Renuka W/O Ashwin Sheth v. State of Maharashtra and Anr.

Bombay HC29 Mar 2023WP/1071/2023

Case brief

AI extract

What is this about?

This writ petition challenged the revisional Court's order setting aside process issuance under Section 138 NI Act. The High Court held that without an enforceable debt, the issuance of process was wrong. The Court affirmed that an unsigned agreement could not create legally recoverable liability, relying on Supreme Court precedents: allowing the writ petition and setting aside the revisional orde

What did the court decide?

Writ petition dismissed; no error of jurisdiction or patent illegality found.

Renuka W/O Ashwin Sheth Vs State of Maharashtra and Anr. — Cheque Dishonour | Bombay HC (2023)

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AGK

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION

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WRIT PETITION NO.1071 OF 2023

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Digitally signed byATUL ATUL GANESH GANESH KULKARNI KULKARNI Date: 2023.03.30 10:22:57 +0530

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Renuka w/o. Ashwin Sheth… Petitioner
V/s.

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The State of Maharashtra & Anr.… Respondents

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Mr. Ashok Mundargi, Senior Advocate with Mr. Jayant
Bardeskar, Mr. Gaurav Srivastav, Ms. Manorama
Mohanty, Ms. Priyanka Gharge, Ms. Anamika Singh
and Ms. Simeen Shaikh i/by S.K. Srivastav & Co. for
the petitioner.

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Ms. M.R. Tidke, APP for respondent no.1/State.

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Mr. Shirish Gupte, Senior Advocate with Mr. Aabad
Ponda, Senior Advocate, Mr. Subodh Desai, Mr. Amit
Gagh, Mr. Bhavik Mehta and Ms. Prakruti Joshi i/by
Dhruve Liladhar & Co. for respondent no.2.

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CORAM:AMIT BORKAR, J.

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DATED:MARCH 29, 2023

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P.C.:

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1.The challenge in this writ petition is to the order dated 30th
December 2022 passed by the revisional Court in a proceeding
under section 138 of the Negotiable Instruments Act, 1881
(hereafter “NI Act”, for short) setting aside order of issuance of
process dated 17th June 2022 passed by Metropolitan Magistrate,
48th Court, Andheri, Mumbai in CC No.1831/SC/2022 mainly on
the ground that there was no legally enforceable debt on the date

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9-wp1071-2023.doc

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of presentation of the complaint assuming the averments in the
complaint are accepted as true.

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2.Relevant facts necessary for the adjudication of the issue
involved are as under:

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The petitioner is original complainant who had filed an
application under section 138 of the NI Act. The basis of alleging
legally recoverable debt is pleaded in paragraphs 4, 7 and 8 of the
complaint. Reading of paragraphs 4, 7 and 8 leaves no manner of
doubt that the basis of legally recoverable liability was settlement
agreement between the parties arrived at in the month of January
2022. In paragraph 7, the basis of liability is pleaded referring to
letter dated 12th January 2022, which, according to the
complainant, confirms issuance and acknowledging liability of
cheque.

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3.It is undisputed fact that the settlement agreement arrived at
between the parties referred in paragraph 4 of the complaint is
unsigned agreement. To confer status of agreement under the
provisions of the Indian Contract Act, 1872, it is essential that
parties must sign the agreement. In absence of such signatures, the
document cannot be termed as agreement. Absence of agreement
does not create right or liability on a person.

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4.Reading of paragraphs 7 and 8 makes it clear that the next
attempt to cast liability on the accused is based on letter dated 12th
January 2022. The paragraph, which, according to the
complainant, is relevant to arrive at conclusion that said letter is
independent contract reads as under:

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9-wp1071-2023.doc

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“In the event the sale of Sheth Developers & Realtors (India)
Limited (“DDRIL”) is completed and RAS does not receive the
sum of Rs.50,00,00,000/- (Rupees Fifty Crores only) from
ANS as per the terms of aforementioned settlement
agreement, then VBG confirms and guarantees to honor the
said cheque and make good the payment of the said amount
to RAS”.

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5.Careful perusal of the clause in the letter makes it clear that
the liability to honor the cheque is based on the settlement
agreement. The earlier part of paragraph has been qualified by
expression ‘as per the terms of aforesaid settlement’. The next
sentence starts with the word ‘Then’. Therefore, in my opinion, it is
clear that the letter dated 12th January 2022 does not create
independent agreement or contract to create liability on accused to
pay amount of Rs. 50 Crore. Said letter only recognizes alleged
liability based on unsigned agreement.

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6.Undisputedly, apart from paragraphs 4 and 7 there are no
averments which create independent legally recoverable liability
which can be termed as basis for honoring the cheque.

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7.The revisional Court based on admitted documents recorded
a finding that there is no legally recoverable liability. Normally in a
complaint under section 138 of the NI Act, legally recoverable
liability is essentially a question of fact. However, in the facts of the
case in view of undisputed documents on record and material
averments in the complaint, existence of legally recoverable
liability is pure question of law.

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8. The revisional Court relying on the judgment of the Apex

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9-wp1071-2023.doc

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Court in Sunil Todi v. State of Gujarat reported in 2021 SCC
OnLine SC 1174 held that the payment of debt was dependent on
happening of event which never occurred and, therefore, there is
no legally recoverable liability. In my opinion, in absence of legally
enforceable document or any other averment in the complaint
which alleges independent liability apart from unsigned document,
the view taken by the revisional Court is legal and proper.

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9.There is no error of jurisdiction or patent illegality. The writ
petition is dismissed. No costs.

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10. It is made clear that the observations made above are in
relation to adjudication of issue involved and shall not be treated
as conclusive for any other purpose.

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(AMIT BORKAR, J.)

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Renuka W/O Ashwin Sheth v. State of Maharashtra and Anr.

Case brief

What is this about?

What did the court decide?

Renuka W/O Ashwin Sheth v. State of Maharashtra and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

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