Negotiable Instruments – Dishonor of Cheque – Legally Enforceable Debt – The appellant filed a complaint under Section 138 of the NI Act against the respondent, alleging that the respondent issued a cheque of ₹1,00,000 as part of a settlement, which was dishonored – The trial Court acquitted the respondent, holding that the cheque amount was intended as a bribe to secure employment in the Punjab Police, and therefore did not represent a legally enforceable debt – Held: Payments made as bribes or for unlawful purposes do not constitute legally enforceable debts under Section 138 of the NI Act – The cheque, being issued for an illegal consideration, cannot give rise to criminal liability under the NI Act [Paras 6-8].

Admittance of Bribe – Consequences – The appellant admitted during cross-examination that the money was paid as a bribe – Since the cheque represented an illegal transaction, no offence under Section 138 of the NI Act was made out – The trial Court correctly acquitted the respondent based on this admission and the lack of a legally enforceable debt [Paras 4, 6-8].

Decision: Appeal dismissed – The findings of the trial Court are upheld, and the respondent’s acquittal is confirmed, as the cheque amount did not represent a lawful liability [Paras 8-9].

Fraud Classification – RBI Master Circular – Natural Justice – The petitioner company sought to quash PNB's action of declaring its account as 'fraud' without prior notice or hearing – The court held that the declaration of the petitioner's account as fraud, without following the principles of natural justice, violated RBI guidelines – Held: The petitioner was neither given a chance to respond nor was the fraud declaration substantiated through proper procedure, making the declaration invalid [Paras 18-21].

Suspension of Credit Facilities – Illegal Action – The court quashed SBI's letter suspending the petitioner's credit facilities based on PNB's fraud classification – It was held that since the fraud declaration itself was invalid, the consequent suspension of credit facilities by SBI could not stand – Held: The suspension of credit facilities was unlawful and must be reversed [Paras 19, 22].

Compensation for Damages – Costs Imposed – The court acknowledged the financial loss and reputational damage suffered by the petitioner due to PNB's wrongful action – As compensation, PNB was ordered to pay Rs. 5,00,000 to the petitioner, failing which an 18% per annum interest would apply from the date of filing the petition [Paras 23-24].

Decision: Petition allowed – The court directed PNB to remove the petitioner's account from the fraud list and notify RBI and SBI accordingly – SBI was instructed to restore the petitioner's credit facilities [Paras 22-24].

Specific Performance – Agreement of Sale – Dispute over sale agreement dated 05.01.1990 – The appellants/defendants claimed that the agreement was fabricated, while the respondent/plaintiff sought specific performance, asserting full payment of sale consideration – Held: The Trial Court’s decree for specific performance was upheld – The plaintiff proved the execution of the sale agreement and payment of the full consideration, while the defendants failed to disprove the validity of the agreement – The appeal was dismissed [Paras 1-20].

Burden of Proof – The plaintiff discharged his burden by proving the sale agreement through oral and documentary evidence, including witnesses and the scribe – The defendants did not produce sufficient evidence to counter the plaintiff’s claim, relying solely on the testimony of one defendant – Held: The plaintiff is entitled to specific performance, and the defendants must execute a registered sale deed [Paras 21-30].

Section 45, Indian Evidence Act – Handwriting Expert – The appellants sought to send the sale agreement to a handwriting expert – The petition was dismissed by the Trial Court and the dismissal was upheld by the High Court in a Civil Revision Petition – Held: The appellants’ renewed request for a handwriting expert during the appeal was dismissed as it was not maintainable [Paras 31-40].

Decision: Appeal dismissed – Trial Court’s decree and judgment upheld – Appellants directed to execute a registered sale deed within two months, failing which the plaintiff may take legal steps.

Income Tax – Bogus Purchases – Disallowance of 10% – The appellant challenged the disallowance of 10% of purchases deemed bogus by the ITAT, despite the acceptance of sales as genuine by the Revenue – Held: The ITAT found no cogent or convincing evidence to support the Revenue's allegation that all purchases were bogus – The ITAT, however, upheld the CIT-A's disallowance of 10% of purchases as a convenient measure, without sufficient justification – The High Court held that disallowing 10% of the expenses without concrete evidence or proper analysis is arbitrary and unsustainable – The ITAT's decision is set aside, and the disallowance is fully reversed [Paras 13-24].

Burden of Proof – Purchases and Sales – Once the ITAT found no cogent evidence from the Revenue to prove the purchases were bogus, the burden shifted to the Revenue to justify any disallowance – Held: The ITAT’s failure to examine why the disallowance was justified, despite its finding that sales were genuine, reflects a flawed approach – The court reiterated that the law does not expect the assessee to prove a negative where no evidence is presented against them [Paras 20-22].

