Final Order 1

Order Details: Copy of Judgment .
Pdf Text: J u d g m e n t Himmat Lalchand Jain V/s.
C.C. No.5600648/SC/2023 M/s Dhanji Developers
(Para 44(i) of Chapter VI of Criminal Manual)
MHMM12003
5012023 IN THE COURT OF JUDICIAL MAGISTRATE
(FIRST CLASS) 56th COURT, MAZGAON, MUMBAI
(Presided over by Avinash Walujkar)
(Date of the Judgment:-27/02/2025)
C.C.No.5600648/SC/2023
Offences punishable Under Section 138 of the Negotiable
Instrument Act, 1881.
Complainant Mr. Himmat Lalchand Jain
R/o. Rajgiri Apartment, 702, B- Wing,
13 Khetwadi, Mumbai-400004.
Represented
by
Adv.Swapnil D. Savekar & Manisha D. Jagtap
Accused 1) M/s Danji Developers
(Proprietary concern)
2) Mr. Danji Gala (abated)
(Properietor of Danji Developers)
Age: Adult Occ.: Business
3) Rajesh Danji Gala
(Authorized Signatory of Cheque)
Age: Adult Occ.: Business
All R/o.: 303/359, Palai Complex,
Bhandarkar Road, Matunga Central Railway,
Mumbai-400019
Represented
by
Adv. Hashmukh V. Shah
(Para 44(ii) of Chapter VI of Criminal Manual)
Date of offence 07/05/2023
Date of Filing complaint 24/05/2023
Date of Charge sheet 24/05/2023
Date of Framing of Charges / Plea 18/08/2023
Date of commencement of evidence 31/01/2024
Date on which judgment is reserved
Date of the Judgment 27/02/2025
Date of the Sentencing order, if any 27/02/2025
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Accused Details
Rank of
the
Accused
Name of
Accused
Date of
Arrest
Date of
Release on
bail
Offence
charged
with
Whether
acquitted
or
convicted
Sentence
imposed
Period of
Detention
undergone
during Trial
for purpose
of Section
428 Cr.P.C.
1 M/s Danji
Developers
--- U/s.138
of N.I.
Act
Abated --- ---
2. Mr. Danji Gala. U/s.138
of N.I.
Act
Abated --- ---
3. Rajesh Danji
Gala
U/s.138
of N.I.
Act
Acquitted --- ---
(Para 44(iii) of Chapter VI of Criminal Manual)
LIST OF PROSECUTION / DEFENCE / COURT WITNESSES
A. Prosecution:
Rank Name Nature of Evidence
(Eyewitnesses, Police Witnesses, Expert
Witnesses, Medical Witnesses, Panch witnesses,
other witnesses)
1 Himmat
Lalchand Jain
The Complainant (Exh.5)
2 Anand Kuri The Witness, Bank Manager (Exh.23)
B. Defence Witnesses, if any:
Rank Name Nature of Evidence
(Eyewitnesses, Police Witnesses, Expert
Witnesses, Medical Witnesses, Panch witnesses,
other witnesses)
-- -- --
C. Court Witnesses, if any:
Rank Name Nature of Evidence
(Eyewitnesses, Police Witnesses, Expert Witnesses,
Medical Witnesses, Panch witnesses, other witnesses)
-- -- --
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C.C. No.5600648/SC/2023 M/s Dhanji Developers
LIST OF PROSECUTION / DEFENCE/ COURT EXHIBITS
A. Prosecution:
Sr. No. Exhibit No. Description
1 10 Receipt dated 27/08/2018
2 11 Confirmation of Account 21-22
3. 12 Cheque dated 03/04/2023
3 13 Cheque Return Memo dated 06/04/2023
4 14 Demand Notice dated 19/04/2023
5 15 Postal Receipt dated 20/04/2023
6 16 Postal A/D Card dated 21/04/2023
7. 17 Track Report
8. 27 Account Opening Form of accused No.1
9. 28 Form of Authorized Signatory of Account
B. Defence:
Sr.No. Exhibit Number Description
1 Death Certificate Dhanji Gala
C. Court Exhibits:
Sr.No. Exhibit Number Description
D. Material Objects:
Sr.No. Material Object Number Description
J U D G M E N T
(Delivered on 27th February, 2025)
A juristic person can be a company within the meaning of the
provisions of the Companies Act, 1956 or a partnership within
the meaning of the provisions of the Partnership Act, 1932 or
an associations of persons which ordinarily would mean a body
of persons which is not incorporated under any statute. A
proprietary concern, however, stands absolutely on a different
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footing. A person may carry on business in the name of business
concern, but he being proprietor thereof, would be solely
responsible for conduct of its affairs.
