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Emperor Vs. Keshavji Madhavji - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtMumbai
Decided On
Case NumberCriminal Appeal No. 455 of 1929
Judge
Reported in(1930)32BOMLR562
AppellantEmperor
RespondentKeshavji Madhavji
DispositionAppeal dismissed
Excerpt:
.....exchange a cheque for rs. 1,500 in their favour. the complainant's cheque was duly cashed; but the accused's cheque when presented for payment was dishonoured :- ;that the accused committed the offence of cheating under section 417 read with section 109 of the indian penal code, inasmuch as they acted in concert throughout the transaction and as the dishonest intention arising from the knowledge that the cheque would not and could not be paid on the due date must be imputed to all of them alike.;what the prosecution has to do in a case of this kind is to establish facts which point prima facie to the conclusion that the failure to meet the cheque was not accidental but was a consequence expected and therefore intended by the accused. it will then be for the accused to establish any facts..........admittedly in embarrassed circumstances. there was a cheque for rs. 7,000 drawn by the accused's firm on september 16 in favour of one kishorilal which had to be met. the credit balance in the accused's banking account carried over on september is was rs. 1,192-6-6. september 17 was a bank holiday. the 18th, though not a bank holiday, was a jain holiday and no transactions appear to have taken place in the accused's account on that day. the opening balance on the 19th was rs. 1,038-1-3. in the course of the day sums amounting to rs. 6,200 were paid in. this amount included the cheque for rs. 1,500 obtained from the complainant. in this way the amount of rs. 7,000 was made up and the cheque for that amount was paid on presentation, the result of this payment being that there remained a.....
Judgment:

Broomfield, J.

1. The accused in this case, who are alleged to be partners in the firm of Keshavji Madhavji, dealers in gunny bags, etc., have been convicted by the Presidency Magistrate, 6th Court, of an offence of cheating under Section 417 read with Section 109 of the Indian Penal Code in respect of a sum of Rs. 2,000.

2. The facts of the case are by no means clearly stated in the judgment of the learned Magistrate. They are set out as follows in the deposition of the complainant Chunilal, who is also a merchant dealing in gunny bags. He states that he had dealings with the accused's firm to a considerable amount up to September 9, 1928, on which date the account was closed and nothing remained due to the accused. On September 18, 1928, accused No. 1 came to the complainant and said that he required a loan of Rs. 500, which would be repaid on the following day. The complainant gave him the money. On the following day, that is, September 19, accused No. 2 and accused No. 3 came to the complainant. Accused No. 2 asked the complainant to give him a cheque for Rs. 1,500 of that date, September 19, against a cheque J' of the accused's firm for the aggregate amount of Rs. 2,000 bearing date September 20. According to the complainant accused No. 2 said at this time that he was expecting some cheques from Ahmedabad and that the cheque for Rs. 2,000 would be duly honoured. The complainant agreed to the proposal. Accused No. 3 drew a cheque for Rs. 2,000, on behalf of the accused's firm and signed it in the presence of accused No. 2. The complainant gave his cheque for Rs, 1,500, which was paid into the accused's account and in due course cashed. The accused's cheque for Rs. 2,000, on the other hand was dishonoured when it was presented on the 20th and has been never met. Having failed to get payment on the 20th the complainant says that he made inquiries and learnt that the accused had absconded. The fact appears to be that accused Nos. 1 and 2 had gone away to Nasik, but accused No. 3 remained behind. Subsequently, on November 2, 1928, the complainant gave information to the police which led to this prosecution.

3. Mr. Thakor for the appellants has pointed out that in the complaint there is no reference to the accused having represented that they expected cheques from Ahmedabad. That is so. But it was not necessary that the complaint should contain all details of the statements made by the accused and there does not seem to be any good reason for disbelieving the complainant's evidence on the point.

