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M/s. Anu Products Ltd. v/s M/s. Raj Agro Tech & Another

    CRL.L.P. No. 612 of 2014

    Decided On, 30 June 2015

    At, High Court of Delhi


    For the Petitioner: M.P. Sharma, Advocate. For the Respondents: S.K. Kashyap, Advocate.

Judgment Text

1. At the time of hearing of the leave petition, the Court was inclined to grant leave and, accordingly, with the consent of parties, the arguments in appeal were heard and judgment reserved.

2. Accordingly, the registry is directed to register and number the appeal.

Crl.A. No. /2015 (to be registered and numbered)

3. The present appeal is directed against the judgment dated 10.09.2014 passed by Sh. Bharat Chugh, Metropolitan Magistrate (NI Act)-01, Central, Tis Hazari Courts, Delhi in CC No.6910/2012, titled M/s Anu Products Ltd. v. Shashi Sharma, Proprietor of M/s Raj Agro Tech. By the impugned judgment, the learned MM has held that the offence under section 138 of the Negotiable Instruments Act, 1881 (NI Act) as alleged by the complainant in its complaint is not made out against the respondent/accused and, therefore, the accused has been acquitted.

4. The appellant/complainant company is engaged in the business of manufacture of insecticides and pesticides. The respondent/accused Shashi Sharma is the proprietor of Raj Agro Tech, who became a distributor of the appellant’s products. The complainant claimed that during the course of their business dealings, a sum of Rs.94,143/- became due from the accused as on 17.08.2012. In discharge of the said debt/liability, the accused issued a cheque no.552091 dated 21.08.2012 for a sum of Rs.94,000/- drawn on HDFC Bank, Aligarh, U.P. (the cheque in question). The said cheque was dishonoured upon presentation vide return memo dated 29.08.2012. Consequently, a legal notice of demand was issued by the complainant. As the payment was not made, the aforesaid complaint under section 138 of NI Act was preferred.

5. The complainant produced Sh. Vijay Kumar Dwivedi, its AR as CW-1, who filed his affidavit by way of evidence. He led in evidence and exhibited several documents.

6. Upon being summoned, the statement of the accused under section 251 Cr PC was recorded. She admitted that the cheque Ex. CW-1/3 was drawn on the bank account of Raj Agro Tech and bears her signature. She stated that she had not filled in all the columns of the cheque Ex. CW-1/3. She stated that the cheque in question had been issued to the complainant as security for purchase of material. She also stated that she had made payment of Rs.52,000/- by way of cheque and cash. She denied receipt of the legal demand notice. She admitted that at the time of dishonour of the cheque in question, her bank account did not have sufficient amount. She opted to lead defence evidence.

7. The accused moved an application under section 145 Cr PC to seek leave to cross examine the complainants witness. However, this application of the accused was rejected by the learned MM on 30.08.2013 by placing reliance on the decision in Rajesh Aggarwal v. State, 171 (2010) DLT 51. The accused preferred a revision petition under section 397 and 399 Cr PC vide criminal revision no.139/2013 to assail the said order dated 30.08.2013. However, that revision petition was also dismissed by the learned ASJ/Special Judge, NDPS-02, (Central), Delhi on 27.01.2014.

8. Thereafter, the accused led evidence of two witnesses. She examined herself, i.e. accused no.2 Shashi Sharma as DW-1, and her husband Babu Ram Sharma as DW-3.

9. The learned MM held that the accused has succeeded in overthrowing the presumption of consideration vis-a-vis the cheque in question, i.e. of the existence of debt, on the premise that there were some inherent flaws in the case of the complainant which greatly probablised the hypothesis of the cheque having been issued as security, and subsequently misused by the complainant.

10. During the cross examination of DW-1, she was confronted with the application for the appointment/confirmation of distributor/dealer of Anu Products Ltd., which was marked as Ex. CX-1. Ex. CX-1 contained an acknowledgment by the complainant that it had received a security of Rs.10,000/- vide cheque no.534611 while confirming the appointment of the accused.

