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Gujarat High Court · body

2024 DIGILAW 1469 (GUJ)

M. SETU MADHAVAN v. STATE OF GUJARAT

2024-07-01

GITA GOPI

body2024
JUDGMENT : GITA GOPI, J. 1. Rule. Mr. Hardik Mehta, learned APP and Mr. K.J. Panchal, learned advocate, waive service of notice of Rule on behalf of respective parties. Rule is fixed forthwith. 2. The present revision applications have been filed under section 397 read with section 401 of Code of Criminal Procedure, 1973 (hereinafter referred to as ‘C.R.P.C.’ for short) with prayer in Criminal Revision Application No. 634 of 2024 to quash and set aside the judgment and order dated 20.04.2024 passed in Criminal Appeal No. 177 of 2019 by the 2nd Additional Sessions Judge, Surat and the judgment and order dated 26.04.2019 passed in Criminal Case No. 19541 of 2011 by the 6th Additional Chief Judicial Magistrate, Surat. While, in Criminal Revision Application No. 648 of 2024, the prayer is made to quash and set aside the judgment and order dated 20.04.2024 passed in Criminal Appeal No. 176 of 2019 by the 2nd Additional Sessions Judge, Surat and the judgment and order dated 26.04.2019 passed in Criminal Case No. 19540 of 2011 by the 6th Additional Chief Judicial Magistrate, Surat. 2.1 The judgment of the 6th Additional Chief Judicial Magistrate, Surat on 26.04.2019 was a common judgment in Criminal Case Nos.19541 of 2011 and 19540 of 2011. The learned Additional Chief Judicial Magistrate, Surat, while recording the facts, has noted the reason for joint decision of the matters. According to the learned trial Court Judge, the amount due of the complainant is much lessor than the amount of cheque, hence, that was a consideration, which weighed in the mind of the Court to pronounce a decision on both the cases in a joint order considering it to be in the interest of justice. The learned trial Court Judge also noted that exhibits of the documents and the depositions are almost same, hence, it would not be difficulty for any authority in case of any challenge of the order. 3. The trial Court Judge noted that the complainant-Udhana Citizens Cooperative Bank Ltd. which merged in Kalupur Commercial Cooperative Bank Ltd. from 15.12.2013, is registered under Cooperative Society Act vide No. 2940 dated 21.10.1995 having licence No. SA1198/P, dated 01.01.1996. The person authorized to file the complaint is serving as a Senior Officer in the Bank and was also holding an authority from the Bank. The person authorized to file the complaint is serving as a Senior Officer in the Bank and was also holding an authority from the Bank. 3.1 While recording the facts of the case, it was noted that the accused was Chairman in the Bank and is the relative of K.N. Mohanan, the proprietor of ‘Rubis’. K.N. Mohanan had received Cash Credit Loan in the capacity of proprietor of ‘Rubis’ from the bank vide Account No. CC-199/2004 and had executed necessary documents in favour of Bank. On 28.02.2011, the amount worth Rs.1,84,79,541/- was due from the said loan account. 3.2 It has further been noted that the present revisionist - accused had agreed to pay the dues and accepted the liabilities and had executed the cheques in favour of the Bank with following details: S. No. Bank Cheque No. Date Amount Cheques of CC No. 19540/2011 1 State bank of India, Udhana, Udhyognagar, Surat 578409 4-2-2011 25,00,000/- 2 “ 578410 5-02-2022 25,00,000/- 3 “ 578411 7-02-2011 25,00,000/- Total Amount 75,00,000/- Cheques of CC No. 19541/2011 1 State bank of India, Udhana, Udhyognagar, Surat 578406 1-2-2011 25,00,000/- 2 “ 578407 2-02-2011 25,00,000/- 3 “ 578408 3-02-2011 25,00,000/- Total Amount 75,00,000/- 3.3 The total amount, as noted in Criminal Case No. 19540 of 2011 is Rs.75,00,000/- with three cheques issued on the dates, as noted hereinabove. And in Criminal Case No. 19541 of 2011, the same total amount of Rs.75,00,000/- is the amount stated to be agreed upon to be paid. The complainant deposited the cheques in the Bank, but came to be returned as unpaid on 15.02.2011 with the endorsement of “Opening Balance insufficient.” 3.4 As per the complainant, the statutory legal notice notice was issued to the accused on 12.03.2011 through registered post and UPC, which came to be served upon the accused on 14.03.2011. Having failed to make good the payment, hence, complaint was filed under section 138 of the Negotiable Instruments Act. Having failed to make good the payment, hence, complaint was filed under section 138 of the Negotiable Instruments Act. 3.5 After recording the deposition and on appreciation of the evidence, the learned 6th Additional Chief Judicial Magistrate, Surat having found the present accused-M. Setu Madhvan guilty for the breach of section 138 of the N.I. Act in both the criminal cases, was ordered to pay Rs.75,00,000/- towards the fine for the offence, and in default of payment of fine, the accused was made liable for simple imprisonment of 6 months, with observation that the fine will be recovered by way of levy, as revenue due from the assets of the accused. It was further ordered that after the appeal period, the amount of Rs.60,00,000/- would be paid as compensation to the complainant under section 357(1) of the Cr.P.C. 3.6 Aggrieved by the judgment and order, Criminal Appeal Nos.176 of 2019 and 177 of 2019 were filed before the 2nd Additional Sessions Judge, Surat. The learned Sessions Judge, by the decision dated 20.04.2024, affirmed the judgment and order of the Additional 6th Chief Judicial Magistrate, Surat by dismissing the appeals. 