Andhra HC (Pre-Telangana)
Nirdosh Enterprises vs State Of A.P., Rep. By Public Prosecutor ... on 16 July, 2004
Equivalent citations: 2004(2)ALD(CRI)298, 2004(4)ALT507
Author: B. Seshasayana Reddy
Bench: B. Seshasayana Reddy
JUDGMENT B. Seshasayana Reddy, J.
1. This Criminal Appeal is directed against the judgment dated 30-11-2001 passed in C.C. No. 529 of 1999 on the file of III Metropolitan Magistrate, Hyderabad, by which the learned Magistrate dismissed the complaint and acquitted the accused-Dr. D. Sudhakar, Managing Director of M/s. Centuary Gardens (P) Limited under Section 255 (1) Cr.P.C. for the offence under Section 138 of N.I. Act.
2. The appellant and R-2 are the complainant and the accused respectively in C.C. No. 529 of 1999. The complainant presented a complaint before the III Metropolitan Magistrate, Hyderabad against the accused alleging, inter alia, that the accused as the Managing Director of M/s. Centuary Gardens Private Limited borrowed an amount of Rs. 1,00,000/- on 14-3-1997 from the complainant finance company under a loan account bearing No. K 1868/P2 and agreed to pay the said loan amount along with interest @ 2.5 per cent per month and executed all the necessary documents. The accused paid an amount of Rs. 55,302/- towards interest on various dates and thereafter stopped paying the amounts. The accused admitted his liability under Ex.P-8 letter dated 19-6-1999 and thereafter issued Ex.P-1 cheque dated 8-10-99 for Rs. 1,27,322/-. The complainant presented the cheque for payment but the said cheque came to be dishonoured for the reason of "account of the drawer is closed". Thereupon, the complainant issued a statutory notice informing him the dishonour of cheque and demanding him to pay the amount covered under the said cheque. Ex.P-3 is the office copy of the statutory notice. Since the accused failed to pay the amount covered under Ex.P-1 cheque, the complainant initiated proceedings before III Metropolitan Magistrate, Hyderabad by filing a complaint. The learned Magistrate took the complaint on file as C.C. No. 529 of 1999 and issued process to the accused. On appearance of the accused, the learned Magistrate examined him under Section 251 Cr.P.C. putting the substance of accusation levelled against him. The accused pleaded not guilty and claimed to be tried. To substantiate the accusation levelled against the accused, the complainant got himself examined as P.W.1 and marked as many as ten documents. On behalf of the accused he got himself examined as D.W.1. The learned Magistrate on appreciation of the evidence brought on record recorded a finding that the complaint is bad because of non-impleadment of the company as co-accused and thereby acquitted the accused under Section 255 (1) Cr.P.C. by judgment dated 30-11-2001. Assailing the judgment of acquittal, the complainant has filed this Criminal Appeal.
3. Learned counsel for the appellant-complainant submits that the trial court has not considered the preposition of law that the complaint against a Director of the company is maintainable without a company being impleaded as a party and therefore the impugned judgment is liable to be set aside and R-2-accused is to be punished for the offence under Section 138 of N.I. Act. He placed reliance on the judgments of Supreme Court in R. Rajgopal v. S.S. Venkat , Anil Hada v. Indian Acrylic Ltd. Sheoratan Agarwal v. State of M.P. . and the decision of our High Court in R. Ramachandran v. Yerram Sesha Reddy 1997 Crl.L.J. 1595 and also the decision of Himachal Pradesh High Court in B.N. Mehta v. Kapoor Agencies and Anr 1 (2004) BC 99.
4. Learned counsel appearing for R-2-accused submits that there was no legally enforceable debt as on the date of Ex.P-1 cheque and therefore the proceedings initiated by the appellant-complainant against R-2-accused are vitiated. It is also submitted by him that the complaint is bad for want of service of statutory notice on the accused as contemplated under Section 138(b) of N.I. Act. His las| submission is that the complaint against the accused without the company being impleaded as co-accused is not maintainable. He placed reliance on the decisions of our High Court in K. Anjana Rao v. N. Ramakrishna Raju Sekhar and Anr. , H. Rajgopal v. D.C. Mehta 2003 (1) ALT (Crl.) 547 (A.P.) = 2003 (1) ALD (Crl.) 993 (A.P.) and D. Chandra Reddy v. Gowrisetty Prabhakar Rao .
