Sukesh Gupta v. M/s Rare Asset Reconstruction Limited

THE HONOURABLE SMT. JUSTICE K. SUJANA CRIMINAL PETITION No.3899 of 2025 ORDER: This Criminal Petition is filed seeking the Court to quash the common order dated 21.1O.2024 passed in Crl.M.P.Nos.683 and 684 of 2024 in Crl.A.No. 1375 of 2017 by the learned Sessions Judge, Hyderabad.

2. The brief facts of the case are that the petitioner Iiled the above criminal Miscellaneous petitions under Sections 391(1) and 311 Cr.P.C., seeking permission to recall and further cross-examine PW1, V. Satyanarayana, Chief Manager of Punjab National Bank, along with production of the statement of account of MBS Jewellers Pvt. Ltd. up to 3l .O8.2O17 stating that no consideration was paid by the complainant bank to MBS Jewellers Pvt. Ltd., and that recalling PW1 was essential to prove the lack of consideration and rebut the presumption under Sections 118 and 139 of the Negotiable Instruments Act. On the other hand, the respondent, Punjab National Bank, opposed the petitions contending that MBS Jewellers Pvt. Ltd., availed credit 2 SKS,J Crl.P.No.3899 of 2025 facilities worth Rs.2O0 crores under a consortium arrangement and defaulted in repayment. To discharge part of the dr:es, l.he petitioner, as Managing Director, issued tu,o cheques for Rs.10 crores each from his personill account along n ith a covering letter dated O2.O7 .2013 (Ex.P2) authorizing the bank to present them if payment was not made by 15.O7.2013. The bank presented the cheques, which u'ere dishonoured for 'Funds Insuflicient." I-{e further submitted lhat the petitions were hled only to delay the appeal proceedings €md lacked bona hdes. After hearing both sides, the trial Court, vide order dated 2l .1O.2O24 dismissed the petitions hokiing that ttre petitioner, being Managing Director of MBS Jewellers Pvt. Ltd., had issued the cheques from his personal account towards repayment of the company's overdraft, ald hence the bank became the holder in due course for consideration. The trial Court relied upon the judgment in Bank of India v. State & Othersr, the trial Court observed that the existing debt constituted valid consideration. S ince the issue had already been dealt with at the trial stage, there was no necessity to recall PW1 for further 'zoto 1rt91 oru +or -) 3 SKS,J Cil.P. o-3899 of2O2S cross-examination. Aggrieved thereby, the petitioner hied the present criminal petit ion.

3. Heard Sri K.S. Rahul, learned counsei appearing on behalf of the petitioner as well as Sri K. Raghavendra Rao, learned counsel appearing on behalf o[ respondent No. I and Sri Rudresh Deshpande, learned Assistant Public Prosecutor appearing on behalfof respondent No.2 - State.

4. Learned counsel for the petitioner submitted that as per Section 9 of the Negotiable Instruments Act, the complainalt Punjab National Bank could not be treated as the holder in due course of the subject cheques (Exs.P3 and P4) as no consideration was paid either to M/s. MBS Jewellers Pvt. Ltd. or to the petitioner and that the cheques were undated and issued as "Account Payee" in favour of M/s. MBS Jewellers Pvt. Ltd., and the dishonour memos (Exs.PS and P6) were al.so addressed to the said company, showing that the complainant presented the cheques only as a holder, not as a holder in due course. He further submitted that the trial court failed to appreciate that the absence of consideration was a crucial fact necessary for a just decision, and that such evidence, being in the exclusive custody of the complainant bank, could be 4 sr(s,J Crl.P.No.3899 of 2025 brought on record only through further cross-examination of PWl. He contendcd that the impugned order was erroneous, passed wit hc,ut proper appreciation of facts or law, and without considering the relevant case law. Thcrefore, he prayed the Court to quash the common order dated

21.10.2024 prassed in Crl.M.P.Nos.683 and 684 of 2024 in Crl.A.No.1il75 of 2Ol7 by the learned Sessions Judge, Hyderabad b1' allowing this criminal petition.

