Case: Jitendra Vora Vs. Bhavana Y. Shah &amp; Another

2. The brief facts of this case are as follows: The appellant supplied goods to M/s. Shah Agencies. The 1st and 2nd respondents carried their business in the names of M/s. Shah Enterprises and M/s. Shah Agencies. In part discharge of the liability of M/s. Shah Agencies, two cheques for Rs. 5 lakhs each, both dated 20th August, 2000, drawn on the Vysya Bank Ltd., S.P. Road, Secunderabad, signed by Respondent No.2 as Power of Attorney Holder of Respondent No.1, were issued on an account maintained by M/s. Shah Enterprises.3. On presentation, both the cheques were dishonoured due to insufficient balance in the account of M/s. Shah Enterprises. A demand notice dated 8th March, 2001 was served upon respondent Nos.1 & 2 which was duly received by them on 13th March, 2001. The respondents failed and neglected to comply with the said notice of demand. Hence, a complaint was lodged before the Metropolitan Magistrate, 28th Court, Esplanade, Mumbai. The said complaint was numbered as CC No.505/S/01 dated 17th April, 2001. The said complaint was lodged against the accused respondents describing accused No.1 as the Proprietor of M/s. Shah Enterprises and accused No.2 as Power of Attorney Holder of the said M/s. Shah Enterprises. The Trial Court acquitted the respondents on the ground that the appellant did not institute the case against the partnership firm i.e. M/s. Shah Enterprises.4. Being aggrieved by the said order passed by the Metropolitan Magistrate, the appellant filed an application for leave to appeal under(4) of Section 378 of the Code of Criminal Procedure, 1973, before the Bombay High Court. The High Court by its order dated April 1, 2009 held that the applicant has not made out a case for grant of leave to appeal under Section 378(4) Cr.P.C. and rejected the said application for leave to appeal. The High Court held that the case made out in the complaint was that the goods were sold and supplied to M/s. Shah Enterprises and the liability was of M/s. Shah Enterprises. While in the affidavit in lieu ofthe appellant herein came out with a case that the liability was that of M/s. Shah Agencies as goods were sold and supplied to M/s. Shah Agencies and it was not the case of the appellant that the accused had agreed to take over and discharge the liabilities of M/s. ShahHigh Court duly perused the complaint, affidavit in lieu ofof the applicant, hisand other material documents on record. From these documents it appears that notice of demand had been addressed to the first respondent in her capacity as a Proprietor of M/s. Shah Enterprises, and to the second respondent in his capacity as the Power of Attorney Holder of M/s. Shah Enterprises. In the notice itself it has been stated that the goods were sold and supplied to the Proprietor of M/s. Shah Agencies. In the notice it has been further stated that the appellant is engaged in business of manufacturing and selling of synthetic Polymers/Resins and in response to the orders from the 2nd respondent as Proprietor of Shah Agencies, the applicant has supplied goods from time to time and the disputed cheques were issued in discharge of the liabilities of such supply. The notice was addressed to the Proprietor and the constituted Attorney of M/s. Shah Enterprises, but there is no specific averment that the liability of M/s. Shah Agencies was taken over by M/s. Shah Enterprises. In the complaint, the first respondent was impleaded as Proprietor of M/s. Shah Enterprises and the second respondent was impleaded as a Power of Attorney Holder of M/s. Shah Enterprises.6. After perusing the notice and the averments made in the complaint and thethe High Court found that the case made out by the appellant/applicant in the aforesaid affidavit is that accused No.1 was one of the partners of M/s. Shah Enterprises. It is not asserted that accused No.2 is the partner of the said firm but what is stated is that accused No.2 is the husband of accused No.1 and Power of Attorney Holder of M/s. Shah Enterprises. After perusing the aforesaid facts, the High Court came to the conclusion asis not the specific case of the applicant made out in the complaint that the first accused in his capacity of proprietor of Shah Enterprises and the second accused in his capacity of power of attorney of Shah Enterprises had agreed to take over and discharge the liability of M/s. Shah Agency. Reliance is placed by the applicant on the letter at Exh.Apart from the fact that the said letter is no evidence to show that the liability of Shah Agency was taken over by Shah Enterprises, as stated earlier, the said case was never made out by the applicant in the complaint. The said case made out in the complaint is that the liability is of M/s. Shah Enterprises and not of M/s. Shah Agencies. The letter dated 7th December 2000 at Exh.is not signed by accused No.1 who according to the applicant is the proprietor or partner of Shah Enterprises. The letter has been sent by accused No.2 in his capacity as constituted attorney of Shah Agencies. Therefore, the letter cannot be termed as a document under which the liability of Shah Agencies was specifically agreed to be taken over by the Shah Enterprises or by the accused Nos.1 andthese circumstances, the High Court held that no case is made out for grant of leave and rejected the application.

Reasoning:
From a bare reading of Section 138 of the NI Act, the first and foremost essential ingredient for attracting a liability under this Section is that the person who is to be made liable should be the drawer of the cheque and should have drawn the cheque on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for discharge, in whole or part, of any debt or other liability.In our opinion, the High Court has correctly come to the conclusion that the liabilities of M/s. Shah Agencies were never taken over by M/s. Shah Enterprises. Therefore, the reasoning given by the High Court, in our opinion, is absolutely flawless and we find no ground to interfere with the concurrent findings of the Trial Court and the High Court.