Maruti G. Shinde v. Bankim D. Desai & Ors.

the parties were knowing one another.

The learned Judge has disbelieved the aspect of the Complainant having secured a loan from a financial institution to help the Respondent No.1 to obtain his loan. Hence, this Court would have to see whether the Complainant in fact obtained and then granted the loan to Respondent No.1 as contended by him, or whether the Respondent No.1 issued the cheque only as security for attendance in his employment.

The Respondent No.1 claims to have worked for a few months until 19th November 2006, when he claims to have stopped working for the Applicant since the Applicant did not pay him his salary. The Respondent No.1 claims to have demanded return of the cheque. He stopped payment on 9th January 2007. On that date the balance in his account was a mere Rs.7,087.78. The cheque earlier issued by the Respondent No.1 is dated 15th January 2007. It was presented on 16th January 2007. The notice of dishonour was given to the Applicant on 19th January 2007. Notice of demand has been sent on 20th January 2007. It is received on 27th January 2007. 4 The reply is undated. The Respondent No.1 has lodged the first police complaint on 12th February 2007.

The short chronology of events and dates would help in ascertaining the truth or otherwise of the parties case.

The notice of demand shows that in September (cid:19) October 2006 the Respondent No.1 approached the Applicant for person loan of Rs.75,000/- stating that he required the amount for payment of school fees of his children. The Applicant arranged for the loan and paid the amount to Respondent No.1. The Respondent No.1 issued a cheque dated 15th Janaury 2007 for Rs.75,000/-.

The reply to the notice shows the Respondent No.1 was the Office Administrator in the Proprietory Firm of the Applicant. The Applicant agreed to pay him Rs.25,000/- p.m and traveling expenses. He only paid him Rs. 10,000/- once by cheque and Rs.5000/- twice in cash. The Respondent No.1 demanded the salary and in October 2006 insisted for his dues. The Applicant suspected that he may discontinue his job. Therefore, to secure his attendance in the Firm he demanded a cheque of Rs. 75,000/- as security for the attendance of Respondent NO.1 and to facilitate Bank collection activity and promised to pay his dues thereon. The Respondent No.1 5 believed the Applicant and handed over the said cheque. The Applicant failed to keep his promise. Hence, the Respondent No.1 stopped working from 19th November

2006. After that he requested the Applicant to settle his dues and demanded the return of cheque. He claimed Rs.1,30,000/- as payable to him on account of salary. This is the essential defence of the Respondent NO.1 to rebut the presumption under Section 189 of the Negotiable Instrument Act regarding the passing of consideration under the admittedly issued cheque.

Since when the Respondent No.1 came in employment of the Applicant is not shown. It must be over a period of about at least 4-5 months since the Applicant is stated to have agreed to pay Respondent No.1 at the rate of Rs.25,000/- p.m by way of salary and additional amount as traveling expenses.

In October 2006 the Respondent No.1 insisted for his dues which were not paid aside from only Rs.20,000/- paid to him. Hence, the salary for even a single month is not fully paid. The Respondent No.1 would have been working for him at least from June 2006 since Rs. 1,30,000/- is claimed as arrears of salary. He stopped working from 19th November 2006. In such a scenario in October 2006 the Applicant is stated to have suspected that the Respondent No.1 would discontinue his job and 6 hence, he demanded from his employee a cheque for security of the employees(cid:25) employment! The defence is most esoteric. No employer can secure the attendance of his employee. No employee would issue a cheque for security of the employer when employer has not paid him a single month(cid:25) s salary. The cheque is stated to have been issued in October 2006. Hence, it was post dated to 15th January 2007. This would not have secured the employer for the period between November 2006 and January 2007 when the cheque was postdated.

The stop-payment instructions are given on 9th January

2007. Since the cheque was of January 2007 and could not have been deposited earlier. There was no need to demand its return. In fact the Respondent No.1 has taken care to see that the cheque is not honoured by his stop-payment instructions. His accounts statement shown to Court by his Advocate shows a balance of merely Rs.7,087.78 on 9th January 2007.

The consideration payable under the cheque is presumed. It is for the Respondent No.1 to rebut the presumption. The case sought to be made out by the Respondent No.1 cannot rebut that statutory presumption.

The reply to the demand notice also shows the denial 7 that the loan was taken by the Respondent NO.1 for the school fees of his children. The Respondent No.1 has stated that his children are grown up and were not schooling. In his oral evidence he has stated that his son was in second year Engineering and his daughter was studying in final year of Engineering in SNDT University. That may be accepted. However, the fees are required to be paid for various activities or reasons even during the Engineering study. Upon the premise that his children are not schooling the Respondent NO.1 has stated in reply to the demand notice that (cid:28) as far as my memory goes(cid:29) he did not borrow the amount. There is therefore, no specific denial of borrowing.

