Nagpur court acquits Ashok Potbhare in Rs 40 lakh cheque bounce case filed by Sunflag Iron and Steel

A court in Nagpur has acquitted Ashok Potbhare, proprietor of Shree Hanuman Minerals, in a Rs 40 lakh cheque bounce case. The complaint was filed by Sunflag Iron and Steel Company Ltd under Section 138 of the Negotiable Instruments Act.

Special Judge A.V. Dakhore, who hears Section 138 cases in Nagpur, delivered the verdict. He gave his decision after examining the arguments of both sides, the cross-examination of the complainant company's witness and the documents produced by the defence.

The dispute began with a business arrangement to process manganese ore into silico manganese. The company alleged that Potbhare owed Rs 40 lakh and had issued the cheque for this dues. The defence said the cheque was given as security and did not represent a legally recoverable debt.

According to the complaint, the arrangement between Sunflag Iron and Steel Company Ltd and Shree Hanuman Minerals was made in 2013. The company alleges that under it, it supplied 857.135 metric tonnes of manganese ore to Shree Hanuman Minerals. It claims only 40.530 metric tonnes of silico manganese was returned in exchange, leaving a shortfall of 735.545 metric tonnes of manganese ore.

The two sides disputed this shortfall and the accounting of the material supplied. Sunflag said that under the agreement, the responsibility to return the material lay with Shree Hanuman Minerals.

The complaint also mentions a meeting in 2014 held to settle the dispute. According to the company's allegations, Potbhare agreed to return the remaining manganese material but later did not do so. The company claims a cheque for Rs 40 lakh was later issued for the alleged dues. After the cheque bounced, the company began legal action under Section 138. Sunflag had also demanded a total of Rs 80 lakh, including the principal amount and compensation.

Appearing for Potbhare, advocates Kamal Satuja, Kailash Dodani and Akbar Sheikh argued that the accused had been falsely implicated and that the disputed cheque was given as security, not in payment of a legally recoverable debt. The defence said that merely issuing a cheque and its bouncing does not prove the specific debt the complainant claimed. It also questioned whether the documents relating to the original business arrangement and the later settlement properly established the alleged liability of Rs 40 lakh. The defence also relied on correspondence and other documents on the purpose for which the cheque was given.

During the hearing, the complainant company examined an authorised representative as its witness. Advocate Dilip Daga appeared for the company. In cross-examination, the defence questioned the witness's direct knowledge of the original business transaction and related documents. It also pointed out that Jagish Jha, whose signatures were said to be on the work order and the agreement, was not examined.

The defence argued that in these circumstances the complainant's evidence and the documents meant to prove the alleged liability needed close scrutiny. It also questioned whether the material produced by the company largely established the calculation of the outstanding amount and the legal basis for demanding Rs 40 lakh from the accused. The defence also cited rulings of the Supreme Court and the Bombay High Court on cheque bounce cases and the requirement to prove a legally recoverable liability.

After hearing both sides and considering the evidence and arguments, Special Judge A.V. Dakhore acquitted Ashok Potbhare. Sunflag Iron and Steel Company Ltd's complaint has thus ended in favour of the accused. The full written judgment was not available, so the legal grounds on which the court decided could not be separately confirmed.