Delhi High Court
M/S Apollo Tyres Ltd. vs M/S Indira Tyres & Ors. on 31 August, 2016
$~19-35.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 31.08.2016
% CRL.L.P. 232/2015
% CRL.L.P. 233/2015
% CRL.L.P. 237/2015
% CRL.L.P. 238/2015
% CRL.L.P. 239/2015
% CRL.L.P. 240/2015
% CRL.L.P. 241/2015
% CRL.L.P. 242/2015
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% CRL.L.P. 249/2015
% CRL.L.P. 250/2015
% CRL.L.P. 251/2015
M/S APOLLO TYRES LTD ..... Petitioner
Through: Mr. Avinash Kumar Lakhanpal, Adv.
versus
M/S INDIRA TYRES & ORS ..... Respondents
Through: Mr. Shahid Azad, Adv.
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
VIPIN SANGHI, J. (OPEN COURT)
Leave granted.
Crl. A. Nos. .............................../2016 (to be registered and numbered)
1. Let the appeals be registered and numbered.
2. With consent, I have heard learned counsels for the parties on the
appeals today itself, and I proceed to dispose of the aforesaid appeals by this
common judgment.
3. The appellant/ complainant had preferred 17 complaints under Section
138 of the Negotiable Instruments Act (the Act) against the respondent/
accused in respect of 61 dishonoured cheques. The particulars of the 61
dishonoured cheques forming subject matter of the 17 complaints are as
follows:
S. No. Cheque No. Cheque Date Amount
1. 567392 14.11.99 19697.00
2. 929514 02.12.99 14168.00
3. 929511 30.11.99 28336.00
4. 929509 30.11.99 18403.00
5. 929513 02.12.99 17332.00
6. 929515 02.12.99 18498.00
7. 567393 16.11.99 19697.00
8. 567375 20.10.99 19697.00
9. 567390 12.11.99 19697.00
10. 567389 11.11.99 19697.00
11. 929531 20.01.99 19697.00
12. 929530 24.01.00 19323.00
13. 929543 20.01.00 12762.00
14. 929532 20.01.00 18498.00
15. 929539 20.01.00 09249.00
16. 929525 17.02.00 19697.00
17. 929520 02.12.99 20702.00
18. 929519 02.12.99 19697.00
19. 929518 02.12.99 20185.00
20. 929512 02.12.99 18498.00
21. 929534 20.01.00 20185.00
22. 929506 26.11.99 19697.00
23. 567376 20.10.99 19697.00
24. 567391 12.11.99 19697.00
25. 567395 19.11.99 20185.00
26. 929549 24.01.00 45403.00
27. 929535 20.01.00 01782.00
28. 567394 16.11.99 40370.00
29. 567396 20.11.99 02185.00
30. 929548 24.01.00 19338.00
31. 929501 24.11.99 16735.00
32. 929503 24.11.99 40370.00
33. 929507 29.11.99 19697.00
34. 929508 29.11.99 19697.00
35. 929510 30.11.99 01782.00
36. 567380 01.11.99 19697.00
37. 567381 01.11.99 20185.00
38. 567383 02.11.99 38645.00
39. 567382 02.11.99 53426.00
40. 567388 11.11.99 19697.00
41. 929547 24.01.00 49545.00
42. 567397 20.01.00 28336.00
43. 929553 24.01.00 45403.00
44. 929550 07.02.00 49545.00
45. 929551 24.01.00 49545.00
46. 929545 24.01.00 19818.00
47. 929546 24.01.00 19818.00
48. 567378 23.10.99 28336.00
49. 929517 02.12.99 20185.00
50. 929516 02.12.99 20702.00
51. 567387 07.11.99 19697.00
52. 929552 24.01.00 49549.00
53. 929554 24.01.00 09161.00
54. 929555 24.01.00 03553.00
55. 929502 24.11.99 01782.00
56. 929556 10.02.00 28457.00
57. 929559 24.01.00 19818.00
58. 929557 10.02.00 28757.00
59. 929537 24.01.00 20185.00
60. 929540 24.01.00 13992.00
61. 929541 24.01.00 06930.00
Total 13,82,814
4. By the common impugned judgment, the learned Magistrate has
dismissed the complaints and acquitted the respondent/ accused, by holding
that the respondents had been able to dislodge the presumption against them
under Section 118 and 139 of the Act.
