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Indian Laws - Case Laws
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2025 (3) TMI 893
Dishonour of cheque - cheques were issued under coercion or not - Dismissal of application of the appellant seeking leave to defend the suit - Order XXXVII of CPC - HELD THAT:- So far as drawing of the cheques in question is concerned, there is clear admission on the part of the appellant that the same were drawn by him. As regards the allegation that the cheques were obtained after abducting the appellant and illegally detaining him, admittedly no police complaint was lodged, nor even any notice was issued by the appellant to the respondent or the bank, alleging the issuance of cheques under force. Nothing prevented the appellant from instructing his bank to stop payment of the said cheques on the ground that the same were not issued voluntarily, but that also was not done. That being so, pushing the parties to undergo rigmaroles of trial would be travesty of justice, since there is no triable issue in this regard.
As regards the liability argument, the issuance of the cheques in question in itself would raise a presumption of legally enforceable debt. As mentioned above, it is not in dispute that the present respondent paid a total sum of Rs.14,04,000/- to the appellant towards investments. And as regards the cheques in question, admittedly drawn by the appellant were towards repayment of the money invested by the respondent. As mentioned above, there is not even shred of material to show that the said cheques were not voluntarily issued by the appellant. Merely because the appellant opted not to initiate proceedings under Section 138 Negotiable Instruments Act, his right to claim recovery of money through this suit cannot get defeated.
Conclusion - The appellant has no substantial defence and raises no genuine triable issues; rather, the defence raised by the appellant is completely frivolous and vexatious.
Appeal dismissed.
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2025 (3) TMI 892
Dishonour of Cheque - complainant was unable to prove that there existed any legally enforceable debt in respect of the impugned cheque - HELD THAT:- The entire events as deposed by the Respondent which is fully corroborated by the testimony of DW3-Smt. Gurmeet Kaur, establishes that the missing of the cheque got reported on 05.09.2007. The cheque has been admittedly presented for encashment thereafter, and has been dishonoured on 13.09.2007. It is difficult to believe that this entire event of missing of the cheque and repayment to Smt. Gurmeet Kaur could have been pre- planned by Respondent in connivance with DW3-Smt. Gurmeet Kaur, only to disprove the claim of the Revisionist of having given loan of Rs. 2 lakhs to the Respondent.
It is also pertinent to note that Smt. Gurmeet Kaur was an employee with the Complainant, which does not rule out the possibility of he having found the blank signed cheque of Respondent. Therefore, the cheque which got misplaced from Smt. Gurmeet Kaur may have landed in the possession of the Complainant as they both were working in the same office, a defence which cannot be completely discarded.
Conclusion - The learned ASJ has thus, rightly concluded that there is no evidence to establish the legally enforceable liability for which the impugned cheque could have been issued by the Respondent.
The present Revision Petition is without merit and is hereby, dismissed.
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2025 (3) TMI 891
Entitlement to the decree for the claimed amount with interest - Jurisdiction of District Court, Cuddalore to try the suit.
Whether the plaintiff is entitled to a decree for money as prayed for? - HELD THAT:- The defendants have never complained about the breakdown of the machinery at any point of time during the subsistence of the contract. It is also pointed out that there is no plea in the written statement regarding break down or un-utilization or under-utilization of the machinery hired. The defendants in fact claim no knowledge regarding the fact as to whether the machinery was put in use in Nagpur or not. Such an ambiguous and nebulous plea without support of documentary evidence cannot be accepted by the plaintiff.
Whether the District Court, Cuddalore had the jurisdiction to try the suit? - HELD THAT:- The offer under Ex.A1 was made from Neyveli and it was accepted, of course from the Head Office of the defendant at Mumbai. The payments were made by the cheques and the cheques were en-cashed at Neyveli. In order to invoke Clause (c) of Sub Section 1 of Section 20 of the Code of Civil Procedure, it is sufficient if the plaintiff is able to demonstrate that at least part of the cause of action arose within the jurisdiction of the Trial Court, the fact that the offer was made from Neyveli and it was accepted without any reservation coupled with the fact that the Cheques were encashed at Neyveli would definitely amount to part of the cause of action arising at Neyveli within the jurisdiction of the Trial Court.
Conclusion - Jurisdiction can be established where part of the cause of action arises, and that a valid contract and acknowledgment of liability are sufficient grounds for awarding a decree for unpaid dues.
Appeal dismissed.
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2025 (3) TMI 839
Dishonour of Cheque - case of the appellant is that the corporate debtor is presently facing insolvency proceedings before the National Company Law Tribunal (NCLT) and a moratorium order was issued u/s 14 of the IBC - HELD THAT:- Clause (c) of the proviso to Section 138 of NI Act makes it clear that cause of action arises only when demand notice is served and payment is not made pursuant to such demand notice within the stipulated fifteen-day period. This Court in Jugesh Sehgal v. Shamsher Singh Gogi [2009 (7) TMI 1143 - SUPREME COURT] has explained the ingredients of Section 138 of NI Act offence has held that the cause of action arises only when the amount remains unpaid even after the expiry of fifteen days from the date of receipt of the demand notice.
The bare reading of the provision shows that the appellant did not have the capacity to fulfil the demand raised by the respondent by way of the notice issued under clause (c) of the proviso to Section 138 NI Act. When the notice was issued to the appellant, he was not in charge of the corporate debtor as he was suspended from his position as the director of the corporate debtor as soon as IRP was appointed on 25.07.2018. Therefore, the powers vested with the board of directors were to be exercised by the IRP in accordance with the provisions of IBC. All the bank accounts of the corporate debtor were operating under the instructions of the IRP, hence, it was not possible for the appellant to repay the amount in light of section 17 of the IBC.
