Criminal Appeal Nos. 2065-2066 of 2014 (Arising out of Special Leave Petition (Crl.) Nos. 4682-4683 of 2012). Case: Vinita S. Rao Vs M/s. Essen Corporate Services Pvt. Ltd.. Supreme Court (India)

Judgment:

Ranjana Prakash Desai, J.

1. Leave granted.

2. The challenge in this appeal is to the orders dated 7/3/2012 and 12/3/2012 passed by a learned Single Judge of the Karnataka High Court allowing the criminal revision petition filed by the Respondents Under Section 397(1) of the Code of Criminal Procedure, 1973 ("the Code"). The prayer made by the Respondents in the criminal revision petition was for setting aside order dated 17/9/2009 passed by the Fast Track Court (Sessions)-V, Bangalore in Criminal Appeal No. 1897 of 2006 and also order dated 9/11/2006 passed by the Court of the XVth Addl. Chief Metropolitan Magistrate, Bangalore in C.C. No. 4116 of 2004.

3. The Appellant is the original complainant. The Respondents are original accused 1 and 2 respectively. Respondent 1 is a private limited company and Respondent 2 is its Managing Director who looks after the day-to-day affairs of Respondent 1 company. The Respondents are financial consultants and sub-brokers who are engaged in the business of trading inter alia on the National Stock Exchange, the Bombay Stock Exchange and the Bangalore Stock Exchange.

4. The Appellant filed a complaint for the offence punishable Under Section 138 of the Negotiable Instruments Act, 1881 ('the NI Act') against the Respondents. Gist of the complaint needs to be shortly stated.

   The Appellant and her husband had discussions with Respondent 2 regarding trading in 10000 shares of Hindustan Lever Limited belonging to the Appellant. The Respondents advised the Appellant to entrust the said 10000 shares to them and it was represented that those shares would not be sold outright; that the Respondents would utilize their expertise and knowledge of the markets to sell and buy back the shares regularly and they would thereby earn profits for the Appellant. The shares were to be held in trust and any dividends and benefits accruing on the 10000 shares to the Appellant were to be made over to her and, at the same time, the Respondents undertook to trade in the shares when time was favourable, after studying market trends to make profit for the Appellant. It was asserted that the Appellant could, at any time, cease trading and take back the said 10000 shares. On this understanding, the Appellant entrusted the said 10000 shares of Hindustan Lever Limited to the Respondents by transferring the shares from her Demat Account to that of the Respondents. On 05/03/2002 the Respondents addressed a letter acknowledging receipt of the said 10000 shares. In the month of April, 2002, the Appellant had a doubt about the intention of the Respondents. On 25/04/2002 the Appellant addressed a letter to the Respondents requesting them to return the said 10000 shares. On 20/05/2002 the Respondents replied, undertaking to return the said shares in lots of 500/10000 citing difficulties between them and their main broker as reason for delay. Another letter was addressed by the Respondents undertaking that the first lot of 500 shares would be returned by 24/05/2002 and all 10000 shares would be returned by 30/06/2002. A separate letter was addressed in relation to the monies due to the Appellant on account of dividends accruing and profits from transactions in the shares. On 25/06/2002 the Respondents sought extension of time to return the shares and confirmed that a sum of Rs. 1,54,000/- was due to the Appellant on account of dividends and profits from share transactions. By August, 2002, the Respondents returned only 1460 shares instead of 6000 shares as agreed by them. The Appellant addressed a letter demanding the balance 8540 shares. The Respondents sought time till 31/12/2002 to return the shares and, in return for extension of time, offered to give cheques as surety for the value of shares being Rs. 20,75,220/- as well as Rs. 1,79,500/- being the amounts due towards dividends and profits from transactions in shares. The Appellant agreed to and extended time till 31/12/2002. On 26/12/2002, the Respondents returned another 1040 shares to the Appellant. Thus, in all, 2500 shares were returned to the Appellant. However, 7500 shares remained with the Respondents. The Respondents sought time upto 30/06/2003. To secure the interest of the Appellant, the Respondents offered to replace the previous cheques dated 30/09/2002 with fresh cheques securing the value of 7500 shares and the money due to the Appellant. The Appellant acceded to this request in the hope of recovering her shares. The Respondents addressed two letters dated 22/02/2003 reiterating their commitment to return the shares as well as amounts due to the Appellant and recording the deposit of two cheques totalling Rs. 18,22,500/- towards the value of shares as well as a separate cheque for Rs. 1,79,500/- towards dividends and profits due from the transactions in the said shares.

   As the extension of time was expiring, the Respondents again sought further extension of time till 31/12/2003 vide letter dated 30/6/2003 and for replacement of earlier cheques, enclosed two cheques; being cheque No. 392942 dated 01/08/2003 for a sum of Rs. 8,50,000/- and cheque No. 392943 dated 01/08/2003 for a sum of Rs. 9,72,000/- both drawn on Corporation Bank, M.G. Road Branch, Bangalore, towards the value of 7500 shares in Hindustan Lever Limited. The Respondents addressed another letter dated 30/6/2003 enclosing another cheque bearing No. 392944 dated 01/08/2003 for a sum of Rs. 1,79,500/- towards the value of profits and dividends received in respect of the said shares. It was stated in the said letter that if the Respondents fail to return the shares by 31/12/2003, the Appellant could deposit the said cheques to recover their dues. As the Respondents had failed to return the 7500 shares or make over the amounts due as promised, the Appellant presented the three cheques bearing Nos. 392942, 392943 and 392944 to her banker- the Shamrao Vithal Cooperative Bank Limited for collection on 2/1/2004. On 03/01/2004...