5. R-2/accused took three-folded defence before the trial court. Firstly, there was no legally enforceable debt as on the date of Ex.P-1 cheque. Secondly, no proper service of statutory notice. Thirdly, the complaint is not maintainable without the company being impleaded as co-accused. The learned Magistrate rejected the first and the second fold of defence while accepting the third fold and accordingly acquitted the accused for the offence under Section 138 of N.I. Act.
6. Let me first deal with the third fold of the defence, which the trial court accepted. The trial court heavily relied on the judgment of the learned single Judge of our High Court in D. Chandra Reddy v. Gowrisetty Prabhakar Rao in recording a finding that the prosecution of the accused without the company being made as a co-accused is not maintainable, The learned trial Judge has misapplied the preposition of law laid down therein to the facts of the case. In the cited case, the accused was sought to be prosecuted in his individual capacity but not as Managing Director of the company. The relevant portion of the above judgment reads as follows:
"If the accused was prosecuted in his capacity as a Managing Director of the Company, then, the cheque drawn by him on an account maintained by the Company would have satisfied the requirement of Section 138 of the Act but as the accused is said to have been proceeded against for an offence under Section 138 of the Act in his individual capacity and inasmuch as the cheque dishonoured for insufficiency of funds was drawn on the account maintained by the Company, namely, Vijaya Industrial Gases Limited and not by the accused petitioner herein, no offence can be said to have been committed under Section 138 of the Act. The requirement of Section 138 of the Act is that for fastening criminal liability on the accused, the cheque, which was dishonoured for insufficiency of funds etc., must have been drawn on an account maintained by the accused. The mere fact that the cheque signed by the accused in his capacity as a "Managing Director" of the Company would in the normal course be honoured by the Bank to which it was presented does not satisfy the statutory requirement of Section 138 of the Act."
Coming to the facts of the case on hand, it is specifically averred in the complaint that R-2/accused was Managing Director of M/s. Centuary Gardens (P) Limited and he was prosecuted as Managing Director of M/s. Centuary Gardens (P) Limited. Even in the statutory notice issued under Section 138(b) of N.I. Act R-2/accused was shown as Managing Director of M/s. Centuary Gardens (P) Limited. The reply notice issued by R-2/accused does indicate that it was issued by him on behalf of M/s. Centuary Gardens (P) Limited.
7. The facts in the cited case and the facts of the case on hand are distinctive and therefore the cited case has no application to the facts of the case on hand. The proposition of law with regard to the maintainability of the complaint against the Director without the company being impleaded as co-accused is well settled by catena of judgments. In Sheoratan Agarwal v. State of M.P. (3 supra) the Supreme Court held that prosecution of person incharge or officer of the company without prosecuting the company is permissible. In Anil Hada v. Indian Acrylic Ltd. (2 supra) the Supreme Court held that inspite of the case being dropped because of winding up of the company, prosecution is maintainable against the Directors. In B.N. Mehta v. Kapoor Agencies and Anr. (5 supra) it is held that the prosecution against a General Manager of Super Bazar (Consumers Co-operative Society Limited) who issued the cheque and in-charge of Super Bazar could be prosecuted without impleading the Co-operative Society as accused. In view of the settled position of law that the Director of the Company can be prosecuted without the company being impleaded as a co-accused, the finding recorded by the trial court that prosecution of R-2/accused without impleading the company as the co-accused is not sustainable and the same is liable to be set aside.
8. It is contended by the learned counsel for R-2/accused that as on the date of Ex.P-1 cheque there was no legally enforceable debt and therefore the prosecution of R-2/accused for the offence under Section 138 of N.I. Act is vitiated. There is no substance in his contention, since R-2/accused himself admitted of his liability in the notice dated 19-6-1999, which has been marked as Ex.P-8. It is useful to extract the relevant portion, which reads as follows:
"...... Herewith we would like to remind you not to worry about the repayment of our loan. Since we have pledged 23 acres of companies land which is worth about 20 lakhs and blank cheques as surety. It is regretted that meanwhile your organization is sending anti-social elements to my residence named Mr. Nagaraju and others pressing me to repay the loan amount and threatening me that if we failed to do so immediately they will take away my valuable household items and also threaten to take me away forcibly.