Honourable Supreme Court of India
( Raghu Lakshminarayanan V/s Fine Tube.)
MANU/SC/7276/2007
The accused stands prosecuted for the offences made
punishable under Section 138 of the Negotiable Instrument Act, 1881.
(Hereinafter, referred to as
'N.I. Act' for the sake of brevity.)
2. The case of the complainant, in a nutshell, is that he
advanced business loan to the accused. The accused no.3 is the authorized
signatory of the cheque, accused no.2 is the proprietor of accused no.1.
The complainant advanced loan on 27/08/2018 of Rs.5,00,000/- @ of
12% p.a. to the accused. The accused executed receipt for the loan
received. The complainant received interest up to 31/03/2022. The
accused then executed confirmation of account an agreed to pay interest
@ 21% p.a. from 01/04/2021. The accused issued a cheque bearing
no.118625 dt.03/04/2023 of Rs.5 lakhs in discharge of its liability to
repay the loan amount.
3. The complainant on 05/04/2023 deposited the cheque in his
bank i.e. Bank of Baroda Minara Msjid Branch Mumbai. The same was
dishonoured for the reason
‘PPS not confirmed’ by the cheque return
memos dated 06/04/2023. On 19/04/2023, the complainant issued a
demand notice demanding the cheque amount from the accused. Despite
service of notice on 21/04/2023, the accused failed to pay the amount
hence, the complainant has filed this case.
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4. On presentation of the complaint under Section 200 of the
Code of Criminal Procedure, verification of the complainant was recorded.
On perusing the verification, complainant, evidence on affidavit, and
documents filed along with it, process was issued under Section 204 of the
Code of Criminal Procedure against the accused by order dated
05/07/2023 for the offence punishable under Section 138 of Negotiable
Instruments Act, 1881.
5. The particulars of the offence where read over and explained
to the accused in vernacular on appearance. Plea of the accused is
recorded as per Section 251 of the Code of Criminal Procedure for the
offence made punishable under Section 138 of Negotiable Instruments
Act, 1881 at Exh.09. He adjured not guilty and claimed to be tried.
6. The complainant examined himself at Exh.5 and P.W. No.2
Anand Kuri at Exh.23 and relied on the aforesaid documents and closed its
evidence by filing pursis.
7. The defence of the accused as it appears from the mode of
cross-examination and statements recorded u/s.313 of Code of Criminal
Procedure at Exh.30, 31, 32 is that the complainant has filed false case
against them to extract money.
8. Considering the evidence on record and submissions
advanced at the bar, the following points arise for my determination, and I
have recorded my findings against them for the reasons mentioned
thereunder:
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SR.No P O I N T S FINDINGS
1. Whether the complainant proved that the he had
complied with requirements of Sec.138 and 142 of
the N.I. Act ?
In the
Affirmative.
2. Whether the accused proved the nonexistence of
debt/liability by a preponderance of probabilities by
referring to the
‘particular circumstances of the case’
?
In the
Affirmative.
3. Whether the complainant proved that the was
dishonoured for the reason ‘PPS not confirmed’ from
the account of accused?
In the
Affirmative
4. What order? Accused No.3
is acquitted.
R E A S O N S
As to point no.1:
9. The ingredients which are to be satisfied by the complainant
for making out the case u/s.138 of the N.I. Act are as under;
(a) The cheque(s) was/were drawn/issued by the accused
person(s) to the complainant on an account maintained by
him/her/them/it with the bank for discharge, in whole or in
part, of any debt or liability.
