Madras High Court
N.Elangovan vs C.Ganesan on 10 October, 2014
Author: M.Venugopal
Bench: M.Venugopal
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED:10.10.2014
CORAM
THE HONOURABLE MR. JUSTICE M.VENUGOPAL
Crl.A.No.964 of 2006
N.Elangovan ... Appellant / Complainant
Vs.
C.Ganesan ... Respondent / Accused
PRAYER: Criminal Appeal is filed under Section 378 of the Code of Criminal Procedure, to set aside the order of acquittal passed by the Learned IX Metropolitan Magistrate, Saidapet, Chennai, in C.C.No.1273, dated 02.08.2006.
For Appellant : Mr.R.Karthikeyan
For Respondent : Mr.K.Sukumaran
Date of Reserving Judgment : 23.09.2014
Judgment Reported Date : .09.2014
JUDGMENT
The Appellant / Complainant has focussed the present Criminal Appeal before this Court, as against the Judgment of acquittal, dated 02.08.2006 in C.C.No.1273 of 2003, passed by the Learned IX Metropolitan Magistrate, Saidapet, Chennai.
2. The Learned IX Metropolitan Magistrate, Saidapet, Chennai, while passing the impugned Judgment in C.C.No.1273 of 2003, dated 02.08.2006 had interalia observed 'that the Appellant / Complainant in his written complaint, argument, evidence and in notice had stated that the Respondent / Accused issued a Cheque in his favour based on private money transaction, since it transpires that Ex.P1 Cheque was issued in favour of Partnership Firm of 'Sri Karpaga Vinayagar Jewellery' and also that the Appellant / Complainant in para 3 of his complaint had admitted that the Respondent / Accused was the partner in the 'Sri Karpaga Vinayagar Jewellery' Partnership Firm and in that case, other partners were not shown as Accused and also that in the aforesaid case, the Appellant / Complainant had not arrayed 'Sri Karpaga Vinayagar Jewellery' as first Accused and although presently 'Sri Karpaga Vinayagar Jewellery' was not in existence, in regard to this there was no pleading in the complaint by the Appellant and as per Section 141(1)(2) of the Negotiable Instruments Act, the Appellant / Complainant had filed the present case only against the Respondent / Accused and as such, the case filed by the Appellant / Complainant is not maintainable and resultantly held that the Appellant / Complainant had not proved the case beyond reasonable doubts to the effect that the Respondent / Accused was guilty under Section 138 of Negotiable Instruments Act and thereby granted the benefit of doubt in favour of the Respondent / Accused and consequently, he was found not guilty and acquitted him under Section 255(1) of Cr.P.C.'
3. According to the Learned Counsel for the Appellant / Complainant, the Judgment of the trial Court in C.C.No.1273 of 2003 is not only against the probability of the case but the same is also devoid of merits.
4. The Learned Counsel for the Appellant / Complainant urges before this Court that the trial Court had failed to appreciate that the Respondent / Accused had not discharged the presumption under the Negotiable Instruments Act, 1881.
5. Advancing his arguments, the Learned Counsel for the Appellant / Complainant submits that the trial Court had not taken into account of an important fact that the ingredients of the offences under the Negotiable Instruments Act have been attracted clearly in the present case and resultantly committed an error in acquitting the Respondent / Accused.
6. Expatiating his contention, the Learned Counsel for the Appellant proceeds to take a plea that the Respondent / Accused had not led any rebuttal evidence and in such circumstances, the trial Court ought not to have acquitted the Respondent / Accused.
7. The Learned Counsel for the Appellant strenuously submits that a Company need not be prosecuted while prosecuting a person in charge of the Company and in this regard he relies on the decision of Hon'ble Supreme Court, Sheoratan Agarwal and Anr v State of Madhya Pradesh reported in AIR 1984 SC 1824.
8. That apart, the Learned Counsel for the Appellant proceeds to take a stand that in the instant case, the Respondent / Accused was prosecuted as partner of the Company and indeed he had not adduced any rebuttal evidence to show that he was not a partner in the said Company and viewed in that context the Judgment of acquittal passed by the trial Court is clearly unsustainable in the eye of Law.
