JITENDRA VORA vs. BHAVANA Y.SHAH & ORS.

1 NON REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.1001 OF 2010 JITENDRA VORA …APPELLANT VERSUS BHAVANA Y. SHAH & ANR. …RESPONDENTS JUDGMENT Pinaki Chandra Ghose, J . 1. This appeal is directed against the judgment and order st dated 1 April, 2009 passed by the High Court of Judicature at Bombay in Criminal Application No.940 of 2008 whereby JUDGMENT the High Court has rejected the prayer for leave to appeal against the judgment of the Trial Court. 2. The brief facts of this case are as follows: The appellant st nd supplied goods to M/s. Shah Agencies. The 1 and 2 Page 1 2

liability of M/s. Shah Agencies, two cheques for Rs. 5 lakhs th each, both dated 20 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 th Enterprises. A demand notice dated 8 March, 2001 was JUDGMENT served upon respondent Nos.1 & 2 which was duly received by th them on 13 March, 2001. The respondents failed and neglected to comply with the said notice of demand. Hence, a th complaint was lodged before the Metropolitan Magistrate, 28 Court, Esplanade, Mumbai. The said complaint was numbered th as CC No.505/S/01 dated 17 April, 2001. The said complaint was lodged against the accused respondents describing Page 2 3 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

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 sub-section (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 JUDGMENT 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 of examination-in-chief, the 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 Page 3 4 the case of the appellant that the accused had agreed to take over and discharge the liabilities of M/s. Shah Agencies. 5. The question which arose before us is whether the High

Court duly perused the complaint, affidavit in lieu of examination-in-chief of the applicant, his cross-examination and 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. JUDGMENT 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 nd orders from the 2 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 Page 4 5 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,

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 the examination-in-chief, the 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 JUDGMENT Attorney Holder of M/s. Shah Enterprises. After perusing the aforesaid facts, the High Court came to the conclusion as follows: “It is 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 Page 5 6

In these circumstances, the High Court held that no case is made out for grant of leave and rejected the application. 7. Learned counsel appearing on behalf of the appellant contended before us that both the Courts below have failed to JUDGMENT appreciate that the complaint was essentially filed against the accused in their personal capacities since at the time of filing of the complaint, the appellant believed that M/s. Shah Enterprises was a proprietary concern of respondent No.1. He further contended that respondent No.2 was a signatory of the cheques and he was incharge of the affairs of M/s. Shah Enterprises. According to the learned counsel, both the Courts Page 6 7 adopted highly technical view of the matter. It is not in dispute that the cheques were drawn from the account maintained with M/s. Shah Enterprises. When this Court asked the

of M/s. Shah Agency, then it was submitted that the cheques were drawn by M/s. Shah Enterprises but the liability, as would be evident from the examination-in-chief, is that of M/s. Shah Agency. Learned counsel further submitted that Section 141 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘the NI Act’) has no application because the partnership firm was not arrayed as an accused. He further submitted that respondent No.2 is liable being a signatory of both the cheques and he was incharge of M/s. Shah JUDGMENT Enterprises. 8. On the contrary, it is submitted by the learned counsel appearing on behalf of the respondents that both the Trial Court as well as the High Court rightly came to the conclusion that the complaint was not maintainable against the partnership firm since cheques were issued on behalf of the first respondent. Furthermore M/s. Shah Enterprises was Page 7 8 never given any statutory notice nor it was arrayed as an accused before the Metropolitan Magistrate. He further submitted that a three Judge Bench of this Court in the case

(2012) 5 SCC 661, held that for maintaining the prosecution under the NI Act, the company should be made a party irrespective of the fact that its Director has been arrayed as an accused. Learned counsel for the respondents further submitted that this appeal should be dismissed since the material facts have been suppressed from the Court. The appellant ceased to be the Proprietor of M/s. Satyen Polymer as per the deed of assignment cum conveyance dated 3.4.2008. The said fact was deliberately suppressed from the JUDGMENT High Court as well as from the Trial Court. The appellant did not make M/s. Shah Enterprises as a party on whose account the cheque was drawn. Furthermore, M/s. Shah Enterprises had no outstanding liabilities. The complainant himself admitted in his cross-examination that nothing was sold to Shah Enterprises and at no point of time Shah Agencies has been prosecuted. The appellant further admits that he has no Page 8 9 account with Shah Enterprises and he has running account with Shah Agencies. He also admitted that the transactions and dealings with Shah Agencies are reflected in the books of

liable to pay any amount M/s. Satyen Polymers, and there were no transactions with Shah Enterprises. Learned counsel for the respondents submitted that in these circumstances, this appeal should be dismissed. 9. We have heard the learned counsel appearing for the parties and we have perused the evidence placed before us. 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 JUDGMENT 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 this context, this Court in the case of Krishna Texport and Capital Markets Ltd. v. Ila A. Agrawal & Ors, (AIR 2015 SC 2091), has held as under- Page 9 10

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