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TMI Blog2024 (5) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore this Court, similar issue has cropped up. Parties in this litigation 2. There are three parties involved. They are :- (a) Hewlett Packard (H.P. Company) Manufacturing Printers and Computer Peripheral Items. (b) Kores (India) Ltd., Distributors who distribute/ sell those products to retailers/Sub distributors. (Complainant/ Appellant). (c) M/s. Ambitious Marketing Retailer whose proprietor is Abhishek Ahuja. (sub distributor/Accused/Respondent). 3. There were two 'Memorandum of Understandings' ("hereinafter, "MoU") executed in between these parties and referred by them. They are:- (a) MoU dated 1st May 2001 between H.P. and Ambitious Marketing (Accused) And (b) MoU between H.P. and Kores (India) Ltd. Amongst these MoUs, the MoU between H.P. and Ambitious is produced during evidence (Exhibit-31). Whereas, MoU between H.P. and Kores (India), referred by the witnesses of Kores, was not produced on the ground of confidentiality/non relevancy. But, from the MoU available and the averments in the complaint and line of cross-examination, we may find the nature of relationship between the parties. Nature of relationship (a) Kores (India) Ltd., used to act as a whole-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earliest'. Filing of complaints 7. When 6 (Six) complaints were filed by Kores (India) Ltd., for an offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter "NI Act") before the Court of JMFC - Thane, the Complainant made several submissions thereby pointing out contrary stands taken by Ambitious. That is to say, writing a plain letter on one occasion and on subsequent occasion, raising certain grievances which are not raised on earlier occasion. As the payment has not come forward for all 16 (Sixteen) cheques, Kores (India) Ltd., filed 6 (Six) separate cases before the trial Magistrate. Their details are as follows :- Sr.No. Case Number Appeal Number 1. Summary Criminal Case No. 804 of 2004 Criminal Appeal No. 840 of 2010 2. Summary Criminal Case No. 805 of 2004 Criminal Appeal No. 842 of 2010 3. Summary Criminal Case No. 806 of 2004 Criminal Appeal No. 844 of 2010 4. Summary Criminal Case No. 807 of 2004 Criminal Appeal No. 845 of 2010 5. Summary Criminal Case No. 808 of 2004 Criminal Appeal No. 841 of 2010 6. Summary Criminal Case No. 809 of 2004 Criminal Appeal No. 843 of 2010 Whereas, the details of cheques involved in every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emo and demand notice are as follows :- Details of Memo Demand Notice Oriental Bank of Commerce dated 09/01/2004 : "Payment stopped by drawer" 27/01/2004 Oriental Bank of Commerce dated 09/01/2004 : "Payment stopped by drawer" 27/01/2004 Three memos of Oriental Bank of Commerce dated 09/01/2004 : "Payment stopped by drawer" 27/01/2004 Three memos of Oriental Bank of Commerce dated 09/01/2004 : "Payment stopped by drawer" 27/01/2004 Three memos of Oriental Bank of Commerce dated 09/01/2004 : "Payment stopped by drawer" 27/01/2004 Three memos of Oriental Bank of Commerce dated 09/01/2004 : "Payment stopped by drawer" 30/01/2004 8. Before the trial Court, both the parties have adduced oral and documentary evidence. There was common evidence recorded. Evidence before the trial Court 9. The evidence on behalf of Kores (India) Ltd., consists of following:- (a) Complainant-Witness No. 1-Rakesh Garg-Commercial Manager and Authorized Representative of Kores. (b) The evidence of PW No. 2 - Sanjay Santosh Mehrotra - Regional Manager for Kores (India) Ltd. The documents referred are as follows :- (i) Copies of cheques, (ii) Copies of invoices and purchase orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut not working as Commercial Manager in the month of July-2003 and he never used to visit the parties to collect the payments. Further admission about collection of cheques by Delhi Office and not by Thane Office. (Para No. 11). (e) Demand notice was issued to 3 (Three) persons whereas, Complaint was filed against Ashish Kumar Ahuja. PW No. 1 could not explain this situation. (Para No. 12). (f) There is interpolation of date in the invoice at Exhibit-20. PW No. 1 took time in answering the question and demeanor was recorded. (Para No. 13). (g) PW No. 1 could not give the name of retailer to whom, Kores have supplied the goods. (Para No. 14). (h) Evidence of PW No. 1 and PW No. 2 are contradictory. According to PW No. 1, there were 15 (Fifteen) consignments and total due amount was Rs. 37,79,045/- and cheques were issued immediately on delivery of cheques (Para No. 15). This is as per the PW No. 1. (i) Whereas, as per PW No. 2, cheques were presented for encashment after expiry of 30 (Thirty) days. (Para No. 16). As per Mr.Jain, fact of issuance is different from fact of deposit of cheques and the trial Court has misunderstood it. (j) The name of PW No. 2 was