9. The Learned Counsel for the Appellant submits that the trial Court should have seen that the partners of the firm can be prosecuted without prosecuting the Firm and as such, the 'Judgment of Acquittal' passed by the trial Court needs to be set aside by this Court to prevent an aberration of justice.
10. The Learned Counsel for the Appellant in support of the contention that a Firm need not be included as an Accused in a complaint under Section 138 of Negotiable Instruments Act, relies on the decision of Saravanan v G.Sampath reported in (1999 CRI.L.J 934) at special page 935 wherein, in paragraph 10, it is observed and held as follows:-
"10. On going through the evidence of witnesses, it is clear that the petitioner purchased silk on credit basis and issued cheques towards the discharge of his liability to the complainant. The learned counsel would point out that in the cheques the petitioner signed only as a partner and that therefore, it must be taken to mean that he issued the Cheques only on behalf of the firm. This argument does not appeal to me, since there is no material to show that the firm purchased silk from the complainant on credit basis. Moreover, it is pointed out by the lower appellate court that the counsel for the petitioner stated before the court that 'V.S. Silk Centre' in which the petitioner is alleged to be a partner, was not a registered one. Whatever it is unless it is established that the firm alone is liable to discharge the liability, the complainant cannot be compelled to add the firm as an accused."
11. The Learned counsel for the Appellant cites the decision of the Hon'ble Supreme Court in R.Rajagopal v S.S.Venkat reported in (2001) 10 SCC 91 wherein, it is observed and held as under:-
"2. The only ground on which the complaint filed by the petitioner against the respondent for the offence under Section 138 of. the Negotiable Instruments Act has been quashed by the High Court is that the Company (the partnership firm in this case) on whose behalf the cheque was issued was not made an accused in the complaint. Respondent who is the partner has been made an accused.
3. The aforesaid stand of the High Court cannot now be sustained in view of the pronouncement of law on the subject in Anil Hada v. India Acrylic Limited
4. Learned Counsel for the respondent then submitted that there are other contentions which respondent has to raise as against the prosecution. We are not disposed to deal with all those contentions, for, it is open to the respondent to raise such contentions in the trial Court."
12. The Learned counsel for the Appellant invites the attention of this Court to the decision of the Hon'ble Supreme Court in T.Stanes & Co.Ltd v A.Jaffarullah reported in (2001) 10 SCC 78 wherein it is held as follows:-
"The Supreme Court in Anil Hada case held that even if the company is not prosecuted for one of the other reason, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in section 141 of the Act. In this view of the matter, the impugned order passed by the High Court cannot be sustained and has to be set aside. "
13. Conversely, it is the submission of the Learned counsel for the Respondent / Accused that the trial Court on an overall appreciation of entire oral and documentary evidence had come to a resultant conclusion that the Appellant / Complainant had not shown 'Sri Karpaga Vinayagar Jewellery' as first Accused in the complaint and further as regards the same had not pleaded in his complaint and only as against the Respondent / Accused the Appellant / Complainant had filed the case and as such, the case filed by the Appellant / Complainant was not maintainable and that apart, the Appellant / Complainant had not established the case against the Respondent / Accused under Section 138 of Negotiable Instruments Act beyond reasonable doubts and thereby acquitted him, which need not be set aside by this Court sitting in appellate Jurisdiction.
14. The Learned counsel for the Respondent seeks in aid of the decision of the Hon'ble Supreme Court in Aneeta Hada v Godfather Travels and Tours Private Limited reported in (2012) 5 SCC 661 at special page 662 and 663 whereby and wherein it is observed and held as follows:-
"Section 141 uses the term "person" and refers it to a company. The company is a juristic person. The concept of corporate criminal liability is attracted to a corporation and company and it is so luminescent from the language employed under Section 141 of the Act. The present enactment is one where the company itself and certain categories of officers in certain circumstances are deemed to be guilty of the offence.
The company can have criminal liability fastened on it, and if a group of persons that guide the business of the companies have the criminal intent, that would be imputed to the body corporate. Section 141 of the Act clearly stipulates that when a person which is a company commits an offence, then certain categories of persons in charge as well as the company would be deemed to be liable for the offences under Section 138. Thus, the statutory intendment is absolutely plain. The provision makes the functionaries and the companies to be liable and that is by deeming fiction. A deeming fiction has its own signification.