5. The relevant facts, in brief, are that the appellant company is engaged
in manufacture and sale of automotive tyres, tubes and flaps. Accused no.1,
which is a partnership concern of the other accused, was appointed a dealer
of the complainant. In the course of its business from time to time, the
accused purchased the products manufactured by the plaintiff/ appellant
against invoices. The accused made payment of the invoices by issuing
cheques. The details of the various invoices, in respect of which the
aforesaid cheques were issued along with the dates and amounts, as set out
in the complaints are as follows:
6. The aforesaid cheques, when deposited, were dishonoured upon
presentation. Consequently, the appellants issued a statutory notice of
demand dated 02.05.2000 to the respondent/ accused. In para 2 of this
notice, the appellant claimed that "you have been purchasing our products
viz. tyres, tubes and flaps for the purposes of resale from our branch office
situated in East Delhi. The sold goods have been handed over to you along
with respective invoices. Details of the invoices in question are given as
under ... ... ...".
The particulars of the invoices in question (as set out hereinabove)
were set out in the said notice.
7. In para 33 of the notice, the appellant averred:
"3. That in discharge of your liability against the goods
purchased vide invoices detailed herein above you issued
following sixty one cheques all drawn on State Bank of India,
G.T. Road, Delhi in favour of the company".
The appellant then set out the particulars of 61 cheques issued by the
accused, as set out herein above.
8. The accused sent a reply to the said legal notice on 12.05.2000. The
accused, in response to para 2 of the said notice stated as follows:
"2. That the receipt of goods by this firm M/s Indra Tyres,
from you, as detailed in para 2 of your notice is not denied.
Similarly, the issue of cheques as detailed subsequently in
your favour is also admitted. However, these facts alone do
not reflect the true and actual dispute between you and my
clients, as mentioned subsequently". (emphasis supplied)
9. The accused claimed that the accused had created a security deposit to
the tune of Rs.12.58 lacs with the appellant. The accused sought to give
particulars of the manner in which the said security deposit had been created
from time to time. It was, inter alia, stated by the accused as follows:
"In view of total Rs.12,58,000/- remaining as security with you
till now the existence of any sole or exclusive liability to pay
Rs.13,82,814/- by my clients does not arise at all".
10. The accused also sought to raise several other claims against the
appellant in respect of its transactions with the appellant. In the last
paragraph, the accused stated:
"Through this Notice, you are called upon to adjust the total
security deposit of Rs.12,58,000/- as detailed in the para-5 of
this notice towards the amount of 61 (sixty one) cheques
dishonoured by my client's bank. My client intends to settle
the balance only upon the receipt of complete statement of
account for the last 3 years from you. The said accounts will
establish that in fact my clients have to receive substantial
funds from you. You are humbly advised to refrain from filing
any complaint u/s 138 NI Act, against my clients and further
requested to settle the claims and counter claims in a business
like manner across the table". (emphasis supplied)
11. Since the amounts were not paid as claimed by the appellant, the
aforesaid complaints came to be filed and registered. In para 7 of the
complaints itself, the complainant disclosed that the accused had raised the
plea of having made a security deposit/ credit of certain amount. The
complaint also averred that, as advised by the accused, the complainant has
appropriated the amount lying to the credit of accused persons in various
security accounts against the following 12 cheques, amounting to Rs.1.35
lacs.
S. No. Cheque No. Cheque Date Amount
1 903786/929514 02.12.00 14168.00
2 903746/929509 30.11.99 18403.00
3 903770/929513 02.12.99 17332.00
4 904446/929513 24.01.00 12762.00
5 904416/929539 20.01.00 09249.00
6 904402/929535 20.01.00 01782.00
7 903629/929501 24.11.99 16735.00
8 903763/929510 30.11.99 01782.00
9 903360/567381 01.11.99 20185.00
10 903632/929502 24.01.00 01782.00
11 904421/929540 24.01.00 13992.00
12 904436/929541 24.01.00 06930.00
The appellant also stated that the accused persons have already been
informed about this appropriation vide communication dated 20.06.2000.
12. The accused, upon being summoned denied any liability and claimed
that accused was not guilty. The accused claimed trial.
13. The appellant then led evidence of CW-1 Sh. Sanjay Jain, Manager
(Legal) and constituted attorney of the appellant company. Along with his
affidavit by way of evidence towards examination in chief, he produced Ex.
CW-1/2 - a copy of the power of attorney in his favour.