Conclusion - The High Court should have exercised its power under Section 482 of the CrPC to quash the proceedings against the appellant, as the cause of action arose after the moratorium, and the appellant was not in charge of the corporate debtor's affairs.
The impugned order dated 21.12.2021 and the summoning order dated 07.09.2018 set aside - appeal allowed.
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2025 (3) TMI 838
Dishonour of Cheque - post dated cheque as an advance payment or cheque was given as security for completing the work - absence of the partnership firm as a party to the proceedings affects the liability of the accused/respondent under Section 138 of the N.I. Act - HELD THAT:- In the present case though the respondent has taken a specific plea that the other partner of Kishan Construction namely Ganesh had handed over the cheque to the complainant but in the complaint neither Ganesh has been made an accused nor any specific role has been attributed against the present respondent Kishan Bouri.
Accordingly it is apparent that the company who have committed offence under section 138 of N.I. Act, if any, has not been made a party and the respondent/partner only has been made as an accused. In Sarad Kumar Sanghi Vs. Sangita Raney [2015 (2) TMI 1117 - SUPREME COURT] the supreme Court has specifically held relying upon Aneeta Hada Vs. Godfather Travels and Tours (p) Ltd [2012 (5) TMI 83 - SUPREME COURT] that, when a company has not been arraigned as a party, no proceeding can be initiated against it, even where vicarious liability is fastened under certain statute.
In Aneeta Hada’s Case [2012 (5) TMI 83 - SUPREME COURT] the Court held that the words ‘ as well as the company’ appearing in the section make it absolutely un mistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof.
Needles to say that in terms of explanation to section 141, “company” means any body corporate and includes a firm or other association of individuals and “director” in relation to a firm means a partner of a firm and as such the present case clearly attracts the rigour of section 141 of the N.I. Act.
The question of remanding the case back to the trial court giving opportunity to the complainant to amend the complaint and to continue the proceeding after adding the partnership firm as an accused, also does not arise in the present context as the defect made in the complaint is an incurable defect, in view of the fact that no notice under section 138 of N.I. Act was served upon the partnership firm within the statutory period of 30 days.
Conclusion - The requirement under Section 141 of the N.I. Act that a company or firm must be made a party to proceedings when an offense is committed by such an entity. The absence of the firm as a party is a fatal procedural defect. The absence of the firm as a party rendered the proceedings invalid.
Application dismissed.
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2025 (3) TMI 825
Dishonour of cheque - interpretation of Section 148 of the NI Act - whether the petitioner has been able to make out any exception for not to deposit 20% of the fine or compensation awarded by the learned MM before the learned ASJ as also whether the learned ASJ has exercised the discretion after taking into consideration the various factors?
HELD THAT:- Since the petitioner has sought to challenge the reasonings in the two impugned orders passed by the learned ASJ, the issue of non-challenge to any of the two earlier orders dated 07.08.2024 and 23.09.2024 and/ or their non-compliance by the petitioner as also the other contentions raised by the learned counsel for the respondent(s) need not be gone into by this Court. Likewise, the contention of the learned counsel for respondent(s) herein that the petitioner had acquiesced with either of those two earlier orders dated 07.08.2024 and 23.09.2024 passed in the very same two appeals by the very same learned ASJ is of no significance. Therefore, in such a scenario wherein the reasonings given by the learned ASJ in the impugned orders are in question, the present petitions challenging them are per se maintainable.
In the considered opinion of this Court, neither of the aforesaid factors spelt out as ought to be for the learned ASJ to direct the petitioner to deposit 20% of compensation amount as awarded by the learned MM vide order(s) dated 08.07.2024. It is said so, since neither the presumptions of/ in the NI Act nor the appellant being pronounced as “guilty”, per se, can be held sufficient for calling upon any such “guilty” like the appellant thereto/ petitioner herein to deposit the 20% of compensation amount as awarded by the learned MM at the very threshold of the appeal itself. Similarly, since vide a detailed judgment passed by the learned MM, has convicted the appellant (like the petitioner herein) and is pronounced as “guilty” cannot qualify to be a reason, necessarily not a sufficient one, since the appeal thereagainst is already pending adjudication/ disposal before the very same learned ASJ and doing so will tantamount to pre-judging the case of the appellant.
Conclusion - This Court finds that there is no clear finding as it is not spelt out in any of the impugned orders as to whether the petitioner has been able to make out any exception for waiver of depositing 20% of the fine or compensation awarded by the learned MM before it as also the aforesaid factors considered by the learned ASJ and the reasons spelt out therein, and instead calling upon the petitioner to deposit 20% of the compensation amount as awarded by the learned MM in the two impugned orders, are insufficient.
Petition allowed.
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2025 (3) TMI 775
Challenge to involvement of the second respondent in an arbitration agreement - HELD THAT:- Under the agreement containing an arbitration clause, M/s Pratibha Industries Limited was appointed as a contractor by the appellant for construction of a hospital consisting of 200 beds. M/s Pratibha Industries Limited has appointed the second respondent to do the electric work. Only because certain payment was directly made by the appellant to the second respondent, it cannot be said that the second respondent becomes a beneficiary under the contract in which arbitration clause was provided. Therefore, the High Court has committed an error.
If the 2 second respondent has deposited any amount towards the cost of arbitration with the Delhi International Arbitration Centre, on the second respondent furnishing proof of the payment, the Delhi International Arbitration Centre shall refund the same to the second respondent - Application disposed off.
