In a recent judgement, the 15th Additional Chief Metropolitan Magistrate of Bangalore City has sentenced two companies and its directors to pay a fine of almost double the amount covered by their cheques which had bounced way back in 1996. While holding the defaulting companies’ directors responsible for dragging on the cases which took 11 years for disposal, the Magistrate has ordered Rs 50,000 out of the fine amount levied in each of the six cases lodged against them, to be deposited in favour of the State.

Magistrate Ravi M Naik convicted B R Vasudeva Murthy, Managing Director of Indbacker India Ltd and director of Vanashree Coffee Ltd, Chikmagalur, Ramamani V, director of the two companies, B R Sachidananda, Managing Director of Vanashree Coffee Ltd and the companies in the cheque bounce cases filed against them. The companies were said to have issued six cheques of different  face value to pay about Rs 3,0,60,000 due by Indbacker India Ltd on redemption of debentures in favour of M/s Goldcrest Finance (India) Ltd.

M/s Goldcrest had instituted criminal proceedings under Section 138 of Negotiable Instruments Act in 1997 since the cheques issued during July 1996 by Indbacker Ltd and Vanashree Ltd had bounced.The Magistrate who rebutted the legal and factual contentions raised by the companies’ directors who had contested the case on several grounds, held them accountable under the Negotiable Instruments Act.

Delay tactics
The magistrate observed that although the directors had admitted the transaction and issuance of the cheques to the complainant  they had resorted to delay tactics, from 1997 to 2007. Considering the complainant company’s plea for levying a fine of twice the amount on the face value of the cheques, the magistrate sentenced the defaulting companies and its directors to pay a fine of Rs 5.7 crore in all.

Out of this amount, Rs 5.67 crores was ordered to be paid to the finance company while Rs 3 lakh was ordered to be paid to the State.  The magistrate also ordered that in case of default in paying the fine amount, the directors would have to undergo simple imprisonment for two years.