14. CW-1, inter alia, stated that the accused had asked for adjustment of
the various security amounts. He stated that the security amount of Rs.1.35
lacs lying with the appellant had been adjusted against 12 cheques, the
details whereof had been given in para 8 of the complaint, and that no
complaint in respect of the said 12 cheques had been filed by the
complainant.
15. CW-1, Sanjay Jain was cross examined on behalf of the accused. He
was asked about the board resolution whereby he had been authorised by the
appellant company to file complaints on behalf of the complainant. In this
regard, he, inter alia, stated:
"I do not remember the date on which board meeting the
resolution was passed in my favour by the complainant. It is
correct that I have not filed the copy of minutes book or the
resolution with my affidavit of evidence. It is correct that the
said copy of the resolution is not filed on record. Vol. I can
produce the same. The resolution was definitely passed only
after my joining the company in 2004. I had gone through the
documents Ex. CW1 which is power of attorney. It is correct
that power of attorney Ex. CW-1 is in my favour does not have
any reference to the resolution in my favour. It is wrong to
suggest that no resolution was passed in my favour and
therefore it is not mentioned in power of attorney. It is wrong
to suggest that I am incompetent to depose in this case".
16. The accused led evidence of Sh. Paramjeet Singh (accused no.4) as
DW-1. In his cross examination, DW-1 stated that he did not have any
document which could suggest or establish that all the cheques i.e. 61
cheques in 17 cases were given in advance. He volunteered to state that the
accused used to give the cheques in advance towards supply of goods and
payment. He also stated that he did not have any document which
authorised the accused to make payment to different companies, namely,
Apollo International Ltd., Kaizen Tyres Ltd. and Apollo Dealers Mutual
Benefit Scheme as per direction given by the complainant company. He
stated that the accused had not filed any complaint before the competent
authority in respect of misuse of the 61 cheques by filing 17 different cases.
He also admitted not to have any documentary proof/ receipt issued by the
complainant company with regard to the creation of security deposits of
Rs.10,000/-, Rs.3,000/-, Rs.5.10 lacs and Rs.25,000/-. He admitted that he
had no document to show that the accused had deposited a sum of Rs.12.48
lacs as security deposit with the complainant company.
17. The Trial Court, while acquitting the accused and dismissing the
complaint has observed in para 31 of the impugned judgment that the
accused had successfully rebutted the presumption and discharged the onus
placed upon them that the 61 cheques were not issued against any debt or
legally enforceable liability, because the accused had sent the letter dated
14.03.2000 (Ex. DW-1/A), and proved that all 61 cheques were given
towards security. On the other hand, the complainant did not furnish any
bill or invoice in respect of which 61 cheques were claimed to have been
issued, to substantiate the version of the complainant. The learned
Magistrate also referred to the cross examination of CW-1 Sanjay Jain,
wherein he admitted not to have placed on record any statement of account.
He also did not show from the statement of account that the security amount
lying with the appellant had been adjusted and the accused given credit for
the same.
18. The submission of counsel for the appellant is that the impugned
judgment suffers from perversity. Learned counsel submits that the Trial
Court has completely ignored and misread the evidence brought on record
by the appellant. The Trial Court has not even properly read and understood
the averments made by the complainant/ appellant in the statutory notice
dated 02.05.2000 and, in particular, in para 2 and 3 thereof, and the response
of the respondent/ accused which was their first stand taken in the matter.
The Trial Court has also not appreciated that the accused, in fact, did not
dispute the factum of receiving the goods under the invoices as mentioned in
the notice, and the factum of issuance of the cheques in question towards
payment of the said invoices. The defence of the accused was that the
accused had created a security deposit to the tune of Rs.12.58 lacs and the
accused in its reply dated 12.05.2000 called upon the appellant to adjust the
said security and also to settle the other claims of the respondent/ accused.
Thus, the accused admitted the outstanding debt in respect whereof the
cheques in question were issued. However, the accused did not lead any
evidence to substantiate or even probabalise their defence that they had
created a security deposit of Rs.12.58 lakhs, or that there were other
crystallized, established or admitted dues owned by the appellant to the
accused.
19. Learned counsel submits that in the face of the stand taken by the
respondent/ accused in their reply, there was no occasion for the appellant to
lead in evidence the specific invoices against which supply of goods had
been effected, or to establish that the cheques in question had been issued in
respect of the said invoices. These aspects had been admitted by the
respondent/ accused.