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2025 (3) TMI 736
Dishonour of cheque - vicarious liability of Petitioner, as a signatory to the cheques and a former director of the company - framing of notice under Section 251 CrPC against the Petitioner - HELD THAT:- The incontrovertible facts emerging from this case are that the Petitioner was serving as a whole-time director of Accused No. 1 at the time these cheques were issued, and was also one of the signatories of the cheques. Further, the Petitioner concededly resigned from Accused No. 1 subsequent to the issuance of the cheques. In fact, the Petitioner’s resignation is just one day after the issuance of cheques dated 14th May, 2012.
The Petitioner’s argument that his resignation on 15th May 2012, prior to the presentation of the cheques, is sufficient for quashing the summoning order, is wholly untenable. In this regard, the Petitioner’s reliance on Kamal Goyal is misplaced, as in that case, the petitioner had resigned from the accused company prior to the issuance of the cheques, and had also filed Form No. 32 with the Registrar of Companies prior to the issuance. Based on these facts, this Court had concluded that since the petitioner had resigned well in advance of the cheques being issued, he could not be held liable under Section 138 of the NI Act. However, in the present case, it is undisputed that the Petitioner’s resignation occurred after the cheques in question were issued, with both his resignation and Form No. 32 bearing the date of 15th May, 2012, which is subsequent to the issuance of the cheques dated 12th May, 2012 and 14th May, 2012.
The Petitioner, who is concededly the signatory of the disputed cheques, is liable for the actions of Accused No. 1 under Section 138 read with Section 141 of the NI Act.
Conclusion - The Petitioner is admittedly a signatory to the cheques issued to the Respondent for the discharge of Accused No. 1’s liability. He was serving as a full-time director of Accused No. 1 at the time of issuance of the cheques in question; and resigned from the company only subsequent to the date of the cheques. There are specific averments regarding the Petitioner’s role as the director of Accused No. 1 in the complaint lodged by the Respondent. Therefore, there is indeed sufficient basis to proceed with the prosecution of the Petitioner under Section 138 of the NI Act.
The Court finds no infirmity in the impugned order - petition disposed off.
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2025 (3) TMI 735
Initiation of proceedings by invoking the provisions of Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - financial institution as contemplated by Section 2(1)(m)(iv) of the Act of 2002 or not - HELD THAT:- Since the prayer is to grant a writ of Prohibition, the objection raised on behalf of the 3rd respondent of availability of an alternate remedy after the order is passed under Section 14 of the Act of 2002 does not warrant acceptance. If it is shown that the 3rd respondent is not a financial institution nor a secured creditor, as defined under the Act of 2002, it would not be in a position to invoke the jurisdiction under Section 14 of the Act of 2002 for seeking any assistance for taking possession of the secured asset. It would therefore require consideration as to whether the Chief Metropolitan Magistrate is empowered to entertain the application preferred by the 3rd respondent under Section 14 of the Act of 2002 and provide assistance as sought.
Thus, a “secured creditor” means a “financial institution”, as defined by Section 2(1)(m)(iv) of the Act of 2002, which would thus require such financial institution to satisfy the requirements of the Notification dated 24th February 2020. As per the affidavit-in-reply filed by the Reserve Bank of India, the asset size of the 3rd respondent as on 31st March 2024 was Rs.16.30 crores which is less than the amount of Rs.100 crores as indicated in the Notification dated 24th February 2020 - for the purposes of the Act of 2002, the 3rd respondent is not a financial institution and hence it cannot be a secured creditor so as to invoke the provisions of Section 14 of the Act of 2002.
Conclusion - As the 3rd respondent is not shown to be a “financial institution” for the purposes of invoking the provisions of Section 14 of the Act of 2002, the application filed on its behalf before the Chief Metropolitan Magistrate cannot be adjudicated on merits. A case therefore has been made out for a writ of Prohibition to be issued.
Application disposed off.
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2025 (3) TMI 672
Seeking grant of bail - prolonged pretrial detention - right to speedy trial - HELD THAT:- The trial is in progress. Till this date the prosecution has been able to examine 42 witnesses. The prosecution intends to examine as many as 100 witnesses. We are conscious of the Order passed by us taking the view that once the trial commences and the witnesses are being examined then in serious crimes like murder, dacoity, rape, etc, the Court ordinarily should not exercise its discretion for the purpose of grant of bail, more particularly, looking into the evidence which has come on record.
However, this is a case in which the appellant is in custody as an under trial prisoner since 24th March, 2020. He has no other antecedents. The panch witnesses to the recovery panchnama have also turned hostile - It’s been now 5 years that he is in judicial custody. The learned counsel appearing for the State has no idea as regards the time likely to be consumed to complete the recording of the oral evidence.
The Special Judge should inquire with the Special Public Prosecutor why he intends to examine a particular witness if such witness is going to depose the very same thing that any other witness might have deposed earlier. We may sound as if laying some guidelines, but time has come to consider this issue of delay and bail in its true and proper perspective. If an accused is to get a final verdict after incarceration of six to seven years in jail as an undertrial prisoner, then, definitely, it could be said that his right to have a speedy trial under Article 21 of the Constitution has been infringed. The stress of long trials on accused persons – who remain innocent until proven guilty – can also be significant.
The impugned order passed by the High Court is set aside. The appellant is ordered to be released on bail forthwith subject to terms and conditions as may be imposed by the trial court.
Conclusion - Howsoever serious a crime may be the accused has a fundamental right of speedy trial as enshrined in Article 21 of the Constitution. The appellant is granted release on bail, subject to fulfilment of conditions imposed.
Appeal allowed.
