TaxTMI 
TaxTMI 
2019 (7) TMI 1338
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.... No. 806/SS/2010 before the Metropolitan Magistrate's Court, Bandra, Mumbai. Eventually, on merits, the trial Court, through its judgement dated 21 August 2014, dismissed the case and acquitted the Company and Sial. Aggrieved, the proprietary concern, through Doshi as its proprietor, filed this appeal. Submissions: 3. Shri Jatin Shah, the learned counsel for the appellant, has submitted that Doshi and the Company have had business relations for more than a decade, with a continuing account. In those business transactions, the Company acknowledged its liability and confirmed the statement of account prepared by Doshi, showing Rs. 6,18,437/as outstanding. Then the Company issued three cheques, signed by M.M. Sial and another, on 16 January 2010, for an aggregate of Rs. 6 lakh, towards partial discharge of the debt. 4. When the cheques were dishonoured, though Doshi issued a statutory notice, dated 18th February 2010, neither the Company nor Sial replied, despite their receiving the notices. To underline the authenticity of the business transaction, Shri Shah has drawn my attention to Exhibit P6 to P8 invoices and Exhibit P9 to P 11delivery challans. He has also drawn my a....
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....marked no documents. According to him, though the judgement refers to the documents, neither in the chief examination nor in the cross examination were they found mentioned. Even to establish that fact, he should have access to the records. 11. Then, Shri Upadhyay argued on the merits. And his submissions can be summarised thus: that Doshi has not discharged the primary evidential burden; that the Company ordered goods, but Doshi could produce no record to show he had actually supplied them; and that Doshi has failed to explain why he has taken cheques for Rs. 6 lakh when the alleged debt is more than that. Accordingly, there is an element of doubt how Doshi secured the cheques, why he has taken three cheques instead of one, why the cheques covered only a part of the alleged debt, why the cheques were taken from three different cheque books, and why only dates on the cheques were stamped when the rest of the matter was handwritten. 12. Shri Upadhyay has also contended that Doshi has not examined his accountant who has prepared the statement of account. According to him, the respondents have effectively discharged the burden cast on them. To support his contentions, he has rel....
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....ubtedly a human right, as was held in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra [(2005) 5 SCC 294] and Rajesh Ranjan Yada @ Pappu Yadav v. CBI through its Director [(2007) 1 SCC 70]. But the Supreme Court in Bir Singh v. Mukesh Kumar [Supreme Court's Judgment, dt.06.02.2019], holds that the complainant can establish the guilt by recourse to presumptions in law and on facts. 19. Let us examine the impugned judgment to ascertain whether it suffers from any incurable legal infirmities and perversity so in appeal we can reverse the findings and hand down a verdict of guilt. And this examination is in the backdrop of the rival submissions, too. I. The Technical or Procedural Objections : Does the non-availability of Record and Proceedings (R & P) affect the rights of a party to the Appeal? 20. The Company's counsel insisted that the Court should not proceed with the appeal without R & P. On the other hand, Doshi's counsel has contended that Doshi is a senior citizen who needs an early disposal of the appeal. According to him, the Company has been dragging the proceedings, despite this Court's asking it to get ready with the matter early. 21. This issue need....
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....y of the R&P from the trial Court stymie the appellate proceedings? Indeed, the unavailability of a material document may prove fatal to the appeal proceedings for either party may stand prejudiced. I will confine the discussion to the document the respondent-accused wanted to have access to: the complainant's statement under Section 200 of Cr PC. 26. While taking cognizance of an offence, the Magistrate examines the complaint on oath and the witnesses present if any. Then, the Magistrate reduces to writing only "the substance of such examination". This substance aids the Magistrate to form a prima facie opinion about the case. In other words, it is to discover the truth or otherwise of the allegations made. It is for deciding the question purely from the complainant's viewpoint, with no reference to the possible defence. Thus, the procedure under Section 200 Cr PC is non-adverserial. And what is recorded is not the complainant's verbatim statement, only the substance or gist. Therefore, it is not a piece of substantial evidence to be used to contradict or discredit the complainant. 27. That apart, let us examine the conduct of the Company and its Director, that is the respon....
