Bangalore District Court
Mr. Sanjay Sahni vs S/O Late Sh. N.N. Sahni on 10 February, 2021
IN THE COURT OF THE LXXII ADDL. CITY CIVIL
& SESSIONS JUDGE AT MAYO HALL
BENGALURU, (CCH73)
Present:
Sri.AbdulRahiman. A. Nandgadi,
B.Com, LL.B., (Spl.,)
LXXII Addl. City Civil & Sessions Judge, Bengaluru.
Dated this the 10th day of February, 2021.
Crl. Appeal. No.25057/2020
Appellant/ Mr. Sanjay Sahni,
Accused: S/o Late Sh. N.N. Sahni,
R/at No.B457, Second Floor,
New Friends Colony,
NEW DELHI110025.
[By Sri. Balaji RaghunathanAdvocate]
V/s
Respondents/ 1. Arvind Lifestyle Brands Ltd.,
Complainants: A Registered Company,
At: Du Parc, Trinity,
8th Floor, 17, M.G. Road,
Bengaluru560 001.
Represented by its Authorized
Signatory:
Mr. Anupam Pillai.
2. M/s. JDS Apparels Pvt. Ltd.
A Company under Liquidation
Through Liquidator,
2 Crl.Appeal.No.25057/2020
appointed by NCLT, Delhi,
Sh. S.K. Mathur,
101, 1st Floor,
Plot No.6, Pocket7,
Benhof Plaza, Sector12,
Dwarka,
New Delhi 110 075.
[By Mrs.Sahana DevanathanAdvocate
R1]
[By Sri. Hanumantha Reddy. G
AdvocateR2]
JUDGMENT
This Appeal is preferred by the Appellant U/Sec. 374(3) of Cr.P.C, being aggrieved by the Judgment of conviction passed by the XVII Addl. Judge, Court of Small Causes & ACMM, Bangalore in CC.No.55479 of 2017, dtd.20.01.2020, convicting the Appellant for the offence punishable U/Sec. 138 of NI Act, thereby sentencing the Accused persons to pay fine of Rs.2,00,00,000/. Indefault to pay the fine, the Accused No.2/ the present Appellant shall undergo Simple Imprisonment for a period of one year. The fine amount shall be recovered from Accused No.1 and Accused No.2 is liable to comply the order of sentence including the payment of fine.
3 Crl.Appeal.No.25057/2020Further directed to pay an amount of Rs.1,99,90,000/, to the Complainant, as compensation U/Sec. 357(1)(b) of Cr.P.C., out of the fine amount.
2. The Brief facts leading to filing of the present appeal are:
The present Respondent No.1 filed a Complaint U/Sec. 200 of Cr.P.C. against the present Appellant and M/s. JDS Apparels Pvt. Ltd., alleging that, the Accused No.1/ Respondent No.2 in the course of its business entered into various agreements titled as "Memorandum of Understanding" (in short henceforth referred as MOU) for sale and permitting the Respondent No.2 to resale the same as a retailer, during the period commencing from 01.01.2009 to 01.11.2015. Under the said MOUs the Respondent No.1 supplied and sold the goods to the Respondent No.2, which the Respondent No.2 was required to pay INR 1,61,77,043.54ps, over a period of time.
Due to nonpayment of the said dues by the Respondent No.2, the accounts were finalized and a 4 Crl.Appeal.No.25057/2020 total sum due from Respondent No.2 was determined as INR 1,61,77,043.54ps.
The Respondent No.2 had issued eight Cheques which were signed by its Directorthe present Appellant for the sum of Rs.20,00,000/each bearing Cheque Nos.827080, 827081, 8270872, 827084, 827085, 827086, 827087 and 827088, all dated. 29.11.2016, totally amounting to INR.1,60,00,000/. The said Cheques were presented for there encashment, but the same have returned unencashed with the endorsements "Account Blocked". The Complainant company has issued notice to the Accused No.1 company calling upon to repay the amount covered under the said Cheque. The Accused No.1 has replied the said notice taking untenable and false contentions.
On completion of the stipulated period required under the statute, the Respondent was constrained to file the present Complaint against the Accused for the offence punishable U/Sec.138 of N.I.Act.
5 Crl.Appeal.No.25057/20203. On being satisfied, the Trial Court has issued summons U/Sec.204 of Cr.P.C., to the Accused on 15.07.2017. The Appellant appeared before the Trial Court on 26.03.2018 and he was enlarged on bail. Substance of Accusation of the Appellant/Accused was recorded by the Trial Court on 10.04.2018, wherein the Appellant pleads not guilty and claims to be tried.
4. The Complainant inorder to prove its case got examined its Authorized Representative Anupam Pillaia as PW.1 and got marked 29documents as Ex.P.1 to Ex.P.29. PW1 was cross examined on behalf of the Appellant/ Accused on 13.11.2018 and 27.11.2018.
Statement of the Appellant/ Accused was recorded U/Sec. 313 of Cr.P.C., on 10.01.2019.
Appellant got himself examined as DW.1 on 21.02.2019 and got marked fivedocuments as Ex.D.1 to Ex.D.5. DW.1 was cross examined on behalf of the Complainant/Respondent No.1 on 02.04.2019 and 06.06.2019.
6 Crl.Appeal.No.25057/2020The Complainant company in its rebuttal evidence got examined its another authorized representative Mr. Sreejith M. as PW.2 and got marked twodocuments as Ex.P.30 and Ex.P.31. PW.2 was cross examined on behalf of the Appellant/Accused on 05.09.2019 and 16.09.2019.
On hearing both the sides, the Trial Court has passed the Judgment convicting the Appellant /Accused and the present Respondent No.2 for the offence punishable U/Sec. 138 of N.I. Act on 20.01.2020. Hence, the Appellant is before this Court, being aggrieved by the said Judgment of conviction.
5. On preferring the appeal, this Court has suspended the execution and operation of the judgment, initially for a period of three months on 18.02.2020. Notice of Appeal Memo and I.A.No.1 was issued to the Respondents and TCR were called for. Respondent No.1/Complainant setin its appearance on 10.03.2020. Respondent No.2 setin 7 Crl.Appeal.No.25057/2020 its appearance on 29.09.2020. TCR were secured on 17.08.2020.
Heard the Learned Counsels for the Appellant and the Respondents.
The Learned Counsel for the Respondent No.1 filed an application on 18.12.2020 at I.A.No.2/2020 U/Sec. 391 of Cr.P.C. praying to permit the Respondent No.1 to produce three documents as additional evidence, which was taken on record on 23.12.2020. The Appellant has filed his objections to the said application on 22.12.2020, the same was taken on record. Heard the Learned Counsel for the Respondent No.1 and the Appellant on I.A.No.2/2020.
The matter was reserved for Judgment, to be pronounced on 27.01.2021. The Learned Counsel for the Respondent filed his Written Arguments alongwith the Memo, in the filing counter on 25.01.2021, the same was taken on record on 27.01.2021, so the judgment could not be pronounced on 27.01.2021. Thereafter, the said matter was adjourned to 29.01.2020, giving an 8 Crl.Appeal.No.25057/2020 opportunity to the Appellant to submit his Written Arguments, at the request of the Learned Counsel for the Appellant. On 29.01.2021, the Learned Counsel for the Appellant filed written synopsis on behalf of the Appellant with a memo, reporting that the said written synopsis to be served to the Learned Counsel for the Respondent No.1 through email. Then again the matter was reserved for Judgment.
6. The Appellant has preferred this appeal on the following grounds:
Grounds of Appeal:
a) The Trial Court has gravelly erred in convicting the Appellant for the offence punishable U/Sec. 138 of N.I. Act, which is manifestly erroneous and opposed to the facts and circumstances of the case;
b) The Trial Court has miserably failed to appreciate the oral and documentary evidence on record, in a proper and perspective manner;
c) The Trial Court has failed to consider that, the Cheques in question were not issued towards payment of the dues, as contended by the Complainant in the Complaint, but the same was issued as security, under the MOUs;9 Crl.Appeal.No.25057/2020
d) The Trial Court has failed to consider that, Accused No.1 company has remained unrepresented, without hearing the Accused No.1, Accused No.1 is being convicted. Thus, grave error is committed by the Trial Court;
e) The Trial Court has failed to consider that, Accused No.2/ the present Appellant cannot be held vicariously liable U/Sec. 141 of the N.I. Act;
f) The Trial Court failed to consider that, the Complaint is not signed by any authorized representative, as recognized under the law, as Anupam Pillai is not authorized by the Complainant company either by way of resolution, or other modes as prescribed in law;
g) The Trial Court has failed to consider that, the Accused No.1 company had transacted with the Delhi Branch of the Complainant company and not with the Bengaluru Branch, filing of the Complaint, is not inaccordance with law;
h) The Trial Court has committed an error in attaching the evidentiary value to the Statement of accounts produced and marked on behalf of the Complainant company at Ex.P.31, in the absence of a Certificate, as required U/Sec. 65B of the Indian Evidence Act;10 Crl.Appeal.No.25057/2020
i) The Trial Court has failed to consider that, the present Appellant was not the incharge of the company to hold him vicariously liable;
j) The Trial Court has failed to consider that, the Accused No.1/ Respondent No.2 company is not due to pay any amount to the Complainant company, towards the transaction inbetween them;
k) The Trial Court has wrongly passed an order on the application filed by the present Appellant U/Sec. 259 of CrPC, praying to conduct the case as a warrant trial;
l) Though the Trial Court has made certain observations in its order, while disposing an application U/Sec. 14 (i) (4) and 238 of Insolvency and Bankruptcy Code, but has failed to convict the Accused No.1/Respondent No.2 company and the Accused No.2/Appellant, fixing the liability to pay the fine, else the Accused No.2/ Appellant shall undergo imprisonment indefault of such payment;
m) The Trial Court has failed to consider that, the Complainant has not produced any documents, inorder to fulfill the ingredient of Sec. 138 of N.I. Act, to say that there is a legally recoverable debt towards issuance of the Cheques, inquestion;
n) The Trial Court has not properly appreciated and considered the principles of law laid down in the citations relied before it;11 Crl.Appeal.No.25057/2020
o) The Trial Court has failed to convict the Appellant on the basis of assumptions and presumptions, which are not sustainable under the law;
p) The Trial Court has wrongly arrived at a conclusion that, the Complainant has discharged its initial burden to avail the benefit of presumption, but the Accused has not rebutted the said presumption;
Hence, prayed to allow the said appeal.
7. Following points arise for my consideration;
1. Whether the Trial Court is right in holding that the Respondent/ Complainant is initially entitle for the benefit of presumption, available U/Sec. 139 of N.I. Act?
2. Whether the Appellant/ Accused shows that, either the person filing the complaint before the Trial Court is having no authority, to file the Complaint or to depose on behalf of the company, as well as PW.2 had no authority to depose, on behalf of the Respondent No.1/ Complainant Company?
2(A) Whether the Respondent No.1/ Complainant company is required to 12 Crl.Appeal.No.25057/2020 be permitted to lead additional evidence by permitting it to produce three documents, on allowing I.A.No.2/2020, filed by it U/Sec. 391 of CrPC?
3) Whether the Appellant shows that Accused No.1/ present Respondent No.2 has remained unrepresented before the Trial Court?
4. Whether the Appellant shows that, Delhi Branch of the Complainant company was dealing with the Accused No.1 and not the Bengaluru Branch, so the Complaint filed by the Bengaluru Branch is not maintainable?
5. Whether the Appellant/ Accused No.2 shows that, Statement of Account marked at Ex.P.31 is inadmissible in evidence, in the absence of Certificate U/Sec. 65B of I.E.Act?
6. Whether the Appellant/ Accused No.2 proves on the basis of preponderance of probabilities that the Cheques in question were issued 13 Crl.Appeal.No.25057/2020 to the Complainant company, as security and not towards repayment of any dues?
7. Whether the Appellant/ Accused No.2 can be held vicariously liable U/Sec. 141 of N.I. Act, as held by the Trial Court?
8. Whether the Trial Court is right in holding that the Appellant/ Accused has failed to rebut the presumption available to the Complainant U/Sec.139 of N.I. Act?
9. Whether the Appellant/Accused shows that the Order of Conviction and Sentence recorded by the Trial Court in C.C.No.55479/2017, dtd.20.01.2020, is perverse and deserves to be setaside, thereby calling for the interference of this Court?
10. What Order?
8. My finding on the above points are as under:
Point No.1 : In the Affirmative; Point No 2 : In the Negative;
Point No.2(A) : In the Negative; Point No.3 : In the Negative;14 Crl.Appeal.No.25057/2020
Point No.4 : In the Negative;
Point No.5 : In the Negative;
Point No.6 : In the Negative;
Point No.7 : In the Affirmative; Point No.8: In the Affirmative; Point No.9: In the Negative;
Point No.10: As per final order for the following :
REASONS
9. Point No.1: The rank of the parties will be referred to, as they were before the Trial Court.
On the basis of the preliminary evidence, the Trial Court has issued summons to the Accused persons on 05.06.2017. Perused the said orders. Do not find any error, in it.
10. The Appellant has appeared before the Trial Court on 26.03.2018 and he was enlarged on bail. The Trial Court has recorded Plea/Substance of Accusation of the Accused on 10.04.2018. Carefully gone through it. Do not find any error, in it.
