 and 142 of Negotiable Instruments Act.
2. It is the case of the complainant that, the complainant is carrying on business of supply of steels etc. Accused No.1 is firm while accused Nos.2 and 3 who are the partners of the said firm are responsible for day-today affairs of the said firm. Accused No.1 firm is involved in business of steel and is customer of complainant. It is further claimed that the accused purchased steel tubes on 7.12.2017 on credit basis under Tax Invoice No.3961 for a sum of Rs.5,37,794/- and on 23.12.2017 on credit basis under Tax Invoice No.4110 for a sum of Rs.5,38,114/- from the complainant. Out of said invoice amount of Rs.10,75,908/-, accused paid a sum of Rs.2 lakhs on 23.2.2018. Towards liability of payment of balance amount of Rs.8,75,908/-, the accused issued two cheques bearing No.000815 dtd.4.2.2019 for Rs.4 lakhs and No.000816 dtd.4.2.2019 for Rs.4,75,908/- drawn on City Union Bank, Dindigul branch, Tamil Nadu. When the complainant presented the said cheques to its banker i.e Vijaya Bank, Mayo Hall branch, Bengaluru, the said cheques came to be dishonoured for the reason "funds insufficient" on 7.2.2019.
4Thereafter, when the complainant got issued legal notice dtd.20.2.2019 (which is posted on 21.2.2019) by registered post calling upon the accused to pay the cheque amount within 15 days, the said notice sent by registered post to the accused was served on 25.2.2019. Thereafter, the accused got issued reply notice on 7.3.2019 denying the liability. The accused have failed to pay the cheque amount and as such the accused are guilty of the offence punishable under Section 138 r/w 142 of N.I. Act. Hence this complaint.
3. After filing of this complaint, cognizance was taken for the offence punishable U/s.138 of N.I. Act. Sworn statement of the complainant was recorded. This court was satisfied as to prima facie case made out by the complainant for issuance of the summons. Accordingly, criminal case was registered against the accused and summons was ordered to be issued.
4. In pursuance of court process issued by this court, the accused appeared through their counsel and got enlarged on bail. Thereafter plea was recorded. The accused Nos.2 & 3 pleaded not guilty and claimed for trial.
5. In order to prove the case of the complainant, General Power of Attorney holder and Authorized official of the complainant company has examined himself as CW.1 5 (PW.1) and got marked Ex.P1 to P23 and closed his side of evidence. Thereafter, statement of the accused Nos.2 & 3 U/s.313 of Cr.PC was recorded. Both accused denied incriminating materials in the evidence of CW.1. Thereafter the accused No.2 examined himself as DW.1 and got marked Ex.D1 to D3 and closed defence side of evidence.
6. Heard both sides. Perused the complaint, evidence on record and court records.
7. The following points arise for my consideration and determination;
1) Whether the complainant proves that the accused has issued two cheques in question in discharge of legally enforceable debt or liability as contended by it?
2) Whether the complainant further proves that the accused have committed the offence punishable under Section 138 of Negotiable Instruments Act?
3) Whether the complainant is entitled for the relief's as prayed in the complaint?
4) What Order?
68. The above points are answered as under;
Point No.1 to 3 : In affirmative, Point No.4 : As per the final order, for the following.......
REASONS
9. Point Nos. 1 and 2: Since these two points are inter linked and to avoid repetition they are taken together for discussion.
10. As regard to limitation to file this complaint, Ex.P7 and P8 are cheques both dtd.4.2.2019 both drawn on City Union Bank, Dindigul branch in favour of complainant. Ex.P9 and P10 are the cheque return memos both dtd.7.2.2019 issued by Vijaya Bank, Mayo Hall, Bengaluru. Ex.P11 is copy of legal notice dtd.20.2.2019 got issued by the complainant to the accused Nos.1 to 3 calling upon them to pay the cheques amount. Ex.P12 to P16 are postal window receipts issued by the postal department for having sent Ex.P11-notice by registered post to the accused on 21.2.2019. Ex.P17 to P21 are the postal acknowledgments signed by accused for having received Ex.P11-notice on 25.2.2019. Ex.P22 is reply notice got issued by the accused to the complainant in response to Ex.P11-notice.
