Delhi District Court
M/S Nature'S Essence vs M/S Shri Ram Distributors on 29 June, 2018
1
IN THE COURT OF MS PRABH DEEP KAUR : METROPOLITAN MAGISTRATE
- 02 : SOUTH : SAKET COURT : NEW DELHI
M/S NATURE'S ESSENCE VS M/S SHRI RAM DISTRIBUTORS
CC No. 467884/2016 & 463462/2016
U/S 138 NEGOTIABLE INSTRUMENTS ACT
JUDGMENT
(1) Serial number of the case : 467884/2016 & 463462/2016 (2) Name of the complainant : M/s Nature's Essence Pvt Ltd Registered office at :
2505, Sector D-2, Vasant Kunj, New Delhi-110070 Through its AR (3) Name of the accused, : M/s Shri Ram Distributors parentage & address Through its proprietor ie V J Rahurkar Prasad Chamber, Shop No. 9, Karve Road, Pune-411044 (4) Offence complained of or proved : 138 Negotiable Instruments Act, 1881 (5) Plea of the accused : Pleaded not guilty (6) Final Order : ACQUITTED (7) Date of Institution : 08.04.08 (CC No. 467884/2016) 08.04.08 (CC No. 463462/2016) (8) Date on which reserved for judgment : 08.06.2018 (9) Date of Judgment : 29.06.2018 M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 1 of 14 2 Admittedly, complainant has filed two complaints against the same accused and the facts & evidence in both the complaints are related to each other and therefore, for the sake of convenience, both the complaints cases are being decided vide one composite judgment.
BRIEF STATEMENT OF THE REASONS FOR THE DECISION
1. The brief facts of these complaint cases as carved out from the complaint are that complainant company is engaged in the manufacturing business of herbal products and accused company is a distributor/dealer of the complainant company in Pune. Sh Vikas Garg is the authorized representative of the complainant company and is duly authorized by the Board of Directors to sign, verify, file & institute the present complaint. The complainant had sold herbal cosmetics products by different bills to the accused from time to time in the financial year 2007-2008 through transportation and as per ledger, the outstanding due against the accused were Rs6,11,390.08/-. Towards partial discharge of his debts and liabilities of receiving of herbal cosmetics, accused issued another cheque bearing no. 293632 dated 28.01.2008 for a sum of Rs.2,00,000/- drawn on Andhra Bank, Aurobindo Marg branch, New Delhi in favour of complainant which was returned unpaid with the endorsement "Payment Stopped by Drawer" vide memo dated 04.02.2008. Thereafter, complainant sent a legal notice dated 10.03.2008 through courier calling upon the accused to make the payment of cheque amount within 15 days of receipt of the legal notice. Despite that payment of the cheque in question was not made by the accused within the stipulated time of 15 days. Hence, the complainant M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 2 of 14 3 filed the complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter "the Act") which is CC No.463462/2016.
In partial discharge of his admitted debts and liabilities towards the complainant, accused issued cheque no. 270546 dated 12.02.2008 amounting to Rs4,11,390/- drawn on Mahesh Sahakari Bank Ltd., Karve Road branch, Pune-411004. Complainant deposited the above said cheque with their banker which was returned unpaid with the endorsement "Exceeds Arrangement" vide return memo dated 21.02.2008. Thereafter, complainant sent a legal notice dated 10.03.2008 through courier calling upon the accused to make the payment of cheque amount within 15 days of receipt of the legal notice. Despite that payment of the cheque in question was not made by the accused within the stipulated time of 15 days. Hence, the complainant filed the complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter "the Act") which is CC No.467884/2016.
2. In the pre-summoning evidence, affidavit by way of evidence was filed by the complainant. In his affidavit of evidence, AR of complainant reiterated all the averments made in his complaint and relied on documents Ex.CW1/A to Ex.CW1/H (colly), which are the copy of SPA, copy of ledger, cheque in question, its return memo, legal notice, courier receipt, postal receipt, copy of reply sent by accused and the complaint.
After closure of pre-summoning evidence, since sufficient material was found against the accused, summoning order u/s 204 Cr.P.C. was passed against the accused vide order dated 09.04.2008.
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3. Accused appeared pursuant to issuance of summons and notice U/s 251 CrPC was served upon the accused vide order dated 28.06.2014 to which the accused pleaded not guilty and claimed trial. Accused further stated that she had handed over blank signed security cheque to the complainant and only the name of complainant was mentioned on the cheque. Accused further stated that she had received legal demand notice. Accused further stated that the cheque has been misused by some other party.
4. Thereafter, upon oral request of accused under Section 145 (2) NI Act to cross examine the complainant and its witnesses, was allowed vide order dated 28.06.2014.
