K. SHANMUGASUNDARA NADAR Vs. V. SADASIVAM

JUDGEMENT

(1.) THE appellant, Shanmugasundara Nadar was convicted under Section 420, Indian Penal Code, and sentenced to undergo R.I. for six months and to pay a fine of Rs. 500, by the Fourth Presidency Magistrate, Madras, in C.C. No. 4690 of 1966.

(2.) THE facts of the prosecution case are these : The appellant is an industrialist. He has been doing business in collaboration with Czeckoslovakian people. He had accounts in various banks like, National and Grindlays Bank Ltd., Madras, Canara Bank, Indian Overseas Bank etc. It appears that he was also having certain business connections in foreign countries, and exporting handlooms and getting import incentive licences. In November, 1965, he was expecting National Defence Remittance Certificates and wanted one Sathar who was doing import business in the name of Commercial Syndicate, examined as D.W.1 in this case, to find out whether he could sell those certificates on forward sale basis. Sathar contacted one Swami of Swami and Co., who were importers. A fortnight later, Swami brought P.W. 1 Sadasivam of Bangalore as a prospective buyer. Swami and D.W. 1 Sathat negotiated the deal on behalf of the appellant and both Sadasivam (P.W. 1) and the appellant entered into an agreement (Exhibit P -l) on 25th November, 1965. By virtue of the agreement, it was agreed that the appellant should secure an import entitlement certificate for an amount not less than Rs. 4,00,000 of Indian Currency, that P.W. 1 should purchase the said certificate at the rate of 175 per cent on Rs. 4,00,000 and that such certificate should be handed over to P.W. 1 on or before 15th January, 1966, time being the essence of the contract and P.W. 1 should pay an earnest money of Rs. 1,25,000. If there was a breach of the agreement, P.W. 1 shall be entitled to the refund from the appellant the earnest money of Rs. 1,25,000 and a further payment of Rs. 50,000 as and by way of damages. If P.W. 1 failed to pay the balance amount of consideration, the appellant shall be entitled to cancel the transaction and refund the earnest money of Rs. 1,25,000 after retaining Rs. 50,000 as damages. According to the agreement, P.W. 1 has paid Rs. 1,25,000 to the appellant as earnest money. This is not disputed.

(3.) THE appellant failed to comply with the terms of the agreement and did not deliver the certificates on or before 15th January, 1966, and thereby committed breach of the agreement. On 22nd January, 1966, the appellant wrote a letter to P.W. 1 stating that due to certain circumstances beyond his control, there was bound to be some delay in getting the certificates as agreed and, therefore, he requested P.W. 1 to give him extension of time upto 28th February, 1966. On 25th January, 1966, P.W. 1 sent a telegram to the appellant informing him about the breach of the agreement and asking him to remit forthwith Rs. 1,25,000, and also a sum of Rs. 50,000 stipulated as damages. On 27th January, 1966, P.W. 1 again wrote a letter to the appellant regretting his inability to extend time. On 11th December, 1966, in supersession of the agreement dated 25th November, 1965, P.W. 1 and the appellant entered into a fresh agreement Exhibit P. -8 wherein it is stated that as the appellant could not fulfil his commitments in time due to reasons beyond his control and as P.W. 1 refused to grant extension of time, the appellant agreed to refund the amount received by him as advance and also a sum of Rs. 15,000 by way of damages .The agreement further states that the parties have agreed to cancel the previous agreement dated 25th November, 1965. In pursuance of this agreement on 11th February, 1966, the appellant gave three post -dated cheques to be drawn on the Canara Banking Corporation, namely (1) for Rs. 50,000 to be cashed on 26th February, 1966; (2) for Rs. 40,000 to he cashed on 28th February, 1966; and (3) for Rs. 35,000 to be cashed on 4th March, 1966. Another cheque for Rs. 15,000 as compensation was also given to P.W. 1 by the appellant, to be cashed on 10th March, 1966.