Gulabchand Motilal Rathi vs National Textile Corporation ...
2007 Latest Caselaw 169 Bom

JUDGMENT

V.R. Kingaonkar, J.

1. This is plaintiffs appeal against dismissal of suit for damages and compensation for malicious prosecution. He claimed compensation and damages of Rs. 7,55,000/-in Special Civil Suit No. 73/1986, which has been dismissed by the Joint Civil Judge (S.D.), Nanded.

2. The Respondent No. 2 Nanded Textile Mills was previously known as "Osmanshahi Mills" and was established at Nanded by Ex Ruler of Hyderabad State. It was taken over by Respondent No. 1 National Textile Corporation, somewhere in 1975. The plaintiff/appellant deals in business of cloth. He had dealings with defendant No. 2 -Nanded Textile Mills since more than 16 years before the incident of his prosecution. He used to run cloth business under name and style as "Shri Balaji Traders" at Nanded from 1965. He used to purchase varieties of cloths from the defendant No. 2, by making payments through Bank. He was having overdraft facility to the tune of Rs. 2,00,000/-(Rupees two lacs) with the Union Bank of India. He was sole distributor of the cloth manufactured by the defendant No. 2, particularly to the dealers at Nizamabad (A.P.). Somewhere in 1982, the defendant No. 2 started direct dealings with the cloth merchants at Nizamabad.

3. The plaintiffs case is that he had placed order for 21 bales of variety called "New Chandan" and 21 bales of variety called "Nagrajmani" with the defendant No. 2 - N.T.M. on 5.6.1982. The defendant No. 2, however, accepted contract only for 21 bales of "New Chandan" variety and rejected remaining part of the order for 21 bales of "Nagrajmani" quality of cloth. The defendant No. 2 failed to give the required number of bales in respect of "New Chandan" quality of cloth. Though, he issued cheque No. 174799 drawn on Union Bank of India for payment in respect of two bales of "New Chandan" variety, yet, delivery of the goods was not effected by the defendant No. 2. The cheque amount of Rs. 9,640=82 was credited in the account of the defendant No. 2 on 14.2.1983. So, on account of failure to supply the two bales of cloth, he sent letters on 16th February, 25th February, 14th March and 11th April, 1983 and called upon the defendant No. 2 to deliver the goods. The plaintiff further alleges that the officers of the defendant No. 2 N.T.M. were demanding Rs. 10/- extra for each bale from him as commission. He lastly issued a notice dated 26.4.1983 and served it on the defendant No. 2 for compliance of demand in respect of two bales of cloth, which he had not received.

4. The plaintiff alleges that the officers of the defendant No. 2 hatched up a plan to fabricate a false complaint against him. They filed false and frivolous complaint against him at Vazirabad Police Station, Nanded on 27.4.1983, accusing him of receiving two bales of cloth under fictitious acknowledgment and that of cheating the defendant No. 2 N.T.M. by preparing false documents. The Police registered an offence against him. He was arrested. He was humiliated, insulted and disreputed due to the arrest. The Police Officer sought police remand but the learned Magistrate granted Judicial custody when he was produced before the Court. He was however, directed to attend the Police Station for a week to face the inquiry. He was troubled during the relevant period. A charge-sheet was filed against him as a result of the Police investigation. He was tried before the Judicial Magistrate (F.C.), for the offence of cheating. The defendant No. 2 engaged advocates to assist the prosecution in that case. He was required to go through ordeal of the criminal case. He incurred heavy expenditure to defend himself in the said criminal case instituted against him at the behest of defendant No. 2. The Criminal Case (R.C.C. No. 228/84) ended in acquittal on 20.7.1985. The Respondent No. 3 -State preferred appeal against acquittal. The appeal bearing Criminal Appeal No. 156/85 was dismissed as leave Under Section 378(1)(3) of the Cr.P.C. rejected by the High Court.

5. The plaintiff alleges that he was falsely implicated in the criminal case, though Officers of defendant No. 2 had knowledge that the complaint was untrue. He further alleges that he was subjected to harassment and disreputation. There were news items published in the newspapers "Marathwada" and "Prajawani" about his arrest and prosecution. His friends, relatives and customers looked down at him. He suffered serious financial set back in his business. He was required to engage an advocate from Hyderabad, by paying huge amount of fees and arranging for his conveyance. So, by a demand notice he claimed an amount of Rs. 7,55,000/-towards compensation and damages on various counts as enumerated in the plaint. The defendant Nos. 1 and 2 failed to comply with the demand notice. Hence, he laid the suit for recovery of the amount so demanded.

