Dismissed

The Maharashtra State Co. Op Marketing Federation Ltd. v. M/S. Jayantilal Mangaldas and Sons and Anr.

Bombay HC8 Jul 2013ALP/117/2013

Case brief

AI extract

What is this about?

In a Criminal Appeal under Section 138 NI Act against acquittal, the High Court held that the accused successfully rebutted the Section 139 presumption by demonstrating no enforceable debt existed on presentation date. The application for leave to appeal was rejected as no interference warranted.

What did the court decide?

Application seeking leave to appeal dismissed; impugned judgment and order of acquittal upheld.

The Maharashtra State Co. Op Marketing Federation Ltd. Vs… — Cheque Dishonour | Bombay HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE SIDE JURISDICTION

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CRIMINAL APPLICATION NO. 117 OF 2013

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The Maharashtra State Co-op. Marketing Federation Ltd. Mumbai.

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... Applicant.

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Versus

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M/s. Jayantilal Mangaldas & Sons & ors.

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... Respondents.

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Mr. Deepak A. Patil, Advocate for Applicant.

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Mr. Subodh Shah, advocate for respondent No. 1.

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Mr. A. S. Shitole, APP for State.

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CORAM : SMT. SADHANA S. JADHAV , J

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DATE : JULY 8, 2013

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P.C.

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1 Being aggrieved by the Judgment and Order passed by the Judicial Magistrate First Class, Nashik dated 23^rd September, 2011, acquitting the Respondent No.1 of the offence punishable under Section 138 of the Negotiable Instruments Act in Summary Criminal Case No. 3136 of 2000, the original complainant/present applicant seeks leave to appeal.

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2 The complainant was the Divisional Officer of Maharashtra State Co-operative Marketing Federation Ltd., Mumbai, registered under the provisions of Maharashtra Co-operative Societies Act, 1960. The respondent No. 1 herein was appointed as a guarantee broker vide agreement dated 12^th January, 2000. The accused had issued postdated security cheques bearing No. 777811, 777813 to 777815 of Rs. 50 Lakhs each dated 25^th February, 2000. The said cheques were dishonoured. Hence, the complainant issued statutory notice to the accused and since, the accused did not pay the amount towards the disputed cheques within 15 days, the applicant herein filed a complaint.

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3 It is the case of the complainant that the complainant Federation purchased onions from farmers and the accused was appointed as a guarantee broker out of State of Maharashtra. An agreement was executed between the complainant and accused on 12^th January, 2000 which is at Exh. 31. Clause 12 of the said agreement contemplated that the guarantee broker shall furnish an earnest money of Rs. 25 Lakhs by way of demand draft in favour of the Federation as a security and shall also furnish a bank guarantee from a nationalised bank for a

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sum of Rs. 1 Crore in favour of the federation. It was further agreed that the earnest money deposit will be returned to guarantee broker without any interest thereon after receipt of bank guarantee. The onions were disbursed in favour of the accused only after he had furnished a bank guarantee of Rs. 1 Crore. He has also furnished earnest money deposit of Rs. 25 Lakhs and gave six post-dated cheques dated 25^th February, 2000. The cheques were furnished alongwith a covering letter. which specifically states that the cheques would be deemed for liability only in case the complainant is unable to recover the sale proceeds within 30 days of the respective sale. That upon failure of the accused to pay the amount, the complainant will first recover the amount of un-recovered sale proceeds from the bank guarantee and in case of any further deficiency, then by depositing the cheques, which were issued towards security.

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4 The complainant has examined Ramesh Ranganath Pagar who was Regional Incharge of the regional purchase of onions scheme run by the complainant at Nashik Branch. He had retired on 31^st March, 2003 on superannuation. He was authorised by the complainant to conduct the present case. He had filed the letter of authority dated

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14^th March, 2000, which is at Exh. 30, by which he was authorised to sign all relevant documents, notices, affidavits and vakalatnama to file a suit in a Court of law on behalf of the complainant.

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5 The accused had raised a preliminary objection that P.W. 1 Ramesh Pagar was not validly authorised to file a complaint. P.W. 1 has admitted that no resolution was passed by the complainant, by which P.W. 1 would be authorised to conduct the case on behalf of the complainant. He had further deposed that the resolution was passed in Mumbai at the head office. However, no such resolution is filed on record. The authority letter which is at Exh. 30 does not bear signature of the Managing Director of the complainant. In any case, the said authority letter was only to file a suit and not any criminal complaint or to lead evidence in criminal complaint. It is admitted by P.W. 1 that by the said letter at Exh. 30, he was not authorised to lead evidence in the criminal complaint even after his retirement. The learned Magistrate has rightly observed that the complaint ought to have been filed by a person on behalf of the society. The complaint was not made by the Payee or the holder in due course of the cheques. P.W. 1 ought to have been validly authorised by the society to institute

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the proceedings, in the absence of which the proceedings would be void ab initio.