20. Learned counsel further submits that the plea of the accused that the
accused had created a security deposit of Rs.12.58 lacs was denied by the
complainant in the complaint itself, and the complainant had acknowledged
adjustment of the security deposit of the accused to the tune of Rs.1.35 lacs
against 12 specific cheques, details whereof were also set out in the
complaint itself. It had been clearly stated by the appellant that these 17
complaints, comprising of 61 cheques, did not relate to the said 12 cheques,
particulars whereof have been set out herein above.
21. Learned counsel submits that the accused, on the other hand, could
not establish his defence of having created a security deposit of Rs.12. 58
lacs, as is evident from the cross examination of DW-1 itself. The debt in
question arose in respect of the specific supplies made through the invoices
aforesaid, in respect whereof each of the aforesaid cheques had been issued
for odd amounts. The accused has also not been able to establish that the
said 61 cheques had been issued as security cheques and the finding of the
Trial Court in this regard is not supported by any evidence whatsoever.
22. On the other hand, the submission of counsel for the accused/
respondent is that the accused has preferred a counter claim which is
pending before a civil Court on the basis of the statement of account
furnished by the complainant in the civil suit preferred by it. Learned
counsel also submits that the accused had demanded the appellant to furnish
the statement of account which was never furnished. In this regard,
reference is made to the letter dated 14.03.2000 (Ex. DW-1/A).
23. On a perusal of the relevant extracts from the notice issued by the
appellant/ complainant under Section 138 of the Act i.e. Ex. CW-1/5, it is
evident that the complainant/ appellant specifically claimed that the
appellant effected supplies of the products manufactured by it, namely,
tyres, tubes and flaps to the accused during the course of business against
invoices, details whereof are also set out in the said notice itself. The
appellant had also set out in the statutory notice Ex. CW-1/5, the particulars
of the 61 cheques issued by the accused in settlement of the said invoices.
The accused responded to the said notice vide Ex. CW-1/8. In the said
reply, pertinently, the accused admitted the receipt of goods as detailed in
the notice, namely, as against the invoices mentioned in the notice. The
accused also admitted issuance of cheques as detailed in the notice itself
against the supplies reflected in the aforesaid 61 invoices. Thus, at the time
when the said 61 cheques were issued, they were issued in respect of an
outstanding debt. In discharge of the said debt and liability, the said cheques
were issued.
24. The lacuna found by the Trial Court in the case of the complainant/
appellant that the appellant had failed to lead in evidence the invoices/ bills,
and had also not produced the statement of account was, therefore,
completely misplaced. There was no need or occasion for the appellant to
prove the facts which had already been admitted by the accused in their
reply to the statutory notice. Pertinently, the accused did not disown their
averments in their reply, and did not even seek to explain the same.
25. The Trial Court also placed reliance on Ex. DW-1/A, the letter of the
accused dated 14.03.2000 to hold that the said 61 cheques "were given
towards the securities". This finding is also wholly misplaced in view of the
admission made by the accused in their response to the statutory notice
clearly admitting issuance of the said 61 cheques in settlement of the 61
invoices.
26. It is amply clear from the statutory notice issued by the complainant
and the response of the accused to the said notice that the said 61 cheques in
question had been issued by the accused in settlement of its dues owed to the
appellant on account of supply of goods, namely, tyres, tubes and flaps. In
its reply to the legal notice under Section 138 of NI Act, the accused
admitted the receipt of the goods as detailed in para 2 of the said notice and
also admitted the issuance of cheques in favour of the complainant/
appellant. Pertinently, these cheques are of exact amounts for which the
complainant/ appellant had raised bill upon supply of goods. Each of the
cheques issued by the accused corresponded to the bills raised by the
complainant/ appellant.
27. The accused do not deny their liability to pay in respect of the
supplies effected by the complainant/ appellant as reflected in the invoices.
The defence of the accused was that the accused had created a security
deposit of Rs.12.58 lacs, which may be adjusted against the outstanding
dues of the appellant. The accused also sought to adjustment/ settlement of
its claims and demanded the appellant/ complainant to make payment of the
amount that may be found due to the accused.
