|
Advanced Search Options
Indian Laws - Case Laws
Showing 61 to 80 of 25512 Records
-
2024 (3) TMI 398 - DELHI HIGH COURT
Dishonour of Cheque - Seeking setting aside of summoning order - vicarious liability on partner of a firm - requirements of Section 141 of the NI Act, satisfied or not, especially in view of the fact that in a previous complaint between the same parties, with respect to the same subject matter, the present petitioner was not named as an accused (as a person in-charge of conduct of day to day affairs of the accused partnership firm).
HELD THAT:- In the present case as noted hereinabove, the allegation with respect to the present petitioner is to the extent that she alongwith with other accused in the said complaint were partners of the partnership firm and “are responsible for the day to day affairs of the Accused No. 1 and are incharge and in control and management of the Accused No. 1”. A further reading of the complaint reflects that the subject matter of the same was a Development Agreement dated 16.03.2018 for developing a land owned by respondent no. 2. It is an admitted case that the said agreement has not been signed by the present petitioner. It is a matter of record that respondent no. 2, in the previous complaint filed on the basis of said Development Agreement did not implead the present petitioner as an accused.
The name of the petitioner is conspicuously not mentioned as an accused or a person responsible for the affairs of the said partnership firm. In the complaint that is the subject matter of the present petition, no averment has been made by respondent no. 2, to state that the petitioner, although not named in the previous complaint but on account of some subsequent development, came to know that she was incharge of affairs and also responsible for conduct of business of the accused partnership firm at the relevant time. In view of the fact that the previous complaint did not name the present petitioner, it was incumbent upon respondent no. 2 to place on record more particulars about the role of the present petitioner in the complaint.
The petitioner is admittedly a 65 years old lady and the accused partnership firm is a family concern. The reliance placed by respondent no. 2 on Income Tax Returns for the financial year 2015-16, filed under the signatures of the petitioner cannot bring her case within Section 141 of the NI Act. As held in SIBY THOMAS VERSUS M/S. SOMANY CERAMICS LTD. [2023 (10) TMI 487 - SUPREME COURT] it is be shown that the petitioner was responsible for the affairs of the partnership and in control of the same for the relevant transaction, .i.e., present cheques in question which are dated 27.07.2018 and 05.08.2018. Admittedly, the petitioner is not a signatory to the cheque. Apart from the above basic averment, nothing has been placed on record to show the petitioner’s involvement in the firm or with respect to the subject transaction.
The summoning order dated 25.07.2019, arising out of CC No. 344/2019, qua the petitioner, is hereby quashed - petition allowed.
-
2024 (3) TMI 397 - BOMBAY HIGH COURT
Declaration of bodies corporate, their promoters and directors, as “wilful defaulters” - seeking various declaratory reliefs whereby adherence to principles of natural justice, including provision of inspection of relevant material, is sought to be read into the due process stipulated by the Respondent No. 2, the Reserve Bank of India - HELD THAT:- The Union Bank is firmly of the view that it is not obligated to provide any material to prove its allegations and that the onus is on the Petitioner to prove his innocence. Therefore, the stance of Union Bank is in conflict with first principles of the rule of law in India. Put differently, once a bank has accused someone of being a wilful defaulter (without providing supporting material), the person accused has to shoulder the onus and burden of proving his innocence. The affidavit in reply makes no bones about the Union Bank’s belief that no underlying material needs to be disclosed to any noticee under the Master Circular - There cannot be a concept more alien to the constitutional protections available under the rule of law in India. The aforesaid stance flies in the teeth of the “imperative” requirements of transparency stipulated by the RBI in the Master Circular.
It is now trite law that in proceedings that can inflict serious civil consequences on any citizen, the noticee should be able to appreciate the case made out against him so that he may deal with the allegations to the best of his ability. The only means of doing so is to provide detailed proper notice of the reasons for having formed a prima facie view when calling upon the noticee to show cause why such prima facie view must not translate into a final view. Such an approach would enable the noticee to understand in a cogent manner the case that he is supposed to meet.
Union Bank is granted liberty to make a proper disclosure of materials and information on which the SCN is based. Once such disclosure is made to the Petitioner, the Petitioner is at liberty to submit a fresh reply to the SCN, after which a reasoned draft order may be issued by the Identification Committee. This draft order of the Identification Committee shall be served on the Petitioner so as to enable him to make his representation to the Review Committee why the said order ought not to be confirmed. Thereafter, a reasoned final order may be passed by the Review Committee, if it is found that there has been a wilful default attributable to the Petitioner.
The Union Bank is permitted to withdraw the final order dated 28th February, 2023 passed by the Review Committee as also the draft order dated 5th August, 2022 purported to have been passed by the Identification Committee, insofar as it relates to the Petitioner - Any agency, including Respondent Nos. 3 to 6, that has published or disseminated the name of the Petitioner identifying him as a wilful defaulter on the strength of the orders that now stand withdrawn by Union Bank, shall forthwith remove such identification from publicly accessible information resources.
Petition disposed off.
-
2024 (3) TMI 396 - BOMBAY HIGH COURT
Disciplinary proceeding against the govt officer - Punishment of withholding of 10% of monthly pension for a period of three years - misconduct - failure to maintain absolute integrity - lack of devotion to duty - violation of Rule 3(1)(i), 3(1)(ii) and 3(1)(iii) of the Central Civil Services (Conduct) Rules, 1964 - HELD THAT:- Neither the inquiry report nor the order of punishment dated 26th April, 2013 passed by the Disciplinary Authority has recorded any finding about doubtful integrity of the petitioner. The Disciplinary Authority in his order, on the other hand, records a categorical finding that “the charge of lack of integrity against the Charged Officer could not be substantiated”. It is also to be noticed that even the Inquiry Officer has not found any such material on record which would lead him to doubting the integrity of the petitioner; the finding rather is that there was no malice or mala fide intent on the part of the petitioner and further that there was no allegation of any corrupt practice or extending undue benefit to the importer, against the petitioner.
Accordingly, neither is there any material nor any finding recorded by the Inquiry Officer or the Disciplinary Authority about doubtful integrity of the petitioner even qua the conduct of the petitioner which became subject matter of disciplinary proceeding against him. To charge and punish a government servant for violation of Rule 3(1)(i) of the Conduct Rules, 1964, it should be proved that the officer concerned has failed to maintain absolute integrity. Since there is nothing on record which even remotely suggest that petitioner failed to maintain absolute integrity, no punishment on that count will be permissible against him. The finding recorded by the Inquiry Officer as also by the Disciplinary Authority are otherwise - in this view of the matter the petitioner in the instant case cannot be said to have found to have failed to maintain absolute integrity.
