IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE : 22.01.2007
CORAM:
THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYAN
Crl.A.No.133 of 2000
M/s Elgi Finance Limited,
rep by its Asst. Manager - Legal
and Authorised Representative
Mr.P.N.Krishnamoorthy ..Appellant/Complainant
vs.
1.R.Prabakaran
2.Ms.R.P.Sudha
3.C.Dhanasekaran ..Respondents/Accused 2, 4 & 5
Prayer: This criminal appeal has been filed against the
judgment of acquittal in so far as the respondents/accused
2, 4 & 5 are concerned, dated 29.1.1999 made in C.C.no.447
of 1996 on the file of the Judicial Magistrate No.VI,
Coimbatore.
For Appellant : Mr.T.S.Ramarathinam
For Respondents : Mr.AR.L.Sundaresan, Senior Cousel,
for Mrs. A.L.Gandhimathi
JUDGMENT
This appeal has been preferred against the judgment in
C.C.No.447 of 1996 on the file of the Judicial Magistrate
No.VI, Coimbatore. The complainant is the appellant herein.
The appeal has been preferred against A2, A4 & A5 alone.
2. The short facts as narrated in the private complaint
preferred by the complainant under Section 200 of Cr.P.C
relevant for the purpose of deciding this appeal are as
follow:-
The complainant is working as a Deputy Manager and
Legal advisor of the de jure complainant. The accused have
obtained a loan by availing bill discount facility to the
tune of Rs.1,00,00,849/-. To discharge the above said loan
the accused have drawn a cheque for Rs.24,99,544/-. When
the said cheque was presented in Canara Bank Azhagapuram
branch on 14.08.1996, the same was returned with an
endorsement that there is no sufficient funds in the account
of the accused. Even after knowing that the cheque was
bounced, the accused have not cared to discharge the loan.
The complainant issued a notice on 23.08.1996 to the accused
which was received by the accused on 24.08.1996, but the
accused have not chosen to send neither reply nor repaid the
debt amount. Hence the complainant has preferred this
complaint under Section138 of the Negotiable Instruments
Act.
3. After taking the sworn statement of the defacto-
complainant, the complaint was taken on file as
C.C.No.147/1996 by the learned Judicial Magistrate and on
appearance of the accused copies under Section 207 of
Cr.P.C. were furnished to the accused. When the offence was
explained to the accused they pleaded not guilty. On the
side of the complainant P.W.1 was examined and Exs.P.1 to
P.10 were marked.
4. P.W.1, defacto-complainant, would depose that he is
working as an Assistant Manager of the de jure complainant-
company and Ex.P.1 is the power of attorney given in his
name, attested by notary public, authorising him to prefer
this complaint on behalf of the de jure complainant-company.
He would depose that A2 to A5 are Directors of the Company
and only at the request of A2 to A5 on behalf of the first
accused bill discounting facility was provided to the
accused by the de jure complainant-company and that after
availing bill discounting facility to the tune of
Rs.1,00,00,849/-, the accused have executed hundials No.11,
13 & 14 on 25.06.1996, but as per the terms and conditions
of the said hundials the accused failed to repay the debt
and after repeated demand, A3 had drawn a cheque for
Rs.24,99,544/- in favour of the complainant and when the
said cheque(Ex.P.2) was presented in Canara Bank on
14.08.1996 the said cheque was returned by saying there is
no sufficient funds in the accounts of the accused. Ex.P.3
is the memo to that effect issued by the Bank. Ex.P.4 is
the debit advoice dated 16.8.1996. Even after the fact of
dishonouring of the cheque was informed to the accused
through a notice dated 23.08.1996 under Ex.P.5 the accused
have not repaid the debt amount. Ex.P.6(series) is
acknowledgments. Ex.P.7 to P.10 are the certified copies of
the hundial issued by the accused in favour of the de jure
complainant-company.
5. When incriminating circumstances were put to the
accused, the accused denied their complicity with the crime.
