ORDER
H.V.G. Ramesh, J.
1. These three revisions have been filed by the petitioner being aggrieved by the orders passed by the Prl. Sessions Judge, Kolar in Crl. A. Nos. 99/03, 98/03 and 100/03 wherein the learned Sessions Judge dismissed the appeals while confirming the order of the learned Magistrate in convicting and sentencing the accused/petitioner for the offence punishable under Section 138 of the Negotiable Instruments Act.
2. As it transpires from the records, complaint was filed under Section 200 of Cr. P.C. for the offence punishable under Section 138 of the Negotiable Instruments Act against the petitioner herein stating that the complainant/ respondent is a commission agent dealing in supply of potatoes on commission basis wherein the accused/petitioner used to place orders for supply of potatoes, as per the request and requirement, the complainant used to supply potatoes to the accused/ petitioner as and when required. Further, during the month of July and August 2001 the accused/petitioner purchased potatoes worth Rs. 10 lakhs, Rs. 5 lakhs and Rs. 10 lakhs respectively on different dates and in lieu of discharge of the debt he issued three cheques bearing Nos. 145810, 145809 and 14581l dated 28-7-2001, 16-7-2001 and 6-8-2001 respectively drawn on Tamil Nadu Mercantile Bank Ltd., Tuticorin. According to the complainant/respondent, while issuing cheques the petitioner had assured that he has got sufficient funds in his account. Later, petitioner requested him to present the cheques after 15 9-2001 as there was shortage of funds in his account, as such, the complainant presented those cheques subsequent to 15-9-2001 and the said cheques were returned on 29-9-2001 for want of sufficient funds and thereby the three cheques were dishonoured. Thereafter, on 12-10-2001, the complainant got issued a legal notice to the petitioner. The notice was sent through registered post as well as through certificate of posting by demanding the payment of amount. Further stating that petitioner neither paid the amount nor replied to the legal notice, the complainant filed three separate complaints in respect of three cheques before the JMFC, Kolar. Subsequently, the accused-petitioner put his appearance and contested the case. The learned Magistrate while dealing with the three cases independently after having held the trial convicted the accused for the offence under Section 138 of the Negotiable Instruments Act and sentenced to undergo S.I. for a period of one year and to pay a fine of Rs. 3.000/-, in default to pay the fine, to undergo S.I. for another three months. Accused was also directed to pay compensation of Rs. 10 lakhs each in respect of two cheques and Rs. 5 lakhs in respect of one cheque. As against the said orders, appeals were preferred before the Prl. Sessions Judge, Kolar, who in turn, after hearing the parties, while confirming the order of the learned Magistrate, dismissed the appeals. Hence, these revisions by the petitioner.
3. Heard the counsel for the petitioner and the counsel representing the respondent in all the cases. Since the parties are common, all the three matters are taken together for disposal.
4. It is the submission of the learned Counsel for the petitioner that no such transaction has taken place in the market yard. Admittedly, the complainant is a commission agent, when such being the case he should have shown the proof of having supplied the potatoes from the market yard. Even as per the Karnataka Agriculture Produce Market Regulation Act, the complainant has not maintained any accounts for having supplied potatoes to the accused and that he has not paid the tax due to APMC and procuring the goods outside the market yard cannot be believed. Further submitted that the cheques have been signed by the petitioner as an agent of the company and as per Section 28 of the Negotiable Instruments Act, the petitioner cannot be made liable for the supply of potatoes if any to the company since he is only an agent and principal is the drawer i.e. the M/s. Rojappoo Animal Trading Company and no notice is issued to the principal and only this petitioner has been prosecuted. Accordingly, submitted that the complainant did not discharge the initial burden of having supplied the potatoes and only relying upon the signatures on the cheques without making the principal as a party, the agent has been proceeded and has been convicted by both the Courts below which is illegal and erroneous and that petitioner is not responsible for any of the transaction and no such transaction had taken place.
