UBC and Others vs M.R. Govarthanam

C.S. Karnan, J.—The revision petitioner herein/accused has preferred this Criminal Revision in Crl. R.C. No. 1603 of 2007 against the

judgment made in C.A. No. 70 of 2007, on the file of Principal Sessions Judge, Erode confirming the judgment made in C.C. No. 243 of 2002,

on the file of Judicial Magistrate-II. The respondent/complainant''s case is as follows:

The complainant is running a textile business. The second accused is the Managing Partner of the first accused firm. The third and fourth accused

are the partners in the first accused firm and are responsible for the conduct of business of the day to day affairs of the first accused firm. The

accused used to buy lungis from the complainant''s firm on credit basis. During the course of business transactions, the accused owed the

complainant a sum of Rs. 19,92,952.23/-. On the basis of negotiations on 25.10.2001, a sum of Rs. 7,70,435.69/- was waived on the said

amount payable by accused and it was agreed that the amount payable by accused to the complainant was Rs. 11,55,653.54/-. The accused had

also issued a cheque dated 19.10.2001, drawn on Union Bank of India, Cochin for a sum of Rs. 50,000/- to and in favour of the complainant, for

the balance dues payable by the accused prior to entering into the said agreement. The said cheque was deposited with the complainant''s bankers

viz., Tamil Nadu Mercantile Bank, Erode Branch, on 20.10.2001 for encashment. It was returned unpaid on 27.10.2001 and on request made by

accused, it was re-presented on 7.12.2001. But, the said cheque was again returned unpaid with the endorsement ""exceeds arrangement"" on

13.12.2001. The complainant sent a lawyer''s notice to the accused on 24.12.2001. The accused had sent a reply notice making false allegations,

stating that the amount involved in the said cheque was also part of the agreement entered on 25.10.2001. As such, the complainant had preferred

a complaint against the accused u/s 138 of the Negotiable Instruments Act before the Judicial Magistrate-II, Erode.

The accused pleaded not guilty before the trial Court and hence trial was conducted.

On the complainant''s side, two witness were examined and ten documents were marked as Exhibits P-1 to P-10 viz., Exhibit P-1-cheque

dated 19.10.2001, Exhibits P-2 and P-3, return memos, Exhibit P-4-debit advice dated 13.12.2001, Exhibit P-5-copy of lawyer''s notice dated

24.12.2001, Exhibit P-6-postal receipts (series) dated 24.12.2001, Exhibit P-7-acknowledgment card (series), Exhibit P-8-reply notice, Exhibit

P-9-the bank account statement of accused and Exhibit P-10-extract of cheque returned register. On the side of the accused, no witness and one

document was marked as Exhibit R-1, i.e., the certified copy of compromise agreement.

P.W. 1, Govarthanam, the complainant herein had adduced evidence that the second, third and fourth accused are the partners in the first

accused firm and that the second accused is the Managing Partner; that the accused used to buy clothes from his shop on credit basis; that as on

25.10.2001, the accused owed him a sum of Rs. 19,92,952.25/- towards purchase of clothes; that after a compromise agreement entered into

between the accused and the complainant, it was agreed that an amount of Rs. 7,00,000/- would be waived from the said total dues and that a

balance amount of Rs. 11,55,653.54/- was to be paid by the accused to the complainant; that while the above agreement was entered into

between them at Ernakulam on 25.10.2001, a cheque issued by the accused for a sum of Rs. 50,000/- drawn on Union Bank of India, dated

19.10.2001 had already been presented for encashment; that at the time of entering into the agreement, when the complainant enquired the

accused about the said cheque which dated 19.10.2001, the accused had replied that the cheque had been cleared and payment had been

effected by them; that when the said cheque was presented for collection on 20.10.2001, it was returned with the endorsement ""exceeds

arrangement"" on 27.10.2001; that he came to know about the return of cheque only after signing the agreement; that the return memo given by the

bankers of the accused was marked as Exhibit P-2; that when the said cheque was re-presented at Tamil Nadu Mercantile Bank, it was returned

unpaid with the endorsement ""exceeds arrangement"" on 13.12.2001; that the return memo sent by the bank was marked as Exhibit P-3; that the

debit advice given by his bankers was marked as Exhibit P-4; that a lawyer''s notice was sent to the accused on 24.12.2001, a copy of which had

been marked as Exhibit P-5; that the postal receipts for proof of notice sent to the accused persons had been marked as Exhibit P-6 (series); that

the acknowledgment card (series) showing proof of acceptance of notice by the accused has been marked as Exhibit P-7; that a reply notice

(Exhibit P-8) was sent by the accused making false allegations; that in spite of receipt of notice, the accused had not made any payment.

