Chidananda S. Sherikar, M/s. Revansiddeshwara Agro Agencies vs The Fertilizer and Chemicals, Travancore Ltd.

Jawad Rahim, J.—Accused is in revision questioning the concurrent finding recorded by the trial court in C.C. 483/05 convicting him for the offence punishable u/s 138 of the Negotiable Instruments Act (hereinafter referred to as the Act, for brevity) and the judgment in Crl. Appeal No. 60/08 confirming the conviction. Heard Sri Gode Nagaraj, learned counsel for the petitioner and Sri P.H. Gotkhindi, learned counsel for the respondent. Perused records.

The contextual facts are:

a) Respondent, a company incorporated under the Companies Act, 1956, initiated prosecution of the petitioner through P. Sathyanarayana, its senior regional manager and authorized officer for the offence u/s 138 of the Act on the assertive contention that the complainant is engaged in the manufacture of fertilizers and chemicals. Petitioner was its customer and had been purchasing its products on credit.

b) During the course of such business, petitioner-accused obtained dealership of pesticides and fertilizers of the respondent company and for some time honestly transacted with it, developing good rapport and relationship and gained the confidence of the complainant. Subsequently he asked for credit facility on the pretext of expanding his business. Complainant, believing him and in good faith, extended credit facility which he availed but failed to pay the value of the goods purchased to the tune of over Rs. 3,00,000/-.

c) On demand made by the complainant, he issued the impugned cheque for Rs. 3,03,084/- which on presentation to the bank was dishonoured, necessitating issuance of statutory notice on 20.5.2002. The notice was duly served on him, but he failed to comply with the demand made, and has thus committed the offence punishable u/s 138 of the Act.

d) Learned jurisdictional magistrate took cognizance and summoned the accused who took up the defense of denial simpliciter. In the trial that ensued, the authorized officer of the complainant tendered evidence as P.W. 1 and placed reliance on 12 documents. Accused except denying, did not tender any evidence in rebuttal.

e) Learned trial judge analyzing the evidence, opined complainant had established its case and convicted him, directing him to pay fine of Rs. 4,00,000/-. Assailing it he was in appeal in Crl. Appeal No. 60/08 which also failed.

f) Against the concurrent finding, he is in this revision.

Petitioner''s counsel would submit, the trial court and first appellate court have seriously erred in ignoring that prosecution initiated by Sathyanarayana was untenable in the absence of any resolution passed by the company, authorizing him to initiate prosecution. The second ground is, Sathyanarayana who has presented the complaint and led evidence has produced the power of attorney which is subsequent to the filing of the complaint and thus the magistrate could not have taken cognizance on the basis of such unauthorized complaint. The third ground is, as complainant is a company incorporated under the Companies Act, either under the by-laws or by resolution it could have authorized any person to initiate prosecution and in the absence of it, cognizance cannot be taken and the entire proceedings are vitiated.

To gain support to his submission, he relies on the decision of this court reported in Laws Director Maruti Feeds and Farms Pvt. Ltd. Vs. Basanna Pattekar, and the decision of the Bombay High Court (Bench at Goa) reported in Shri Ashok Bampto Pagui Vs. Agencia Real Canacona Pvt. Ltd. and State, .

The third contention urged is, complainant has failed to discharge the initial burden of proof regarding issuance of cheque towards ''existing debt or legal liability.'' He submits, complainant had merely produced the cheque and bank endorsement without substantiating the transaction between the company and the accused. In this regard, he submits complainant was obliged to produce the statement of accounts to show liability of the accused which has not been done. Lastly he submits, prosecution is untenable as the impugned cheque: was issued by the accused only as security and not towards discharge of any legal liability. He submits, the trial court and appellate court have ignored these aspects consequent to which conviction is unjustifiably ordered.

Learned counsel for the respondent-complainant, Mr. P.H. Gotkhindi has supported the impugned judgment and submits, petitioner has no locus to question the authority of Sathyanarayana who was the duly authorized agent of the complainant company. In this regard he would refer to the narration of facts in the complaint and the deed of power of attorney produced which confirms the authority on Sathyanarayana to initiate prosecution, tender evidence and do all those acts that are necessary in legal action.

Keeping in mind what is urged by both sides, I have re-appraised the evidence even though there is limited scope for enquiry u/s 397, Cr.P.C. On perusal of the records, the following facts become apparent:

Respondent-complainant has filed the complaint with the categoric assertion in paragraph 1 itself that P. Sathyanarayana is the authorized representative of the company.

P. Sathyanarayana has produced the deed of power of attorney executed by the company through its managing director in his favour appointing him as the attorney to represent the company.

The power of attorney is dated 28.6.2002 and the complaint is presented on 3.7.2002 before the trial judge. Therefore authorization is issued prior to the filing of the complaint.

In the case of Director, Maruti Feeds and Farms Pvt. Limited. v. Basanna Pattekar (supra), this court opined on the basis of records produced in that case that the complainant was a company registered under the Companies Act and P.W. 1, apart from his self-serving testimony that he is the director authorized to depose on behalf of the company, had not produced any documentary evidence to show he is the director. In such fact situation, this court observed that the resolution of the company having not been produced and as P.W. 1 pleaded ignorance in cross-examination about the resolution passed by the board of directors, it was held he had no authority to present the plaint. In the instant case, the facts are different.

In the preamble to the complaint, there is a categoric declaration that P. Sathyanarayana is the authorized officer to represent the company. Besides, he has produced the deed of general power of attorney dated 28.6.2002 at Ex. P1 authorizing him to represent the company for initiating prosecution against the respondent. Thus there is sufficient documentary evidence showing authorization which was absent in the case dealt by the High Court in the decision referred to above. Thus on facts it is not applicable.

Even otherwise, we must notice that under the provisions of the Companies Act, the company will be represented by the principal officer like managing director, chairman or company secretary or any other person to represent it could be done by issuing a special authorization. In the instant case, the managing director has appointed P. Sathyanarayana as the attorney to represent the company by virtue of which he has tendered evidence. Since the complainant is a juristic person, de facto some one had to represent. Ex. P1 answers the requirement of law. Thus there was no infirmity, legal or otherwise.

A similar view has been taken by the Mumbai High Court and for the reasons stated above, it is not applicable.

Coming to the merit of this case, as could be seen, complainant has categorically stated petitioner was appointed as its dealer and he had availed credit facility. Accused has not disputed this aspect. Petitioner-accused admits he has been taking goods from the complainant company on credit and had issued the impugned cheque as security. This shows he acknowledges liability in favour of the company. What was the extent of liability is known to him and he should have disclosed it. Complainant, on the other hand, has disclosed petitioner is due Rs. 3,03,084/-, whereas accused has withheld information.

Section 106 of the Evidence Act compels the accused to disclose what was the transaction in relation to which he had issued the impugned cheque. In the absence of disclosure of facts which was in his exclusive knowledge as per his own defense, adverse inference has to be drawn. Besides, prosecution of the accused is for the offence punishable u/s 138 of the Act. Therefore presumption about passing of due consideration as embodied in Section 118(c) of the Act applies with regard to issuance of cheque. Similarly as the cheque has been dishonoured, presumption u/s 139 of the Act would be inevitable. Therefore the trial court was right in holding complainant had discharged the burden of proof that the cheque having been dishonoured, accused despite having notice of it, failed to clear the amount within the stipulated period. The finding of guilt recorded by the trial court and consequent sentence imposed is just and proper and needs no interference. Rightly the appellate court has confirmed the same. In the circumstances, I find no merit in the petition. It is accordingly rejected.