15 Crl.Appeal.No.25057/202011. On careful perusal of the evidence led by the Complainant as well as the Accused, it is the case of the Complainant that, inorder to repay the dues the Accused No.1 Company has issued eight Cheques Ex.P12 to Ex.P19.
Percontra, it is the case of the Appellant/Accused No.2 that, the said eight
ChequesEx.P12 to Ex.P19 were given as security, under MOUsEx.P2 to Ex.P11.
11.01. Coming to ocular evidence, on this point more specifically, examinedinChief of DW.1, Page No.2, Line Nos.1 to 2, which reads as under;
"..... The disputed 8 Cheques were in given undated for Rs.20,00,000/ each, one for each MOU dtd.01.11.2015."
As per this evidence, the Accused No.2/DW.1 admits that, 8 Cheques produced at Ex.P12 to Ex.P19, were given undated for Rs.20,00,000/ each, under each MOU, dtd.01.11.2015, (MOUs are marked as Ex.P2 to Ex.P11).
16 Crl.Appeal.No.25057/2020Further as per the cross examination of DW.1, at Page No.7, Para No.1, Line Nos.1 to 4, which reads as under; "I have signed to Ex.P3 to Ex.P11. Ex.P2 is signed by Naveen Garg. I have signed Ex.P12 to Ex.P19 Cheques. 02942790000024 was the CC Account of the Accused No.1 company."
As per this evidence, Accused No.2/DW.1 admits that, he had signed Ex.P12 to Ex.P19 Cheques and Ex.P3 to Ex.P11 MOUs. CC A/c bearing No.02942790000024 pertains to Accused No.1 company.
It is seen that, Ex.P12 to Ex.P19 Cheques pertained to the said CC A/c bearing No.02942790000024, belonging to the Accused No.1 company.
Further as per the cross examination of DW.1, at Page No.7, Para No.1, Line Nos.17 to 20, which reads as under:
".... Ex.P12 to Ex.P19 Cheques were handedover to the Complainant at the time of Ex.P4 to Ex.P11 MOUs. It is true say that, in Ex.P12 to Ex.P19 the other details were filed and the only dates were kept blank."17 Crl.Appeal.No.25057/2020
As per this evidence, Accused No.2/DW.1 admits that, Ex.P12 to Ex.P19 Cheques were handover to the Complainant company at the time of entering into MOUEx.P4 to Ex.P11. Further the Accused No.2/DW.1 admits that, all the details were filed except the date column of Ex.P12 to Ex.P19 Cheques, were kept blank.
11.02. Thus, as per the documentary evidence produced by the Complainant, as per Ex.P4 to Ex.P19 and on the basis of the admission on the part of the Accused No.2/DW.1, referred to supra, it can be said that the Complainant has initially proved that, the Cheques Ex.P12 Ex.P19 belong to the CC A/c of the Accused No.1 company and signed by the Accused No.2/DW.1/ present Appellant.
And on presenting the said Cheques, the same have returned unencashed, under the memos Ex.P22 to Ex.P27, for which the Complainant company had issued a legal notice, as per Ex.P28, which is replied by the Accused No.1 company as per Ex.P29.
18 Crl.Appeal.No.25057/2020Thus, the above documentary and oral evidence will suffice the Complainant company, to have benefit of presumption available U/Sec.138 and 139 of N.I. Act.
Therefore, Complainant company has shown that, it is initially entitle for the benefit of Presumption, available U/Sec. 139 of N.I. Act. The Trial Court has considered the said aspect. No fault can be attributed on the Trial Court, in this regard. Hence, POINT NO.1 IS ANSWERED IN THE AFFIRMATIVE.
12. POINT Nos.2 and 2(A):
Both these points are taken for joint discussion, as they are interlinked with each other and to avoid repeatition and confusion in the discussion.
12.01. The Appellant disputes the authority of a person who has filed the Complaint on behalf of the Complainant company. So also, the Appellant disputes the authority of PW.1 and PW.2, as they are not having proper authority to depose on behalf of the Complainant company. Neither the person who 19 Crl.Appeal.No.25057/2020 has filed the Complaint nor PW.2 have produced the resolution of the Complainant company authorizing them.
The Learned Counsel for the Appellant has placed his reliance on the below mentioned decisions:
(a) of the Hon'ble Apex Court, in the case of A.C. Narayana V/s State of Maharastra & Another, and Kamalakar V/s M/s. Surana Security Ltd & Another, reported in AIR 2014 SC 613, wherein it is held that;
"The Attorney Holder cannot file a Complaint in his own name, as if, he was the Complainant, but he can initiate criminal proceedings on behalf of his Principal. When the payee is a proprietary concern, the Complaint can be filed (i) by the Proprietor of the Proprietary concern, describing himself as a sole proprietor of the payee firm; (ii) the proprietary concern, describing itself as a sole proprietary concern, represented by its sole proprietor; and (iii) the proprietor or proprietary concern represented by the Attorney Holder under a power of attorney executed by the sole proprietor.20 Crl.Appeal.No.25057/2020
Power of Attorney Holder possessing due knowledge of the transaction can depose and verify the Complaint inorder to prove its contents.
Functions under General Power of Attorney cannot redelegate to another person without specific permission.
12.02. The Learned Counsel for the Respondent No.1/ Complainant company would contend that, Respondent No.1 company is represented through its Authorized representative and the ground of improper authorization is mere technical ground, which should be subservient to add justice.
The Learned Counsel for the Respondent No.1 has placed his reliance on eleven the decisions:
(a) of the Hon'ble Apex Court in the case of Shreenath and other V/s Rajesh and others, reported in (1998) 4 SCC 543, dealing with the objector application U/Or 21 Rule 97 of CPC, it is observed in Para No.3, as under: "3. In interpreting any procedural law, where more than one interpretation is possible, the one 21 Crl.Appeal.No.25057/2020 which curtails procedure without eluding the justice is to be adopted.
The procedural law is always subservient to, and is in a add to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be followed."
(b) of the Hon'ble Apex Court in the case of MMTC Ltd., and another V/s MEDCHL Chemicals and pharma (P) Ltd., and another, reported in (2002) 1 SCC 234; wherein it is held that;
"Any one can set the Criminal law in motion by filing a complaint of facts constituting an offence before a Magistrate entitle to take cognizance. No Court can decline to take cognizance on the sole ground that, the Complainant was not competent to file the complaint. If any special statue prescribes offences and makes any special provision for taking cognizance of such offences under the statued, then the Complainant requesting the Magistrate to take cognizance of the offence must satisfied the eligibility criterion prescribe by the statue. The only eligibility criterion prescribed by Sec 142 of NI Act, is that the Complaint must be by the or holder in due course. This criteria is satisfied as 22 Crl.Appeal.No.25057/2020 soon as the complaint is filed in the name of and on behalf of the Complainant company."
(c) of the Hon'ble Apex Court in the case of United Bank of India V/s Naresh Kumar and other, reported in (1996) 6 SCC 660; wherein it is held that;
"Plaint can be signed and verified by a person duly authorized. Company may expressly authorized of its officers to sign the plaint or it may ratify,expressly or impliedly, the act of signing. Court can render its finding about the ratification on the basis of evidence on record and circumstances, especially conduct of the trail."
(d) of the Hon'ble High Court of Karnataka in the case of C. Prabhu V/s Sangam Corporation (Finance and Investment) Bengaluru, reported in ILR 2002 KAR 2198, wherein it is observed in Para No.7 as under:
"The clearly answer the query and question raised by the Petitioner. It is to be noted that the proceedings in question are under the Negotiable Instruments Act which is a selfcontained special law. As such, the provision of other Acts, like the 23 Crl.Appeal.No.25057/2020 Indian Partnership Act, are not attracted. Even on perusal of the act or even the person should disclose that he is authorised to do so or to produce any authorization at the time of filing of complaint. It is noted that when the Manager has stated that he is the manager of the partnership firm and is authorised to do so at the earliest stage the courts need not doubt his authorization or capacity. If at all the same is required to be considered, it is at the stage while trial is taking place. It is to be seen that the Apex Court as far back as in 1983 in the case of Vishwa Mitter V/s O.P Poddar and Ors., MANU/SC/0378/1983: 1984CriLJ, held that any one can set the criminal law in motion by filing a complaint of the facts constituting an offence before a take cognizance. It has been held that no Court can decline to take cognizance on the sole ground that the Complainant was not competent to file take complaint. It has been held that if any special statue prescribes offence and make any special provision for taking cognizance of such offences under the statute, then the Complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by the statue. In the present case the payee or the holder in due course. This 24 Crl.Appeal.No.25057/2020 criterion is satisfied as the complaint is in the name and on behalf of the Appellant company."
(e) of the Hon'ble High Court Andhrapradesh in the case Waterbase Ltd., V/s Karuturu Ravendra, wherein it is observed in Para No.38, as under: "38. In the instant case, the Complainant who is PW.1, has already noticed, has been associated with the credit transaction of the company. He was the person who have the notice referring to various transactions and he was the person who got the authorization from the Chief Executive of the company. No doubt there is nothing on record to show that the Chief Executive has got authorization to authorize PW.1 to represent the company. I am of the view that going into this question amounts to going into the root of the issue. But from the circumstances, it can safely be inferred that he has the implied authorization to act on behalf of the company and after all the represented the company only to safeguard it interest i.e., his acts are not to the prejudice of the company, but on the contrary they are for the benefit of the company. Mos importantly the Board of the Appellant company never expressly implicitly, 25 Crl.Appeal.No.25057/2020 disrobed PW.1 from the capacity of the Assistant ManagerCredit Control of the company, nor has disowned his acts representing the company. Therefore, a comprehensive look at the whole circumstances would only go to show that PW.1 had definite authorization to represent the company."
(f) of the Hon'ble Apex Court in the case of Vishwa Mitter of Vijay Bharat Segregate Stores V/ O.P Poddar and others, wherein it is observed at Para No.5, as under: "5. It is thus crystal clear that anyone can set the criminal law in motion by filing a Complaint of facts constituting an offence before a Magistrate entitled to take cognizance Under Section 190 and unless any statutory provision prescribes any special qualification or eligibility criteria for putting the criminal law in motion, no Court can decline to take cognizance on the sole ground that the Complainant was not competent to file the Complaint. Section 190 of the Code of Criminal Procedure clearly indicates that the qualification of the Complainant to file a Complaint is not relevant. But where any special statute prescribes offences and makes any special provision for 26 Crl.Appeal.No.25057/2020 taking cognizance of such offence under the statute, the Complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by the statute. Even withregard to offences under the Indian Penal Code, ordinarily anyone can set the criminal law in motion but the various provisions in Chapter XIV of prescribe the qualification of the Complainant which would enable him or her to file a Complaint in respect of specified offences and no Court can take cognizance of such offence unless the Complainant satisfied the eligibility criterion, but in the absence of any such specification, no Court can throwout the complain or decline to take the cognizance on the sole ground that the Complainant was not competent to file the Complaint".
(g) of the Hon'ble Apex Court in the case of Samarth Shipping Company V/d Dolly George, reported in (2002) 9 SCC 455; wherein it is observed that in Para No.3 as under: "3. Having heard both sides we find it difficult to support the orders challenged before us. A Company can file a Complaint only through human agency. The person who presented the Complaint 27 Crl.Appeal.No.25057/2020 on behalf of the Company claimed that he is the authorized representative of the company. Prima facie, the Trial Court should have accepted it at the time when a Complaint was presented. If it is a matter of evidence when the Accused disputed the authority of the said individual to present the Complaint, opportunity should have been given to the Complainant to prove the same, but that opportunity need be given only when the trial commences. The dismissal of the Complaint at the threshold on the premise that the individual has not produced certified copy of the resolution appears to be too hasty an action. We, therefore, set aside the impugned orders and direct the Trial Court to proceed with the trial and dispose it off in accordance with law. Parties are directed to appear before the Trial Court on 31.01.2000".
(i) of the Hon'ble High Court of Andrapradesh, in the case Sagar Cement Pvt. Ltd., V/s P Sreenivas and others, reported in (2002) 9 SCC 455; wherein it is observed that in Para No.12, as under: "In the above circumstances and in view of the case law discussed above, I am of the considered opinion that the 28 Crl.Appeal.No.25057/2020 course of action adopted by the Trial Court in negating the Complaint filed by the Complainant on the ground of legal, infirmity that as no authorized person represented the company, the same is not maintainable, is not supported by any provision of law under Cr.P.C. Therefore, I am of the view that the judgment of the Trial Court does not stand the scrutiny of law and it requires to be set aside, and accordingly, the same is set aside".
(g) of the Hon'ble High Court of Punjab and Haryana in the case of Bedi son's Steels and Wires V/s B.G Brothers, reported in 2002 (2) RCR (Criminal) 45; wherein it is held that:
"Even where prosecution lodged against the proprietorship concern through proprietor, it has to be considered as against the proprietor as the proprietorship concern, itself as no legal entity."
