NAGPUR: A Nagpur court has acquitted Ashok Potbhare, proprietor of Shri Hanuman Minerals, in a ₹40 lakh cheque bounce case filed by Sunflag Iron and Steel Company Limited under Section 138 of the Negotiable Instruments Act.
Special Judge A.V. Dakhore, hearing cases under Section 138 of the Negotiable Instruments Act in Nagpur, pronounced the decision after considering the arguments advanced by both sides, the cross-examination of the complainant company’s witness and documents presented by the defence.
The dispute arose from a business arrangement involving the processing of manganese ore into silico manganese. While the complainant company alleged that Potbhare was liable to pay ₹40 lakh and had issued a cheque towards the outstanding liability, the defence argued that the cheque had been provided as security and did not represent an established legally enforceable debt.
Dispute Originated in 2013 Business Transaction
According to the complaint, Sunflag Iron and Steel Company Limited and Shri Hanuman Minerals entered into a business arrangement in 2013 for processing manganese ore into silico manganese.
The company alleged that it supplied 857.135 metric tonnes of manganese ore to Shri Hanuman Minerals under the arrangement. It further claimed that only 40.530 metric tonnes of silico manganese were returned and alleged a shortfall of 735.545 metric tonnes of manganese ore.
The alleged shortfall and the accounting of the material supplied became the subject of a dispute between the two parties. Sunflag maintained that the agreement placed the responsibility for returning the material on Shri Hanuman Minerals.
Company Cited Settlement Meeting in 2014
The complaint further referred to a meeting between the parties in 2014 to resolve the dispute. According to the company’s allegations, Potbhare had agreed to return the remaining manganese material but subsequently failed to do so.
The company claimed that a cheque for ₹40 lakh was later issued towards the alleged outstanding liability. After the cheque was dishonoured, the company initiated legal proceedings under Section 138 of the Negotiable Instruments Act.
Sunflag also sought compensation, claiming a total amount of ₹80 lakh, including the principal amount and compensation.
Defence Contended Cheque Was Issued as Security
Representing Potbhare, advocates Kamal Satuja, Kailash Dodani and Akbar Sheikh argued that the accused had been wrongly implicated and that the disputed cheque had been issued as security rather than towards payment of a legally enforceable debt.
The defence submitted that the mere issuance and dishonour of a cheque did not, by themselves, establish the specific liability claimed by the complainant. It questioned whether the documents relating to the original business arrangement and the subsequent settlement adequately established the alleged ₹40 lakh liability.
The defence also relied on correspondence and other documents that it argued supported its contention regarding the purpose for which the cheque had been issued.
Questions Raised During Cross-Examination
During the proceedings, the complainant company presented an authorised representative as a witness to support its case. Advocate Dilip Daga represented Sunflag Iron and Steel Company Limited.
During cross-examination, the defence questioned the witness’s direct knowledge of the original business transaction and the relevant documents. It also pointed out that Jagish Jha, whose signatures were stated to be on the work order and agreement, had not been examined as a witness.
The defence argued that these circumstances warranted careful scrutiny of the complainant’s evidence and the documents relied upon to establish the alleged liability.
It further questioned whether the material presented by the company sufficiently established the calculation of the outstanding amount and the legal basis for claiming ₹40 lakh from the accused.
Defence Cited Supreme Court and Bombay High Court Judgments
The defence also referred to judgments of the Supreme Court and the Bombay High Court in support of its arguments concerning cheque dishonour cases and the requirement to establish a legally enforceable liability.
After hearing both sides and considering the evidence and submissions, Special Judge A.V. Dakhore acquitted Ashok Potbhare in the case.
The acquittal brings the complaint filed by Sunflag Iron and Steel Company Limited to a conclusion in favour of the accused at this stage. The detailed written judgment was not available for independent examination while preparing this report; therefore, the precise legal grounds recorded by the court could not be independently confirmed.
