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Case Title: Satish P. Bhatt v. The State of Maharashtra & Anr

Case No.: Criminal Appeal No. of 2024 (arising out of Special Leave Petition (CRL.) No.7433 of 2019)

Decided on: 3^rd January, 2024

CORAM: THE HON’BLE MR. JUSTICE VIKRAM NATH AND HON’BLE MR. JUSTICE RAJESH BINDAL

Facts of the Case

The case centered around a petitioner who, despite numerous court directives, demonstrated a lackadaisical approach to meeting financial obligations, leading to the revocation of bail and suspension of sentence. Both the petitioner and an intervenor faced convictions under the Negotiable Instruments Act and were sentenced to ten months with a combined liability of Rs. 5 crores. Despite settlement agreements, the petitioner failed to adhere to payment schedules, prompting repeated court interventions. The High Court annulled the bail and sentence suspension due to non-compliance. The appellant contested this decision, asserting that he had fulfilled his part of the settlement. The intervenor, claiming a partnership ratio, alleged fraudulent alteration of the settlement terms.

Issue

The central issue in this case is the complainant’s extended legal struggle since 2007 and the non-realization of intended benefits from previous court orders, leading to the Supreme Court directing the appellant and intervenor to surrender for sentence within four weeks.

Legal Provision

Section 138 of Negotiable Instruments Act, 1881 provides for criminal provision regarding a cheque bounced due to insufficiency of funds.

Court’s analysis and decision

The Supreme Court has affirmed the annulment of the suspension of sentence and bail for individuals convicted of cheque bounce, citing a breach of previous commitments. Justices Vikram Nath and Rajesh Bindal, on the matter, noted that despite the High Court’s order on March 20, 2019, the convicts failed to fulfill the agreed-upon payment. Consequently, the interim protection provided through bail and sentence suspension would be revoked automatically, without the need for court intervention.

The Supreme Court observed that the complainant had been engaged in litigation since 2007 and had not yet benefited from the outcomes of previous judgments. In this context, it was highlighted that “the complainant has still not received not only the benefits of the order dated 03.07.2018 but also of the Trial Court’s order dated 26.08.2011. Despite being entitled to a higher amount as per the Trial Court’s order, he agreed to accept a significantly lesser sum. He has been involved in litigation for almost 16 years since 2007.” Consequently, the Supreme Court instructed the appellant and intervenor to surrender within four weeks to serve the sentence.

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Written by- Afshan Ahmad

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Title: Afsal Hussain v. K.S. Muhammed Ismail & Anr.
Decided on: 14 November, 2023

+ CRL.REV.PET NO. 1060 OF 2008

CORAM: HON’BLE Justice Sophy Thomas

Introduction

The Kerala High Court ruled that, in cases where the company is not proved to have committed the offense, the directors of the company cannot be found guilty of a crime under Section 138 of the Negotiable Instruments Act (NI Act), which is known as “Dishonour of Cheque.”

Facts of the Case

In the current case, the Managing Director of Omnitech Information Systems Pvt. Ltd., the revision-petitioner, was sued by the first respondent for dishonouring a Rs. 10 lakh cheque that the latter had sent to the former. In the complaint, the Company was listed as the first accused, the Managing Director/revision-petitioner as the second accused, and the other Directors as the other accused parties. According to Section 138 of the NI Act, the trial court found all of the accused guilty. The first accused firm was fined, and the other accused directors—including the revision petitioner—were sentenced to simple imprisonment and a fine. The Appellate Court only maintained the conviction of the revision-petitioner, even though his substantive sentence was lowered, while clearing the other respondents—including the firm.

Courts analysis and decision

The revision-petitioner issued the check in his capacity as the company’s managing director, the court stated. It was determined that the Managing Director could not be held accountable for any offenses committed by the Company after the appellate court cleared the company of all charges. As a result, it overturned the contested ruling and cleared the revisionist of any wrongdoing.

Written by- Hargunn Kaur Makhija

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Accused Condemned in Cheque Bounce Case for Failing to Honor Payment Undertaking; Fined Rs 5 Lakhs: Supreme Court

The Kerala High Court held that cheque dishonour directors not held vicariously liable if company found not guilty of crime under NI Act