TMI Blog2013 (7) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of - SANJAY MISHRA VERSUS KANISHKA KAPOOR AND ORS. [ 2009 (2) TMI 901 - BOMBAY HIGH COURT] was humbly dissented. - Criminal Appeal No. 6 of 2012 - - - Dated:- 19-7-2013 - R.C. Chavan, J. For Appellant: Nitin Sardessai For Respondents: Rohit Bras De Sa JUDGMENT R.C. Chavan, J. 1. This appeal questions appellate judgment of the learned Additional Sessions Judge, Mapusa whereby the learned Additional Sessions Judge set aside judgment of conviction of the respondent for offence punishable under Section 138 of the Negotiable Instruments Act and sentence of paying compensation quantified at ₹ 4,00,000/- or in default to suffer imprisonment for one year imposed upon the respondent by the learned JMFC, 'E' Court, Mapusa Goa on the conclusion of trial of Criminal Case No. OA/NIA/759/P/06/E before the learned Magistrate. The facts which are material for deciding this appeal are as under: The appellant claimed to be a friend of respondent. The respondent approached the appellant in last week of March, 2006 stating that the respondent wanted to renovate his premises and, therefore, needed a sum of ₹ 3 lacs which he would repay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises dealing with consumer goods had been inaugurated in the premises on 11/10/2005. Further, there was no question of the appellant being in a position to advance any amount to the respondent in the shop on 31/03/2006. After considering this evidence tendered before the learned Magistrate, the learned Magistrate held that the appellant had proved the charge and convicted the respondent as aforementioned. Aggrieved thereby, the respondent preferred an appeal before the Court of Sessions. 3. The learned Additional Sessions Judge held that the respondent had proved that the defence was probable and, therefore, set aside the conviction. While doing so, he relied on several judgments and also invoked provisions of Section 269SS and 271D of the Income-tax Act. He observed that the appellant had not produced the books of account to show that he had sum of ₹ 2,40,000/- to be advanced to the respondent. The learned Additional Sessions Judge relied on the judgments of Supreme Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde, reported at (2008 (4) SCC 54 : AIR 2008 SC 1325) and Kamala S. v. Vidyadharan M.J. Anr., reported at 2007 (2) Bom CR 570 : (AIR 2007 SC (Supp) 1142) as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent avoided payment towards the remaining cheques. 6 . The learned Counsel for the respondent submitted that the respondent filed an application in the case No. 478/06/C on 8/01/2007, unconditionally proposing to pay a sum of ₹ 20,000/- with the understanding that the appellant would withdraw even the present case i.e. Criminal Case No. 759/06, if he made that payment. This according to the learned Counsel for the appellant appears to be farfetched since the order passed by the learned Magistrate on application at exhibit 15 in the said case No. 478/06 shows that the complainant was not willing to compound the matter though the appellant was ready to pay a sum of ₹ 20,000/-. Therefore, there is no question of there being any understanding reached between the parties. Therefore, the payment of ₹ 20,000/- by allowing a cheque to be encashed, and an offer to pay a sum of ₹ 20,000/- made in case No. 478/06 are inexplicable and would be indicative of the respondent having some liability towards the appellant. 7 . The learned counsel for the appellant submitted that the story put forth by the respondent that he had no need of money is itself not pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the truthfulness of what the respondent stated. Lawrence Fernandes stated in his cross-examination that though the schedule of payment was mentioned in the agreements there was some delay in payment of amounts under the agreement. The payment under the first agreement was delayed by 2 to 3 months and payment under the second agreement was delayed by about an year. DW 2/Lawrence Fernandes denied having ever stated in the earlier criminal case, where he was examined, that he had received possession of shop No. 5 in compliance with agreement dated 17/02/2006. He was confronted with his evidence in the earlier case, where it was mentioned that it was true that possession of shop No. 4 was given in compliance with exhibit 33 and shop No. 5 was given in compliance with exhibit 34. On being confronted with this statement the witness stated that it may be due to some mistake that he made such a statement. If he was so casual about making statement on oath in Court, it cannot be said that the learned Magistrate was off the mark in branding Lawrence Fernandes as a lier. In any case, on his own admission, the entire consideration has not been paid to the respondent. Therefore, to say that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awrence Fernandes itself shows that the payment was not being made as per schedule and that in respect of the second agreement the payment was lagging behind by almost an