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2025 (3) TMI 671
Maintainability of writ petition filed under Article 226 of the Constitution of India against the Reserve Bank of India (RBI) for failing to exercise its powers under the RBI Act - alleged siphoning of funds and misappropriation in the ECL - HELD THAT:- The Coordinate Bench of this Court vide order dated 9th August, 2024 [2024 (8) TMI 1466 - DELHI HIGH COURT] found the abovementioned appeal to be premature as the order assailed was only with regards to the issuance of notice and held that the matter requires examination. It was also observed by the Coordinate Bench of this Court that the parties may take all their arguments on the maintainability as well as merits of the writ petition before the learned Single Judge.
The respondent no. 1, in the writ petition, has sought for a direction to the RBI to exercise its power under Chapter IIIB of the RBI Act governing NBFCs. It has been contended therein that the RBI has the power under Section 45IE of the RBI Act to supersede the Board of Directors of an NBFC and to conduct a special audit under Section 45MA of the RBI Act. The main grievance of the respondent no. 1 (writ petitioner) is that there is a failure to exercise the power by the RBI in relation to the affairs of ECL - This Court has taken notice of an email dated 24th May, 2024 issued by the RBI to ECL noting the violations committed by the ECL. Despite taking note of all the irregularities committed by the ECL, the RBI has not taken any action against ECL till date.
In the case of CAG vs. K. S. Jagannathan & Anr. [1986 (4) TMI 344 - SUPREME COURT], the Hon’ble Supreme Court held that a writ of mandamus can be issued where there is a failure to exercise power vested with a public authority.
Thus, it is crystal clear that a duty is implied by the vesting of statutory power upon a public authority. Further, the performance of such duty can be secured by proceedings under Article 226 of the Constitution of India.
The respondent no. 1 has sought for the interference of the learned Single Judge considering the failure of RBI to act in exercise of its power under Chapter-III-B and more particularly Section 45-IE and Section 45MA of the RBI Act. Such reliefs claimed are, therefore, clearly maintainable in proceedings under Article 226 of the Constitution of India.
Issuance of writ of mandamus to the RBI to exercise its jurisdiction is not and could not have been the subject matter of the NCLT proceedings - HELD THAT:- The learned NCLT has no jurisdiction to issue prerogative writs to RBI to exercise such powers under the RBI Act. Therefore, this fact has no bearing on the merits of the dispute or such that is determinative of the outcome of these proceedings since the existence of the NCLT proceedings is duly disclosed and considered by the learned Single Judge while passing the impugned order.
This Court has also taken note of the report of the learned Observer, in which it has been clearly observed that despite repeated reminders, the management of ECL has not shared several details regarding the nature of organizational structure of ECL, list of secretarial records, statutory compliances, detailed particulars of all the managerial personnel (current and former), scope of their respective roles/responsibilities along with the details of their remuneration/perks and benefits. It is also observed that non-compliance of another direction of the learned Observer in the light of the order of learned NCLAT, and such non-compliances assumes significance that the affairs of the ECL are not being managed rightly by the present management.
Conclusion - i) A writ of mandamus can be issued to compel a public authority to exercise its statutory powers when there is a failure to act. ii) The RBI, as a regulatory authority, has a duty to act upon discovering regulatory breaches by an entity under its supervision. Failure to do so can warrant judicial intervention under Article 226. iii) The existence of proceedings before specialized tribunals like the NCLT and NCLAT does not preclude the High Court's jurisdiction to issue writs of mandamus when the relief sought pertains to the exercise of statutory powers by a regulatory authority. iv) The principles of natural justice are upheld when parties are given a fair opportunity to present their case, and the Court found that such opportunity was provided in this instance.
The instant letters patent appeal is dismissed being devoid of any merits.
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2025 (3) TMI 622
Initiation of arbitration proceedings under Section 18(3) of the Micro Small & Medium Enterprises Development (MSMED) Act, 2006 and the Arbitration & Conciliation Act, 1996 - HELD THAT:- This Court is of the view that Section 18 of the MSMED Act, 2006 is not akin to Section 11(6) of the Arbitration and Conciliation Act, 1996. It is pertinent to mention that while the power under Section 11(6) is exercised by a referral court, the reference under the MSMED Act is exercised by the council.
Further, the Supreme Court in Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods (P) Ltd. [2022 (11) TMI 91 - SUPREME COURT] has categorically held that the issue of lack of inherent jurisdiction can be decided by the Arbitral Tribunal appointed under the MSMED Act, which by virtue of Section 18(3) of MSMED Act is competent to rule on its own jurisdiction as also the other issues in view of Section 16 of the Arbitration and Conciliation Act, 1996. Consequently, the sequitur is that the decision of the Arbitral Tribunal on the issue of jurisdiction would be amendable to challenge under Section 34 of the Arbitration and Conciliation Act, 1996.
Conclusion - MSEFC has the jurisdiction to refer disputes to arbitration under the MSMED Act, and the arbitral tribunal is competent to rule on its own jurisdiction.
Appeal dismissed.
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2025 (3) TMI 559
Dishonour of Cheque - over writing in the date of cheque - discrepancy in mentioning of the amount in words and figures - invalid notice - what are the legal requirement for holding a legal Demand Notice issued under Section 138 B NI Act valid? - HELD THAT:- In Central Bank of India & Anr. v. M/s. Saxons Farms & Ors., [1999 (10) TMI 718 - SUPREME COURT] the Apex Court held that the object of the Notice is to give a chance to the drawer of the cheque to rectify his omission. Though in the Notice demand for compensation, interest, cost etc. is also made, drawer will be absolved from his liability under Section if he makes the payment of the amount covered by the cheque of which he was aware, within 15 days from the date of receipt of the Notice or before the Complaint is filed.