not cited i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact is with H.P. and it has nothing to do with dispute with Ambitious. The claims raised by Ambitious were in fact raised for avoiding the payment to Kores. d. There were sufficient documents in the form bills and challans which shows delivery of goods to Ambitious. I will give reasons hereafter for arriving at above findings. Findings about evidence of Accused 14. The Accused is not having direct connection with Kores but he used to place orders with H.P., and materials are supplied by Complainant. The original MoU with H.P. was produced. The arrangement continued till May-2003. According to the trial Court, this is the same document for which both the witnesses of the Complainant have given different version (Paragraph No. 22). As per Mr. Jain, this finding is incorrect. (In fact, according to him, the trial Court is confused about this argument). 15. There was some dispute about commission over the sales in between H.P. and Ambitious and case was pending in Delhi High Court. The MoU (Exhibit-31) gives clear picture about mechanism between H.P., and Ambitious. On its perusal, the trial Court opined, original agreement existed in between H.P., and Ambitious and not betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al sought by the State Government was refused by the High Court. The Hon'ble Supreme Court refused to interfere in the said judgment. Merely because contrary view is permissible, is no ground to interfere in the judgment of acquittal. (Para No. 27). But, it is also true that an enquiry in an offence for the offence punishable under Section 138 of NI Act cannot be equated with the trial of an offence under other laws. 21. Normally, in an offence under other laws, entire burden is on prosecution and there is no role for the Accused except to pin point out lacunae and to create doubt in the prosecution evidence. Whereas, an enquiry under 138 of NI Act is different due to following aspects:- (a) When foundational facts are proved, presumption comes to the help of Complainant under Sections 118 and 139 of NI Act. (b) Unless and until Accused rebuts that presumption, initial presumption continues till conclusion of the enquiry and it may results into a decision against the Accused. (c) So, pendulum of proving a fact moves from the Complainant to Accused, from Accused to Complainant and again to Accused depending on facts and circumstances throughout completion of an enquiry. 22. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lacuna in the case put up through P.W. 1. According to Mr. Bhadbhade those findings are correct and if the evidence of both these witnesses are perused, we can very well say that what is there in the evidence of P.W. 2 is not deposed by P.W. 1. According to him, if both witnesses are working in Kores Company, they are supposed to depose the facts in tandem. 25. Whereas, according to Mr. Jain, it cannot be considered as inconsistency. In fact, both these witnesses are the employees of Kores India and they are working in different offices and in different cities. Their job is different and their responsibilities are different. According to him, in fact P.W. 1 works in Bombay office and he is looking after accounts. Whereas, P.W. 2 works at Delhi office and he has represented the Company in dealing with Ambitious. As such he knows each and every fact. In fact few of the correspondence made by the Ambitious are also addressed to P.W. 2 and the said fact itself proves involvement of P.W. 2. 26. If we read the tenor of their evidence, we may find that P.W. 1 has deposed on the basis of documents and he is not having personal dealings with Ambitious. On the other hand, P.W. 2 - Sanjay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Ahooja is the proprietor. (b) Whereas, P.P. Ahooja has signed the documents relating to stop payment instructions. (c) He knows earlier Sunil Ahooja was taking active part in the business. Whereas the complaint is filed only against accused Ashish Kumar Ahooja being proprietor of Ambitious. It is decided by the management not to involve the father of Ashish Kumar. It was the oral decision. (vi) He was aware about part-payment made by the accused about goods supplied as per invoices and cheques were issued towards remaining payment of the invoices and even earlier cheques were taken back. 28. On this background, it will be material to see what P.W. 1 Rakesh has deposed. The facts are as follows:- Evidence of P.W. 1 (a) He has reiterated the averments in the complaint and board resolution authorising him to represent the company. In paragraph 4, he has given the details about 15 consignments worth Rs. 37,79,400/- and delivery of goods in perfect condition and issuance of 15 cheques by the accused. (b) The cheques covered in every complaint are different. He knows the reason for dishonour is stop payment instructions. Through him the relevant invoices, cheques and mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... honour of cheques/ issuance of cheque why cannot be considered as the facts stated on the basis of the documents? 