So far as Rule 3(1)(ii) of the Conduct Rules, 1964 is concerned, it mandates that every government servant shall at all times maintain devotion to duty and any breach thereof will amount to misconduct - So far as the facts in the instant case are concerned, there is nothing on record; neither is there any finding recorded by the Inquiry Officer or by the Disciplinary Authority that the petitioner was habitual of failing in performance of the tasks assigned to him within the timeframe for the purpose and with the quality of performance expected of him. The petitioner was charged for solitary act of cancellation of bonds and bank guarantees without proper scrutiny and verification of documents put up before him, however, the explanation given by the petitioner was that he cancelled the bonds and bank guarantees on the recommendation of the Appraisal Officer. Apart from the solitary incident in terms of the charge memorandum, nothing is available on record which may establish the charge of the petitioner having failed habitually in performance of the tasks assigned to him.
Any penalty under Rule 9 of the Pension Rules, 1972 can precipitate in two circumstances, namely, (i) if a government servant is found guilty of grave misconduct or negligence and (ii) such misconduct causes pecuniary loss to the government. From a perusal of the Inquiry Officer’s report as also the findings recorded by the Disciplinary Authority in the punishment order dated 26th April, 2013, breach of either Rule 3(1)(i) or 3(1)(ii) or 3(1)(iii) of the Conduct Rules, 1964 is not made out. There is no finding on record relating to pecuniary loss caused on account of the alleged misconduct of the petitioner in the order of punishment dated 26th April, 2013. In absence of finding of proof of charge of pecuniary loss to the government and also because on the basis of material available on record of the departmental proceeding, no breach of Rule 3(1)(i), 3(1)(ii) and 3(1)(iii) of the Conduct Rules, 1964 is found, the impugned order passed by the Disciplinary Authority dated 26th April, 2013 inflicting punishment of recovering 10% of monthly pension for a period of three years, in our opinion, is not sustainable.
The order of punishment dated 26th April, 2013 is hereby quashed - writ petition allowed.
-
2024 (3) TMI 274 - BOMBAY HIGH COURT
Disciplinary proceedings - Reliance on confessional statements made by accused persons during the investigation - Petitioner, who at the relevant point of time, was working as Superintendent of Central Excise - Landing of smuggled explosives, arms and ammunitions which were used in conducting bomb blast in Mumbai during the year 1993 - Penalty of compulsory retirement from Government service in terms of Rule 11(vii) of the Central Civil Services (Classification, Control & Appeal) Rules, 1965 - entitled to only 65% of the full compensation of pension and gratuity under Rule 40 of the Central Civil Services (Pension) Rules - contravention of provisions of Rule 3(1), (i), (ii) and (iii) of the Central Civil Services (Conduct) Rules 1964 - principles of judicial review.
Whether the confessional statements made by accused persons during the course of investigation of a criminal case where the employees were not tried as co-accused and the accused persons retracted from the confessional statements in their deposition during the course of trial, forms sufficient evidence to bring home the charges in departmental proceedings? - Whether there is any evidence on record of the departmental proceedings drawn and conducted against the employees in these cases other than the confessional statements made by certain co-accused persons in the criminal case during the course of investigation before the Investigating Agency/Officer, on the basis of which the charges leveled against them can be said to be proved or it is a case of no evidence?
HELD THAT:- The legal principle which emerges as per cumulative reading of Sections 25 and 26 of the Indian Evidence Act and Sections 161 and 162 of the Cr.P.C. is that any statement made before a Police Officer cannot be proved during the course of a criminal trial and accordingly no confession made by any person in custody of Police Officer shall be proved against such person. The statement recorded under Section 161 of the Cr.P.C. can, during the course of trial, be used only for the purpose of contradiction.
Since in the instant matters, the Disciplinary Authority has relied upon the confessional statement made during the course of investigation by the Investigating Officer of a criminal case pertaining to TADA, it is also noted that Section 15 of the TADA Act which carves an exception to the provisions of the Indian Evidence Act and the Cr.P.C., however, the exception is circumscribed by certain conditions. According to Section 15 of the TADA Act, a confession made by a person before a Police Officer not below the rank of a Superintendent of Police and recorded by such Police Officer, shall be admissible in trial of such person or co-accused, abettor or conspirator for an offence under the TADA Act - However, so far as the admissibility of confessional statement under Section 15 of the TADA Act against co-accused or abettor or conspirator is concerned, the proviso appended to Section 15 needs to be noticed, according to which, for such confessional statement to be admissible against co- accused, such co-accused should be charged and tried in the same case together with the accused whose confessional statement is relied upon as an evidence against co-accused.
Analyzing the evidence available on record of the disciplinary proceedings, it is found that the department has relied upon the confessional statements made by four accused persons during the course of investigation of criminal case and these accused persons are (i) Uttam Potdar (smuggler) (ii) Mohd. Sultan Sayyed, Superintendent, Customs Officer (iii) R. K. Singh, Assistant Commissioner and (iv) Dawood M. Phanse (smuggler). These persons were not examined during the course of departmental proceedings; rather, to prove the confessional statement Police Officers were examined. Smt. Meeran Chadha Borwankar, Superintendent of Police was examined before the Inquiry Officer as witness in the departmental proceedings. This witness in the departmental proceedings has only stated she had recorded the confessional statement of Uttam Potdar during the course of investigation of the criminal case conducted by her and that the confessional statement was made by Uttam Potdar without any duress.
The principle that any punishment order passed in disciplinary proceedings can be subjected to judicial review in a case where the punishment order is based on no evidence, is already well established. From these discussions, it is apparent and well established that it is a case where despite existence of no evidence to prove the charge in the departmental proceedings, the employees have been punished by the Disciplinary Authority. The evidence available on record is only the confessional statements made by the accused persons during the course of investigation of the criminal case which, for the reasons already stated, could not be made basis of inflicting the punishment upon the employees in this case. In absence of any evidence, it is not even a case where guilt of the employees in the departmental proceedings can be said to have been proved even on preponderance of probabilities.
There are no hesitation to hold that the Tribunal, while passing the impugned judgment and order dated 13th June 2013 in Original Application No. 465 of 2010 was in error in dismissing the said Original Application - petition allowed.
-
2024 (3) TMI 273 - BOMBAY HIGH COURT
Dishonor of cheques - Condonation of delay of 1259 days in filing the complaint for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - sufficient reason to condone the delay or not - HELD THAT:- The nature of the proceedings in a complaint under Section 138 of the Act, assumes significance. Learned Counsel for the Petitioner made an earnest endeavour to draw home the point that the prosecution for an offence under Section 138 of the Act, entails punishment, and, therefore, a strict interpretation is the norm. The courts below could not have, therefore, condoned the delay in a light manner.