(b) the cheque(s) was/were presented to the bank within a
period of six months from the date on which it is drawn or
within the period of its validity, whichever is earlier;
(c) The cheque(s) so presented for encashment was/were
dishonored.
(d) the payee or the holder in due course of the cheque(s), as
the case may be, made a demand for the payment of the said
amount of money by giving a notice; in writing, to the drawer
of the cheque, within thirty days of the receipt of information
by him from the bank regarding the return of the cheque as
unpaid;
(e) the drawer of such cheque failed to make the payment of
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the said amount of money to the payee or, as the case may be,
to the holder in due course of the cheque, within fifteen days
of the receipt of the said notice.
(f) The complaint was presented within 30 days after the
expiry of above fifteen days.
10. The complainant adduced his evidence as per Section 145 of
N.I. Act and has reiterated the contents of the complaint. He has relied
upon the receipt on the letter head of accused no.1, signed by accused
No.3 on behalf of accused no.2 as authorized signatory of accused no.1.
He also relied upon confirmation of account Exh.11, disputed cheque,
cheque return memo, demand notice, postal receipt and acknowledgment.
In his cross-examination, he admitted that he received interest up to the
year 2018 and from January, 2019 till presentation of cheque in April-
2023 he had not received any amount from the accused.
11. The disputed cheque, in this case, is dated 03/04/2023. The
same was returned unpaid by the bank on 06/04/2023. It is therefore
apparent that the cheque was presented within the period of its validity
and Section 138(a) of N.I. Act is complied with. The demand notice, in
this case, was issued on 19/04/2023, as is evident from Exh.14 and it was
posted on 20/04/2023, as is depicted from postal receipts Exh.15. It is
therefore established that the complainant/payee made a demand for the
payment of the cheque amount by giving a demand notice in writing to
the drawer of the cheque within 30 days from the date of receipt of
information from the bank about the return of cheques as unpaid and
accordingly Section 138(b) of the N.I. Act is abide by. The
acknowledgment cards Exh.16 goes on to show that the notice was
received on 21/04/2023. The accused/drawer of the cheque was to make
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the payment of the cheque amount within 15 days from the date of receipt
of notice i.e. 07/05/2023. The accused has not made any payment within
the stipulated time. The complainant has established the fulfillment of
requirements of Section 138(c) of the N.I. Act. The complaint is filed by
the complainant in writing on 24/05/2023 which is within a period of
one month from the date of cause of action i.e. 07/05/2023. The
complainant has accordingly complied with the requirements of Section
142(1)(a)(b) of the N.I.Act. The complainant has proved the technical
requirements of Section 138 of N.I.Act. Hence, I answer point No.1 in the
affirmative.
As to point no.2:
12. The burden is upon the accused to prove that there existed no
liability on his part to pay the cheque amount. The accused is not required
to discharge the burden beyond reasonable doubt but is sufficient if the
accused to the extent of preponderance of probabilities established that
there existed no such debt or liability. Then, the onus will shift on the part
of the complainant to again prove his case. The accused has not adduced
his evidence in this case and therefore, the particular circumstances of this
case and the cross-examination of the complainant have to be considered
to see if the accused has proved the nonexistence of debt or liability.
Therefore, in view of presumption u/s.118 and 139 of the N.I. Act and the
law laid down by the Honourable Supreme Court in the case of Rajesh
Jain V/s. Ajay Singh (2023) INSC 803 in para No.56, the point No.2
accordingly framed and taken up for discussion.
56. At the stage when the courts concluded that the signature
had been admitted, the Court ought to have inquired into
either of the two questions (depending on the method in
which accused has chosen to rebut the presumption): Has the
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accused led any defense evidence to prove and conclusively
establish that there existed no debt/liability at the time of
issuance of cheque? In the absence of rebuttal evidence being
led the inquiry would entail: Has the accused proved the
nonexistence of debt/liability by a preponderance of
probabilities by referring to the ‘particular circumstances of
the case’?