30. Trial Court has overlooked the fact that Company runs through the natural persons and when complainant Company is having offices at Bombay and at Delhi also Company has deputed several persons at these two places. There is distribution of work as Commercial Manager and Regional Manager. These are the practices and customs followed when business is run on the large scale and through company. On this background, if you say that a person working at one place is not aware about the transactions that are carried out at other place, can you say that it is inconsistency or variance? About collection of cheques 31. He has also clarified goods are supplied by Delhi office and employees working there used to collect the payments and in this case cheques are collected by Delhi officials only. When he had given this candid answer and when P.W. 2 has deposed on that line, can you say that it is inconsistent. If PW-1 could have stated that the Bombay office has in fact collected the cheques then it can be said to be inconsistent and untruthful. Whereas subsequently P.W. 2 depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e already narrated their nature of job, their nature of portfolio and their place of work. Admittedly, P.W. 2 was looking after supply of goods in Delhi office whereas P.W. 1 from Bombay office is looking after the accounts. It seems that P.W. 1 comes into picture only after issuance of cheque. He is more conversant with issuance of notice, posting of notice and its service. Whereas, P.W. 2 seems to be more conversant with the transaction that took place till the time Ambitious issued the cheques. 37. There is one more instance which suggests that Ambitious was aware about involvement of P.W. 2. In the letter dated 1st August 2003 addressed by Ambitious through Aashish Kumar, attention of P.W. 2 was also brought. It pertains to non-deposit of cheque. 38. When we consider the evidence of both these witnesses together, we find that approach of the trial Court is hyper-technical. Trial Court has lost site of the fact that Kores India works from different places. When both these witnesses have deposed their different roles, it is but natural that they are going to depose different facts. In fact, it cannot be considered as inconsistency. In fact, it can be said that they have deposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Court". (page 123 of Appeal No. 840 of 2010) 43. Trial Court further observed:- "The prosecution is attempting to withhold the document i.e. an agreement executed between the complainant and H.P. Ltd. and giving different contention for the same which are completely contested nature. As P.W. 1 is saying that this document is not important, hence, it was not produced. At the same time P.W. 2 is saying that said agreement was a confidential and important in nature. Hence, it was not produced in the Court". (page 135 - 136) of same appeal. Accused version 44. Whereas Ashish proprietor of Ambitious laid emphasis on their MoU with H.P. & he produced it in his evidence. (SCC/806/2004 Exh. 31). His contention is :- a. After discontinuation of the business with HP, he claimed the dues. But HP has not responded. b. Dispute is pending before Delhi High Court. c. Even Kores has not responded and hence, he gave instructions to Kores & also to bank not to deposit/honor the cheques. 45. Before appreciating the submissions advanced by both the learned Advocates on this issue, it will be relevant to understand nature of business relationship amongst three parties. It can be inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing facts emerges after reading the MoU dated 1st May 2001 in between HP and Ambitious :- (a) MoU is restricted to promotion, sales and support of HP products. (b) It will be valid for 6 months from May 2001 - October 2001. (c) It talks about appointment of minimum staff by sub-distributor. (d) RSR has to cover only the area assigned to him. (e) To provide periodical information to HP about the sales. (f) RSR has to purchase products from HP authorised whole-seller. (g) HP shall reimburse Rs. 16,000/- p.m. to RSR for the expenses incurred in the program. He will loose the amount if he will not send periodical reports. (h) There was an arbitration clause in case of dispute. Nature of dispute with HP 48. In his evidence, Ashish proprietor of Ambitious raised following dispute:- (a) No direct financial relationship with Kores (India). (b) Kores India has only supplied the goods. (c) dispute with HP about payment of commission is pending. It is pending with Delhi High Court. (d) there is no legal liability with Kores for supply of goods. It will be relevant to consider the findings of the trial Court in respect of nature of business relationship and nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -production weakens the case of complainant"? 