TaxTMI 
TaxTMI 
2015 (6) TMI 1275
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....is a Private Limited Company incorporated under the Companies Act, 1956 having its office at Okhla Industrial Area, New Delhi. It is dealing in manufacture of different kinds of goods and allied products. The respondent/accused No. 1, M/s Chander Industries, represented itself to be a partnership firm. It approached the complainant and placed orders between the period of September, 2007 to February, 2008 for supply of goods. The accused No.1 firm was supplied the goods/materials as per the purchase orders through one Sh. Parveen Aggarwal (accused no. 2) and Sh. GK Mishra (accused no. 3); the goods were lastly supplied on 25.02.2008; Form-C were issued by the accused on 26.02.2008; the partner of the accused signed the accounts statement; the accused made payment of Rs. 10,55,788/- only, leaving an outstanding balance of Rs. 7,18,432/. To discharge the remaining liability, the accused issued two cheques of Rs 2 Lakhs each. 6. The first cheque was cleared, but the second cheque bearing no. 013983 dated 25.06.2008 (hereinafter referred to as "the cheque") drawn on State Bank of India, SSI Branch, Baddi, Solan, Himachal Pradesh was dishonoured for reason of "payment stopped by drawe....
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....re sufficient funds in the account of the accused to discharge its liability and the stop payment is for valid reasons, then the presumption raised under Section 139 would stand rebutted by the accused, and the accused would not be held accountable under Section 138 NI Act. The Trial Court observed that the accused managed to rebut the presumption by proving that there were sufficient funds in its bank account to discharge the said liability, and that the "stop payment" was for a valid reason. 11. While not disputing the above stated legal proposition, ld. Counsel for the appellant submits that the respondent's defence that the material supplied was of inferior quality is not substantiated, and was merely an afterthought. The complainant company supplied materials to the accused firm from September, 2007 to February, 2008 - the last supply being made on 25.02.2008. The accused firm did not reject the materials on the ground that the quality is inferior, or the materials supplied are defective in nature. The cheque in question was issued much later, bearing the date 25.06.2008. The stand that the goods were defective/inferior was communicated, for the first time, in reply to the ....
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.... Counsel submits that the fact that the accused firm had balance in its account throughout the period will not act as a safeguard when the stop payment instruction was not issued for any valid reason. 16. On the other hand, learned counsel for the respondent/accused firstly submits that the accused no. 2 has been wrongly made an accused in the present case, as he has no connection to the accused firm, nor has he ever been an employee of the accused firm. The accused no. 2 has never been involved in the working of the accused firm either. Ld. counsel submits that the accused no. 2 is not vicariously liable, as he was not a partner of the firm, nor was he the signatory of the cheque, and he was not responsible to the firm for the conduct of the business of the firm, or to the firm. 17. Ld. Counsel further submits with regard to accused no. 3, G.K. Mishra, that he was the purchase manager of the accused firm and he was not in-charge of the day to day affairs of the accused firm. Accused no. 3 was an employee in the purchase department and placed orders on behalf of the accused firm between the period September, 2007 to February, 2008. He never made payments on behalf of the accu....
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....used had to establish - as probable, its defence that the materials supplied were of inferior quality. 22. It is not in dispute that the parties had business transactions, and that the complainant company had been supplying material/PCBs since 2007, nor had the accused firm claimed that the materials supplied earlier were ever found to be of inferior quality. It is only when the cheque dated 25.06.2008 was dishonoured, that the accused firm took the plea - for the first time, in its reply to the legal notice, that the goods supplied were of inferior quality and therefore, the payment was stopped. 23. DW-2 in his examination-in-chief dated 06.04.2003 deposed as follows: "That some of the lots of the material received by the complainant was not of good quality and was rejected for the reasons of problem of dry soldering in the said PCB models. That thereafter repeated reminders and request for made to the complainant regarding the same but to no avail." In his cross-examination dated 05.09.2013, he deposed to the effect: "I do not remember the date when the fault in the PCB was detected by the accused firm. The same was detected when the components were use....
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....e premises of the accused firm, there is nothing on record to establish that Sanjay Sharma visited the accused firm in relation to any issue of inferior quality or defect in the goods, much less to establish that he agreed that the supplied goods were defective or inferior. Mere entry in the visitor's register does not establish - even as a probable case, that the visit was for the aforesaid reason, or that the goods were found to be, or acknowledged to be defective/ inferior. Since the accused firm has brought no evidence on record to prove that Sanjay Sharma visited the accused firm to assess the quality of the material supplied, or that he acknowledged that the quality of the goods supplied was defective or inferior, the entry of visit of Sanjay Sharma relied upon is of no avail. 28. Further, the accused firm has claimed that it sent repeated reminders to the complainant company regarding the inferior quality of the materials supplied. The accused contended that after the visit of Sanjay Sharma an e- mail dated 07.06.2008 was sent to the complainant company informing them of the defective nature of the materials supplied. DW-2, Rajat Aggarwal, in his examination-in-chief date....
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....anagement of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it." Thus, for an electronic evidence to be admissible as evidence, it is required to have a certificate in accordance to the above mentioned section. The certificate under Section 65B assures its authenticity. Since, the copy of the e-mail (Mark DW2/B) dated 07.06.2008 is not certified in terms of Section 65 B, it is not admissible evidence and cannot be relied upon by the accused. Consequently, as the only evidence provided by the accused to prove that it intimated the complainant company regarding the inferior quality of the supplied materials is inadmissible; its defence is not substantiated. 30. There is no explanation as to why, in respect of goods supplied lastly on 25.02.2008, no recorded or acknowledged communication was issued, recording the factum of the goods being defective/ inferior in quality. There is no explanation as to why the cheque in question was issued, if the goods were allegedly de....
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...., in his cross- examination dated 24.10.2013 deposed that "My father Sh. Rajinder Kumar Aggarwal has also signed the cheque in question Ex.C30 at point A." On perusal of the aforesaid mentioned partnership deeds it is noted that accused no.2, namely Sh. Parveen Aggarwal, does not appear to be a partner of the accused firm. The Partnership Deeds mention names of one Sh. R.K. Aggarwal, party no. 1, and S.K. Mittal, party no. 2, as partners of the accused firm. There is no mention of the accused no. 2 in the said partnership deeds as a partner or even a manager. Thus, it is concluded that he was not a partner of the accused firm. The appellant has not established on record that accused no. 2 is the signatory to the cheque. Since the complainant company has also not produced any evidence to establish that accused No.2 was in charge of, or responsible to the accused firm for the conduct of the business of the firm, as well as to the firm, accused no. 2 stands acquitted. 34. The accused no. 3 was the purchase manager of the accused firm and, he had placed orders on behalf of the accused firm. His vicarious liability has to be tested on the touchstone of Section 141 NI Act. The said Se....
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....ot be liable under the provision. The liability arises from being in charge of and responsible for conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a Company may be liable if he satisfies the main requirement of being in charge of and responsible for conduct of business of a Company at the relevant time. Liability depends on the role one plays in the affairs of a Company and not on designation or status. If being a Director or Manager or Secretary was enough to cast criminal liability, the Section would have said so. Instead of "every person" the section would have said "every Director, Manager or Secretary in a Company is liable"....etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action. XXXXXXXXXXXXXXXXXX 10. The conclusion is inevitable that the ....