Karnataka High Court
M/S Networth Stock Broking Limited vs Smt Shanthala on 23 November, 2020
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23RD DAY OF NOVEMBER, 2020
BEFORE
THE HON'BLE MR. JUSTICE N.K.SUDHINDRARAO
CRIMINAL APPEAL No.335/2017
BETWEEN:
M/s.NETWORTH STOCK BROKING LIMITED
VEER NARIMAN ROAD, FORT
MUMBAI - 400 001.
REPRESENTED BY THEIR
AUTHORISED AGENT
MR.KIRAN KUMAR
AGED 45 YEARS
SON OF SRI DHARMA PRAKASH
3RD FLOOR, SRI RAM ARCADE
OPPOSITE TO HEAD POST OFFICE
UDUPI - 576 001. ..APPELLANT
(BY SRI N JAGADISH BALIGA, ADVOCATE)
AND:
SMT. SHANTHALA
AGED ABOUT 42 YEARS
WIFE OF SRI CHANDRASHEKARA
RESIDING AT SHRESTHA COMPLEX
1ST FLOOR, D.No.384, WARD II, A.S.ROAD
KARKALA - 574 104
UDUPI DISTRICT. ..RESPONDENT
(BY SRI V S YOGESH KUMAR, ADVOCATE)
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THIS CRIMINAL APPEAL IS FILED UNDER SECTION
378(4) OF CR.P.C PRAYING TO SET ASIDE THE JUDGMENT
DATED 23.01.2017 PASSED BY THE ADDITIONAL CIVIL
JUDGE AND JMFC, UDUPI IN C.C.No.634/2010-
ACQUITTING THE RESPONDENT/ACCUSED FOR THE
OFFENCE PUNISHABLE UNDER SECTION 138 OF THE
NEGOTIABLE INSTRUMENTS ACT.
THIS CRIMINAL APPEAL COMING ON FOR
ADMISSION THIS DAY, THE COURT THROUGH VIDEO
CONFERENCE AT BENGALURU DELIVERED THE
FOLLOWING:
JUDGMENT
With the consent of the learned counsel appearing for the parties, appeal is taken up for final disposal.
Appeal is directed against the Judgment dated 23.01.2017 passed in C.C.No.634/2010 by the Additional Civil Judge and JMFC, Udupi, wherein accused came to be acquitted for the offence punishable under Section 138 of the Negotiable Instruments Act. Being aggrieved by the said Judgment complainant has come in appeal. 3
2. In order to avoid confusion and overlapping parties are referred in accordance with the ranks held by them before the trial court.
3. This appeal is preferred by the complainant. The brief facts of the case as could be seen from the certified copy of the order dated 23.01.2017 passed in C.C.No.634/2010 is that complainant is a firm doing the business of brokerage of shares and securities as per the regulations provided by BSE/NSE and Mr.Kiran Kumar is representing the firm and accused is customer of the complainant company who has been purchasing and selling shares through the sub- brokers. The accused was due an amount of Rs.96,881/- to the complainant towards the transaction. When demands were made for repayment of due, accused issued a cheque drawn on Mangalore Catholic Co-operative Bank Ltd., dated 17.11.2008. 4 When cheque was presented by complainant for encashment through Corporation Bank, Udupi, the same was returned with endorsement as "Payment Stopped by the drawer" and memo in this connection was issued on 13.04.2009. On 08.05.2009 notice was issued demanding repayment of amount due as cheque was bounced. Notice was served on accused on 11.05.2009 and it was replied on 23.05.2009. In the circumstances after following legal formalities and procedure contemplated under the Negotiable Instruments Act criminal case is filed.
4. The respondent-accused appeared before the court and contested the case.
5. Learned trial Judge was accommodated with oral evidence of PW-1 -Kiran Kumar, DW-1-Shanthala and documentary evidence as under:
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On behalf of complainant -
Ex.P-1 -Authorisation letter Ex.P-2-Ledger extract Ex.P-3- Cheque Ex.P-3(a)- Signature of accused Ex.P-4 & P-5 - Bank Memos Ex.P-6- Lawyer notice Ex.P-7 -Reply notice Ex.P-8 -Postal acknowledgement On behalf of accused-
Ex.D-1 - Letter Ex.D-2 to D-5 - Lawyer notices Ex.D-6- Letters written to Bank
6. Learned counsel Sri.Jagadish Baliga for appellant-complainant would submit that the peculiar circumstances of the case a random legal course wherein one takes unfair advantage to fix the other one in difficulty. He would submit that the cheque that was issued to the complainant was not in respect of existing independently borrowed debt or it was in respect of loan. But the accused deceived the complainant in ensuring the right of complainant that 6 gets merged and there will not be liability on the accused.