In the post notice complainant evidence, the AR of complainant examined himself and reiterated the averments made in the pre-summoning affidavit and also relied on the already exhibited documents Ex.CW1/A to Ex.CW1/H. AR of complainant was cross examined by Sh. Anshuman Sinha, Ld. Counsel for accused. No other witness was produced by the complainant and thereafter, CE was closed vide separate statement of AR of complainant vide order dated 01.05.2017.
5. Thereafter, the plea of the accused Vaishali Rahurkar u/s 313 r/w 281 Cr.P.C. was recorded vide order dated 21.08.2017, wherein, all material existing on record including the exhibited documents were put to accused. The accused reiterated the defence taken by her in the notice U/s 251 Cr.P.C. in her statement and stated that she had purchased herbal products from the complainant but she did not had liability to pay Rs.6,11,390.08/- to the M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 4 of 14 5 complainant as she had already returned the stock to the complainant. Accused further stated that she had given blank signed security cheque which has been misused by the complainant. Accused admitted the receipt of legal notice. Accused further stated that she does not have legal liability to pay the cheque amount to the complainant.
Accused further expressed his desire to lead defence evidence.
6. Thereafter, matter was listed for DE. The accused examined Jayant Arun Rahul Kar as DW1. The defence witnesses was cross examined by Sh. Brijesh Oberai & Sh. Ghanshyam, Ld. Counsels for the complainant and thereafter, since no other defence witness was produced by the accused, DE was closed vide submissions of counsel for accused vide order dated 30.05.2018.
7. Written submissions were filed by Sh. Brijesh Oberai, Ld. Counsel for complainant on behalf of complainant and by Sh. Abhijit Hartalkar, Ld. Counsel for accused on behalf of accused.
8. In order to prove an offence under Section 138 NI Act, following ingredients are required to be fulfilled :
i) That there is legally enforceable debt or liability;
ii) The drawer of the cheque issued the cheque to discharge in part or whole the said legally enforceable debt or liability,
iii) The cheque so issued was returned unpaid by the banker of the drawer.
iv) Legal demand notice was served upon the accused and the accused failed to make the payment within 15 days of the receipt of the said notice.
9. In the case at hand, the issuance of the cheques in question, their M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 5 of 14 6 dishonour and receipt of legal notice by the accused are not disputed. The only defence raised by the accused is that the accused does not have the legal liability to pay the cheques amount to the complainant.
10. It is the case of the complainant that he had sold herbal cosmetics products to the accused from time to time and the accused had issued cheques in question towards the payment of outstanding pending and the same got dishonoured.
On the other hand, the defence of the accused is that the cheques in question were given to complainant as security in terms of agreement between the parties but complainant misused the cheques. Further, complainant had supplied goods to accused but at the time of cancellation of dealership, accused deposited their excess goods remains with ESVEE Pharmachem Pvt. Ltd. As per settlement between complainant and accused and accused has no liability to pay cheques amount to complainant, to the banker and had also filed complaint against the complainant.
11. It is a well settled position of law that when a negotiable instrument is drawn, two statutory presumptions arises in favour of the complaint, one under Section 139 NI Act and another under Section 118 (a) of the NI Act. Further, the court will presume a negotiable instrument for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or consider the non existence of the consideration so probable that a prudent person may ought under the circumstances of the particular case to act upon the supposition that the M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 6 of 14 7 consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon. Reliance placed on M.S. Narayana Menon v. State of Kerala, (2006) 6 SCC 39).
12. The first issue raised by the accused is that there are material defects in the complainant's SPA as it does not mention the name and designation of executant nor carry common seal of the company and is in contravention with Section 85 of Indian Evidence Act and Section 4 of Power of Attorney Act.
On the other hand, complainant has formally opposed the plea. Heard. Perused. In the present case, complainant has examined Sh Vikas Garg as CW-1 who is, admittedly, an Account Officer of complainant company and who has specifically deposed that he has personal knowledge of the transaction in question. The issue of authority of AR of complainant is more important when there are allegations of fraud or forgery upon the complainant company but from the perusal of reply to legal notice i.e. Ex.CW-1/G, it is clear that the parties have regular transactions with each other and accused has even taken the plea that matter was settled with the complainant. Therefore, the plea is not maintainable as the AR of complainant company has specifically deposed that he has personal knowledge of the facts and circumstances of the case. Moreover, the accused cannot be given benefit of defect in authority of AR of complainant company unless there is a dispute even as to existence of company as a separate legal entity or there is dispute as to existence of contract M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 7 of 14 8 or transactions between the parties.