Reliance on Precedent – Nikunj Eximp Enterprises Case – The ITAT relied on CIT v. Nikunj Eximp Enterprises but failed to apply its principles correctly – Held: In cases where the Revenue has not conclusively proven that purchases are bogus, the disallowance should not be upheld merely as a compromise measure – The High Court emphasized the need for clear findings before any disallowance is sustained [Paras 16-18].

Decision: All three income tax appeals are allowed in favor of the appellant – The ITAT's decision to disallow 10% of purchases is set aside – No costs [Paras 24-25].

SARFAESI Act – Bar under Section 34 – Fraud Allegations and Collusion – Suit Maintainable – The petitioner, a shareholder and director, alleged fraud and collusion between respondent-bank and other directors regarding the sanctioning of a loan without board authorization – The trial court and appellate court rejected the suit under Order VII Rule 11, citing the bar under Section 34 of the SARFAESI Act – Held: Section 34 does not bar the civil court's jurisdiction in cases where fraud or collusion is alleged – The allegations of fraud were sufficiently pleaded, and the suit is maintainable under Section 9 of CPC [Paras 30, 31, 44, 45].

Company Affairs – Director’s Rights – Loan Sanction without Board Resolution – Fraud Claims Established – The petitioner claimed that the loan was sanctioned by the bank without a valid board resolution – The court accepted that this amounts to collusion and fraud between the bank and other directors – The plaint contained specific averments supporting this allegation [Paras 42, 44, 45, 47].

Jurisdiction of Civil Courts – Scope of Section 34 of SARFAESI Act – Section 34 does not preclude civil courts from deciding matters involving fraud – The court emphasized that Section 34’s bar is not absolute, especially when the claim involves fraud, as held in Mardia Chemicals Ltd. v. Union of India – The civil court retains jurisdiction to adjudicate such disputes [Paras 51, 70, 71, 83].

Decision: Both the orders of the trial court and appellate court rejecting the plaint were quashed, and the plaint was restored for trial. The court held that the bar under Section 34 of the SARFAESI Act does not apply in cases of fraud and collusion.

Criminal Law – Relevance of Evidence from Another Crime – Section 311 CrPC – The prosecution sought to introduce evidence from a subsequent crime (Cr.No.1031 of 2021) in the ongoing trial (SC.No.113 of 2018) – Held: The evidence relating to the subsequent crime was irrelevant to the current trial, as the accused had not been charged in the latter case, and the proposed witness (Sub Inspector) was not an eyewitness – Introducing such evidence would violate fair trial principles and the accused’s right to defend against the charges solely in the ongoing trial – The impugned order permitting the evidence was set aside [Paras 1-20].

Bad Character Evidence – Sections 53 and 54 of the Indian Evidence Act – The court noted that introducing evidence of another crime could unfairly suggest the bad character of the accused – Held: Under Sections 53 and 54 of the Evidence Act, evidence of bad character is inadmissible unless the accused himself introduces evidence of good character – The prosecution’s attempt to introduce such evidence was impermissible [Paras 21-30].

Fair Trial – Prejudice Against the Accused – Allowing evidence from a separate ongoing case could force the accused to disclose his defense prematurely, prejudicing the trial process – Held: The trial court’s decision was improper and violated norms of a fair trial – The revision petition was allowed, and the trial court's order was set aside [Paras 31-40].

Decision: Criminal Revision allowed – The order dated 29.08.2024 in Crl.M.P.No.359 of 2024 was set aside – The trial court was directed to proceed with the trial in SC.No.113 of 2018 without considering evidence from the subsequent case.

Tenancy Law - Landlord-Tenant Relationship – Unlawful Subletting – Tenant's Liability Confirmed – The plaintiffs (landlords) challenged the finding that Defendant Nos. 2 and 3 were direct tenants of the plaintiffs, asserting that they were unlawfully inducted as subtenants by Defendant No. 1 (son of the original tenant) – Held: The Trial Court and Appellate Court erroneously inferred a landlord-tenant relationship between the plaintiffs and Defendant Nos. 2 and 3 based on a stray admission in cross-examination – Plaintiffs' claim of unlawful subletting by Defendant No. 1 upheld, and eviction decree modified to reflect this – Defendant Nos. 2 and 3 ordered to vacate the suit premises [Paras 27-31, 58].