(g) of the Hon'ble High Court of Karnataka in the case of Indian Oil Corporation Ltd., V/s Mukund Construction Company, reported in ILR 2019 Kar 4172; wherein it is observed in Para No.11, as under: 29 Crl.Appeal.No.25057/2020 "11. In the instant case, the Plaintiff may not have produced original P.O.A. of Arun Jyothi who instituted the suit, the P.O.A dtd.17.04.2009 of P. Janakan, Sr. Divisional Manager is marked at Ex.P16. The P.O.A dtd.01.04.2009 of P. Rajendra, General Manager is marked at Ex.P17. The board resolution is marked at Ex.P18 and the Memorandum of Articles of Association is marked at Ex.P19. The Ex.P19 declares that the Board authorizes the Executive Directors and the General Manager to appoint P.O.A to conduct the affairs of the company including filing of the suit. The director (Marketing) has executed Ex.P17 appointing P. Rajendran as P.O.A. with incidental power of delegation and to appoint other executives of the company as P.O.A. The averments in Ex.P17 make extensive reference to filling of the suit and filing of the appeal. The averments categorically suggest ratification of act of filing of suit and the appeal."
(h) of the Hon'ble High Court of Allahabad in the case of Bharat Petroleum Corporation Ltd., V/s Amar Autos and others, reported in (2008) ILR 2 ALL 552; wherein it is observed in Para No.10, as under: 30 Crl.Appeal.No.25057/2020 "10. Upon considering the pros and cons of the matter we are of the view that the learned Judge of the Court below has proceeded in a wrong premises and with hothaste. Accordingly to us, a power of attorney or an affidavit of sch nature is only required to prima facie satisfy the Court that a company or corporation or a body corporate has presumably proceeded with the suit under its seal and signature. It has nothing to do with the registration of the document unless it is compulsorily registrable. Persuasive value of M/s. Nibro Ltd. (supra) cannot pursue us. There is a thinner line in between authorization to sign and verify the pleadings, and to institute a suit on behalf of the corporation, company or a body corporate. Whenever a person is authorized to sign and verify the pleadings other than verification of plaint, Written Statement, memorandum of appeal, etc., it is doing so by filing affidavit in support of such contentions. Therefore, it stands on a better position than ordinary verification. But a person when verifies the plaint, Written Statement or memorandum of appeal, it is a verification simplicitor, meaning thereby that the verification part is also to be evidently proved unlike an affidavit, which itself is an evidence. Hence, authorization to institute a suit 31 Crl.Appeal.No.25057/2020 stands in the lower side than putting signature and verifying a pleading byway of an affidavit. On the other hand, signature and verification of the pleading of a plaint cannot be made for the sake of signature and verification alone but for the purpose of filing of the same before the Court either by him or by his learned advocate. As soon as it is filed, the same will be treated to be institution of such proceeding by the person who has signed and verified. It is automatic. Institution of suit and right to institute the suit are distinct and different. The arguments of Mr. Shashi Nandan restricted only to the first part of Order XXIX, Rule 1 of CPC, but not to the last part. If the suit is proceeded and the evidence is led and if any of the Defendants want to challenge the verification of the plaint, he can call the deponent as witness for the purpose of examination. But Court cannot prevent anyone from instituting a suit when his authority is apparently satisfactory. No body will be prevented enforcing his legal rights. It is a gross mistake on the part of the Court below to construe that the power of attorney should be registered and then only the suit can be instituted by a representative of the company or corporation. Moreover justification of filing the plaint by the authorised 32 Crl.Appeal.No.25057/2020 representative of the corporation or company will be considered from the practical point of view. If the Court below is not happy, it could have called upon the company to file an affidavit of competency, which is desirable under such circumstances, but not out right rejection of the plaint."
12.03. The Learned Counsel for the Appellant would contend that, Mr. Anupam Pillai, who has filed the complaint on behalf of the Complainant company claims to be the authorized signatory, but he has neither produced any authorization letter given by the Complainant company nor any resolution passed by the Complainant company authorizing him to act on behalf of the Complainant company. Further the Learned Counsel for the Appellant drives the attention of this Court to Ex.P1 and would contend that, Ex.P1 is not signed by any director or the person managing the affairs of the Complainant company, authorizing Mr. Anupam Pillai. But it is signed by Mr. S. Kannan, Chief Financial Officer, of the Complainant company, not authorizing Mr. 33 Crl.Appeal.No.25057/2020 Anupam Pillai, but certifying the authorization of Mr. Anupam Pillai.
12.04. On perusal of Ex.P1 it is seen that, Mr. S. Kannan, Chief Financial Officer, has certified the authorization of the authority given to Mr. R Annupam Pillai to sign all Court papers for and on behalf of the company, including Affidavit, Petition, reply, application or any other instruments, paper and writing as may be required from time to time to represent the company in all manners and in all steps as may be considered necessary or appropriate or expedient in the matter pertaining to dishonor of Cheques U/Sec 138 of NI Act, 1881 against M/s JDS Apparels Pvt.Ltd., having its Registered Office, C 156, Sector 63, Noida20130, Uttar Pradesh before any Court at Bangalore, Karnataka and to do all other acts and things incidental thereto.
12.05. The Learned Counsel for the Respondent No.1 filed an application at I.A.No.2/2020 U/Sec. 391 of CrPC praying to permit the Respondent No.1 to produce three documents 34 Crl.Appeal.No.25057/2020 viz., (1) certified true copy of resolution passed by the Board of Directors dtd.18.10.2016; (2) Authorization letter dtd.15.11.2016; and (3) extract of minutes of the Board of Directors dtd.11.12.2020, as additional evidence.
The legal head of the Respondent No.1 has sworn to an affidavit insupport of the said application contending that, Complaint before the Trial Court was filed on behalf of the Respondent No.1 company by Mr. Anupam Pillai, in his capacity as an ExecutiveLegal of the Respondent No.1 company. Mr. Anupam Pillai has also led his evidence on behalf of the Respondent No.1 company on the basis of the authorization letter dtd.09.02.2017. The Respondent No.1 inadvertently did not produced (a) Board resolution passed by the Board of Directors on 18.10.2016; (b) authorization letter dtd.15.11.2016. Nonproduction of these documents is only due to oversight and for bonafide reasons. Further it is contended that, even if it is considered as a defect in initiation of the proceedings before Trial Court, the same can be cured even at a 35 Crl.Appeal.No.25057/2020 later stage and even before this Court. The document proposed to be sought under this application are important and relevant for adjudication of the dispute inbetween the parties. If the Respondent No.1 is permitted to produce the said documents, no loss or prejudice will be caused to the Appellant. On the other hand, the Respondent No.1 will be put to heavy and irreparable loss.
12.06. The Appellant has filed his objections to the said application contending that, the Respondent No.1 cannot be permitted to fillup the lacuna, at this belated stage i.e., after conclusion of the arguments in the appeal by the Respondent No.1. If really, the Respondent No.1 was serious, then it could have produce the said documents in the trial itself. More than fair opportunity was granted to the Respondent No.1, before the Trial Court. The documents sought to be produced by the Respondent are not the public documents and cannot be permitted to be simply placed on record. Hence, prayed to reject the said application.
36 Crl.Appeal.No.25057/202012.07. Heard the arguments of the Learned Counsel for the Respondent No.1 and the Appellant on I.A.No.2/2020.
The Learned Counsel for the Respondent No.1 would contend that, this Court being an appellate Court has having an ample jurisdiction to consider the said application and to permit the Respondent No.1 to produce the documents sought to be produced under I.A.No.2/2020. Learned Counsel for the Respondent No.1 has placed his reliance on six decisions viz.,
(a) of the Hon'ble Apex Court, in the case of Brigadier Sukhjeet Singh (Retired) V/s State of Uttar Pradesh & Others, reported in (2019) 16 SCC 712, wherein it is held that:
"Additional evidence is to be permitted, if the Appellate Court thinks that such additional evidence is necessary for deciding the appeal. Additional evidence must be necessary not because it would be impossible to pronounce the judgment, but because there would be failure of justice, without it. Power to take additional evidence U/Sec. 391 CrPC is with an 37 Crl.Appeal.No.25057/2020 object to appropriately decide the appeal by the Appellate Court to secure the hands of justice. The ultimate object of judicial administration is to secure hands of justice.
In a criminal case the appellate Court has to consider as to whether conviction of the Accused is sustainable or the Appellant has made out a case for acquittal. The endeavour of all courts has to be rich to true and justice. However, the Court has to take note off the following cautions; (a) that the additional evidence cannot and ought not to be received in such a way so as to cause any prejudice to the Accused;
(b) It is not a disguise for a retrial or to change the nature of the case against the Accused; and (c) the order must not ordinarily be made if the prosecution has had an fair opportunity and has not availed it.
(b) of the Hon'ble High Court of Himachal Pradesh, in the case of Uttam Traders Ranghri V/s Tuleram, reported in ILR 2018 5 HP 280, wherein it is held that:
"Section 69 (2) of the Partnership Act is applicable only where the Civil rights are invoked and not in the criminal cases. Criminal Complaint filed by a 38 Crl.Appeal.No.25057/2020 partner of a unregistered firm, will not be hit by Sec. 69(2) of the Partnership Act. Nonregistration of the firm has no legal bearing on the criminal case.
Legal enforceable debt or other liability, used in the explanations to sec. 138 of N.I. Act, refers to the enforceability in law of the debt or the liability in question and have no reference to the right of the person enforcing it. If there is no legal impediment for enforceability of debt or other liability in general, disability of a particular individual or entity to enforce such right to recover such debt or liability does not render such debt or liability not legally enforceable debt or liability. The intention of the Legislature is to make nonpayment of amounts of Cheques despite service of notice as per the provisions of the Act an offence only when the Cheque has been issued for payment of a legitimate debt or liability. Amount required to be paid as price of articles or goods is a legitimate debt or liability and therefore it is a legally enforceable debt or liability".
(c) of the Hon'ble Apex Court, in the case of Rambhau & Others V/s State of Maharastra, reported in (2001) 4 SCC 759, wherein it is held that:
39 Crl.Appeal.No.25057/2020"The purpose of introduction of sec, 391 CrPC., in the statute book has been for the purpose of making it available to the Court not to fill up any gap in the prosecution case but to oversee that the concept of justice does not suffer. It is not to fill up the lacuna but to subserve the ends of justice. No set of principles can be set forth for such an exercise of power under Section 391, since the same is dependent upon the fact situation of the matter and having due regard to the concept of fair play and justice, well being of the society. The additional evidence cannot and ought not to be received in such a way so as to cause any prejudice to the Accused. It is not a disguise for a retrial or to change the nature of the case against the Accused".
(d) of the Hon'ble High Court of Delhi, in the case of Rajkumar V/s State, reported in (Crl.M.A. 14076/2012 in Cl.A.582/2012, date of decision: 18.10.2012), wherein it is held in Para No.27 as under:
"Power of the appellate Court, under Section 391 CrPC., is wide and appellate Court can take additional evidence when it considers it necessary, for reasons to be recorded.40 Crl.Appeal.No.25057/2020
The underline principle is that justice should be done. In the present case, additional evidence is not a disguise for retrial and does not result into a change in nature of the case. Evidence was collected, by the prosecution, but for technical and legal reasons the same has to be ignored. The legal principle itself was highly debatable and subject matter of different opinions".
(e) of the Hon'ble Apex Court, in the case of Zahira Habibulla H Sheikh & Others V/s State of Gujarath & Others, reported in (2004) 4 SCC 158, wherein it is observed in Para Nos.47 to 49 as under:
"47. Section 391 of the Code is another salutary provision which clothes the Courts with the power of effectively decide an appeal. Though Section 386 envisages the normal and ordinary manner and method of disposal of an appeal, yet it does not and cannot be said to exhaustively enumerate the modes by which, alone the Court can deal with an appeal. Section 391 is one such exception to the ordinary rule and if the appellate Court considers additional evidence to be necessary, the provisions in Section 386 and Section 391 have to be 41 Crl.Appeal.No.25057/2020 harmoniously considered to enable the appeal to be considered and disposed of also in the light of the additional evidence as well. For this purpose it is open to the appellate Court to call for further evidence before the appeal is disposed of. The appellate Court can direct the taking up of further evidence in support of the prosecution; a fortiori it is open to the Court to direct that the Accused persons may also be given a chance of adducing further evidence. Section 391 is in the nature of an exception to the general rule and the powers under it must also be exercised with great care, specially on behalf of the prosecution lest the admission of additional evidence for the prosecution operates in a manner prejudicial to the defence of the Accused. The primary object of Section 391 is the prevention of guilty man's escape through some careless or ignorant proceedings before a Court or vindication of an innocent person wrongfully Accused. Where the Court through some carelessness or ignorance has omitted to record the circumstances essential to elucidation of truth, the exercise of powers under Section 391 is desirable".
48. The Legislature intent in enacting Section 391 appears to be the empowerment tof the appellate Court to 42 Crl.Appeal.No.25057/2020 see that justice is done between the prosecutor and the persons prosecuted and if the appellate Court finds that certain evidence is necessary in order to enable it to give a correct and proper findings, it would be justified in taking action under Section 391.
49. There is no restriction in the wording of Section 391 either as to the nature of the evidence or that it is to be taken for the prosecution only or that the provisions of the Section are only to be invoked when formal proof for the prosecution is necessary. If the appellate Court thinks that it is necessary in the interest of justice to take additional evidence it shall do so. There is nothing in the provision limiting it to cases where there has been merely some formal defect. The matter is one of the discretion of the appellate Court. As reiterated supra the ends of justice are not satisfied only when the Accused in a criminal case is acquitted. The community acting through the State and the public prosecutor is also entitled to justice. The cause of the community deserves equal treatment at the hands of the Court in the discharge of its judicial functions".