It is the bounden duty of the court to ascertain for what purpose the legal fiction has been created. It is also the duty of the court to imagine the fiction with all real consequences and instances unless prohibited from doing so. That apart, the use of the term "deemed" (used in the present case in Section 141) has to be read in its context and further, the fullest logical purpose and import are to be understood. It is because in modern legislation, the term "deemed" has been used for manifold purposes. The object of the legislature has tobe kept in mind.
The word "deemed" used in Section 141 of the Act applies to the company and the persons responsible for the acts of the company. It crystallises the corporate criminal liability and vicarious liability of a person who is in charge of the company. The criminal liability on account of dishonour of cheque primarily falls on the drawer company and is extended to the officers of the company and as there is a specific provision extending the liability to the officers, the conditions incorporated in Section 141 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."
15. For a fuller and better appreciation of the merits of the controversies between the respective parties, at this stage, this Court makes an useful reference to the evidence of P.Ws. 1 to 3, in the interest of justice.
16. It is the evidence of P.W.1 (Appellant / Complainant) that the Respondent / Accused had worked with him for 20 years and that 20 years before the Respondent / Accused while working at Rani Madras at Velachery, he was running a Finance Company and that when the Respondent / Accused was so working, he had financial dealings like obtaining money from him and paying it back and latter he started a Jewellery Shop and at that time of opening of Jewellery shop the Respondent / Accused asked for money from him, since he require the same and that he (Appellant / Complainant) along with his friends gave a loan of Rupees six lakhs to him and since the Respondent / Accused was a close friend to him he stood in forefront and obtained the loan in question and further the Respondent / Accused had not paid the loan amount and he demanded money by compelling him to pay the same.
17. It is the further evidence of P.W.1 that the Respondent / Accused issued Ex.P1 Cheque, dated 09.12.2002 drawn on Indian Overseas Bank, Velachery Branch for Rupees six lakhs and he deposited the said cheque at UTI Bank, Mylapore Branch on 27.12.2002 and the said cheque was returned based on the reason 'for want of sufficient funds' and he was informed about the return of Cheque on 03.01.2003 and the Memo was Ex.P2 and the Debit Advice was Ex.P3 and that was issued Ex.P4 Lawyer's Notice, dated 07.01.2003 to the Respondent / Accused and the said notice was sent to the Respondent / Accused village address and also to the Chennai address in two registered tapals and they returned the cover from Tiruvarur address was Ex.P5 and the returned cover sent to Chennai address with an endorsement of 'refused to receive the same' was Ex.P6 and subsequently, till date, since the Respondent / Accused had not paid either the money or given any reply, he had filed the case for appropriate action.
18. P.W.1 in his cross-examination had deposed that in Ex.P:7 (Respondent's Statement of Account) the Respondent / Accused Ganesan's name was not there and it was in the name of 'Sri Karpaga Vinayagar Jewellery' and further stated that he does not know as to whether the Respondent / Accused had issued the Cheque affixing his signature in the capacity as partner of the partnership Firm.
19. P.W.2 (Assistant Manager of IOB, Velacherry) in his evidence had stated that Ex.P1 Cheque was issued by their Bank to and in favour of the Respondent / Accused and the said Cheque was received by their Bank for encashment on 31.12.2002 and that the said cheque was returned by the Bank owing to insufficiency of funds and that the cheque was issued for rupees six lakhs and further that on the date when cheque was returned by the Bank, in Respondent / Accused Bank account there was only a balance sum Rs.8.52 and the said cheque was returned for the reason that there was no sufficient funds and Ex.P7 was the Bank Account Statement and Ex.P8 (Cheque Returned Register) was the xerox copies of the documents maintained for the purpose of returned cheque.
20. It is to be borne in mind that the Appellant / Complainant in his complaint in C.C.No.1273 of 2003 (filed under Section 138 of Negotiable Instruments Act) in paragraphs 3 and 4 had stated as under :-
" That the accused is one of the partners of a Jewellery shop under the name and style of "Sri Karpaga Vinayagar Jewellery'. The complainant states that the accused being a friend of the complainant, approached the complainant in the month of January 2002 for sanction of hand loan for a sum of Rs.6,00,000/- to improve his business in jewellery. The complainant states that accordingly, the complainant in order to help the accused to develop his business, arranged the said sum of Rs.6,00,000/- from his friends and handed over the same to the accused on 10.1.2002.
