1 Revn.329/2010 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL REVISION APPLICATION NO.329 OF 2010 M/s Saikrupa Silk Mills Pvt.Ltd. .... Applicants & Anr. Vs. M/s Paper Deal Partnership Firm .... Respondents & Anr. Mr. S.R. Ganbavle, Advocate for applicants. Mr. Tushar Sonawane, Advocate for respondent no.1. Mr. D.R. More, APP for State. Coram : SMT. R.P. SONDURBALDOTA, J. Date : 24th January, 2011 P.C. 1. By this revision application, the applicants challenge their conviction for the offence punishable under Section 138 Negotiable Instruments Act and the sentence awarded to them in S.C. No.1006 of 2005 by respondent no.1. The appeal preferred by the applicants challenging their conviction was dismissed by the Sessions Court, Nashik. 2. Respondent no.1, a partnership firm filed the complaint against applicant no.1- Company and its directors i.e. applicant no.2 and his wife for dishonour of three cheques for the amounts, Rs.5,00,000/-, 5,00,000/- and Rs.3,38,440/- drawn on Nashik Zilla Mahila Vikas Sahakari Bank on 14th, 13th and 15th December 2004 respectively. According to respondent no.1, the cheques had been issued towards the price of the raw material purchased by the applicants of craft 2 Revn.329/2010 paper for manufacture of boxes. Applicant no.2 did not dispute his signature on the three cheques as also the fact of having business transactions with respondent no.1. He, however, denied that in the present case, there was any order placed either orally or in writing or any goods received from respondent no.1. His specific defence however was as follows. He owes about Rs.24,00,000/- to 25,00,000/- to respondent no.1 towards some old transactions. As he met with an accident on 6th February 2002, he could not pay the amount to respondent no.1 immediately. Therefore, partner of respondent no.1 had managed to get loan in a sum of Rs.30,00,000/- sanctioned in the name of applicant no.1, from Nashik Zilla Mahila Vikas Sahakari Bank, in which at the relevant time, wife of the partner of respondent no.1 was one of the directors. At that time, the bank manager had obtained his signatures on some blank cheques and kept the same in his possession. After sanction of the loan, respondent no.1 managed to withdraw the entire amount payable by the applicants. Even thereafter respondent no.1 demanded enhanced interest, leading to a dispute between the two. Then respondent no.1 obtained the blank cheques from the Manager of Nashik Zilla Mahila Vikas Sahakari Bank through his wife and misused the same. 3. The trial Court further hearing the parties came to the conclusion that the cheques in question were issued by the applicants in discharge of legally enforceable liability and after the cheques were dishonored, the applicants had failed to make the payment within the period as required by law, inspite of receipt of the notice. With this 3 Revn.329/2010 finding, the applicants and original accused no.3 were convicted and sentenced to suffer simple imprisonment for six months and directed to pay fine of Rs.13.00 lacs, as compensation. Feeling aggrieved by the same, the applicants and original accused no.3 preferred Criminal Appeal No.179 of 2008 to the Sessions Court, Nashik. Respondent no.1 also filed criminal revision application seeking enhancement of the sentence and of compensation to Rs.26.00 lacs. The Sessions Court, Nashik, by the impugned judgment and order, dismissed the criminal revision application for enhancement and partly allowed the appeal. Original accused no.3 was acquitted of the offence punishable under Section 138 Negotiable Instruments Act, but the conviction and sentence of the applicants herein was confirmed. 4. The above concurrent finding of conviction is sought to be challenged by the present revision application contending that respondent no.1 had failed to produce any documents on record to prove the existence of legally enforceable liability. It is also contended that the courts below failed to appreciate the defence of the applicants that the cheques in question were not in fact issued by the applicants to respondent no.1 towards discharge of the liability, but the same were given to Nashik Zilla Mahila Vikas Sahakari Bank by way of security towards repayment of the loan obtained by the applicants from the bank. The wife of respondent no.1, who was one of the directors of the bank had handed over the cheques to respondent no.1 without the consent and knowledge of the applicants, which cheques had been misused by respondent no.1. 4 Revn.329/2010 5. Perusal of the judgments of both the courts below show that the defence of the applicants has been exhaustively dealt with and rejected. The courts have noted that the cheques admittedly bear signature of applicant no.2. The applicants had received statutory notice (Exhibit 61). They had failed to give any reply to the same. Applicant no.2 did not step into the witness box in order to prove the applicants’ specific defence. The applicants examined witness, Dilip Avate, who was working as Chief Executive Officer in Nashik Zilla Mahila Vikas Sahakari Bank. Since the signatures on the cheques were admitted by the applicants, the trial court raised presumption under Section 139 Negotiable Instruments Act by referring to the decision of the Apex Court in the case of K. Bhaskaran vs. Sankaran Vaidhyan Balan, reported in A.I.R.1999 page 3762(S.C.). The appeal court found that no exception could be taken to the learned Magistrate raising presumption and therefore the only question that remained to be considered was whether the applicants rebutted the presumption on the touchstone of preponderance of probability. The appeal court held that in the facts of the specific defence of the nature taken by the applicants, it would have been natural for any person to promptly lodge complaint with the bank or atleast send a reply to the statutory notice setting out circumstances, in which the cheques were obtained by respondent no.1 from the manager of Nashik Zilla Mahila Vikas Sahakari Bank. However, the applicants had taken neither of the steps. It held that non issuance of reply went a long way in suggesting that the defence was not 5 Revn.329/2010 acceptable. 6. Witness Dilip Avate examined by the applicants is the Chief Executive Officer of Nashik Zilla Mahila Vikas Sahakari Bank. He stated that at the relevant time i.e. on 20th July 2002, when scrutiny report of loan application of the applicants was received, one Mr. Jadhav was the Manager, handling the transaction. Therefore, he was not personally knowing the facts of loan transaction. He deposed that as the loan was “hypothetication loan”, there was no need to take cheques as security for repayment. Such cheques are taken only when the loan is on “instalments”. Thus the applicants had failed to rebut the presumption by sufficient evidence before the Court. The appeal court then found that respondent no.1 had produced sufficient material before the court indicating existence of legally enforceable liability. It had produced on record the documents such as invoices (Exhibit 59 to Exhibit 59/15), which are for the period from 6th December 2001 to 3rd October 2002, “C” Form (Exhibit 47) and statement of profit and loss account (Exhibit 48). “C” Form bears signature of applicant no.2 as the director of applicant no.1. Respondent no.1 also examined an Officer from the Sales-Tax Office. He deposed that respondent no.1- Firm is registered with his office under the Bombay Sales Tax Act and as per the rules, it has to submit returns for every financial year. The purchasers had to fill up the said form and seller is supposed to submit the same. It bears signature of purchaser, the said form is prescribed for the goods sold out of the State. If the transaction of sale and purchase of goods occurred 6 Revn.329/2010 within Maharashtra, then the seller has to pay sales-tax. The witness had brought the original challan for payment of tax in the court, the counter-part of which was on record is at Exhibit 47. Thus it is seen that apart from the presumption available to respondent no.1 under Section 139 of Negotiable Instruments Act, it had succeeded in establishing legally enforceable liability. This evidence before the court fully justifies the judgments of conviction. There can be no interference with the impugned judgments and order. Hence, the criminal revision application is dismissed. 7. Respondent no.2 is at liberty to withdraw the amount deposited by the applicant in the lower court at Nashik. At the request of Mr. Ganvavle, time of four weeks is granted the applicant to surrender. Parties to act on authenticated copy of this order. (Smt. R.P. SondurBaldota, J)