43 Crl.Appeal.No.25057/2020(f) of the Hon'ble High Court of Delhi, in the case of Mohammed Sallauddin V/s State & Another (Crl.R.P.56/2007, date of decision:
20.03.2015), wherein it is observed in Para No.22 as under:
"22. Section 386 Cr.P.C. envisages the normal and ordinary manner and method of disposal of an appeal, but it cannot be said to exhaustively enumerate the modes by which alone the Court can deal with an appeal. Section 391 of the Code is an exception to the ordinary rule and if the appellate Court considers additional evidence to be necessary, the provisions in Section 386 and 391 of the code have to be harmoniously considered to enable the appeal to be considered and disposed of also in the light of the additional evidence as well. For this purpose it is open to the appellate Court to call for further evidence before the appeal is disposed off. The appellate Court can direct the taking up of further evidence in support of the prosecution. The primary object of Section 391 CrPC is the prevention of guilty man's escape through some careless or ignorant proceedings before a Court or vindication of an innocent person wrongfully Accused. Where the Court 44 Crl.Appeal.No.25057/2020 through some carelessness or ignorance has omitted to record the circumstances essential to elucidation of truth, the exercise of powers under Section 391 CrPC is desirable. Section 391 CrPC has been enacted for the empowerment of the appellate Court to see that justice is done between the prosecutor and the persons prosecuted and if the appellate Court finds that certain evidence is necessary in order to enable it to give a correct and proper findings, it would be justified in taking action under Section 3891 CrPC".
12.08. The Learned Counsel for the Appellant would contend that permitting the Respondent No.1 to produce the documents sought to be produced under I.A.No.2/2020, will lead to filling up of lacuna; Respondent No.1 could have exercised his duty before the Trial Court, as it had fair opportunity to produce the same. The Respondent No.1 has not placed any grounds to consider the said application. And lastly, he would contend that, allowing the said application will be nothing but tragedy of criminal justice system.
45 Crl.Appeal.No.25057/202012.09. On perusal of the Complaint, it is seen that, the said Complaint is filed by the Arvind Lifestyle Brands Ltd., represented by its Authorized signatory, Mr. Anupam Pillai. But neither authorization letter issued by the Board of Directors nor Board resolution is produced alongwith the Complaint.
Further, PW.1Anupam Pillai, claims to be the authorized person of the Complainant company to depose on behalf of the Complainant company. Ex.P.1authorization letter is produced. This document did not speak about any resolution passed by the Board of Directors nor this document is signed by any one of the Board of Directors or by the Managing Director.
Thereafter, Complainant company has led the evidence of PW.2Mr. Sreejith M., on the basis of letter of authority Ex.P.30. Even this document did not speak about any resolution passed by the Board of Directors nor this document is signed by any one of the Board of Directors or by the Managing Director.
46 Crl.Appeal.No.25057/2020The Complainant has produced the copy of the resolution passed by the Board of Directors at their meeting held on Oct. 18, 2016. This document is produced by the Complainant alongwith Ex.P.30. This document can be found at Page No.121 of the Trial Court records. This document speaks as to the resolution passed in the meeting of the Board of Directors, more specifically, last but two paras of the said document read as under:
"Resolved further that Mr. Suresh Jayaraman and Mr. Jayesh Shah, Directors of the Company or Mr. Kannan 5, CFO, or Mr. Manikandan B. Finance Controller or Ms. Shilpa Vaid, Chief Human Resource Officer of the Company of the Company be and are hereby severally authorized to subdelegate aforesaid power through power of attorney or authorization letter to any other officer/officers of the company as they may think fit from time to time".
"Resolved further that a certified true copy of this resolution duly certified by any one of the Director or Company Secretary of the Company, be furnished to the concerned persons/authorities with a request to act upon the same".47 Crl.Appeal.No.25057/2020
This document is nothing, but the document No.1, which the Respondent No.1 intends to produce under I.A.No.2/2020.
As per this document, it is seen that, Mr. Kannan S. CFO of the company is authorized to sub delegate the power through power of attorney or authorization letter to any other officer/officers of the company. If Ex.P.1 authorization letter is viewed on the basis of this clause, it can be said that the certification under Ex.P.1 done by S. Kannan authorizing PW.1 Mr. R. Anupam Pillai on 09.02.2017, is a valid authorization.
Secondly, as per this document, it is seen that, Mr. B. Manikandan, Finance Controller, of the Complainant company is authorized to subdelegate the power through power of attorney or authorization letter to any other officer/officers of the company. If Ex.P.30 authorization letter, authorizing Mr. Sreejith M. is viewed on the basis of this clause, it can be said that the certification under Ex.P.30 done by B. Mani Kandan authorizing PW.2 Mr. Sreejith M. on 16.08.2019, is a valid authorization.
48 Crl.Appeal.No.25057/202012.10. Further as per the decision of the Hon'ble Apex Court, in the case of M.M.T.C. Ltd., V/s Medchl Chemicals & Pharma (P) Ltd., MANU/SC/0728/2001; 2002 CriLJ 266, wherein it is observed in Para Nos.11 and 12, as under:
"11. The Court has, as far back as, in the case of Vishwa Mitter V. O.P. Poddar MANU/SC/0378/1983;
1984CriLJ held that it is clear that any one can set the criminal law in motion by filing a Complaint of facts constituting an offence before a Magistrate entitled to take cognizance. It has been held that no Court can decline to take cognizance on the sole ground that the Complainant was not competent to file the Complaint. It has been held that if any special statute prescribes offences and makes any special provision for taking cognizance of such offences under the statue, then the Complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by the statute. In the present case, the only eligibility criteria prescribed by Section 142 is that the Complaint must be by the payee or the holder in due course. This criteria is satisfied as the Complaint is in the name 49 Crl.Appeal.No.25057/2020 and on behalf of the Appellant Company".
Further as per the decision of the Hon'ble Apex Court in the case of Vishwa Mitra V/s O P Poddar, reported in 1984 Crl. L. J Page 1, wherein it is observed in Para No.5, as under;
"5. It is thus crystal clear that anyone can set the criminal law in motion by filing a Complaint of facts constituting an offence before a Magistrate entitled to take cognizance Under Section 190 and unless any statutory provision prescribes any special qualification or eligibility criteria for putting the criminal law in motion, no Court can decline to take cognizance on the sole ground that the Complainant was not competent to file the Complaint. Section 190 of the Code of Criminal Procedure clearly indicates that the qualification of the Complainant to file a Complaint is not relevant. But where any special statute prescribes offences and makes any special provision for taking cognizance of such offence under the statute, the Complainant requesting the Magistrate to take cognizance of the offence must satisfy the eligibility criterion prescribed by the statute. Even withregard to offences under the Indian 50 Crl.Appeal.No.25057/2020 Penal Code, ordinarily anyone can set the criminal law in motion but the various provisions in Chapter XIV of prescribe the qualification of the Complainant which would enable him or her to file a Complaint in respect of specified offences and no Court can take cognizance of such offence unless the Complainant satisfied the eligibility criterion, but in the absence of any such specification, no Court can throwout the complain or decline to take the cognizance on the sole ground that the Complainant was not competent to file the Complaint".
Further as per the decision of the Hon'ble Apex Court, in the case of Samarth Shipping Company V/s Dolly George, reported in (2002) 9 SCC 455, wherein it is observed at Para No.3, as under;
"3. Having heard both sides we find it difficult to support the orders challenged before us. A Company can file a Complaint only through human agency. The person who presented the Complaint on behalf of the Company claimed that he is the authorized representative of the company. Prima facie, the Trial Court should have accepted it at the time when 51 Crl.Appeal.No.25057/2020 a Complaint was presented. If it is a matter of evidence when the Accused disputed the authority of the said individual to present the Complaint, opportunity should have been given to the Complainant to prove the same, but that opportunity need be given only when the trial commences. The dismissal of the Complaint at the threshold on the premise that the individual has not produced certified copy of the resolution appears to be too hasty an action. We, therefore, set aside the impugned orders and direct the Trial Court to proceed with the trial and dispose it off in accordance with law. Parties are directed to appear before the Trial Court on 31.01.2000".
12.11. Applying the above principles of law to the instant case at hand, it is seen that, the Complaint is filed before the Trial Court in the name of Arvind Lifestyle Brands Ltd., represented by its Authorized Signatory. Mr. Anupam Pillai is the authorized signatory as per Ex.P.1.
Secondly, the Complainant company has led the evidence of Mr. Anupam Pillai as PW.1, on the basis of Ex.P.1.
52 Crl.Appeal.No.25057/2020Thirdly, the Complainant company has led the evidence of Mr. Sreejith M. as PW.2, on the basis of Ex.P.30.
Thus, filing of the Complaint and adducing of the evidence on behalf of the Complainant company is with an authority from the Complainant company and for and on behalf of the company.
Having observed so, this Court feels that, there is no necessity of the documents sought to be produced by the Respondent No.1 under I.A.No.2/2020, as the documents already available on record are sufficient to hold the authorization of the person signing the Complaint, adducing the evidence as PW.1 on behalf of the company as well as to hold authorization of PW.2 to depose on behalf of the company. Under such circumstances, the application filed by the Respondent No.1 under I.A.No.2/2020, deserves to be rejected. Hence, I ANSWER POINT NO.2(A) IN THE NEGATIVE.
12.12. On having observed supra, I do not find any force in the contention raised on behalf of 53 Crl.Appeal.No.25057/2020 the Appellant/ Accused No.2 that, there is no authority either to file the Complaint or to depose on behalf of the Complainant to the PW.1 and PW.2. Hence, I answer POINT NO.2 IN THE NEGATIVE.
13. POINT NO.3:
The Learned Counsel for the Appellant/ Accused No.2 would contend that, Accused No.1 company/present Respondent No.2 has remained unrepresented before the Trial Court as liquidation order was passed inrespect of Accused No.1 company appointing Interim Resolution Professional and subsequently appointing the Liquidator. Neither the Interim Resolution Professional, nor the Liquidator was made party to the present proceedings.
Further the Learned Counsel for the Respondent No 2 would contend that (a) the Official Liquidator was not made party before the Trial Court; (b) No notice was issued to the Official Liquidator; and (c) Complainant company has not filed any claim application before the Official liquidator.54 Crl.Appeal.No.25057/2020
The Learned Counsel for the Appellant/ Accused No.2 would contend that, an application was filed by the Appellant U/Sec 14(1)(4) and 238 of Insolvency and Bankruptcy Code on 08.08.2018. The Trial Court has disposed the said application with observations and the said observations has not been followed by the Complainant company to implead either the Interim Resolution Professional or the Liquidator has party to the complaint. Hence, he would contend that, Respondent No.2 company who was Accused No.1 before the Trial Court has remained unrepresented before the Trial Court. And on this count alone the complaint of the Complainant company deserves to be dismissed.
13.01. On careful perusal of the Trial Court record, it is seen that, an application is filed by the present Appellant U/Sec 14(1)(4) and 238 of Insolvency and Bankruptcy Code and 08.08.2018 (vide Page Nos.157 to 159 of Trial Court record). The Complainant company has filed its objections to the said application on 21.08.2018 (vide Page Nos.154 to 156 of Trial Court record). The present Appellant 55 Crl.Appeal.No.25057/2020 has filed Written Arguments on the said application on 11.09.2018 (vide Page No.205 of the Trial Court record). The Trial Court has passed the orders on the said application on 10.10.2018 (vide Page No.217 to 221 of the Trial Court record). On careful perusal of the said orders, the Trial Court in Page Nos.8 & 9 of its order has observed as under:
"..... Therefore, after 18.05.2017 the Interim Resolution Professional will be the representative Accused No.1 company. If Interim Resolution Professional was appointed at the time of filing of the Complaint, there was duty on the part of the Complainant to disclose that Accused No.1 company is represented by Interim Resolution Professional Mr. Jagadish Kumar Agarwal. Since, he has been appointed as Interim Resolution Professional after filing of the Complaint, the Court cannot find fault in nonmentioning his name as representative of Accused No.1 company. But subsequent changes shall have to be considered to give a right of hearing to the company. Under these circumstances, liberty is given to the Complainant to make a mention that, Accused No.1 company is represented by its Interim Resolution Professional, by filing necessary application either U/Sec.56 Crl.Appeal.No.25057/2020
305 of CrPC R/W Sec. 141 of N.I. Act or under other relevant provisions within a reasonable time. Further it may also be necessary to issue notice to the Interim Resolution Professional as he is the present incharge of Accused No.1 company. If necessary steps are not taken in this regard, it is kept open to the parties to submit their arguments on this issue at the time of final arguments."
