* 1 * Cri.Appln.4604-4606.2010 12.01.2011 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION NO. 4604 OF 2010 ALONGWITH CRIMINAL APPLICATION NO. 4605 OF 2010 ALONGWITH CRIMINAL APPLICATION NO. 4606 OF 2010 (FOR LEAVE TO APPEAL) IN CRIMINAL APPEAL NO. OF 2010 Manhor K. Naidu ... Applicant V/S. Dinesh Sadu Shetty and anr. ... Respondents * * * * Mr. M.K. Kocharekar a/w. Ms. Prabha Badadare i/by. Mr. Rajeev Sawant & Associates, Adv.for the applicant. Mr. Gautam Bharat i/by. Bharat & Co. Advocate for respondent no.1. Ms. A.S. Shitole, in Cri.Appln.- 4604/2010. Mr. P.A. Pol, in Cri.Appln.- 4605/2010. Mr. D.R. More, in Cri.Appln No. 4606/2010 APP for State-respondent no.2. * * ** CORAM :- Smt. R.P. SondurBaldota, J. 12 January, 2011. * 2 * Cri.Appln.4604-4606.2010 12.01.2011 P.C. :- 1. This is a common order on the three applications filed by the original complainant for leave to prefer appeals against the judgment and orders dated 3rd August 2010 passed by the Sessions Court, Mumbai in Criminal Appeal Nos. 615 of 2008, 616 of 2008 and 617 of 2008. Parties to all the three appeals are same. The facts alleged therein are identical, hence the three applications have been disposed off by a common order. 2. The applicant filed three proceedings being C.C. No. 8312/SS/06, C.C. No. 8313/SS/2006 and C.C. No. 300165/SS/2007 against respondent no. 1 under Section 138 Negotiable Instruments Act. The facts alleged in the complaints stated in brief are that the respondent, a Chartered Accountant by profession was at the relevant time neighbour of the applicant. He used to handle work of several companies. He had promised good returns to the applicant, if any investment was made with him. The applicant, accordingly, during the period 1993 to 2002, from time to time invested a total sum of Rs.15 lacs with him. Initially for some * 3 * Cri.Appln.4604-4606.2010 12.01.2011 period, the applicant did receive returns over his investment but later as the returns stopped forthcoming, he demanded his money back. Respondent no. 1, however did not respond immediately to the demand. Finally when the applicant expressed his desire to forego the interest and accept the only principal amount, respondent no.1, in discharge of part of his legal liability to return the amount of Rs.15 lacs, issued three cheques of June 2006, each in the sum of Rs.1 lac. All the three cheques on being presented for payment, were returned with remarks Account Closed . The “ ” applicant then served the statutory notice and when respondent no. 1 failed to comply with the same, he filed the three proceedings. 3. The defence of respondent no.1 was that there was no legally enforceable liability towards the applicant. He claimed that the cheques in question had been given by way of only security in connection with a transaction of hand-loan in the year 2006. The liability claimed was not legally enforceable, since the applicant had not disclosed his investment of Rs.15,00,000/- in his income tax returns. Respondent no.1 also claimed that the cheques had * 4 * Cri.Appln.4604-4606.2010 12.01.2011 been drawn on a bank account which had been closed way back in the year 2002. 4. The trial court accepted the case of the applicant and convicted respondent no.1 in all the three cases. The judgment of conviction then came to be challenged by preferring three appeals to the Sessions Court, Mumbai, which appeals were allowed and the conviction set aside. 5. Mr. Kocharekar, the learned counsel for the applicant, submits that the lower appellate court erred in observing that the presumption raised under Section 139 Negotiable Instruments Act was limited to the aspect of the cheque being drawn in discharge of debt or other liability and it did not extend to the existence of legally recoverable debt . He points out that the decision of the “ ” Apex Court in the case of Krishna Janardhan Bhat V/S. Dattatraya G. Hegde AIR 2008 S.C. page 1325, relied upon by the lower appellate Court is no longer a good law in view of subsequent decision of the Apex Court of a three judge Bench in the case of Rangappa V/S. Mohan reported in AIR 2010 S.C. page 1898. In the * 5 * Cri.Appln.4604-4606.2010 12.01.2011 subsequent judgment, the Apex Court held that the presumption mandated by Section 139 Negotiable Instruments Act, itself included the existence of a legally enforceable debt or liability and to that extent the observations in the case of Krishna Janardhan Bhatt (supra) may not be correct. In view of the subsequent decision, the Court is required to proceed with the presumption that the