Gujarat High Court

M/S Shri Hatkesh Industries Thro ... vs State Of Gujarat on 15 December, 2023

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   R/CR.MA/13100/2019                                        ORDER DATED: 15/12/2023

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         IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

 R/CRIMINAL MISC.APPLICATION (FOR CONDONATION OF DELAY)
                    NO. 13100 of 2019
     In R/CRIMINAL MISC.APPLICATION NO. 13099 of 2019
                           With
      R/CRIMINAL MISC.APPLICATION NO. 13099 of 2019
                           With
            R/CRIMINAL APPEAL NO. 1488 of 2023
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         M/S SHRI HATKESH INDUSTRIES THRO ALINDRABEN
                      MAHESHBHAI BHATT
                            Versus
                       STATE OF GUJARAT
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Appearance:
MR RUSHABH R SHAH(5314) for the Applicant(s) No. 1
DS AFF.NOT FILED (R) for the Respondent(s) No. 2
MR.D K.PUJ(3836) for the Respondent(s) No. 3,4
Mr. Hardik Mehta. Addl. PUBLIC PROSECUTOR for the Respondent(s)
No. 1
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 CORAM:HONOURABLE MS. JUSTICE NISHA M. THAKORE
                  Date : 15/12/2023
                    ORAL ORDER

Order in Criminal Misc. Application No.13100 of 2019

1.0. The learned advocate for the respective parties were heard at length and the matter was re-notified for order. Learned advocate for the respondent has requested to pass appropriate order.

2.0. This application is filed by the applicant-original complainant under Section 5 of the Limitation Act seeking condonation of delay of 1168 days caused in filing the Criminal Appeal along with application for leave to appeal against the judgment and order of acquittal dated 20.02.2016 passed by the

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learned Judicial Magistrate First Class, Vapi in Criminal Case No.1815 of 2014 for the offences registered under Section 138 of the Negotiable Instruments Act.

3.0. This Court by order dated 12.07.2019 had issued Rule upon the respondents. From the record, it transpires that Rule was duly served upon the respondents no.3 and 4. Initially, notice upon respondent no.2 had remained unserved as not found at the address mentioned in the cause title. This Court by order dated 19.03.2022 had issued fresh notice and had permitted direct service.

4.0. When the matter was taken up for hearing, Mr. Rushabh Shah, learned advocate for the applicant had submitted that respondent no.2 is company and the respondent no.3 is Director of the said company and respondent no.4 is the authorized signatory of the disputed cheque on behalf of respondent no.2 company. He, therefore, submitted that the interest of respondent no.2 is represented through respondent nos. 3 and

4. He, therefore, urge this Court to consider this application seeking condonation of delay.

4.1. At the outset, he invited attention of this Court to the facts of the case and has made an attempt to highlight the fact that old lady is awaiting the realization of the money since year 2013. In fact, the respondents accused have tried to dupe her. He has submitted that initially parties have entered into the settlement agreement and in the first round of litigation, the complaints were withdrawn relying upon the assurance of the respondent accused. The cheque offered pursuant to such settlement had

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once again got dishonored. The quashing petition was filed against the proceedings arising out of dishonor of cheque wherein the respondents accused on technical ground has succeeded and the complaint was quashed and set aside. In such circumstances, she has approached this Court seeking leave to appeal against the order of withdrawal of original complaint.

4.2. Mr. Shah, learned advocate in support of his submission has invited attention of this Court to the averments made in the application. He has further relied upon the order passed by the Coordinate Bench of this Court in quashing proceedings being Criminal Miscellaneous Application No.34217 of 2016, more particularly, para 16, wherein, this Court has given liberty to the complainant to initiate appropriate proceedings against the accused of Criminal Complaint No. 1815 of 2014 and others challenging the order of acquittal.

5.0. The aforesaid submissions of the learned advocate for the applicant- original complainant has been vehemently objected by Mr. Puj, learned advocate for the respondent nos. 3 and 4. He has submitted that the order of acquittal came to be passed pursuant to the withdrawal of complaint by the applicant on 20.02.2016. He has not disputed the fact that settlement was arrived at with respondent no.2 and the amount outstanding of Rs.40 lakhs was reduced to Rs.22.50 lakhs and the cheque was also handed over to the complainant in terms of settlement entered into between the parties. However, the fact remains that the applicant has approached this Court only on 29.06.2019 though the liberty, even assuming for the sake of argument,

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being extended by this Court relates to January 2019. He, therefore, urge this Court that the explanation offered by the complainant cannot be treated sufficient to condone the delay caused in filing the present leave to appeal along with appeal. He further submitted that even otherwise once settlement is entered into between the parties, the order of withdraw cannot be a subject matter of challenge in appeal and the appropriate remedy as observed by this Court lies elsewhere.