That the complainant states that he was waiting all along patiently for the repayment of the said sum of Rs.6,00,000/- as the complainant was expecting that the accused would repay the said amount early. But the accused attitude towards the complainant was not satisfactory and hence, the complainant insisted for repayment since the complainant has to clear the loans borrowed from his friends as stated above."
21. Further, the Appellant / Complainant in his complaint in paragraph 8 had also stated that the registered notice sent through his Lawyer to the Respondent / Accused was managed to be returned on 13.01.2003 and the copy of the said notice sent to the Respondent / Accused Madras address also was managed to be returned and hence it was presumed to be delivered and contents of the notice also presumed to be known.
22. It may not be out of place by this Court to relevantly point out that in Ex.P4 Lawyer's Notice, dated 07.01.2013, issued on behalf of the Appellant / Complainant addressed to the Respondent / Accused to the addresses at Tiruvarur and Kilpauk, Chennai-10. It was mentioned that the Respondent / Accused approached the Appellant / Complainant in the month of January 2002 for sanction of hand loan for a sum of Rs.6,00,000/- to improve his business in Jewellery and under the Appellant / Complainant in order to help the Respondent / Accused to develop the business collected the said sum from his friends and handed over the same on 10.01.2002 etc.,
23. A perusal of Ex.P6 Registered Post Returned Cover addressed to the Respondent / Accused shows that it was refused to be received at Kilpauk, Chennai 10 address and there was an endorsement made to that effect by the concerned postal authority.
24. A perusal of Ex.P5 Registered Post returned cover shows that it was not received by the Respondent/Accused at Tiruvarur Address and was redirected to the address of the Appellant / Complainant Lawyer at Chennai-42
25. It is to be pointed out that a cheque in whose name it has been cut will be the 'Holder for Value in Due Course'. But to attract prosecution under Section 138 of Negotiable Instruments Act, it was necessary that cheque should have been issued in respect of either past or current existing Debt or other Legal Liability. As a matter of fact, every Debt or Liability upon which cheque was issued was not enforceable, as per the decision J.Daniel v State of Kerala (2006) BC 273 (Ker). Further, only claim arising out of Negotiable Instruments Act, 1991, which constitutes an offence can be looked into by a Court of Law. In fact, an agreement forbidden by Law or opposed to law is not enforceable, as opined by this Court.
26. When the drawer of the cheque who falls within the ambit of Section 138 of Negotiable Instruments Act is a Homo-Sapien or a Body corporate or even firm prosecution proceedings can be initiated against such drawer. In this regard, the phrase, 'as well as' used in Sub-section (1) of Section 141 of Negotiable Instruments Act gains significance. The said phrase would embroil the persons mentioned in the first category within the tentacies of offence on par with offending company. Likewise, the words, ' shall also' in Sub-section 2 are capable of bringing the 3rd category of individuals additionally within the purview of an offence on an equal par.
27. One cannot brush aside a vital fact that the effect of reading Section 141 of Negotiable Instruments Act is that when the Company is Drawer of the cheque such company is the principal offender under Section 138 of Negotiable Instruments Act and the remaining individuals are made offenders by means of legal fiction created by the Legislature as per Section. Therefore, the real offence ought to have been committed by the Company, and then only the other two categories of persons can also become liable for the offence.
28. At this juncture, this Court significantly points out that the settled position of law is that the act of the partners of the firm can well be construed as an act on behalf of all the partners if the circumstances warrants such a conclusion as per the decision Structee Mech India v Bharat Kumar Pahlajrai and Others reported in AIR 1982 Mad 51 at special page 55. Also, that the Firm is not presumed, conversely, to be an agent of the individual partner, in the considered opinion of this Court. Every partner is in contemplation of the law the general and accredited agent of the partnership, or as it is some times expressed each partner is praepositus Negotiis Societaties, and may resultantly bind all the other partners by his acts in all matters which are within the ambit and objects of the partnership. The usual authority of a partner in a trading partnership also enables him to receive, and give receipts for 'Debts', due to the Firm, employ staff members for the Firm and retain an Advocate to conduct proceedings for recovering 'Debts' due to the Firm. Although a partner may do an act on behalf of the Firm, which he is not authorised to do it is always open to the other partners to ratify his act. But they should ratify the entire transaction or disclaim the old transaction and cannot ratify a part of the transaction, which best serves their interests and repudiate the remainder.