year. Therefore, if the accused had in fact agreed to sell his premises, presumably because he needed money, rather than the premises, and if money was not forthcoming for whatever needs he had, it cannot be said that he had no reason to borrow from the complainant. This is also to be considered in the context of the fact that the accused agreed to repay in instalments which may be consistent with the promise of the purchaser Lawrence Fernandes to pay according to a schedule fixed in the agreements and not in one lump sum. 12. As to the question whether the appellant-complainant was right in claiming that the accused had sought this advance for renovating his bar, this need not have influenced the learned Additional Sessions Judge, even if it is taken that the complainant's word on this count was not true, since the complainant would depend on what the accused told him and would have no reasons to check up whether the accused really needed money for the purpose for which he was seeking it. Therefore, these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance taken by way of any loan of more than ₹ 20,000/- was to be made by way of an account payee cheque only. 27. Section 271D of the Income-tax Act reads as under: 271D. Penalty for failure to comply with the provisions of Section 269SS - (1) If a person takes or accepts any loan or deposit in contravention of the provisions of Section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. (Emphasis supplied). The Supreme Court then allowed appeal and set aside the conviction of the accused. 16. As already observed the judgment in Krishna Janardhan Bhat (supra) (AIR 2008 SC 1325), in so far as it relates to interpretation of Section 139 of the Negotiable Instruments Act, has been overruled by a three Judges Bench of the Supreme Court in Rangappa (supra). In Rangappa (supra) the Supreme Court was considering an appeal against conviction recorded by the High Court reversing an acquittal by the Court below for the offence punishable under Section 138 of the Negotiable Instruments Act. In that case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance taken by way of loan of more than ₹ 20,000/- was only to be made by way of an account payee cheque. He submitted that in Rangappa (supra) the Supreme Court was specifically considering the case of an advance of ₹ 45,000/- made in cash and yet the Supreme Court had upheld the conviction recorded. Thus even those observations based on the provisions of Section 269SS and 271D of the Income-tax Act made in Krishna Janardhan Bhat (supra) would stand impliedly overruled. I am entirely in agreement with the learned counsel for the appellant because the Supreme court in Rangappa (supra) had specifically noted the judgment in Krishna Janardhan Bhat (supra). The Supreme Court had obviously noted the observations in para 26 in Krishna Janardhan Bhat (supra) that advance of more than ₹ 20,000/- was to be made only by way of an account payee cheque, and yet the Supreme Court accepted case of a complainant who claimed to have made an advance of ₹ 45,000/- in cash and proceeded to uphold the conviction, even though the case rested on the fact that cash advance of a sum more than ₹ 20,000/- was made. Thus, on this aspect also Krishna Janardhan Bhat (supra) stood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y whom the loan or deposit is taken or accepted are both having agricultural income and neither of them had any income chargeable to tax under this Act.] Section 271D-(1) If a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. (2) any penalty imposable under sub-section (1) shall be imposed by the joint Commissioner. (Emphasis supplied). A plain reading of Section 269SS shows that no person can accept any loan or deposit of a sum of ₹ 20,000/- or more otherwise than by an account payee cheque or account payee bank draft. It does not say that a person cannot advance more than ₹ 20,000/- in cash to another person. It is clear that the restriction on cash advances was in fact on the taker and not the person who makes the advance. The penalty for taking such advance or deposit in contravention of provisions of Section 269SS was to be suffered by one who takes the advance. Therefore, it was obviously impermissible to invoke these provisions for preventing a person from recovering the advance which he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) was expressly overruled on the nature of presumption under Section 139 and impliedly on the question of cash advances, it remains a decision on facts of that case and so the observations in Sanjay Mishra (supra) based on Krishna Janardhan Bhat (supra) may be safely excluded from consideration. 22. In Sanjay Mishra (supra) the Court had also noted in para 14 the observations of the Supreme Court in Dalmia Cement (Bharat) Ltd. v. Galaxy Traders Agencies Ltd. Ors., reported at (2001) 6 SCC 463 : (AIR 2001 SC 676) and, ultimately, refused leave for filing an appeal against acquittal, possibly principally on account of the following facts noted by the Court in paras 6, 7 8 of the judgment. 