7. Learned counsel for respondent-accused Sri.V.S.Yogesh Kumar would submit that the trial court has passed a well reasoned order wherein rightlessness of the complainant over the accused is well discussed. There is no legally recoverable debt and cheque was not issued to the complainant. Learned counsel further submits that the signature made in the cheque is by one person and other things is filled by other person i.e., clearly looked into by perusal of the cheque.
8. Complainant claims that it was liasioning between the accused and share broker. Further the transaction according to complainant and accused is not the first one which is one among umpteen number 7 of transactions entered into between the complainant and the accused. It is not disputed that in the past there are instances wherein the shares were sold and made to purchase through mediation of the accused and also payments were made for choice.
9. The rule of agency is based on two principles (1) whatever a person can do by himself he can do through another. (2) He who does an act through another does it by himself.
10. Learned counsel for accused submits that accused never passed instructions to the complainant to buy or sell shares in the share market. The symbolic recognition of an agency and documentary representation of agency is through power of attorney holder wherein one person called principal authorizes to another -agent to do or not to do act in connection 8 with business, transaction and day to day affairs. In this connection complainant claims that it was instructed to buy shares accordingly they were brought. But incidentally they were sold it for lesser amount that has resulted in loss to the purchaser. Learned counsel for accused would submit that there was no authorization of any kind to the complainant to sell shares and the status of the complainant is that of a share broker that is not disputed. There are umpteen examples wherein shares are transacted and mediated through the accused. The ways in which contract of agency comes into existence is clearly mentioned in the Indian Contract Act in Chapter X, definition of agent and principal is as under:
"An `agent' is a person employed to do any act for another, or to represent another in dealings with third person. The person for whom such act is done, or who is so represented, is called the `principal'.9
Section 183 of Indian Contract Act is as under:
"183. Who may employ agent.--Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent. --Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent."
11. Section 183 details who can employ an agent. It is not confined to a particular class of person. Any person with whom principal is having confidence can appoint him as an agent certain times even a minor can be appointed as an agent. However acts of liability will be borne out by principal who has appointed a minor. Insofar an agent is concerned 10 there is no formality. Ultimately it is principal who is accountable.
12. Learned counsel for respondent-accused would submit there was no question of agency of any manner between the accused and complainant. No power of attorney was executed but at the same time no instructions were given by the accused to deal with the shares in the present case. In this connection it is necessary to mention there is no fixed format for fixing the agency. No doubt normally a person may enter into agreement. The two tests of agency are:
first is nature and scope of transaction between them and binding liability on the principal. Agency may be expressed or implied and agency by ratification and the related. Infact agency by ratification may be expressed or implied. Section 197 of Indian Contract Act is as under:11
Section 197 - Ratification may be expressed or may be implied in the conduct of the person on whose behalf the acts are done.
13. Certain regular transactions involving a person who is being represented, person representing the former and the third parties may very well be akin to agency when the binding nature of the liability/duty on the person who is so presented by his representative. Thus the person so represented is principal and who represents is agent.
14. Thus, a person who does an act entrusted to him by principal while doing so if he exceeds the authority when he was directed to purchase sheep if he purchases goat and if the principal accepts it is called as agency created by ratification which goes to show when the agent acts in the bonafide interest of the 12 principal to protect his interest and without any fraudulent intention though specifically that particular person was not authorized principal may accept it or reject it. If he rejects agent would be personally liable. If principal accepts he will have to bear the responsibility. Infact when the transaction is entered into on a particular date and the existence or authorization or endorsement is made at a later date ratification has retrospective effect and dates back to transaction.
15. Agency may be expressed or implied agency. Expressed agency is one wherein two parties agree for transaction where one will be acting as agent of another and person so acting as agent for valid acts bind the principal. When agent exercises authority or enters into transaction it will be authority by virtue of authority given by principal and benefit or loss 13 principal is entitled to. Infact many of the principles are similar to that of law of partition. As a matter of fact contract of agency is considered as very partnership is concerned as extension of partnership and the implied authority of an agent.
