Bangalore District Court
M/S Core Designers vs M/S Rose Flowers Co (Papers) on 4 February, 2016
BEFORE THE LXVI ADDL.CITY CIVIL & SESSIONS
JUDGE, BANGALORE CITY.
(CCH-67)
DATED THIS THE 4th DAY OF February 2016.
PRESENT
SRI.VIJAYAN.A., B.A.(LAW), LL.M.
LXVI Addl.City Civil & Sessions Judge
Crl.A.No.576/2015
APPELLANT 1. M/s Core Designers,
No.192, 2nd Cross,
M.Vishweshwaraiah Road,
Near Bhanu Nursing Home,
Bommanahalli,
Bangalore.68.
Rep.by its Proprietor
N.Chandrashekar.
2. N.Chandrasekar,
Proprietor,
M/s Core Designers,
No.192, 2nd Cross,
M.Vishweshwaraiah Road,
Near Bhanu Nursing Home,
Bommanahalli,
Bangalore.68.
(Rept. By Sri.M.M.Somaiah, Adv.)
VS.
2 Crl.A.No.576/2015
RESPONDENT M/s Rose Flowers Co (Papers)
Pvt.Ltd.
No.230/235, Srinath Building,
Sultanpet,
Bangalore.560 053.
(Rept. By Sri.KRA , Adv.)
JUDGMENT
Appellant has preferred this appeal under Sec.374 of Cr.P.C. being aggrieved by order of conviction passed in CC.No.16604/2012 dated:19.3.2015 by the learned XXV ACMM, Bengaluru.
2. Brief facts of the appellant's case are that:-
The Appellant/accused purchased paper and paper articles on credit basis on various dates from the complainant/opponent and the outstanding dues as on 18.5.2012 was Rs.2,24,527/-. The accused had issued two cheques i.e. cheque bearing No:113927 dated:
25.4.2012 for Rs.13,871/- and cheque bearing 3 Crl.A.No.576/2015 No.113930 dated: 7.5.2012 for Rs.1,47,407/- drawn on Allahabad Bank, and the same were dishonored with an endorsement 'stop payment'. Inspite of repeated requests and demand notice dated: 19.5.2012 and 21.5.2012 by RPAD and courier accused failed to pay the cheque amount and not replied the notice. Hence, complaint.
3. The learned magistrate was pleased to take cognizance and sworn statement of complainant was recorded and issued summons to the accused. Thereafter, the PA holder of complainant is examined as P.W.1 and got marked Ex.P.1 to P.15 and closed his side of evidence. The statement of accused under Sec. 313 of Cr.P.C. was recorded and accused himself examined as DW.1 and not got marked any documents. The trial court after hearing the arguments on both sides passed the impugned judgment dated 4 Crl.A.No.576/2015 19.3.2015 convicting the accused/appellant for the offence punishable under Sec.138 of N.I. Act and sentenced her to pay a fine of Rs.1,75,000/- and in default shall undergo S.I. for a period of one year.
4. Aggrieved by order of conviction and sentence the appellant herein has approached this court for the following among other grounds:-
i. The respondent has no power and authority to institute and to file the above case against the appellant before the trial court and it is not properly represented before the trial court.
ii. The respondent being a private limited company ought to have followed the Companies Act and Rules and ought to have its own memorandum of Association and Articles of association to run the respondents company and it has failed to produce any resolution passed by the respondents company before the trial court to file a case against the appellant.
iii. The respondent failed to produce the proceedings of board meeting held on that day 5 Crl.A.No.576/2015 authorizing Sri.A.Nateshan to issue power of attorney on behalf of the respondent to Sri.Mahadevaiah (PW1) to file and to defend the case against the appellant.
iv. The respondent has produced the power of attorney dated: 14.3.2011 Ex.P1 before the trial court executed by Sri.A.Nateshan one of the director of the respondent in favour of Mahadevaiah (PW1) if the averments of the said PA then it can be clearly and categorically makes out that the said power of attorney has been executed in favour of PW1 dated: 14.3.2011 much before the order has been placed by the accused as per invoice dated:22.2.2012 and 22.3.2012.
v. Further urged that PW1 do not have any power and authority to file and defend case against the appellant before the trial court on the authority confirmed upon him is not against the appellant but it is related to M/s Select Marketing Pvt.Ltd.
vi. There is no legally enforceable debt as on the date of filing this complaint. On the goods supplied by the respondent is of defective in nature and appellant has not made use of goods as it is not fit to use and there is mutual understanding between respondent and 6 Crl.A.No.576/2015 the appellant only after the verification of the goods supplied by the respondent to the appellant. If it is according to the specification and after clearance from appellant the respondent is to be present the said cheque to his banker i.e. only after 60 days, if the goods is not fit to use then respondent has to take back goods and return back cheques to the appellant.