Now coming to the facts of the present case, the Legal Notice dated 28.09.2017 clearly mentioned about the dishonour of the cheque in the sum of Rs. 4,65,000/-. Legal Notice specifically and clearly specified the cheque amount. The problem has arisen because though figure in numerical has been clearly written as Rs. 4,65,000/-, but unfortunately while writing in words it was written as “Rs. Four lac sixty five”. It is quite evident that though after word Sixty Five there has been inadvertence in not mentioning the word “thousand”. Prima facie, the error appears to be inadvertence rather than depicting different amounts.
Though it is correct that Section 18 of NI Act, states that when there is a discrepancy in the amount of cheque as mentioned in figures and words, the words shall prevail. However, as has already been mentioned above, such discrepancy did not weigh with the Bank which clearly stated in the Return Memo that the cheque amount was Rs. 4,65,000/-. Likewise, overwriting of the date on the cheque, has not been considered as a material interpolation meriting dishonour of the cheque. In these circumstances, it would not be appropriate to dismiss the Complaint under Section 138 of the NI Act on technical ground, without putting the parties to trial and without affording opportunity to prove their respective cases.
Conclusion - The error in writing the correct figure in words, would not at this stage, make the cheque invalid especially when no Reply has been given by Respondent No. 2 to the Legal Notice to refute his liability and has not questioned the Notice making a demand. The Complaint is sought to be defeated on the technical ground of inadvertent error in mentioning the correct figure of the cheque in words, which cannot be a justiciable ground for discharge, but merits a Trial.
The impugned order is set aside - petition disposed off.
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2025 (3) TMI 558
Dishonor of cheque - conviction of revision petitioner without examining the issue of maintainability of the complaint.
Whether both the Courts have committed an error in convicting the revision petitioner without examining the issue of maintainability of the complaint, as contended and requires interference of this Court by exercising the revisional jurisdiction? - HELD THAT:- The complaint was filed by an authorized person and resolution was passed on 24.10.2008 and the said resolution was issued by the Managing Director of the Company consequent upon the resolution passed by the Board of Directors. Hence, it is clear that authorization was given to the Regional Manager of the Company to initiate the proceedings against the petitioner - No doubt, the learned counsel for the petitioner relied upon the judgment of the Apex Court in the case of A.C. Narayanan [2015 (4) TMI 847 - SUPREME COURT], wherein the Apex Court held that the complaint was not signed either by the Managing Director or Director of Company and subsequently Deputy General Manager of the Company gave evidence on behalf of the Company though he does not know anything. Nothing on record to suggest that he was authorized by Managing Director or any Director. Hence, the acquittal of the accused was held proper.
But in the case on hand, the factual aspect is different and before initiating the proceedings, general body meeting was held and resolution was passed in terms of Ex.P.49 and when the person who was authorized left the Company, authorization was given to P.W.1 by the Managing Director in terms of Ex.P.50 and also powers are conferred to the Director and Managing Director in terms of Articles 163 and 164 of Ex.P.52 i.e., Memorandum and Articles of Association of the complainant Company and hence the said judgment is not applicable to the facts of the case on hand.
This Court having considered the merits also, it is not in dispute that cheques Exs.P.1 to 10 have been issued. In one breath the petitioner says that those cheques are issued as security and in other breath says that the cheques were obtained by coercion in the police station. The issuance of cheques is not disputed and the same is signed by the petitioner is also not in dispute. The petitioner cannot blow hot and cold. The fact that there were business transactions between the complainant and the accused is not in dispute. It is important to note that the Trial Court relied upon Ex.P.46 reply notice issued by the accused - It is also stated that the complainant must be aware of the fact that for this type of transaction by the accused with third parties there is due consent and permission by the complainant and acknowledges the receipt of diamond jewellery articles supplied by the complainant and therefore requests the patience of the complainant by waiting for some time till all the payments are received by the accused from third parties and repay them to the complainant. Hence, this averment made in paragraph No.4 of the reply notice is clear that reply was given and notice was served and admitted the transaction.
Having considered all these materials on record, both the Trial Court and the Appellate Court comes to the conclusion that the complainant has proved the case. No doubt, the revision petitioner examined himself as D.W.1 and got marked the documents at Exs.D.1 to 12, but no material is placed on record to show that the accused has repaid the amount of Rs.67 lakhs. He gave admission in the cross-examination regarding transaction is concerned, particularly admitted the memorandum of agreement in terms of Ex.P.47 with regard to the business and also categorically admits that earlier he was having good and cordial relationship with the Company and also admits that he did not take any action in respect of issuance of reply notice in terms of Ex.P.46 as against the advocate.
Having taken note of all these admissions and evidence on record, it is not a case for exercising of revisional jurisdiction and no perversity is found in the findings of the Trial Court and the Appellate Court. Both the Courts have given detailed consideration and meticulously examined the documents of Exs.P.1 to 10, 46, 47, 49, 50, 51 and 52 and hence the order of both the Courts not suffers from its legality and correctness and the same is based on material on record and question of law not involved in the matter and hence it is not a case for interference by exercising the revisional jurisdiction.
Conclusion - The complaint was maintainable and the conviction was justified based on the evidence and legal presumptions under the NI Act.
The criminal revisional revision is dismissed.
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2025 (3) TMI 557
Refusal of an ad interim prayer of injunction made by the plaintiff in a suit, inter alia, for declaration that the plaintiff/appellant is having 50% ownership right, title and interest in the suit property - jurisdiction of Civil Court has jurisdiction to grant injunction - competence of the signatory under Order XXIX Rule 1 of the Code of Civil Procedure.
