2024 (5) TMI 518 - HC - Indian Laws

Dishonour of Cheque - liability created in favour of the Complainant by the Accused or not - MoU between the manufacturer and the retailer - The retailer issued multiple cheques to the distributor, which were subsequently dishonoured - presumption under Section 139 of NI Act was rebutted by the Accused - differences in the evidences - presumption of innocence in criminal trial - evidentiary value of evidence - proof of foundational facts for drawing of presumption under Section 139 of NI Act on the basis of available documents - HELD THAT - The view of the trial Court is hyper technical view. The trial Court has overlooked the basic facts about the roles played by CW No. 1 and CW No. 2. The trial Court scrutinized their evidence by presuming that they are the witness to prove a particular fact only but in fact, they are the witness in respect of the facts forming transaction right from placing of the orders till filing of complaint. The trial Court overlooked the fact that the Complainant is not a natural person but an artificial entity working through natural persons and that too, in the office situated at different places. The trial Court decided the complaint as if the trial of bodily offences is being conducted. The complaint under Section 138 of NI Act is based on the documents and proved by giving oral evidence. On some occasion, these complaints involve business transactions. It involves the correspondence in between the parties made in usual course. Such correspondence throws light on the intention of the parties. The trial Court overlooked the difference in relationship in between the H.P., and Kores, Kores and Ambitious and Ambitious and H.P., and Ambitious. No doubt, Kores on behalf of H.P., was selling the products to the Sub-distributors. It is true that the MoU in between H.P., and Kores was not produced. There must be some financial terms. However, it is already observed the relationship in between Kores and Ambitious, stand on different footing. It is purely sale and purchase of products. Ambitious was getting some incentives from H.P. Ambitious was not satisfied - The MoU is restricted only to incentives by way of sale promotion and it has nothing to do with basic transaction of sale and purchase of products. This defence was taken by the Ambitious just to avoid a lawful payment to Kores. This finding is given on the basis of available documents and on the basis of documents not produced by the Ambitious including the Court litigation. The cheques are the cheques within the purview of instruments. The instructions given for not depositing these cheques by Ambitious could not be substantiated by bona fide dispute with Kores. In fact, it was a dispute with the H.P. Coupled with this fact, no evidence was adduced to prove the sufficiency of amount in the account by Ambitious. The Kores have complied with the provisions of Section 138 of the NI Act relating to issuance of notice in time, receipt of notice and filing of complaint in time - the judgment of acquittal needs to be reversed - the Accused has committed offence punishable under Section 138 of the NI Act. The order of conviction upheld - appeal allowed.

Issues Involved:
1. Nature of Relationship and Memorandum of Understandings (MoUs)
2. Liability and Issuance of Cheques
3. Issuance of Statutory Notice
4. Filing of Complaints
5. Evidence Before the Trial Court
6. Defence of Accused
7. Findings by the Trial Court
8. Scope of Enquiry in an Appeal Against Acquittal
9. Points for Adjudication
10. Variance in Evidence of P.W. 1 and P.W. 2
11. Non-production of MoU
12. Issuance of Cheques and Rebuttal of Presumption
13. Dishonour of Cheques and Issuance of Notice
14. Defect in Recording 313 Statement
15. Conclusion and Sentence

Summary:

1. Nature of Relationship and MoUs:
The case involves three parties: Hewlett Packard (H.P.), Kores (India) Ltd., and M/s. Ambitious Marketing. Two MoUs were executed: one between H.P. and Ambitious Marketing, and another between H.P. and Kores (India) Ltd. The MoU between H.P. and Ambitious was produced during evidence, while the one between H.P. and Kores was not produced due to confidentiality.

2. Liability and Issuance of Cheques:
Kores sold and delivered products to Ambitious, which issued 16 cheques to Kores. All cheques were dishonoured with the reason "payment stopped by the drawer."

3. Issuance of Statutory Notice:
Two statutory notices dated 27th January 2004 and 30th January 2004 were issued to Ambitious, which were replied to by Ashish Kumar Ahuja, the proprietor of Ambitious.

4. Filing of Complaints:
Kores filed six complaints u/s 138 of the Negotiable Instruments Act, 1881, before the Court of JMFC - Thane, as the cheques were dishonoured.

5. Evidence Before the Trial Court:
Kores presented oral and documentary evidence, including cheques, invoices, and delivery challans. The accused presented a stop payment letter, a letter to the bank, and a copy of the MoU with H.P.

6. Defence of Accused:
The accused claimed a dispute with H.P. regarding commission, denied delivery of goods, and argued that the prosecution was unjustified due to the stop payment letter.

7. Findings by the Trial Court:
The trial court acquitted Ambitious, concluding that the presumption u/s 139 of the NI Act was rebutted by the accused. The court noted inconsistencies in the evidence of Kores' witnesses and the non-production of the MoU between H.P. and Kores.

8. Scope of Enquiry in an Appeal Against Acquittal:
The appellate court noted that the principle of "slow interference" does not apply with full force in cases involving u/s 138 of the NI Act, as the burden of proof shifts between the complainant and the accused.

9. Points for Adjudication:
Key points included whether goods were delivered by Kores to Ambitious, the relevance of the MoU between H.P. and Kores, and whether the accused rebutted the presumption u/s 139 of the NI Act.

10. Variance in Evidence of P.W. 1 and P.W. 2:
The trial court emphasized inconsistencies between the testimonies of P.W. 1 and P.W. 2, but the appellate court found these differences to be natural due to their different roles and responsibilities.

11. Non-production of MoU:
The appellate court disagreed with the trial court's adverse inference from the non-production of the MoU between H.P. and Kores, noting that it was not relevant to the dispute between Kores and Ambitious.

12. Issuance of Cheques and Rebuttal of Presumption:
The appellate court found that the cheques were issued towards discharge of liability and that the accused failed to rebut the presumption u/s 139 of the NI Act. The court noted that the accused's dispute was with H.P., not Kores.

13. Dishonour of Cheques and Issuance of Notice:
The cheques were dishonoured for the reason "payment stopped by the drawer," and statutory notices were issued and received. The complaints were filed within the limitation period.

14. Defect in Recording 313 Statement:
The appellate court found that the trial court's recording of the 313 statement was adequate and did not cause prejudice to the accused, as the accused was aware of the case and had given evidence on oath.

15. Conclusion and Sentence:
The appellate court reversed the trial court's judgment of acquittal, concluding that the accused committed an offence u/s 138 of the NI Act. The accused was sentenced to pay double the amount of the cheques as a fine, with a default sentence of simple imprisonment for two months in each case. The fine amounts were to be paid within eight weeks and then given to the complainant as compensation.

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