11. During her cross examination, DW-1, inter alia, stated 'It is wrong to suggest that any blank cheque was taken by the complainant company from me at the time of distributorship, i.e. on 08.12.2010. I have no knowledge with regard to the complainant having received any blank cheque from me'. At the same time, she also stated that 'I had given a blank cheque to the complainant as security and also Rs.10,000/- in cash'. However, in the same breadth, she also stated that 'It is wrong to suggest that the security amount was paid otherwise than the one mentioned in the appointment/confirmation of distributor form'. Thus, her last statement was contradicted by her earlier statement that she had given the cash security of Rs.10,000/- apart from blank signed cheque. She also admitted that the complainant used to supply the goods always on credit basis.

12. The defence of the accused was that goods of Rs.48,337/- and Rs.50,951/- had been supplied by the complainant on 27.12.2010 and 29.12.2010 respectively. Apart from the cash security of Rs.10,000/- paid on 27.12.2010, the accused claimed to have made payment of Rs.10,000/- vide cheque dated 10.02.2011 which was claimed to have been honoured on presentation. She stated that she again paid a sum of Rs.10,000/- on 27.08.2011 by making online transfer. She further stated that she handed over two cheques drawn on her bank of Rs.10,000/- each on 15.11.2012 and 25.12.2012 to the complainant, and both of them were honoured on presentation.

13. DW-2, the husband of the accused made his statement on similar lines as DW-1. He also stated that the complainant company made supplies worth about Rs.48,000/- and Rs.50,000/- on 27th and 29.12.2010. The accused paid Rs.10,000/- in cash to the complainant on 27.12.2010 and gave a blank signed cheque towards security on 27.12.2010. Thereafter, payments were made in instalments of Rs.10,000/- on 10.02.2011 by cheque; by online transfer of Rs.10,000/-; and vide two cheques dated 15.11.2011 and 25.11.2011 of Rs.10,000/- each.

14. In his cross examination, DW-2 while admitting that the form Ex. CX-1 mentioned the security cheque of Rs.10,000/- as bearing no.534611, admitted that the security had been given only once and not again and again. In his further cross examination, DW-2, inter alia, stated that according to him, 'the liability towards the complainant is for Rs.45,000 – 46,000 and this amount is due since the year 2011. Because of my accident, the payment towards the complainant was detained and that the complainant’s staff also did not contact me'. He also admitted that 'It is correct that I had not taken into consideration the interest amount chargeable towards the accused for overdue payments in the amount of Rs.45,000 – 46,000 as admitted herein above by me'.

15. It appears that the statements of DW-1 and DW-2 led the learned MM to undertake a deeper scrutiny of the manner in which the security amount of Rs.10,000/- was deposited at the time of appointment of the accused as the appellant’s distributor. What emerged from the said scrutiny was that cheque no.534611 was not the cheque through which the security amount was furnished or encashed. The AR of the complainant filed the statement of security amount. The same was marked Ex. X-1. It reflected that the security was deposited vide cheque no.552093, and not cheque no.534611. On account of the aforesaid discrepancy, the learned MM disbelieved the case of the complainant and held that the cheque in question was indeed a security cheque given as a blank signed cheque to the complainant which was misused by the complainant subsequently by filling in the amount of Rs.94,000/- therein.

16. The relevant discussion in the impugned judgment reads as follows:

'In my opinion, the same is not inadvertence, but a clever concoction of facts which shatters the very basis of the case of the complainant and greatly probablises the theory of the cheque in question which is Cheque No.552091 having been issued as security. The complainant who doggedly persisted on arguing that the admission of the accused should be taken as waiver of proof, somehow forgot that though under normal conditions admission acts as waiver of proof, the same is not an absolute preposition of law and the court can in appropriate case refuse to take an admission at its face value and seek independent evidence. To illustrate an occasion - the court may do so when the witness is a weaker party not accustomed to the formality of court proceedings who may when faced with aggressive cross examination may have said something she did not mean. The weakness of defence does obviate the complainant from explaining what looks to be an inherent infirmity, nay downright falsity in its case. In any event, the complainant in this case, when exposed, has frankly admitted that the suggestions made to the accused were made wrongly and even their own distributorship form reflects the wrong cheque number.

