Bhakthavatsalam Vidhyashram and Others vs V. Veliah

K. Natarajan, J.—As the parties are the same and the facts are similar in both these original petitions, they are taken up together and a

common order is recorded.

The petitioners in Crl. O. P. No. 16049 of 1998 are seeking for quashing the proceedings in C. C. No. 409 of 1997 on the file of the Judicial

Magistrate, Ambatur. The petitioners in Crl. O. P. No. 19694 of 1998 are seeking for quashing the proceedings in C. C. No. 408 of 1997 on the

file of the District Munsif-cum-Judicial Magistrate, Ambattur.

The short facts are : The respondent/complainant filed two private complaints against the petitioners in C. C. Nos. 408 of 1997 and 409 of

1997 on the file of the District Munsif-cum-}udicial Magistrate, Ambattur, alleging that the second petitioner issued ten post-dated cheques of the

first petitioner, each for a sum of Rs. 2.50 lakhs. Rs. 12,50,000 was paid by the second petitioner and he had collected five cheques from the

respondent. Out of the remaining five cheques, three cheques, bearing Nos. 488243 of July 4, 1997, 488244 of March 4, 1997 and 488245 of

June 15, 1997, totalling Rs. 7.50 lakhs, were presented for collection under one challan, through the complainant''s bankers, viz., UCO Bank,

Korattur Branch and the said three cheques were dishonoured with the endorsement ""funds insufficient"", on July 29, 1997. The remaining two

cheques bearing Nos. 488246 of June 50, 1997 and 488247 on June 15, 1997, were presented on July 25, 1997, to the UCO Bank, Korattur

Branch and they were also returned unpaid with the similar endorsement, ""funds insufficient"", on July 29, 1997. In respect of the presentation of

these five cheques, the respondent/complainant issued a lawyer''s notice, on July 31, 1997, to the petitioners/accused, which was served on the

first and fourth petitioners. Notices sent to the second and third petitioners were returned unclaimed. Therefore, the respondent/complainant filed

complaints, in C. C. No. 408 of 1997, in respect of the three cheques, and, in C. C. No. 409 of 1997, in respect of the two cheques, u/s 138 of

the Negotiable Instruments Act, 1881 (hereinafter referred to as ""the Act""), as the cheques were dishonoured. To quash the proceedings in both

the C. C. Nos., these two Crl. O. Ps. have been filed.

Learned counsel for the petitioners submitted that petitioners Nos. 3 and 4 are not signatories to the cheques issued and, therefore, the

prosecution against them is not maintainable. Further, the statutory notice contemplated u/s 138(b) of the Act has not been served on respondents

Nos. 2 and 3. Though the respondent has stated in the complaint that the second petitioner had issued the abovesaid cheques for and on behalf of

the first petitioner, the respondent did not issue notice as stipulated u/s 138(b) of the Act to the first petitioner, viz., the institution, but impleaded

the institution as the first accused, which is illegal and, therefore, the complaints in both C. C. Nos. have to be quashed by this court.

Learned counsel for the respondent pointed out that the registered notice was issued to the first petitioner through its chairman and managing

director, the second petitioner, so far as the first petitioner is concerned, instead of addressing as ""Bhakthavatsalam Vidhyashram, represented by

Chairman and Managing Trustee"", it has been addressed as ""K: V. Kuppusamy, Chairman and Managing Trustee, Bhakthavatsalam Vidhyashram,

Korattur"". A separate registered notice to the second petitioner, describing him as ""K. V. Kuppusamy, s/o. K. P. Venkatachalam Chettiar,

Chairman and Managing Trustee, Bhakthavatsalam Vidhyashram, 242-B, Trichy Road, Sulur, Coimbatore"", which is his personal'' address, has

also been issued. Registered notices to the other petitioners also were given. The institution, viz., the first petitioner and the fourth petitioner

received notices while the notices issued to petitioners Nos. 2 and 3 were returned as unclaimed.

Learned counsel for the respondent/complainant submitted that the statutory notice contemplated u/s 138(b) under the Act has been issued to

the first petitioner also and the slightly different description of the address in respect of the first petitioner would not make it an invalid notice. The

mere fact that the institution, viz., the first petitioner is not described as ""represented by the second petitioner"" cannot be a ground for the first

petitioner to argue that the statutory notice had not been issued to it at all. Admittedly, petitioners Nos. 3 and 4 have authorised the chairman and

managing trustee, viz., the second petitioner, to draw, endorse, discount, negotiate, execute cheques, bills of exchange and other negotiable

instruments, among other things, as per the trust deed, and, therefore, it is not open to them to contend that since they are not signatories to the

cheques, they are not liable to be proceeded against in a criminal court for the dishonour of cheques, signed by the second petitioner.

In support of the above submission, learned counsel for the respondent/complainant invited the attention of this court to the decision in R.

