TaxTMI 
TaxTMI 
2022 (12) TMI 593
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.... the Firm. There was relationship of Financer and Developer in between the Appellant and the Respondent No. 1 (hereinafter they will be described as per their original status before the trial Court). The complainant have given loan of Rs. 1 Crore to the accused. They have entered into a Memorandum of Understanding on 09/05/2003. The complainant was given various options of re-payment. 3. The amount was advanced as accused wants to pay the consideration to owner of the property. Owner of the property situated at Bahadur S. K. Bole Marg, Dadar, Mumbai and owned by one Kishorebhai Karamsey Vikamsey. The said Kishorebhai has agreed to entrust that property for development to the accused. For some reason or other, the accused could not complete the construction of the building on the said plot. 4. Amongst various modes available as per the Memorandum of Understanding, the complainant has opted for refund of the amount of Rs. 1 Crore alongwith interest. When the Memorandum of Understanding was executed, the accused has issued two cheques to the complainant. Their details are given in para no. 11 of the Memorandum of Understanding. Those two cheques were not completed in all respect....
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....of law but rule of prudence not to interfere in the judgment of acquittal. It is important to note that the prosecution under Section 138 of the Negotiable Instrument Act is quasi criminal in nature. So as to say that burden not only lies on the complainant (just like on prosecution in criminal trial), but it also lies on the accused. In other words, the burden never entirely rests on the complainant. So, it cannot be said that "there is limited scope for interference in the judgment of acquittal particularly, when it is for the offence punishable under Section 138 of the Negotiable Instrument Act". Judgment of the trial Court 10. It will be material to consider the reasonings given by the trial Court for arriving at conclusion of the acquittal. (a) Though the contention was raised about the authority of the partner for filing the complaint, the trial Court has considered the answers given in the statement under Section 313 of the Criminal Procedure Code. Therein the accused has admitted that M/s. Pinak Bharat and Company is Partnership firm and complainant is one of the partners. It was observed that facts are admitted need not be proved. (para no. 24) (b) ....
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....d over on 09/05/2003 there was no liability. (ii) When the suit was pending how the accused can give an authority to the complainant to put name of the payee and the date on the cheques. (iii) Cheques were handedover by way of security. (iv) Once the complainant has admitted the payment of Rs. 19,00,000/- in the year 2005, there was no existing debt or liability when actually cheques were deposited on 27/04/2007. Submissions 13. Whereas according to the learned Advocate Shri Khandeparkar, the trial Court has failed to consider the provisions of Sections 138 and 139 of the Negotiable Instrument Act as interpreted in various judgments. He read over the contents of the Memorandum of Understanding, various correspondence and also filed copy of the award dated 25/09/2015 delivered by learned Arbitrator. Whereas according to learned Advocate Ms. Bajoriya, in fact there was no criminal intention on the part of the accused to cheat the complainant and accused has shown his bonafides when he has paid Rs. 19,00,000/-. According to her, the date and name of the payee were blank and when the complainant has filled in those details. By way of civil suit the accu....
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....na Rao Vs. Indian Renewable Energy Development Agency Limited (supra) has clarified the validity of the prosecution under Section 138 of the Negotiable Instrument Act and in respect of cheques which are issued as a security. If cheque is issued towards discharge of the existing debt or liability, the prosecution is maintainable (para nos. 11 and 12). 18. So, I am not inclined to agree with the observations of the trial Court that cheques were issued by way of security. Even when second cheque for Rs.68,6=51,590/- was deposited, the liability towards interest has accrued. Legally recoverable debt or liabilities 19. There is much emphasis on payment of Rs. 19,00,000/- by accused to the complainant. It is not disputed by the complainant. Only issue was on her own she has not brought it on record but it is by way of cross examination. According to learned advocate for the Respondents this payment is towards repayment of the principal. Whereas according to the learned Advocate Khandeparkar, it is for the payment of the interest. Both the learned Advocates has read over the correspondence in between the parties. They are as follows:- Sr.No. Letter Dated Sent by wh....
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....in name of the payee i.e. Firm name and date 27/04/2007. 22. So, material question is whether the complainant was justified in putting name of the payee and date on the cheques. According to the trial Court when the suit was pending, the complainant was not justified in completing it without authority of the accused. In case of Bir Singh Vs. Mukesh Kumar (supra) as referred above the Hon'ble Supreme Court had an occasion to make certain observations on this issue. The observations are as follows:- "33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted." It is further observed that "34. If a signed blank cheque is voluntarily pres....
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..... It is for the reason that they were handed over to the complainant only. 28. Section 87 of the Negotiable Instrument Act authorises alteration in two contingencies: - (a) If it is with the consent of the parties. (b) Even if party does not given consent if the alterations is done in order to carry out common intention of the parties. 29. If we apply this test, it can be said that neither of these contingencies exist so as to authorize to the complainant to put in dates on the cheques. They were handedover in the year 2003 and they were deposited in the year 2007. The complainant has not stated that those dates were put in as instructed by the accused. In fact, the circumstances brought on record suggest that there was dispute filed in Civil Court by way of suit. The accused has sought for extension of the time. 30. The facts of Bir Singh (supra) does not involve interpretation of section 87 of the Negotiable Instruments Act. 31. As per clause no. 5, the financer is prohibited from calling the developer to repay to secured loan with interest for a period of 36 calendar months next to execution of the Memorandum of Understanding. Whereas clause no.7 gi....