Mr. Mayank Kshirsagar, Mr. Akhilesh Yadav and Mr. Parth Sarath I., Advocates v. COIM INDIA PVT. LTD

Judgment

1. The present petition under Section 482 of the Code of Criminal Procedure, 1973, (for short, ‘CrPC’) has been filed seeking the following prayers: - “In light of the foregoing facts, it is humbly prayed that this Hon’ble Court may be pleased to: Signature Not Verified Digitally Signed By:BHASKAR SINGH RAWAT Signing Date:19.08.2025 05:22:28 CRL.M.C. 2325/2023 a) Quash and set aside the complaint bearing CC No. 9656/2019 pending before the Ld. Metropolitan Magistrate, Tis Hazari, New Delhi; and/or b) Quash and set aside the Final Order dated 07.01.2020 passed by the Ld. Metropolitan Magistrate Tis Hazari Court Complex, New Delhi in complaint bearing CC No. 9656/2019, c) Pass other and such orders as this Hon’ble Court deems fit in the interest of justice.”

2. The present petition arises out of complaint, CC No. 9656/2019, under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881, (for short, ‘NI Act’) filed by the respondent/company against the petitioner. Necessary averments in the complaint filed by the respondent/company are as under: - “3 . That the Accused is the Sole proprietor of Mans Marketing and incharge for day to day affairs and responsible for conduct of the business of Mans Marketing being its sole proprietor. The Accused is also the signatory of cheque in question.

4. That the Accused approached the Complainant Company and represented that the Accused has been doing his business as Sole Proprietor of Mans Marketing and has experience in sales promotion for various clients and necessary wherewithal in the food packaging industry and have lot of links with various customers in the said industry. The Accused also represented that he could help the Complainant Company with the development of sales in the territory of Indore as the Accused had had its base there for the past so many years and was well connected in the industry circles. Based on the representations and warranties of the Accused, the Complainant Company appointed the Accused as its agent and an ’Agreement with Commercial Agent’ dated 01.12.2017 was executed between the Accused and the Complainant, hereinafter referred to as the ’Agreement’. Signature Not Verified Digitally Signed By:BHASKAR SINGH RAWAT Signing Date:19.08.2025 05:22:28 CRL.M.C. 2325/2023

5. That as per the terms and conditions of the Agreement, the Accused was required to promote sales of the products of the Complainant Company with the diligence of a good merchant and a responsible businessman. As per terms and conditions agreed with the Accused, the Accused was responsible for regular sales of products of the Complainant Company, timely collection and/payment for the sales made through the Accused to different customers and to make payment to the Complainant.

6. That in furtherance of the said Agreement, the Accused represented to have made the following sales and the goods were accordingly supplied by the Complainant Company as per instructions of the Accused and were delivered to the concerned as per details below: - Customer Name S No. 1. Primaflex

2. Arcox Multipack Private Limited Invoice Date Invoice No Amount

17.04.2018 HRFPI1800265 4,09,578/-

27.04.2018 HRFPI1800415 5,11,973/-

3. Packers

04.05.2018 HRFPI1800545 2,04,789/- Total Amount Payable 11,26,340/-

7. That out of the above, Mr. Manoj Nagar was able to get payment of Rs. 1,11,973/- from Arcox Multipack Private Limited only. No other purchaser has made any direct payment to complainant. I say that the Accused is thus liable to pay the amount of Rs. 10,14,367/- (Rupees Ten lakhs fourteen thousand three hundred sixty seven only). Apart from the above, the Accused is also liable and the Complainant Company is entitled to interest @22% on the aforesaid amount as per terms and conditions of sale.

8. That after lot of follow ups and reminders, as per agreed terms and conditions and in discharge in discharge of part of liability, the Accused made a part payment of Rs.7,00,000/- (Rupees Seven lakhs only) vide Cheque bearing no.249932 dated 16.10.2019 drawn in PNB Bank, Airport Road , Indore Branch with an assurance that the said cheque was good for payment and shall be honoured by its bankers on its first presentation itself by the Complainant Company. Signature Not Verified Digitally Signed By:BHASKAR SINGH RAWAT Signing Date:19.08.2025 05:22:28 CRL.M.C. 2325/2023

9. That accordingly as per assurance and commitment of the Accused that sufficient funds were available in his bank account to honour the said cheque, the abovementioned cheque for Rs. 7,00,000/- (Rupees Seven lakhs only) vide bearing nO.249932 dated 16.10 .2019 drawn on PNB Bank, Airport Road, Indore Branch was presented for encashment by the Complainant through its banker Bank of India, Kirti Nagar Branch, Delhi. However, to the shock and surprise of the Complainant, the aforesaid cheque for Rs .7,00,000 / - bearing nO.249932 dated 16.10 .2019 drawn on PNB Bank, Airport Road, Indore Branch was returned back unpaid and dishonoured by the bankers of the Accused, with the remarks "FUNDS INSUFFICIENT" and an intimation of the same was received by the Complainant vide memo of Bank of India dated 02.11.2019. **** **** ****