13.02. On careful perusal of the Trial Court records, it is seen that,
(a) the present Appellant has signed Vakalathnama filed on 23.06.2018, before the Trial Court, on his behalf and on behalf of the Accused No.1 company/ the present Respondent No.2(vide Page 146 of the Trial Court record);
(b) application U/Sec. 445 of CrPC is filed by Accused Nos.1 and 2 on 26.03.2018, wherein the present Appellant/Accused No.2 has signed for himself and on behalf of Accused No.1 company (vide Page 186 of the Trial Court record);
(c) application U/Sec. 70(2) of CrPC is filed by the Accused Nos.1 and 2, to recall warrant on 57 Crl.Appeal.No.25057/2020 26.03.2018 (Vide Page No.187 of the Trial Court record);
(d) application U/Sec. 437 of CrPC is filed on behalf of the Accused Nos.1 and 2 on 26.03.2018, wherein present Appellant/ Accused No.2 has signed for himself and on behalf of the Accused No.1 company/ present Respondent No.2 (vide Page No.188 of the Trial Court record);
As per these documents, it can be said that, upto 26.03.2018 the present Appellant/Accused No.2 has represented the Accused No.1 company.
The present Appellant in his evidence contends that, he has intimated orally to the official liquidator, withregard to pendency of this case. This part of evidence can be seen as per the crossexamination of DW.1 at Page No.12, Line Nos.2 to 7, which read as under:
" I have pointed orally to the official liquidator withregard to the pendency of this case. I have not made any written communication withregard to the pendency of this case with the official liquidator. I have not sent the information of the 58 Crl.Appeal.No.25057/2020 disputed Cheques to the official liquidator. ...."
First of all, it was the duty of the Accused No.2 to intimate about the pendency of the case at the time of appointing the Interim Resolution Professional or to the official liquidator, on its appointment. Secondly, when the present Appellant/ Accused No.2 contends that, he has intimated pendency of the case to the official liquidator, then it was the duty of the official liquidator to represent Accused No.1 company. For no fault on the part of the Complainant company, the Complainant company cannot be held liable or questioned for not getting represented the Accused No.1 company either through the Interim Resolution Professional or to the official liquidator appointed under the Insolvency and Bankruptcy Code.
Secondly, the present Complaint is filed on 10.02.2017 and the Interim Resolution Professional is appointed subsequent to filing of the Complaint i.e., on 18.05.2017, as per Ex.D.1. So also, official liquidator is appointed on 12.08.2018, as per Ex.D.2.
59 Crl.Appeal.No.25057/2020The Interim Resolution Professional or the official liquidator would have been a necessary party to represent Accused No.1 company if they would have been appointed prior to the filing of the Complaint by the Complainant company. Secondly, existence of the Accused No.1 company had not seized, when the alleged offence U/Sec. 138 of NI Act was committed. So, there was no necesstity for getting represented the Accused No.1 company either through the Interim Resolution Professional or through the official liquidator.
Under such circumstances, I do not find any substance in the submission of the Learned Counsel for the Appellant that, Accused No.1 company has remained unrepresented before the Trial Court. Hence, I ANSWER POINT NO.3 IN THE NEGATIVE.
14. POINT NO 4:
The Learned Counsel for the Appellant would contend that the Complaint filed by the Bangaluru Branch of the Complainant Company is not 60 Crl.Appeal.No.25057/2020 maintainable, as the Accused No 1 company had transacted with the Delhi Branch of the Complainant Company.
14.01. On perusal of the averments of the Complaint, it is seen that the Complaint is filed by the Complainant Company, showing it, to be a Corporate Office.
Further the Complainant Company has produced the MOUs entered into with the Accused No 1 Company, at ExP2 to ExP11. On perusal of the said documents, it is seen that the understanding is entered by the Complainant Company, who is having its Corporate Office at Bengaluru.
Further the Complainant Company has produced ExP1 and ExP30Authorization Letter, wherein it is seen that the Complainant Company is functioning through its Corporate Office, situate at Bengaluru.
Further the Complainant Company has issued the Statutory Notice U/Sec 138 of NI Act, which is marked at ExP28. Even this notice is sent through 61 Crl.Appeal.No.25057/2020 the Corporate Office of the Complainant Company, situate at Bengaluru.
14.02. Coming to the ocular evidence, more specifically, cross examination of PW.2, Page No 4, Line Nos 1 to 6, which reads as under:
"It is true to suggest that we have commercial division at Delhi branch. It is true to suggest that the commercial division of Delhi branch is looking after the accounts pertaining to Northern region including, Delhi. Witness volunteers that the said commercial division at Delhi branch is controlled by the Bengaluru Head Office of our Company. ..."
As per this evidence, PW2 affirms the suggestion made him, on behalf of the Accused that Complainant company has commercial division at Delhi branch and the said branch is looking after the accounts pertaining to Northern region including Delhi. But PW2 contends that the said Commercial division at Delhi branch is controlled by the Bengaluru Head Office of the Complainant Company.
14.03. Thus on the basis of the evidence, both ocular and documentary, referred to supra, it 62 Crl.Appeal.No.25057/2020 can be concluded that the Complainant Company is having a commercial division branch at Delhi, taking care of the business of the Northern region, which is controlled by the Bengaluru Head Office. The complainant Company is having its corporate office at Bengaluru. Thus the complaint filed by the Corporate Office of the Complainant Company at Bengaluru is maintainable.
Hence I answer POINT NO 4 IN THE
NEGATIVE.
15. POINT NO 5:
The Learned Counsel for the Appellant would contend that the Complainant Company has produced the Computerized Statement of Account at ExP31, the same cannot be admissible in evidence, as no certificate U/Sec 65B is attached to the said Statement. He has placed his reliance on the decision of the Hon'ble Apex Court in the case of Samsaung India Electronics Pvt. Ltd., Vs MGR Enterprises and others, reported in 2019 SCC 63 Crl.Appeal.No.25057/2020 Online Del 8877, wherein it is observed in Para Nos 21 and 22, as under:
"21. Section 65B of the Indian Evidence Act came up for consideration before the Supreme Court in the decision Anvar P.V. (supra) wherein it was held that a computer generated document would be admissible only when accompanied by a certificate under Section 65B Indian Evidence Act and in the absence thereof it would be inadmissible. The three Judge Bench of the Supreme Court in Anvar P.V. (supra) overruling its earlier decision in (2005) 11 SCC 600 State (NCT of Delhi) V. Navjot Sandhu Held:
"14. Any documentary evidence by way of an electronic record under the Evidence Act, in view of Sections 59 and 65A, can be proved only in accordance with the procedure prescribed under Section 65B. Section 65B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or 64 Crl.Appeal.No.25057/2020 copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under subsection (2) are satisfied, without further proof or production of the original. The very admissibility of such a document i.e., electronic record which is called as computer output, depends on the satisfaction of the four conditions under Section 65B(2).
17. Only if the electronic record is duly produced in terms of Section 65B of the Evidence Act, would the question arise as to the genuineness thereof and in that situation, resort can be made to Section 45Aopinion of Examiner of Electronic Evidence.
18. The Evidence Act does not contemplate or permit the proof of an Electronic record by oral evidence if requirements Under Section 65B of the Evidence Complaint are not complied with, as the law now stands in India.
20. Proof of Electronic record is a special provision introduced by the IT Act amending various provisions under the Evidence Act. The very caption of Section 65A of the Evidence act, read with Sections 59 and 65B is sufficient to hold that the special provisions on evidence relating to Electronic record shall be governed by the procedure 65 Crl.Appeal.No.25057/2020 prescribed under Section 65B of the Evidence Act. That is a complete code in itself. Being a special law, the general law under Sections 63 and 75 has to yield.
22. The evidence relating to Electronic record, as noted herein before, being a special provision, the general law on secondary evidence under Section 653 read with Section 65 of the Evidence Act shall yield to the same. Generalia specialibus non derogant, special law will always prevail over the general law. It appears, the Court omitted to take note of Sections 59 and 65A delaing with the admissibility of Electronic record. Sections 63 and 65 have no application in the case of secondary evidence by way of Electronic record; the same is wholly governed by sections 65A and 65B. To that extent, the statement of law on admissibility of secondary evidence pertaining to electronic record, as stated by this Court in Navoj Sandhu case (State (NCT of Delhi) V. Navjot Sandhu, (2005) 11 SCC 600: 2005 SCC (Crl) 1715), does not lay down the correct legal position. It requires to be overruled and we do so. An electronic record by way of secondary evidence shall not be admitted in evidence unless the requirements under Section 65B are satisfied. Thus, in the case of CD, CVD, 66 Crl.Appeal.No.25057/2020 chit, etc., the same shall be accompanied by the certificate in terms of Section 65B obtained at the time of taking the document, without which, the secondary evidence pertaining to that Electronic record, is inadmissible".
22. Legal position on the point is thus well settled that is if the document is otherwise inadmissible for want of a certificate or any other requirement of law, it being exhibited in the course of trial does not make the document admissible in law and though an objection as to the mode of proof can be waived off and should be taken at the first instance, however the objection as to the admissibility of a document which goes to the root of the matter can be taken at any stage. Supreme Court in the decision reported as R.V.E. Venkatachala Gounder (supra) held:
"20. The learned counsel for the defendantrespondent has relied on Roman Catholic Mission v. State of Madras [AIR 1966 SC 1457] in support of his submission that a document not admissible in evidence, though brought on record, has to be excluded from consideration. We do not have any dispute with the proposition of law so laid down in the abovesaid case. However, the present one is a case which calls for the correct position of 67 Crl.Appeal.No.25057/2020 law being made precise. Ordinarily, an objection to the admissibility of evidence should be taken when it is tendered and not subsequently. The objections as to admissibility of documents in evidence may be classified into two classes: (i) an objection that the document which is sought to be proved is itself inadmissible in evidence; and (ii) where the objection does not dispute the admissibility of the document in evidence but is directed towards the mode of proof alleging the same to be irregular or insufficient. In the first case, merely because a document has been marked as "an exhibit", an objection as to its admissibility is not excluded and is available to be raised even at a later stage or even in appeal or revision. In the latter case, the objection should be taken when the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. The latter proposition is a rule of fair play. The crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the 68 Crl.Appeal.No.25057/2020 party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because by his failure the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two reasons:
firstly, it enables the court to apply its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the court on the mode of proof sought to be adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence. Such practice and procedure is fair to both the parties. Out of the two types of objections, referred to hereinabove, in the latter case, failure to raise a prompt and timely objection amounts to waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence. In the first case, acquiescence would be 69 Crl.Appeal.No.25057/2020 no bar to raising the objection in a superior court."
15.01. Statement of Account is produced by the Complainant Company in rebuttal to the evidence, led by the Accused/Appellant. It is a computerized Statement of Account.
15.02. Coming to the ocular evidence on this point, more specifically, examination in chief of PW2, Page No 3, Line No 4, which reads as under:
".... ನಪ31 ನನ ನ ನನನ ತಯರಸರನತತನನ. ..."
As per this evidence, PW2 contends that ExP31 Statement is prepared by him.
So ExP31 Statement of Account is prepared by the Complainant Company, by PW2.
15.03. As per the decision of the Hon'ble Apex Court in the case of Arjun Panditrao Khotkar Vs Kailash Kushanrao Gorantyal and Others, reported in 2020 SCC Online SC 571, wherein while answering the reference, the Hon'ble Apex Court has observed in Para No 80, as under:
"80. The reference is thus answer by stating that:70 Crl.Appeal.No.25057/2020
(a) Anvar P V (supra), as clarified by us hereinabove, is the law declared by this Court on Section 65B of the Evidence Act. The judgment in Tomaso Bruno (supra), being per incuriam, doesnot lay down the law correctly.
Also, the judgment in SLP(Crl.) No. 9431 of 2011 reported as Shafi Mohammad (supra) and the judgment dated 03.04.2018 reported as (2018) 5 SCC 311, do not lay down the Law correctly and are therefore overruled.
(b) The clarification referred to above is that the required certificate under Section 65B(4) is unnecessary, if the original document itself is produced. This can be done by the owner of a laptop computer, computer tablet or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him. In case where the "computer" happens to be a part of a "computer system" or "computer network" and it becomes impossible to physically bring such system or network to the Court, then the only means of providing information contained in such electronic record can be in accordance with Section 65B(1), together with the requisite certificate under Section 65B(4). The last sentence 71 Crl.Appeal.No.25057/2020 in Anvar P V (supra) which reads as "...if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act ..." is thus clarified; it is to be read without the words "under Section 62 of the Evidence Act...", With this clarification, the law stated in paragraph 24 of Anvar P V (supra) does not need to be revisited.
(c) ......
(d) ......"
Applying the above proposition of law to the instant case at hand, it can be seen that ExP31 statement is prepared by the Complainant company and the person who has prepared it (PW2) has deposed, so ExP31 will not fall within the ambit of Sec 65B(1), so no certificate is required U/Sec 65B(4) of Evidence Act.
Hence I answer POINT NO 5 IN THE
NEGATIVE.
16. POINT NO 6:
16.01. The Learned Counsel for the
Appellant would contend that the ChequesExP12 to 72 Crl.Appeal.No.25057/2020 ExP19 were issued by the Accused No 1 Company, as security under the MOUsExP3 to ExP11.
The Learned Counsel for the Appellant has placed his reliance on the below mentioned decisions:
(a) of the Hon'ble High Court of Madras, in the case of Balaji Seafoods Exports (India) Ltd.
Vs Mac Industries Ltd., reported in 1999 (1) CTC 6, wherein it is held that, "An undated cheque having been given only as security, the provision of Section 138 of Negotiable Instruments Act are not at all attracted and hence, the complaint against the accused under section 138 of the Negotiable Instruments Act cannot be maintained at all."
