Mvkandhand Bothra vs T. Jayalakshmi

K.N. Basha, J.—This appeal is preferred by the complainant challenging the order of acquittal passed by the learned VIII Metropolitan Magistrate, George Town, Chennai in C.C.No.1699 of 1996 dated 06.08.1997 acquitting the accused of the offence u/s 138 of Negotiable Instruments Act.

The case of the complainant is that the accused had borrowed a hand loan of Rs.5.00.000/- on 06.04.1995 and executed five pro notes for Rs. 1,00,000/- each on the same date. The complainant marked Ex.Pl, pro note in this case. It is further pointed out by the complainant that in order to discharge the above said dues, the accused had paid a part of the amount by a cheque bearing No.123158 dated 12.02.1996 for an amount of Rs. 1,00,000/- drawn on Vysya Bank Limited, Park Road, Erode in favour of the complainant and it is stated by the complainant that the accused had made an oral promise to the complainant that necessary arrangements were made to honour the above cheque at the time of presentation. The cheque is marked as Ex.P2.

The complainant has examined himself as P.W.I and stated that, believing the representation of the accused, he had presented the above said cheque Ex.P2 to his banker viz., The Karnataka Bank Limited on 12.02.1996 and the same was returned as unpaid on the ground of "insufficient funds". The bank intimations Exs.P3 and P4 were received by the complainant on 19.02.1996. Thereafter, the complainant issued a legal notice dated 26.02.1996 calling upon the accused to discharge the entire amount towards the dishonoured cheque within 15 days from the date of receipt of the notice. The said legal notice is marked as Ex.P5. The complainant also stated that he had sent the legal notice under Certificate of Posting and also through registered post. The complainant marked Ex.P6 to prove that the legal notice, Ex.P5 was sent through Certificate of Posting. It is also stated by the complainant that the notice was received by the accused on 29.02.1996. The postal acknowledgement is marked as Ex.P7. The complainant has also produced a statement of account under Ex.P8. The complainant further submitted that in spite of receiving the notice, the accused failed to settle the amount till the date of filing of the complaint. The complainant stated that the accused had issued the cheque, Ex.P2 knowing fully well that no sufficient funds were standing to the credit of her account and she further failed to settle the amount towards dishonoured cheque till the date of filing of the complaint and thereby, the accused has committed an offence punishable u/s 138 of Negotiable Instruments act.

The complainant in order to prove his case examined himself as P.W.I and also examined P.W.2, Manager of Vysya Bank Limited, Erode to speak about the return of the cheque on the ground of "insufficient funds". The complainant filed Exs.P.1 to P.8.

When the accused was questioned u/s 313 Cr.P.C. in respect of the incriminating materials made appearing against her through the evidence adduced by the complainant, the accused has come forward with a version of total denial.

The learned Magistrate, on consideration of the entire evidence adduced by the complainant and also on consideration of the documents marked by the complainant, came to the conclusion that the complainant has not proved his case against the accused and therefore acquitted the accused of the offence u/s 138 of Negotiable Instruments Act. Being aggrieved against the order of acquittal, the complainant has come forward with the present appeal.

Mr.N.Chandrasekaran, learned counsel appearing for the appellant contended that the reason assigned by the learned Magistrate for acquitting the accused is unsustainable in law. The learned counsel for the appellant further contended that the only ground on which the learned Magistrate had acquitted the accused is that Ex.P.2, Cheque, was issued by the accused in the capacity of the President of Sree Amman Trust and non-impleading of the Trust as one of the accused in this case, renders the complaint has not maintainable, is contrary to the well settled position of law. The learned also further contended that it is well settled by the decisions of this Court as well as the Apex Court that a complaint u/s 138 of the Negotiable Instruments Act against any person, who is responsible and in charge of of the conduct of the affairs of the company or the firm is very well maintainable without prosecuting the company. The learned counsel appearing for the appellant also placed reliance on the decision of the Hon''ble Supreme Court of India in Anil Hada Vs. Indian Acrylic Limited, . The learned counsel for the appellant further contended that the Trial Magistrate has even misread the evidence adduced by the complainant.