After going through the available evidence the learned
Magistrte has come to a conclusion that A1 and the signatory
in Ex.P.2-cheque dated 14.08.1996, which was dishonoured by
the Bank i.e A3 alone are guilty of the offence under
Section 138 of NI Act and consequently convicted and
sentenced A1 and A3 to pay a fine of Rs.12,500/- each with
default sentence and acquitted A1, A4 & A5. Aggrieved by
the findings of the learned trial Judge against A2 , A4 & A5
alone this appeal has been preferred by the complainant.
6. Now the point for determination in this appeal is
whether A2, A4, & A5 are also guilty under Section 138 of NI
Act?
7. I have heard the submissions of Mr.T.S.Ramarathinam,
learned counsel for the appellant and Mr.AR.L.Sundaresan,
Senior Cousel, appearing for the respondents and considered
their respective submissions.
8. The Point:-
8(a) Against the conviction against them, A1
and A3 have preferred an appeal in C.A.No.70/1999 before the
Additional Sessions Judge, Coimbatore, but the same was
dismissed on 1.10.1999. Against that no appeal was
preferred.
8(b) The learned counsel appearing for the
appellant would contend that A2, A4 & A5 are all the other
Directors of A1-company and only at their request they were
given bill discounting facility to the tune of
Rs.1,00,00,849/- and after availing the said bill
discounting facility, they have executed Ex.P.7 to P.10
hundials and hence they are also to be held guilty under
Section 138 of NI Act. Section 138 of NI Act runs as
follows:-
“Dishonour of cheque for insufficiency,
etc., of funds in the account –
Where any cheque drawn by a person on an
account maintained by him with a banker for
payment of any amount of money to another person
from out of that account for the discharge, in
whole or in part, of any debt or other liability,
is returned by the bank unpaid, either because of
the amount of money standing to the credit of
that account is insufficient to honour the cheque
or that it exceeds the amount arranged to be paid
from that account by an agreement made with that
bank, such person shall be deemed to have
committed an offence and shall, without prejudice
to any other provision of this Act, be punished
with imprisonment for a term which may extend to
two year, or with fine which may extend to twice
the amount of the cheque, or with both”
Provided that nothing contained in this
section shall apply unless –
(a) the cheque has been presented to the
bank within a period of six months from the date
on which it is drawn or within the period of its
validity, whichever is earlier;
(b) the payee or the holder in due course of
the cheque, as the case may be, makes a demand
for the payment of the said amount of money by
giving a notice in writing, to the drawer of the
cheque, within thirty days of the receipt of
information by him from the bank regarding the
return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make
the payment of the said amount of money to the
payee or, as the case may be, to the holder in
due course of the cheque within fifteen days of
the receipt of the said notice.
Explanation – For the purpose of this
section, ‘debt or other liability’ means a
legally enforceable debt or other liability.
The learned counsel also had drawn the attention of this
Court to Section 141 of the NI Act and contended that 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 deemed to be guilty of the offence and
shall be liable to be proceeded against and punished
accordingly.
8(c) On the other hand learned senior counsel
appearing for the respondents/accused 2, 4 & 5 would contend
that even the complaint was preferred against the accused
only under Section 138 of the NI Act and except at para 2 of
the complaint that A2, A4 & A5 are directors of the company,
there is no specific averment in the complaint regarding the
overtact of A2, A4 & A5. The trial Court has held that A3
guilty on the ground that, he as one of the Directors has
signed in Ex.P.2-cheque dated 14.8.1996. The learned senior
counsel for the respondent relying on 2005 SCC (Cri) 1975
(S.M.S. Pharamaceuticlas Ltd., Vs. Neeta Bhalla and
another), contended that it is necessary to aver in the
complaint that at the time the offence was committed the
person accused was in charge of, and responsible for the
conduct of business of the company and without averment
being made in the complaint the requirements of Section141
cannot be said to be satisfied. The exact observation in
the above said judgment runs as follows:-
“The normal rule in the cases involving
criminal liability is against vicarious
liability, that is, no one is to be held
criminally liable for an act of another. This
normal rule is, however, subject to exception on
account of specific provision being made in the
statutes extending liability to others. Section
141 of the Act is an instance of specific
provision which in case an offence under Section
138 is committed by a company, extends criminal
liability for dishonour of a cheque to officers
of the company. Section 141 contains conditions
which have to be satisfied before the liability
can be extended to officers of a company. Since
the provision creates criminal liability, the
conditions have to be strictly complied with.
