Pvt firm's CMD sentenced in Rs 16 L cheque bounce case

A top official of a private firm has been sentenced to two months simple imprisonment by a Delhi court in a Rs 16 lakh cheque bounce case.
The court modified the jail term of nine months awarded to him by the magisterial court in July 2011 to two months and ordered that convict S K Jain be taken into custody to serve the sentence.
Special Judge Manoj Jain also directed Jain to pay Rs 24 lakh compensation to complainant National Agricultural Cooperative Marketing Federation of India (NAFED).
Meanwhile, the court upheld the fine of Rs 10,000 imposed on firm Reliance Polycrete Limited, which was also convicted in the case, by the magisterial court.

A cheque of Rs 16 lakh was issued on November 2, 2005 by Jain, Chairman-cum-Managing Director (CMD) of M/s Reliance Polycrete Limited towards the part repayment of Rs 18.38 crore given to them by NAFED as financial assistance on March 9, 2005 but it (cheque) was returned dishonoured due to insufficient funds.
"...It also cannot be forgotten that NAFED had provided financial assistance of more than 18 crore to convicts (S K Jain and M/s Reliance Polycrete Limited)and payments received, in return, is less than one crore... Several other cheques issued by accused favouring NAFED had returned dishonoured even in past. Once a cheque is written, any such drawer has to ensure that such cheque would be realised on presentation.

"Such criminal proceedings might essentially have shade of civil liability but no economy can flourish if, during the serious business transactions, cheques are issued in nonchalant and injudicious manner. Convict did not respond to the notice and never demonstrated during the trial that he was willing to settle the matter," the court observed.

The judge further said, "magisterial courts are clogged because of such cases. Court can always shower clemency and bestow compassion when accused, at the earliest available opportunity, shows his inclination to clear the dues. He cannot expect empathy at fag end after causing waste of precious judicial hours.

"Thus while maintaining the sentence awarded to convict company, the sentence given to convict S K Jain by trial court is modified. Simple imprisonment for two months," it added.
The court's decision came on the appeal filed by Jain and the company challenging the magisterial court order which had held them guilty under section 138 of the Negotiable Instruments Act (dishonour of cheque).
As per the prosecution, the accused and the company had approached the complainant, NAFED, in December, 2004 with the proposal for procurement of export of iron ore and had sought financial assistance of Rs 80 crore.
"He (Jain) assured about sound financial condition and promised timely, diligent and honest observance of all the obligations including payment of any amount. Accordingly, an agreement was entered between them on January 31, 2005 and financial assistance, in the shape of advance, was given to them from time to time.

"Accused had received financial assistance of Rs 18,38,75,000 by March 9, 2005...Cheque bearing No... Of November 2, 2005 for Rs 16 lakh was towards part re-payment of such financial facility but that cheque returned dishonoured due to funds insufficient," the prosecution said.
It further said, legal notice did not yield any result and accordingly NAFED had filed complaint in February 2006.
The counsel for accused contended that the company had approached NAFED for seeking financial facility of Rs 80 crore but the cheque in question had nothing to do with such facility or alleged liability arising out of any such financial assistance.

The court, however, turned down their plea and said that "It is also important to mention here that accused has been a chronic defaulter. His previous four cheques issued in the name of NAFED also met the same fate.
"He has availed huge financial assistance of more than Rs 18 crores and has shown the audacity of issuing cheques, time and again, in a very nonchalant manner."
"Such realisation of compensation would not also trim down the claim of NAFED against the convicts in relation to arbitral proceedings," the judge said.