Narender Anand vs Maruti Udyog Ltd.
1997 Latest Caselaw 961 Del

JUDGMENT

J.K.Mehra, J.

(1) I have heard the parties. Since common questions of law and facts are involved in all cases, I am disposing of all these petitions by this common order.

(2) The petition arises out of an order of summoning passed by the Metropolitan Magistrate on an application of the accused whereby the said order is sought to be recalled by the said Magistrate. The complaints in the present cases arose out of dishonour of ten cheques amounting to a total sum of Rs. 2,06,31,571.00 . It was pointed out that the petitioner No. 3 was a dealer of respondent No. 1 Maruti Udyog Limited under an agreement of dealership and was engaged in sale of various kinds of vehicles, spare parts and also rendering after sale service to the purchasers of vehicles manufactured by respondent No. 1. The said dealership was terminated on 31.8.1994 which am informed, has been challenged by the petitioner by means of a civil suit.

(3) The said cheques were issued by the petitioners purporting to be payments being made from time to time in discharge of their dealership liability towards booking of vehicles and sale of spare parts etc. The said cheques were presented for encasement, but on presentation those were dishonoured with the remarks "effects not cleared". Following the dishonour of the cheques, it has been submitted that the dishonoured cheques alongwith the bank's memo returning the cheques were returned to the petitioners. Thereafter a notice under Section 138 of Negotiable Instruments" Act was given, which remained unreplied. The respondent has contended that the original dishonoured cheques alongwith the memo of the bank returning the cheques, were returned on the representation of the petitioners that they will arrange payment in lieu of these cheques. Incidently, there is no such mention in the notice under Section 138 of Negotiable Instruments Act although before that the cheques and the memos of dishonour had already been returned. By return of such cheques, the respondent/complainant ceased to be "holder in due course". It also was left with no right to file a summary suit under Order 37 of Civil Procedure Code . after parting with the said negotiable instruments.

(4) The petitioners filed an application before the learned Magistrate stating that the accounts had been adjusted between the parties and it was as a consequence of such adjustment that the original cheques and the memos returning the cheques were returned because there was no amount due and outstanding. Although it was not necessary at this stage for the respondent to place on record anything, yet they in reply filed a statement of account based on its own books of account. Therefore, for the purposes of the present application, the Magistrate could always look into that statement of account as it had emanated from and had been placed on record by respondent/complainant. The said statement does not show any amounts outstanding except the amount of Rs. 509.53 lacs, which represented the amount of sales tax which had been debited on account of non-receipt of C-Forms. It is not disputed that the sales tax assessment has not yet been made. The liability to pay sales tax for non-submission of C-Forms could arise only when the assessment is made. If C-Forms are submitted before assessment, there could be no question of any sales tax liability. Admittedly no final assessment has so far been made by the Sales Tax Officer. Under law, the sales tax liability could arise only on assessment, which had admittedly not taken place and which stood wiped out by supply of C-Forms during the pendency of the case before the Court. In this connection, a reference be made to the decision of Division Bench of Calcutta High Court comprising of Hon'ble Mr. Justice Sabyasachi and Hon'ble Mr. Justice R.N. Pine in the case of Mahata Brothers Vs. Additional Member, Board of Revenue, West Bengal, reported as 1975(36) Stc 582 and another case of State of Tamil Nadu Vs. Chellaram Garments (P) Limited, reported as 1979(44) Stc 239. In this judgment, it was held that even before the Appellate Authority, C-Forms could be produced and on production of C-Forms, the sales tax liability could be wiped out.

(5) On respondent/complainant's own showing, the cheques did not represent sales tax dues as no sales tax had fallen due for payment till that date. The learned Magistrate, after hearing extensive arguments, refused to go into the papers which were placed on record by the respondent/complainant. As already noticed, even the amount of Rs. 509.32 lakhs, which was shown as due on account of sales tax liability, resulting from non-submission of C-Forms, stood wiped out before passing of the impugned order as all the relevant C-Forms were handed over to the complainant during the pendency of the complaint and before passing of the impugned order as per the admitted stand of the parties. The complainant then raised the plea that a further sum has also fallen due on account of subsequent cancellation of the orders for the vehicles. That by itself would not give any right to the complainant to continue with the present complaint and if at all could be a matter for a civil action wherein merits of such subsequent claims could be examined. While it is true that no businessman will issue cheques at any stage for such a huge amount running, into crores without tallying the accounts unless the amount is due, as has been held by the Trial Court, but the Trial Court lost sight of the fact that no businessman will return the original negotiable instruments, i.e., the cheques in question alongwith original dishonour memo issued by the bank of such huge amount and thereby deprive itself of the right to file a summary suit under Order 37 of Civil Procedure Code . and ceasing to be a "holder in due course", without settling the amount or without exchange of any further documentation. Furthermore, the statement of account which was filed by the respondent/complainant itself should have been looked into by the Trial Court which reflected that the only amounts due on that date were on account of the alleged sales tax liability on account of non-submission of C-Forms, which could not be the purpose of the cheques which were issued earlier. Any amount which is shown after scrutiny of the accounts subsequently can also not be made the basis for prosecution as that would be a matter for the accounts to be gone into between the parties and was not the consideration for issuance of the cheques in the first instance. The complainant has nowhere in its notice under Section 138 set up the position of subsequent cancellation of orders or the return of cheques, as is now being canvassed before the Court.