28. Pertinently, the amount claimed by the accused was neither quantified
nor was it claimed by the accused that the same had been acknowledged to
any extent by the complainant/ appellant. Though the accused claimed to
have created security deposit to the tune of Rs.12.58 lacs, during cross
examination of DW-1 Sh. Paramjeet Singh, he admitted that, firstly, there
was no document to suggest or establish that the said 61 cheques were given
in advance and, secondly, that the accused had no documentary proof/
receipt with regard to creation of security deposits as claimed by the accused
of Rs.10,000/- Rs.3,000/-, Rs.5.10 lacs or Rs.25,000/-. The accused also
admitted not to have any document to show that the accused had deposited a
sum of Rs.12.48 lacs as security deposit with the complainant.
29. The approach of the Trial Court in finding fault with the complainant
in not leading in evidence the invoices or the account statement is
completely misdirected in the facts of this case taken note of herein above.
There was no need or occasion for the complainant to lead any such
evidence, in view of the admissions made by the accused in their reply to the
legal notice under Section 138 of the NI Act. The Trial Court has sought to
place heavy reliance on the letter dated 14.03.2000 Ex. DW-1/A (as marked
in complaint case no.311/2014). The said document has been given
different exhibit numbers in different complaints. It has been marked as Ex.
DW-1/5 in CC No.315/2014 - the Trial Court record whereof has been
summoned.
30. A perusal of this communication shows that the accused asked the
complainant to "adjust security deposited by us, credit notes for incentives,
turnover discount, product discount, interest on security in our regular
account and depute a person to reconcile our accounts". The accused asked
the complainant not to present the cheques issued in favour of the
complainant in advance in routine and to return the unused cheques. The
accused also demanded that after reconciliation, whatever amount is due to
the accused may be paid at the earliest. Pertinently, in this communication,
the accused did not claim that the security deposit lying with the
complainant was to the tune of Rs.12.58 lacs. The accused also did not
particularise or quantify the amount claimed as "credit notes for incentives",
"turnover discount", "product discount", "interest on security". Merely
because the accused may have claimed that some undetermined amount is
due under the aforesaid heads, in my view, the crystallised and admitted
liability of the accused, in respect whereof the cheques in question had been
issued, could not be denied. The cheques had been issued by the accused in
respect of specific supplies made against invoices which had admittedly
been received by the accused. The mere raising of claims by the accused
which were neither quantified nor acknowledged by the complainant could
not have justified the conduct of the accused leading to dishonour of the 61
cheques in question.
31. Pertinently, while accepting supplies of the goods against the 61
invoices, the accused did not seek adjustment of the so-called security
deposit or its claims under the other heads aforesaid. The accused
proceeded to issue the cheques in question thereby clearly agreeing to make
payment in respect of the said 61 invoices by the said cheques. At that
stage, the accused did not claim that the payment in respect to the said 61
invoices, or any part thereof was liable to be adjusted from the so-called
security deposit or claims under other heads. There is no explanation
furnished by the accused for its aforesaid conduct.
32. In view of the said admission made by the accused, there was no
question of there being merely a presumption in favour of the complainant
about the existence of debt or other liability in respect whereof the said 61
cheques had been issued. There was no question of the said presumption
being discharged by the accused. There was absolutely no basis to conclude
that the said 61 cheques had been given towards security. These findings
returned by the learned Magistrate are completely contrary to the stand taken
by the accused in the response to the statutory notice under Section 138 of
the NI Act and, therefore, contrary to the evidence brought on record.
33. The complainant had specifically disclosed in the complaints itself
that as desired by the accused, the security deposit of Rs.1.35 lacs against 12
specific cheques, details whereof are also set out in the complaint itself.
This being the position, there was no question of there being any doubt
arising in the mind of the court with regard to the outstanding debt and
liability of the accused qua the 61 cheques in question.
34. For all the aforesaid reasons, in my view, the impugned judgment
borders on perversity and they are, accordingly, set aside. The complainant
had been able to establish that the cheques in question had been issued
against specific debts incurred by the accused against supplies of tyres, tubes
and flaps, and that the said cheques were dishonoured upon presentation and
despite issuance of statutory notice, the amount covered by the said 61
cheques had not been paid. It is established beyond all reasonable doubt that
the accused are guilty of commission of the offences under Section 138 of
NI Act in each of these cases. They are, accordingly, stand convicted of the
said offence in each of these cases.
35. List on 26.10.2016 to consider on the aspect of sentence.
36. The accused shall personally remain present in court on the next date.
VIPIN SANGHI, J
AUGUST 31, 2016
sr
