S.138 NI Act : Supreme Court Slams Accused In Cheque Bounce Case For Not Honouring Undertaking To Pay; Imposes Rs 5 Lakhs Cost

The Supreme Court (on January 03) took a strong stand while affirming the suspension of the accused/ present appellant's sentence, who was convicted under Section 138 of the Negotiable Instruments Act, 1881.

The Court highlighted that the complainant has been litigating since 2007, i.e., for almost 16 years, but has not been able to receive its due amount. This was irrespective of an undertaking given by the appellant and the intervenor aggreging to pay the major portion of the liability. The Court marked that this is a persistent disregard for judicial directives.

“The behaviour of the Petitioner stands as a testament to how an individual's nonchalant attitude towards financial responsibilities and court orders can undermine the essence of judicial efficacy.,” observed a Division Bench of Vikram Nath and Rajesh Bindal.

The facts of the present case are such that the appellant (Satish P. Bhatt) and the intervenor, Vishwanath Ramakrishna Nayak, were Chairman-cum-Managing Director and Vice-Chairman of an M/s.Astral Glass Private Limited.

The appellant and intervenor, along with the company, were convicted under Section 138 by order of the Trial Court. They were awarded sentence of ten months with total liability of Rs.5 crores cumulatively. Aggrieved by this, they approached the Session's Court in an appeal. The same being dismissed, they approached the High Court in its revision jurisdiction.

Before the High Court, the accused persons filed an undertaking based on a settlement. As per the settlement, it was agreed that a total sum of Rs.4,63,50,000/- would be given to the complainant. Accordingly, the High Court granted them interim protection and released them on bail. While doing so, the Court specifically directed that no further extension shall be granted for payment of the settled amount.

Notwithstanding, an extension was sought on the next hearing, and the High Court acceded. In the interim period, the appellant also filed another application stating that he has paid his share and, thus, may be absolved of the charges and acquitted. Pursuant to this, the matter was adjourned on two occasions. Since the undertaking stood non-complied, the Court canceled the suspension of sentence and bail granted. Thus, the present appeal.

At the foremost, the Top Court examined the undertaking. It noted that the same clearly mentioned that both the appellant and the intervenor will pay the amount equally. Importantly, it also stipulated that in default of the payment by either of them as per their agreed share in the settlement, they shall be held liable and prosecuted as per law.

The Court clearly stated that since the amount agreed was not paid, the interim protection, granted via suspension of sentence and bail, was withdrawn. In view of this, the Court dismissed the appeal with cost of Rs 5 lakhs. It further directed the appellant and the intervenor to surrender within a period of four weeks.

Notably, the Court, in no uncertain terms, stated that the High Court, while deciding the revisions, shall ensure that the undertaking is fully complied with and the complainant is compensated for the further harassment.

“The High Court will proceed to decide the revisions as also pending applications if any and ensure that the undertaking is fully complied with and the complainant is suitably compensated for the further harassment caused.”

Case Title: SATISH P. BHATT vs. THE STATE OF MAHARASHTRA., Diary No.- 29002 - 2019

Citation : 2024 LiveLaw (SC) 16

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