Bhagat Industrial Corporation Limited (BIC) has its register office at Khasa, District Amritsar and its Head Office are situated in New Delhi, India. It deals with Indian manufactured saree and had its factory licenced for the operation in Uttar Pradesh, up till 31st March 2015. The Branch Manager at Kanpur managed the wholesale business of saree in Uttar Pradesh.

Since the company was left with vast quantities of unsold stock by the end of the term of its license, the license was extended up to 30th April 2017. According to the terms of the licence, Rogayah Amma, the manager in Uttar Pradesh was required to sell the unsold quantity to a wholesale merchant only after obtaining prior permission from the Director, Mr Seth, in New Delhi.

On 11th May 2016, Rogayah Amma was visited by a very smart looking Nath Arora and Raman Arora, who described themselves as partners of Varanasi Saree Wholesale Corporation (VSWC). They learned about the abandoned saree through Mr Seth. The VSWC expressed a desire to purchase the unsold saree as soon as Rogayah Amma gets permission from the head office. Rogayah Amma liked the idea of selling the abandoned saree quickly

before the material design ran out of fashion. Furthermore, Mr Seth has had communication with the two of them. Rogayah Amma was very impressed seeing the two of them came with a driver in a Mercedes car printed with VSWC’s logo. However, since quick discussion by phone, and since the financial position of Nath Arora was not known to BIC head office, Rogayah Amma and Mr Seth were reluctant to agree to the said proposition by VSWC except against full payment in cash. However, Nath Arora and Rahman Arora managed to prove that a good Bank represented them and they also showed them their printed Bank Statement dated March 2016. They convinced Mr Seth and Rogayah Amma that they were men of money and would make part payment by cash and the balance by instalment through a post-dated cheque to be issued by them.

On 7th May 2016, Rogayah Amma obtained the necessary permission and on 19th May 2016, Nath Arora and Rahman Arora took delivery of the goods in three separate invoices Nos. 1560, 1561 & 1562. They assured Mr Seth that payment would be made by the 20th of May 2016 and thus they induced Mr Seth to accept part payment by bank draft first on 19th May and the balance amount by post-dated cheque and to the effect of delivery.

The total value of the goods thus delivered to the VSWC on 19th May 2016, came to USD 144,252.36. Out of which a sum of USD 27,000 was paid by VCWC using a bank draft instead of cash. The rest of the balance amount paid by post-dated cheques (four cheques dated 5th June 2016, of USD. 29,313/36, dated 24th June 2016, USD 29,313.39/-on the 19th July 2016 and 14th August 2016, in the sums, and USD 29,313.39/-) 

respectively were delivered to Mr Seth. No other cheque was received after the last one.

The said cheque was presented on the due dates to the Bankers, but the same was returned unpaid with the endorsement "refer to drawer" on two cheques and "not arranged for" on the other two cheques.

The BIC further said that after the delivery of the goods and after the dishonour of the cheques they had contacted Nath Arora and Rahman Arora via phone personally. However, Rogayah Amman or BIC Office could not reach the two of them. BIC did not know as to why the cheques had been dishonoured.

Rogayah Amma also found out that the cheques given were not cleared by the bank for lack of funds in the account on which cheque was drawn. She also found that the said bank account was opened by Nath Arora and and Raman Arora for that business deal only, a week before they went to meet Rogayah Amma in May 2016.

On 1st December 2016, Rogayah lodged a report with the police station in New Delhi, contending that sometime in May 2016, Nath Arora and Raman Arora, who described themselves as partners of Varanasi Saree Wholesales Corporation (VSWC), contacted them through Mr Seth at their Head Office in New Delhi. They expressed a desire to purchase the unsold saree lying with them at Kanpur, and after delivery of the goods, failed to make good the payment as agreed. However, Rogayah Amma and Mr Seth were unsure of the correct amount they were owed. As such, the amount of unpaid goods was not mentioned in the police report.

BIC now hired you to investigate and make a proper recommendation on the situation above, whether there is/are any crime committed, and how best to deal with the crimes.

Advise BIC on the offence(s) to enable the investigation to prepare for the evidence to meet the appropriate element(s) of the offence(s) (if any) before the charge(s) can be drawn by the Prosecution Office.