711. It is clear from Ex.P7 to P22 that when the complainant presented Ex.P7 and P8 -cheques before its banker I.e Vijaya Bank, Mayo Hall, Bengaluru, said cheques were returned dishonored with bank endorsement dtd.7.2.2019 as "Funds Insufficient" and that when the complainant got issued Ex.P11-notice by registered post on 21.2.2019 to the accused, the said notice came to be served on the accused on 25.2.2019 and replied by the accused on 7.3.2019. In other words, when the complainant has presented the cheques in question to its banker within three months from the date of said cheques, the said cheques came to be dishonored and that when the complainant got issued statutory notice U/s. 138 of N.I. Act to the accused within 30 days from the date of intimation of dishonour of said cheques, it was served on the accused on 25.2.2019. Hence, the present complaint filed on 3.4.2019 i.e after expiry of 15 days from the date of receipt of such legal notice and within 30 days thereafter is well within time.
12. As regard to legally enforceable debt or liability, in 2010 (11) SCC 441 - (Rangappa Vs Sri. Mohan), it is held that;
8" The presumption mandated by Sec.139 of the Act includes a presumption that there exists a legally enforceable debt or liability. This is of course in the nature of a rebutable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, herein, there can be no doubt that there is an initial presumption which favours the complainant"..............."when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the presumption can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own".
13. If the facts and circumstances of this case are considered in light of above said principle of law, it is clear that DW.1 has admitted during cross-examination that Ex.P7 and P8 -cheques are pertaining to bank account of accused No.1 firm and that the cheques bears his signature. Therefore, statutory presumption arises U/s.139 of N.I. Act in favour of the complainant that Ex.P7 and P8
-cheques are issued in discharge of debt or liability. The burden of rebutting the said presumption is on the accused.
914. I have meticulously gone through the complaint and evidence on record. It is case of complainant that it has supplied steel tubes under Ex.P2 and P3-invoices to the accused firm worth of Rs.10,75,908/- on 7.12.2017 and 23.12.2017 and that accused firm has paid Rs.2 lakhs on 23.2.2018 towards part payment and issued Ex.P7 and P8
-cheques towards said liability, but the said cheques came to be dishonored. On the other hand it is defence of the accused (as made out from Ex.D1 to D3 and evidence of DW.1) that though complainant company dispatched steel tubes under Ex.P2 and P3-invoices, the accused firm returned the said goods as they were defective and thereafter he intimated the complainant company on phone regarding return of said goods and reason for such return. It is further defence of the accused that the transport company I.e Venus transport and Hanuman regular service which dispatched the said goods have endorsed on the invoices as per Ex.D1 and D2 that the goods supplied were defective and as such they have taken back the material to the supplier I.e complainant. It is further defence of the accused that thereafter accused firm stopped purchasing goods from the complainant and after some negotiations, complainant company promised to supply good materials to the accused firm and as such accused firm has paid Rs.2 lakhs through cheque as 10 advance for supply of good materials. It is further defence of the accused that the complainant has neither sent good materials to the accused firm nor has the complainant repaid said advance amount of Rs.2 lakhs. It is further defence of the accused that complainant company which used to take two blank signed cheques from the accused firm by way of security for supply of goods in advance, misused the said cheques.