Ramachandran Vs. Yerram Sesha Reddy and Others, . In that decision, the learned judge of the Andhra Pradesh High Court has made the

following observation (page 833) :

From a reading of Section 141 of the Act, it will be evident that if the person committing an offence u/s 138 is a company, then every person, who

at the time the offence was committed, was in charge of, and was responsible to the company for conducting its business, shall be deemed to be

guilty as also the company itself of the offence and both of them shall be liable to be proceeded against and punished accordingly. It is the proviso

which really gives defence to a person, who is in charge of and responsible to the company for conduct of the business. The proviso says that any

person, who proves that the offence was committed without his knowledge or if he proves that he exercised all due diligence to prevent

commission of such offence would not be liable for punishment even if he is in charge of and responsible to the company for the conduct of the

business. The section nowhere says that the prosecution shall always be against the company along with the person in charge of and responsible for

the conduct of the business of the company. What the section says is the company as well as such person are both liable for punishment.

Therefore, their liability is independent. Each of them is independently liable for punishment. As this is the true purport of the section I fail to

understand as to how it can be urged that the prosecution has to be against both, to make it maintainable. When the liability is of each one of them

it is perfectly permissible that both can be prosecuted jointly or only one can be prosecuted or both can be prosecuted.

In Dilip Kumar Jaiswal v. Debapriya Banerjee [1992] 73 Comp Cas 434 ; [1992] 1 Cri 1233, a Division Bench of the Calcutta High Court

took the following view in paragraph 9 (page 440) :

Now, the question to be decided is as who is the maker of the cheque in this particular case. The liability to make the payment to the present

opposite party was that of Hisco Steel Pvt. Ltd. The cheque that was signed by the petitioner was issued by him for Hisco Steel Pvt. Ltd. as

director. Therefore, the liability to make the payment being that of the limited company, it was the limited company who was the drawer of the

cheque and not the petitioner who is one of its directors. The petitioner being, at the time of the issuing of the cheque in charge of the business of

the company he has issued the cheque for and on behalf of the limited company. Therefore, it was a cheque issued by the limited company and as

a limited company has to act through its instrumentality such as a director or a secretary or any other principal officer, the petitioner as director

signed that cheque. But that would not make him the maker of the cheque and the limited company in question must be held to be the maker of the

cheque. The opposite party seeks to prosecute the present petitioner along with the company u/s 141 of the Act which reads as follows :

''141. Offences by companies.-(1) If the person committing an offence u/s 138 is a company, every person who, at the time the offence was

committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall

be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly :

Provided that nothing contained in the sub-section shall render any person liable to punishment if he proves that the offence was committed without

his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by the company and it is proved

that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager,

secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and

shall be liable to be proceeded against and punished accordingly.

Explanation.--For the purpose of this section,

(a) ""company"" means any body corporate and includes a firm or other association of individuals ; and

(b) ""director"" in relation to a firm means a partner in the firm.''

We are of the view that the contention of the opposite party is correct. In the petition of complaint the present petitioner being the director is being

prosecuted u/s 141 of the Act along with the company. Therefore, we are unable to accept the submission of Roy that a separate notice upon the

petitioner-director is required to be given under proviso (b) to Section 138 of the Negotiable Instruments Act for prosecuting him along with the

company for the offence alleged to have been committed by the company u/s 138 of the Negotiable Instruments Act. In the result we are unable to

hold that there is any ground for this court to quash the proceeding even against the present petitioner.

Per contra, learned counsel for the petitioners relied on a decision in Sudesh Kumar Sharma v. K. S. Selvamani [1994] 1 LW 337 ; [1996] 84

Comp Cas 806 wherein, on the allegations in the complaint that the first accused was the father of the second accused, and the second accused

was the proprietor of the concern and was the authorised signatory, and, when the cheques drawn by the second accused were dishonoured, it

was held that criminal liability cannot be fastened on the first accused, the father. It was argued by learned counsel for the petitioners that the

second petitioner had been authorised to issue cheques on behalf of the petitioner institution and petitioners Nos. 3 and 4 are not signatories to the

cheques and, therefore, criminal liability cannot be fastened on them and the prosecution in both the C. C. Nos. has to be quashed.

On a careful consideration of the submissions of learned counsel for both the parties, I am unable to find any substance in the submissions of

learned counsel for the petitioners. As a matter of fact, the necessary statutory notice under ""Section 138(b) of the Act had been issued to the first

petitioner also, of course with a slightly different description. The fact that a separate notice to the second petitioner had been issued to his Coim-

batore address cannot be overlooked. I am satisfied that the principles of law laid down in R. Ramachandran Vs. Yerram Sesha Reddy and

Others, and Dilip Kumar Jaiswal v. Debapriya Banerjee [1992] 73 Comp Cas 434 ; [1992] 1 Cri 1233 are applicable to the facts of the present

case. The first petitioner institution and the second petitioner can be independently prosecuted without the other. Likewise, both of them can be

prosecuted jointly also, on the above legal principle. I am of the view that the description of the address as ""K. V. Kuppusamy, Chairman and

Managing Trustee, Bhakthavatsalam Vidh-yashram, A-596, TNHB Colony, Korattur, Chennai-80"" relates only to the institution, viz., the first

petitioner and it does not indicate the second petitioner, as a separate registered notice has been issued to the second petitioner to his Coimbatore

address, and, therefore, the submission made on behalf of the petitioners that no statutory notice has been issued to the first petitioner has no force.