6. By filing separate written statements (Exh.25, Exh.86 and Exh.118) the defendant Nos. l to 4 resisted the suit. They denied truth into all the material averments. They contended that on 12.2.1983, the two bales of cloth were sent to the shop of the plaintiff immediately after receipt of the cheque. There was no reason for the plaintiff to grumble about non-delivery of two bales. They submitted that the plaintiff played a mischief while accepting the delivery of the two bales. According to them, the plaintiff issued acknowledgment by affixing a rubber stamp impression of another shop styled as "M/s Var Laxmi Textile, Nizamabad", with whom he had previous dealings. The two bales of cloth were actually delivered to the plaintiffs shop. The plaintiff falsely made grievances about non delivery of the two bales. The officers of the defendant No. 2 -N.T.M. lateron made internal inquiry, cross checked the relevant documents and found that the plaintiff had received the goods but was falsely complaining about the non-delivery. It was further noticed that in the past too he had received goods by using wrong rubber stamp of "M/s Var Laxmi Textiles". The documents and the oral inquiry gave sufficient material to infer offence of cheating, fabrication of documents and wrongful claim made by the plaintiff. According to the defendants, the complaint lodged at the Police Station was outcome of such internal inquiry made by the officers of the defendant No. 2 - N.T.M. and it was a bonafide action on their part. It is denied that the officers of the defendant No. 2 - N.T.M. were demanding amount of Rs. 10/-for each bale as commission from the plaintiff. It is categorically denied that the plaintiff was falsely prosecuted. It is denied that there was malice against the plaintiff when the complaint was lodged. The defendants denied that the plaintiff was put to loss of reputation, loss of money and was humiliated, as a result of the prosecution. The defendants sought, therefore, dismissal of the suit.

7. The parties went to trial over issues framed at Exh.50. The trial Court held that the criminal prosecution was not outcome of any malice. The trial Court held that the plaintiff failed to prove absence of reasonable and probable cause for the criminal prosecution. The trial Court further held that the plaintiff failed to prove that due to the criminal prosecution he was handcuffed, defamed and lost reputation and suffered loss of business. The trial Court dismissed the suit in keeping with the negative findings on the material issues. Hence this appeal.

8. Heard learned advocate Mr. S.C. Bora, for the appellant/plaintiff, learned advocate Mr. Sharma for Respondent Nos. l and 2 and learned A.G.P. Mr. Dharashive, for Respondent No. 3.

9. It is argued by Mr. Bora, learned advocate that the significant aspects of the matter have not been properly considered by the trial Court. He would submit that immediate conduct of the plaintiff is material. He would point out that the cheque issued on 12.2.1983 was encashed on 14.2.83 and, therefore, the delivery, in accordance with the business practice of the defendant No. 2 - Mill, could not have been effected on 12.2.83. He submitted that the plaintiff immediately sent four letters about non receipt of the delivery but no reply was given by the defendant No. 2 - N.T.M. and it is a relevant conduct of the parties. He would submit that the plaintiff has produced a chit Exh.94 which shows that an amount of Rs. 300/- was demanded by Shri Nandkishor Somani, which he had refused to pay. Mr. Bora, would submit that there was total absence of reasonable and probable cause for filing of the criminal complaint. He would submit that the very fact that the payment was not received by the defendant No. 2 - N.T.M. on 12.2.83 is sufficient to reach conclusion that delivery of the goods could not have been made to the plaintiff on that day. He would submit that the officers of the defendant No. 2 - N.T.M. were annoyed with the plaintiff and had conspired to frame him in the false case. Mr.Bora, learned Counsel took me through the deposition of the witnesses and the relevant documents. He would submit that the plaintiff is entitled to receive compensation and damages on account of his malicious prosecution which is duly proved. He would leave it to the Court to determine the quantum of compensation and damages. On the other hand, Mr. Sharma, supported the impugned judgment.

10. It is well settled that in a case for recovery of damages and compensation for malicious prosecution, the plaintiff is required to prove that he was prosecuted by the defendant, such prosecution had terminated in his favour, the prosecution was without reasonable and probable cause and that the prosecution was actuated by malice. The fact that the plaintiff was prosecuted in the criminal case bearing R.C.C. No. 228/84, on the basis of complaint lodged by Girdharilal Karnani, Sales Manager of the defendant No. 2 is not in dispute. There is no dispute about the fact that the plaintiff was tried before the Judicial Magistrate (F.C.) in the said criminal case. He was acquitted for the criminal charges levelled against him. Obviously, it is most essential to examine as to whether the complaint lodged by Sales Manager - Girdharilal Karnani, was destitute of reasonable and probable cause and was filed with ulterior motive.