3.7 Challenging the legality and propriety of the judgments and orders of both the courts, the petitioner as revisionist is before this Court by filing the Revision Application Nos.634 of 2024 and 648 of 2024. 4. Learned advocate Mr. Narendra L.Jain by referring to the facts of Dashrathbhai Trikambhai Patel Vs. Hitesh Mahendrabhai Patel, (2023) 1 SCC 578 , of being a loan transaction, submitted that, the Hon’ble Apex Court has noted the effect of part payment of debt prior to presentation of cheque for encashment, and has clarified the principles in context with section 138 of the N.I. Act, where the question was raised, whether section 138 of the N.I. Act would still be attracted when the drawer of the cheque makes a part-payment towards the debt or liability after the cheque is drawn but before the cheque is encashed for the dishonour of the cheque, which represents the full sum. 4.1 Advocate Mr. Jain submitted that the case was against the proprietor of ‘Rubis’, which was engaged in textile business. The proprietor is K.N. Mohanan. Mr. Jain submitted that as per deposition of Jayesh Brijesh Sakliya of the Kalupur Commercial Cooperative Bank Ltd., recorded before the trial Court at Exh.37, K.N. Mohanan had already deposited the amount. Mr. 4.1 Advocate Mr. Jain submitted that the case was against the proprietor of ‘Rubis’, which was engaged in textile business. The proprietor is K.N. Mohanan. Mr. Jain submitted that as per deposition of Jayesh Brijesh Sakliya of the Kalupur Commercial Cooperative Bank Ltd., recorded before the trial Court at Exh.37, K.N. Mohanan had already deposited the amount. Mr. Jain submitted that the complaint was filed for the Bank Account of K.N. Mohanan in connection with ‘Rubis’ and ‘Ferro Cast’. As per the deposition, in compliance of the order passed by co-ordinate bend in Bail Application No. 12491 of 2011, the proprietor of ‘Rubis’ had deposited an amount of Rupees One Crore Seventy Lakhs for both his loan Accounts of ‘Rubis’ and ‘Ferro Cast’, and both the cases against the proprietor of ‘Rubis’ and ‘Ferro Cast’ had been withdrawn. 4.2 Advocate Mr. Jain submitted that there was no reason to continue with any proceedings against the present revisionist, who has no connection whatsoever with the business of ‘Rubis’ or ‘Ferro Cast’. The case registered against the present revisionist was on the premise that he had undertaken liability of payment of the amount standing in the Bank Account of ‘Rubis’ and ‘Ferro Cast’. Mr. Jain submitted that no such undertaking had been filed before the trial Court to be proved. 4.3 Advocate Mr. Jain further submitted that mandatory legal notice under section 138 of the N.I. Act, has not been served to the present revisionist. The facts on record also proves that legal notice was served to K.N. Mohanan at his place of business, while it is a proprietorship, hence, the revisionist would have no concern with the business of K.N. Mohanan against whom no process was issued nor claimed to be issued, rather in the trial, vide Exh.20, in both the criminal cases being Criminal Case Nos. 19540 of 2011 and 19541 of 2011, a purshish was filed on 23.03.2016 by the complainant that they do not claim any process against the accused no. 2. 4.4 Advocate Mr. Jain further stated that the trial Court failed to even examine the fact that no legal notice was served upon the accused. The deposition of Jayesh Brijesh Sakliya proves that the residential address of the revisionist was very much known to the Bank, and the witness had also stated the residential address of the revisionist as Meghdhara Bungalows, Piplod. 4.5 Advocate Mr. The deposition of Jayesh Brijesh Sakliya proves that the residential address of the revisionist was very much known to the Bank, and the witness had also stated the residential address of the revisionist as Meghdhara Bungalows, Piplod. 4.5 Advocate Mr. Jain submitted that the revisionist was a Chairman of the Bank from the very initiation of Udhana Citizens Cooperative Bank Ltd. The only connection, which could be brought on record, was that the present revisionist and the proprietor of ‘Rubis’ and ‘Ferro Cast’, K.N. Mohanan, are relatives. Mr. Jain submitted that both the courts could not lay down liability of paying the compensation to the Bank, where already the account has been settled with proprietor of ‘Rubis’ and ‘Ferro Cast’. 