6.0. Having heard the learned advocates for the respective parties, the question which falls for the consideration of this Court is that whether there exists sufficient cause to condone the delay of 1168 days occurred in filing Criminal Appeal along with application for leave to appeal. The Court while examining the application for condonation of delay is required to notice rational reason offered by the applicant seeking condonation of delay. In the present case, it has emerged on record that the lady is pursuing the criminal proceedings for realization of the outstanding amount of business transaction entered into way back in the year 2013. It has emerged on record that at the relevant time at the stage when the order of acquittal was passed on 20.02.2016, the withdrawal of such complaint was made under a belief that the accused have offered for settlement. The complainant had agreed and even the amount was reduced from Rs.40 lakhs to Rs.22.50 lakhs. Indisputably, the second cheque issued by the respondents accused could not be realized which was presented in the year July 2016, this led to filing of second complaint against all the respondents- accused which was in the month of September 2016. The aforesaid proceedings came to be challenged before this Court by filing quashing petition i.e.

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Criminal Miscellaneous Application No.34217 of 2016. The matter was pending adjudication before this Court and came to be finally decided by order dated 08.01.2019. Though quashing petition was allowed however noticing the modus operandi adopted by the respondents -accused led the Court to make few observations. The Court has kept open for the complainant to initiate appropriate proceedings against the accused challenging the order of acquittal passed on the earlier complaint. It transpires from the record that present application seeking leave to appeal along with appeal came to be filed in the month of July, 2019. Noticing the peculiar facts of the case, prima facie the Court finds that the complainant has been duped. Present application seeking condonation of delay requires consideration. This Court is of the view that dismissing the appeal at the threshold on the technical ground of delay would amount to no adjudication of the case on merits and result into miscarriage of justice. On the other hand, the respondents accused would be released without there being any adjudication on the merits of the case. The explanation offered by the complainant cannot be treated as no cause being explained. Hence, present application for condonation of delay of 1168 days caused in preferring Criminal Appeal along with application for leave to appeal is hereby condoned. Rule is made absolute to the aforesaid extent.

Order in Criminal Misc. Application No.13099 of 2019

1.0. Present application under Section 378(4) of the Code of Criminal Procedure, 1973 has been preferred by the applicant for Leave to Appeal against the impugned judgment and order of acquittal dated 20.02.2016 passed by the learned Judicial

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Magistrate First Class, Vapi in Criminal Case No.1815 of 2014 for the offences registered under Section 138 of the Negotiable Instruments Act.

2.0. Mr. DK Puj, learned advocate who has appeared on behalf of respondent nos. 3 and 4, who are Directors of the respondent no.2 company and the Chief Executive Officer, who is also authorized signatory of the respondent no.2 company.

3.0. At the outset, Mr. Puj has vehemently objected to grant leave to appeal. He has invited attention of this Court to the facts of the case and has submitted that in the first round of litigation, four criminal cases were lodged by the applicant against present respondent for the alleged outstanding debt liability of the amount of Rs.40 lakhs. The complainant had entered into settlement pending the trial. The settlement deed was also executed between the complainant and the respondent no.3 in his individual capacity whereby respondent no.3 in his personal capacity had agreed to make good the payment of an amount of Rs.25 lakhs. He further submitted that the complainant had withdrawn the aforesaid four criminal cases voluntarily. He fairly admitted that second cheque given by the respondent no.3 from his own account got dishonored. He, however resisted present leave to appeal by submitting that the respondent no.2 company and respondent 4 - Chief Executive Officer of the company are in no manner liable to be prosecuted. Even though, the complainant had joined them as well as wife of the respondent no.2 as accused in the second complaint. This led the aforesaid respondents -accused to approach this Court in filing quashing petition under Section 482 of the Code of

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Criminal Procedure. The Court had protected the aforesaid respondents- accused and after hearing the complainant had finally by order dated 08.01.2019, passed in Criminal Miscellaneous Application No.34217 of 2016, had quashed and set aside the complaint. He fairly submitted that based on the aforesaid order of quashing passed by this Court against respondent nos. 2 and 4, the learned Magistrate committed gross error in dropping the criminal case against the present respondent no.3 accused. However, the complainant without pursuing the proper remedy of filing appeal against such erroneous order of learned Magistrate has approached this Court by way of present leave to appeal against the impugned judgment and order of withdrawal which has resulted into acquittal of the present respondents - accused. He further submitted that the cause of action which had arisen for default of cheque in the earlier proceedings had subserve in the settlement agreement entered into between the parties and therefore, having persuaded proceedings by filing second complaint against the respondents -accused, which has ultimately led into quashment of second complaint, present proceedings in the form of appeal may not be entertained.

4.0. The aforesaid arguments of the learned advocate for the respondent nos. 3 and 4 has been dealt with by the learned advocate for the applicant- original complainant. He has invited attention of this Court to para 16 of the order dated 08.01.2019 passed in Criminal Miscellaneous Application No.34217 of 2016 by the Coordinate Bench of this Court and has submitted that noticing the peculiar facts of the case where lady aged about 65 years has been duped and has been precluded from realizing

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outstanding amount for so many years, the Court has granted liberty to the complainant to pursue appropriate proceedings challenging the impugned judgment and order of acquittal. He, therefore, urge this Court that leave to appeal may be granted.