(b) of the Hon'ble High Court of Gujarat, in the case of Shanku Concretes Pvt. Ltd. Vs State of Gujarat, reported in 2000 Crl.L.J. 1988, wherein it is held that, "Cheques issued as collateral security for due performance of contract. Payment was agreed to be made at some future date. No debt or 73 Crl.Appeal.No.25057/2020 liability exist on the date when cheques were issued. Such case is out of the purview of Sec 138 of NI Act."
(c) of the Hon'ble Apex Court, in the case of Indus Airways Pvt Ltd. Vs Magnum Aviation Pvt Ltd., reported in 2014(2) UC 1221, wherein it is held that, "Dishonour of post dated cheques issued by the purchasers as advance payment inrespect of purchase orders, do not amount to offence under section 138 of NI Act."
(d) of the Hon'ble Apex Court in the case of Sampelly Satyanarayana Rao Vs Indian Renewable Energy Development Agency Limited, (Crl Appeal No 867 of 2016, date of decision 19.09.2016), wherein it is held that, "Post dated cheques issued towards payment of installments of loan, were given by way of security. When cheques were issued, loan has been sanctioned. Hence falls in first category that they were cheques issued for debt in the present but payable in future."
74 Crl.Appeal.No.25057/202016.02. Percontra, the Learned Counsel for the Respondent No 1 would contend that the cheques ExP12 to ExP19, were given by the Accused No 1 company towards the liability arising out of the contract under the MOUs. Sec 138 of NI Act is attracted on the dishonour of the said cheques.
The Learned Counsel for the Respondent No 1 has placed his reliance on the below mentioned decisions:
(a) of the Hon'ble Apex Court, in the case of Iwomb Laboratories Pvt Ltd. Vs Vijay Ahuja and Ors, reported in 2019(4) RCR (Crl) 258, wherein it is observed at Para No 5, as under:
"5. In our opinion, the High Court has muddled the entire issue. The averment in the complaint does indicate that the signed cheques were handed over by the accused to the complainant. The cheques were given by way of security, is a matter of defence. Further, it was not for the discharge of any debt or any liability is also a matter of defence. The relevant facts to countenance the defence will have to be proved that such security could not be 75 Crl.Appeal.No.25057/2020 treated as debt or other liability of the accused. That would be a triable issue. We say so because, handing over of the cheques by way of security per se would not extricate the accused from the discharge of liability arising from such cheques."
(b) of the Hon'ble Apex Court, in the case of I.C.D.S. Ltd. VS Beena Shabeer and Ors, reported in (2002) 6 SCC 426, wherein it is observed in Para No 10 as under:
"10. The language, however, has been rather specific as regards the intent of the legislature. The commencement of the Section stands with the words "Where any cheque".
The above noted three words are of extreme significance, in particular, by reason of the user of the word "any" the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event 76 Crl.Appeal.No.25057/2020 the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment."
(c) of the Hon'ble High Court of Punjab and Haryana, in the case of Kailash Vati Vs Ludhiana Beverages Pvt. Ltd., reported in 2020(3) BomCR (Crl.) 1, wherein it is observed in Para Nos 22 & 23, as under:
"22. As discussed earlier, the provisions of the Act does not lay down that the cheque is required to be of existing liability. The word "existing"
has not been used in the statute. Still further, the date on which the cheque was drawn is also the date mentioned in the column meant for the date in the cheque.
23. In the present case, respondent has produced the letter issued by the petitioner to the respondent wherein the complainants have been authorized and assured that these signed blank undated cheques 77 Crl.Appeal.No.25057/2020 can be utilized against any outstanding liability due to them. The relevant portion of the letter through which the signed undated cheques were issued has already been extracted."
(d) of the Hon'ble High Court of Delhi, in the case of Credential Leasing & Credits Ltd. Vs Shruti Investments and Ors., reported in 2015 Crl LJ 4273, wherein it is observed at Para No 28, as under:
"28. In my view, therefore, the scope of Section 138 NI Act would cover cases where the ascertained and crystallized debt or other liability exists on the date that the cheque is presented, and not only to case where the debt or other liability exists on the date on which it was delivered to the seller as a postdated cheque, or as a current cheque with credit period. The liability, though, should be in relation to the transaction in respect whereof the cheque is given, and cannot relate to some other independent liability. If, on the date that the cheque is presented, the ascertained and crystallized debt or other liability relatable to the dishonored cheque exists, the dishonor of the cheque would invite action under Section 138 NI Act. There could be 78 Crl.Appeal.No.25057/2020 situations where, for example, an issue may be raised with regard to the quality, quantity, deficiency, specifications, etc. of the goods/services supplied, or accounting. It would have to be examined on a case to case basis, whether an ascertained or crystallized debt or other liability exists, which could be enforced by resort to Section 138 NI Act, or not."
(e) of the Hon'ble High Court of Bombay, in the case of Purushottam Maniklal Gandhi Vs Manohar K Deshmukh and Ors, reported in 2007(4) BomCR 404, wherein it is observed at Para No 23, as under, "23.Since a cheque is a promise made in writing to pay certain sum, it would be covered by Clause 3 of the Section 25 and, therefore, it would not be open for the accused to say that there is no legally enforceable liability. In view of this the learned Counsel for the appellant submitted that the learned Magistrate was in error in acquitting the accused holding that the cheque was not given for legally enforceable liability. Consequently, the acquittal of the respondent for offence punishable under Section 138 of 79 Crl.Appeal.No.25057/2020 Negotiable Instrument Act cannot be upheld."
16.03. On careful perusal of the MOUs ExP3 to ExP11, under which chequesExP12 to ExP19 are issued, it is seen that, there is a column as under:
Cheque for all Dues 1 No. of undated blank Cheque to be provided by Retailer to be filled up and deposited by the Company to collect its dues from the Retailer So the intention behind issuing of the Cheques ExP12 to ExP19 under the said MOUs was precisely to secure the debt/liability that may arise under the MOU, which the Accused No 1 Company had purchased/transaction on credit basis.
Thus inorder to form a legally recoverable debt or other liability, the Respondent No 1/Complainant company has to show that there exists an ascertained and crystallized debt or other liability on the date of presentation of the cheque.
16.04. The Respondent No1/Complainant Company contents that as on the date of 80 Crl.Appeal.No.25057/2020 presentation of the ChequesExP12 to ExP19, the Accused No 1 company was liable to pay an amount of Rs 1,61,77,048/, as on 30.11.2016. This can be seen as per the examination in chief of PW2, at Para No 3, Line Nos 1 to 5, which reads as under:
"3. I submit that the Exhibit D4 is a false, concocted and fabricated document and that infact the ledger statement of the Complainant as on 30.11.2016 serves to show that INR 1,61,77,048 (Rupees One Crore Sixty One Lakhs Seventy Seven thousand and Forty Eight Only) amount is due and payable by the Accused to the Complainant towards invoices raised from 01.04.2012 to 30.11.2016. ...."
16.05. Further the Complainant has produced the Statement of Account at ExP31. On perusal of the same it is seen that the outstanding balance is shown to be Rs 1,61,77,048.
16.06. To this, the Accused No 1 Company has takenup three lines of defences:
(A) First line of defence takenup by the Accused Company under ExP29 can be seen at Page No 2, that Complainant company has not cooperated in 81 Crl.Appeal.No.25057/2020 reconciliation of the accounts and accounts inbetween the Accused No 1 company and the Complainant Company is not yet settled or finalized.
Coming to the ocular evidence on this point, more specifically, cross examination of DW1 at Page No 12, Para No 1, Line Nos 7 to 24, which reads as under:
".... The records for the sale of goods are maintain in our company through invoices raised to the customer. The same was communicated to the Complainant company through monthly sales report. The monthly sales report is not with me it may with the Accused No.1 company. The goods returned report were sent to the Complainant company to issue credit notes. The statements of the goods sold and returned goods accounts were maintained separately in my company. I am not aware that Complainant company is also separately maintaining sales of goods and return goods account. The Complainant company sent to Accused company for the goods returned, discount, sharing, vat reimbursement, rate difference and goods not supplied and after reconciling the same with goods supplied, the final balance were tallied. After every season that is summer from March to October 82 Crl.Appeal.No.25057/2020 and from winter from November to February reconciliation was happen. Then reconciliation was made through E mails and it was received by the account department of Accused No.1 company."
As per this evidence, the Accused No 2/DW1 would contend that, records for sale of goods are maintained by the Accused Company on the basis of the invoices raised to the customer and the same are intimated to the Complainant Company. He pleads his ignorance that he is not aware that Complainant company is also maintaining separate accounts for sale of goods and for return of goods. The Complainant company has sent the details of credit notes, goods returned, discount, sharing, vat reimbursement, rate difference and goods supplied to the Accused company, after reconciling the same with goods supplied, the final balances were tallied. Reconciliation use to take place every summer season from March to October and in every winter season from November to February. The said reconciliation was got done through Emails and the same was received by the Accounts department of the Accused No.1 Company.
83 Crl.Appeal.No.25057/2020Further as per the cross examination of DW1, Page No 13, Para No 1, Line Nos 5 to 8, which reads as under:
"... I have not checked the reconciliation statement with the MCA record of the Complainant company to check the veracity of the statement. ...."
As per this evidence, the Accused No 2/DW1 contends that he has not checked and verified the reconciliation statement with the MCA record of the Complainant company.
Thus as per the ocular evidence, it can be concluded that there was conciliation inbetween the Complainant Company and the Accused No 1 company twice in a year and after reconciliation the final balances were tallied, but the Accused No 2 has not verified and checked the reconciliation statement. Non verification of reconciliation statement by the Accused No 2, will not amount to non cooperation by the Complainant Company, as contended by the Accused No 1 company, in the reply notice. Thus 84 Crl.Appeal.No.25057/2020 said defence of the Accused No 1 company cannot be accepted.
(B) Second line of defence takenup by the Accused No 1 Company that the Complainant company has not considered the amount paid by the Accused No 1 company and the Goods returned by the Accused No 1 company to the Complainant company.
Firstly this stand is not taken by the Accused No 1 company in ExP29Reply given by it to the Statutory Notice.
Secondly, as per the ocular evidence, more specifically, cross examination of PW1, Page No 12, Para No 2, Line Nos 6 & 7, which reads as under:
"... I do not know the goods worth Rs 2,26,42,894/ were returned back to the Complainant. ..."
As per this evidence, PW1 pleads his ignorance that the Accused No 1 Company has returned goods worth Rs 2,26,242,894/.
Further as per the cross examination of PW2, Page No 3, Line Nos 12 to 14, which reads as under:
85 Crl.Appeal.No.25057/2020"... ಇನ ವಯಸ, ಕಕಡನಟನನನಟಟ ಹಗನ ಕಕನಡಟ ಪರ ಗನಡಟ ರಟನನ ಅನ ರಕಡರ ದಖಲಗಳನನ ನ ನನನ ಪರಶನಲನ ಮಡರನತತನನ. ಗನಡಟ ಹಹದನರನಗಸದ ವಸನತಗಳ ಮಲಲ 5 ಕನನಟ ಅಗತನತ. ..."
As per this evidence PW2 contends that he has verified Invoice, Credit Notes, Credit per goods returned on record and total goods returned were worth Rs 5 crores.
When the Accused No 2 claims that Accused No 1 Company has returned goods worth Rs 2,26,242,894/, then it is for it, to prove the same. But no evidence either documentary or oral are placed by the Accused No 2 to substantiate his defence. Hence this defence also cannot be believed, in the absence of any evidence.
(C) Third line of defence takenup by the Accused No 2 that the Accused No 1 Company has paid the entire amount and no dues are pending.
Coming to the ocular evidence on this point, more specifically, cross examination of PW2, Page No 3, Line Nos 7 to 9, which reads as under:
86 Crl.Appeal.No.25057/2020"....ದ.01.12.2016 ರಹದ ಇಲಯವರಗ ಆರನನಪಯವರನ ಎಷನ ಷ ಹಣವನನ ನ ನನಡರನತತರ ಎಹದನ ತನನರಸಲನ ದಖಲ ಹಜರನ ಪಡಸಬಹನದನ. ಸಕಯನ ಪನನ 01.12.2016 ರಹದ ಯವದನ ಆರನನಪಯವರನ ನಮಮ ಕಹಪನಗ ಕನಟಷರನವದಲಲ ಎನನತತರ. ..."
As per this evidence PW2 contends that he can produce the documents to shown the payments made by the Accused No 1 company from 01.12.2016 till date, but he contends that the Accused No 1 Company has not paid any amount from 01.12.2016.
Further as per the cross examination of PW2, Page No 6, Para No 2, Line Nos 5 & 6, which reads as under:
"... It is false to suggest that no amount is due from the accused. ...."
As per this evidence, a suggestion is made to PW2 on behalf of the Accused No 2 that no amount is due from the Accused, which is denied.
So under such circumstances, it is for the Accused No 2 to prove that all the dues has been paid to the Complainant Company and no any dues 87 Crl.Appeal.No.25057/2020 are pending from the Accused Company. No evidence either documentary or oral is forthcoming from the side of the Accused No 2 to substantiate his defence. Hence this defence also cannot be believed, in the absence of any evidence.