4. There appears to be some dispute between the parties as to the facts previous to the 19th. The complainant's evidence, as I have said, is that Rs, 500 were borrowed by accused No. 1 on the 18th. The accounts of the accused's firm appear to show that Rs. 1,000 were borrowed from the complainant on the 15th, Rs. 00 repaid on the 16th and then Rs. 1,500 borrowed on the 19th in the shape of the cheque. The probabilities of the case appear to be in favour of the complainant's version of the facts. There would seem to be no object in the accused borrowing a thousand rupees on the 15th, repaying Rs. 500 of it an the next day and then borrowing a further sum of Rs. 1,500 on the 19th. But this difference is in any case of no material importance. It is admitted that on September 19, on which date the accused gave the cheque for Rs. 2,000 the sum of Rs. 2,000 was owing by them to the complainant, and the cheque was given in payment of that debt.

5. The offence with which the accused are charged is defined in Section 415 of the Indian Penal Code as the deceiving of any person and thereby fraudulently or dishonestly inducing the person so deceived to deliver any property. Illustration (f) to the' section is:-

A intentionally deceives Z into a belief that A means to repay any money that 2 may lend to him and thereby dishonestly induces Z to lend him money, A not intending to repay it, A cheats.

6. In support of his contention that the representation made by the accused in this case amounted to a dishonest inducement within the meaning of the definition, the Government Pleader has relied on two cases, Emperor v. Uttamlal (1920) 23 Bom. L.R. 340 and Martin-dale v. Emperor ILR (1924) Cal. 347. We consider that these cases are of no real assistance to us, owing to the existence in them of a number of special circumstances which we do not find in the present case and which must have affected the decisions. There is an English case, however, The Queen v. Haselion (1874) L.R. 2 C.C.R. 134 which is an old but a perfectly good authority for the proposition that the giving of a cheque on a bank as payment for goods, or in payment of a debt as here, does not amount to a representation that the person giving the cheque has money to the amount in the bank at the time, but does amount to a representation (1) that he has authority to draw on the bank for that amount, (2) that the cheque is a good and valid order for the payment of its amount and that the cheque will be paid, i. e,, that the existing state of facts is such that in the ordinary course the cheque will be met. It has not been disputed indeed by the learned counsel for the appellants that the effect of this transaction was that the accused promised to pay, and the complainant expected to be paid, the amount of Rs. 2,000 on September 20. It is perfectly clear that the offence of cheating is made out if the accused knew that the cheque would not be met. The contention of the defence is that the onus of proof in this respect is on the prosecution. According to Mr. Thakor it is for the prosecution to prove that the accused had no expectation that funds would be in the bank and that they did not intend to pay, and not for the accused to show that they had reasonable expectations of being able to meet the cheque or that they made any attempts to collect money for that purpose. Now broadly speaking, as this is a criminal ease, it is correct to say that the burden of proof is on the prosecution in the first instance; and clearly if the only facts proved by the prosecution were that the cheque was given on the 19th and that on the 20th it was dishonoured, the accused could not be convicted of cheating or any offence. ' But the provisions of Section 106 as to facts specially within the knowledge of any person must be borne in mind. The prosecution cannot be expected and is not required to prove or disprove facts which are within the special knowledge of the accused himself. What the prosecution has to do I take it, m a case of this kind, Is to establish facts which point prima facie to the conclusion that the failure to meet the cheque was not accidental but was a consequence expected and therefore intended by the accused, It will then be for the accused to establish any facts there may be in his favour which are specially within his knowledge and as to which the prosecution could not be expected to have any information.

7. The facts on which the prosecution are entitled to rely in this connection are mainly these. At the material time the accused's firm was admittedly in embarrassed circumstances. There was a cheque for Rs. 7,000 drawn by the accused's firm on September 16 in favour of one Kishorilal which had to be met. The credit balance in the accused's banking account carried over on September IS was Rs. 1,192-6-6. September 17 was a bank holiday. The 18th, though not a bank holiday, was a Jain holiday and no transactions appear to have taken place in the accused's account on that day. The opening balance on the 19th was Rs. 1,038-1-3. In the course of the day sums amounting to Rs. 6,200 were paid in. This amount included the cheque for Rs. 1,500 obtained from the complainant. In this way the amount of Rs. 7,000 was made up and the cheque for that amount was paid on presentation, the result of this payment being that there remained a sum of Rs, 238-1-3 in the accused's account. The evidence also shows that on September 17 the accused's firm had purchased fifteen bales of Hessian for which they had to pay Rs. 4,00 0. This amount they did not pay (see the evidence of witnesses Devidas and Kanji, the latter a clerk in the accused's firm). From the account books of the accused's firm which have been put in it appears that though there was a nominal balance of Rs, 16,342-5-9 on September 19 and a nominal balance of Rs. 16,142-5-9 on September 20, the actual amount of cash in the shop on the former date was Rs. 1,218-12-3 on the first date and Rs. 0-12-3 on the second date. Then, further, it appears that the accused's firm did no business after September 20. As I have stated, accused Nos. 1 and 2 had gone away to Nasik and, though accused No. 3 remained behind, the shop was to all intents and purposes closed. ,