15. On careful perusal of evidence on record, it is clear that the defence of the accused is not probable nor does it inspire confidence of this court. It is because accused has produced Ex.D1 and D2 which are copies of tax invoices dtd.7.12.2017 and 23.12.2017. In Ex.D1- invoice, there is a hand written endorsement that "defective quality materials, materials rejected and returned" there is also seal and signature of transporter I.e Venu transport, Salem under the said endorsement. Similarly, in Ex.D2-invoice, there is hand written endorsement that "all materials are defective in quality, materials are rejected and returned". There is also seal and signature of transporter I.e Hanuman regular service under the said endorsement. It is pertinent to note that even though complainant seriously disputed genuineness of Ex.D1 and D2. Accused has not examined the respective transporters who alleged to have made said endorsements 11 on Ex.D1 and D2. DW.1 has deposed during cross- examination that employee of Venus transport came to the office of the accused on the request of the accused and put the seal of said transporter on Ex.D1, while employee of Hanuman regular services came to the office of the accused on the request of the accused and put seal of said transport on Ex.D2. DW.1 has deposed that he does not know where the said transporters are now and as such accused has difficulty to examine those transporters who made shara on Ex.D1 and D2. However it is clear from the seals of said transporters on Ex.D1 and D2 that addresses of respective transporters are mentioned in the said respective seals. Both transporters are from Salem. Hence it is highly improbable that the accused who had requested the respective transporters to come to office of accused in Dindigul to put seals on Ex.D1 and D2, has any really difficulty in summoning and examining the said transporters to prove the said endorsements on Ex.D1 and D2. When addresses of said transporters are mentioned in seals itself, the statement of DW.1 that he does not know where the said transporters are now cannot be believed. Moreover DW.1 has admitted during cross-examination that handwriting of the endorsement on Ex.D1 and D2 invoices are the handwriting of staff/employee of the accused firm. Even otherwise on perusal of said endorsements on Ex.D1 12 and D2, It is clear that the handwritings of said endorsements on Ex.D1 and D2 are same. However the accused has not examined the said staff/employee of accused, who has written said endorsements on Ex.D1 and D2 in his handwriting. Even the accused has not disclosed the name of said staff/employee nor has given any explanation for non-examination of such staff/employee. Mere production of Ex.D1 and D2 is not sufficient to prove the defence of the accused, particularly when the complainant has seriously disputed genuineness of those documents. The accused has withheld best evidence available to the accused by not examining the transporters or said staff/employee and as such an adverse inference can be drawn against the accused that the evidence of said transporters or staff/employee would go against the accused. Even chances of staff/employee of accused subsequently making endorsements on Ex.D1 and D2 above the seal and signature put by transporters for some other purpose cannot be overruled. Hence, the accused utterly failed to prove Ex.D1 and D2 to show that accused firm has returned the goods sent under Ex.P2 and P3 invoices.
16. Secondly, it is clear from the evidence on record that both complainant company and accused firm are registered under G.S.T and that G.S.T number of accused 13 firm is 33ACRFS4660D1Z0. G.S.T Act has come into force with effect from 1.4.2017. The supply of goods under Ex.P2 and P3 took place in December 2017. Hence, G.S.T Act is applicable to parties to this case. Registered dealer under G.S.T Act can claim input tax credit. Input tax credit means reducing the taxes paid on inputs from the taxes to be paid on output. When any goods supplied to taxable person, the G.S.T charged is known as input tax. On the other hand, when the purchaser returns any goods on the ground of defective quality or otherwise, the seller has to issue credit note for the value of the returned goods to buyer. The said seller must declare the credit note in GSTR-1 of the month in which it was issued. Thereafter the credit note will automatically flow into buyer's GSTR-2 as debit note. The credit note must be issued and declared within September of next financial year or date of furnishing of relevant annual return, whichever is earlier. The purchaser can issue debit note to the seller to indicate or request return of funds due to incorrect or damage goods received, purchase cancellation, or other specified circumstances. In other words, debit note basically acts as buyer's formal request for credit note from the seller. The document therefore serves as evidence of support of the purchase return in the accounts book of the buyer. In the present case on hand, if the accused firm had received the goods 14 I.e steel tubes under Ex.P2 and P3 invoices and thereafter sold the same to others, the accused should have claimed input tax credit under G.S.T Act. If the accused had really returned the goods under Ex.P2 and P3 invoices, the complainant company which is registered seller should have issued credit note to the accused firm and the same would have reflected in the G.S.T account of accused firm as debit note. If the complainant company had not issued credit note for the value of returned goods under Ex.P2 and P3, the accused firm could have issued debit note to the complainant company requesting the complainant company to issue credit note for the value of returned goods. However, the accused firm has not produced any documentary evidence nor examined its Accountant to show that the seller I.e complainant company has issued credit note for the value of returned goods or the accused firm has issued debt note to the complainant company. The accused firm has also not produced G.S.T input and output statement for the period of 2017 - 2018 to show that it has not claimed input tax benefit for the goods under Ex.P2 and P3. On the contrary, DW.1 has admitted during cross-examination that he has claimed G.S.T benefit for returned goods. Hence, it can be concluded that since the accused firm has received goods under Ex.P2 and P3 invoices and utilized the same and sold the same to others, 15 it has claimed input tax credit for the said goods under Ex.P2 and P3 and that complainant company has not issued credit note nor has the accused firm issued debit note. In other words, the accused has withheld best evidence available with the accused to show that it has not claimed input tax credit for the goods under Ex.P2 and P3 invoices or that complainant has issued credit note or that the accused firm issued debit note. Hence, adverse inference can be drawn against the accused that if the said documentary evidence regarding G.S.T Tax are produced, it would go against the defence of the accused. This is also one of the circumstances which go against the defence of the accused.