The impugned judgment is perverse and unsustainable and sentence passed is also illegal.
Hence, learned advocate for appellant prayed this court to set aside the judgment of conviction and sentence passed and acquit the appellant in the interest of justice and equity.
5. Heard. The learned advocate for the appellant has submitted the following citations:
1. 1997 Crl.L.J. 1942
2. 2001 Vol 107 Comp Cases 121
3. 2002 Vol 108 Comp Cases 24
4. 2003 Vol 115 Comp Cases 161
5. 2005 Vo. 128 Comp Cases 17
6. ILR 2007 KAR 3155
7. 2011 Crl.L.J. 3680
8. 2000 Crl.L.J. 1988
9. ILR 2008 KAR 3735 7 Crl.A.No.576/2015 The learned advocate for the Respondent has submitted the following citations:
1. 2002 Kar.L.J. 458
2. 2013(1) Kar.L.J. 283
3. ILR 2002 Kar 3793
6. On the basis of case made out, following points arise for my determination:
1. Has appellant prove appeal is maintainable in the name of GPA Holder of Company?
2. What Order?
7. My findings to the above points are:
1) In the Affirmative
2) As per final Order, for the following:
REASONS
8. POINT No.1: The complainant has filed this case against the accused for the offence punishable under Sec.138 of NI Act.
8 Crl.A.No.576/2015
During the course of trial complainant himself examined as Pw1 and got marked documents Ex.P1 to P15. On the other hand accused examined himself as DW.1. Court after appreciating both oral and documentary evidence adduced and produced by both the parties passed an order of conviction convicting the accused No.1 and 2 for the offence punishable under Sec.138 of NI Act and sentenced to pay fine of Rs.1,75,000/- in default to undergo simple imprisonment for one year and invoking Sec.357(1)(b) of Cr.P.C. paid compensation of Rs.1,73,000/- to complainant and Rs.2,000/- as fine to State. Being aggrieved by judgment of conviction and sentence accused preferred this appeal for setting aside judgment of court below and allowing this appeal in the interest of justice and equity.
9. This court being both court of law as well as court on facts inclined to re appreciate facts as well as evidence on record. P.W.1 Mahadevaiah filed affidavit in lieu of 9 Crl.A.No.576/2015 examination in chief reiterating all complaint averments and in support of his case he produced and got marked GPA in Ex.P.1 , two tax invoices at Ex.P.2 and P.3 , two cheques issued by accused in Ex.P.4 and P.5, two endorsements issued by Banker in Ex.P.6 and P.7. Copy of legal notice in Ex.P.8, postal receipt in Ex.P.9, two postal acknowledgment in Ex.P.10 and P.11 reply of accused in Ex.P.12. In his cross examination he deposed that complainant company is private limited company , it has both memorandum of association as well as articles of association. Company has to follow rules and regulations and he also further admitted that company will have Managing Director as well as Directors in order to take any decision with regard to company matters , company has to pass resolution and further admitted that Managing Director will pass resolution but company has not issued any resolution to prosecute this case but they have issued GPA. He clearly admitted that the Director alone had given GPA to him to prosecute this 10 Crl.A.No.576/2015 case but not Managing Director. He denied that Ex.P1 not only issued to him to prosecute case against M/s Select Marketing Pvt. Ltd. and others, company used to sell products to accused , accused used to purchase them and he denied that the cheques has been issued for security purpose, he clearly admitted that they used to supply goods after 30 or 60 days they used to take cheques from purchasers on 25.4.2012 as well as 7.5.2012 they sold the products to the accused, thereafter they received cheque from accused and he also clearly admitted that in two cheques the ink and writings are different and he denied several suggestions put by learned counsel for the accused.
10. Thereafter N.Chandrashekar accused No.2 in this case examined himself as DW1. In his examination in chief he deposed that complainant is known to him, he used to purchase printing paper and board from complainant orally, complainant used to supply goods to their godown on credit basis for 30 or 45 days. Accordingly, in the year 2012 they 11 Crl.A.No.576/2015 requested complainant to supply goods and he used to issue cheques to complainant for security purposes. After checking goods supplied he used to inform the complainant to present the cheque for encashment in case goods supplied by complainant not in accordance with specification they would inform to take back goods supplied and to return the cheque.
11. But in this case since goods were not in accordance with their specification same has been informed to complainant but complainant refused to take back the goods and return the cheque, instead they have foisted this false case against him , so he requested bank authorities to stop payment when the cheque bounced only on that ground they have filed this case and notice has been sent to him in the name of company but not through GPA holder but he has replied that notice , in that notice he had recounted all facts alleged above, but complainant has not sent reply notice to his reply, he has issued cheques to 12 Crl.A.No.576/2015 complainant for security purposes hence, he is not liable to pay any amount to complainant. Hence, he prayed this court to dismiss the complaint.