29. As per Section 25 of the Indian Partnership Act, 1932 every partner is liable, jointly with all other partners and also severally for all acts of the Firm done while is a partner. Admittedly, a Firm is not a legal entity. It is only a collective or compendious name for all the partners, as opined by this Court. To put it differently, a Firm does not have any existence away from its partners. Each partner shall be liable as if the 'Debt" of the firm has been incurred on its personal liability. At this stage, this Court recall and recollect the decision of the Hon'ble Supreme Court in Manoben Ketanbhai Sha v State of Gujarat reported in (2004) 7 SCC 15 (arising under Section 138 of Negotiable Instruments Act) wherein it is held that the primary responsibility is on the Complainant to make necessary averments in the complaint so as to make an Accused vicariously liable for saddling the criminal liability, there is no assumption or presumption that every partner knows about the transaction. The obligation of the Respondent / Accused that at the time of the offence was committed he was not incharge and was not responsible to the Firm for the conduct of the business of the Firm wold arise only when firstly the Appellant / Complainant make proper and necessary averments in the complaint and establishes that fact.
30. It is to be pointed out that in trading firms every partner has an implied power to bind the Firm, if there is no agreement to the contrary. However, a non-trading Firm is not bound, unless the issue of Negotiable Instruments by one partner is shown to be necessary or usual in the particular business (vide Lindley on Partnership, 15th end. pp 296-98.
31. As a matter of fact, the mere writing or filing of an acknowledge of the debt by one partner does not necessarily of itself bind its co-partner unless he had Authority, express or imply to do so. Furthermore, the proof of authority from other partner is quite essential and necessary and cannot be presumed. Also that after dissolution, however, express authority must be proved. A partner will have no imply authority to bind the firm unless it can be shown that giving of guarantees is necessary for carrying on the business of the firm in ordinary fashion. When an Negotiable Instrument is regularly drawn by a partner in a trading Firm in a transaction ancillary to form business another partner is not less liable because his name does not appear on the face of the instrument. A specific conferment of power to contract 'Debt' on a partner in a trading form is unnecessary, since every partner is an agent of the Firm for the purpose of its business, where the partnership agreement spoke of raising of loan by the firm, then the managing partner have every rights to borrow of money for the purpose of the Firm. However, a Firm will be bound under the Negotiable Instruments Act only a partner of 'acts' in the name of the Firm. It is essential that Negotiable Instruments must in order to bind the firm be made in the name of the firm as per decision M M Abbas Brothers and Others v Chetandas Fatehchans and Another reported in AIR 1979 Mad 272, at pages 275 and 276 where Negotiable Instruments has been drawn by a partner in his own name, other partners are not liable on the Instruments in the absence of evidence that it was made for and on behalf of the firm, as per decision Sitaram Krishna v Chimandas (1928) 52 Bom 640. A partner cannot without the consent and knowledge of other partner enter into a contract with itself so as to bind the firm as per the decision Sunderdas v Liberty Pictures reported in AIR 1956 Bom 618.
32. It is to be remembered that Section 24 of the Indian Partnership Act, 1932 is based on the principle that as a partner stand as an agent in relation to the firm, a notice to the 'Agent' amounts to the principal and vice versa. As an ordinary rule, notice to a principal is notice to all its agents and notice to an Agent of matters connected with the 'Agency' is notice to his 'Principal'.
33.It is to be pointed out that Section 59 of the Indian Partnership Act, 1932 speak of Registration of a Firm. In fact, the Registration of the Firm takes place only when the necessary entry is made in the Register of Firms under Section 59 of the Act, by the Registrar. Section 63 of the Act refers to recording changes in and dissolution of a Firm. Indeed, Section 61 of the Act speaks 'Noting of closing and opening of branches'. Once there is registration under the Act, it continues so cancelled in regard to that Law as per decision Girdharman Kapur Chand v Dev Raj Madan Gopal (AIR 1963 SC 1587).