16. Learned counsel submitted that there is no power of attorney and agency cannot be presumed and it can never be jumped into conclusion that it is an agency.
17. The previous transactions wherein complainant has entered into in the stock market on behalf of the principal is stated in Ex.P-2 which is the copy of the ledger reflecting the relevant transactions with accused.
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18. Learned counsel submits that when the document Ex.P-2 was marked there was no objection from the accused or counsel for accused.
19. The main grievance of learned counsel for accused that the said document Ex.P-2 cannot be looked into for the purpose of appreciation of evidence. It is one of the documents filed by complainant at the time of lodging the complaint. The entries maintained in the regular course of business. Learned counsel for accused relied upon the decision of the Hon'ble Apex Court in the case of Anvar P.V. Vs P.K.Basheer and others reported in (2014) 10 SCC
473.
20. If any of the entries are fraudulent, deceptive or forged it was open for the accused to mention. That did not happen. The objection is raised when the Judgment is being dictated. Thus, creation of agency 15 expressed or implied shows that there was a legal course of action. Agent has the authority to do such acts to protect the interest of agency. The requirement is he should have acted bonafide in the interest of principal. No precise evidential material is placed by the accused regarding malafide, cheating or deception. If there was a transaction which resulted in loss and conducted independently though may not be the responsibility of principal. In the present case when there are plethora of transactions telling directly to the reader that so many transactions were entered into between complainant and accused reminding of agency but suppression of fact by accused, she is estopped from contending contrary and the defence is not that agency was revoked and complainant had no authority. On the other hand though the accused submits that there was no authorization or no such relationship of principal and agent, one of the 16 circumstances regarding appreciation of evidence is that when a person volunteers to give explanation or when he is under duty to give explanation in respective cases or when a person volunteers to give a false explanation or no explanation he stands in inescapable position of the area of guilt. The agent is entitled for remuneration infact he has a right of claim and insofar as cheque is concerned signature is not disputed.
21. Learned counsel for accused submits that it was given as a security. Second submission in this connection is the handwriting of manuscript portion differs. It is quite surprising to know the contradictory statement. First of all there was no authorization given to the complainant by accused and cheque was given as a general security.
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22. In similar transactions security means with the aspect of promise, bond, undertaking and related given to a person securing repayment of the amount given to him or for the purpose of involving monetary liability otherwise security is given by no person to another without any purpose.
23. Security may also be a document because of the existing obligation. It is not only the question of denial. The accused endorses to say that there was no authorization for transaction and the onus is on the accused to establish when the previous authorization that came to an end or when it was suspended because when pleaded similar aspects when denial is made it amounts to denial of assertion. When a special existence of circumstance that defends him or exonerates, it is on his part to establish the same. Learned counsel for appellant-complainant who 18 submitted that after the present transaction relationship between the parties strained and it came to an end. Other things being equally incomplete aspects which are not material in nature on a negotiable instrument whether promissory note or bill of exchange or a cheque are to be read with reference to Section 20 of the Negotiable Instruments Act which is as under:
"20. Inchoate stamped instruments.-- Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person 19 so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder".
24. I find section 139 of Negotiable Instrument Act goes to the aid of the complainant.
"139. Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
25. Learned counsel for accused submits the date of transaction is not mentioned and there is arbitration 20 clause. In this case Section 138 Negotiable Instrument Act attracts criminal liability.
26. Further regarding arbitration clause it is not applicable to criminal cases.
27. It is necessary in the fact and circumstances of the case particular date is mentioned on the cheque it tells identification of liability and acknowledgment to repay the same.
28. Learned trial Judge without mentioning the legal provisions, principles and proper appreciation of evidence seriously erred in dismissing the complaint. I find there is no proper appreciation of evidence or application of mind in disposing of the matter. The Judgment is liable to be set aside and complaint deserves to be allowed.
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Hence, the following:
ORDER Appeal is allowed. Judgment of acquittal passed in C.C.No.634/2010 dated 23.01.2017 is hereby set aside and accused is convicted for the offence punishable under Section 138 of Negotiable Instruments Act and sentenced her to pay fine amount of Rs.1,05,000/-. Out of which Rs.1,00,000/- shall be paid to the complainant as compensation within two months and balance Rs.5,000/- is ordered to be adjusted to the State Exchequer. In default of payment of fine accused shall undergo simple imprisonment for one year.
Sd/-
JUDGE SBN