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6 The transaction in question had taken place between 12^th January, 2000 to 28^th February, 2000 and on the last day of the transaction i.e. 28^th February, 2000 the exact dues for which the accused could be held liable were not computed. His account was not consolidated on 28^th February, 2000 and therefore, it was difficult to ascertain the exact liability of the accused. The account was not reconsolidated on 28/2/2000 as has been admitted by P.W. 1. It is also admitted that the onions were sold in the last week of February and were to reach to the clients within 5 to 6 days and only thereafter, the onions would be sold in the market. The amounts received from the clients could not be credited in the account of the accused till 28^th February, 2000 and on that day the transaction was closed. The complainant could determine the exact liability only on 30^th June, 2000. The cheques were presented for encashment on 6^th April, 2000. The accounts were not settled. P.W. 1 has admitted the said contingencies.

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7 The accused has placed on record a letter dated 28^th March, 2000 and a letter dated 1^st April, 2000 issued by the complainant which are at Exh. 40 and Exh. 51 respectively. In both the letters, the complainant had not specifically stated the exact amount of liability. The accused had also placed on record a letter dated 7^th April, 2000 at Exh. 52, which indicated that sale proceeding amounting to Rs. 1 Crore 60 Lakhs were only paid by the accused to the complainant by way of demand draft dated 7^th April, 2000 and hence, according to the accused, he had paid the entire dues to the complainant on 7^th April, 2000. The complainant has issued a receipt towards the said payment. It was clarified by the accused that actual dues were to the tune of Rs. 1,51,58,740/- only. The cheques were issued towards security with clear understanding that they could be presented for encashment only in the eventuality that the liability was not duly paid. The letter issued by the accused is at Exh. 54 and was duly acknowledged by the complainant. It is an admitted position that the cheques were presented on 6^th April, 2000.

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8 The learned Judicial Magistrate First Class has rightly held that the complainant had not filed on record any documentary evidence to

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show that on 6^th April, 2000 there was an outstanding amount of Rs. 2 Crores due and payable by the accused. The account statement filed by the complainant at Exh. 58 and 59 did not reflect the exact amount due on 6^th April, 2000. On the other hand, the record including the account statement at Exh. 59 shows that Rs. 1,60,00,000/- was deposited by the accused in the account of the complainant on 7^th April, 2000. On 11^th April, 2000 Rs. 2 Lakhs were deposited in the account of accused. The learned Magistrate has therefore, rightly held that the accused has rebutted the presumption by filing documents and referring to them during the cross-examination and that the complainant has admitted the contents of the documents at Exh. 50 to 55. The statutory notice was issued to the accused on 5^th May, 2000. The said notice was replied by the accused on 15/5/2000. The said reply is at Exh. 44.

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9 The learned Counsel appearing for the applicant submits that in fact, the accused ought to have been held guilty for the offence punishable under Section 138 of the Negotiable Instruments Act. It is contended that (i) the cheques were signed by the accused and issued in favour of the complainant; (ii) The said cheques were dishonoured,

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(iii) The statutory notice was issued within the stipulated time. The learned Magistrate ought to have drawn the presumption as contemplated under Section 139 of the Negotiable Instruments Act. Hence, the acquittal of the accused has caused irreparable loss to the complainant.

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10 P.W. 1 Pagar cannot be said to be validly authorised to file complaint and depose on behalf of the complainant. P.W. 1 was neither a Power of Attorney holder nor payee nor holder in due course and moreover, the authority letter at Exh. 30 did not authorise him to depose before the Court. Section 139 of the Negotiable Instruments Act contemplates as follows :

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“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.”

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The embargo is “unless the contrary is proved”. In the present case, the accused had rebutted the presumption by placing on record the documentary evidence which would clearly establish that on the day when the cheques were presented for encashment, the accused was not

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liable to pay any legally enforceable debt to the complainant and hence, the Magistrate has rightly acquitted the accused.

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11 It is further pertinent to note that the contents of the documents filed by the accused have been admitted by the complainant and therefore, the learned Magistrate has drawn justifiable inference that the accused was not liable to pay any legally enforceable debt on the day of presentation of cheque for encashment. There was an agreement between the parties and Clause 12 of the said agreement had clarified the eventuality in which the cheques were to be presented for encashment.

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12 The learned Judicial Magistrate has assigned justifiable reasons for acquitting the accused. The reasons are based upon the documentary as well as oral evidence on oath. There is no perversity in the findings recorded by the learned Magistrate. Hence, no interference is called for. The application seeking leave to appeal is therefore, rejected.

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( SMT. SADHANA S. JADHAV , J)

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The Maharashtra State Co. Op Marketing Federation Ltd. v. M/S. Jayantilal Mangaldas and Sons and Anr.

Case brief

What is this about?

What did the court decide?

The Maharashtra State Co. Op Marketing Federation Ltd. v. M/S. Jayantilal Mangaldas and Sons and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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