17. Thirdly, the subsequent conduct of the accused also goes against defence of the accused. It is pertinent to note that goods under Ex.P2 and P3 invoices were dispatched in December 2017. The accused contends that it has made payment of Rs.2 lakhs to the accused as advance amount, on the promise of the complainant to furnish good quality materials to the accused. It is pertinent to note that the said payment of Rs.2 lakhs was made by the accused to the complainant on 23.2.2018. The accused contends that in spite of payment of advance amount of Rs.2 lakhs, the complainant has failed to supply good quality materials to the accused as promised or to 16 refund the said advance amount of Rs.2 lakhs. If the complainant had really failed to do so, any prudent purchaser in the place of accused would have made correspondence with complainant to supply the goods or else to refund advance amount and would have taken necessary legal action for recovery of said advance amount. However the accused kept quite for long period of one year and did not take any such action against the complainant though the complainant has failed to supply the goods or refund the advance amount. It is pertinent to note that only when the complainant got issued Ex.P11- legal notice in February 2019, the accused got issued reply notice as per Ex.P22 that defective goods were dispatched by the complainant and as such the advance amount of Rs.2 lakhs should be refunded. This inaction on the part of the accused to make any correspondence or to take necessary legal action against the accused for a long period of one year till February 2019, raises serious doubt regarding the defence of the accused. Any prudent purchaser would have felt shocked and cheated when seller sent defective goods on two occasions and failed to dispatch good materials or to refund advance amount as promised. Such prudent purchaser would have made suitable correspondence with such seller and would have taken necessary legal action against seller for recovery of 17 advance amount. The failure of the accused to do so leads to conclusion that the goods which had been supplied under Ex.P2 and P3 invoices were received by the accused firm and utilized by the accused firm and as such the said payment of Rs.2 lakhs is towards part payment of due amount under Ex.P2 and P3 invoices and not advance amount for supply of fresh quality of goods. Moreover, DW.1 has deposed in his examination-in-chief itself that the complainant company was in practice of taking blank signed cheques from the accused by way of security before supplying any goods. DW.1 has never deposed that accused firm was making payment of advance amount to the complainant even prior to supply of goods. Therefore, it can be concluded that payment of Rs.2 lakhs made by accused to the complainant is not advance amount but towards part payment of goods supplied under Ex.P2 and P3-invoices.
18. Fourthly, DW.1 has deposed that the goods under Ex.P2 and P3 were returned to the complainant as the said goods were defective. However, the accused has not disclosed what is specific nature and type of the defect in the steel tubes. DW.1 has further deposed that when the goods were entered in the premises of the accused firm, defect in the goods was noticed, even before unloading itself and as such the goods were not at all unloaded.
18Further it is highly improbable that the defect in goods were noticed even before the said goods were unloaded from the vehicle. Moreover, it is not the defence case that DW.1 was present on both occasions when the goods under Ex.P2 and P3 dispatched. Therefore, DW.1 has no personal knowledge regarding nature of defect in steel tubes and regarding the transporters making endorsements on Ex.D1 and D2. Hence evidence of DW.1 regarding defect in goods and return of goods is only hearsay evidence. The staff/employees who were present on both occasions were not examined in this case. Therefore the defence of the accused does not inspire confidence of this court.