13. The undisputed fact of the case are that the accused No.1 is a
proprietary concerned and accused No.2 is its proprietor. The accused no.3
is the authorized signatory of accused no.1. The accused no.2 proceeded
to heavenly abode during pendency of this case. Therefore the proceeding
against the sole proprietor i.e. accused no.2 is abated. The only question
which remain to be decided is whether the proceeding can continue
against authorized signatory i.e. accused no.3 and can he be prosecuted
under Section 138 of N.I. Act.
14. The Learned Advocate for the complainant argued that
accused no.3 as taken part in the transaction and was aware of the
transaction. He argued that accused no.3 has received the loan and
executed receipt Exh No.10 on behalf of accused no.1. He also argued
that the accused no.3 has sign the disputed cheque on behalf of accused
no.1 as authorized signatory. He further argued that the complainant has
examined the bank witness of the accused and the bank witness produced
the accounts details of accused no.1 Exh No.26, account opening form of
account no. 6475675719 i.e. current account standing in the name
accused no.2 Exh No.28. The bank witness also placed on record KYC
document of accused no.3 at Exh No.28. He therefore argued that the
accused no.3 had knowledge of the transaction and is signatory of
disputed cheque therefore he be prosecuted and conviction under Section
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138 of N.I. Act.
15. The Learned Advocate for the accused argued that due to the
demise of accused no.2 during pendency of this case he is not making any
submissions upon the merits of the case but only arguing on the point that
accused no.3 an authorized signatory of accused no.1 can not be
prosecuted under Section 138 of N.I. Act.
16. In this respect he has relied upon the Judgment of
Honourable Supreme Court in the case of Raghu Lakshminarayanan V/s
Fine Tubes 2007 AIR (SC) 1634, where in it is held that;
11. The distinction between partnership firm and a proprietary
concern is well known. It is evident from Order XXX Rule 1 and
Order XXX Rule l0 of the Code of Civil Procedure. The question
came up for consideration also before this Court in Mis. Ashok
Transport Agency v. Awadhesh Kumar and Anr., [ 1998] 5 SCC 567]
wherein this Court stated the law in the following terms:-
"6. A partnership firm differs from a proprietary concern owned by
an individual. A partnership is governed by the provisions of the
Indian Partnership Act, 1932. Though a partnership is not a juristic
person but Order X:XX, Rule 1, CPC enables the partners of a
partnership firm to sue or to be sued in the name of the firm. A
proprietary concern is only the business name in which the
proprietor of the business carries on the business. A suit by or
against a proprietary concern is by or against the proprietor of the
business. In the event of the death of the proprietor of a proprietary
concern, it is the legal representatives of the proprietor who alone
can sue or be sued in respect of the dealings of the proprietary
business. The provisions of Rule 10 of Order XXX, which make
applicable the provisions of Order XXX to a proprietary concern
enable to be sued in the business names of his proprietary concern.
The real party who is being sued is the proprietor of the said
business. The said provision does not have the effect of converting
the proprietary business into a partnership firm. The provisions of
Rule 4 of Order XXX have no application to such a suit as by virtue
of Order XXX, Rule 10 the other provisions of Order XXX are
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applicable to a suit against the proprietor of proprietary business "in
so far as the nature of such case permits." This means that only
those provisions of Order XXX can be made applicable to proprietary
concern which can be so made applicable keeping in view the
nature of the case."
17. He also relied upon the Judgment of Honourable Bombay
High Court in the case of Inder Rochaldas Lulla V/s Laxmi Agni
Components and forgings Pvt. Ltd. MANU/MH/4628/2022, wherein it is
held that;
15. It is reiterated that, the cheque has been issued on an account
maintained by the proprietary concern. The proprietress of the
proprietary concern is not an accused in the complaints. The
petitioner has issued the cheques for and on behalf of the
proprietary concern. In the complaints, he is described as General
Manager of the proprietary concern. The petitioner has not issued
the cheques on an account maintained by him. As such, ingredients
of Section 138 of the Negotiable Instruments Act do not squarely get
attracted against him. The learned Magistrate erred in issuing
process against the petitioner. The learned Additional Sessions
Judge has upheld the orders of issuance of process. Interference
with the orders impugned herein is warranted for the reasons given
hereinabove.