Chapter XVII came to be inserted in the N.I. Act by the Amendment Act, 1988 with the object of enhancing the acceptability of the cheques for the settlement of liabilities. The primary object of visiting the penal consequences to the dishonour of the cheque is not mere penal, but also to maintain the efficiency and value of a negotiable instrument in commercial transactions by making the accused to honour the negotiable instrument and pay the amount for which such instrument had been drawn. The object of provisions contained in Chapter XVII has thus been described as both punitive and compensatory.
The Supreme Court in P. MOHANRAJ & ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [2021 (3) TMI 94 - SUPREME COURT] delved into the question as to whether the proceedings under Section 138 of the Act, are quasi criminal in nature. In paragraph No. 84 of the said judgment, the Supreme Court concluded that given the hybrid nature of a civil contempt proceeding, described as ‘quasi-criminal’ by several judgments of the Supreme Court, there was nothing wrong with the same appellation ‘quasi-criminal’ being applied to Section 138 proceeding for the reasons given by the Supreme Court on an analysis of Chapter XVII of the Act, 1888.
Another three Judge Bench of the Supreme Court again had an occasion to consider the nature of the proceedings under Chapter XVII of the Act, 1888 in the case of M/S GIMPEX PRIVATE LIMITED VERSUS MANOJ GOEL [2021 (10) TMI 378 - SUPREME COURT]. The Supreme Court observed that the nature of the offence under Section 138 of the NI Act is quasi-criminal in that, while it arises out of a civil wrong, the law, however, imposes a criminal penalty in the form of imprisonment or fine. The purpose of the enactment is to provide security to creditors and instil confidence in the banking system of the country.
In the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [2010 (5) TMI 380 - SUPREME COURT] the Supreme Court has observed that it is quite obvious that with respect to offence of dishonour of cheques, it is compensatory aspect of the remedy which should be given priority over the punitive aspect.
The aforesaid being the nature of the proceedings under Section 138 of the Act, 1881, the circumstances in which the complainant could not lodge the complaint, within the prescribed period, deserves to be apprised in a slightly different perspective than a case where the prosecution is under an enactment, the primary object of which, is punitive. The conduct of the parties also becomes relevant.
In the case at hand, there are documents which indicate that after the service of the demand notice, the accused had not only acknowledged the liability, but also expressly requested the complainant not to act on the demand notice. Subsequently, again a MOU was executed acknowledging the liability and promising to pay the amount in five installments. There are number of messages exchanged between the parties on Whatsapp, which lend prima facie credence to the claim of the complainant that he was made to believe the representations of the accused and forebear from lodging the complaint.
The learned Magistrate cannot be said to have committed an error in exercise of discretion to condone the delay. The Revisional Court was justified in refraining from interfering with the exercise of discretion by the learned Magistrate. As the courts below cannot be said to have exercised the discretion in the manner which could be termed perverse and the discretion has been exercised positively to condone the delay which promotes the cause of substantive justice, this Court does not find any reason to interfere with the impugned orders - Petition dismissed.
-
2024 (3) TMI 265 - CALCUTTA HIGH COURT
Application under Section 156(3) of the Code - misuse of digital signature of the petitioner, uploaded false returns by even including the names of clients whom the petitioner has never dealt with - non-submission of PF and ESI returns of the company - HELD THAT:- It appears that no report in final form has yet been submitted in respect of Jadavpur Police Station Case No.59 dated 07.04.2023 - Let the investigating agency conclude the investigation expeditiously and in accordance with law.
The petition disposed off.
-
2024 (3) TMI 222 - DELHI HIGH COURT
Dishonour of Cheque - security cheque or not - lease deed has been obtained by misrepresentation or not - rebuttal of presumption u/s 139 of the NI Act - HELD THAT:- In the present case, as the debt or liability in terms of the Agreement to Sell and/or the Addendum itself had not arisen, Section 138 of the NI Act was not attracted and the ingredients of the offence were not satisfied - Though the power under Section 482 of the Cr.P.C. is to be exercised sparingly and in the rarest of rare cases, at the same time, where, from a bare reading of the complaint, the offence is not made out, the power must be exercised to quash such a complaint.
In S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, [2022 (9) TMI 846 - SUPREME COURT], the Supreme Court has held The Court concerned would owe a duty to discharge the accused if taking everything stated in the complaint is correct and construing the allegations made therein liberally in favour of the complainant, the ingredients of the offence are altogether lacking.”
Applying the abovementioned principles enunciated by the Supreme Court to the facts of the present case, as the Complaint filed by the respondent lacks the necessary averments that would give rise to the debt and/or liability of the petitioners for which the cheque had been issued, the complaint filed by the respondent deserves to be quashed.
Complaint, being pending before the Court is hereby quashed - Petition allowed.
-
2024 (3) TMI 221 - PUNJAB & HARYANA HIGH COURT
Dishonour of Cheque - Rebuttal of presumption - Financial Capacity - misuse of Cheque by the complainant - The petitioner argued that the complainant did not have the financial capacity to lend the amount mentioned in the cheques, as it was not reflected in his income tax returns. - presumption of legal liability under Section 139 of the Negotiable Instruments Act to be read with Section 118 of the Act - rebuttal of presumption - HELD THAT:- Petitioner does not dispute his signature on any of the two cheques in question. His defence is that said cheques have been misused by the complainant. Once signature on the cheques are not in dispute, there is a presumption of legal liability under Section 139 of the Negotiable Instruments Act to be read with Section 118 of the Act, in favour of the complainant, though the said presumption is rebuttable.
In Rangappa vs. Sri Mohan [2010 (5) TMI 391 - SUPREME COURT], a three judge bench of the Hon’ble Supreme Court held that Section 139 of the NI Act includes the presumption regarding the existence of a legally enforceable debt or liability and that the holder of a cheque is also presumed to have received the same in discharge of such debt or liability. It was clarified in the aforesaid decision that the presumption of the existence of a legally enforceable debt or liability is, of course, rebuttable and it is open to the accused to raise a defence, wherein the existence of a legally enforceable debt or liability can be contested. Without doubt, the initial presumption is in favour of the complainant - An accused may not be expected to discharge an unduly high standard of proof, reverse onus clause requires the accused to raise probable defence for creating doubt about the existence of a legally enforceable debt or liability for thwarting the prosecution. The standard of proof for doing so would necessarily be on the basis of “preponderance of probabilities” and not “beyond shadow of any doubt.”
In present case, in order to rebut the presumption, petitioner contended that complainant did not have the financial capacity; that he did not show the amount allegedly lent to the complainant in his income tax returns; and that cheques were managed by the complainant, when he was working as accountant with the accused and which he later on misused - Learned Trial Court rightly observed that no further question was asked from the complainant as to when the land was sold and for how much sale. Thus, the financial capacity of the complainant to lend the money is duly established.