16.07. Thus it was for the Accused No 2 to prove on the basis of preponderance of probabilities that the Cheques ExP12 to ExP19 were issued as Security for the transaction and not towards repayment of dues.
Hence I answer POINT NO 6 IN THE
NEGATIVE.
17. POINT NO 7:
The Learned Counsel for the Appellant would contend that the Accused No 2 cannot be held vicariously liable, when the Accused No 1 Company remained unrepresented. He has placed his reliance on the decision of the Hon'ble Apex Court in the case of Aneeta Hada Vs Godfather Travels and 88 Crl.Appeal.No.25057/2020 Tours Pvt. Ltd., reported in (2012) 5 SCC 661, wherein it is held that, "Criminal liability on account of dishonour of cheque primarily falls on drawer company and extends to its officers only when conditions incorporated U/Sec 141 stands satisfied. Sec 141 of the Act stipulates that when a person which is a Company commits an offence, then certain categories of persons incharge as well as the company would be deemed to be liable for the offences U/Sec 138. the provision makes the functionaries and the companies to be liable and that is by deeming fiction."
17.01. Percontra the Learned Counsel for the Respondent No 1 would contend that, since the Appellant is responsible for the conduct of the Accused No 1 Company, so he is liable and his liability is attracted by virtue of Sec 141 of NI Act. He has placed his reliance on the below mentioned citations:
(a) of the Hon'ble Apex Court, in the case of N Rangachari Vs Bharat Sanchar Nigam Ltd., 89 Crl.Appeal.No.25057/2020 reported in (2007) 5 SCC 108, wherein it is observed at Para No 18, as under:
"18. In the case on hand, reading the complaint as a whole, it is clear that the allegations in the complaint are that at the time at which the two dishonoured cheques were issued by the company, the appellant and another were the Directors of the company and were incharge of the affairs of the company. It is not proper to split hairs in reading the complaint so as to come to a conclusion that the allegations as a whole are not sufficient to show that at the relevant point of time the appellant and the other are not alleged to be persons incharge of the affairs of the company. Obviously, the complaint refers to the point of time when the two cheques were issued, their presentment, dishonour and failure to pay in spite of notice of dishonour. We have no hesitation in overruling the argument in that behalf by the learned Senior Counsel for the appellant."
(b) of the Hon'ble Apex Court, in the case of Gunmala Sales Pvt. Ltd. Vs Anu Mehta, reported in (2015) 1 SCC 103, wherein it is observed at Para No 33, as under:
90 Crl.Appeal.No.25057/2020"33. We may summarize our conclusions as follows:
a) Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director;
b) If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director.
c) In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly 91 Crl.Appeal.No.25057/2020 indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an arm twisting tactics, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed;
d) No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power 92 Crl.Appeal.No.25057/2020 sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but, nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director."
(c) of the Hon'ble High Court of Delhi, in the case of Bharat Poonam Chand Shah Vs Dominos Printech India Pvt. Ltd., reported in I(2008) BC 618, wherein it is observed at Para No 14, as under:
"14. A person normally having business or commercial dealings with the company, would satisfy himself about its creditworthiness and reliability by looking at its promoters and Board of Directors and the nature and extent of its business and its Memorandum or Articles of Association. Other than that, he may not be aware of the arrangements within the company in regard to its management, daily routine, etc. Therefore, when a 93 Crl.Appeal.No.25057/2020 cheque issued to him by the company is dishonoured, he is expected only to the aware generally of who are in charge of the affairs of the company. It is not reasonable to expect him to know whether the person who signed the cheque was instructed to do so or whether he has been deprived of his authority to do so when he actually signed the cheque. Those are matters peculiarly within the knowledge of the company and those in charge of it. So, all that a payee of that cheque that is dishonoured can be expected to allege is that the persons names in the complaint are in charge of its affairs. The Directors are prima facie in that position."
(d) of the Hon'ble High Court of Delhi, in the case of Shree Raj Travels and Tours Ltd and Ors Vs Destination of the World (Subcontinent) Pvt. Ltd., reported in (2010) 104 SCL 127 (Delhi), wherein it is observed at Para No 12, as under:
"12. The Directors have collective responsibility towards the company. It is quite possible and is usual practice that different Directors among themselves divide responsibilities within 94 Crl.Appeal.No.25057/2020 the company, but this is an internal arrangement made by the BoD amongst themselves as to who shall look after what. It is also quite true that they appoint Managing Director, Managers, Secretary, paid Directors, paid whole time Directors but this division of work or responsibility is not brought to the knowledge of public by advertisements nor the internal arrangement of the company is revealed to the company‟s creditors. The common creditor or the person dealing with the company, being an outsider, would not know different facets of internal management of the company, he would know only the Board of Directors. Even this information he has to gather from Registrar of Companies or from prospectus of company or from Memorandum of Association. So a person dealing with the company has only the knowledge of those affairs which are made public by the company otherwise he has no means to know the internal management of the company."
17.02. Coming to the ocular evidence on this point, more specifically, cross examination of DW1, Page No 5, Para No 1, Line Nos 6 to 10 and 13 to 19, which read as under:
95 Crl.Appeal.No.25057/2020".... Accused No.1 was company was dealing with the same business during the year 2009 to 2015. At the time of incorporation of the Defendant No.1 company there was 3 share holders. They are Mrs.Janakdulari Sahani, Sanjay Sahani and Sameer Sahani. ..."
"... At the time of the incorporated of Accused No.1 company the directors were Mrs.Janakdulari Sahani, Sanjay Sahani and Sameer Sahani. Some were between December 2016 and January 2017 Mrs. Janakdulari Sahani resigned the director ship. I and Samee Sahani were the directors from the inspection and now we are suspended directors of the Accused No.1 company..."
As per this evidence DW1/Accused No 2/Appellant would contend that, Accused No 1 Company was dealing in the business from 2009 to 2015, at the time of its incorporation, there were three sharers viz., Mrs Janakdulari Sahani; Sanjay Sahani (DW1/Accused No 2/Appellant) and Sameer Sahani. Inbetween December 2016 and January 2017 Mrs Janakdulari Sahani resigned the directorship and only DW1 and Sameer Sahani were the directors and now they are the suspended directors of Accused No 1 Company.
96 Crl.Appeal.No.25057/2020Further as per the cross examination of DW1, Page No 6, Para No 2, Line Nos.7 to 12 and 15 to 19, which read as under:
"... It is true to suggest that, I and Sameer Sahani were taking the decisions of the Accused No.1 company. March 2016 I have signed the balance sheet of the Accused No.1 company as director and now in the year 20172018 I have signed the balance sheet of Accused No.1 company as suspended director. ...""... Accused No.1 company had 10
to 11 stores and a ware house and each stores of the Accused No.1 company had assigned current account. Assigned current account stands in the name of company, but it is used more for the stores. Those accounts were controlled by me and Sameer Sahani."
As per this evidence, DW1/Accused No 2/Appellant admits that he and Sameer Sahani were taking the decisions of Accused No 1 Company. He has signed the balancesheet for March 2016, as the Director of Accused No 1 Company; and for the years 201718, he has signed as the Suspended Director of Accused No 1 Company. Further he contends that Accused No 1 Company had 10 to 11 stores and a 97 Crl.Appeal.No.25057/2020 warehouse and each stores has assigned current account, standing in the name of the Accused No 1 Company, which were controlled by him (DW1) and Sameer Sahani.
Further as per the cross examination of DW1, Page No 7, Para No 1, Line Nos 1 to 4 and 5 to 7, which read as under:
"I have signed to Ex.P3 to 11. Ex.P2 is singed by Naveen Garg. I have signed Ex.P12 to 19 cheques 02942790000024 was the CC account of the Accused No.1 company. EPF department have blocked the account of Accused No.1 company by sending notice to the bank. ..."
"... I need to check the company records if available to know for which period the dues were to the EPF department. ..."
As per this evidence, DW1/Accused No 2/Appellant admits that he has signed ExP3 to ExP11MOUs and signed ExP12 to ExP19Cheques, pertaining to the current Account of the Accused No 1 Company bearing No 02942790000024. Further he contends that, he has to check the records to know for which period the dues were to the EPF 98 Crl.Appeal.No.25057/2020 Department. It shows that he is also the custodian of the records of the Accused No 1 Company.
Further as per the cross examination of DW1, Page No 9, Para No 1, Line Nos 2 to 5, which reads as under:
"... My share in the Accused No.1 company approximately 30%. I have attended every board meeting of the Accused No.1 company. ...."
As per this evidence, DW1/Accused No 2/Appellant contends that he is having 30% shares in Accused No 1 Company. He has attended every Board Meeting of the Accused No 1 Company.
Further as per the cross examination of DW1, Page No 11, Para No 2, Line Nos 1 to 6, which reads as under:
"I have communicated the Complainant company through meeting in my office through employees of Accused No.1 company. It is correct to says that I never addressed or communicated with the Complainant company through Email. Sometimes I have orally communicated the sale team of the Complainant company. ...."
99 Crl.Appeal.No.25057/2020As per this evidence, DW1/Accused No 2/Appellant admits that he had communication with Complainant Company through employees of the Accused No 1 Company through meetings held in his office, but he has never communicated by addressing any Email to Complainant Company. Sometimes, he has orally communicated the sales team of the Complainant Company.
17.03. Thus, on the basis of the above ocular evidence, conduct of Accused No 2/DW1/Appellant can be gather and it can be concluded that the Accused No 2/DW1/the present Appellant was the incharge of the Accused No 1 Company, when ExP12 to ExP19Cheques were delivered and when the said cheques were presented. So as per Sec 141 of NI Act, he will be vicariously held liable. Rightly the Trial Court has concluded the same, holding him vicariously liable. I find no fault with the conclusion of the Trial Court.
Hence I ANSWER POINT NO 7 IN THE AFFIRMATIVE.
100 Crl.Appeal.No.25057/202018. POINT NO 8:
18.01. The Learned Counsel for the Appellant would contend that it is for the Complainant Company to prove that there exists a legally recoverable debt, as on the date of presentation of the cheques. Presumption is to be raised only on proof of the said fact, by the Complainant Company. In the absence of the said proof, question to rebut the presumption, does not arise at all.
He has placed his reliance on three decisions, viz.,
(a) of the Hon'ble Apex Court, in the case of Rangappa Vs Sri Mohan, reported in (2010) 11 SCC 441, wherein it is observed at Para Nos 27 & 28, as under:
"27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under 101 Crl.Appeal.No.25057/2020 Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof.
28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of `preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the 102 Crl.Appeal.No.25057/2020 complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
(b) of the Hon'ble Apex Court, in the case of Raj Kumar Khurana Vs State of (NTC of Delhi) and Another, reported in (2009) 6 SCC 72, wherein it is observed at Para No 12 and 13, as under:
"12. The parameters for invoking the provisions of Section 138 of the Act, thus, being limited, we are of the opinion that refusal on the part of the bank to honour the cheque would not bring the matter within the mischief of the provisions of Section 138 of the Act.
13. The court while exercising its jurisdiction for taking cognizance of an offence under Section 138 of the Act was required to consider only the allegations made in the complaint petition and the evidence of the complainant and his witnesses, if any. It could not have taken into consideration the result of the complaint petition filed by the respondent No. 2 or the closer report filed by the Superintendent of Police in the First Information Report lodged by the appellant against him."103 Crl.Appeal.No.25057/2020
(c) of the Hon'ble High Court of Delhi, in the case of Col. R P Mendiratta Vs Sandeep Choudhary, (Crl. A 1125/2013, date of decision 12.05.2015), wherein it is observed at Para No 20, as under:
"20. In view of the decision referred to above for discharging the burden which lay upon the accused, the accused was not required to sttep into the witness box. However, he was able to discharge his burden on the basis of material already brought on record in as much as there were several material infirmities and contradictions in the testimony of the Complainant. ...."
18.02. On the contrary, the Learned Counsel for the Respondent No 1, would contend that, the Complainant has shown that there exist legally enforceable liability on the Accused No 1 Company, but the Accused No 1 contends that no dues are pending with the Complainant Company. Complainant Company has produced ExP31 Statement of Account to show that there exists recoverable debts against the Accused Company. There raises a presumption infavour of the 104 Crl.Appeal.No.25057/2020 Complainant Company U/Sec 139 of NI Act. But the Accused has failed to rebut the said presumption, by cogent evidence.
He has placed his reliance on seven decision, viz.,
(a) of the Hon'ble Apex Court, in the case of Bir Singh Vs Mukesh Kumar, reported in (2019) 4 SCC 197, wherein it is observed at Para Nos 36 to 40, as under:
"36. The proposition of law which emerges from the judgments referred to above is that the onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act.
37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial 105 Crl.Appeal.No.25057/2020 that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.
38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.
39. It is not the case of the respondentaccused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondentaccused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative.
40. Even a blank cheque leaf, voluntarily signed and handed over by 106 Crl.Appeal.No.25057/2020 the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.''