Default in Payment of Rent – Eviction Upheld – Defendant Nos. 2 and 3 failed to pay rent to the plaintiffs or deposit it in court as required under Section 15(3) of the Maharashtra Rent Control Act – Held: Default in rent payment established, warranting eviction – Failure to deposit rent regularly during the pendency of the suit violated the statutory provisions, and the eviction decree is sustainable on this ground as well [Paras 54-60].

Additional Evidence – Application Rejected Under Order 41 Rule 27 – Defendant Nos. 2 and 3 sought to introduce additional evidence in the form of rent receipts to prove direct tenancy with Dara K. Irani, but this application was rejected – Held: The Appellate Court correctly rejected the application for additional evidence, as the documents did not substantiate the claim of direct tenancy and would not alter the outcome of the case [Paras 40-45].

Decision: Civil Revision Application No. 71/2024 is dismissed – Writ Petition No. 8788/2024 is allowed – The eviction decree is modified to reflect that Defendant No. 1 was the tenant who unlawfully sublet the premises to Defendant Nos. 2 and 3 – Defendants are directed to hand over possession of the premises by 31 December 2024 – Plaintiffs are entitled to an inquiry into mesne profits from 9 September 2014 [Paras 60-65].
 

Maintenance – Entitlement of Wife – Section 125 of Cr.P.C. – The petitioner sought reduction of the maintenance amount awarded to the respondent (wife) on the grounds that she is well qualified (M.Com. degree) and capable of earning – Held: Merely being qualified does not disentitle the wife from claiming maintenance – Financial support is required even if the wife is capable of earning – Maintenance entitlement upheld, but quantum reduced [Paras 15-18, 25].

Quantum of Maintenance – Financial Status and Socio-Economic Standard – While determining the quantum of maintenance, the court must consider the standard of living the wife was accustomed to during her matrimonial life – The maintenance amount should not be oppressive to the husband or insufficient for the wife – In this case, considering the wife's qualifications and abilities, the court reduced the maintenance amount from Rs. 25,000/- to Rs. 20,000/- per month [Paras 30-35].

Child's Maintenance – Continuance Till Majority – The maintenance awarded to the minor child (respondent No. 2) shall continue until the child attains the age of majority – No changes made to the amount of maintenance awarded for the child [Para 36].

Decision: The criminal revision is partly allowed. The maintenance awarded to the respondent-wife is reduced from Rs. 25,000/- to Rs. 20,000/- per month. The maintenance for the child remains unchanged. The remaining part of the Family Court's order remains intact.
 

Civil Law – Declaration of Title and Recovery of Possession – Plaintiff filed a suit seeking declaration of title over agricultural land and recovery of possession, challenging the proceedings under the ROR Act as null and void – Trial Court decreed in favor of the plaintiff, holding that the ROR proceedings were void as no notice was served to the plaintiff – First Appellate Court upheld the Trial Court's decision – Second Appeal preferred by the defendants challenging both judgments – Held: Suit barred by limitation as it was filed after 6 years of denial of title by the defendants in the earlier suit – Appeal allowed [Paras 8, 9, 10, 24.9].

Limitation – Suit for Declaration – Plaintiff sought declaration of title based on Article 65 of the Limitation Act (12 years), but the Court found that Article 58 (3 years) was applicable for the relief of declaration of title – Defendants denied the plaintiff's title in 1990, and the suit was filed in 1997, beyond the 3-year limitation period – Courts below erred in applying Article 65 and placing the burden of limitation on the defendants – Suit barred by limitation [Paras 24.4, 24.5, 24.9].

Record of Rights Proceedings – Nullity of ROR Proceedings – Plaintiff challenged the ROR proceedings initiated by the defendants under Section 5-A of the ROR Act – No appeal was filed by the plaintiff under Section 5-B of the Act – MRO not made a party to the suit – Courts below declared the ROR proceedings null and void without proper consideration – Second Appeal held that without joining the MRO as a necessary party, the suit could not succeed – Declaration of nullity of ROR proceedings set aside [Paras 27, 28.1, 28.2].

Possession – Plea of Dispossession – Plaintiff failed to specify the date of dispossession by the defendants – No legal action taken between 1990 and 1997 – Evidence showed inconsistency in plaintiff’s claim of dispossession – Courts below overlooked the lack of specific pleadings on dispossession – Second Appeal upheld the defendants' possession of the land under Section 53-A of the Transfer of Property Act – Relief of possession denied to the plaintiff [Paras 26, 26.4].

Decision: Second Appeal allowed – Judgments of Trial Court and First Appellate Court set aside – Suit dismissed – No costs [Paras 29].