As a head of an organization, I hope that you very well understand that threatening and abducting is an offence. I therefore request you to ask your subordinates to stop such illegal activities.
Once again I request you to bear with me for the delay in repayment of loan amount including interest. I assure you that as soon as we got the financial assistance we will clear all the dues and we will repay the loan amount without fail. Hope you will oblige our request."
9. Learned counsel tries to explain the admission of liability by R2/accused in Ex.P-8 letter by contending that the liability mentioned in letter dated 19-6-1999 relates to some other transaction. I do not see any merit in his contention since R2/accused while being examined as D.W.1 admits of addressing Ex.P-8 letter to the petitioner/ complainant. No evidence has been placed on record to show that there are any transactions other than the transactions for which Ex.P-1 cheque is issued. Therefore, I find that Ex.P-8 letter relates to the transaction in dispute and towards discharge of which Ex.P-1 cheque came to be issued.
10. It is nextly contended by the learned counsel for R2/accused that there is no proper service of statutory notice under Section 138 (b) of N.I. Act and therefore R2/accused is entitled for acquittal. In elaborating his argument, he contends that Ex.P-4 acknowledgment does not contain the signature of R2/accused as proof of service of Ex.P-3 statutory notice. It is no doubt that Ex.P-4 acknowledgment contains the signature of one A. Jaya as the person who received the registered letter. Ex.P-3 is the copy of the statutory notice issued under Section 138(b) of N.I. Act. It is addressed to R2/accused. His address as mentioned in Ex.P-3 notice is as follows:
"Dr. D. Sudhakar, Managing Director, Century Gardens Private Limited, 16-11-741/10/c, Opp. Andhra Bank Colony, Dilsukhnagar, Hyderabad-660.
The letter dated 19-6-99 (Ex.P-8) addressed by R2/accused to the petitioner/complainant contains R2/accused's address which reads as follows:
"Century Gardens Pvt. Ltd. Farm Houses, Holiday Resorts & Club, 16-11-741/10/C, Opp. Andhra Bank Colony, Dilsukhnagar, Hyderabad - 660. Ph: 878685"
There cannot be any dispute that Ex.P-3 statutory notice has been sent to R2/ accused to his correct address by registered post. When once notice is sent to R2/ accused to his correct address by registered post, the appellant/complainant is entitled to take the aid of Section 27 of General Clauses Act, 1897 and plead that notice sent to R2/accused is deemed to have been served on him.
11. Learned counsel appearing for R2/accused contends that unless proof is placed on record to show that Ex.P-3 notice has been served on R2/accused it cannot be said that the appellant/complainant has complied with Section 138(b) of N.I. Act. I do not see any substance in his contention since the material placed on record clearly establishes that the appellant/complainant has sent the notice to R2/accused to his correct address by registered post. In view of the above discussion, I find that the appellant/complainant has been able to prove the guilt of R2/accused for the offence under Section 138 of N.I.Act beyond reasonable doubt and accordingly he is convicted of the same.
12. In the result, this Criminal Appeal is allowed setting aside the judgment dated 30-11-2001 passed in C.C. No. 529 of 1999 on the file of III Metropolitan Magistrate, Hyderabad and consequently R2/accused is found guilty for the offence under Section 138 of N.I. Act and he is convicted of the same and is sentenced to suffer SI for six months and to pay a fine of Rs. 5,000/- (Five thousand only), in default to suffer SI for three months. R2/accused is directed to surrender himself before the court below on or before 1 -8-2004 and thereupon the learned Magistrate shall commit him to prison for serving the sentence. In the event of R2/accused failing to surrender before the court below within the date specified above, the learned Magistrate shall issue NBW and on production of R2/accused, he shall be committed to prison for serving the sentence, of imprisonment as indicated above.