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IN THE HIGH COURT OF BOMBAY, GOA BENCH
N.A. Britto, J.
Balaji Agencies Pvt. Ltd. - Appellant
Vs.
Vilas Bagi And Another - Respondents
Criminal Appeal No. 70 of 2006
Decided On : 16-06-2008
For the Appellant : V.A. Lawande and F.M. Mesquita,
For the Respondent: Winnie Coutinho, Public Prosecutor for and Y.V. Nadkarni
The main legal point established in the judgment is that the accused is liable for the dishonour of the cheque issued as security, and subsequent payments made by the accused cannot absolve the accused of liability under Section 138 of the Act.
Headnote:
Negotiable Instruments Act - Acquittal Appeal - 138 - 138 - 138 - The court discussed the applicability of Section 138 of the Negotiable Instruments Act, 1881 in a case where a cheque was issued as security. The court held that the accused was liable for the dishonour of the cheque as it was given as security and the complainant enforced the security after due notice to the accused. The court also considered subsequent payments made by the accused and held that they cannot absolve the accused of liability under Section 138 of the Act.
Fact of the Case:
The complainant appealed against the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881. The accused issued a cheque as security, which was later dishonored. The complainant enforced the security after due notice to the accused. Subsequent payments were made by the accused after the offence was committed.
Finding of the Court:
The court found that the accused was liable for the dishonour of the cheque as it was given as security and the complainant enforced the security after due notice to the accused. The subsequent payments made by the accused cannot absolve the accused of liability under Section 138 of the Act.
Issues: The issues included the applicability of Section 138 of the Negotiable Instruments Act in a case where a cheque was issued as security and the effect of subsequent payments made by the accused.
Ratio Decidendi: The court held that the accused was liable for the dishonour of the cheque as it was given as security and the complainant enforced the security after due notice to the accused. The subsequent payments made by the accused cannot absolve the accused of liability under Section 138 of the Act.
Final Decision: The court set aside the acquittal of the accused and convicted the accused under Section 138 of the Negotiable Instruments Act, 1881. The court directed the accused to pay a compensation of Rs. 1,00,000, in default to undergo six months S.I.
N.A. Britto, J.
This is complainant's appeal against the acquittal of the accused u/s 138 of the Negotiable Instruments Act, 1881 by virtue of judgment dated 24-3-2006 of the learned J.M.F.C., Panaji.
2. There is hardly any dispute as to the facts.
3. M/s. Balaji Agencies was a proprietorship concern of Vijay M. S. Usgaonkar till about 1998 with whom the accused who is the Chairman and Managing Director of M/s. Bagi Packages Ltd. had dealings.
4. Thereafter, the said Vijay along with his brother Venkatesh formed a company and registered under the Indian Companies Act, 1956. Both were the distributors for Indian Petro Chemicals Company Ltd. and the accused had dealings with both of them. The accused placed an order for supply of certain material sent by letter dated 22-9-1997 addressed to M/s. Balaji Agencies and along with the said letter sent the subject cheque bearing No. 294434, not over Rs. 5,00,000/- as token of security. The terms agreed upon were also noted in the said letter, and, inter alia, it was stipulated that the said Balaji Agencies would give a rotating credit limit of Rs. 5,00,000/- against the deposit of the said undated cheque for Rs. 5,00,000/-. The payment would be made by the Company of the accused against the supply of material in favour of I.P.C.L. The Company of the accused would make the payment within 15 to 30 days either in part or in whole and payment made after availment of I.F.C. would attract an interest of 21%.
5. Thereafter, by letter dated 16-3-1999. produced by the accused in the course of cross-examination, the Complainant brought to the notice of the accused that as per discussion held on 15-3-1999 the outstanding overdue as on 31-3-1999 was Rs. 9,69,647.05 including interest of Rs. 2,32,503-00. The Complainant also called upon the accused to send! a Bank Guarantee covering the said outstanding amount of 9,69,647.05 and further informed that in case they did not receive 'the Bank Guarantee by 15-4-1999 then they would be forced to deposit the blank cheque on 16-4-1999 which was given to them as security for purchases made by them and in case the cheque was returned for whatsoever reasons then they would be compelled to initiate legal action against them. It was also informed that in case they desired to further purchase any raw material, they would still be in a position to supply the same on 15 days credit basis as specified by their suppliers M/s. Indian Petrochemicals Corporation Limited but the amount of purchase of raw material should be included in the Bank Guarantee over and above the total overdue outstanding. It was also explained that in case the accused desired to purchase any raw material, of Rs. 2,00,000/-then the bank guarantee 6h6uld be of Rs. 11,69,647-05 plus Rs. 2,00,000/-. The accused was also requested to send TDS certificate for which provision was made in their statement of accounts for Rs. 3,610/-.
6. Admittedly, the accused did not react to the said letter dated 16-3-1999 and as a result of which the complainant completed the cheque on 31-3-1999 and presented to the State Bank of India at Panaji on 19-8-1999 for encashment only to be returned with endorsement "Exceeds Arrangements" on 24-8-1999. The complainant therefore issued a notice dated 2-9-1999 to the accused calling upon them to make the payment of the amount due on the cheque within 15 days from the receipt of the notice. The accused received the notice on 7-9-1999 but did not reply nor comply with the same. The complaint was filed by the complainant on 6-10-1999 and in support of the same the complainant examined the said Vijay M. S. Usgaonkar. The accused examined himself.
7. The learned trial Court came to the conclusion that the subject cheque was not issued in discharge of any liability, but was issued in token of security, which was not meant to be deposited and therefore the accused was entitled to be acquitted.
8. Mr. V.A. Lawande, learned Counsel on behalf of the complainant submits that even if