The accused has maintained that at the time of taking of distributorship of the complainant company blank cheque was given as security. Now the numbers of these cheques reveal, what seems like the actual story. The security cheque duly encashed [as reflected in Mark X1] bears the Number 552093. This cheque, it is the complainant’s own case was issued and encashed on 27.12.2010. Now the present cheque bears the Number 552091 i.e two cheques prior in the serial order to the said security cheque, this cheque the complainant claims was issued on 21.08.2012, about two years later. Now - what are the odds of that cheque having been issued in discharge of liability, as claimed by the complainant, in 2012. The ordinary presumption is that the drawer would issue cheques serial wise and chronologically, it is hard to believe and does not quite stand to reason that the cheque in question which is 552091 would be earmarked and set aside by the complainant for use, about two years later to discharge the liability towards the complainant, and then for her to take the defence of security, when the cheque coming later in the cheque book have been used before. The modus operandi of the complainant appears to have been to take security cheques, which were obviously in series 552091 and 552093 (which was actually appropriated for security purposes) at the time of taking of distributorship. It seems the cheque in question 552091 was also taken at that time only. Even a perusal of the cheque reveals that amount and date are in one ink (darker than the rest) and it appears that the same has been filled in subsequently. The cheque as issued originally therefore cannot be said to have been issued in discharge of liability, much less one existing on 17.08.2012 as the accused has succeeded in making out a believable and plausible defence. The cheque in question must have issued antecedent to the said security cheque or in any event contemporaneously in 2010 and not two years later in 2012.

We have already ruled that it does not appear that the accused had issued the cheque in discharge of an obligation in 2012. What appears to be the real story is, that the accused who has, in all fairness, conceded to the purchase of material worth about Rs. 99,288 from the complainant in 2010, actually took the material and made some repayment in parts. These payments are also reflected in the accounts of the complainant firm. It seems that the accused could not make the entire payments. Accused’s husband DW2 Ram Babu Sharma, who in all probability, is the acting mind and hand of the business, has admitted that some further amount is to be paid to the complainant. Now what seems to have happened is that the complainant company had to recover it’s dues [original sum due as well as the interest] from the accused, however instead of filing a legitimate civil action for recovery of principal amount plus interest, the complainant company has sought to convert a civil liability into a criminal one, by filling in the cheque, already lying with them and subsequently presenting it. This tendency of turning a civil dispute into a criminal one, as a faster mode of recovery needs to be curbed.

17. Learned counsel for the appellant submits that even if one were to proceed on the premise that the cheque in question was a blank signed cheque given as security at the time when the accused was appointed as distributor vide Ex. CX-1, the same by itself was not a valid ground to hold that the accused had been able to rebut the statutory presumption with regard to existence of the debt, under Section 139 of the NI Act. The submission is that the appellant/ complainant had been able to establish the crystallised and ascertained liability of the accused under the distributorship agreement. The accused had been appointed as the distributor and was supplied the pesticides and insecticides on credit basis on the strength of the blank signed security cheque. The cheque had been used by the appellant for the purpose of realisation of the outstanding dues since the accused failed to clear the same. It is argued that the whole purpose of taking a security cheque was to enable the appellant to use and encash the same in case of failure of the accused to liquidate its ascertained liability under the distributorship agreement. Learned counsel submits that the accused had failed to raise any doubt with regard to the accounts maintained by the complainant and the computation of the liability of the accused.

18. Learned counsel has placed reliance on the judgment of this Court in Ravi Chopra v. State & Anr., 2008 (2) JCC (NI) 169, where this Court had held that it matters little if the name of the payee, date and amount are filled up at a subsequent point of time, when the admitted position is that the blanked signed cheque had been handed over to the complainant under their transaction. Reference has also been made to a decision of the Punjab and Haryana High Court in Gurmeet Singh v. State of Haryana, 2012 (2) RCR (Crl.) 306, which is to the same effect.

19. Learned counsel submits that the evidence of the complainants witness has gone unrebutted and there was no reason for the learned MM to disbelieve the case of the appellant. Learned counsel submits that apart from the mere ipsi dixi of the accused that the accused had made payment as claimed by it, in instalments of Rs.10,000/- each, the accused did not lead any evidence to establish each and every of those payments. The accused admittedly did not even take into consideration the liability arising on account of overdue interest in terms of the agreement Ex. CX-1. The accused had not pointed out any falsity or error in the statement of account Ex. CW-1/2. The said statement of account gave credit in respect of payments made into the account of the accused on 25.08.2011, 15.11.2011 and 25.11.2011.