11. The main plank of the plaintiffs case is that he had issued the cheque for Rs. 9,640=82 on 12.2.1983 which was encashed on 14.2.83 and, therefore, the two bales of cloth could not have been delivered to him prior to the encashment of the said cheque. The plaintiff further seeks to rely on his conduct of sending the four letters in respect of non-delivery of the goods. The version of P.W.1 Gulabchand - plaintiff purports to show that an agent of the defendant No. 2, by name Nandkishor Somani, used to visit his trading shop for the purpose of business inquiries. He used to place demands of the cloth bales with the said agent-cum-sales Manager. Thereafter, he used to receive the contract form in which he used to place the orders with the defendant No. 2 - N.T.M. His version purports to show that as and when the ordered goods used to be ready for delivery, the sales agent used to ask him about the willingness to take delivery of the goods. Thereafter, he used to send the cheques for price of the goods. Usually, said Nandkishor Somani, used to collect the cheques. He deposed that after realisation of the amount of the cheque, the goods used to be delivered to him. The delivery of cloth bales used to be effected on handcart or bullock-cart at his shop and he used to incur the expenditure for transportation.

12. The version of P.W. Gulabchand, further purports to show that in June 1982, Nandkishor had asked him to pay over payment of Rs. 420/- for the 42 bales demanded by him at the rate of Rs. 10/-per bale. He deposed that he had refused to pay such extra amount on the ground that the defendant No. 2 N.T.M. had started supply of the goods to his sub-dealer, namely, Laxmi Textiles at Nizamabad. In other words, he was not averse to making of such payment but had declined to do so for the reason that the defendant No. 2 N.T.M. had directly started business dealings with the traders at Nizamabad without his intervention as Commission agent. His version purports to show that on 12.2.83, son of Nandkishor, visited his shop and informed him that Nandkishor had sent a message to accept delivery of two bales of the cloth. So, he issued the cheque. He further states that Nandkishor Somani had sent a chit (Exh.94) for demand of Rs. 300/- with his son. He gave details of the letter correspondence made by him after 14.2.83, when he had not received the delivery of the two bales of cloth. He sent demand notice (Exh.128) on 26.2.83 by Registered Post.

13. The demand notice (Exh.128) does not show anything about so-called demand of Rs. 300/-by Nandkishor. The demand notice does not show that the cheque was issued on 12.2.83 towards price of the two bales. The cross-examination of P.W. Glabchand, reveals that as and when the cloth bales were delivered to him, he used to receive the same at his shop and used to pay the transportation charges to the handcart puller. He admitted that proprietors of Jitendra Trading Company and Kachi Trading Company were examined in the criminal case in order to show that they had purchased cloth of the same quality from him which was allegedly sent to his shop in the two bales.

14. At this juncture, it is important to note that the plaintiff was having credit facility with the Union Bank of India, Nanded Branch, upto Rs. 2,00,000/-(Rupees two lacs). The business relations of the plaintiff and the defendant No. 2 were in existence for approximately 16 years prior to the criminal prosecution. It is but natural that the defendant No. 2 - N.T.M. had reason to believe that the cheque issued by the plaintiff would be encashed without difficulty. The officers of the defendant No. 2 -N.T.M. were knowing that the plaintiff was having financial credibility with the concerned Bank and, therefore, there was nothing wrong to make delivery of the goods on the day the cheque was issued. There was no substantial reason to await until the encashment of the cheque was effected. This was precisely the business practice as stated by D.W.5 Girdharilal. The testimony of D.W. Girdharilal, who was working as Sales Manager of the defendant No. 2, reveals that he used to supervise the entire work of effecting delivery of the goods. His version purports to show that on 12.2.83, the plaintiff gave phone message to him to give delivery of the two bales as he had issued the cheque to the sales agent - Shri Somani. His version purports to show that after receiving the cheque in his office from Shri Somani, he prepared the delivery memos and sent two bales of cloth on bullock-cart to the shop of the plaintiff. His version purports to show that the defendant No. 2 used to deliver the goods by taking into account the responsibility of the middle agent to clear the amount of the cheque. He categorically states that the prevailing practice was to deliver the goods immediately after accepting the cheques through the agents. Needless to say there was no reason for the defendant No. 2 -N.T.M. to withhold the delivery of goods until the encashment of the cheque by the Bank.