The complainant is not obliged to prove the loan or the financial capacity. Once the presumption under Section 139 of the NI Act is available to the complainant, entire burden shifts upon the accused to rebut that presumption, which in the present case accused-petitioner has utterly failed - In Rohitbhai Jivanlal Patel v. State of Gujarat & another [2019 (3) TMI 769 - SUPREME COURT], it was held by the Hon’ble Supreme Court thatIn the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing the loan to the accused and want of examination of the relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the Trial Court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-appellant. The aspect relevant for consideration had been as to whether the accused-appellant has brought on record such facts/material/circumstances which could be of a reasonably probable defence."
It is held that the learned Trial Court rightly concluded that the defence as pleaded by the accused was not probable and thus, he had failed to rebut the presumption under Section 139 of the Negotiable Instruments Act available to the complainant. Learned Appellate Court has also considered all the pleas as raised by the petitioner accused. This Court does not find any illegality in the impugned order.
Present revision is hereby dismissed.
-
2024 (3) TMI 175 - SUPREME COURT
Seeking grant of bail - charges under the UAP Act along with other charges under the Indian Penal Code and Arms Act - reliance placed on disclosure statement - HELD THAT:- The test for rejection of bail is quite plain. Bail must be rejected as a 'rule', if after hearing the public prosecutor and after perusing the final report or Case Diary, the Court arrives at a conclusion that there are reasonable grounds for believing that the accusations are prima facie true. It is only if the test for rejection of bail is not satisfied - that the Courts would proceed to decide the bail application in accordance with the 'tripod test' (flight risk, influencing witnesses, tampering with evidence). This position is made clear by Sub-section (6) of Section 43D, which lays down that the restrictions, on granting of bail specified in Sub-section (5), are in addition to the restrictions under the Code of Criminal Procedure or any other law for the time being in force on grant of bail.
The question of entering the 'second test' of the inquiry will not arise if the 'first test' is satisfied. And merely because the first test is satisfied, that does not mean however that the Accused is automatically entitled to bail. The Accused will have to show that he successfully passes the 'tripod test'.
The material available on record indicates the involvement of the Appellant in furtherance of terrorist activities backed by members of banned terrorist organization involving exchange of large quantum of money through different channels which needs to be deciphered and therefore in such a scenario if the Appellant is released on bail there is every likelihood that he will influence the key witnesses of the case which might hamper the process of justice. Therefore, mere delay in trial pertaining to grave offences as one involved in the instant case cannot be used as a ground to grant bail. Hence, the aforesaid argument on the behalf the Appellant cannot be accepted.
The material on record prima facie indicates the complicity of the Accused as a part of the conspiracy since he was knowingly facilitating the commission of a preparatory act towards the commission of terrorist act Under Section 18 of the UAP Act - Bail application dismissed.
-
2024 (3) TMI 174 - CALCUTTA HIGH COURT
Dishonour of Cheque - complainant could not show, by producing any evidence that in fact the notice was served on him - Onus to prove on complainant - non-fulfilment of essential condition for taking cognizance, as provided under Section 138 clause (c) read with section 142(1)(b) of the NI Act - whether non-filing of track report or acknowledgement due card would illegal to proceed with the case filed under Section 138 of the Negotiable Instruments Act, 1881 or not? - HELD THAT:- It appears from the complaint itself the requirements as provided under Section 138 of the Negotiable Instruments Act, 1881 have been fulfilled by the complainant.
So far as the issue raised by the petitioner that no postal track report has been filed by the petitioner to show actual service of notice under Section 138 of Negotiable Instruments Act, 1881. The complainant has issued a demand notice to the correct address of the accused person. No envelope returned back to the claimant. So it seems notice is properly served. In several decisions, the Hon’ble Supreme Court of India held that when the notice is served upon the actual or proper address of the addressee, it shall be deemed to be properly served unless contrary is proved.
The trial Court seems to have drawn a presumption of law with regards to service of demand notice. Furthermore, onus lies upon the claimant to prove his case at the time of trial. At the same time, accused person also gets opportunity to contest the same during trial.
This Court does not find any illegality or infirmity in taking cognizance by the learned Magistrate and issue summon upon the accused person. Accordingly, CRR 1710 of 2021 is devoid on merit and required to be dismissed.
-
2024 (3) TMI 173 - KARNATAKA HIGH COURT
Dishonour of Cheque - legally enforceable debt or liability - statutory presumption in terms of Sections 118 and 139 of the NI Act - time barred debt - HELD THAT:- It is evident that issuance of a cheque on a time barred debt is enforceable in terms of Section 25(3) of the Indian Contract Act and such debt is legally enforceable debt within the meaning of Section 138 of the NI Act. In the present case, according to the evidence of PW.1 he has paid Rs.3 Lakhs on 22.07.2009 by way of cheque and Rs.1,50,000/- by way of cash as on the date of issuance of cheque on 02.04.2013, it was barred by time.
The fact alleged by complainant in the complaint that he has paid Rs.4,50,000/- as hand loan to the accused in the month of June 2012. The said statement is further reiterated in the demand notice - Ex.P3. However, the evidence of PW.1 in examination-in- chief itself as referred above in paragraph Nos.2 and 3 of the affidavit evidence would stand contrary to the pleading in complaint regarding giving hand loan of Rs.4,50,000/- to the accused. Complainant has also failed to establish the nexus between payment of Rs.3 Lakhs by way of cheque on 22.07.2009 - Ex.P6 to the transaction covered under cheque - Ex.P1. Complainant in the cross- examination has given again totally different version that he has given money of Rs.4,50,000/- in three installments to the accused. However, to evidence the said fact there are no any documents or requisite evidence to prove the said fact. The said circumstance would create serious doubt in the claim of complainant that accused has issued cheque in question - Ex.P1 for lawful discharge of debt.
It is in the evidence of DW.1 regarding complainant taking advance of Rs.70,000/- for sale of open space belongs to his father-in-law. The documents at Exs.D2 to D7 would go to show that accused and her husband is known to complainant and there are transaction between complainant and accused. Further, accused was also surety for the loan transaction of complainant in the Society. The deposit of Rs.3 Lakhs by way of cheque shown in Ex.P6 is dated 22.07.2009 would go to show that there was earlier transaction of complainant with accused. Complainant has failed to establish the nexus of the said transaction evidence from Ex.P6 with the transaction covered under cheque - Ex.P1. Therefore, the possibility of complainant coming in possession of the cheque of accused with respect to any earlier transaction cannot be totally ruled out.