Mr.N.Doraisamy, learned counsel for the respondent/accused has contended that the learned Magistrate has given a reasonable ground for acquitting the accused. It is further submitted by the learned counsel for the respondent/accused that the learned Trial Magistrate has rightly placed reliance on the decisions of this Court reported in A. Jaffarullah Vs. M/s.T.Stanes & Co. Ltd. reported in (1994) 1 L.W. (Cri.) 262 and Swryunarayanan Vs. M/s. Anchor Marine Service reported in (1995) 1 L.W. (Cri.) 132. In view of the above said decisions, Mr. N. Doraisamy, learned counsel for the respondent/accused submitted that the non-impleading of the Trust as the accused, signed the cheque on behalf of the Trust, is render the complaint has not maintainable and therefore the entire proceedings are vitiated.

I have given my careful consideration to the rival contentions put forward by either side.

A perusal of the impugned order of acquittal passed by the learned Magistrate shows that the learned Magistrate has chosen to acquit the accused on the sole ground that Ex.P2 cheque was issued by the accused in the capacity of President, Sree Amman Trust and and since the complainant has not impleaded the Trust as one of the accused in this case, the complaint is not maintainable.

Learned Magistrate, for giving such a finding as stated above, has placed reliance on the decisions of this Court reported in A. Jaffarullah Vs. M/s. T. Stanes & Co. Ltd. reported in (1994) 1 L.W. (Cri.) 262 and Suryanarayanan Vs. M/s.Anchor Marine Service reported in (1995) 1 L.W. (Crl.) 132.

In the decision reported in 1994 1 L.W. (Crl.) 262 (cited supra), the learned single Judge has observed that in view of two contradictory views expressed by the Apex Court in one decision that the persons or officers of the company can be separately prosecuted u/s 1 or 2 of the E.C. Act irrespective of whether the company itself is prosecuted or not, for the contravention of the order by the company and in another decision that unless there was prosecution of the company, there can be no prosecution of the Managing director, the learned single Judge of this Court opted to place reliance on the later decision of the Apex Court in U.P. Pollution Control Board Vs. Modi Distillery (AIR 1988 SC 1123).

In the second decision in the case of Suryanarayanan Vs. M/s. Anchor Marine Service reported in (1995) 1 L.W. (Cri.) 132 a single Judge of this Court has held that,

The respondent had deliberately omitted to implead the company in the complaint though Section 141 of the Negotiable Instruments Act emphasizes that the company also shall be an accused. According to the learned senior counsel for petitioner, the defect in this case, is a serious legal infirmity in the complaint itself, and therefore, when the complaint itself has the initial defect, the proceedings cannot be allowed to continue against the petitioner. It is found that without impleading the company, the present complaint against the petitioner is not sustainable. Therefore, when the complaint has the initial defect in its sustainability, the defect cannot be cured by amending the proceedings. Section 319 of the Code of Criminal Procedure no doubt permits for impleading any other accused, who was party to the commission of the offence. But, impleading such co-accused u/s 319 of the Code of Criminal Procedure is not intended for curing the infirmity in the proceedings but only to bring all the culprits before Court when their role in the commission of the offence was brought to light only after the evidence before Court. Such is not position in this case. The proceedings against the petitioner have to be quashed.

It is relevant to consider that a learned Judge of this Court (M. Karpagavinayagam, J.) has held in K.S. Subbaraman v. Iyyammal reported in 1999 (2) CRI 11 : 1999 2 L.W. (Cri.) 611 that,

As regards the second point, namely, non-inclusion of the Company as the co-accused'' the trial Court has followed the judgment of this Court rendered in N. Doraisamy V. Archana Enterprises and that of the Kerala Court in Iqbal V. Uthaman, and held that when the offence is committed by a Company, either the company alone, or the person in charge of the business of the Company alone, or both of them together, can be prosecuted for the offence u/s 138.