5.0. Having heard the learned advocates for the respective parties and having perused the record, the Court notices that the original complainant is the private limited company and is engaged in the business of sale of chemicals. It appears from the averments made in the complaint that parties were having business relationship and various transactions were entered into whereby the complainant was claiming outstanding amount of Rs.1,06,94,912/- against the sale of goods. Such transaction prevailed for a period between December 2013 to May 2014, against which, various bills were raised by the complainant company. The respondent accused no.3 who is the Director of the company and respondent no.4, is the authorized signatory being the Chief Executive Officer of the company, had handed over the cheque to the complainant for an amount of Rs.40 lakhs against the total outstanding amount. The said cheque was not realized and was defaulted for "funds insufficient". In such circumstances, the complainant was constrained to approach the Court of learned Judicial Magistrate, First Class, Vapi by filing four criminal complaint including present complaint being Criminal Case No.1815 of 2014 under Section 138 of the Negotiable Instruments Act. It further transpires from the record that the aforesaid complaints were withdrawn by the complainant considering the assurance of the respondents accused that amount offered which was reduced to Rs.22.50 lakhs would be realized in near future. The settlement deed was

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entered into between the parties and the respondents accused have handed over the cheque of such reduced amount, which was also subsequently dishonored. In such circumstances, the complainant was compelled to pursue the appropriate legal remedy. Noticing that the complainant is awaiting the payment of money of transaction entered into between the parties as evident from the details of the bills which relate to the year 2014, even this Court while considering the prayer of quashing of the second complaint filed by the company and other co-accused though accepted the prayer sought for, having noticed the conduct of the respondent accused observed as under:

"16. Before parting with the judgment,the facts of the case necessitate observations against the modus operandi adopted by the applicant Nos.1 and 2, and Sheetal Shashikant Mehta, Chief Executive Officer of the applicant No.1 in committing fraud against the complainant,who is a lady of 65 years. The complainant, after she entered into settlement with them, in bonafide belief of getting her dues, had withdrawn the Criminal Complaint Nos.1815 of 2014, 1816 of 2014, 1818 of 2014 and 1819 of 2014 filed by her against them for a total debt liability of an amount of Rs.40,00,000/- In the settlement, the amount was reduced to Rs.22,50,000/ and the liability was shouldered by Sheetal Mehta by issuing the cheque, which was also subsequently dishonoured. Thus, the complainant was left without any remedy of pursuing her original complaints for the amount of Rs.40,00,000/- since the same were disposed of in view of the settlement. As per Section 147 of the N.I.Act, the offences punishable under the Act are compoundable and hence, the effect of the compounding will amount to acquittal. In the considered opinion of this Court, if a complaint is disposed of pursuant to any settlement, and the cheque which is issued pursuant to such settlement gets dishonoured, then the original accused, who are the signatories to the compromise cannot be letoff only for the reason that some other person has shouldered the liability of discharging the debt and

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they cannot be prosecuted in view of acquittal. In such cases it can be presumed that the accused have in fact abused the process of law and by adopting such tactics they were successful in obtaining acquittal because of the compounding of the offence under Section 147 of the N.I. Act. In such circumstances, the complainant can file an appeal against the acquittal of the accused. Thus, it will be open for the respondent No.2 to initiate appropriate proceedings against the accused of Criminal Complaint Nos.1815 of 2014,1816 of 2014, 1818 of 2014 and 1819 of 2014 challenging their acquittal."

6.0. Having noticed the conduct of the respondent accused when this Court has granted liberty to the complainant to file an appeal against the order of acquittal based on settlement which actually did not fructified, in my opinion, arguable case is made out by the complainant to grant leave to appeal. Prima facie, the Court finds that the complainant had entered into settlement on assurance of the accused. Indisputably, the cheque issued by the respondents accused has not been realized. This had given fresh cause of action for the complainant to prefer complaint under Section 138 of the Negotiable Instruments Act, which has resulted into disposal of the complaint by the learned Magistrate noticing the order of this Court in quashing petition. Thus, the question which arise for consideration of this Court is that whether the liability of respondent accused stood discharged and cannot be prosecuted, though the original proceedings stood terminated upon withdrawal of complaint, based on settlement which otherwise may not acted upon? Prima facie the Court is of the opinion that once the settlement agreement has been entered into between the parties' was not acted upon. The proceedings of the original complaint would be maintainable in light of the observations of this Court in Criminal Miscellaneous Application

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No.34217 of 2016. Ultimately, the complainant cannot be made remediless. Hence, the present application is allowed and Leave to Appeal, as prayed for, is hereby granted.

Order in Criminal Appeal:

Admit. Learned Additional Public Prosecutor waives service of notice of admission on behalf of the respondent State and Mr.D K Puj, learned advocate waives service of notice of admission on behalf of respondent nos. 3 and 4. Registry is directed to call for the Record and Proceedings of the case from the concerned Court.