5. In support of his submissions, he relied upon the judgment of .he Hon'ble Supreme Court in T,abira Habibulla H. Sheikh and Another v. State of Gujarat and Others2, wherein in paragraph Nos.58 and 59, it is held as follows: "58. Though it was emphasised with great vehemence by Mr Sushil Kumar and Mr K.T.S. Tulsi that the High Court dealt with the application under Section 391 of the Code in detail and not perfirnctorily as contended by learned counsel tor the irppellants, we lind that nowhere the High Court has effectively dealt with the application under Section 391 as a part of the exercise to deal \\,ith and dispose of the appeal. In fact the High Court dealt with it practically in one paragraph i.e. para 36 <,f the judgment accepting the stand of learned counsel for the accused tl.at the consideration of the appeal has to be limited to the records set up ' lzooa; a surnen: couRT cASEs 158 '1 5 SKS,.T Crl.P.t{o.3899 of 2025 under Section 385(2) of the Code for disposal oI the appeal under Section 386. This perception of the powers of the appellate court and misgivings as to the manner of disposal of an appeal per se vitiates the decision rendered by the High Court. Section 386 ol'the Code deals nirh the manner and disposal of the appeal in the normal or ordinary course. Section 391 is in the nature of exception to Section 386. As was observed in Rambhau case [(20O1) 4 SCC 759 : 2001 SCC (Cri) 8121 if the stand of learned counsel for the accused as was accepted by the High Court is maintained, it would mean that Section 391 of the Code would be a dead letter in the statute book. The necessity for additional evidence arises when the court feels that some evidence which ought to have been before it is not there or that some evidence has been left out or erroneously brougtrt in. In all cases it cannot be laid dorvn as a rule of universal application that the court has to lirst find out whether the evidence already on record is sufhcient. The nature and quality of the evidence on record is also relevant. If the evidence already on record is shown or found to be tainted, tailored to suit or help a particular party or side and the real truth has not and could not have been spoken or brought forth during triat, it would constitute merely an exercise in futility, if it considered f,rrst whether the evidence already on record is suflicient to dispose of the appeals. Disposal of appeal does not mean disposal for statistical purposes but effective and real disposal to achieve the object of any trial. The exercise has to be taken up together. tt is not that the Court has to be satisfied that the additional evidence would be necessary for rendering a verdict different from what 6 SKS,J Crt.P.l{o.3899 of 2025 was rendered by the trial court. [n a given case e\1:n after assessing the additional evidence, the High Cour t carr maintain the verdict of the trial court and similarly the High Court on consideration of r-ne addi"ional evidence can upset the trial court's verdrct. It all depends upon the relevance and acceptability of the additional evidence and ,ts qualitative worth in deciding the guilt or innocence of tlre accused.