The Trial Court has rightly appreciated the oral and documentary evidence placed on record in holding that the complainant has failed to prove that accused has issued the cheque in question - Ex.P1 for lawful discharge of debt. The said findings recorded by the Trial Court is based on the material placed on record and the same does not call for any interference by this Court.
Appeal dismissed.
-
2024 (3) TMI 172 - PUNJAB & HARYANA HIGH COURT
Dishonor of Cheque - suspension of sentence and criminal appeal - Validity of imposing a condition of depositing 20% of the compensation amount - Violation of principles of natural justice - order, where no reasoning has been given by the Lower Appellate Court, while issuing notice in the appeal but to grant bail and suspension of sentence subject to deposit compensation - HELD THAT:- This Court after having heard learned counsel for the petitioner with respect to the rationality of the order passed by the Lower Appellant Court in not giving any reason for deposit of 20 % of compensation amount, is of the view that no doubt that it is a statutory liability under Section 148 of Negotiable Instruments Act, which is enforceable by the Lower Appellate Court and has been very justifiably so ordered, therefore, this Court does not press for further reasoning to be mentioned in the order as to why 20 % compensation amount is to be deposited, rather the onus would be upon the petitioner-appellant to make out a case of an exception, if at all to show his inability to deposit the 20 % of compensation amount that too once he has been proved guilty and convicted by the trial Court for the offence under Section 138 of Negotiable Instruments Act, whereby cheque amounting to Rs.6,00,000/- issued by him was dishonoured, which has been ordered as compensation.
Even before this Court, no such reason has been stated by learned counsel for the petitioner during the course of hearing or in the petition so pleaded at all that his case is covered under the ratio of JAMBOO BHANDARI VERSUS M.P. STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. AND ORS. [2023 (9) TMI 560 - SUPREME COURT], wherein the Hon'ble Apex Court has made it abundantly clear that Appellate Court will be justified in imposing the condition of deposit as provided under Section 148 of Negotiable Instruments Act, but only in a case, if it is satisfied that condition of such deposit will be unjust or imposing of such condition will amount to deprivation of right to appeal of the appellant, an exception can be made with the reason specifically recorded.
This Court considered the question of validity for imposing the restriction to deposit 20% of the compensation amount as a pre-requisite for suspending the sentenced on the touchstone of the decision in SURINDER SINGH DESWAL @ COL. S.S. DESWAL AND OTHERS VERSUS VIRENDER GANDHI [2019 (5) TMI 1626 - SUPREME COURT], wherein the Apex Court, after having considered the provisions of Section 148 of the NI Act and the objects and reasons for its enactment by way of Amendment No.20/2018, held that the power of the Appellate Court in directing the accused to deposit more than 20% of the fine is mandatory in nature and as such upheld such stipulation for suspension of sentence.
The reasoning given by the Lower Appellate Court would only be a case, where the Court has to grant an exception from deposit of such 20 % compensation amount, which is a prerequisite for entering into an appeal under Section 148 of Negotiable Instruments Act of the amount awarded by the trial Court under Section 357(3) Cr.P.C., and not to record reasons, wherein it is an obligation as per the provisions of Negotiable Instruments Act itself and hence such an argument does not hold good and is not acceptable.
Petition dismissed.
-
2024 (3) TMI 171 - MADRAS HIGH COURT
Suit for recovery of money on the foot of promissory note - Burden/onus to prove - Whether or not the burden is on the plaintiff to prove that the promissory note is given for valid consideration or proving the execution of promissory note is sufficient in view of Section 118 of Negotiable Instruments Act? - burden shifts on the respondent/defendants immediately on plaintiff proving the execution of Promissory Note or not - burden is on the plaintiff to prove the Promissory Note is supported by consideration, while the defendant had admitted the signature contained in Promissory Note in view of Section 101, 102 of Indian Evidence Act or not.
HELD THAT:- The plaintiff, having prima facie proved to the court that the signatures were those of the defendants by examination of the attesting witnesses, the least that the defendants should have done was take out an application for appointment of an advocate commissioner to take the document to the forensic science laboratory and have obtained a report that the document is an act of forgery and does not contain their signatures. Unfortunately for Mr.N.Subramani, this act has not been done. This will also answer the argument of Mr.N.Subramani that the address of the attesting witnesses had not been mentioned in the document.
The basis on which the said acquittal had been rendered, had not been made available to the court. A party relying upon a document must produce the document before the court and the mere fact that they have pleaded in the written statement about its pendency is insufficient for the court to conclude otherwise - the lower appellate court has not even discussed the scope of Section 118 of the Negotiable Instruments Act. In a suit based on the Negotiable Instruments Act, the presumption under Section 118 is a crucial point on law and in fact, not having been referred to, it amounts to the learned Appellate Judge ignoring the vital provisions of law and thus, requires interference.
The substantial questions of law are answered in favour of the appellant and against the respondents - Second appeal is allowed.
-
2024 (3) TMI 121 - SUPREME COURT
Appointment of an arbitrator for the adjudication of disputes - Applicability of time limitation - Section 11(6) of the Arbitration and Conciliation Act, 1996 - agreement entered into between the parties for the AELA- failure of the respondent in nominating an arbitrator as per the mutually agreed upon procedure in response to notice for invocation of arbitration.
Whether the Limitation Act, 1963 is applicable to an application for appointment of arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996? If yes, whether the present petition is barred by limitation? - HELD THAT:- There is no doubt as to the applicability of the Limitation Act, 1963 to arbitration proceedings in general and that of Article 137 of the Limitation Act, 1963 to a petition under Section 11(6) of the Act, 1996 in particular. Having held thus, the next question that falls for determination is whether the present petition seeking appointment of an arbitrator is barred by limitation.
The determination of the aforesaid question is an exercise involving both law and facts. As is evident from Article 137 of the Limitation Act, 1963, the limitation period for making an application under Section 11(6) of the Act, 1996 is three years from the date when the right to apply accrues. Thus, to determine whether the present petition is barred by limitation, it is necessary to ascertain when the right to file the present petition under Section 11(6) of the Act, 1996 accrued in favour of the petitioner.
When does the right to apply under Section 11(6) accrue? - HELD THAT:- The request for appointment of an arbitrator was first made by the petitioner vide notice dated 24.11.2022 and a time of one month from the date of receipt of notice was given to the respondent to comply with the said notice. The notice was delivered to the respondent on 29.11.2022. Hence, the said period of one month from the date of receipt came to an end on 28.12.2022. Thus, it is only from this day that the clock of limitation for filing the present petition would start to tick. The present petition was filed by the petitioner on 19.04.2023, which is well within the time period of 3 years provided by Article 137 of the Limitation Act, 1963. Thus, the present petition under Section 11(6) of the Act, 1996 cannot be said to be barred by limitation.