(6) The petitioners have also contended that the complainant had concealed the following facts:

"(A)That the amount of Rs. 2,10,93,069 was lying in excess with them in the account of Maruti 1000 cc cars of the account of the dealer, M/s Classic Motors Ltd. (b) An amount of Rs. 61,340 was lying in excess in Gypsy account of the dealer, Classic Motors Ltd. (c) An amount of Rs. 3,68,000 was lying in excess in the customers account as the customer got the booking cancelled and got the refund from the applicant company."

(7) As against this credit of Rs. 2,15,22,409.00 the cheques in question which were dishonoured, amounted to Rs. 2,12,32,571.00 and according to the petitioners, this amount was fully adjustable by the respondent/complainant company from the account of petitioner No. 3. There is one statement of account which the petitioners had annexed to the application for recall of the orders summoning the petitioners. Also annexed to this petition are two documents, i.e., letter dated 12.9.1994 from respondent/complainant to the petitioners calling upon the latter to adjust the account following dishonour of cheques and the reply of the petitioners dated 14.9.1994.

(8) The relevant part of the letter dated 12.9.1994, i.e., Mr. G.S.Maheshwari from the office of the respondent/complainant, reads as under;-

"Please arrange to seehat the aforesaid payments are credited to MUL's account forthwith. It is also essential for us to reconcile the funds available against the funds required as per customers bookings with your dealership. You are requested to hand over complete details and relevant documents in this regard to our representative, deputed to your dealership, to carry out complete funds reconciliation exercise. Kindly note that only after completion of this funds reconciliation exercise, it would be possible for us to resume despatches to your dealership. We seek your full cooperation in this regard."

(9) This was replied to by the petitioners on 14.9.1994, as follows:-

"This has reference to your letter number MUL/RO(N-I) dated 12/9/1994 regarding reconciliation of our vehicle Accounts vis-a-vis pending payments as on 31/8/1994.

(10) This is four your information that on 31.08.94 the following was the excess amount lying in our 1000 C.C. and other Vehicle Accounts.

As on 31.08.94, Closing Balance with Mul Actual Amount 1000 6,47,79,147 Pending Payments 4,36,66,076 2,10,93,069 from 1000 a/c 61,340 from gypsy a/c 3,68,000 from direct billing 2,15,29,409 total dealer's fund

(11) The excess amount mentioned above may be utilised in the 800 Car A.C. and Omni Account to make up for all the payments received from the customers during the last few days before issue of Termination Letter and who were to be given priority on the clearance of their respective payments but since our bankers had stopped operations of our accounts no further cheques could be issued to MUL. Therefore we request to transfer the excess amount lying in M-1000, Gypsy & Direct Billing a/c to Maruit 800 & Omni Accounts to make all intact.

(12) We hope you find this in order and we further request you to kindly resume despatches for our Dealership as there is sufficient amount lying with Mul as on 31/08/1994. An early action in this regard will be highly appreciated."

(13) The said letters are not on the Trial Court record though the existence thereof was not disputed by counsel for respondent/complainant when asked on, the matter was listed for further hearing. There is, however, no mention of these letters and the return of cheques in the notice under Section 138 of Negotiable Instruments Act. Since these letters are not on record of Trial Court, this Court will not take note of those.