5. In support of his argument, the counsel for the petitioner has relied upon the decision of this Court reported in ILR 2001 Kar 101 : 2001 AIR Kant HCR 190) in the case of N.G. Narayanaswamy v. Vijayanand Roadlines Ltd., to contend that the drawer of the cheque only can be prosecuted and that petitioner is not the drawer and the principal is the drawer. Further, he relied upon the decision reported in 2001 (1) KCCR 437 in the case of Sri G. Premdas v. Sri Venkataraman to contend that the provision of Section 139 introduced in the Act as a presumption. This presumption is available for the holder of the cheque and unless the complainant discharges the basic requirements of proof of commission of offence through cogent evidence such presumption cannot be drawn. Further, he relied upon another decision of this Court reported in 2001 Cri LJ 745: 2001 AIR Kant HCR 310 in the case of B.P. Venkatesulu v. K.P. Mani Nayar wherein this Court has held that if a cheque has been issued for actual loan amount and not including the amount of interest on loan payable there is a strong intrinsic circumstance of suspicious character and material legal infirmities will definitely displaces the complainant’s story and that accused successfully rebuts the presumption under Section 139 of the Negotiable Instruments Act. Further, he also relied upon the decision of the Madras High Court in the case of M. Mahadevan Pillai v. Vedavalli Ammal wherein it is held that (para 7):
The principle is that unless the maker has clearly affixed his signature to the instrument as agent or on account of or on behalf of a principal whose name is disclosed or, unless though he has signed unconditionally he has unequivocally and clearly disclaimed in some portion of the document his own responsibility and mentions the name of the person really liable, he cannot escape the liability.
He further relied upon the decision reported in 1997 Cri LJ 3616 in the case of B. Lakshmi v. Trishul Coal Services and Transporters with reference to Sections 138 and 141 of the N.I. Act to contend that only the person in-charge and responsible for affairs and conduct of business of company is liable and although cheque is issued by the managing partner wherein the partner not alleged to be the in-charge and responsible for conduct of business of the firm cannot be proceeded against. He also relied upon the decision of the Apex Court in the case of Baidyanath Prasad Srivastava v. State of Bihar to contend that by commenting on failure of accused to give evidence and by drawing a presumption against him, both are illegal. Further relying on one more decision of the Apex Court reported in AIR 1961 SC 1316 in the case of Kundan Lal Rallaram v. Custodian, Evacuee Property, Bombay contended that relevant evidence withheld by the plaintiff amounts to rebuttal of the presumption. He also relied upon the decision of the Calcutta High Court reported in AIR 1988 Cal 59 in the case of Sahney Motor Corporation v. Smt. Sova Mukherjee with reference to Section 118 of the Negotiable Instruments Act to contend that presumption stands rebutted by contrary presumption under Section 114(g) of the Evidence Act only in case of deliberate withholding of material evidence.
6. Per contra, the learned Counsel appearing for the respondent has vehemently contended that accused/petitioner is a trader at Tuticorin. He specifically admits that he had a transaction with the complainant/respondent for nearly 7-8 years. The petitioner was exporting potatoes to Sri Lanka. The same has been elicited in his cross-examination. The complainant/respondent never transacted with any other company and was only dealing with the petitioner/accused and on the order placed by him potatoes were being supplied and in this regard three cheques were issued by the accused/petitioner requesting the respondent to present them on a later date and the same were dishonoured and even the petitioner did not reply to the legal notice issued and as a matter of defence during the trial he has set up that he was coerced to sign the cheques and he is only an agent and not the principal. Further submitted that if really the petitioner has been coerced to sign the cheques as contended by him on behalf of the principal or somebody when there is a transaction of huge amount to the tune of Rs. 25 lakhs he would have definitely lodged a complaint. He neither whispered anything nor any steps have been taken immediately after the issuance of cheques and in between the presentation of cheques or before the filing of the complaint. The fact that petitioner is a big businessman and exporter itself is sufficient to hold that he had transacted and further when he has duly signed and issued the cheques there is an initial presumption as per Section 139 of the Negotiable Instruments Act and it is for the accused to discharge the burden and to rebut the presumption and there is no unconstitutionality in such presumption being there under the law and it is a presumption of law and not a fact. The petitioner has not placed any material to show that he has signed only as an agent on behalf of the company and nothing has been disclosed by him either in the reply or in any other circumstance while transacting throughout that he was acting on behalf of the company and submitted that even without making the company as a party, the petitioner can be proceeded. Further submitted that Section 28 of the N.I. Act cannot be read in isolation and Section 141 of the Act prevails over the provisions of Section 28 of the N.I. Act. Accordingly, submitted that both the Courts below in a concurrent finding held the accused/petitioner guilty of the offence punishable under Section 138 of the Negotiable Instruments Act, which does not call for interference.
7. In the light of the arguments advanced, let met consider, whether both the Courts below have committed any illegality in passing the impugned orders?
