IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION NO.2688 OF 2007 Shree Krishna Petro Yarns Ltd (Now known as Eskay K’n’IT (India) Ltd.) .. Applicant Versus M/s.Somani Cement Co Ltd & Ors. .. Respondents Mr.Subhash Jha with Mr.Yashpal Thakur a/w Mr.Vivek Patil, Mr.Sameer Mohite i/by Paras Kuhad & Associates for the applicant. Mr.J.P.Yagnik, A.P.P for the State. CORAM CORAM CORAM : A.S.OKA, J. : A.S.OKA, J. : A.S.OKA, J. DATE DATE DATE : 02nd February 2009. : 02nd February 2009. : 02nd February 2009. P.C.: . I have heard learned counsel Shri Jha appearing for the applicants. This is an application preferred under sub section 3 of section 378 of the Code of Criminal Procedure, 1973. The applicants filed a complaint alleging commission of offence under section 138 read with section 142 of the Negotiable Instruments Act, 1881. The 1st to 3rd respondents are the accused. The case made out in the complaint is that the 1st complainant at the request of the 2nd and 3rd respondents respondent advanced a sum of Rs.25 lacs to the 1st respondent on 25th April 1996 as and by way of bills discounting facility. According to the case of (2) the applicants, the 1st respondent had pledged certain shares with the 1st applicant authorising the 1st applicant to dispose of the shares in the event of the 1st respondent failing to pay the amount payable to the applicants. The case of the applicants is that accordingly the 1st applicant sold 2 lacs shares held by the 1st respondent-Company at the rate of Rs.13/- per share for Rs.26 lacs through a broker M/s.Networth Finance Limited to one Mr.Shrenik Shah, N.S.E broker. 2. On 05th September 1996, Mr.Shrenik Shah lodged a complaint with N.S.E for non receipt of the payment of the shares from purchaser. Mr.Shrenik Shah requested for reversal of sauda (transaction) of shares. The matter was referred to arbitration. According to the case of the applicants on 08th January 1997, an award was made by an Arbitrator deciding to reverse the said sauda. It is contended that the 1st applicant was instructed to refund the sum of Rs.19,99,420/- to Mr.Shrenik Shah against cancellation of the said sauda. Towards payment of the said amount of Rs.19,99,420/-, the 1st respondent (1st accused) issued a cheque dated 31st May 1997 in the sum of Rs.19,99,420/- favouring the 1st applicant. According to the applicants, the said cheque was issued by the 1st respondent towards the discharge of debt and liability of the accused no.1 (3) against the award of arbitration of the National Stock Exchange. The said cheque was dishonoured and therefore the present complaint has been filed. 3. The learned trial Judge passed an order of acquittal on various grounds. The findings of the learned Judge can be summarised as under: (a) The liability of the 1st respondent to pay a sum of Rs.19,99,420/- will arise only if the applicants prove that they had refunded a sum of Rs.19,99,420/- as per the award of the arbitration dated 08th January 1987 at Exhibit 92. (b) In support of the case of the applicants that the applicant had paid a sum of Rs.19,99,420/- to Mr.Shrenik Shah, no documentary evidence was produced on record by the applicant except for bare words of P.W.No.1. (c) P.W.No.1 has not given any details in respect of payment of Rs.19,99.420/- to Mr.Shrenik Shah. (4) (d) The award at Exhibit 92 has been set aside by this Court and the matter was remanded. (e) After remand by this Court, a fresh award was made on 20th August 1999 by which sauda was confirmed and the claim of Mr.Shrenik Shah was rejected and therefore, no question arises of compliance with the award at Exhibit 92. (f) On the basis of the material on record the presumption under sections 118 and 139 of the Negotiable Instruments Act, 1881 stands rebutted. 4. The learned counsel appearing for the applicant has taken me through the averments made in the complaint, notes of evidence and other material on record. He submitted that even in the cross-examination of the P.W.No.1, the respondents did not challenge the version of P.W.No.1 as regards the payment of a sum of Rs.19,99,420/- by the applicant to Mr.Shrenik Shah. He submitted that if there is no challenge in the cross-examination to the said case made out by the (5) applicant, the applicant was under no obligation to adduce any evidence to prove the payment of the said amount. He submitted that in view of the presumption under section 139 of the said Act of 1881, the applicant was under no obligation to adduce any evidence in support of its case of payment of a sum of Rs.19,99,420/- on the basis of award at Exhibit 92. He submitted that the presumption has not been rebutted and therefore the learned Judge has committed a gross error by passing an order of acquittal. 