Supreme Court comes to the rescue of person against whom false case of cheque dishonor was filed

Ramdass vs  Krishnanand   Criminal Appeal No.1522/2014

Facts of the case are that the cheque of Rs.5 lakh issued by the appellant Ramdass in favour of respondent was dishonored as the appellant instructed the bank to stop the payment. The respondent filed criminal case under Section 138 of Negotiable Instruments Act against the appellant. The complainant/respondent set up the case that he had given hand loan of Rs.1.75 lakh to the appellant and that to discharge said liability, the appellant had issued the cheque of Rs.5 lakh.  The case of the appellant, on the other hand, was that he had entered into an agreement with the complainant to purchase 3 acres of land belonging to the complainant for a total consideration of Rs.10,00,000/- and for that purpose, an advance of Rs.30,000/- in cash was paid and the Cheque in question for Rs.5,00,000/- was handed over to the complainant in presence of B.S. Pai (DW 2) and that when the complainant failed to execute the sale agreement and not even willing to return the advance amount of Rs.30,000/- and the Cheque of Rs.5,00,000/-, he had to instruct the Bank to stop payment against the said Cheque.

The Magistrate Court took note of the financial condition of the complainant and found his version to be false on the evidence led before him and dismissed the complaint and acquitted the appellant of the offence.

The complainant filed appeal in the High Court. The High Court while allowing the appeal, set aside the judgment of the Trial Court and sentenced the appellant-accused to pay a fine of Rs.8,50,000/- within a period of eight weeks, failing which, to suffer simple imprisonment for a period of six months.

Aggrieved by the reversal of his acquittal, the appellant appealed to Supreme Court of India. The appellant deposited Rs.1,75,000/- in the trial court in accordance with the Supreme court’s order initially. However, vide final judgment dated 23^rd July 2014, the Supreme Court allowed the appeal and set aside the  judgment of High court and restored the judgment of trial court acquitting the appellant. The Court observed that it can not be believed that the complainant had raised loan of Rs.1,75,000/- only to give hand loan to his employer/appellant. The court observed that it is not trustworthy that complainant was in a position to extend hand loan of such a big amount to the appellant particularly when the complainant himself admitted that his net savings in a year came to Rs.10,000/- per year and he was working as lorry driver with appellant who used to deal in sale purchase of properties. The supreme court permitted appellant to withdraw Rs.1,75,000/- which were earlier deposited by the appellant in the trial court in pursuance to Supreme Court’s initial order.

Read the full Judgment.

Sunil Goel advocate B.Sc. L.Lb L.Lm

Banks can publish photographs of wilful defaulters in newspapers, rules Supreme Court of India

The borrowers defaulted in repayment of loan. The bank initiated action under Sarfaesi Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act) 2002. The Bank issued notice under Section 13(2) of said Act. The Bank then issued further notice that if the account is not regularized within 10 days, the bank would publish the photographs of the directors and Guarantors of the borrower company in the newspapers.

The borrowers challenged this letter of the bank by way of a writ petition WPL No. 2808/2013 in the Bombay High Court. The High Court referred to Rule 8 of the Sarfaesi Rules and noticed that the said Rule permit the bank to publish the names and addresses of the defaulters . The Division Bench of the High Court observed that such publication of names serve two purposes – firstly that these persons are willful defaulters is made known to the public at large and secondly, it  tends to caution the prospective buyers  who may be offered the property which may be mortgaged by these defaulters with the bank.

After so observing, the High court held that that being the primary objective for publication of notice, there would be no impediment in publishing the photographs of such willful defaulters and particularly those defaulters who have committed various acts of misfeasance. The High Court however cautioned that banks should not publish the photographs of willful defaulters in a routine manner. Only after examining the facts and circumstances of each case, the bank should consider whether the photographs should be published.

Having said so, in peculiar facts of said case, the High court (Justice V.M.Kanade and Justice M.S.Sonak) did not find any fault with the proposed action of the bank to publish the photographs of directors and guarantors of the defaulter borrower company and dismissed the writ petition. 

The borrower company and its directors / guarantors challenged the said decision dated 28th November 2013 of Bombay High Court in  the Supreme Court of India. The Supreme Court (Justice F.M.I. Kalifulla and Justice Shiva Kirti Singh) by its order dated 14th July 2014 dismissed the said SLP No. 37726/2013 and thus the judgment given by Bombay High Court was upheld.