One Mr. V. Padmanaban, the Manager of Union Bank of India, Ernakulam Branch had adduced evidence that the accused had a cash credit

account facility in their bank; that the cheque marked as Exhibit P-1 presented for encashment on 10.12.2001, drawn on Tamil Nadu Mercantile

Bank, Erode Branch came for collection to their bank, but it was returned unpaid as it exceeded arrangement; that as on 1.11.2001, the accused

owed their bank a sum of Rs. 1,03,68,441.03/-; that the copy of bank account statement of first accused was marked was marked as Exhibit P-9;

that the copy of extract of cheque return register was marked as Exhibit P-10.

The learned Magistrate, on considering the oral and documentary evidence held the accused No. 1 to 4 guilty of offence u/s 138 read with 142

of Negotiable Instruments Act and sentenced each of them to undergo simple imprisonment for a period of two years. The learned Magistrate

further held that the second accused, being the Managing Director should further undergo punishment of simple imprisonment imposed on the first

accused, as it was a firm.

Aggrieved by the said conviction and sentence imposed by the trial Court, the accused have filed an appeal in C.A. No. 70 of 2007, before the

Principal Sessions Judge, Erode District, Erode. The learned counsel for the appellant has argued that Exhibit R1, the compromise deed has not

been properly appreciated by the trial Court. It was also pointed out that another compromise deed dated 25.10.2002 mentioned in the complaint

has not been marked before the trial Court. It was submitted that the first respondent had violated the terms and conditions mentioned in Exhibit

D-1, the compromise deed. The appellate Court framed an issue viz.,

Whether the conviction and sentence imposed by the trial Court is to be set-aside?

The learned judge, after scrutinizing of documentary and oral evidence dismissed the appeal and confirmed the judgment of conviction and

sentence imposed by the trial Court.

Aggrieved by the dismissal of appeal, the accused have preferred the present revision.

The learned counsel for the revision petitioners have argued that the learned judge failed to appreciate the vital admissions made by the

complainant during his cross-examination and also the recitals in Exhibit D-1, compromise deed. It was pointed out that the learned judge failed to

see that as the parties had agreed to abide by the terms of compromise deed, the complainant is not entitled to present the cheque in question for

collection. It was also argued that the learned judge failed to see that it is not shown or proved that the accused 3 and 4 were aware of the

transactions and that they took part in the day to day administration of the first accused firm and that the complainant had failed to discharge his

burden of proof so far as accused 3 and 4 are concerned. It was also pointed out that the sentence imposed on the petitioners was excessive and

arbitrary.

The learned counsel for the complainant submits that the cheque for a sum of Rs. 50,000/- had been issued by the accused 2 to 4, on behalf of

the first accused firm. The said cheque was dishonoured on the ground of insufficient funds. The same was proved before the trial Court after

evidence. Subsequently, the appeal had also been dismissed on merits and the trial Court''s conviction and sentence was confirmed. The learned

counsel further submits that the case was established against the accused u/s 138 read with 142 of the Negotiable Instruments Act. As such, the

complainant shall be awarded compensation by the accused.

On verifying the facts and circumstances of the case and submissions made by the learned counsels and on scrutinizing the impugned judgments

of the Courts below, this Court is of the considered view that there is no discrepancy in the judgments of the Courts below, as regard the

conviction. However, the sentence of two years simple imprisonment imposed on the accused is on the higher side. Therefore, this Court reduces

the sentence of simple imprisonment from two years to three months, as far as accused Nos. 2, 3 and 4 are concerned and the additional

imprisonment period of two years imposed on the second accused on behalf of first accused firm is set-aside.

This Court further directs the accused 2 to 4 to pay a total compensation of a sum of Rs. 50,000/- either jointly or individually to the

complainant, as it is found to be appropriate. Originally the case was filed in the year 2002. Therefore, this Court directs the Judicial Magistrate-II,

Erode to issue bailable warrant on the accused and secure the accused 2 to 4 into judicial custody to undergo simple imprisonment for a period of

three months, as per this Court order. If the accused remits the compensation amount of a sum of Rs. 50,000/- (Rupees Fifty Thousand only) into

the credit of C.C. No. 243 of 2002, on the file of Judicial Magistrate-II, Erode before being remanded into judicial custody, the accused would be

set at liberty and this Court order would not be operated against them any further. If the accused deposits the said compensation amount before

the trial Court, it is open to the complainant to withdraw the same after filing a Memo before the trial Court. This modified order has been passed

by this Court by invoking its discretionary power vested with it. Resultantly, the above revision has been disposed of with the above observations.

Consequently, the judgment of conviction and sentence passed in C.A. No. 70 of 2007, on the file of Principal Sessions Judge, Erode, dated

26.9.2007, confirming the conviction and sentence passed in C.C. No. 243 of 2002, on the file of Judicial Magistrate-II Erode, dated 5.3.2007 is

modified. Accordingly ordered.