The conditions are intended to ensure that a
person who is sought to be made vicariously
liable for an offence of which the principal
accused is the company, had a role to play in
relation to the incriminating act and further
that such a person should know what is attributed
to him to make him liable. In other words,
persons who had nothing do do with the mater need
not be roped in. A company being a juristic
person, all its deeds and functions are the
result of acts of others. Therefore, officers of
a company who are responsible for acts done in
the name of the company are sought to be made
personally liable for acts which result in
criminal action being taken against the company.
It makes every person who, at the time the
offence was committed, was in charge of, and was
responsible to the company for the conduct of
business of the company, as well as the company,
liable for the offence.”
So it is clear from the above said dictum that it is to be
proved by the complainant that every person who at the time
when the offence was committed was in charge of the company,
and was responsible to the company for the conduct of
business of the company as well as the company, to rope
into the offence. Even a perusal of hundials in the case on
hand viz. Ex.P.7 to P.10, would go to show that A3 has
signed in each of those hundials and not the other Directors
viz. A2, A4 & A5.
8(d) The learned senior counsel for the
respondents relied on 2006(4) CTC 489 (Sabitha Ramamurthy
and another Vs. R.B.S.Channabasavaradhya), and contended
that the averments in the complaint must be to show that all
the Directors are responsible to clear liability under
dishonoured instrument and if the complaint has not
satisfied the requirements of law, the complaint is to be
quashed. The exact observation in the above said judgment
runs as follows:-
“Section 141 raises a legal fiction. By
reason of the said provision, a person although
is not personally liable for commission of such
an offence would be vicariously liable therefor.
Such vicarious liability can be inferred so far
as a company registered or incorporated under the
Companies Act, 1956 is concerned only if the
requisite statements, which are required to be
averred in the Complaint Petition, are made so as
to make the accused therein vicariously liable
for the offence committed by the company. Before
a person can be made vicariously liable, strict
compliance of the statutory requirements would be
insisted.”
In the case on hand also there is absolutely no averment in
the complaint against A2, A4 & A5 regarding their
involvement in the offence under Section 138 of the NI Act.
8(e) While deciding an appeal against acquittal,
as per the ratio decidendi laid down in 2003 SCC (Cri) 161
(C.Antony Vs. K.g.Raghavannair), we have to see whether the
findings of the trial Court is perverse or contrary to the
materials on record. The exact observation of the
Honourable Apex Court in the above said dictum runs as
follows:-
“The High Court had lost sight of the fact
that it was sitting as an appellate court against
a judgment of acquittal passed by the trial
Court, therefore, there was an obligation on the
part of the High Curt to come to a definite
conclusion that the findings of the trial Court
are either perverse or the same are contrary to
the material on record because the High Court
could not have substituted its finding merely
because another contrary opinion was possible
based on the material on record. It was the
duty of the High Court to have first
come to the conclusion that the conclusions
arrived at by the trial Court for good reasons
are either unreasonable or as stated above,
contrary to the material on record. In the
absence of any such finding in our opinion, the
High Court was in error in taking a contra-view
merely because another view was possible on the
material on record.”
In view of the above discussion, I am of the considered
opinion that it cannot be said that A2, A4 & A5 are also
guilty under Section 138 of the NI Act. The learned trial
Judge has considered all those point and has come to a
correct conclusion that the other Directors except A3 are in
no way connected with the offence and has rightly dismissed
the complaint against A2, A4 & A5, which does not warrant
any interference from this Court. Point is answered
accordingly.
11. In the result, the appeal is dismissed confirming
the judgment in C.C.No.447 of 1996 on the file of the
Judicial Magistrate No.VI, Coimbator.
ssv
To,
The Judicial Magistrate No.VI,
Coimbator.