12. In his cross examination he deposed that as per Ex.P2 and P3 company has sent goods but they are not printing worthy and clearly admitted that on 22.2.2012 and 22.3.2012 the complainant company has sent goods after elapse of 25 to 30 days they came to know that goods sent by complainant company are not worthy and they are not qualitative in nature. But he did not bring notice of goods sent on 22.2.2012 that they are not qualitative in nature immediately. But he has not returned goods immediately because complainant company has stated that the goods sent for 2nd time are entirely different and clearly admitted that in Ex.P2 and P3 there is no averment that if goods sent are not qualitative complainant company would take back those goods and there is no memorandum of understanding between himself and company to that effect. But before 13 Crl.A.No.576/2015 writing of Ex.P2 and P3 he used to purchase goods from complainant and he also clearly admitted that Ex.P4 and P5 were sealed and signed after receipt of notice he had sent reply notice to the company. On 18.7.2012 the reply sent by complainant was received by him. He also denied several suggestions put by learned counsel for the complainant.
13. Admittedly in this case complainant is the company registered as M/s Rose Flower Co. (Papers) Pvt.Ltd. It is basic of company law , once certain company is incorporated under company law it will attain legal personality and for all practical purposes company cloth with all rights and liabilities as if it is person in the eye of law. As admitted by the GPA holder Mahadevaiah he has not produced the resolution passed by Board of Directors authorizing him to prosecute the case on behalf of the company. It is basic necessity to prosecute case on behalf of company. But in this case one of the Director of 14 Crl.A.No.576/2015 company has executed GPA in favour of Mahadevaiah in turn that GPA holder has prosecuted this case. It is as against company jurisprudence, because under company jurisprudence company can sue and be sued in its corporate name. In this case though notices are sent to accused in the name of company but directors of Company have not followed the articles of association in passing resolution to prosecute his case on behalf of company, infirmity as well as defective. We are under rule of law. Under the rule of law everything should be done in accordance with law and law only. Anything done as against the law is illegal. Article 14, 19 , 21 of the Constitution of India preaches that there is rule of law in India. Under these circumstances, the Director or any person who is acting as agent to the company cannot deviate from rule of law but has to conduct this case only in accordance with company law. Under these circumstances, the case laws produced by appellant clearly holds good to the case of appellant in those cases 15 Crl.A.No.576/2015 Hon'ble Supreme Court as well as Hon'ble High Courts in India clearly held that company can sue and be sued in its corporate name but not any deviation from that rule. Hence, there is reasonable ground to intervene in the judgment of conviction and sentence passed by trial court in view of above said finding as well as case laws produced by the appellant. Therefore, this court hold point NO.1 in the Affirmative.
14. POINT No:2 In view of my finding to the point No.1 and for reasons discussed above, I proceed to pass following ORDER The Criminal Appeal filed by the appellant under Sec.374 Cr.P.C. is hereby allowed.
Judgment of conviction and sentence passed by XXV Addl.CMM, Bengaluru in CC.No:16604/2012 dated:
19.3.2015 is hereby set aside.
Accused is hereby acquitted. Further accused is directed to execute personal bond for Rs.50,000/- 16 Crl.A.No.576/2015 along with a surety for the likesum as required under Sec.437 A of Cr.P.C.
Send LCR along with the copy of this order forthwith to the trial court.
(Dictated to the Judgment writer on Computer, corrected by me and pronounced by me in the open court on this 4th day of February 2016) (A.VIJAYAN), LXVI Addl.CC & SJ, Bangalore.
17 Crl.A.No.576/20154.2.2016 For Judgment Order passed and pronounced in open court with following Operative portion:
ORDER The Criminal Appeal filed by the appellant under Sec.374 Cr.P.C. is hereby allowed.
Judgment of conviction and sentence passed by XXV Addl.CMM, Bengaluru in CC.No:16604/2012 dated: 19.3.2015 is hereby set aside.
Accused is hereby acquitted. Further accused is directed to execute personal bond for Rs.50,000/- along with a surety for the likesum as required under Sec.437 A of Cr.P.C.
Send LCR along with the copy of this order forthwith to the trial court.
LXVI Addl.CC & SJ, Bangalore.18 Crl.A.No.576/2015
18.2.2016:
Orders-
Heard learned counsel for the appellant. Learned advocate for appellant filed an application under Sec.362 of Cr.P.C. submitting that offence under Sec.138 is summons case, hence, Sec.437-A will not apply to summons cases. On facts and circumstances of the case application filed under Sec.362 Cr.P.C. is hereby allowed. In operative portion the order of this court directing accused to execute bond as required under Sec.437A of Cr.P.C. is hereby deleted.
LXVI Addl.CC & SJ, Bangalore.