20. Learned counsel also submits that DW-2 had admitted the outstanding liability has Rs.45,000 – 46,000 since the year 2011. Even though the accused claimed to have made payment of Rs.52,000/- by cheques and cash, the payment of the entire amount of Rs.52,000/- was not established on record. Learned counsel submits that the accused had not set up a probable defence to rebut the presumption under Section 139 of the NI Act.

21. On the other hand, learned counsel for the accused has supported the impugned judgment. It is argued that the blank signed cheque taken as security had been misused, and that the cheque in question being a security cheque could not form the basis of the complaint under Section 138 of the NI Act.

22. Learned counsel for the accused, on instructions, stated that the accused was willing to discharge the outstanding liability of Rs.45,000 – 46,000 to settle the present appeal. However, the appellant was not agreeable to the said settlement as the appellant insisted on a decision on merits, as, according to the appellant, the cheque amount along with interest was due and outstanding from the accused.

23. What appears to have heavily weighed with the trial court is the fact that the cheque in question had Sl. No. 552091, whereas the security of Rs.10,000/- had been furnished by a cheque bearing Sl. no. 552093, i.e. by a later cheque in the same series/ cheque book, and not by cheque no.534611 as recorded in Ex. CX-1. The trial court held that this fact showed that the cheque in question bearing no.552091 had been issued by the accused at the time of execution of Ex. CX-1, and not subsequently. Thus, the defence of the accused that the cheque in question was a security cheque and it was blank and signed, and that it was delivered at the time of execution Ex. CX-1 was held to be a probable defence.

24. On the aspect of maintainability of a complaint under Section 138 of the NI Act in respect of a security cheque (including in respect of a security cheque which is issued in relation to a liability which does not exist on the date of issuance of such a cheque, but is contingent upon future transactions), this Court has considered the legal position in Suresh Chandra Goyal Vs. Amit Singhal, Crl. Appeal Nos.601/2015 decided on 14.05.2015, and in Credential Leasing & Credits Ltd v. Shruti Investments & Anr, Crl. Appeal No.729/2015 decided on 29.06.2015.

25. I do not consider it necessary to delve into the same issue once again, and the said decisions may be referred to. This Court has come to the following conclusion in Credential Leasing & Credits Ltd (supra):

'27. Thus, the 'debt or other liability' has to be a legally enforceable debt or other liability. Neither the main provision of Section 138, nor the explanation suggest that the debt or other liability should be in existence on the date of issuance of the cheque, i.e. on the date of its delivery to the drawee or someone on his behalf or, on the date that the cheque bears. The only reference to time in the Section, is the point of time when the cheque is returned unpaid by the drawers bank.

28. In my view, therefore, the scope of Section 138 NI Act would cover cases where the ascertained and crystallised debt or other liability exists on the date that the cheque is presented, and not only to case where the debt or other liability exists on the date on which it was delivered to the seller as a post-dated cheque, or as a current cheque with credit period. The liability, though, should be in relation to the transaction in respect whereof the cheque is given, and cannot relate to some other independent liability. If, on the date that the cheque is presented, the ascertained and crystallised debt or other liability relatable to the dishonoured cheque exists, the dishonor of the cheque would invite action under Section 138 NI Act. There could be situations where, for example, an issue may be raised with regard to the quality, quantity, deficiency, specifications, etc. of the goods/services supplied, or accounting. It would have to be examined on a case to case basis, whether an ascertained or crystallised debt or other liability exists, which could be enforced by resort to Section 138 NI Act, or not.'