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....Section 141 of the NI Act makes, by legal fiction, even a firm a legal entity, on a par with a company proper. So for Section 138, there is little difference between a company and a (partnership) firm. The explanation appended to Section 141 clarifies that (a) "company" means anybody corporate and includes a firm. By extension, a partner must be likened to a director. Though a mere association of individuals cannot be termed a firm, yet the explanation to Section 141 makes it so. Even an unregistered partnership firm-that is, an Association of Individuals-must also be treated as a firm for the offences under Section 138 of NI Act. 33. The remaining category is the "proprietary concern." A proprietary concern, I may note, is neither a company nor a firm- not even an association of individuals. It is no legal entity, either. A proprietary concern is set up by an individual; in fact, it is the individual described with a varied or fancied name, or even purely with his or her own name. If more than one person join, then it becomes a partnership firm, a limited liability partnership firm, or a company. It may even become a simple association of persons, as permitted under Section 141....
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.... given as security. 38. Admittedly, the Company and Doshi have business relations for many years; Doshi supplies steel to the Company. They have a continuing account. In other words, the transactions are not singular or watertight. Based on the Company's orders, Doshi keeps supplying; periodically they draw up accounts showing the amount due; and, on demand, the Company continues to pay the amounts for the supplies it has received. There can be no individually corresponding transactions of supply and payment. 39. To illustrate that there had been business transactions during the relevant period, Doshi produced before the trial Court (a) the copies of invoices No. 161/08/-09, No. 167/08-09 and No. 014/09-10, as Exts. P-6 to P-8. Then, he has also produced the copies of Challans No. 161/08/-09, No. 167/08-09 and 014/09-10, as Exts. P-9 to P-11. And of much significance is the statement of account with a heading "confirmation of accounts" for the period from 01.04.2009 to 15.01.2010, drawn up by Doshi and acknowledged by the Company. It was marked as Ext. P-12. On all these documents, Sial signed as the Director, under the Company's seal. These documents have not been disputed. ....
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.... such a course-that is, a debtor drawing multiple cheques from different cheque-book series, to be given to a payee on the same day. Let us think on the converse. A person gives, say, three cheques, drawn on the same day. But the cheques were not from the same cheque book. Unwary or impressed by the fact that there is no legal prohibition, the creditor accepts them. Once they are dishonoured, in the ensuing litigation, is it not the surest way for the accused to set up a defence of variation in the cheque series and get away? Improbable the conduct may be, unusual the practice may be, but not impossible. And in the least illegal. 45. The Company has insisted, as the trial Court has observed, that there is no concrete and reliable evidence on Doshi's part about who has signed these cheques, who has filled the contents of these cheques, or who delivered these cheques to Doshi. In that context, the trial Court has found that "neither in the complaint, nor in the statutory demand notice, and nor in its evidence," Doshi pleaded when the Company issued the cheques, or when "the amount of the present subject cheques had become due and payable". 46. Who signed the cheques, who filled....
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....on 139 of the NI Act. And the provision reads: "139. Presumption in favour of holder: It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability." 51. True, the presumptions under Section 118 or under Section 139 are rebuttable. Section 139 allows a presumption that the cheque referred to in Section 138 was given to discharge the debt in whole or in part. But the question is whether the debt or other liability under Section 139 is presumed to be "a legally enforceable debt." 52. In Krishna Janardhan Bhat v. Dattatraya G. Hegde [[(2008) 4 SCC 54], a two-Judge Bench of the Supreme Court has analysed Section 138 of the NI Act and found three ingredients: "(i) that there is a legally enforceable debt; (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds." It has, then, held that existence of lega....
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....can raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution will fail. So the accused can rely on the materials submitted by the complainant to raise such a defence and it is conceivable that sometimes the accused may not need to adduce evidence of his/her own. 56. The trial Court has accepted that the Company admitted the "issuance of subject cheques" and the "signature of the accused on these cheques." Then, it went on to observe that notably the complainant has produced no document to prove that the alleged goods were sold and delivered to the Company. So "the defence taken by the accused persons appears to be natural and probable one." It has finally held that Doshi, in his evidence, gave the details of the alleged transaction. Yet "neither any Register nor any book of accounts is produced on recorded to show the details as such the date of delivery of goods, quality, quantity and rate of the said goods, the mode of delivery of these gods etc." 57. I am afraid the trial Court has remained oblivious of the statutory presumptions under Sections 118 and 139 of the NI Act. The Company has led no direct evid....