4.6 Advocate Mr. Jain submitted that it is a very definite case of the revisionist that since he was a Chairman of the Udhana Citizens Cooperative Bank Ltd., his signed cheques were in the drawer and during the proceedings of merger and when the administrator (Vahivatdar) had taken up the charge, the cheques, which were lying in the drawer were misused, when three criminal complaints were filed against the Chairman and Directors of the Bank. 4.7 Mr. Jain, learned advocate submitted that the legal mandatory necessity of issuance of notice has not been proved, and further there was no legal valid and legal dues against the present revisionist as an accused of proceeding under section 138 of the N.I. Act. 5. Countering the arguments, learned advocate Mr. K.J. Panchal for the Udhana Citizens Cooperative Bank Ltd., merged in Kalupur Commercial Cooperative Bank Ltd., submitted that the present revisionist had undertook to pay the liability of K.N. Mohanan, the proprietor of ‘Rubis’ when received the Cash Credit Loan from the Bank. Mr. Panchal has referred to the depositions of witness - Jayesh Brijesh Sakliya and Mahesh Narrotum Patel to substantiate the complaint filed by the Bank against the accused. Mr. Panchal submitted that the revisionist had undertook to pay the liability of ‘Rubis’ and had issued the cheque in favour of the Bank, and after the legal notice had failed to make the payment, thus, was tried by the Special Court under the N.I. Act and had been ordered to pay compensation amount to the Bank. 6. The legal notice under section 138 of the N.I. Act, as per the record, was sent to ‘Rubis’. 6. The legal notice under section 138 of the N.I. Act, as per the record, was sent to ‘Rubis’. The acknowledgment shows that it was received by K.N. Mohanan. The Bank was having the knowledge of residential place of the present revisionist, while notice of both the cases was sent at Plot No. 125, Ayappa Industrial Estate, Bhedwad, Surat showing the residential address as under C/O, Ganesh Textiles. The postal acknowledgment bears the signature of K.N. Mohanan on both the acknowledgment slips. The summons of the Court was served to the present revisionist in jail. 6.1 Advocate Mr. Panchal submitted that during the appeal under section 391 of the Cr.P.C., document dated 04.11.2011, which is an agreement of sale between Bharatatbhai Vitthalbhai Patel, Kusum Bharatratbhai Patel and Kumari Nisha Sethu Madhwan and Manikant Sethu Madhwan, where the mention of the sale deed at serial no. 24452 before sub-registrar dated 20.09.1999 showed the ownership of the second part, who is the present revisionist with his daughter, and they had agreed to sell the property for their liability which they had undertaken of their relative K.N. Mohanan. 6.2 Advocate Mr. Panchal has also referred to the cheque numbers on the documents. The said document, which had been produced during the appellate proceeding, has been referred on page no. 14 of the appellate court judgment, where the submission was made in connection with section 391 Cr.P.C. that the sale deed on record shows that Plot No. 125 of Ayappa Industrial Estate belongs to the revisionist, hence, the notice was legally served on him under C/O, Ganesh Textiles, 28-A, Plot No. 125, Ayappa Industrial Estate, Bhedwad, Surat. 7. It is required to be noted that the learned appellate Court has referred to the bail application no. 12491 of 2011 of K.N. Mohanan before the co-ordinate bench of this Court, where he undertook to deposit the money. The learned appellate Court noted that the accused has failed to rebut the presumption by cogent and convincing evidence. The learned appellate Court has observed that the accused was a Chairman and the management of the Bank was by him with the Board of Directors. The management was not as per R.B.I. Guidelines and, therefore, the complainant Bank was removed from the clearance by R.B.I. It was because of mismanagement of the Bank, three police complaints were filed against the Board of Directors. The management was not as per R.B.I. Guidelines and, therefore, the complainant Bank was removed from the clearance by R.B.I. It was because of mismanagement of the Bank, three police complaints were filed against the Board of Directors. The learned appellate Court had observed that the revisionist - accused had admitted of K.N. Mohanan being his relative, thus, the learned Judge came to the conclusion that the accused has misused his authority by giving loan to his relative. 7.1 The elements, which are required to be proved under section 138 of the N.I. Act are as under: (i) There is legally enforceable debt. (ii) The cheque was drawn from the account of Bank for discharging whole or in part of any debt or liability which pre-supposes a legally enforceable debt. (iii) Cheque so issued had been returned due to insufficiency of funds. 7.2 The admitted fact is that K.N. Mohanan has not been prosecuted in present both the matters, rather the facts on record shows that the complaint had been withdrawn against him. The evidence, as recorded of Jayesh Brijesh Sakliya shows the dealing with the K.N. Mohanan as proprietor of ‘Rubis’. There is no specific direction in Resolution No. 4 by the Board of Directors in the meeting on 14.03.2014 against the present revisionist, nor any resolution for initiating any proceedings against the present revisionist. The witness - Jayesh Brijesh Sakliya in cross-examination has specifically stated that there is no dues of the accused, the present revisionist, in Udhana Citizens Cooperative Bank Ltd. He has also affirmed that the proprietor of ‘Rubis’ K.N. Mohanan had filed a suit against Kalupur Commercial Cooperative Bank Ltd. in city Civil Court, and the matter is pending before the Commercial Court. The witness has also affirmed that no loan papers have been produced in the trial of C.C. No. 199 of 2004. The Bank statement does not clarify of any legal dues against the present revisionist. The cross-examination of the witness confirms the fact that K.N. Mohanan has deposited amount of Rupees One Crore Seventy Lakhs in compliance of order passed by this High Court as a proprietor of ‘Rubis’, while the total cheque amount is Rs.1.50 Crore. 