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Crl.A. No.1664 of 2005

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.1664 OF 2005

Pallav Sheth …..Appellant   

Versus

Canara Bank …..Respondent

J U D G M E N T

SHIVA KIRTI SINGH, J.

1. This is an appeal under Section 10 of the Special Court (Trial of  

Offences Relating to Transactions in Securities)  Act,  1992, directed  

against the final judgment and order dated 17.10.2005 of the Special  

Judge in Special Case No. 1 of 2002.

2. In  view of  nature of  the order proposed to be passed in this  

appeal, it is not necessary to go into the details of the evidence.  It  

would suffice to notice that there was no serious dispute raised on  

behalf of the appellant that he was liable to pay the agreed price of  

Rs.83,00,000/-  for  20000  shares  which  were  not  returned  to  the  

respondent-bank.  In fact the appellant had admitted the liability and  

issued cheques to meet it but the cheques were not honored.  The  

defence of the appellant that such liability  was only a civil  liability  

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Crl.A. No.1664 of 2005

without  any  criminal  intention  was  not  accepted  by  the  learned  

Special  Court.   After  discussing the relevant  materials  it  held that  

dishonest misappropriation of those shares on the part of the accused  

is writ large.  While rejecting the defence of the accused that there was  

no  criminal  intention  on  his  part  in  not  paying  the  amount  of  

Rs.83,00,000/-, the learned Judge, Special Court in paragraph 23 of  

the judgment under appeal has given lucid account of relevant facts  

for reaching at such conclusion.  Para 23 runs as follows:  

“23. In this view of the matter, I do not find merit in the  submissions made on behalf of the accused.  Dishonest  intention is  quite  clear  and it  is  since beginning of  the  transaction.   It  is  on the representation of  the accused  that 20000 shares alongwith blank share transfer forms,  duly signed by the Authorised Officer,  were delivered to  the  representative  of  the  accused,  against  post  dated  cheques, that was also as per the market practice. What is  pertinent to be noted is that the cheque was post dated,  the transaction took place on 2nd April, 1992. The delivery  of the shares and blank share transfer forms against the  post dated cheque was made on 5.6.1992, the cheque was  post  dated  of  20.06.1992.  Before  the  due  date  of  the  cheque, the accused had called the Complainant’s witness  Sriram-PW2 and requested them to present the cheque for  encashment a little later.  Accordingly, the cheque came to  be presented on 29.6.1992. It was dishonoured. Again, the  accused  requested  to  present  the  cheque  subsequently  and on such subsequent presentation also the cheque was  dishonoured. Then he happened to promise to issue Pay  order,  which  he  never  issued.  He  then  delivered  two  cheques,  one  for  Rs.  50,00,000/-  and  another  for  Rs.33,00,000/-,  both  were  dishonoured,  not  once  but  twice.  This  conduct  of  the  accused  shows  a  clear  dishonest intention of misappropriation of the shares or  its sell consideration.”

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3. Since we were inclined to agree with the aforesaid view of the  

learned Special  Court on the basis whereof the appellant has been  

convicted for offence under Section 409 of the Indian Penal Code and  

sentenced to suffer RI for six months and to pay fine of Rs.1,00,000/-  

only and in default to suffer RI for further three months, a suggestion  

was  made  by  Mr.  Rajiv  Dutta,  learned  senior  advocate  for  the  

appellant, on the basis of instructions received, that respondent bank  

should file a chart showing the amount payable by the appellant after  

deducting the amount that has already been paid and/or after taking  

into  consideration the adjustment of  shares already made.   In the  

light of such pro settlement stand on behalf of the appellant, an order  

to that effect was passed on 24th February, 2016.

4. On  the  next  and  final  date  of  hearing  a  chart  showing  the  

amount payable by the appellant to the bank was produced by Ms.  

Radhika Gautam, learned counsel for the respondent bank.  As per  

the  original  chart  Rs.58,10,000/-  is  the  principal  amount  decreed  

against the appellant vide  order dated 3.5.2007 passed by the Special  

Court, Mumbai in Civil Suit No. 6 of 2002.  It further transpires that  

interest has also been allowed at the rate of 18% per annum from 20th  

June, 1992.  After adjusting Rs.20,00,000/- paid by the appellant in  

2003 by way of part settlement, the balance amount with same rate of  

interest  till  29th February,  2016  has  resulted  into  an  amount  of  

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Rs.2,86,17,424  payable  by  the  appellant  to  the  Bank  as  on  29th  

February, 2016.  

5. On hearing counsel for both the parties, we found good chances  

of a settlement between the parties if a substantial amount could be  

paid to the bank by the appellant so as to virtually meet the entire  

decretal liability within a reasonable period of time. On behalf of the  

appellant a strong plea was made for working out such settlement but  

with  a  further  plea  that  in  the  larger  interest  of  justice  and  

considering his precarious financial condition, the rate of interest may  

be reduced to a reasonable rate such as 12% per annum.

6. On our  persuasion,  learned counsel  for  the  respondent-Bank  

obtained  instructions  and  conveyed  that  the  respondent-bank  was  

willing for such a settlement.  It was also made clear that a reasonable  

rate of interest as may be determined by this Court will be acceptable  

to the respondent-Bank.

7. On recalculation with rate of interest at 12% per annum and  

adjustment  of  Rs.20,00,000/-  already  made,  according  to  learned  

counsel  for  the  respondent-bank  the  total  amount  payable  by  the  

appellant as on 29.2.2016 would be Rs.2,03,10,400/- only.  Learned  

senior counsel for the appellant has conveyed acceptance but pleaded  

that  the  appellant  be  given  six  months  time  to  pay  the  decretal  

amount due to the Bank with modified rate of interest at the 12% per  

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annum.  It  was accepted on behalf of the appellant that the entire  

dues calculated at the rate of 12% per annum shall be paid in two  

installments, first one payable by end of three months and the final by  

end of six months from today.

8. In the aforesaid facts and circumstances, in the special  facts  

and larger interest of justice this appeal is disposed of in the following  

terms:

(i) Since the settlement indicated above have been  

accepted by the parties, the same is recorded as a part of  

this judgment and order.

(ii) The  appellant  shall  pay  the  decretal  amount  

with interest calculated at the rate of 12% per annum (in  

place  of  18%  per  annum)  from  20th June,  1992  with  

adjustment of Rs.20,00,000/- already paid in 2003, in two  

installments payable in three months and six months time  

respectively.  On  such  payment  the  sentence  imposed  

upon  the  appellant  shall  stand  reduced  to  the  period  

already undergone along with fine of Rs.1,00,000/-.

(iii) The decree of the Special Court, Mumbai in Civil  

Suit No. 6 of 2002 will be treated to have been satisfied by  

the appellant on his making the payment of the settlement  

amount indicated above.

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(iv) In case the settlement amount is  not paid by  

the appellant in the manner and to the extent indicated  

above,  then  after  six  months  this  order  shall  stand  

recalled and the appellant shall surrender to serve out the  

remaining period of sentence of RI for six months as per  

the  judgment  under  appeal  which  shall  then  stand  

confirmed by this Court.

The Appeal is disposed of accordingly.

     .…………………………………….J.       [DIPAK MISRA]

      ……………………………………..J.                  [SHIVA KIRTI SINGH]

New Delhi. April 13, 2016.

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