53. Both the sides are having rival claims. According to complainant the said MoU is not connected to present dispute and as such not relevant. According to Mr. Jain, this MoU pertains to relationship in between HP & Kores. According to him, even though it is true that all the three parties deal in the business of selling HP products, still these MoUs are different and they are not correlated to each other. Whereas, learned Advocate Shri. Bhadbhade submitted there is interconnection in between their business and promises, counter promises and their fulfillment and breaches, if any are depending upon each other. 54. For deciding this controversy, I have read the provisions of Section 114 and illustration (g) also. Illustration (g) says :- (i) evidence which could be produced (ii) and is not produced (iii) if produced (iv) be unfavourable to the person who withholds it. 55. There is no dispute about existence of MoU in between HP & Kores. There is no dispute that it is not produced. Dispute is about "necessity of production". For that purpose, wordings of Section 114 are relevant. The principle is laid down and illustrations ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with Kores. 61. Ambitious was not a party to MoU in between HP & Kores. The Court is not aware why separate MoUs are prepared. It may be a part of practices/ customs followed in the business of selling Computer related products. So long as the Ambitious does not claim that said MoU contains a clause throwing some light on relationship in between distributor Kores & sub-distributor/Ambitious the accused is not going to be benefited. Though all are involved in same business, still their financial dealings are separate. So it can safely said that MoU in between HP & Kores has nothing to do with dispute in between Kores & Ambitious. Trial Court was wrong in observing an adverse inference against Kores for not producing MoU. Evidence on the point of sale/delivery by Kores to Accused 62. Trial Court disbelieved this evidence and one of the reason is inconsistency in between testimony of PW-1 and PW-2. To prove delivery/ supply of goods, Kores relied upon the oral testimony and documentary evidence in the form of bills and challans. In all there are 6 complaints and now there are 6 Appeals. The details of bills/ invoices, cheques issued accordingly and the complaints filed is alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tendered in evidence by PW-2. But authenticity is not disputed by accused. He nowhere deposed those orders do not bear signature of his representatives. Trial Court has overlooked this documentary evidence. Even both the witnesses were not put suggestions that goods were not delivered. 64. Mr. Jain invited my attention to pre-complaint correspondence. I have already referred. The accused never complained that goods were not received. The dispute with HP is raised. 65. Trial Court approach is totally wrong. Ultimately what is appreciation of evidence? It is nothing but weighing the evidence, consider faults / lacunae in the evidence, to ascertain whether these lacunae goes to the root of the matter or whether it is minor/ superficial. Trial Court treated minor lacunae as major one and discarded the evidence to non-suit the complainant. This cannot be considered as proper appreciation. This is nothing but an appreciation done so as to deny the relief to the complainant. That is why this Court has gone through the evidence minutely. It cannot be said that on this evidence, another view is possible. But the appreciation by the trial Court is an exercise undertaken by neglecting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess this submission, he relied upon observations in case of Pinak Bharat and Company, Mumbai v/s. Anil Ramrao Naik and another (2022) SCC OnLine Bom.6707. Mr. Jain disputed this contention and according to him, the facts are different. Mr.Bhadbhade submitted that the cheques were issued towards security and not towards discharge of liability. 70. I agree with the submission of Mr. Jain. The facts of Pinak's case are different. There was dispute in between the parties to the cheque about liability. Whereas in the case before us, there is dispute in between Ambitious and HP. The dispute raised by Ambitious is about financial issues in between them. If Kores have delivered goods to Ambitious, they are eligible for payment of amount. The MoU in between Ambitious and HP does not say anything about payment of goods received. This payment is independent. The amount mentioned in 16 cheques is nothing but the amount mentioned in the invoices/ challans. Kores is having every right to fill those details in cheques and make them complete. The observations in Pinak is not applicable. Mr. Jain relied upon the observations in case of