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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 ..... promises depends upon fulfillment by other parties. If, one of them, fails to fulfill his promises, it affects fulfillment of the promises by other two parties. In some cases, one of the parties is a formal party, that is to say, though his presence is important, but fulfillment of the promises in between other two parties does not depend upon the fulfillment of the promise by the First-Party. In the Appeals before 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 1st August, 2003 - sent by Ashish Ahuja to the Complainant Kores (India) Ltd., asking them 'not to deposit the cheque till he will inform' and letter of same date issued to "Oriental Bank of Commerce to stop the payment of the cheques" And (b) Letter dated 22nd September, 2003 by Ashish Ahuja to Kores (India) Ltd., informing 'to start fresh chapter and assurance was given to clear pending payments at the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003: Rs. 3,28,100/- (xxviii)12/06/2003: Rs. 3,74,220/ (xxix)07/06/2003: Rs. 2,43,360/- (xxx)05/06/2003: Rs. 2,05,500/- 615359 (i) 26/06/2003 (i) 23/06/2003: Rs. 2,80,050/- 180568 180569 180570 (i) 17/06/2003 (i) 17/06/2003: Rs. 2,13,900/- (ii) 18/06/2003: Rs. 4,05,575/- 180563 180566 180558 Nil (i) 12/06/2003 180556 180553 180559 Nil (i) 18/06/2003 180564 180565 180567 The details of memo 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PW No. 1 and PW No. 2 are giving different versions about this MoU. According to PW No. 1, this MoU is not relevant, whereas, PW No. 2 considers it as confidential. (Para No. 10). (c) PW No. 1 gave different versions about signing the cheques by Accused. In chief-examination, he says cheques are signed in his presence, whereas, in cross-examination, he says it is not. (Para No. 11). (d) Admission by PW No. 1 about 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utted the presumption. My opinion on these findings is :-- a. Trial Court lost sight of the fact that roles/participation of two witnesses for the complainant is different. As such variances are bound to occur. b. Trial Court had fallen in to the trap laid by the accused. In fact, the MoU between H.P. and Kores has no connection with the dispute between Kores and Ambitious. c. The dispute raised by the accused 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt should be slow in interfering the judgment of acquittal. The Appellate Court is not justified in reversing the judgment of acquittal just because a view different from the view expressed by the trial Court is permissible. Whereas, Mr. Bhadbhade relied upon the observations in case of Central Bureau of Investigation v/s. Shyam Bihari and Others 2023 SCC OnLine SC 844. In this case, a special leave to prefer an Appeal 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 Compla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I Act ? (i) Whether it can be said that cheques are issued not towards discharge of liability but by way of security ? Variance in between evidence of P.W. 1 and P.W. 2 24. Trial Court at various places in the impugned judgment has emphasized on this variance i.e. to say "facts deposed by P.W. 2 does not find place in the evidence of P.W. 1". Even the trial Court observed P.W. 2 was examined in order to fill up the 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 repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (RSR). (ii) According to him, agreement in between Kores & HP is confidential and as such not having any concern to the transaction between Kores and Ambitious. (iii) He knows difference between confidential and non-confidential. (iv) Statutory notices are given by Company Secretary on the instructions of the management of the Company. (v) He is aware that notices are given to three persons :- (a) Ashish Kumar 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust 2003. In July 2003, he was not Commercial Manager. In the month of July, cheques were issued. Being Commercial Manager, it is his duty to collect the payment and not his duty to supply goods. In fact, he had given this answer truly. Answers given by him about issuance of notices, dispatch and receipt of notice in fact pertains to his portfolio. The facts deposed by him in respect of the transactions earlier to dishonour 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those instructions he deposited the cheques for encashment. He did not make inquiry about sufficiency of funds (however, the burden is on accused to show that in fact, there is sufficient balance in his account. He has not laid any evidence on this aspect). When the witness was asked about the name of the retailer, he has kept mum. Conclusion 36. While reiterating the answers given by both these witnesses, I have 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 cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document is a confidential one and could not be produced. Resultantly, the only inference can be drawn from the contradictory evidence of these two witnesses with respect to the said document that the complainant i.e. Kores India Ltd. is attempting to withhold said agreement executed between Kores India Ltd. and H.P. Ltd. so it may give adverse inference which would be unfavorably to the complainant if it is produced 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 (page 31) raising following issues:- (i) Blank cheques were given at the time of delivery. It is as per the policy of H.P. (ii) Grievance was raised about exploitative conduct of H.P. (iii) Kores India and two others are only creatures of HP to cover up illegal business strategy. (iv) Ambitious has stopped the business with HP since August 2003. (v) That is why payment of cheque was stopped. 47. The following 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of Section 114(g) of the Indian Evidence Act (Para 29). Furthermore, when PW-1 & 2 have given inconsistent answers, trial Court has drawn an inference that the MoU will be unfavourable to the Complainant (Para 10). I have already observed there is no inconsistency in between evidence of PW-1 and PW-2 on the point of "reason for not producing MoU in between HP & Kores". Now, it needs to be seen "whether its non-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. Illustra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow before the trial Court and this Court, Ambitious have not produced any documents to show exact nature of dispute between them, nature of reliefs sought and exact settlement arrived at subsequently. This Court feels "merely raising a claim that there is dispute in between them and HP is not enough". Accused ought to have filed documents so show nature of their dispute and to show how it has a bearing on their dispute 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 Kor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is negligible. It ought to have been overlooked. The approach of trial Court is fault finding approach. 63. Trial Court has overlooked the fact that Ashish has deposed that Kores used to deliver the goods to Ambitious. The delivery challans were sent when goods were delivered. It is signed by representatives of accused (whoever is available). Though he has deposed that he used to place order on HP, there are orders 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 lacun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Court opined that Ambitious has rebutted the presumption u/s. 139 of Negotiable Instruments Act. I am not in agreement with the observations of the trial Court about variance in evidence and non-production of MoU in between HP and Kores. According to Mr. Bhadbhade, if the drawer issues blank cheque and if payee will fill those details, it amounts to material alterations and it is not negotiable instrument. To buttress 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 do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y effect on the dispute in between Kores and Ambitious. Neither before the trial Court nor before the Appellate Court Ambitious has filed any documents showing nature of exact dispute. So the Court cannot accept the said contention in order to exonerate Ambitious from the liability arising out of the provisions of NI Act. I hold that cheques are issued towards discharge of debt or liability and Ambitious has failed to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 3 and 4 are also relevant. They are safeguards to the Accused. They are as follows:- (a) An oath should not be administered to the Accused. [Section 313(2)]. (b) Accused cannot be prosecuted for refusing to answer questions or by giving false answers. [Section 313(2)]. (c) Answers given by the Accused may be taken into consideration in the enquiry or trial wherein he is prosecuted. 77. The provisions of Section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 complaints there are 3 cheques involved in every complaint and in 1 complaint, 1 cheque is there and total of 16 cheques comes to Rs. 44,99,270/-. (c) The question was asked about reason for dishonour being 'stopped payment' and the relevant memos in the same question. (d) Issuance of demand notice by the corporate division - Thane and failure to make payment was asked in question No. 4. (e) It was asked in question 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on the basis of documents not produced by the Ambitious including the Court litigation. 89. 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. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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