Gujarat: Sareshwala acquitted in cheque return case

Ahmedabad: A sessions court in Kalol, Gandhinagar, has acquitted businessman Zafar Sareshwala, who was sentenced to one-year imprisonment with others in a cheque return case in 2023, by a magisterial court holding his vicarious liability.

Sareshwala appealed against the conviction under Sections 138 and 141 of the Negotiable Instruments Act. The complaint against the Sareshwalas was filed by businessman Ridham Sheth, who said he invested Rs 5.32 crore as share application money in Parsoli Motor Works Pvt Ltd, a BMW dealer in Gujarat.

He said his family collectively invested Rs 20 crore and later exercised an exit option after no shares were allotted. He claimed that the company acknowledged the refund liability and issued a post-dated cheque of Rs 5.32 crore in his favour, which was dishonoured due to insufficient funds.

While acquitting Sareshwala, the sessions court held that the complainant had successfully proved all ingredients of the offence under Section 138 against the company, including existence of legally enforceable liability, issuance of cheque, dishonour, notice and non-payment. However, the court found that Sareshwala could not be held vicariously liable under Section 141, as he was neither the drawer nor signatory of the cheque. The court noted there was no documentary evidence showing he was in charge of or responsible for the day-to-day business of the company at the time. The court also noted that the power of attorney was never produced or proved.