Refusal of ad interim injunction - HELD THAT:- The learned Trial Judge, in a single sentence, held that considering the nature of the case, it appeared to him that in this nature of case, injunction should not be granted without hearing the other side. Under Order XXXIX Rule 3-A, it is incumbent upon the court to record its reasons for its inability to dispose of an injunction application within Thirty (30) days from the date on which ex parte injunction is granted without giving notice the opposite party. However, such reasons are confined to the inability of the court to dispose of the application within Thirty (30) days in case an ad interim ex parte injunction is granted. The said provision does not necessarily mean that either while granting or refusing ad interim injunction, independent reasons for such grant or refusal is not required to be given. It is well-settled that reason is the soul of any judgment and any judicial order without cogent reasons is, on the face of it, bad in law. The order impugned herein suffers from such malady.
Whether a triable issue has been made out by the plaintiff? - HELD THAT:- It transpires from the purported declaration/letter issued by Hari Ram along with the appellant, which is produced by the Bank, that the Bank had obtained a magisterial declaration from the owners, including the appellant. However, such declaration has not been produced by the respondent no. 1-Bank, thereby constraining the court to draw adverse inference against the Bank on such count. That apart, the appellant has alleged in his pleadings that the documents produced by the Bank are forged and manufactured insofar as any continuing guarantee having been granted by the appellant is concerned - sufficient doubt as to be veracity of the Bank’s claim of the appellant being either a borrower or a guarantor has been raised.
The recurring notices issued by the Bank under Section 13(2) of the SARFAESI Act also indicate the extreme urgency involved. In the event coercive measures under Section 13(4) of the SARFAESI Act are taken by the Bank against the appellant, the appellant might suffer irreparable injury - the balance of convenience and inconvenience is, thus, in favour of the appellant since if the suit property is disposed of in favour of third parties or the appellant is ousted from the suit property prior to the disposal of the suit, it would affect the plaintiff/appellant irreversibly, whereas the suffering of the Bank would not be of such magnitude even if its action for recovery of the loan is deferred - all the ingredients for grant of ad interim injunction are satisfied in the present case.
Maintainability of the suit - HELD THAT:- It is an admitted position that the suit was filed on November 5, 2024, whereas the first notice under Section 13(2) of the SARFAESI Act was received by the appellant only subsequently, on November 6, 2024. In any event, the said first notice was waived by the respondent no.1-Bank by issuance of a subsequent notice under the self-same provision on December 24, 2024, that is, after the filing of the suit.
Importantly, the remedy of a borrower and/or any person aggrieved by the actions of the Bank under Section 17 of the SARFAESI Act is available only upon measures being taken under Section 13(4) of the said Act. In the present case, there is nothing on record to show that any such measure has been taken by the Bank till date or at least that any such measure had been taken till the date of passing of the impugned order - the remedy of the appellant under Section 17 of the SARFAESI Act is not only illusory but also non-existent.
Locus standi of the signatory to the affidavit- in-opposition of the injunction application - HELD THAT:- Rule 1 of Order XXIX clearly stipulates that in a suit by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the Secretary or by any Director or other Principal Officer of the corporation who is able to depose on the facts of the case. As per the averment in the affidavit- in-opposition, the signatory thereto merely claims herself to be a “constituted attorney” of the Bank and not a Secretary/Director/Principal Officer thereof. Hence, the necessary ingredients of Order XXIX Rule 1 are not satisfied. There is no reason as to why the principle incorporated in Order XXIX, although applicable in terms to a suit, should not also be borrowed in connection with an application filed in an appeal arising out of a suit.
Conclusion - i) The refusal of the ad interim injunction by the Trial Court was unjustified due to the lack of reasons. ii) The Civil Court has jurisdiction to entertain the suit and grant the reliefs sought, as the principal reliefs fall outside the DRT's jurisdiction. iii) The appellant had established a prima facie case for an injunction, with the balance of convenience and potential irreparable harm favoring the appellant.
Application disposed off.
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2025 (3) TMI 556
Dishonour of Cheque - vicarious liability of director, when he claims to have resigned before the cause of action arose - Section 141 of the NI Act - HELD THAT:- It is true that section 141 of the N.I. Act mandates that when the person committing an offence under section 138 is a company every person who at the time of offence was ‘in charge of’ and ‘was responsible’ to the company for the conduct of the business of the company, as well as the company shall deemed to be guilty of the offence and in the present context in the averments made in the complaint, the words ‘in charge of’ as required under section 141 of the N.I. Act is missing from the petition of complaint and in respect of which the learned counsel strenuously argued that the petition of complaint is not maintainable. However it is settled law that reproduction of section 141 in verbatim in the complaint is not necessary, if the substance of the allegations made in the complaint fulfils requirements of section 141 and in such cases even if in the absence of verbatim reproduction of the language of section 141, the complaint has to proceed and is required to be tried.
Before issuing process against the present petitioner Anil Bhutoria, the court below ought to have made an inquiry inter alia to get answer to the aforesaid questions either from the materials available from the record or even putting questions to the complainant by himself to elicit answers to the aforesaid questions, to find out whether there are grounds for proceeding against the present petitioner or not. As it is quoted above neither the initial deposition nor the order issuing process dated 08.09.2015 reflects that the magistrate on being prima facie satisfied about the questions raised herein came to a finding that there are reasons to believe that the petitioner has committed the alleged offence.
Thus, the order of issuance of process against the present petitioner on 08.09.2015 has not been made in compliance with either chapter XV or chapter XVI of the Code of Criminal Procedure.
Conclusion - The issuance of process by the court below under section 204 of Cr.P.C. against the present petitioner Anil Bhutoria by the order dated 08.09.2015 is not sustainable in the eye of law and therefore, set aside. The trial court is directed to conduct an inquiry to determine whether a prima facie case exists against the petitioner.