(14) Even if the said letters were not to be looked into at this stage by the Trial Court, the statement of account filed with the reply to this application by the respondent/complainant could not be lost sight of in a case where the accused had appeared and sought recall of the summoning order on the plea that no case for proceeding against the petitioners/accused is made out. In the case of Mohan Lal Singhal Vs. State (Crl.M.(M) No. 1091/92) decided on 18.9.1995. I had after examining the law on the point, held that the prosecution could be called upon to admit or deny the documents and such documents should be taken into account at the time of framing of the charge In my opinion, if any material, correctness whereof is not disputed, is placed by the complainant on record and that could have effect on the merits of the complainant's case, the same should not be ignored. Undisputed facts and documents can be looked into by the Trial Court. Refer Satish Mehra Vs. Delhi Administration, reported as 1996 (3) Crimes 85. The statement of account annexed to the complainant's reply filed before the learned Magistrate shows the position as on 27.10.1994, a perusal whereof clearly shows that the amount which is shown as due and payable, comprises of two items, i.e., Rs. 485.53 lakhs and Rs. 24 lakhs, each being debit for additional sales tax liability due to non-submission of C-Forms, which have since been submitted before the assessment, clearly showing that the total of these two figures comes to Rs. 509.53 lakhs, which is slightly more than the amount shown as due and outstanding in the statement of account, which is Rs. 509.32 lakhs. No other amount is shown as due and outstanding. The position of supply of C-Forms is not disputed before me nor is the correctness of the statement of account filed by the respondent/complainant before the learned Magistrate in dispute. The effect of these two has not been considered by the Court. The Court has also failed to apply its mind to return of cheques dishonoured alongwith the accompanying dishonour advices. The bald statement has been made on record that these were returned as per past practice while no such practice has been established by any witness on record with reference to any past transaction. After this position of account, some further dues were put up by the complainant, which were not there in the complaint nor were those proved by any of the witnesses who were examined by way of preliminary evidence. Hon'ble Supreme Court has held in its judgment in the case of K.M. Mathew Vs. State of Kerala, reported as 1992 Crl.L.J. 3779 as under:-

"If one reads carefully the provisions relating to trial of summons cases, the power to draw up proceedings against the accused cannot be denied to the Magistrate. Section 204 of the Code indicates that the proceedings before the Magistrate commence upon taking cognizance of the offence and the issue of summons to the accused. When the accused enters appearance in response to the summons, the Magistrate has to take proceedings under Chapter 20 of the Code, but the need to try the accused arises when there is allegation in the complaint that the accused has committed the crime." (Para-8)

(15) In another case of this Court, i.e., Vijay Khanna Vs. Jumbo Electronic Company Limited & Another, it was held that the Courts have to be very cautious in appreciating the material placed before it and in case criminal case raises dispute of civil nature, it is liable to be quashed. In the case of Satish Mehra Vs. Delhi Administration (supra), the Hon'ble Supreme Court had laid down the following principles:- "1. When the Judge is fairly certain that there is no prospect of the case ending in conviction the valuable time of the Court should not be wasted for holding a trial only for the purpose of formally completing the procedure to pronounce the conclusion on a future date. 2. if the Sessions Judge is almost certain that the trial would only be an exercise in futility or a sheer waste of time it is advisable to truncate or ship the proceedings at the stage of Section 287 of the Criminal Procedure Code itself. 3. Sessions Judge would be within his powers to consider even materials which the accused may produce at the stage contemplated in Section 227 of the Criminal Procedure Code."

(16) Those principles should in my opinion also govern the proceedings in summons case before the Court.

(17) In the light of the above discussion and facts and keeping in view that the statement of account filed by the respondent/complainant itself before "the Magistrate does not disclose any other amounts due except for the alleged sales tax liability on account of non-submission of C-Forms and the fact that the C-Forms have since been duly submitted before passing of the impugned order, thus, wiping out that liability also because the said forms were submitted before the sales tax assessment there does not appear to be a case for prosecution under Section 138 of Negotiable Instruments Act. Even if the documents withheld by the complainant, i.e., its letter dated 12.9.1994 and the reply dated 14.9.1994 are not taken into account, the irresistable conclusion would be that there was no amount due or debit outstanding or the liability for which the cheques dishonoured were issued. If there are nay subsequent claims arising in favour of the respondent/complainant and against the petitioners, the same could not be made subject matter of the present proceedings under Section 138 of the Negotiable Instruments Act. That may constitute a separate cause of action for any action including civil claim.

(18) Thus keeping in view the above position, I find that the complainant had no case to proceed against the petitioners under Section 138 of the Negotiable Instruments Act. In the light of this, I accept the petition and set aside the impugned order and also quash the summoning order. The result is that the complaint fails and is dismissed with no order as to costs.