15. I have gone through the evidence of D.W.2 Shankarsingh, D.W.3 Bhagwanprasad, D.W.4 Nandkishor and D.W.5 Girdharilal. They were all employees of the defendant No. 2 - N.T.M., except D.W. Nandkishor. D.W. Nandkishor, used to work as local agent of the defendant No. 2 - N.T.M. His version purports to show that the plaintiff was his customer. The evidence of all these witnesses go to show that after receiving the order for goods, the concerned trader used to be informed telephonically about readiness of the goods for purpose of delivery. The concerned trader used to issue cheque for payment of the price of the goods through the agent, like D.W. Nandkishor. The cheque used to be deposited with the office of the defendant No. 2 -N.T.M. The delivery of goods used to be arranged either on handcart or on bullock-cart after issuing gate pass. The contract of sale always stipulated the term that the delivery was to be made at the Mill premises i.e. at outside gate of the defendant No. 2 Mill. Though, such was the written term yet, the bales of the clothes used to be sent to the shop premises of the traders and acknowledgment used to be obtained from them after effecting the actual delivery. The traders used to pay transportation charges directly to the cartman. Thus, it was the responsibility of the concerned trader, like the present plaintiff, to collect the goods outside the gate of the defendant No. 2 Mill. But in practice the delivery used to be made at the doorstep of the shop.

16. The evidence of D.W.1 Sk.Shabbir, reveals that he used to run bullock-cart. He deposed that he is uneducated and cannot read and write. His version purports to show that on the relevant day he had received 5 bales for delivery at about 3-30 p.m. He received the delivery memos alongwith gatepass. He took out the goods from the Textile Mill of the defendant No. 2 after it was duly verified at the gate by D.W. Shankarlal. His version reveals that he delivered two bales of the cloth at the shop of the plaintiff. He deposed that the plaintiff signed the delivery memo after affixing the stamp and paid transport charges of Rs. 4/-. He narrated as to how the remaining bales of the cloth were delivered to the other traders. It appears from version of D.W. Shankarsingh, that on 12.2.83 he verified that five bales were taken out of the premises of the defendant No. 2 Mill as per the entries on page No. 124 and 125 of the relevant Register (Exh.173). Among those five bales, two were to be delivered to the plaintiff. They bore Nos. 2329 and 2345 and were sent to the shop of the plaintiff. His version reveals that subsequently the Sales Manager Shri Girdharilal conducted the inquiry and then he gave details regarding the entries on the gatepass as well as the entries in the outward register.

17. On consideration of the evidence tendered by the defendants, it is manifest that there was no substantial reason for the employees of the defendant No. 2 - N.T.M. to hatch up any conspiracy against the plaintiff. The evidence on record reveals that taking undue advantage of the fact that D.W. Sk.Shabbir was unable to read anything, the plaintiff accepted the delivery of the two bales on 12.2.83, at his shop but falsely stamped the delivery memo by using a rubber stamp of "M/s Var Laxmi Textiles, Nizamabad", instead of using the rubber stamp of M/s Balaji Traders, Nanded. It is conspicuous from the version of D.W. Bhagwanprasad, that he did not verify the delivery memos after they were received by him. He received the delivery memos in respect of the number of bales sent outside the gate of the defendant No. 2 Mill and, therefore, there was no reason to immediately cross-check the stamps on the acknowledgement issued on the delivery memos. It appears that the plaintiff sent letters thereafter with a view to seek double delivery for the same payment. The evidence on record reveals that the plaintiff had sold the goods received by him to other traders in the local market under misrepresentation about the quality thereof. The mischief committed by the plaintiff could not be located by the office of the defendant No. 2 without thorough cross-checking of the delivery memos alongwith the gate pass and the oral inquiry with all concerned. After the due inquiry, D.W. Girdharilal Karnani, lodged the complaint with the Police Station, Wazirabad. It does not appear that the complaint (F.I.R.) was lodged without verification of the record and much less without reasonable cause.

18. The evidence on record reveals that the Police carried out investigation before charge-sheeting the plaintiff. The investigating officer recorded statement of the proprietor of M/s Var Laxmi Textile, Nizamabad. The investigation disclosed that said proprietor by name Gangadhar Mudholkar had never purchased variety of cloth "New Chandan" from the defendant No. 2 Mill at any point of time and had not received the delivery of bales on 12.2.83. The investigation revealed that the plaintiff used to visit shop of M/s Var Laxmi Textile at Nizamabad and had used the rubber stamp of the said shop on one previous occasion while acknowledging the delivery memo dated 11.8.1982 (Exh.220). The police investigation also revealed sale of the cloth by the plaintiff to M/s Jitendra Trading Company and others in the proximity of said period and it was the same cloth which was sent to him in the two bales. Mere acquittal of the plaintiff, under the circumstances, will not give rise to inference about existence of ulterior motive for his prosecution. It is well settled that the plaintiff must prove oblique intention of the defendant in order to establish malice at the bottom of the criminal complaint. The plaintiffs evidence is not worthy of credence in this behalf.