Petition disposed off.
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2025 (3) TMI 492
Alleged wrongful confinement - seizure of 1280 grams of brown powder (allegedly heroin) - Sections 8(C), 21 and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - HELD THAT:- It is a settled principle of law that the jurisdiction conferred upon a Court under Section 439 CrPC is limited to grant or refusal of bail pending trial. In the following decisions, this Court has time and again held that the sphere of consideration, when exercising power under this Section pertains only to securing or restricting liberty of the person in question.
In RBI v. Cooperative Bank Deposit A/C HR. Sha [2010 (8) TMI 1191 - SUPREME COURT], this Court held that the High Court order, directing the Cooperative Bank to distribute the money recovered from the accused, to persons who had made deposits less than Rs.10,000/- as and when such recoveries are made, passed in a Bail Application had far-reaching consequences and was beyond the scope of Section 439 CrPC.
In State v. M. Murugesan [2020 (1) TMI 1719 - SUPREME COURT], this Court again reiterated that the Court’s jurisdiction is limited to grant or refusal to grant bail, pending trial. In this case, the High Court, while taking a decision on bail application, had retained the file and directed the State to form a committee and seek its recommendations on the reformation and rehabilitation of convict/accused persons. The Court held that while ordering such directions the High Court has committed grave illegality and held that the jurisdiction under Section 439 CrPC ends when the bail application is finally decided.
Time and again, the act of Courts overstepping the bounds of jurisdiction, has clearly been frowned upon. The instant case is another such example. It is undisputed that the application for bail filed before the High Court had become infructuous since the District Court had already released the respondent herein. The straightforward course of action that ought to have been adopted, therefore, was that the bail application would have been dismissed as such. No occasion arose for the Court to pass an order delving into the aspects of impermissibility of retesting and/or wrongful confinement. Not only was the same outside the bounds, as discussed above, but it is erroneous on a further count that since the application was infructuous, the exercise of jurisdiction was entirely unjustified and contrary to law.
Conclusion - The High Court's order of compensation was without legal authority and set it aside.
Application disposed off.
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2025 (3) TMI 491
Challenge to order demanding 10% deposit of the grant-in-aid and interest from the petitioner, as a precondition for considering their representation - breach of terms and conditions of the concession - HELD THAT:- In the present case, this Court finds that the demand to deposit 10% of the total grant-in-aid concession provided to the petitioner, for hearing of the representation is neither founded in the statute nor the same is at an appellate stage. Learned Standing Counsel is unable to point out any provision under law under which the State Government/opposite party No.1 would had demanded the pre-deposit for disposal of the representation of the petitioner. Further, this Court is unable to appreciate the conduct of the opposite parties in demanding the said pre-deposit at the belated stage of April, 2023, especially when the representation had been pending since December, 2020.
Further, this Court finds that the impugned order dated 24.04.2023 and consequential order dated 26.05.2023 demanding deposit of 10% of the total amount of grant-in-aid has been passed by the opposite party nos.1 and 3, respectively, without any reasoning or affording any opportunity of hearing to the petitioner.
It is a trite law that no order prejudicing the interest of a person resulting in civil consequences can be passed without affording an opportunity of hearing. It is not the case of opposite parties that opportunity of hearing was afforded to the petitioner or that the present case is such wherein notice of hearing is to be dispensed with. This Court finds that no opportunity of hearing was provided to the petitioner before the passing of the impugned order dated 24.04.2023 and consequential order dated 26.05.2023, whereby the petitioner had been directed to deposit Rs. 40,75,035.90 as and towards pre-deposit for hearing of their representation dated 03.12.2021.
Conclusion - i) The demand for a pre-deposit must be grounded in statutory provisions and is typically appropriate at the appellate stage, not during initial representation consideration. The orders dated 24.04.2023 and 26.05.2023 demanding a 10% pre-deposit were quashed. ii) The authorities were directed to consider the petitioner's representation dated 03.12.2021 without insisting on any pre-deposit, within three months. iii) The Court refrained from commenting on the merits of the cancellation order dated 05.02.2021, focusing solely on the legality of the pre-deposit demand.
Petition allowed.
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2025 (3) TMI 490
Dishonour of Cheque - whether in a case under Section 138 of N.I. Act, against the Partnership Firm, compounding by one partner would be in discharge of the entire liability of the Partnership Firm or it can be apportioned to the partners individually? - HELD THAT:- Section 142 of N.I. Act deals with ‘cognizance of offence’ and provides that the Complaint under Section 138 of NI Act in writing, can be made by the Payee or holder in due course. The Legislature in its wisdom, has used the word ‘Complaint’ and not ‘Suit’ in Section 142 of N.I. Act thereby indicating that the bar created for maintaining a Suit in Section 69 of the Partnership Act by or against an unregistered Firm, cannot be stretched and applied to maintain a criminal proceeding under Section 138 of N.I. Act.
The Apex Court in B.S.I. Ltd. and Another vs. Gift Holdings Pvt. Ltd. and Another, [2000 (2) TMI 719 - SUPREME COURT], interpreted the word ‘Suit’ while deciding maintainability of a proceeding under Section 138 of NI Act in the context of ban imposed by the Sick Industrial Companies (Special Provisions) Act. It provides that no Suit for Recovery of Money or Enforcement of any security against the Industry, Company or Guarantee in respect of any loan or advance granted to the Industrial Company shall lie if in respect of the Industrial Company, an inquiry under Section 16 is pending or any scheme referred to under Section 17, is under preparation or consideration. The Court observed that the word ‘Suit’ envisaged in Section 22 (1) cannot be stretched to criminal prosecution as it is neither for recovery of money nor for enforcement of any security, etc. Section 138 of NI Act is a penal provision for commission of an offence which entails conviction and sentence on proof of the guilt in duly conducted criminal proceedings. Once the offence under Section 138 of NI Act is completed, the prosecution initiated is not for recovery of the amount covered by the Cheque, but for bringing the offender to penal liability.