11. That since the monies due and payable by the Accused to the Complainant were not paid by the Accused, the Complainant Company got sent a Legal Notice dated 20.11.2019 sent through Speed Post on 21.11.2019 to the Accused under the provisions of section 138 of the Negotiable Instruments Act, 1881 (as amended up to date) through its Advocate . That the said legal notice was duly served upon the Accused on or around 26.11.2019 as is evident from Tracking Report downloaded from the official website of "India Post". The Accused has however, avoided to receive the notice sent at other two addresses of the Accused and as such the Accused has been duly served with the legal notice. However, even after receipt of the said legal notice, the accused neither replied nor made payment as demanded by the said legal notice within stipulated period of 15 days and thus the accused has committed offence punishable under section 138 of the Negotiable Instruments Act (as amended upto date).”

3. Learned counsel for the petitioner has submitted that the proceedings arising out of the complaint case are abuse of the process of the Court inasmuch as the subject cheque was handed over to the respondent as a security at the time of the execution of the agreement in terms of Clause 11.3 of the Agreement dated 01.12.2017 and not in discharge of any existing debt or other liability. It Signature Not Verified Digitally Signed By:BHASKAR SINGH RAWAT Signing Date:19.08.2025 05:22:28 CRL.M.C. 2325/2023 is the case of the petitioner that no debt or liability was existing against the petitioner from the respondent at the time of the issuance of the subject cheque, and thus, the offence punishable under Section 138 of the NI Act has not been made out in the present case. Reliance has been placed on the judgment of Hon’ble Madras High Court in Balaji Seafoods Exports (India) rep. by its Director, Chalapathy and Anr. v. Mac Industries Ltd.1, wherein it was held that if an undated cheque was issued only as a security and not in discharge of any liability, the same would not draw the liability for the offence punishable under Section 138 of the NI Act. Reliance has also been placed on the judgment of a Coordinate Bench of this Court in Poonam v. Kotak Mahindra Bank Ltd. & Anr.2. In the said case, the accused had merely stood as a guarantor under the loan agreement and the subject cheque was not issued in discharge of primary liability towards loan, and therefore, could not be prosecuted under Section 138 of the NI Act. Reliance has also been placed on the judgment of a Coordinate Bench of this Court in M/s Collage Culture & Ors. v. Apparel Export Promotion Council & Anr.3, to contend that the post-dated cheque which was issued for a debt payable in future upon the occurrence of a contingent event by way of security would not attract liability under Section 138 of the NI Act. Reliance has also been placed on Indus Airways Pvt. Ltd. v. Magnum Aviation Pvt. Ltd.4, to contend that the criminal liability under Section 138 of the NI Act would be attracted in case of legally enforceable debt or other liability subsisting on the date of drawal of the cheque. Reliance has also been placed on a judgment of Hon’ble Madras High Court in M/s S. Albert 1 1998 SCC OnLine Mad 704 2 2012 SCC OnLine Del 382 3 2007 SCC OnLine Del 1407 4 (2014) 12 SCC 539 Signature Not Verified Digitally Signed By:BHASKAR SINGH RAWAT Signing Date:19.08.2025 05:22:28 CRL.M.C. 2325/2023 & Company (P) Ltd. v. M/s Sree Meghana Distributors & Ors.5, to contend that in similar circumstances, the accused therein who was del credere agent of the complainant and had issued a cheque by way of security was acquitted by the Court therein by holding that the cheque issued in such transactions would be in the nature of security and thus, would not attract the liability under Section 138 of the NI Act.

4. It was further submitted that as per Clause 11.3 of the Agreement, it was imperative on the respondent to provide written intimation to the petitioner for the sole purpose of bad credits recovery. However, no intimation was provided by the respondent to the petitioner prior to the presentation of the subject cheque which was in their custody. Reliance has been placed on Harshendra Kumar D. v. Rebatilata Koley and Ors.6, to contend that this Court in exercise of power under Section 482 of the CrPC can quash the proceedings even in cases wherein, the trial is yet to take place and the matter is at the stage of issuance of summons if materials relied upon by the accused which are in the nature of public documents beyond suspicion show that the accusation against him cannot stand and that it would be travesty of justice if the accused is relegated to trial to prove his defence before the Trial Court.