The contention raised on behalf of petitioners Nos. 3 and 4 that they are not signatories to the cheque and, therefore, they are not liable to be

prosecuted, in my opinion, cannot also be entertained inasmuch as they have authorised the second petitioner, the managing trustee, to issue

cheques on behalf of the institution, of which they are also trustees. Therefore, petitioners Nos. 3 and 4 are bound by the actions of the second

petitioner, which he had legally entered into, on behalf of the institution.

The contention that the notices issued on petitioners Nos. 2 and 3 were returned unclaimed and, therefore, it cannot be said that they have

been served with notice and on that ground the prosecution against them has to be quashed, in my opinion, cannot be decided in the proceedings

u/s 482 of the Criminal Procedure Code and an opportunity should be given to the respondent/complainant to prove that they have evaded to

receive the notice and that is a question of fact, which can be decided only in the trial. In this regard, it may be appropriate to refer to the

observation made by a learned judge of the Kerala High Court in Syed Hamid Bafaky Vs. Moideen, . In that case, in paragraph 2 of the judgment,

it has been observed thus (page . . .) :

It is not in dispute that the complainant/respondent sent a notice, but the only dispute is that the notice was not served upon the petitioner. Counsel

for the petitioner submitted that inasmuch as no notice was served upon him the proceedings u/s 138 of the Negotiable Instruments Act have to be

quashed. A similar contention was considered by a learned judge of this court in K. Madhu and Another Vs. Omega Pipes Ltd. and Another, The

learned judge after considering the law on the subject took the view that the proviso to Section 138 of the Negotiable Instruments Act affords

clear indication that ''giving notice'' in the context is not the same as receipt of notice. Giving is the process of which receipt is the accomplishment.

The payee has to perform the former process by sending the notice to the drawer at his correct address. If receipt or even tender of notice is

indispensable for giving the notice in the context envisaged in Clause (b) an evader would successfully keep the postal article at bay at least till the

period of fifteen days expires. Law shall not help the wrongdoer to take advantage of his tactics. Hence the realistic interpretation for the

expression ''giving notice'' in the present context is that, if the payee has despatched notice to the correct address of the drawer reasonably ahead

of the expiry of fifteen days, it can be regarded that he made the demand by giving notice within the statutory period. Any other interpretation is

likely to frustrate the purpose for providing such a notice. It is not in dispute that the address to which the notice was sent is the correct address.

Learned counsel relying upon the judgment in Sosamma v. Rajendran [1993] 1 KLT 629 ; [19931 Cri. LJ 2196 ; 1994 80 Comp Cas 503 would

urge that the magistrate ought not to have given a finding even at the initial stage on the question that the petitioner was evading notice. It is no

doubt true that since the general burden to prove the prosecution case rests with the complainant, it is necessary for the complainant to prove the

facts constituting the sending of notice and its receipt. The tender of the notice by the postal peon at the address of the accused has to be proved

and the same could not be actually served due to the culpable default or deliberate evasion of the accused, then the same would constitute

''receipt'' of notice. The burden to establish those facts rests with the complainant. In the abovesaid judgment the learned single judge took the view

that it is open to the complainant where the notice was returned ''unclaimed'' to prove the said elements in support of- the prosecution case.

Sending of notice and the return of the same with an endorsement by the postal authorities is a matter for evidence and the petitioner cannot at this

stage say that no notice was sent by the complainant/respondent. The respondent certainly must have a right to prove his case and the petitioner

cannot put a spoke in the wheels of justice even at the threshold by filing a petition to have the whole proceedings quashed on the allegation that no

notice was sent at all to him. Whether any notice was sent by the complainant/respondent and whether the petitioner successfully evaded it being

questions of fact, I am of the view that the complainant/respondent must be given an opportunity to prove the same before the trial court. This

court exercising powers u/s 482 of the Criminal Procedure Code will not interfere and give findings on questions of fact.

I am of the opinion that the correct position of law is reflected in the above decision and I agree with the view taken by the learned judge and

the same is applicable to the facts of the present case also. For the reasons aforestated, I find no merit in both the original petitions and, therefore,

they are liable to be dismissed.

In the result, both the criminal original petitions are dismissed. It is open to petitioners Nos. 2 and 3 to raise whatever contentions are open to

them in law, in respect of service of notice, at the time of trial.