The Kerala High Court in Abdul Gafoor vs. Abdurahiman, [1999 (3) TMI 657 - KERALA HIGH COURT], held that Section 138 is not a Suit and the bar of Section 69 (2) of the Partnership Act would not operate in such cases. It was further observed that the effect of non-registration of a Partnership Firm, is applicable only to the cases involving civil rights and has no application to criminal cases.
Whether a Partnership Firm is a legal entity, which can sue or be sued in its own name? - HELD THAT:- Section 141 of N.I. Act read with Explanation, makes it abundantly clear that when an offence is committed by a Company or a Firm, every member who is responsible and in charge of the affairs of the Company/Firm is guilty of the offence committed under Section 138 of NI Act - the Notice under Section 251 N.I. Act was framed on 18.04.2018 only against the two partners and not the Partnership Firm, which has not been challenged by either Party.
It is settled that in the absence of Company being arraigned as an accused, the Directors cannot be held liable for the offence committed by a company - Since the Notice under S.251 Cr.P.C. has not been framed against the Partnership Firm, this itself is a sufficient ground for discharge of the Petitioner.
Whether compounding of Offence by one Partner would result in complete discharge of the Liability of the Partnership Firm against all the Partners? - HELD THAT:- The Firm is not a legal entity; it is a collective or compendious name for all the partners. In other words, a Firm does not have any existence away from its partners, though by virtue of S.141 NI Act, it can be sued in its name. A Decree in favour of or against a Firm has the same effect as a Decree in favour of or against the partners. When the Firm incurs a liability, it can be assumed that all the partners were incurring that liability and so the partners remain liable jointly and severally for all the acts of the Firm. Therefore, the liability of the partners is joint and several.
In Ashutosh vs State of Rajasthan & Ors., [2005 (8) TMI 725 - SUPREME COURT], it had been observed by the Apex Court that it is open to a creditor of the Firm to recover the debt from any one or more of the partners. Each partner shall be liable as if the debt of the Firm has been incurred on his personal liability - Therefore, when there is a compromise by one partner, it has to be for and on behalf of the Partnership Firm and there cannot be any partial settlement with one partner, as has been done in the present case.
In the present case, both the partners, namely, Petitioner/Satish Kumar Pawa and the Respondent No. 4/Sant Lal Agarwal, were jointly and severally responsible for the liability incurred by the Partnership Firm, meaning thereby that each is liable for the entire liability individually as well as jointly. The partners may have agreed to be entitled to the share profit & loss in a particular ratio, but their legal liability towards the third person is joint and several and there can be no apportionment.
Once the matter stands compromised for whatever the amount, the offence is compounded towards all the existing liabilities of the Partnership Firm; nothing survives in the Complaint which has to be necessarily disposed of as compromised against the second partner/Petitioner as well. Thus, Section 257 of Cr.P.C. do not come to the rescue of the Complainant/Respondent No. 2 in the case herein.
Conclusion - The principle that compounding by one partner results in the discharge of the entire liability of the partnership firm and its partners, given the joint and several liability under Section 25 of the Partnership Act.
The complaint under Section 138 of N.I. Act filed by the Respondent No. 2 is quashed/disposed of as compounded and the Petitioner/Satish Kumar Pawa is hereby, acquitted - petition allowed.
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2025 (3) TMI 489
Seeking to attach the suit property - validity of mortgage which was created in favour of the erstwhile assignor SBI - principles of equity - HELD THAT:- In an equitable mortgage, the borrower can sell the mortgage property to the third party without knowledge of the lender as in an equitable mortgage, the mortgage is created by depositing the title deed with the lender as a security for the loan amount. Registration is not compulsory for an equitable mortgage - In the present proceedings, in the first transaction the SBI had collateral security by way of equitable mortgage by depositing title deed. However, admittedly, the title deed of the property was not deposited with the SBI or ARCL being the assignee. The only document referred by the ARCL was that of lodgment receipt.
In the Indian Bank [2009 (7) TMI 1404 - MADRAS HIGH COURT] the Court held that the Indian Bank in its apparent hurry to enter into the transaction had omitted to take precautions and because of such negligence, the owner of the property induced Punjab National Bank to advanced loan by creating equitable mortgage by deposite of original title deeds. Therefore, Appellate court has rightly applied law to derive conclusion that time the Indian Bank had not taken a proper care.
The main issue was whether a first mortgagee (second defendant) should be postponed to a second mortgagee (plaintiff company) due to gross negligence in allowing the title deeds to remain in the possession of the mortgagor, which enabled the mortgagor to obtain a subsequent loan from the plaintiff company? The Madras High Court confirmed the lower court's decision in Madras Building company v. Rowlandson & Anr. [1891 (11) TMI 3 - MADRAS HIGH COURT] and dismissed the appeal, ruling in favour of the plaintiff company. The Court held that the second defendant (first mortgagee) should be postponed to the plaintiff company’s mortgage due to gross negligence in allowing the title deeds to be out of his possession, thereby enabling the mortgagor to fraudulently obtain a loan from the plaintiff company. The Court based its decision on several key points.
Conclusion - The Appellate Court had rightly allowed the appeal by setting aside the impugned judgment and order - Petition dismissed.
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