Payal Malhotra v/s. Sulekh Chand 2023 SCC OnLine Del 7597 (the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rebut the presumption. Dishonour of cheques and issuance of notice 73. It is a matter of record that all the cheques were dishonoured for the reason 'payment stopped by the drawer'. It is not in dispute because Ambitious themselves have written a letter to Kores. For the reason stated above, Ambitious was not justified in issuing stop payment letter. Furthermore, no evidence was adduced to show there was sufficient balance in the Bank account of Ambitious. You cannot expect the witnesses for the complainant to know about the balance in the account of Ambitious. In fact, apart from taking plea of dispute about liability, Ambitious ought to have given an evidence about balance in the account. He has not done it. So the reason for dishonour falls within the purview of Section 138 of NI Act. Issuance of notice 74. There are two notices dated 27th January 2004 and 30th January 2004. Reply is also given. So receipt of a notice is not in dispute. There is no dispute that complaints were filed beyond the period of limitation. This part of NI Act is also fulfilled. Defect in recording 313 statement 75. According Mr. Bhadbhade trial Court has put omnibus questions. He invited my atten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 313(2) and (3) are nothing but an extension of the constitutional protection and the provisions of Section 313(4) of the Code are nothing but the extension of the principle laid down in the Evidence Act about "entire burden on the Prosecution". 78. On the basis of answers given by the Accused, the Complainant is not relieved from the responsibility to prove the offence. The Court may consider the answers or may not consider it prior to arriving at a guilt of the Accused. There is one more factual aspect. Apart from answering the questions in 313, the Accused himself has also given evidence on oath. This is what is provided in Section 315 of the Code. This can be only on his request. These factual backgrounds need to be considered. 79. In case of Maheshwar Tigga (supra), the Hon'ble Supreme Court has considered what will be the effect of not putting a particular circumstance to the Accused in 313 statement. In that case, questions put to the Accused were put in an extremely casual and perfunctory nature. The question consisting of composite facts were put. (Para No. 7). The provision is incorporated for ensuring fair trial and it should not be done in a slipshod manner. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 5 that the cheques are issued for the respective invoice bill for materials supplied to him. 83. It is no doubt true that there is no reference of CW No. 1 and 2 and what are the roles played by them. But, particulars of material evidence is certainly put to the Accused. 84. Question is, merely because there is no reference of CW Nos. 1 and 2 in those questions, does it mean to say that any prejudice is caused to the Accused? It is important to note that even the Accused has given evidence on oath. That was his choice. However, it implies the fact that the Accused was fully aware about the case he has to meet and the case which he has to put up before the Court. 85. I agree that the trial Court ought to have made some reference of the Complainant Nos. 1 and 2. However, the trial Court adopted an approach of putting summary of facts deposed by the two witnesses. After all, it is a summary trial. The issue of prejudice also needs to be considered on the background of giving of evidence on oath by the Accused. This fact rules out the grievance of prejudice taken by the Accused. I reject that contention. Conclusion 86. For the above discussion, I come to the conclusion that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Hence, I conclude that the judgment of acquittal needs to be reversed. I conclude that the Accused has committed offence punishable under Section 138 of the NI Act. 90. After pronouncing this judgment, I have heard both the learned Advocates on the point of sentence. 91. Learned Advocate for the Appellant submitted that let there be both the sentence. Whereas, learned Advocate for the Respondent prayed for leniency. It is true that there can be sentence for two years or fine which may extend to twice the amount of cheque or both. I am not inclined to award the sentence of imprisonment. Instead of that, there can be fine being the double amount of the cheques. In view of that following order is passed:- ORDER (i) The Appeals are allowed. (ii) The order of conviction and sentence passed by the Court of JMFC - Thane in (a) Summary Criminal Case No. 804 of 2004 (b) Summary Criminal Case No. 805 of 2004 (c) Summary Criminal Case No. 806 of 2004 (d) Summary Criminal Case No. 807 of 2004 (e) Sum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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