6. I have given careful consideration to the submissions. I have perused a copy of the complaint and notes of evidence. In the cross-examination, the applicant has categorically stated thus: .... The entire amount was given in cash. The entire amount was my cash amount. The cash amount was kept at my Chembur's residence. At that time, it was unaccounted. I had not disclosed this amount to the Income Tax after giving the loan till date. There was no agreement for interest on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 (4) AIR Bom R 436) (supra) failure to show the advances in income tax returns is not held to be always fatal. While observing that small amounts of less than ₹ 20,000/- could be so advanced, the Court was obviously influenced by observations in Krishna Janardhan Bhat (AIR 2008 SC 1325) (supra) and provisions of Sections 269SS and 271D of Income-tax Act, which as already pointed out, require a borrower to receive amount in excess of ₹ 20,000/- only by cheques. In the case at hand, the amount was advanced in the last week of March, 2006 and was to be repaid by 30/09/2006 i.e. within 6 months. Thus, even observations in Sanjay Mishra (supra) (minus the ceiling of ₹ 20,000/- which has no legal sanctity), would not make the appellant's case untenable. 24. The learned counsel for the appellant submitted that the amounts which were not reflected in the income tax returns or in the books of accounts do not become irrecoverable. He relied on a judgment of this Court in Shri Deelip Apte v. Nilesh P. Salgaonkar Ors., reported at 2006 (2) Goa LR 229 : (2006 (6) ABR (DOC) 161) in support of this proposition. It was observed therein at para 4 as under: 4. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent relied on the question of object of Section 138 of the Negotiable Instruments Act, this Court held in para 15 as under: 15. The Apex Court has held that the laws relating to the said Act are required to be interpreted in the light of the object intended to be achieved by it despite there being deviation from general law. The Apex Court expressed that the object of section 138 of the said Act was to ensure that commercial and mercantile activities are conducted in smooth and healthy manner. The explanation to section 138 of the said Act clearly provides that a debt or other liability referred to in section means a legally enforceable debt or other liability . The alleged liability to repay an unaccounted cash amount admittedly not disclosed in the Income Tax Return cannot be a legally recoverable liability. If such liability is held to be a legally recoverable debt, it will render the explanation to, section 138 of the said Act nugatory. It will defeat the very object of section 138 of the Act of ensuring that the commercial and mercantile activities are conducted in a healthy manner. The provision of section 138 cannot be resorted to for recovery of an unaccounted amount. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd even the learned Counsel for the respondent could not show any such provision to me. For this reason, the judgment in Sayeeda Iqbal Vakil (supra) and Vassudev Ramchand Ahuja (supra) cannot be followed. Judgments in Patricio D'Souza v. Oscar D'Souza Anr., reported at 2009 (1) Bom CR (Cri) 710 :( 2009 (6) ABR (DOC) 101) and Sandeep Shirodkar v. Shankar Dhawaskar Anr., reported at 2010 (2) Bom CR (Cri) 867 : (2011 (4) AIR Bom R 303) are on facts unfolded in those cases. 26. The learned counsel for the respondent submitted that if this Court was taking a view different from that taken in Vassudev Ramchand Ahuja (supra) or Sanjay Mishra (supra), this Court ought to make a reference to a Division Bench. I do not think it is necessary because first there is also a judgment of single Judge of this Court in Shri. Deelip Apte (supra) which has already taken such a view and, secondly, in the absence of express provision which would make such loans unrecoverable it would not be possible for any Court to so hold. 27. The learned counsel for the respondent next submitted that the presumptions are rebutable and the accused is not required to tender evidence or bear burden of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. 28. The question in this case is however that the defence evidence tendered by the accused in this case, far from rebutting the burden, only reinforces the case of the complainant. There would be no reason for the accused to allow the cheque of sum of ₹ 20,000/- to be honoured and offer to pay another sum of ₹ 20,000/- if in fact nothing was due and he had been forced to write the cheques. This itself makes the story of the accused suspicious. 29. The learned counsel for the respondent next submitted that since this Court is considering an appeal against acquittal, this Court ought to be extremely slow in setting aside an acquittal. There can be no doubt about this proposition. In fact, the learned counsel for the appellant himself drew my attention to four judgments which discuss as to when ..... X X X X Extracts X X X X X X X X Extracts X X X X
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