8. Learned Magistrate in a detailed order referring to various decisions of the Supreme Court and various High Courts and noting that the accused has admitted the issuance of cheques which are in dispute in the complaint and further rioting that the stand of the accused is that it was obtained under threat and coercion, has observed that the accused has not established under what circumstance he had come to Kolar and has issued the cheques and that the cheques were obtained from him under threat and coercion. The learned Magistrate has also observed that the accused has not shown to the Court that he had complained to the police about obtaining of the cheques by the complainant under threat or coercion. The learned Magistrate has also noted that the accused has not made any efforts to see that the cheques were not to be honoured when they were presented for realisation and on that basis, has drawn the presumption to the effect that the accused must have issued the cheques for discharge of his liability towards the complainant and that the efforts made by the accused to rebut the presumption is not sufficient. Referring to the decision of the Supreme Court in in the case of Bharath Barrel and Drum Manufacturing Company v. Amin Chand Pyarelal wherein the said case, as regards promissory note alleged to have been executed as a collateral security and not for value received as mentioned therein, it has been held that on failure on the part of the defendant to prove non-existence of consideration the onus cannot be shifted on the complainant. The Supreme Court has also held that the claim made by the plaintiff has to be allowed even if the evidence adduced by the plaintiff is found to be unbelievable in rebuttal of the defendant’s case. Relying upon the ratio laid down in the said case, learned Magistrate was of the view that it was for the accused to have discharged the burden by producing cogent and convincing evidence and that there is no cogent evidence produced by the accused.
9. Further, the learned Magistrate has also relied upon the admission of D.W. 1 in his cross-examination to the effect that farmers will some times stock the potatoes in cold storage and at that time, they will not be knowing about the goods supplied outside the APMC Yard. Nothing further that it is not the case of the complainant that he has not contended that he used to supply the goods only through APMC. has discarded the contention of the accused as to there is no evidence to show that the potatoes were supplied from the APMC yard at Kolar.
10. In appeal, learned Sessions Judge noting that the petitioner-accused has been doing business in potatoes for more than four to six years in the name and style of M/s. Rojappoo Ammal Trading Company and he must have submitted his income-tax and sales tax, was of the view that it was for the accused to produce the accounts to show that he has not made any transaction curing the month of July-August, 2001 and on that basis, was of the view that adverse inference has to be drawn against him. Further, it was also of the view that when the accused has taken the defence that the cheques were taken by force and misused by the complainant, it has to be established by cogent and convincing evidence and similarly, it has noted that the accused did not reply to the legal notice issued to him much less has taken steps to file a complaint against the complainant alleging coercion and having slept over the matter till the filing of the complaint, he has come up with a different defence at a later stage after lapse of sufficient time, which would go against him. As to the issuance of three consecutive cheques, it was of the view that it was for the accused to explain under what circumstances, he has issued those cheques and nothing has been done in this regard. Accordingly, it has dismissed the appeal while confirming the order passed by the learned Magistrate.
11. A perusal of the complaint shows that on the order placed by the accused, complainant is said to have supplied potatoes worth Rs. 10 lakhs on two occasions and for Rs. 5 lakhs on one occasion. It appears, there is compliance of mandatory requirement under the Negotiable Instruments Act so far as issuance of legal notice and filing of the complaint is well within time. A reading of the complaint as also the evidence of the petitioner depicts that the complainant is said to have supplied potatoes on various dates. It is clear that there is said to be assurance given by the accused regarding payment of the cheques on the ground that some amount is due to the accused from Sri Lanka and that he would remit the amount after receipt of the amount from Sri Lanka and as such, he asked the complainant to present the cheques to the bank only after 15-9-2001. Although it is the argument of the petitioner’s counsel that no details for supply of potatoes has been produced by the complainant as a matter of discharge of initial burden, it is pertinent to note in this regard that the petitioner has not made any efforts at least to file a complaint if really such cheques are issued under coercion as is noted by the Courts below. Mere denial of issuing cheques would not be sufficient as it is time and again noted that once the cheque is issued duly signed by the petitioner, the presumption goes against him as per Section 139 of the Negotiable Instruments Act.
12. In so far as discharge of initial burden on the part of the complainant is concerned, he has specifically stated as to supply of potatoes on various dates but, the details of the same has not been furnished which is the only grouse according to the petitioner. But, according to practise, as a Commission Agent when the complainant used to supply the goods through the possession of the farmers, on commission basis and if it is kept in cold storage and supplied to the accused directly as noted by the learned Magistrate, there would not be any record available in the APMC for having supplied the potatoes to the petitioner. If really the petitioner was serious, he would have sought the complainant to produce the records in this regard and the account books maintained by him nor has he himself produced any account books maintained by him in this regard. It appears as an alternative defence, petitioner has tried to shift the burden stating that it is the company which is the principal and the petitioner is only a commission agent and relying upon Section 28 of the Negotiable Instruments Act, contended that the principal is liable and not the commission agent. In this regard, the petitioner has also sought the assistance of various provisions under the Negotiable Instruments Act to stand by his contention that primarily the principal is liable and not the agent. Even as per Section 141 of the Negotiable Instruments Act, the petitioner being an agent who had transacted the business on behalf of the company and much less he is signatory to the cheque renders himself liable and shall be liable to be proceeded against. It is well settled that company alone or the person-in-charge of business of company alone or both can be prosecuted for offence under Section 138 of the Negotiable Instruments Act.
