Parisrama Minerals Impex vs Clariya Steels Private Ltd. and Others

S.N. Satyanarayana, J.—1. Though this matter is at the stage of admission, since lower Court records are secured, taken up for final disposal at the stage of orders itself.

The complainant in C.C. No. 331/2012, on the file of Prl. Civil Judge and JMFC, Ballari, has come up in this appeal seeking to set aside the judgment dated 1.7.2013, passed in C.C. No. 331/2012, which was initiated for the offence punishable under Section 138 of the Negotiable Instruments Act and consequently to allow the complaint and punish the respondent/accused for the offence punishable under Section 138 of the Act.

The brief facts leading to this appeal are that the appellant/complainant herein is a partnership firm represented by its managing partner H. Santosh, dealing in the business of mining of iron ore, granites and other minerals and also processing and selling the said products both locally and outside the country by way of export. It is seen that the object, nature of business right of the partners and their obligations inter-se is reduced into writing in the form of partnership deed which is Annexure-A to the appeal memo in this proceedings. The transaction which has led to this proceedings is that the respondent accused had issued work order to the complainant for crushing of iron ore below 600 m.m. on 23.4.2011 vide Ex. P.7. It is stated that the said work was executed and as per the ledger extract as per Ex. P.6 the amount which is due to the complainant was informed to the accused by its letter dated 1.9.2011.

Pursuant to that, it is stated a cheque was issued by the respondents/accused in favour of the complainant for a sum of Rs. 40 lakhs on 20.12.2011, which is at Ex. P.1 bearing No. 072483. When the said cheque was presented for realization, it came to be dishonoured for want of sufficient funds on 23.1.2012. In this behalf notice was issued by the complainant to the respondent on 6.2.2012 vide Ex. P.3, which has come back with an endorsement ''refused'' on 7.2.2012 as could be seen from Ex. P.4 and P.5. Thereafter a private complaint was filed by the complainant herein in P.C. No. 32/20 12 on the file of Prl. Civil Judge and JMFC, Ballari, wherein after recording the sworn statement the learned JMFC has taken cognizance of the same and issued summons to the respondent/accused who entered appearance through counsel and contested the mater.

In the said proceedings evidence was recorded and thereafter by hearing the learned counsel for the parties this matter was disposed of by judgment dated 1.7.2013, wherein the complaint filed for the offence punishable under Section 138 of the Negotiable Instruments Act was disposed of by acquitting the accused of the offence punishable under Section 138 of the Act. Being aggrieved by the same, the present appeal is filed.

In this appeal after service of notice, the respondents entered appearance through counsel. The lower Court records are also secured and this matter is taken up for final disposal at the stage of admission with consent of both the parties.

Heard the learned counsel for the appellant/complainant and respondent/accused. Perused the grounds urged in this appeal with reference to finding of learned Magistrate in the judgment dated 1.7.2013 in C.C. No. 331/2012, with reference to the documents and evidence available on record.

On going through the same, it is seen that in the proceedings before the learned Magistrate after cognizance was taken, the trial Court by recording evidence of both the parties formulated three points for consideration. The 1st point is to establish as to whether the complainant proves that accused had issued a cheque bearing No. 072483, dated 20.12.2011, for Rs. 40 lakhs towards discharge of legally enforceable debt due to him. The said point is answered in the affirmative.

So far as point No. 2 is concerned, as to whether the complainant proves that he was authorized to present the complaint in C.C. No. 331/2012 is concerned, the same is answered in the negative and consequently the complaint which is filed is disposed of by acquitting the accused of the offence under Section 138 of N.I. Act.

So far as finding on point No. 1 with reference to issuance of cheque by the accused Nos. 1 and 2 for a sum of Rs. 40 lakh is towards discharge of legally enforceable debt is concerned, the same is accepted by the respondent accused Nos. 1 and 2 in not challenging the said finding by filing an appeal. Therefore what remains for consideration in this appeal is whether the learned Magistrate was justified in holding that the complainant was not having proper authorization to file the present complaint.

Admittedly the proceedings before the learned Magistrate is a private complaint which was initiated by a partnership firm by one of its managing partners. The objects, terms and conditions of the business will be looked into from the terms of agreement agreed into between the parties in running the business.

In the instant case the partnership deed which is produced before the Court would clearly disclose that at clause 13 which deals with management that any one of the partner would be entitled to appear on behalf of the firm before any authority on behalf of the firm and do any act on behalf of firm which should be binding on all other parties.

Even assuming such recital is not there, in the partnership deed, it is not open for the third parties to raise that objection when it comes to decide the liability as to whether there is a recoverable debt to the firm from the third parties. If at all any objection that could be raised for the said lacuna it is only by one partner against another partner and not by a third party against the firm. In the instant case which is under Section 138 of N.I. Act, what is to be seen is issuance of cheque. Whether the accused has issued the cheque in the instant case has to be rightly appreciated by the learned Magistrate.

There is an admission by the accused to the effect that the said cheque was issued as and by way of security, without taking defence that the cheque was not issued by the accused and the signature is not that of accused No. 2. The same is not rightly appreciated by the learned Magistrate. In the event if the cheque was not issued by them or not signed by them, it would be a proper defence to challenge the complaint and also for initiating appropriate proceedings against the complainant for trying to realize the amount stated in that cheque.

The very fact that such a step is not taken by the accused would clearly indicate that the defence raised by them in the cross examination is only a lame excuse and more so the admission which is made by them before the learned Magistrate that the cheque is issued as security with reference to business transaction between the complainant and the respondent presupposes existence of transaction where, monies are required to be paid by the accused to the complainant.

If the transaction on hand is looked into from the aforesaid angle, it is clear that the respondent/accused are trying to play mischief in issuing a cheque and thereafter not honouring the same as and when it comes up for realization. In that view of the matter, this Court feel that the finding of learned Magistrate on second point for consideration is erroneous.

In the instant case such objection being raised by the third party against the firm the same could not be entertained by the learned Magistrate. In that view of the matter this Court hold that, the finding of learned Magistrate on point No. 2 is required to be set aside and consequently it has to be accepted that accused Nos. 1 and 2 herein have committed an offence punishable under Section 138 of N.I. Act, accordingly the finding given on point No. 2 in C.C. No. 331/2012 is hereby set aside. Consequently the complaint in C.C. No. 331/2012 is allowed holding that the accused Nos. 1 and 2 have committed the offence punishable under Section 138 of N.I. Act. The appeal is allowed accordingly.

Now coming to the sentence is concerned, accused No. 2 is sentenced to undergo simple imprisonment for a period of two years and also to pay sum of Rs. 65 lakhs for the offence punishable under Section 138 of the Negotiable Instruments Act. In default to pay the compensation amount, he shall undergo further simple imprisonment for a period of one year. Out of the compensation amount, Rs. 60 lakhs to be paid to the complainant as compensation and remaining Rs. 5 lakh shall be appropriated to the Registry towards cost.