26. In the present case, even if one were to accept that the cheque in question was a security cheque given as a blank signed cheque in respect of a future/contingent liability, that by itself would not be sufficient to non suit the complainant by holding that a complaint under Section 138 of NI Act is not maintainable. It was for the accused to set up a probable defence by raising a doubt with regard to the existence of liability or its quantification, as projected by the complainant. In the present case, the accused did not raise any such probable defence. The accused claimed to have made payments of Rs.10,000/- (apart from the initial security deposit of Rs.10,000/-) on four other occasions. However, they were not substantiated by leading any credible evidence. On the other hand, the complainant had produced the statement of account of the accused (Ex. CW-1/2) which reflected three payments credited into the account of the accused maintained by the appellant on 25.08.2011, 15.11.2011 and 25.11.2011. This statement of account also took into account the credit given to the accused on account of interest on security, and other debits on account of interest and bank charges. This statement of account Ex. CW-1/2 went unrebutted. Ex. CX-1 shows that interest was payable by the accused on delayed payments in terms of Clause 4 of the terms and conditions for appointment as a distributor/dealer, which reads as follows:

'4. The afore-said order shall be accompanied by a Demand Draft payable to the company at Delhi, or payable to the Consigning/Handling Agent at this place of business/office. However, in exceptional cases and purely on the discretion of the company, a credit may be allowed to the applicant. In case the payment is delayed for more than the credit period, the applicant shall be liable to pay interest at the rate of 24% per annum from the date of despatch of pesticides to the applicant. It is understood by the applicant that the said rate of interest of 24% per annum is prevailing market rate of interest. The applicant shall make all the payment by way of D.D./Cheque only in favour of the Company'. (Emphasis supplied)

27. Clause 12 of the terms and conditions provides for payment of interest @ 9% per annum on the security deposit, which reads as follows:

'12. The applicant shall be required to deposit a sum of Rs.10,000/- with the company as Security Deposit carrying interest at the rate of 9% per annum provided such security deposit remains with the company for a minimum period of one year. In the event of termination/ cancellation of Distributorship/ Dealership of the applicant, the security amount shall be refunded by the company to the applicant after adjusting its dues, if any. In case of non-payment of dues, security deposit will be forfeited in case of legal proceedings by the Company on the party for the recovery of dues'. (Emphasis supplied)

28. In my view, the conclusion drawn by the learned MM with regard to the facts is palpably wrong and the impugned judgment is likely to result in grave miscarriage of justice. The approach of the Trial Court in dealing w

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ith the case is patently illegal and the impugned judgment is manifestly unjust and unreasonable. The Trial Court has ignored the evidence and misread the material evidence while coming to its conclusion that the accused had raised a probable defence. Merely because there may have been a confusion in the mind of the appellant/complainant with regard to the Sl. No. of the cheque by which the initial security deposit of Rs.10,000/- was made (on account of the incorrect cheque number recorded in the Distributorship Agreement Ex.CX-1), and merely because the cheque in question may have been the one given as a blank signed cheque towards security for supply of goods on credit basis, the Trial Court could not have come to the conclusion that the accused had set up a probable defence. As held by this Court in Ravi Chopra (Supra), and by the Punjab & Haryana High Court in Gurmeet Singh (Supra), the fact that a blank signed cheque had been issued by the drawer, which had subsequently been filled up by the holder, is not a ground to hold that the complaint under Section 138 NI Act would not be maintainable. The Trial Court should have examined whether on merits, the claim made by the appellant/complainant was in respect of an ascertained and crystallised amount, and whether the accused had been able to raise a doubt with regard to the existence of its liability and its quantification. In my view, the learned MM was unduly swayed by the fact that the cheque in question was a blank signed cheque given at the time of execution of the distributor agreement Ex. CW-1, and not subsequently, and that the said blank signed cheque had been used by the appellant to realise its outstanding dues. The respondents have not been able to raise a probable defence – either by showing that there was no debt due under the Dealership Agreement (Infact debt to the extent of Rs.45,000 – 46,000 was also admitted), or by showing that the quantification of the debt was fallacious and not in accordance with the dealership agreement. The defence that the respondents had made payment of Rs.52,000/- in the aggregate is nothing more than the ipse dixit of the respondents. The same is not substantiated by evidence. The advance cheque was given precisely for the purpose of realising the outstanding dues, and it was used for the said purpose only. 29. Accordingly, the impugned judgment is set aside and the accused is held guilty of commission of the offences under Section 138 of the NI Act.