Whether the court may refuse to make a reference under Section 11 of Act, 1996 where the claims are ex-facie and hopelessly time-barred? - HELD THAT:- The present petition filed by the petitioner is not barred by limitation.
Whether the claims sought to be arbitrated by the petitioner are ex-facie barred by limitation, and if so, whether the court may refuse to refer them to arbitration? - Jurisdiction versus Admissibility - HELD THAT:- From the email communications placed on record, it appears that due to the pre-existing disputes between the parties in relation to the franchise agreements, the respondent sent a demand notice to the petitioner seeking payment of royalty and renewal fees from the petitioner. It appears that in reply to the said notice dated 23.03.2018, the petitioner raised the issue of payment of dues relating to the ICCR project. Some more emails were exchanged between the parties on the issue however it can be seen that vide email dated 28.03.2018, the respondent clearly showed unwillingness to continue further discussions regarding payments related to the ICCR project. Thus, it can be said that the rights of the petitioner to bring a claim against the respondent were crystallised on 28.03.2018 and hence the cause of action for invocation of arbitration can also said to have arisen on this date.
When does the Cause of Action arise? - HELD THAT:- The balance limitation left on 15.03.2020 would become available w.e.f. 01.03.2022. The balance period of limitation remaining on 15.03.2020 can be calculated by computing the number of days between 15.03.2020 and 27.03.2021, which is the day when the limitation period would have come to an end under ordinary circumstances. The balance period thus comes to 1 year 13 days. This period of 1 year 13 days becomes available to the petitioner from 01.03.2022, thereby meaning that the limitation period available to the petitioner for invoking arbitration proceedings would have come to an end on 13.03.2023.
When is Arbitration deemed to have commenced? - HELD THAT:- In the present case, the notice invoking arbitration was received by the respondent on 29.11.2022, which is within the three-year period from the date on which the cause of action for the claim had arisen. Thus, it cannot be said that the claims sought to be raised by the petitioner are ex-facie time-barred or dead claims on the date of the commencement of arbitration - from an exhaustive analysis of the position of law on the issues, while considering the issue of limitation in relation to a petition under Section 11(6) of the Act, 1996, the courts should satisfy themselves on two aspects by employing a two-pronged test – first, whether the petition under Section 11(6) of the Act, 1996 is barred by limitation; and secondly, whether the claims sought to be arbitrated are ex-facie dead claims and are thus barred by limitation on the date of commencement of arbitration proceedings. If either of these issues are answered against the party seeking referral of disputes to arbitration, the court may refuse to appoint an arbitral tribunal.
The present arbitration petition having been filed within a period of three years from the date when the respondent failed to comply with the notice of invocation of arbitration issued by the petitioner is not hit by limitation - The notice for invocation of arbitration having been issued by the petitioner within a period of three years from the date of accrual of cause of action, the claims cannot be said to be ex-facie dead or time-barred on the date of commencement of the arbitration proceedings.
Shri Justice Sanjay Kishan Kaul, Former Judge of the Supreme Court of India, appointed to act as the sole arbitrator - petition allowed.
-
2024 (3) TMI 120 - SUPREME COURT
Recovery of narcotics from a vehicle which was stopped during transit - Ganja - contraband item - procedure of search and seizure governed by Section 43 read with Section 49 of the NDPS Act - HELD THAT:- Admittedly, no proceedings under Section 52A of the NDPS Act were undertaken by the Investigating Officer PW-5 for preparing an inventory and obtaining samples in presence of the jurisdictional Magistrate. In this view of the matter, the FSL report(Exhibit P-11) is nothing but a waste paper and cannot be read in evidence. The accused A-3 and A-4 were not arrested at the spot. The offence under Section 20(b)(ii)(c) deals with production, manufacture, possession, sale, purchase, transport, import or export of cannabis. It is not the case of the prosecution that the accused A-3 and A-4 were found in possession of ganja. The highest case of the prosecution which too is not substantiated by any admissible or tangible evidence is that these two accused had conspired sale/purchase of ganja with A-1 and A-2. The entire case of the prosecution as against these two accused is based on the interrogation notes of A-1 and A-2.
It is trite that confession of an accused recorded by a Police Officer is not admissible in evidence as the same is hit by Section 25 of the Evidence Act. Neither the trial Court nor the High Court adverted to this fatal flaw in the prosecution case and proceeded to convict A-3 and A-4 in a sheerly mechanical manner without there being on iota of evidence on record of the case so as to hold them guilty.
The prosecution has miserably failed to prove the charges against the accused. The evidence of the police witnesses is full of contradictions and is thoroughly unconvincing. The conviction of the accused appellants as recorded by the trial Court and affirmed by the High Court is illegal on the face of record and suffers from highest degree of perversity.
The judgment dated 10th November, 2022 passed by the High Court affirming the judgment of the trial Court convicting and sentencing the accused appellants for the charge under Section 8(c) read with 20(b)(ii)(c) of the NDPS Act is hereby quashed and set aside. The appellants are acquitted of all the charges - Appeal allowed.
-
2024 (3) TMI 119 - DELHI HIGH COURT
Declaration of Petitioner as a Wilful Defaulter under the Master Circular on Wilful Defaulters, 2015 - depriving the Petitioner from availing credit facilities for his present and prospective business enterprises - HELD THAT:- In the present case, the satisfaction to issue Show Cause Notice does not appear to have been recorded in accordance with the requirements of the Master Circular. Keeping the object of the Master Circular in mind and the consequences that it entails, both civil and penal, the lender banks have an obligation to comply with the inbuilt safeguards in the Master Circular. Lest, the line between persons who commit mere default in repayment of loan obligations and those who commit Wilful Default in terms of the Master Circular, would get obliterated.
Whether the Petitioner committed acts of Wilful Default? - HELD THAT:- The Forensic Audit Report only observed that it is not in a position to comment on their nature of loans and advances made to M/s Value Solar Energy Ltd., as necessary documents were not available. Merely because necessary documents were unavailable to the Forensic Auditor, the Respondent Bank could not have drawn an inference of diversion of funds. In doing so, the Respondent Bank failed to adhere to the requirement of Clause 2.1.3 read with Clause 2.5 of the Master Circular to identify “Wilful Default” which is “intentional, deliberate and calculated” and based on “objective facts and circumstances of the case”. The Respondent Bank cannot merely quote an observation from the Forensic Audit Report, which itself is not conclusive, and conclude that the same amounts to the diversion of funds.