5. Learned counsel for the petitioner has further submitted that the learned Metropolitan Magistrate has erred in summoning the petitioner in the present 5 Criminal Appeal 681 of 2006 decided vide judgment dated 29.09.2018 by Hon’ble Madras High Court 6 (2011) 3 SCC 351 Signature Not Verified Digitally Signed By:BHASKAR SINGH RAWAT Signing Date:19.08.2025 05:22:28 CRL.M.C. 2325/2023 complaint as the subject cheque was given as security and was not issued in discharge of existing or past adjudicated liability in terms of Section 138 of the NI Act. It is pointed out that the respondent/company had filed two suits, CS(COMM) 239/2021 and 241/2022, under Order XXXVII of the Code of Civil Procedure, 1908, (for short, ‘CPC’) against the merchants/purchasers of the petitioner for recovery of their respective amounts due towards the respondent. It is submitted that in one of the said suits, CS(COMM) 241/2022, the petitioner stood discharged from liability as his name was removed from the array of parties in the plaint and the said suit was decreed vide judgment dated 12.10.2022 and the other suit, CS(COMM) 239/2022, was dismissed as withdrawn as the same was settled between the respondent/plaintiff and defendant Nos. 1, 2 and 3 therein (actual debtors) and the present petitioner was defendant no.4 in the said suit.

6. Per contra, learned counsel for the respondent/complainant has submitted that subject cheque was presented for encashment in pursuance of an intimation received from the petitioner via email in respect of his liability existing on the date of drawing of cheque as the latter had failed to collect payments and the respondent had raised debit note on 11.10.2019 for Rs.11,26,340/-. He further submitted that the petitioner was appointed as del credere agent of the respondent vide the agreement dated 01.12.2017 and he had taken responsibilities and guarantees for recovery of the amounts from the buyers, to whom sales were made by him, and in case of default of payments to make good the said payments and therefore, he cannot avoid his obligations as agreed to in the said agreement. Signature Not Verified Digitally Signed By:BHASKAR SINGH RAWAT Signing Date:19.08.2025 05:22:28 CRL.M.C. 2325/2023

7. It is the case of the respondent that the petitioner had given the said cheque as additional guarantee in respect of payments from customers for the purchase of goods supplied by the respondent and had also given authority to them to deposit the same if he fails in his commitment for payments. Attention of this Court has been drawn towards an email dated 24.12.2018 sent by the petitioner to the respondent wherein the petitioner himself had undertaken that all the overdue payment from his side will be paid till 15th of January and he had also given authority to the respondent to deposit the cheque given by him, in case, he fails in his commitment for the payment of the customers in the said timeline. It is submitted that the subject cheque was presented for encashment after the aforesaid undertaking was given by the petitioner and the same can also be considered as due intimation as contemplated in Clause 11.3 of the Agreement entered into between the parties. Learned counsel has placed reliance on T.I. and M Sales Ltd. v. CIT7, to contend that a del credere agent guarantees to his principal that third persons with whom he enters contracts on behalf of the principal shall pay any sum becoming due thereafter under those contracts and the same shall be due in every case of sale of goods.

8. Learned counsel has further submitted that the learned Metropolitan Magistrate had declared the petitioner as proclaimed offender vide order dated

03.04.2023 and a revision against the said order before learned ASJ was filed, however, no stay was granted and the said fact was not disclosed in the pleading 7 1972 SCC OnLine SC Cal 187: (1985) 151 ITR 286 Signature Not Verified Digitally Signed By:BHASKAR SINGH RAWAT Signing Date:19.08.2025 05:22:28 CRL.M.C. 2325/2023 filed before this Court. It is further submitted that even though the suit for recovery was decreed in favour of the respondent, however, the said amount has not been recovered so far. Reliance has been placed on HMT Watches Ltd. v. MA Abida8, to contend that the question whether the subject cheque was given as security or not or whether there was outstanding liability on the drawer of the cheque towards the complainant is a question of fact which could be determined by the Trial Court after recording evidence of the parties. Reliance has also been placed on Sunil Todi v. State of Gujarat9, to contend that the presentation of the cheque upon the failure of the buyer to pay is a consequence which would be in the knowledge of the drawer of the cheque and the cheque, as such, would be in such instance mature for presentation as in effect, it was towards a legally enforceable debt or liability. Thus, it is prayed that the present petition is not maintainable at this stage and is to be dismissed with costs. Reliance has also been placed on the following judgments: - a) Credential Leasing & Credits Ltd. v. Shruti Investments & Anr.10, b) Rathish Babu Unnikrishnan v. The State (Govt. of NCT of Delhi) & Anr.11,

9. Heard learned counsel for the parties and perused the record.