34. As far as the present case is concerned, Ex.P7 IOB, Velacherry, Chennai-42 Statement of Account is in the name of 'Sri Karpaga Vinayagar Jewellery'. It is the evidence of P.W.1 ( Appellant / Complainant in cross examination) that out of six lakhs loan advanced by him to the Respondent / Accused, Rs.4,00,000/- belonged to him and Rs.1.25,000/- belonged to Somasundaram and a sum of Rs.75,000/- belonged to Niyamathulla and further that the amount mentioned in the cheque for the outstanding amount paid to him. Also that P.W.1 in his evidence had stated that he does not know whether the Respondent / Accused had affixed his signature in the cheque and issued the same in the capacity as partner of the partnership firm. Further, a perusal of the complaint in C.C.No.1273 of 2003 on the file of the trial Court shows that the Appellant / Complainant had arrayed the Respondent / Accused C.Ganesan in his individual name. In the cause title of C.C.No.1273 of 2003 on the file of trial Court the Respondent / Accused was not shown as partner of the 'Sri Karpaga Vinayagar Jewellery' . Also that the said Jewellery Firm was not arrayed as the first Accused viz., as Principal offender under Section 138 of Negotiable Instruments Act.
35. Apart from the above, it is latently and patently quite clear from the contents of para 3 of of the complaint in C.C.No.1273 of 2003 filed by the Appellant / Complainant that the Appellant / Complainant had simply stated that the Respondent / Accused 'being his friend approached in the month of January 2002 for sanction of hand loan for a sum of rupees six lakhs to improve his business in jewellery and further only to help the Respondent / Accused to develop his business, he arranged the said sum of rupees six lakhs from his friends and handed over the same to him on 10.01.2002. Therefore, from the aforesaid averments it is crystal clear that the Appellant / Complainant had lent the sum of rupees six lakhs in his private money transaction with the Respondent / Accused and in view of the fact that the Respondent / Accused was admittedly a partner in the 'Sri Karpaga Vinayagar Jewellery' partnership firm, as stated in paragraph 3 of the complaint in C.C.No.1273 of 2003 on the file of trial Court and also this Court taking note of the fact that the said Jewellery firm was not shown as partner along with other partners, if any, this Court is of the considered view that the Appellant / Complainant had only filed the complaint in C.C.No.1273 of 2003 on the file of the trial Court only against the Respondent / Accused in his individual capacity and as such, in the absence of principal offender viz., 'Sri Karpaga Vinayagar Jewellery' Firm was not shown as one of the Accused.
36. To put it precisely, without filing a complaint against the partnership firm, filing a complaint against the Respondent / Accused in his individual capacity is per se not maintainable in the eye of Law, as opined by this Court. Ordinarily, a complaint based on bald / vague averments can only be construed to be a case of utilising the process of Court in an otiose fashion. Also that, in the instant case, though Ex.P1 Cheque appears in the name of the Respondent / Accused as partner for 'Sri Karpaga Vinayagar Jewellery' yet the principal offender viz., Jewellery partnership firm was not arrayed as the principal Accused along with other Partners / Accused, if any. Only when the 'Sri Karpaga Vinayagar Jewellery' (Partnership Firm) was shown to have committed an offence under Section 138 of Negotiable Instruments Act, 1881, the Respondent / Accused can be roped in as an Accused in the capacity as partner of the said Jewellery Firm and then only he along with other partners, if any, can be liable for the dishonour of Ex.P1 Cheque in issue. Looking at from any angle, there are no tangible reasons advanced on behalf of the Appellant / Complainant before this Court so as to enable it to reverse the Judgment of acquittal passed by the trial Court in C.C.No.1273 of 2003. Consequently, the Criminal Appeal fails.
37. In the result, the Criminal Appeal is dismissed, for the reasons ascribed by this Court.
10.10.2014 Index : Yes Internet : Yes MPK To The IX Metropolitan Magistrate, Saidapet, Chennai, M.VENUGOPAL, J.
MPK Judgment made in Crl.A.No.964 of 2006 10.10.2014