The Petitioner did not furnish his personal guarantee for the CDR package nor did he participate in any of the deliberations for the approval of the CDR package. The lender banks still approved the CDR package and acted upon it without the presence and personal guarantee of the Petitioner. The lender banks, therefore, tacitly acquiesced to the Petitioner’s exit from MBSL and approved the CDR package of MBSL without his presence in any capacity or personal guarantee - Further, the undertaking relied upon by the Respondent Bank was not given by the Petitioner but by MBSL. Hence, if there exists a breach of the said undertaking, the remedy, if any, lies against MBSL and elsewhere and not against the Petitioner - thus, resignation from a company per se is not an act of Wilful Default under the Master Circular.
Effect of Forensic Audit Report - HELD THAT:- Even under the Indian Evidence Act, 1872, the opinion of an expert witness under Section 45 is not a conclusive proof. It is subject to cross-examination and the opinion and conclusions of an Expert are subject to challenge. In the present scheme of things, the Master Circular casts a specific obligation on the Respondent Bank to act independently and objectively under Clause 2.1.3 read with Clause 2.5 as discussed above. It would, therefore, be unsafe if lender banks start to declare borrowers as Wilful Defaulter merely on the basis of observations made in the Forensic Audit Report without there being an independent application of mind. The lender banks must follow the mandate of Clause 2.1.3 read with Clause 2.5 of the Master Circular and independently find acts of Wilful Default which are “intentional, deliberate and calculated” and the said conclusion should be based on “objective facts and circumstances of the case”. Any other view would lead to consequences where mere cases of default would be categorised as acts of Wilful Default under the Master Circular. The Master Circular is not to be invoked in every case of default but only when the default is Wilful Default as construed under the scheme of the Master Circular.
Identification of Wilful Default has to be made keeping in view the track record of the borrower and not on the basis of isolated transactions/incidents - HELD THAT:- The FRS, does not show a consistent negative track record of MBSL. MBSL was seen as a global player in photovoltaic cells. It had presence in several countries. It had serviced its debt and largely repaid the principal dues. The Respondent Bank, under Clause 2.1.3 read with Clause 2.5, was obligated to reflect upon the entire track record of MBSL and then conclude whether there existed events of Wilful Default and not on the basis of isolated transactions/incidents.
Consequences of admitting MBSL for CDR under the CDR Scheme - HELD THAT:- This Court is of the view that it is incumbent upon banks who are dealing with public funds and discharging a public duty to make appropriate enquiries as to whether a borrower is in genuine financial difficulty or whether there exist events of fraud and malfeasance. If the lender banks find fraud or malfeasance, the CDR-EG must either refuse CDR completely or impose such additional onerous conditions as provided in the CDR Scheme itself - In the present case, the lender banks were fully aware of all the transactions, which are now alleged to be acts of Wilful Default. This fact is part of the documents leading to the finalization of the CDR scheme. Despite noting all transactions, financial statements, balance sheets, TEV Report and Stock Audit Report, the lender banks placed MBSL in Class-B of CDR Master Circular which cannot be assigned if there is diversion of funds. They found no occasion to order a forensic audit of MBIL before finalization of CDR scheme. The lender banks, therefore, never treated the alleged acts of Wilful Default as an act of diversion or siphoning either during finalization of CDR scheme or after its failure.
The lender banks may become aware of such acts subsequently, may be, on their own, or on the basis of subsequent Forensic Audit Report. Having considered such acts, which were known subsequently, the lender banks may take an objective decision under the Master Circular on whether such acts constitute Wilful Default or not. In such a situation, the mere fact that an earlier CDR Scheme was finalised and nothing negative was flagged at that stage, may not come in way of the lender banks in invoking jurisdiction under the Master Circular. However, it may not be open for lender banks to classify known acts as events of Wilful Default merely because subsequently, in respect of the same known acts, the Forensic Audit Report has made certain observations. To declare a person as a Wilful Defaulter, lender banks have to independently find that the “Wilful Default” is “intentional, deliberate and calculated” and the said conclusion is based on “objective facts and circumstances of the case”, as required under the Master Circular. The Forensic Audit Report, at best, can act as a piece of corroboration for the said exercise, but not the sole basis.
The reasons assigned in the impugned order dated 20.04.2023 passed by the Review Committee confirming the Petitioner as Wilful Defaulter under the Master Circular are unsustainable and the impugned order is accordingly, quashed and set aside - Petition allowed.
-
2024 (3) TMI 63 - SC ORDER
Automatic Vacation of the interim order / Stay Order after six months - judicial legislation or not - Whether this Court, in the exercise of its jurisdiction under Article 142 of the Constitution of India, can order automatic vacation of all interim orders of the High Courts of staying proceedings of Civil and Criminal cases on the expiry of a certain period? - Whether this Court, in the exercise of its jurisdiction under Article 142 of the Constitution of India, can direct the High Courts to decide pending cases in which interim orders of stay of proceedings has been granted on a day-to-day basis and within a fixed period?
HELD THAT:- There cannot be automatic vacation of stay granted by the High Court. The direction issued to decide all the cases in which an interim stay has been granted on a day-to-day basis within a time frame, not approved. Such blanket directions cannot be issued in the exercise of the jurisdiction under Article 142 of the Constitution of India - both the questions framed is answered in the negative.
Following conclusions have been arrived:
a. A direction that all the interim orders of stay of proceedings passed by every High Court automatically expire only by reason of lapse of time cannot be issued in the exercise of the jurisdiction of this Court under Article 142 of the Constitution of India;
b. Important parameters for the exercise of the jurisdiction under Article 142 of the Constitution of India which are relevant for deciding the reference are as follows:
(i) The jurisdiction can be exercised to do complete justice between the parties before the Court. It cannot be exercised to nullify the benefits derived by a large number of litigants based on judicial orders validly passed in their favour who are not parties to the proceedings before this Court;
(ii) Article 142 does not empower this Court to ignore the substantive rights of the litigants;
(iii) While exercising the jurisdiction under Article 142 of the Constitution of India, this Court can always issue procedural directions to the Courts for streamlining procedural aspects and ironing out the creases in the procedural laws to ensure expeditious and timely disposal of cases. However, while doing so, this Court cannot affect the substantive rights of those litigants who are not parties to the case before it. The right to be heard before an adverse order is passed is not a matter of procedure but a substantive right; and
(iv) The power of this Court under Article 142 cannot be exercised to defeat the principles of natural justice, which are an integral part of our jurisprudence.
c. Constitutional Courts, in the ordinary course, should refrain from fixing a time-bound schedule for the disposal of cases pending before any other Courts. Constitutional Courts may issue directions for the time-bound disposal of cases only in exceptional circumstances. The issue of prioritising the disposal of cases should be best left to the decision of the concerned Courts where the cases are pending; and
d. While dealing with the prayers for the grant of interim relief, the High Courts should take into consideration the guidelines prescribed.
The reference is answered accordingly.