18. The Learned Advocate for the complainant argued that if the
preposition canvased by Learned Advocate for the accused is held legally
valid, a fraudster will open a bank account in the name of proprietary
concern by one individual and another individual will be nominated as
authorized signatory. This will allow the cheque drawn by authorized
signatory get bounced and then the authorized signatory pleased that he is
only the drawer of the cheque but not a proprietor or a person
maintaining the account. Such interpretation of the provisions of law
would be contrary to the object of N.I. Act and would defeat the very
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purpose of law.
19. The fact that accused No.2 was the sole proprietor of accused
NO.1 is not disputed. So also, the fact of demise of accused No.2 sole
proprietor is not disputed. In view of the Judgment of the Hon'ble
Supreme Court in the case of Raghu Lakshminarayanan V/s Fine Tubes
2007 AIR (SC) 1634, a proprietary concern stands on a different footing
than a company, partnership or association of persons. A person may carry
on business in the name of business concern but the said person being
proprietor thereof would be solely responsible for the conduct of its
affairs. In the case at hand, the accused No.3 was not the sole proprietor
of accused No.1. He was only the authorized signatory of the cheque and
was bound to issue the cheques as per the instructions of accused No.1
and 2. The sole responsibility of the business of accused No.1 was that of
the sole proprietor accused No.2 and not of any other person.
20. It is pertinent to note that in Section 138 only the drawer of
the cheque is held liable for punishment. The vicarious liability is provided
under Section 141 of the N.I. Act but the same does not cover a signatory
of the proprietary concern. Hence a signatory of proprietary concern
cannot be held liable for being signatory of the cheque more purticularly
when the sole proprietor is some one else. The accused No.3 established
that he being the authorized signatory and not the sole proprietor is not
liable to pay the cheque amount. Hence, I answer point No.2 in the
affirmative.
As to point No.3: -
21. Himmat Lalchand Jain (C.W.1) deposed that he had deposited
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the cheque (Exh.12) in his bank and the same was dishonoured on
6/4/2025 for the reason “PPS not confirmed” from the account of the
accused. The complainant has placed on record the cheque return memo
Exh. 13. The cheque return memo demonstrates that the cheque of the
account of the accused was dishonoured and returned for the reason “PPS
not confirmed”. In view of Section 146 of the N.I. Act, the cheque return
memo gives rise to the presumption of the fact of dishonour of the cheque.
Considering the oral evidence of C.W.No.1 Himmat, along with
documentary evidence i.e. the cheque return memo and presumption
under section 146 of the N.I. Act, I hold that the complainant has proved
that the cheque at (Exh.12) was dishonoured from the account of the
accused for the reason “PPS not confirmed”. Hence, I record my finding in
answer to point no.3 in the affirmative. As the finding to point no.2 is
recorded in affirmative, consequently, in answer to point No.4, I pass the
following order.
O R D E R
1. The accused 3) Rajesh Danji Gala is acquitted of the offence
punishable under Section 138 of Negotiable Instrument Act 1881 vide
Section 255 (1) of the Code of Criminal Procedure, 1973.
2. The bail bonds of accused No.3, stand cancelled.
3. The accused No.3 shall execute bail bond of PB and SB of
Rs.15000/- to appear before the appellate Court as per Section 437(A) of
the Code of Criminal Procedure.
4. The proceeding against accused No.2 Dhanji Gala the
proprietor of M/s Dhanji Developers are disposed off as abated.
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5. Dictated and pronounced in the open Court.
Place: Mazgaon. (Avinash A. Walujkar)
Date: -27/02/2025. Judicial Magistrate, First Class,
56th Court, Mazgaon, Mumbai.
Dictated on 27/02/2025.
Typed on 27/02/2025.
Ready on 27/02/2025.
Signed on 27/02/2025.
Rgz.
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