cheques were drawn in discharge of legally enforceable debt. This presumption being a rebuttable presumption, it will be necessary to see whether there is any material brought on record by respondent no.1 to rebut the presumption and whether after such rebuttal, there is any evidence produced by the applicant to establish that the debt relied upon by him, was a legally enforceable debt. 6. Respondent no.1 has examined himself in support of his defence and also produced documentary evidence. He deposed that the applicant was introduced to him by his brother who is a sub-broker dealing in shares in Bombay Stock Exchange, as well as, National Stock Exchange. The applicant wanted advise of respondent no.1 for investing his cash amount so as to earn good * 6 * Cri.Appln.4604-4606.2010 12.01.2011 returns. Respondent no.1 had introduced different persons known to him to the applicant who had after verifying the credentials of such persons directly, invested the amount in cash with those persons. He invested an amount of Rs.1,00,000/- with Riddhi Sidhi Textile, a company registered under the Companies Act, Rs. 4,00,000/- with a builder by name, Gautam Yadav and Rs. 10,00,000/- with one Mr. Bajaj who has a shop at Kurla. Respondent no.1 deposed that the applicant used to receive returns over the investment directly from those persons. The applicant had also given a personal loan of Rs.1,80,000/- to respondent no.1 in the year 1995 and 1996 which amount has been repaid with monthly instalments of Rs.10,000/-. That amount has been duly acknowledged and accepted by the applicant. Respondent no.1 produced the statement of his bank Account showing refund of the loan amount. As regards the cheques in question, respondent no.1 stated that he had handed over the cheques to the wife of the applicant in the year 1999 and 2000 by way of security for the investment made by the applicant on the * 7 * Cri.Appln.4604-4606.2010 12.01.2011 advise of respondent no.1. The cheque issued were blank cheques which blanks were filled in by the applicant and the cheques presented for payment. Respondent no.1 stated that the cheques preceding and succeeding the cheques in question had been duly encashed in the years 1999-2000. He produced the statement of Accounts of the Banks in support of his statement. Later in the year 2002, respondent no.1 closed his bank Account. This evidence of respondent no.1 was sufficient to rebut the presumption under Section 139 Negotiable Instruments Act. 7. In view of the above evidence, the applicant was required to establish that respondent no.1 had issued the cheques in question to him towards part discharge of a debt in the sum of Rs. 15,00,000/- to him. The evidence of the applicant as regards the investment is far from satisfactory. It has been his claim that he had during the period 1993 to 2002 invested different amounts with respondent no.1. He was, however, able to give details of only four payments. He stated that he had paid amounts of Rs.20,000/-, Rs. 30,000/-, Rs.50,000/- and Rs.1,00,000/- to respondent no.1. These * 8 * Cri.Appln.4604-4606.2010 12.01.2011 payments accounted for only Rs.2,00,000/-. As regards the balance amount of Rs.13,00,000/- the applicant stated that he did not know as to when and how that payment had been made. Whatever the little details stated in the evidence do not find place in the complaint. The lower appellate court however has opined that respondent no.1 has contradicted himself in his evidence by stating, on one hand, that the applicant had direct dealing with the persons mentioned above while making investment and, on the other hand, that the cheques in question were given by him in respect of the investment by way of security inrespect of the very investment. The lower appellate Court, however, considered the above evidence of the applicant as regards the investment and his admission that the amount of investment of Rs.15,00,000/- was not shown in the income-tax returns at the relevant time. It opined that failure to disclose the said amount in income-tax returns assumed character of unaccounted amount and by no stretch of imagination, it can be said that the liability to repay the unaccounted amount is a legally enforceable liability within the * 9 * Cri.Appln.4604-4606.2010 12.01.2011 meaning of explanation to Section 138 Negotiable Instruments Act. There can be, no opinion other than that expressed by the lower Appellate Court, about the enforceability of the liability. In the circumstances, the Criminal Applications are rejected. [Smt. R.P. SondurBaldota, J]