-
2024 (2) TMI 1297 - ALLAHABAD HIGH COURT
Wrongful representation of poor landless slum dwellers - illegal and unauthorised constructions on the government land - U.P. Slum Areas (Improvement and Clearance) Act, 1962 - HELD THAT:- Admittedly, all these showrooms/workshops, engaged in furniture and related businesses, exist on main road or are immediately adjacent to it. They are getting all benefits of any regular area of the city. They have widest road possible in the city. The main road is not filthy or lacks in any possible municipal facility. Their huge showrooms/workshops cannot be called filthy, run-down or unfit for humans. It is only that their address is shown as Akbar Nagar. The actual slum, covered by aforesaid definitions, begins behind these showrooms. Thus, petitioners are not suffering any of the challenges faced by the actual slum dwellers of the said slum. In the given circumstances, it is not possible for this court to accept that the showrooms/workshops of petitioners can be called as existing in a slum area.
The documents were called for and considered to ascertain the status of Kukrail river/water channel next to the slum area and impact of slum on the said water channel. Once it is held that neither the petitioners are slum dwellers nor their establishments fall within the slum area, the said documents do not in any manner have any impact on the rights of the petitioners. Both before the prescribed authority as well as appellate authority petitioners represented themselves to be slum dwellers and did not place correct facts. Both the authorities have held proceedings and passed orders against petitioners on the basis of the said incorrect presumption.
Looking into the entirety of the matter this Court finds no reason to exercise its discretionary jurisdiction in favour of petitioners - Petition dismissed.
-
2024 (2) TMI 1296 - BOMBAY HIGH COURT
Dishonour of Cheque - non-application of mind - denial of an opportunity to cross-examine the Complainant by disclosing specific defence in the Application - Preponderance of probabilities - violation of principles of natural justice - HELD THAT:- The Petitioner is an Accused in a complaint filed under Section 138 of the N.I. Act by the Respondent-Finance Company, in which, the Magistrate has issued a summons on satisfaction that a case is made out for summary trial. The Accused appeared before the learned Magistrate and after explaining the substance of accusation as provided under Section 251 of Cr.P.C., wherein the Petitioner/Accused pleaded not guilty and claimed to be tried, filed an Application under Section 145(2) of the N.I. Act for permission to cross-examine the Complainant.
The impugned order shows that the learned Magistrate after considering the objections raised by the Complainant observed in paragraph 5 that such an Application is filed in the most casual manner and without disclosing any valid defence. The vague statements cannot be considered a valid defence to grant leave to the Accused to cross-examine the Complainant. The grounds mentioned in the Application have no substance as there is no denial about the loan transaction and hence, there is no question of cross-examining the witness - The ground regarding misuse of the cheque is again not explained in the Application and thus, Application was rejected.
The proceedings under Section 138 of the N.I. Act are special proceedings wherein the Complainant is equipped with a presumption in his favour under Section 139 of the N.I. Act when the signature on the cheque is not denied by the Accused. In such a situation, the reverse burden is on the Accused to disprove such presumption though on preponderance of probabilities. It is also well settled by a catena of decisions that in order to dispel the presumption which arises out of Section 139 of the N.I. Act, the Accused either do so by pointing out the defects, discrepancies and inconsistencies in the case of the Complainant by way of cross-examination of the Complainant and his witnesses - the Accused is entitled to rebut such presumption either by showing that the cheque is not issued for legally recoverable debt through the cross-examination of the Complainant or by leading evidence.
The learned Magistrate committed an error in observing that the defence raised by the Accused/ Petitioner is vague and does not disclose the details and the same is found to be incorrect. There are grounds raised in the Application which only after permitting cross-examination of the Complainant could be ascertained as a specific defence. Such defence raised in the Application could be considered as sufficient to bring the case of the Petitioner in terms of “setting up a specific defence” as held by the Apex Court in the case of Meters and Instruments Pvt. Ltd. [2017 (10) TMI 218 - SUPREME COURT] as at that stage, nothing more is expected from the Petitioner/Accused. Admittedly, the Petitioner/Accused is entitled to have a fair trial which includes cross-examination of the Complainant and his witnesses.
The impugned order therefore suffers from improper exercise of jurisdiction. Hence, needs to be quashed and set aside - Application filed by the Petitioner under Section 145(2) of the N.I. Act is accordingly allowed.
-
2024 (2) TMI 1295 - DELHI HIGH COURT
Dishonour of Cheque - Liability of a Director - principles of vicarious liability - petitioner had already resigned on 15.03.2014 as Director of the Company and was neither signatory of the cheques, nor Managing Director of the Company - Section 141 of NI Act - HELD THAT:- This Court is of the considered view that present petitions under Section 482 Cr.P.C. are not maintainable since the earlier petitions were withdrawn with liberty to urge all the pleas before the learned Trial Court at an appropriate stage and there has been no change of circumstances thereafter. However, in the interest of justice, present petitions have also been considered on merits since the clarificatory certificate issued by Chartered Accountant dated 07.08.2018 that petitioner was a Non-Executive Director is stated to have been filed with the concerned office on the date of withdrawal of earlier CRL.M.Cs. (i.e. 07.08.2018).
The scope of proceedings under Section 141 of NI Act has been considered by the Hon’ble Apex Court in SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [2005 (9) TMI 304 - SUPREME COURT], wherein, it was observed that persons, who are sought to be made criminally liable under Section 141 of NI Act, should at the time of commission of offence be incharge of and responsible to the Company for the conduct of the business of the Company. Consequently, a Director, merely by holding a designation or office in a Company, would not be liable unless he was in-charge of and responsible for the conduct of the business of the Company. Thus, the liability depends upon role in the conduct of the affairs of the Company and not merely by the designation or status except in the case of Managing Director and Joint Managing Director.
The existence of special circumstances or change of circumstances which is specific to the knowledge of accused needs to be established during the course of trial, if the same is not apparent from the record. Since the object of enactment of Section 138 and 141 of NI Act is to prevent bouncing of cheques and sustain credibility of commercial transactions, the proceedings can be quashed only if the ingredients of the offence are altogether lacking despite the foundational facts laid by the complainant.
The principle of law, as referred in Siby Thomas v. Somany Ceramics Ltd., [2023 (10) TMI 487 - SUPREME COURT], is not disputed, but it may be noticed that in the aforesaid case, the appellant submitted that he had retired from the partnership firm on 28.05.2013, while the cheque in question was issued on 21.08.2015. It was further noticed that the complaint was devoid of mandatory averments required to be made in terms of sub-Section 1 of Section 141 of NI Act.
All the petitions are dismissed with composite cost of Rs. 25,000/- to be paid to respondent No. 1. Pending applications in respective petitions, if any, also stand dismissed.
........
|