13. In the complaint No. 467884/2016, the cheque in question ie cheque bearing no. 239632 dated 28.01.2008 got dishonoured vide memo dated 04.02.2008 for the reason "payment stopped by drawer". Thereafter, complainant sent legal notice on 10.03.2008. As per requirement of Section 138 N I Act, the legal notice has to be sent within 30 days from the date of receipt of information regarding return of cheque as unpaid from the bank. Now, in the present complaint, complainant had taken plea that complainant received the information/return memo on 13.02.2008 but during cross examination, AR of complainant deposed that :
"I have received the cheque return memo on 13.02.2008. It is correct that I have not filed any proof regarding the same.............It is correct that apart from my averment that I received the cheque return memo on 13.02.2008, I have no other proof to prove this fact".
Thus, complainant has not produced anything on record to show that it received the information of return of cheque as unpaid from the bank on 13.02.2008 nor there is any endorsement on the return memo. In the present complaint, the period of limitation is to be computed from 04.02.2008 which expired on 06.03.2008 and legal notice has to be sent on or before 06.03.2008 but the complainant has sent the legal notice ie 10.03.2008 ie beyond the period of limitation. There is no provision in the entire N I Act whereby the delay in sending the legal notice can be condoned by the court. Therefore, the complaint No. 467884/2016 is liable to be dismissed only on this ground. However, let us consider both the complaints on merits too.
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14. Now, to prove his defence, accused has cross examined the AR of complainant. During cross examination, accused has produced certain documents and had put the same to the AR of complainant. The AR of complainant has been shown one Distributorship Agreement ExDW1/E (Mark Z1) to which AR of complainant replied that :-
"I am working in the present company since the year 2002 on the post of the Accountant................ Mrs. Sunita Arora is the marketing Head of our company. I have never been to Pune. Mrs. Sunita Arora who is the marketing head may be going to Pune in connection with work.................... Mrs. Sunita Arora does not report to me after coming back from her tour. She reports to Mr. R. K. Nanda, who is the Director of our company. Mrs. Sunita Arora and Mr. R. K. Nanda do not report to me. Whatever transpires between both of them is not reported to me. Whenever the accused persons or for that matter any other parties come to Delhi at our office they discuss the issues with Mrs. Sunita Arora.................. I am not aware as to whether Mrs. Sunita Arora marketing head of our company had told the accused to deposit the excess/ remaining goods with another dealer. She never verbally also discussed with me also. It had come to my knowledge that the accused proprietorship firm had been removed from dealership but I was not sure because the sales were down in Pune................... Ques : Do you identify the signature of Mrs. Sunita Arora ? Ans. Yes, I can identify the signature of Mrs. Sunita Arora. .................At this stage, the witness is shown an agreement between the accused and the complainant company. The documents marked as Mark Z1 (colly). The witness says that the agreement is in the letter head of the company but he is unable to identify because this agreement never came in front of him.
Ques. Is it correct that all the above mentioned documents are not being identified by you because you are dealing with accounts department and all the documents are pertaining to marketing department.
Ans. Yes..
It is correct to suggest that the agreement between the accused and the complainant never came before me in my official capacity. The witness further states that at present I M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 9 of 14 10 do not remember.
Ques : Can you exactly tell us that when the distributorship of the accused was canceled ?
Ans. I do not remember the time now.
It is correct to suggest that the marketing department of my company is the appropriate authority to answer the question as to when the distributorship of the accused was canceled.
So far as the distributorship of ESVEE Pharmachem Pvt. Ltd., is concerned I do not remember presently as to whether they are our distributors or not. I cannot say as to whether their name has changed or not.
It is correct to suggest that regular correspondence is being done by me as well as marketing department with ESVEE Pharmachem Pvt Ltd., as on today.
It is wrong to suggest that the present cheque was placed for encashment by the accounts department without settlement of the accounts by the marketing department".
Thus, AR of the complainant has neither admitted the documents produced by the accused stated to be executed by complainant nor denied the same and in case of evasive reply, the court is left with no alternative but to presume that the document relied upon by the opposite party is correct unless contrary is proved. Moreover, during cross examination of DW-1, the Distributorship Agreement has been admitted by the AR of complainant.
Clearly, the complainant has withhold the material fact from the court that accused was not a buyer of products only but accused was a super distributor of complainant company in Pune. It is a material fact because generally the agreement with the distributor is distinct from the general sale. Now, as per clause No. IX of agreement ExDW1/E, the complainant was to give 12% discount to the accused on purchase of goods/cosmetics. The complainant has nowhere averred that any discount as per agreement was given to the accused nor complainant has averred that M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 10 of 14 11 the invoices were raised as per the terms & conditions of Distributorship Agreement between parties.
Further, the accused has disputed the amount of outstanding liability as shown by the complainant in the ledger ExCW1/B. Thereafter, during cross examination, AR of complainant had produced certain invoices but not the complete invoices generated between parties. Further, complainant has not explained the amount of opening balance mentioned as Rs.9,02,874.08/- as shown in the ledger account. Now, as per Section 34 of Indian Evidence Act, statement of accounts alone is not sufficient to prove the liability of opposite party.
