Criminal Appeal No. 73 of 2007. Case: 1. A.C. Narayanan, 2. Shri G. Kamalakar Vs 1. State of Maharashtra & Anr., (With Criminal Appeal No. of 2013, (Arising out of S.L.P. (Crl.) No.2724 of 2008)), 2. M/s. Surana Securities Ltd. & Anr.. Supreme Court

Case Number:Criminal Appeal No. 73 of 2007
Party Name:1. A.C. Narayanan, 2. Shri G. Kamalakar Vs 1. State of Maharashtra & Anr., (With Criminal Appeal No. of 2013, (Arising out of S.L.P. (Crl.) No.2724 of 2008)), 2. M/s. Surana Securities Ltd. & Anr.
Judges:Ranjana Prakash Desai and Ranjan Gogoi, JJ.
Issue:Negotiable Instruments Act, 1881 - Sections 138 and 142; Code of Criminal Procedure, 1973 - Section 204
Judgement Date:September 13, 2013
Court:Supreme Court
 
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Judgment:

P.Sathasivam,CJI.

Criminal Appeal No. 73 of 2007

This appeal is filed against the final common judgment and order dated 12.08.2005 passed by the High Court of Judicature at Bombay in Criminal Application Nos. 797, 798, 799, 801, 802 and 803 of 2002 whereby the High Court dismissed the applications filed by the appellant herein against the order of issuance of process against him for the offence punishable under Sections 138 and 142 of the Negotiable Instruments Act, 1881 (in short ''the N.I. Act) by the IXth Additional Chief Metropolitan Magistrate at Bandra, Mumbai in Complaint Case Nos. 292/S/1998, 293/S/1998, 297/S/1998, 298/S/1998, 299/S/1998 and 300/S/1998.

Brief facts:

(a) The appellant is the Vice-Chairman and Managing Director of the Company by name M/s Harvest Financials Ltd. having its registered office at Bombay. Under a scheme of investment, the appellant collected various amounts from various persons in the form of loans and in consideration thereof issued post-dated cheques either in his personal capacity or as the signatory of the Company which got dishonoured.

(b) On 16.12.1997, Mrs. Doreen Shaikh, Respondent No.2 herein, the Power of Attorney Holder of six complainants, namely, Mr. Yunus A. Cementwalla, Smt. Fay Pinto, Mr. Mary Knoll Drego, Smt. Evelyn Drego, Mr. Shaikh Anwar Karim Bux and Smt. Gwen Piedade filed Complaint Case Nos. 292/S/1998, 293/S/1998, 297/S/1998, 298/S/1998, 299/S/1998 and 300/S/1998 respectively against the appellant herein under Sections 138 and 142 of the N.I. Act before the IXth Metropolitan Magistrate at Bandra, Mumbai. On 20.02.1998, Respondent No. 2 herein verified the complaint in each of these cases as Power of Attorney Holder of the complainants. Vide order dated 04.04.1998, the Additional Chief Metropolitan Magistrate, issued process against the appellant under Section 204 of the Code of Criminal Procedure, 1973 (in short ''the Code'') for the offences punishable under Sections 138 and 142 of the N.I. Act.

(c) Being aggrieved of the issuance of the process, on 13.01.2000, the appellant herein moved an application for discharge/recall of process in each of the complaints. Vide common order dated 29.11.2000, the Additional Chief Metropolitan Magistrate, IXth Court, Bandra, Mumbai dismissed the applications filed by the appellant herein.

(d) Being aggrieved of the said order, the appellant herein preferred applications being Criminal Application Nos. 797, 798, 799, 801, 802 and 803 of 2002 before the High Court for quashing of the complaints. By impugned order dated 12.08.2005, the said applications were dismissed by the High Court.

(e) Against the said order, the appellant has preferred this appeal by way of special leave before this Court.

Criminal Appeal........../2013 @ S.L.P.(Crl.) No. 2724 of 2008:

Leave granted.

This appeal is directed against the judgment and order dated 19.09.2007 passed by the High Court of Judicature, Andhra Pradesh at Hyderabad in Criminal Appeal No. 578 of 2002 whereby the High Court allowed the appeal filed by M/s Surana Securities Ltd.-Respondent No.1 herein (the complainant) against the judgment and order dated 30.10.2001 passed by the Court of XVIII Metropolitan Magistrate, Hyderabad in C.C. No. 18 of 2000 dismissing the complaint and acquitting the accused for the offence under Section 138 of the N.I. Act.