5. I have carefully considered the submissions. It will be necessary to refer to the averments made in the complaint. In paragraph 3 of the complaint, the applicant has referred to the award dated 08th January 1997 accepting reversal of ‘sauda’ (transaction) of sale of shares of the 1st respondent by the applicant for the price of Rs.26 lacs. The relevant part of paragraph 3 of the complaint reads thus: "On 05.09.96 Mr.Shrenik Shah lodged a complaint with NSE for non receipt of payment from the purchaser of these shares and requested for the reversal of sauda transaction. The Arbitrator decided on January 8, 1997 to reverse the said (6) sauda and instructed the complainant no.1 to refund Rs.19,99,420/- to Mr.Shrenik Shah against cancellation of said sauda. Towards that payment the accused no.1 issued a cheque bearing No.279892 dated 31.05.1997 drawn on Union Bank of India, Bombay Main Office, Nariman Point, Bombay for Rs.19,99,420/- favouring complainant no.1." Thus, the specific case made out by the applicant is that the cheque on the basis of which the complaint is filed was drawn by the 1st respondent towards the liability created by the award dated 08th January 1997. In paragraph 4 of the verification statement of the applicant, the said case has been specifically made out. Even in paragraph 7 of the affidavit in lieu of examination in chief, the case made out by the applicant reads thus: "7. ..... I say that NSE referred the aforesaid complaint to Arbitration, wherein the Arbitrator, on 08th January 1997, decided to reverse the said sauda and instructed the complainant no.1 to refund Rs.19,99,420/- (Rupees Nineteen Lakhs Ninety Nine Thousand Four (7) Hundred Twenty Only) to Mr.Shrenik Shah against cancellation of said sauda. I say that the I say that the I say that the complainant complainant complainant paid Rs.19,99,420/- (Rupess Nineteen paid Rs.19,99,420/- (Rupess Nineteen paid Rs.19,99,420/- (Rupess Nineteen Lakhs Lakhs Lakhs Ninety Nine Thousand Four Hundred Twenty Ninety Nine Thousand Four Hundred Twenty Ninety Nine Thousand Four Hundred Twenty Only) Only) Only) to Mr.Shrenik Shah. I say that towards to Mr.Shrenik Shah. I say that towards to Mr.Shrenik Shah. I say that towards that that that repayment and in order to discharge the repayment and in order to discharge the repayment and in order to discharge the liability, liability, liability, the accused no.1 issued a cheque the accused no.1 issued a cheque the accused no.1 issued a cheque bearing bearing bearing no.279892 dated 31st May 1997 drawn on no.279892 dated 31st May 1997 drawn on no.279892 dated 31st May 1997 drawn on Union Union Union Bank of India, Bombay Main Office, Nariman Bank of India, Bombay Main Office, Nariman Bank of India, Bombay Main Office, Nariman Point Point Point for Rs.19,99,420/- (Rupees Nineteen Lakhs for Rs.19,99,420/- (Rupees Nineteen Lakhs for Rs.19,99,420/- (Rupees Nineteen Lakhs Ninety Ninety Ninety Nine Thousand Four Hundred Twenty Only) Nine Thousand Four Hundred Twenty Only) Nine Thousand Four Hundred Twenty Only) in in in favour of the complainant Company, which was favour of the complainant Company, which was favour of the complainant Company, which was dishonoured dishonoured dishonoured. ......" 6. Perusal of the complaint as well as affidavit in lieu of examination in chief shows that the applicant has not pleaded any particulars of the payment of Rs.19,99,420/- made to the said Mr.Shrenik Shah on the basis of the award dated 08th January 1997 (Exhibit 92). It is pertinent to note that the said award was not made against the applicant as the applicant was not a party to the said award. 7. It is borne out from the record that the said award dated 08th January 1997 was challenged by filing a (8) petition under section 34 of the Arbitration and Conciliation Act, 1996. By setting aside the award, this Court remanded the proceedings to the learned arbitrator. Persuant to the order of remand, a fresh award was made on 20th August 1999 by which the claim of Mr.Shrenik Shah was rejected and the sauda (transaction) of sale of shares made by the applicant was confirmed. 8. The cheque in dispute was issued in discharge of the liability created under the award dated 08th January 1997 passed in favour of Mr.Shrenik Shah. The documentary evidence on the record shows that the said award was set aside by this Court by passing an order of remand and after remand, a fresh award has been made which upholds the transaction of sale of shares by the applicant. By the fresh award, the claim of Mr.Shrenik Shah was rejected. The said subsequent award shows that no amount was payable by the applicant to Mr.Shrenik Shah on account of transaction of transfer of shares. In this context that the learned trial Judge has observed that the applicant has not adduced any evidence to show that a sum of Rs.19,99,420/- was paid by the applicant to Mr.Shrenik Shah as per the award dated 08th January 1997. 9. Even the date on which said payment was (9) allegedly made and the mode in which the said payment was allegedly made by the applicant is not disclosed either in the complaint or in the affidavit in lieu of examination in chief. Except for bald statement by the authorised representative in the affidavit in lieu of evidence, no material is placed on record to show that the said amount was paid by the applicant to the said Mr.Shrenik Shah. In fact in the verification statement there is no assertion that the said amount was paid by the applicant. All this was sufficient to rebut the presumption under section 139 of the said Act of 1881. 10. The cheque was issued admittedly in discharge of the liability created by award dated 08th January 1997. The award is admittedly not in existence by virtue of subsequent award which is referred to above. It is in this context that the learned trial Judge has held that the applicant has not adduced any evidence to show that the amount of Rs.19,99,420/- was paid to the said Mr.Shrenik Shah under the award dated 08th January 1997. 11. Thus, the view taken by the learned Judge is certainly a possible view. The conclusions drawn by the learned Judge are supported by evidence on record. No case is made out for grant of leave. Application for leave is rejected. (10) (A.S.Oka,J)