8. That is clear from the evidence of the two witnesses just mentioned, Devidas and Kanji, and also that of witness Narbheram. An important point to be noted in this connection is that the complainant was not informed by the accused about their difficulties in meeting the cheque. They did not ask him for time or make any communication to him whatever. The accused's clerk Kanji has stated in the course of his evidence that on September 20, presumably before they went to Nasik, accused Nos. 1 and 2 had instructed him to deposit in the bank money received from people to whom it had been given as ' Uplak,' that is advanced on loan. The witness, however, also states that no money was received in this way either on the 19th or on the 20th and it appears from his evidence that no attempt was made or was directed by accused Nos. 1 and 2 to be made to collect any outstandings either to meet the cheque given to the complainant or for any other purpose. Lastly, it appears from the evidence of this witness and from the a account with the bank that on October 4 the account was practically closed by drawing out the sum of Rs. 225 out of the balance of Rs. 238-1-3.

9. The facts on which reliance has been placed on behalf of the appellants are mainly these. The complainant has admitted in his deposition that his transactions with the accused's firm were on a large scale and that in the year 1984 Samovar, that is to say 1928, he had purchased goods from the accused's firm to the extent of Rs. 1,36,000. However, as I have stated, whatever the previous business carried on by the accused's firm may have been, at the material time they were admittedly in low water and very hard pressed for money. It has also been urged that there had been previous instances of loans by the complainant to the accused. The complainant has denied this. But in the course of his evidence he had to admit that there was on one occasion, that is on June 21, 1928, a temporary loan of Rs. 700 to the accused which was repaid on June 23. There is also a transaction of July 7, 1928, an item of Rs. 2000 paid and debited to the accused, which is alleged to have been a loan. The complainant's case is that this was the price of five bales of cloth which the complainant purchased from the accused and which was delivered on July 25, 1928. It is not disputed that the accused did repay this amount of Rs. 2,000 by the delivery of the five bales of cloth, the value of which was Rs. 1,995-10-6, and by paying a small balance in cash. In support of the contention that the transaction was a loan it is pointed out that the complainant charged the accused a sum of Rs. 8-8-0 as interest on the sum of Rs. 2,000 for the interval between July 7 and 25, It is difficult to decide with confidence between these two contentions because there is on the one hand the word of the complainant and his accounts, and on the other the word of the accused and their accounts, in which the transaction is entered as though it were a loan, I think that on the whole the circumstances point to the conclusion that the Rs. 2,000 was not really a loan in the ordinary sense but was the payment in advance for the five bales of cloth. But in any case the question is not really at all material. Neither the transaction of Rs. 700, which was a temporary loan in the ordinary course of business, nor the transaction in connection with the bales of cloth purchased from the accused, could possibly justify any inference as regards the intention of the parties at the time of the transaction with which we are concerned. In neither of those cases was there any question of a cheque being given and dishonoured, and the evidence relating to those transactions in my opinion does not in the least affect the proposition which I have already stated, and which is not seriously disputed, namely, that the effect of the transaction with which we are concerned was that the accused promised to pay and the complainant expected to be paid the sum of Rs. 2,000 on September 20.