8. In Dashrathbhai Trikambhai Patel Vs. Hitesh Mahendrabhai Patel (supra), the Hon’ble Apex Court in Para-34 observed as under: “34. 8. In Dashrathbhai Trikambhai Patel Vs. Hitesh Mahendrabhai Patel (supra), the Hon’ble Apex Court in Para-34 observed as under: “34. In view of the discussion above, we summarise our findings below: 34.1 For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation. 34.2 If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque. 34.3 When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted. 34.4 The first respondent has made part-payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the ‘legally enforceable debt’ on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds. 34.5 The notice demanding the payment of the ‘said amount of money’ has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138. Since in this case, the first respondent has not committed an offence under Section 138, the validity of the form of the notice need not be decided.” 9. Here, the payment of Rupees One Crore Seventy Lakhs is deposited in the loan account, while the cheque amount is Rupees One Crore Fifty Lakhs. The defence, as was raised by the present revisionist, is that the signed cheques lying in the drawer as was Chairman of the Bank, those cheques were misused by the administrator of the Bank to file criminal complaint against him. The defence, as was raised by the present revisionist, is that the signed cheques lying in the drawer as was Chairman of the Bank, those cheques were misused by the administrator of the Bank to file criminal complaint against him. The legal notice under section 138 of the N.I. Act had not been served to him at his residential place, while the postal acknowledgment on record shows that the notice was received by K.N. Mohanan at his place of business, where he is proprietor of ‘Rubis’. 9.1 Both the courts appear to have not gone through the provision of section 138, while appears to have conducted the trial, as were making the recovery on behalf of the Bank against the present revisionist being the former chairman of the Bank. The connection of the present revisionist with the business deals of ‘Rubis’ could not be proved. The fact that he had undertaken to pay the liabilities of ‘Rubis’ has not been proved on record. 10. In the case of M.D. Thomas Vs. P.S. Jaleel and Anr. (2009) 14 SCC 398 , where, as per the facts of the case, the notice was received by the family members, which was served on wife. It was held that notice to drawer is sine quo non in terms of clause (b) of proviso to section 138 of the Act. 11. Here, in the present matters, the prosecution has failed to prove the case against the revisionist. The legal notice has not been served to him. The complainant has failed to even show the legal dues, much less, the fact of any undertaking by the revisionist to pay the debts on or on behalf of K.N. Mohanan, the proprietor of ‘Rubis’, who even was not prosecuted along with the accused-revisionist in the trial; while the complainant had rather filed a purshish praying non-issuance of process against him. The complainant has failed to prove on record that the cheques drawn from the account of the Bank was for the discharge in whole or in part of the debt or liability, which could be considered as a legally enforceable debt. The judgments and orders passed by courts are unjust and perverse. 12. In view of the aforesaid, the present applications are allowed. The judgments and orders passed by courts are unjust and perverse. 12. In view of the aforesaid, the present applications are allowed. The judgment and order dated 20.04.2024 passed in Criminal Appeal No. 177 of 2019 by the 2nd Additional Sessions Judge, Surat and the judgment and the judgment and order dated 26.04.2019 passed in Criminal Case No. 19541 of 2011 by the 6th Additional Chief Judicial Magistrate, Surat, impugned in Criminal Revision Application No. 634 of 2024; and the judgment and order dated 20.04.2024 passed in Criminal Appeal No. 176 of 2019 by the 2nd Additional Sessions Judge, Surat and the judgment and order dated 26.04.2019 passed in Criminal Case No. 19540 of 2011 by the 6th Additional Chief Judicial Magistrate, Surat, impugned in Criminal Revision Application No. 648 of 2024, are quashed and set aside. 13. It is stated that the revisionist has deposited, the amount of Rs.22,50,000/- before the Court. Let the same be returned back to the present revisionist along with interest accrued thereon on proper verification of identity.