Brief facts

(a) Respondent No.1 herein-the complainant is a limited company carrying on the business of trading in shares. The appellant herein is a client of the respondent-Company and used to trade in shares. During the course of business, the appellant became liable to pay an amount of Rs. 7,21,174/-towards the respondent-Company. The appellant, in order to discharge the said liability, issued six cheques amounting to Rs.1,00,000/- each and another cheque for Rs.1,21,174/- drawn on Andhra Bank on different dates. When the first six cheques were presented for encashment on 18.09.1997, the same got dishonoured with an endorsement ''funds insufficient''. Upon receiving the said information, the respondent-Company issued a legal notice to the appellant calling upon him to pay the amounts due but he did not pay the same.

(b) The Board of Directors of the respondent-Company, by a resolution, authorized its Managing Director to appoint an agent to represent the Company. Pursuant thereto, one Shri V. Shankar Prasad was appointed as an agent by executing a General Power of Attorney. Later, he was substituted by one Shri Ravinder Singh under another General Power of Attorney. (c) Respondent-company filed a complaint under Section 138 of the N.I. Act being CC No. 1098 of 1997 in the Court of XIth Metropolitan Magistrate, Secunderabad. Subsequently, vide order dated 03.05.2000, the said complaint was transferred to the Court of XVIII Metropolitan Magistrate, Hyderabad and was registered as C.C. No. 18 of 2000. By order dated 30.10.2001, the Metropolitan Magistrate dismissed the complaint filed by the respondent-Company under Section 138 of the N.I. Act.

(d) Aggrieved by the said order, respondent-company filed an appeal being Criminal Appeal No. 578 of 2002 before the High Court of Judicature, Andhra Pradesh at Hyderabad. By impugned order dated 10.09.2007, learned single Judge of the High Court allowed the appeal and set aside the order dated 30.10.2001 passed by the XVIII Metropolitan Magistrate, Hyderabad and convicted the appellant herein under Section 138 of the N.I. Act.

(e) Being aggrieved by the order passed by the High Court, the appellant has filed this appeal by way of special leave.

(f) By order of this Court dated 07.04.2008, this appeal was tagged with the Criminal Appeal No. 73 of 2007 arising out of S.L.P. (Crl.) Nos. 6703-6708 of 2005. Hence, we heard both the appeals together.

6) Heard Ms. Indu Malhotra, learned senior counsel and Mr. Annam D.N. Rao, learned counsel for the appellants and Mr. Shankar Chillarge, Mr. Saurabh Kumar Tuteja, and Mr. Mayur R. Shah, learned counsel for the respondents.

7) On 04.01.2007, a Division Bench of this Court, on 04.01.2007, while considering Criminal Appeal No. 73 of 2007 (arising out of Special Leave Petition (Crl.) Nos. 6703-6708 of 2005) with regard to the interpretation of Section 142(a) of the N.I. Act observed that in view of the difference of opinion among various High Courts as also the decisions of this Court in M.M.T.C. Ltd. and Anr. vs. Medchl Chemicals and Pharma (P) Ltd. and Anr., (2002) 1 SCC 234 and Janki Vashdeo Bhojwani and Anr. vs. Indusind Bank Ltd. and Ors., (2005) 2 SCC 217, the matter should be considered by a larger Bench in order to render an authoritative pronouncement. In view of the same, it is desirable to extract the entire order of reference which reads as under:-

"Delay in filing counter affidavit is condoned.

Leave granted.

Interpretation and/or application of Section 142(a) of the Negotiable Instruments Act, 1881, ("NI Act") is in question in this appeal which arises out of a judgment and order dated 12.8.2005 passed by a learned Single Judge of the High Court of Judicature at Bombay.

The basic fact of the matter is not in dispute.

Several cheques on different dates were issued by the appellant herein which were dishonoured. The complainant executed a Special Power of Attorney on or about 28.11.1997, in favour of one Smt. Doreen Shaikh. She filed complaint petitions in the Court of Additional Chief Metropolitan Magistrate, Bandra, Mumbai.

The complaint petitions were filed in the name of the respective payees of the cheques. She also filed affidavits in support of the averments made in the said complaint petitions. Cognizance of offence under Section 138 of the NI Act was taken against the appellant. Summons were issued. Questioning the order issuing summons by the learned Magistrate in exercise of his power under Section 204 of the Code of Criminal Procedure...

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