Conversely, it is proved that the complaint was lodged due to reasonable suspicion and on the basis of material collected during the internal inquiry by the complainant - D.W. Girdharilal. It is also duly proved that the investigation was further carried out by the Police without element of any particular malice against the plaintiff. Obviously, it must be said that the plaintiff has failed to prove absence of reasonable and probable cause for filing of the complaint as well as presence of malice beneath his prosecution.

19. In Dattatraya Pandurang Datar v. Hari Keshav Gokhale 1948 Bombay Law Reporter [Vol.L] 622, it is held that when the defendant lodged an information with the Police about the commission of cognizable offence and pointed out suspicion at the plaintiff as the offender, the defendant was not liable, as in doing what he did, he could not be regarded as launching of prosecution. Herein the plaintiff has failed to prove that the defendant No. 2 had influenced the Police and investigation. The learned advocate for the defendant Nos. l and 2 seeks to rely on certain observations in case of Gustav Adolph Abrath v. The North Eastern Railway Company 1886 [Vol.XL] Appeal Cases 247. It is held that honest belief of prosecutor in lodging of the complaint would show presence of reasonable and probable cause. There are cases and cases. Mr.Bora, learned Counsel seeks to rely on Garikipati Ramayya v. Araza Biksham and Anr. , T. Subramanya Bhatta v. V.A. Krishna Bhatta , Govindji J. Khona v. K. Damodaran and Ors. , Vishweshwar Shankarrao Deshmukh and Anr. v. Narayan Vithoba Patil 2005 [2] Bombay Cases Reporter 491.

20. In Major Gian Singh v. S.P. Batra , it is observed that defendant in a suit for malicious prosecution can escape liability only if he places true and correct information before the Police or a Magistrate having jurisdiction to take cognizance of the offence charged against the plaintiff. It is further observed that where a defendant conceals the material facts or distorts them to an unreasonable extent, he cannot be allowed to urge that he was not the prosecutor. It is not necessary to elaborately deal with the other cases cited by learned advocate Mr.Bora. For, the principle enunciated in most of these cases is the same. The plaintiff is required to establish element of malice is well settled principle. Mr.Bora, would submit that the plaintiff demanded for the delivery by sending four letters and yet, the complaint was lodged is itself indicative of suppression of material fact. He would submit that due to concealment of such material facts, there is proof about malicious intent of the defendant No. 2 in setting the criminal law in motion. I do not agree. First, though the plaintiff sent four letters after 16.2.1983, yet, certain time was consumed by the office of the defendant No. 2 -N.T.M. for verification of the record. It was only after due verification of the record that the probability of cheating by the plaintiff was brought on surface. There was no material suppression of the facts by the complainant -D.W. Girdharilal, the Police investigation led to the prosecution when the connecting evidence was collected. The facts obtained in the present case are quite distinguishable from the facts of the cases referred by Mr.Bora. There are no parallels and, therefore, it is not useful to refer these cases while determining relevant issues on the touch stone of facts. The plaintiff appears to have misused the rubber stamp of M/s Var Laxmi Textiles, Nizamabad, while accepting delivery of two bales on 12.2.1983 and that indeed, triggered the criminal prosecution. In this view of the matter, I find myself in general agreement with the reasoning and the findings of the trial Court.

21. The plaintiff gave elaborate account of the expenditure incurred by him for defending himself. He also deposed that he was required to undergo humiliation and ordeal of prosecution. He has not stated anything about the details of expenditure required for payment of lawyers fees. He also examined P.W.2 Balkrishan whose testimony purports to show that the plaintiff was morally, physically and economically weakened. He states that the plaintiff stopped the business after the incident of arrest. His cross examination shows, however, that the plaintiffs business is being looked after his only son by name Navin. There is general statement regarding loss of reputation and the so-called financial set-back received by the plaintiff. The plaintiff has failed to prove the amount of damages which could be reasonably due if it is proved that he was subjected to malicious prosecution. I hold that if the relevant issues are proved regarding malicious nature of the prosecution then the plaintiff would be entitled to claim general damages of Rs. 25,000/- for loss of reputation, loss of business and mental agony caused due to the prosecution. He will be entitled to an additional amount of Rs. 15,000/- as compensation for the amount of expenditure required by him to defend himself. However, in view of negative findings on the material issues, the suit must fail.

22. In the result, there appears no substance in this appeal. The appeal is accordingly dismissed with no order as to costs.