15. Further, the accused has put his defence to the AR of complainant during cross examination and accused had produced one letter dated 24.04.2008 ExDW1/F (Mark Z2) whereby accused was asked to give two undated security cheques and AR of complainant has deposed that :
"At this stage the witness is shown a letter dated 24.04.2006. The said letter is marked Z2 for identification. Ques : Do you recognize the signature of Mrs. Sunita Arora in the present document?
Ans. No".
Further, on being asked as to who has written the contents of cheque, AR of complainant deposed that :
"Ques : I suggest to you that the amount of the present cheque in dispute is not filled by the accused ? Ans. The cheque which was received in the accounts department by me was filled.
It is correct to suggest that the present cheque was deposited by the accounts department. I have deposited the M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 11 of 14 12 cheque on the instructions of the marketing department due to outstanding amount.
Ques : Is it correct to say that you have not filed any such instructions before this Hon'ble court in writing ? Ans. It was in verbal.
It is incorrect to suggest that there was no verbal instructions from the marketing department to deposit the cheque with accounts department because the accounts where yet to be settled".
Further as per agreement Mark Z1 (ExDW1/E), clause no. XIII, the accused was required to give undated blank cheques to the complainant company as security. All the documents produced by the accused corroborates the defence of accused that accused had given two blank signed cheques security and the complainant has not specifically denied any of these documents.
16. Further, accused has produced one letter dated 03.04.2008 Mark X (ExDW1/C) whereby accused was asked to dispatch the material to new party and accused has also produced list Mark Y (ExDW1/D) and tax invoices Mark Z (ExDW1/G) whereby accused has allegedly deposited the material to ESSVEE Pharachem Pvt Ltd and AR of complainant has deposed that :
"One letter bearing reference No. Dist./04/2008 dated 03.04.2008 is shown to the witness signed by Mrs. Sunita Arora, GM Marketing.
Ques : Do you recognize the signature of Mrs. Sunita Arora ? Ans. The signature is not clear and hence, cannot identify. The document is marked as Mark X. Ques : Is it correct that ESVEE Pharmachem Pvt. Ltd., was appointed as distributors by your company after the removal of the accused firm ?
Ans. So far as I remember at that period of time the process for appointment of ESVEE Pharmachem Pvt. Ltd. as M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 12 of 14 13 distributor was under process.
Q. Is it correct that upon the instructions of Mrs Sunita Arora, Marketing Head, the accused firm had deposited their excess goods/remains with ESSVEE Pharmachem Pvt Ltd ? A. I have no knowledge.
Q. I suggest to you that the accused firm had deposited with the ESSVEE Pharmachem Pvt Ltd goods worth Rs5,26,187/- and this was to be settled in the accounts between the complainant and the accused ?
A. I have no knowledge.
At this stage, the witness is shown 7 pages of list of goods. The witness does not identify the documents as he says that these documents never came in front of him. The documents marked as Mark Y (colly).
At this stage, the witness is shown Tax invoice of the goods returned by the accused Shri Ram Distributors to ESSVEE Pharmachem Pvt Ltd containing 13 pages. The witness does not identify the documents as he says that these documents never came in front of him. The documents marked as Mark Z (colly)".
Thus, from the entire testimony of AR of complainant, it is clear that AR of complainant has chosen to give Evasive replies which creates a reasonable clouds over the credibility and truthfulness of his testimony and therefore, the testimony of AR of complainant is not trustworthy at all.
17. Therefore, in view of the above discussions and reasons, in the opinion of this Court, the presumptions arising in favour of the complainant U/s 118 & 139 of the Act have been rebutted by the accused by preponderance of probabilities, whereas the complainant has failed to prove its case beyond all reasonable doubts. Resultantly, this court finds the accused no. 2 V J Rahurkar not guilty for the offence punishable U/s 138 N I Act. Hence, she stands acquitted.
18. Further, accused is directed to furnish bail bond and surety bond in M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 13 of 14 14 the sum of Rs50,000/- U/s 437(A) CrPC and is directed to be present before the Ld Appellate Court as and when notice is served upon her.
19. File be consigned to Record Room after due compliance.
Digitally signed PRABH by PRABH DEEP KAUR Announced in the open court DEEP Date: 2018.07.02 on 29.06.2018 KAUR 16:55:37 +0530 (PRABH DEEP KAUR) Metropolitan Magistrate-02/N I Act/South Saket Court/New Delhi
Certified that this judgment contains 14 pages and each page bears my signature.
(PRABH DEEP KAUR) Metropolitan Magistrate-02/N I Act/South Saket Court/New Delhi M/s Nature's Essence vs M/s Shri Ram Distributors CC No.467884/2016 CC No. 463462/2016 page no. 14 of 14