59. Merely because the High Court permits additionat evidence to be adduced, it does not necessaril,y lead to the conclusion that the judgment of the trial court iyas wrong. That decision has to be arrired at after assessing the evidence that rvas befo:e the trial court and the additional evidence pernritted to be adduced. The High Court has observed that question of accepting application for additional evidence will be dealt with separately, and in fact dealt with it in a cryptic manner, practically in one paragraph, and did not think it necessarlr to accept the additional evidence. Bui at the same time made threadbare analysis of the aJhdavits as if it had accepted it as additional evid.:nce ald was testing its acceptability. Even the con<:lusions arrived at with reference to those aflliavits do not appear to be correct and sce[r to suff,:r from apparent judicial obstinacy and avoq.ed determination to reject it. For example, to brard a person as not truthful because a different statemcnt u'as given before the trial court unmindful of r-he earl est statement given during investigation and the reasons urged for turning hostile before court negrltes the legislative intent and purpose of inccrporating Section 391 in the Code. The quesdon 1 ? SKS,J Crl.P.No.3899 of 2O25 of admission of evidence initially or as additional evidence under Section 391 is distinct from the efficacy, reliability and its acceptability for consideration of claims in the appeal on merits. [t is only after admission, the court should consider in each case whether on account of earlier contradiction before court and the testimony allowed to be given as additional evidence, which of them or any one part or parts of the depositions are creditworthy and acceptable, after a comparative analysis and consideration of the probabilities and probative value of the materials for adjudging the truth. To reject it merely because of contradiction and that too in a sensitised case like the one before the Court with a horror and terror oriented history of its own would amount to conspicuous omission and deliberate dereliction of discharging functions judiciously and vrith a justice-oriented mission. [n a given case when the Court is satisfied that for reasons on record the rvitness had not stated truthfulty before the trial court and was rvilling to speak the truth before it, the power under Section 391 ofthe Code is to be exercised. It is to be noted at this stage that it is not the prosecution which alone can file arr application under Section 391 of the Code. It can also be done, in an appropriate case by the accused to prove his innocence- Therefore, any approach without pragmatic consideration defeats the very purpose for which Section 391 of the Code has been enacted. Certain observations of the High Court like, that if the accused persons were really guilty they would not have waited for long to commit offences or that they would have killed the victims in the night taking advantage of the darkness and/or that the accused 8 SKS,J Crl.P.tfo.3E99 of 2025 pers,lns had saved some persons belonging to the othe: community, were not only immaterial for the purFose of adjudication of application for additional evidr:nce but such surmises could have been c.lre-ully avoided at least in order to observe and mairtain the judicial calm and detachment required oi t:re leamed Judges in the High Court. The c,rnclusions of the High Court that 65 to 70 persons belorging to the attacked community were saved by the accused or others appears to be based on the ei.id,:nce of the relatives of the accused who were surprisingly examined b,v the prosecution. We shall deai rvith the propriety of examining such persons, infrer. These aspects could have been, if at all pernrissible to be done, considered after accepting the prayer for additional evidence. It is not known as to what cxtent these irrelevant materials have inflr,enced the ultimate judgment of the High Court, in coming u,ith such a strong and special plea in ftrvour of a prosecuting agency which has miserably f:riled to demonstrate an]' credibitity by its course of actron. The entire approach of -the High Court suffr:rs from serious infirmities, its conclusions lopsided and lacks proper orjudicious application of minC. Arbitrariness is found writ large on the app.oach as well as the conclusions arrived at in the judgment under challenge, in unreasonably keel)ing out relevant evidence from being brought on reccrd."

6. On the other hand, learned counsel for respondent No.1 I-tled counter affidavit denying the averments made by the learned counsel for tJle petitioner stating that the petitioner 9 SKS,\' Crl.P. 0.3899 of2025 had sought permission to cross-examine P.W. 1, the Chief Manager of Punjab National Balk, and to adduce further evidence regarding the "holder in due course" of the cheques, but the trial Court dismissed both petitions on 21.1O.2O24, observing that the issue had already been decided on merits. He contended that the cheques were issued by the petitioner on behalf of M/s MBS Jewellers Pvt. Ltd. to discharge or reduce the company's loan liability, and upon receipt, the bank became holder in due course q,ith full authority to collect and adjust the cheque amounts in the company's account and that the petitioner's attempt to re-agitate the same issue was impermissible. Therefore, he prayed the court to dismiss the criminal petilion.

1. In the light of the submissions made by both learned counsel and on a careful perusal of the material available on record, it appears that the C.C. was of the year 2O 14, during which P.W. 1 was examined and extensively cross-examined on O5.O5.2O15 and 15.O6.2O15. The trial concluded with a judgment rendered in the year 2O2O, and the appeal against the same was preferred in the year 2OL7 . lt is an undisputed fact that during all these years, from 2OL7 till 2024, the 10 SI(S,J crl.P.Ilo.3899 of 2O25 petitioner did not take any steps to recall or further cross- examine P.W.l. The present petitions came to be filed after an inordinate delav of nearly ten years from the institution of the case, withc',ut lurnishing any sa[isfactory explanation for such delay. The reason now mentioned that further cross- examination is required to establish that the complainant bank was nor a "holder in due course" and that there was no consideratior.r does not justify reopening the evidence at such a highly belated stage.