Though the Respondent No.1 has claimed to be an Office Administrator and has claimed to have been the experienced in Marketing and to recover the amounts on behalf of banks and financial institutions, in his cross examination he has deposed that he would not be able to answer in English, and he has no other technical qualification. He has accepted that he is working in Urmi Sarjan High School since 1985 as an Office Clerk. He also does job work for account writing for various parties. He has not shown that that service has been discontinued or that he retired or resigned therefrom. He has accepted that during the course of 8 his employment with the school he kept a liaison with the Education Department of the State Government as well as the B.M.C. He has also accepted that the office of the Education Department is at Marine Lines. This aspect assumes importance in view of the case of the Applicant supported by his 2 employees who have been examined as P.W2 and P.W3.

P.W3 who is an office-boy of the Applicant has deposed that he knew both the Applicant and the Respondent No.

The Respondent No.1 used to come and sit in the office of the Applicant, since he was his relative. On 14th September 2006 the Respondent No.1 paid him Rs. 75,000/- and gave him an address to deliver that amount to the addressee at Marine Lines. Accordingly he paid that amount there. That was for (cid:28) some admission(cid:29) .

16.P.W.3 has also deposed how he was the employee of the Applicant between 2004-2007. He has also deposed about the incident of 14th September 2006. He had also gone to the Finance Company with the Applicant as well as the Respondent No.1 for seeking gold loan. He has deposed that the Respondent NO.1 completed the formalities. The application was signed by the Applicant. Cash of Rs.93,000/- and some odd amount was given to the Complainant. They returned to their office. Then the Complainant gave Rs.80,000/- to the 9 Respondent No.1 who gave the said cash to P.W.2 and asked him to pay (cid:28) somebody in Education Department at Charni Road(cid:29) .

Hence, it is seen that the evidence of the Respondent No.1 that he worked in a School and kept the liaison with the Education Department is corroborated by 2 independent witnesses.

This Court is not concerned with the exact need of the Respondent and the exact reason for availing of the loan. It had something to do with handing over the amount to some authority relating to School. Hence, the evidence of P.W.2 and P.W.3 that it was paid for some admission to somebody in the Education department at Charni Road by P.W.2, seen by P.W.3, upon the instructions of the Respondent No.1 is seen. The Respondent No.1 has produced 2 bank accounts; one of himself and one of his wife. Neither of these bank accounts had Rs.75,000/- at any time. Hence, the case of the complainant that he needed a loan which the Applicant arranged for is seen to be substantiated.

The case of the Respondent No.1 that he gave the cheque to secure his employer when he was himself an unpaid employee has to be rejected as an untruthful deposition. 10

The cross examination of the Respondent No.1 shows some earlier transaction of Rs.25,000/- given by the Complainant. Though he has tried to deny that fact in his cross-examination, his police complaint dated 12th February 2007 shows that the Applicant had given him a loan of Rs.25,000/- in April 2006 because he had a need for that amount, but he had returned that amount within one week to the Applicant.

His cross examination further shows that he had taken a loan from ICICI Bank. He has admitted this fact as true in his cross examination.

A reading of the entire evidence shows that the Applicant had advanced him a loan after making arrangement for it. The Applicant was the Proprietor of a business. The Respondent No.1 was merely a clerk in a School. He could not arrange for the loan himself. The Applicant helped him to obtain the loan. He, therefore, issued a cheque, though post-dated to the Applicant for the return of that loan. The consideration of the loan and the cheque amount is the same, though there is a minor anomaly between P.W.2 and P.W.3, who have deposed that Rs.75,000/- and Rs. 80,000/- respectively were given to the Respondent No.

1. That amount had to be returned. The cheque was for 11 no other reason. The Respondent No.1 stopped payment a week before the cheque could be encashed. Respondent No.1 did not have sufficient funds either on the date of issue of the cheque or when he stopped payment or when it was presented. Merely because the Applicant did not have his own funds, but arranged for the loan, his case cannot be believed. Hence, the impugned order requires to be set aside. Hence, the following order:

O R D E R

1. The order dated 25th April 2009 of the Metropolitan Magistrate, 10th Court, Andheri, Mumbai is set aside.

The Respondent No.1 is convicted of the offence punishable under Section 138 of the Negotiable Instruments Act and sentenced to suffer Simple Imprisonment for a period of 6 months and to pay fine of Rs.1000/- and in default of which to undergo further Simple Imprisonment for one week.

The Respondent No.1 is directed to pay compensation to the Applicant in a sum of Rs.80,000/-.

4. The Appeal disposed off accordingly.

(SMT. ROSHAN DALVI, J.)