19. In view of my above discussion, I am of considered opinion that the accused have utterly failed to prove or probabalize their defence and thereby to rebut statutory presumption under Sec.139 of N.I. Act in favour of the complainant. It clearly appears from the evidence that defence of the accused persons is only afterthought without any basis. Unless and until the accused rebuts the statutory presumption with convincing and cogent evidence, burden cannot be shifted on the complainant. The complainant has placed sufficient materials to establish his contention. The evidence on record is sufficient to accept the case of the complainant that accused have issued cheques in question towards 19 discharge of legally enforceable debt or liability and the complainant has proved all the requirements of Sec.138 of N.I. Act, so as to constitute the offence against the accused persons. Therefore, Point Nos.1 & 2 are in affirmative and answered accordingly.
20. Point No.3: As discussed in connection with Point Nos.1 & 2, the complainant has proved his case as to commission of the offence punishable U/s.138 of N.I. Act by the accused persons. The punishment prescribed for the said offence is imprisonment for a period which may extent to two years or with fine. Considering the facts and circumstances of this case, nature, year of the transaction, nature of the instrument involved, provisions of Sec.117 of N.I. Act, cost of litigation and the rate of interest proposed by Hon'ble Supreme Court in 2012 (1) SCC 260 (R.Vijayan Vs Baby), etc., this court is of the considered view that it is just and desirable to impose fine of Rs.9,40,000/- and out of the said amount a sum of Rs.5,000/- has to be remitted to the State and the remaining amount of Rs.9,35,000/- is to be given to the complainant as compensation as provided U/s.357(1) of Cr.PC and accordingly Point No.3 is answered in Affirmative.
2021. Point No.4: For the reasons discussed in connection with Point Nos.1 to 3 this court proceed to pass the following......
ORDER Acting under Section 255(2) of Cr.PC accused Nos.1 to 3 are hereby convicted for the offence punishable under Section 138 of Negotiable Instruments Act. The accused Nos.1 to 3 shall pay a fine of Rs.9,40,000/- for the offence punishable U/s.138 of N.I. Act within one month. In default of payment of fine amount, the accused Nos.2 & 3 shall under go simple imprisonment for a period of eight months.
By exercising the power conferred U/s.357(1) of Cr.PC., out of total fine amount of Rs.9,40,000/- , a sum of Rs.9,35,000/- is ordered to be paid to the complainant as compensation and Rs.5,000/- is ordered to be remitted to the State.
The bail bond of the accused Nos.2 & 3stands cancelled. The cash security deposited by the accused are ordered to be continued till expiry of the appeal period.
Supply the free copy of this judgment to the accused Nos.2 & 3 forth with.
(Dictated to the stenographer, transcript thereof, computerized and print out taken by him is verified, corrected and then pronounced by me in open court on this the 8th Day of November, 2019) (K. GURUPRASAD) XIV A.C.M.M., Bengaluru 21 ANNEXURE Witnesses examined for the complainant:
CW.1 : Sri. Vittal TGR
Witnesses examined for the defence:
DW.1 : Sri. Manikantan
Documents marked for the complainant:
Ex.P1 : Certified copy of Special Power of Attorney
Ex.P2 & 3 : Tax invoices
Ex.P4 & 5 : Lorry receipts
Ex.P6 : Confirmation of accounts
Ex.P7 & 8 : Two Cheques
Ex.P9 & 10: Bank endorsements
Ex.P11 : Legal notice
Ex.P12 to 16: Postal receipts
Ex.P17 to 21: Postal acknowledgments
Ex.P22 : Reply dtd.7.3.2019
Ex.P23 : Cheque dtd.14.11.2017
Documents marked for the defence:
Ex.D1 & 2 : Two tax invoices
Ex.D3 : Ledger account
(K. GURUPRASAD)
XIV A.C.M.M., BENGALURU