13. In so far as contract of agency is concerned, might be the principal is liable for the act of the agent. Section 222 of the Indian Contract Act, 1872 provides that the agent can be indemnified against consequences of all lawful acts and for which the principal is liable. If the agent wants to take the shelter that it is the principal who is liable and not the agent and of course, for his acts or breach committed by him, the principal would be liable, but it does not necessarily convey the meaning that primarily the principal alone could be proceeded with and not against the agent. Moreover, there are certain obligations cast upon the agent as duties towards the principal. As is well settled, the principal is liable for all lawful acts of the agent. Similarly, the agent is bound to render proper accounts to his principal and to communicate to the principal and he has to use all reasonable diligence in doing so. It appears, nowhere the petitioner has placed any material nor brought to the notice of the complainant that the transaction is directly between the company and the complainant and that the petitioner has got nothing to do with the transactions. Even if it is taken as a fact that petitioner has acted as an agent of the company of the principal, then necessarily the issuance of notice to this petitioner by the complainant and failure on the part of this petitioner to reply to the same or not intimating the complainant the fact that the primary liability is on the principal for the amount due if any, will estop the petitioner from taking up such a contention that he is not liable and rather the principal is liable. If really the petitioner has acted on behalf of the principal as an agent, as a matter of indemnification, ultimately it is for the petitioner to step into the shoes of the complainant to recover the amount from the principal.
14. When the petitioner did not avail the opportunity of calling for the records nor produced the records from his end to show that no transaction has taken place and when he could not duly discharge the burden, the presumption under Section 139 of the Negotiable Instruments Act goes against the petitioner and presumption stands unrebutted.
15. It is seen, in respect of three cheques issued, the trial Court has only convicted and sentenced the petitioner to pay the amount of the cheque and a fine of Rs. 3,000/- each and to undergo simple imprisonment for one year in each of these cases. The transaction is of the year 2001 and now we are in the fag end of 2006. From a perusal of the impugned order passed by the Courts below and also on hearing the arguments advanced by the counsel for the respective parties and on going through the ratio laid down in various decisions cited by the petitioner’s-counsel, I am of the view that those decisions are of no help to the petitioner. Even Section 28 of the Negotiable Instruments Act clearly lays down the liability of the maker of the instrument. In the case on hand, the drawer of the cheque is not the principal, the petitioner has drawn the cheque and that part cannot be disputed. As rightly noted by both the Courts below, no element of coercion is established by the petitioner against the complainant nor is it even brought to the notice of the complainant that he is only acting as an agent on behalf of the company, No such endorsement is being made by him nor replied in the legal notice issued in this regard.
16. In the ratio laid down in M. Mahadevan Pillai v. Smt. Vedavalli Ammal, the Madras High Court has held thus:
Knowledge of agency to other party does not free the agent from liability, if he does not disclose on the instrument that he signed as an agent. The principle is that unless the maker has clearly affixed his signature to the instrument as agent or on account of or on behalf of a principal whose name is disclosed or, unless those he has signed unconditionally, he has unequivocally and clearly disclaimed in some portion of the document his own responsibility and mentions the name of the person really liable, he cannot escape liability.
Further, Section 28 of the Negotiable Instruments Act reads thus:
Liability of agent signing : An agent who signs his name to a promissory note, bill of exchange or cheque without indicating thereon that he signs as agent, or that he does not intend thereby to incur personal responsibility, is liable personally on the instrument, except to those who induced him to sign upon the belief that the principal only would be held liable.
17. The above ratio as well as the legal position makes it clear that the agent will be liable in the absence of any such endorsement being made and also when he fails to establish that he has been induced to sign the cheques on the assurance that the complainant will only proceed against the principal and not against the petitioner-agent. The finding of both the Courts below that the petitioner did not discharge his responsibility by way of rebuttal evidence cannot be faulted with.
18. For the foregoing reasons, as I do not find any illegality in the impugned order of conviction passed by both the Courts below, appeals are dismissed. However, in the interest of justice, the order of sentence to undergo imprisonment for one year in each of these cases would be modified and the same shall not be executed if the petitioner pays the amount within three months from the date of receipt of the copy of this order, while maintaining the order of the learned Magistrate as well as the Sessions Judge regarding compensation/fine amount imposed. In the event, the amount is deposited or paid to the complainant within three months from the date of receipt of this order, there shall not be any order to execute the sentence of imprisonment and it shall be treated as deleted or modified or else the petitioner may have to suffer the order in its entirety.