8. It is well-settled that the powers under Sections 3 1 1 and 391 of tne Code of Criminal Procedure are discretionar5r and are to be exercised sparingly, only to prevent a miscarriage of justice. These provisions are not intended to enable a party to fill up lacunae in its case or to reopen issues that have already been adjudicated. The test is whether the evidence sought to be adduced is essential for a just and proper decisi,rn of the case. In the present case, the record discloses that. P.W.1 was

1. thoroughll, cross-examined on two occasions, and the petitioner had full opportunity to put forth all relevant questions concerning the bank's status as 'holder in due 11 SKS,J Crl.P.t{o.3899 of 2025 course' and the alleged absence of consideration. Nothing prevented the petitioner from raising these aspects during the trial itself. The attempt to recall P.W. 1 at this belated stage, after the conclusion of trial and during the pendency of appeal, clearly appears to be an afterthought. lo. The contention of the petitioner that the complainant bank was not a "holder in due course" under Section 9 of the Negotiable Instmments Act and that the cheques lacked consideration is essentially a question of law. Such a plea cal be urged and adjudicated in the appeal on the basis of the evidence already available on record. Therefore, there is no necessit5r to recail P.W.l or adduce further evidence to establish the same. The learned Sessions Judge rightly observed that the trial Court had already considered this issue and recorded a finding that the cheques were issued by the petitioner from his personal account towards discharge of part of the company's debt and that the bank, having received the cheques in that context, became a holder for value and consequently a holder in due course. tl. Further, the reliance placed by the learned Sessions Judge on the judgment of the Delhi High Court in Bank of 72 SKS,J Crl.P.No,3E99 of 2O2S India v. State 6s Others is well-founded. In that decision, it was held that when a banker negotiates a cheque clrawn by a third partv torvards reduction of an overdraft rrr existing liability, the tranker becomes a holder for value, and the pre- existing debt constitutes valid consideration. The principle laid down thr:rein squarely applies to the facts of the present CASC 12-. The learned Sessions Judge has also rightly distinguished the judgment of the Hon'ble Suprerne Court in Zabfua Habibulla H. Sheikh and Another v. State of Gujarat and Others. which enunciated the circumstances under which powers under Section 391 Cr.P.C. may be invoked. The said provision is meant to secure the ends of justice in cases where essential evidence has been omitted or withheld, and its absence would result in failure of justice. In the instanc case, the petitioner has neither demonstrated that erny material evidence u'as unavailabie nor shown that the proposed further evidence wor-rld materially affect the decision of the appeal. Therefore, reiiance on the said judgment is mispla,:ed.

13. The sequence of events ciearly indicates that the applications were filed belatedly and appear to ber an attempt I I I I i I 13 SKS,J Crl.P.No.3899 of 2025 to delay the appellate proceedings. The piea raised by the petitioner being purely legal in nature does not reqlrire further evidence. The learned Sessions Judge has considered all relevant aspects in their proper perspective and has assigned cogent and valid reasons for dismissing the petitions. Therefore, this Court does not find any merit in the criminal petition to interfere with the order of the trial Court and this Criminal Petition is devoid of merit and the same is liable to be dismissed. l+. In the result, the Criminal Petition is dismissed. Miscellaneous applications, if any pending, shall stand closed. SD A M. OSMAN ALI BAIG ISTANT REGISTRAR I //TRUE COPY/i I SECTION OFFICER To, The Metropolitan Sessions Judge at HydeiSqad T;; Ca; to th" Prbli" Prosecutor, Higll cqql of Telangana' (oUT) One CC to SRI K S Rahul Advocate [OPUC] O;; Ca io Snr X Raghavendra Rao Advocate IOPUC] Two CD CoPies 1 2 3 4( lrpr/sa P HIGH COURT DATED:1 0110i2025 ORDER CRLP.No.3899 of 2025 fm-"\ (ii' rqNtl r.t6 ((*.* CRIMINAL PETITION IS DISMISSED L