The judgment rendered by this Court reported in N. Doraisamy case (supra), interpreting the sections on first principle and following the judgment of the Apex Court in Sheoratan Agarwal v. State of Madhya Pradesh, while dealing with the aspect elaborately, concluded that the Managing Directors of the Company can be prosecuted even without including the Company as a co-accused. The gist of the proposition given in the decision referred to above is that the prosecution proceedings against the persons in-charge of and responsible to the Company for the conduct of its business, or the persons, with whose consent or connivance of, or an act attributable to, or the persons, with whose consent or connivance of, or an act attributable to, or due to any neglect on their part, the offence had been committed, are maintainable irrespective of whether the Company is prosecuted or not. In this decision, Honourable Janarthanam, J. held that the earlier decision rendered by this Court on this point is contrary to the said view and that the said proposition of law was not correctly laid down, in the light of the Supreme Court''s decision reported in Sheoratan Agarwal and Another Vs. State of Madhya Pradesh, , I am in entire agreement with the view expressed in the said decision.

The Hon''ble Supreme Court of India also held in Anil Hada Vs. Indian Acrylic Limited, that,

The offender in Section 138 of the Negotiable Instruments Act, 1881 is the drawer of the cheque. He alone would have been the offender thereunder if the Act did not contain other provisions. It is because of Section 141 of the Act that penal liability u/s 138 is cast on other persons connected with the company.

Three categories of persons are brought within the purview of the penal liability through the legal fiction envisaged in Section 141. They are: (1) the company which committed the offence (2) everyone who was incharge of and was responsible for the business of the company and (3) any other person who is a director or a manager or a secretary or officer of the company, with whose connivance or due to whose neglect the company has committed the offence. .......................The provisions do not contain a condition that prosecution of the company is sine qua non for prosecution of the other persons who fall within the second and third categories mentioned above. No doubt a finding that the offence was committed by the company is sine qua non for convicting those other persons. But if a company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in Section 141 of the Act.

It is relevant to consider the provision u/s 141 of Negotiable Instruments Act in respect of the offence committed by the Companies. Section 141 of the Negotiable Instruments Act reads as follows:

Offences by Companies: (l)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 liable to be proceeded against and punished accordingly.

It is relevant to note that the above said provision u/s 141 of the Negotiable Instruments Act makes it crystal clear that every person, who at the time the offence was committed was in charge and was responsible for the company for conduct of the business of the company shall be liable to be proceeded against and punished accordingly. Therefore, the very provision itself is clear and there is absolutely no ambiguity in the provision. As such, in a complaint u/s 138 of Negotiable Instruments Act. even without prosecuting the company or firm, the persons who are all responsible and in charge for the day to day affairs of the company or firm can very well be prosecuted.

A perusal of Ex.P1, pro note said to have been executed by the accused clearly shows that the accused executed the pro note in her personal capacity though she has signed the pro note and affixed the seal as Correspondent, Sree Amman Arts and Science College, Erode. It is also relevant to be noted that the cheque Ex.P2 issued by the accused dated 12.02.1996 bears the signature of the respondent/accused. There is also a seal showing her as the President of Sree Amman Trust. Therefore, there is no consistency between Ex.Pl, pro note and Ex.P2, cheque issued by the respondent/accused. But the undisputed fact remains that the respondent/accused has signed the cheque as well as the pro note which itself makes it clear as to the liability of the accused, thus going to show that there is a legally enforceable liability on the part of the accused to the complainant. It is also relevant to be noted that the accused has not even replied to the legal notice, Ex.P5 sent by the complainant in spite of receiving the notice as the complainant has proved the receipt of the notice by the respondent/accused by marking Ex.P6 proof of Certificate of Posting and also Ex.P7, postal acknowledgement to show that the accused has received the legal notice, Ex.P5 in this case.

Therefore, the reason assigned by the learned Magistrate as stated above is wrong, both factually and legally. Under such circumstances, this Court is left with no other alternative except to allow the appeal.

Considering the fact that the transaction took place about 10 years back and the respondent/accused since being a house wife, imposing a fine of Rs.5,000/- would meet the ends of justice. The order of acquittal is set aside and this Court is inclined to impose a fine amount of Rs.5,000/- (Rupees Five Thousand only).

Before parting with this matter, this Court must place on record the commendable services rendered by Mr. N.Doraisamy, who appeared in this matter as the legal aid counsel and produce the authorities and took this Court through the materials available on record.