10. Then considerable stress has been laid on the fact that this cheque for Rs. 1,500, which the accused obtained from the complainant was used for the purpose of meeting the cheque for Rs. 7,000, to which I have already referred, and also on the fact that in the course of September 19 other sums were paid into the bank by the accused, making up, with the cheque of Rs. 1,500, the total of Rs. 6,200. The suggestion is that if the accused had a dishonest intention they would probably have allowed the other cheque, that is the cheque for Rs. 7,000, to be dishonoured,, and further that, as considerable sums of money were paid into the bank on the 19th, other sums might have been expected, to be paid in on the 20th. It is in connection with arguments of this kind that I think Section 106 of the Indian Evidence Act is important. For any thing we know to the contrary, there may have been special reasons why it was essential that the cheque for Rs. 7,000, should be met at all costs. As I have stated the cheque had been drawn on September 16 and it was therefore some days overdue. For anything we know to the contrary, the payment of these sums into the bank on the 19th in order to meet this urgent claim exhausted, all the resources of the accused's firm. An examination of the accused's account in the bank strongly points to the conclusion that that was so. If it was not so, arid if there really was any expectation or likelihood that payments would have been made into the bank after the 19th to B enable the complainant's cheque to be met, then that could only be made plain by evidence within the knowledge of the accused themselves which they ought to have produced. Stress has also been laid upon the balance shown in the accused's account on September 19 arid 20 and on preceding days, which balances apparently included a large amount on account of outstandings. Here again in the absence of any evidence produced by the accused it is impossible for us to know whether these outstandings, which are described as sums lent on 'tithes' were or were not recoverable either about September 20 or at all. All that we know is that the actual cash balance was what I 'have stated it to be, that no recoveries on account of outstandings were in fact made, and that no attempt was made to recover outstandings.

11. We consider that it is a fair conclusion on the above facts that at any rate accused Nos. 2 and 3, who were present when the cheque for Rs. 2,000 was drawn, had no expectation that it would be met if presented on the 20th, and in fact knew that it would not be met.

12. The question then arises whether all the accused have been properly convicted of the offence. It has been pointed out that accused No. 1 was not present on the 19th when the cheque for Rs. 1,500 was obtained and the cheque for Rs. 2,000 given ; also that accused No. 2, though ho was present on the 19th, did not sign the cheque and had in fact no authority to do so. The learned Magistrate has found that all the accused were partners in the firm of Keshavji Madhavji. He has relied mainly on the evidence of the complainant, who, having had many dealings with the accused, ought to be in a position to know, and also upon a document Ex. H, which is a form of application for opening a current account in the Central Bank of India. The application has to be signed by ' partners, directors, agent, etc.,' and accused Nos. 1 and 3 signed the application under that description. I think that there may perhaps be some doubt as to whether all three of the accused are legally partners in the firm, but it is obvious that that is not a matter of much importance. The fact that they were all partners would not in itself render them all liable on this criminal charge. The fact that they may not be partners in the legal sense will not absolve them from the charge, if the evidence shows that they were all concerned together in the commission of the offence. The trial Magistrate has found, and we agree with him, that the evidence does make this perfectly clear. The complainant has stated that when accused No. 1 came to him on the 18th he promised to repay the sum of Rs. 500, which he borrowed, on the following day. The visit of accused Nos. 2 and 3 on the 19th was clearly in continuation of the same transaction. The accused required the money to meet the cheque of Rs. 7,000., and the cheque for Rs. 2,000, which they gave on the 19th included the Rs. 500, borrowed by accused No. 1 the day before and Rs. 1,500, which they took for payment into their banking account. It is obvious that accused No. 1, who is admittedly a partner in the firm and according to his own allegation the solo partner, must have been aware of the circumstances of the transaction. Accused No. 1 in his statement says that accused. Nos. 2 and 3 were his servants and not his partners but that they were doing business on his behalf. He alleges that he knew nothing about the facts of the case but that I think under the circumstances it is impossible to believe. Accused No. 2 in his statement says that he was working as a broker for accused No. 1 at the time in question. He goes on to say, however, that the transaction complained of took place between the complainant's firm and ' ours ', that is ' our firm,' in the ordinary course of business. As for accused No. 3, he admittedly has authority to sign cheques on behalf of the firm and it was he who drew and signed the cheque with which we are concerned. We think there can be no doubt that the three accused acted in concert throughout this transaction and that the dishonest intention arising from the knowledge that the cheque would not and could not be paid on September 20 must be imputed to all of them alike. For these reasons we confirm the convictions and sentences in the case of all the three accused and dismiss the appeal.

Mirza, J.

13. I agree.


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