(b) of the Hon'ble Apex Court, in the case of Hiten P Dalal Vs Bratindranath Banerjee, reported in (2001) 6 SCC 16, wherein it is observed at Para No 38, as under:
"38. The burden was on the appellant to disapprove the presumptions under Ss. 138 and 139 a burden which he failed to discharge at all. The averment in the written statement of the appellant was not enough. Incidentally, the defence in the written statement that the four cheques were given for intended transactions was not the answer given by the Appellant to the notice under Section
138. Then he had said that the cheques were given to assist the Bank for restructuring (Ex.H). It was necessary for the appellant at least to show on the basis of acceptable evidence either that his explanation in the written statement was so probable that a prudent man ought to accept it or to establish that the effect of the material brought on the record, in its totality, rendered the 107 Crl.Appeal.No.25057/2020 existence of the fact presumed, improbable. (Vide Trilok Chand Jain Vs. State of Delhi 1975 (4) SCC 761 ). The appellant has done neither. In the absence of any such proof the presumptions under Sections 138 and 139 must prevail."
(c) of the Hon'ble Apex Court, in the case of Kumar Exports Vs Sharma Carpets, reported in (2009) 2 SCC 513, wherein it is observed at Para No 11, as under:
"11. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over. The accused in a trial under Section 138 of the Act has two 108 Crl.Appeal.No.25057/2020 options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the nonexistence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the nonexistence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court 109 Crl.Appeal.No.25057/2020 may either believe that the consideration and debt did not exist or their non existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act. The accused has also an option to prove the nonexistence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the 110 Crl.Appeal.No.25057/2020 complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue."
(d) of the Hon'ble Apex Court, in the case of B N Beena Vs Muniyappan and Ors, reported in (2001) 8 SCC 458, wherein it is observed at Para No 7, as under:
"7. In our view the impugned Judgment cannot be sustained at all. The Judgment erroneously proceeds on the basis that the burden of proving consideration for a dishonored cheque is on the complainant. It appears that the learned Judge had lost sight of Sections 118 and 139 of the Negotiable Instruments Act. Under Sections 118, unless the contrary was proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. Under Section 139 the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Thus in complaints under Section 138, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebutable. However the 111 Crl.Appeal.No.25057/2020 burden of proving that a cheque had not been issued for a debt or liability is on the accused. This Court in the case of Hiten P. Dalal vs. Bratindranath Banerjee reported in (2001) 6 S.C.C. 16 has also taken an identical view."
(e) of the Hon'ble Apex Court, in the case of Rohitbhai Jivanlal Patel Vs State of Gujarat and Ors, reported in AIR 2019 SC 1876, wherein it is observed in Para No 21, as under:
"21. The result of discussion in the foregoing paragraphs is that the major considerations on which the Trial Court chose to proceed clearly show its fundamental error of approach where, even after drawing the presumption, it had proceeded as if the complainant was to prove his case beyond reasonable doubt. Such being the fundamental flaw on the part of the Trial Court, the High Court cannot be said to have acted illegally or having exceeded its jurisdiction in reversing the judgment of acquittal. As noticed hereinabove, in the present matter, the High Court has conscientiously and carefully taken into consideration the views of the Trial Court and after examining the evidence on record as a whole, found that the findings of the Trial Court are vitiated by 112 Crl.Appeal.No.25057/2020 perversity. Hence, interference by the High Court was inevitable; rather had to be made for just and proper decision of the matter."
(f) of the Hon'ble Apex Court, in the case of Rallis India Ltd Vs Poduru Vidya Bhusan and Ors, reported in (2011) 13 SCC 88, wherein it is observed at Para Nos 12, 14 & 15, as under:
"12. The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no legal requirement for the complainant to show that the accused partner of the firm was aware about each and every transaction. On the other hand, proviso to Section 141 of the Act clearly lays down that if the accused is able to prove to the satisfaction of the Court that the offence was committed without his knowledge or he had exercised due diligence to prevent the commission of such offence, he will not be liable of punishment. Needless to say, final judgment and order would depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm.113 Crl.Appeal.No.25057/2020
But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners "qua" the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquitted.
14. Before concluding the present discussion, we also take this opportunity to strike a cautionary note with regard to the manner in which High Courts ought to exercise their power to quash criminal proceedings when such proceeding is related to offences committed by companies. The world of commercial transactions contains numerous unique intricacies, many of which are yet to be statutorily regulated. More particularly, the principle laid down in Section 141 of the Act (which is pari materia with identical sections in other Acts like the Food Safety and Standards Act, the erstwhile Prevention of Food Adulteration Act etc. etc.) is susceptible to abuse by unscrupulous companies to the detriment of unsuspecting third parties. In the present case, there are several disputed facts involved for instance, the date when the partnership came into being, 114 Crl.Appeal.No.25057/2020 who were the initial partners, if and when the Respondents had actually retired from the partnership firm etc.
15. Strictly speaking, the ratio of the SMS Pharmaceuticals (supra) can be followed only, after the factum that accused were the Directors or Partners of a Company or Firm respectively at the relevant point of time, stands fully established. However, in cases like the present, where there are allegations and counterallegations between the parties regarding the very composition of the firm, the above rule of `specific averment' must be broadly construed. Indeed, it would be nothing short of a travesty of justice if the Directors of a Company of Partners of a Firm, who, having duped a thirdparty by producing false documents (like a fake partnership deed) or making false statements (that some others were in charge of the Company/Firm), at a subsequent stage, seek protection from prosecution on the ground that they were not directly indicted in the complaint such a proposition strikes against one of the very basic tenets of the law of natural justice, which is, that none shall be allowed to take advantage of his own default. Of course, the above observation is of a general nature, and has no bearing on the present case, but nonetheless, the power to quash a criminal proceeding 115 Crl.Appeal.No.25057/2020 with respect to an offence under Section 141 of the Act, must be exercised keeping this advisory note and caveat in mind."
(g) of the Hon'ble High Court of Karnataka, in the case of J Ramaraj Vs Iliyaz Khan, reported in 2007 (4) Kar.L.J. 489, wherein it is observed at Para No 12, as under:
"12. In so far as discharge of initial burden on the part of the complainant is concerned, he has specifically stated as to supply of potatoes on various dates but, the details of the same has not been furnished which is the only grouse according to the petitioner. But, according to practise, as a Commission Agent when the complainant used to supply the goods through the possession of the farmers, on commission basis and if it is kept in cold storage and supplied to the accused directly as noted by the learned Magistrate, there would not be any record available in the APMC for having supplied the potatoes to the petitioner. If really the petitioner was serious, he would have sought the complainant to produce the records in this regard and the account books maintained by him nor has he himself produced any account books maintained by him in this regard. It appears as an alternative defence, 116 Crl.Appeal.No.25057/2020 petitioner has tried to shift the burden stating that it is the company which is the principal and the petitioner is only a commission agent and relying upon Section 28 of the Negotiable Instruments Act, contended that the principal is liable and not the commission agent. In this regard, the petitioner has also sought the assistance of various provisions under the Negotiable Instruments Act to stand by his contention that primarily the principal is liable and not the agent. Even as per Section 141 of the Negotiable Instruments Act, the petitioner being an agent who had transacted the business on behalf of the company and much less he is signatory to the cheque renders himself liable and shall be liable to be proceeded against. It is well settled that company alone or the personincharge of business of company alone or both can be prosecuted for offence under Section 138 of the Negotiable Instruments Act."
18.03. a) As per the decision of the Hon'ble Apex Court in the case of Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal, reported in (1999) 3 SCC 35, it is observed in para No.12 as under:
117 Crl.Appeal.No.25057/2020"12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption U/Sec.118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The Defendant can prove the nonexistence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the Plaintiff who will be obliged to prove it as a matter of fact Accused upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the nonexistence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the Plaintiff is entitled under law to rely upon all the evidence led in the case including that of the Plaintiff as well. In case, where the Defendant fails to 118 Crl.Appeal.No.25057/2020 discharge the initial onus of proof by showing the nonexistence of the consideration, the Plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The Court may not insist upon the Defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt."
b) As per the decision of the Hon'ble Apex Court, in the case of Hiten P. Dalal V. Bratindranath Banerjee 8 (2001) 6 SCC 16:
2001 SCC (Cri) 960, wherein it is observed in para Nos.22 and 23 as under;
"22. .....Presumptions are rules of evidence and do not conflict with the presumption of innocent, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the Accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable 119 Crl.Appeal.No.25057/2020 possibility of the nonexistence of the presumed fact.
23. In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, 'after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists'.
Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man'."120 Crl.Appeal.No.25057/2020
c) As per the decision of the Hon'ble Apex Court, in the case of M.S.Narayana Menon v. State of Kerala 5 (2006) 6 SCC 39: (2006) 3 SCC (Cri) 30, it was held that, "Once the accused is found to discharge his initial burden, it shifts to the complainant."
d) As per the decision of the Hon'ble Apex Court, in the case of Goaplast (P) Ltd. v. Chico Ursula D'Souza (2003) 3 SCC 232 : 2003 SCC (Cri) 603, wherein it is observed at para 6, as under;
"6. ... The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act which is to promote the efficacy of banking operation and to ensure credibility in the business transactions through banks persuades us to take view that by countermanding payment of post dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 121 Crl.Appeal.No.25057/2020 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of one's own wrong. If we hold otherwise, by giving instructions to banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences under Section 138. Once a cheque is issued by a drawer, a presumption under Section 139 must follow and merely because the drawer issued notice to the drawee or to the bank for stoppage of payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of the cheque in due course. This was the view taken by this Court in Modi Cements Ltd. v. Kuchil Kumar Nandi (1998) 3 SCC 249. On same facts is the decision of this Court in Ashok Yeshwant Badave v. Surendra Madhavrao Nighojakar (2001) 3 SCC
726. The decision in Modi case (1998) 3 SCC 249 overruled an earlier decision of this Court in Electronics Trade & Technology Development Corpn. Ltd. v.
Indian Technologists & Engineers (Electronics) (P) Ltd (1996) 2 SCC 739:
1996 SCC (Cri) 454 which had taken a contrary view. We are in respectful 122 Crl.Appeal.No.25057/2020 agreement with the view taken in Modi Case (1998) 3 SCC 249. The said view is in consonance with the object of the legislation. On the faith of payment by way of a postdated cheque, the payee alters his position by accepting the cheque. If stoppage of payment before the due date of the cheque is allowed to take the transaction out of the purview of Section 138 of the Act, it will shake the confidence which a cheque is otherwise intended to inspire regarding payment being available on the due date."
e) As per the decision of the Hon'ble Apex Court in P.Venugopal v. Madan P.Sarathi, it is held that;
"Under Sections 139, 118(a) and 138 of the NI Act existence of debt or other liabilities has to be proved in the first instance by the complainant but thereafter the burden of proving to the contrary shifts on the accused. Thus, the plea that the instrument/cheque had been obtained from its lawful owner or from any person in lawful custody thereof by means of an offence or fraud or had been obtained from the maker or acceptor thereof by means of an offence or fraud or for unlawful consideration, the burden of disproving that the holder is a holder in 123 Crl.Appeal.No.25057/2020 due course, lies upon him. Hence, this Court observed therein, that indisputably, the initial burden was on the complainant but the presumption raised in favour of the holder of the cheque must be kept confined to the matters covered thereby. Thereafter, the presumption raised does not extend to the extent that the cheque was not issued for the discharge of any debt or liability which is not required to be proved by the complainant as this is essentially a question of fact and it is the defence which has to prove that the cheque was not issued towards discharge of a lawful debt.
f) Further in an Article, 'The Presumption of Innocence and Reverse Burdens, A Balancing Duty published in 2007 CLJ (March Part) 142 it has been stated:
"In determining whether a reverse burden is compatible with the presumption of innocence regard should also be had to the pragmatics of proof. How difficult would it be for the prosecution to prove guilt without the reverse burden? How easily could an innocent Defendant discharge the reverse burden? But courts will not allow these pragmatic considerations to override the legitimate rights of the 124 Crl.Appeal.No.25057/2020 Defendant. Pragmatism will have greater sway where the reverse burden would not pose the risk of great injusticewhere the offence is not too serious or the reverse burden only concerns a matter incidental to guilt. And greater weight will be given to prosecutorial efficiency in the regulatory environment."
18.04. In order to determine the question whether offence punishable under Section 138 of the N.I. Act is made out against the Appellant, it will be necessary to examine the scope and ambit of the presumptions to be raised, as envisaged by the provisions of Sections 118 and 139 of the Act. In a suit to enforce simple contract, the plaintiff has to aver in his pleading that it was made for good consideration and must substantiate it by evidence. But to this rule, the negotiable instruments are an exception. In a significant departure from the general rule applicable to contracts, Section 118 of the N.I. Act provides, certain presumptions to be raised. This section lays down some special rules of evidence relating to presumptions. The reason for these presumptions is that, Negotiable Instrument 125 Crl.Appeal.No.25057/2020 passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain presumptions are made. The presumption, therefore, is a matter of principle to facilitate negotiability as well as trade.
Section 118 of the N.I. Act provides presumptions to be raised until the contrary is proved (i) as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance, (iv) as to time of transfer, (v) as to order or endorsements, (vi) as to appropriate stamp and (vii) as to holder being a holder in due course.
Section 139 of the N.I. Act provides that, 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.
Presumptions are devices by use of which the Courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence.
126 Crl.Appeal.No.25057/2020Section 118 of the Act inter alia directs that it shall be presumed, until the contrary is proved, that every Negotiable Instrument was made or drawn for consideration. Section 139 of the Act stipulates that unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque for the discharge of, whole or part of any debt or liability. Applying the definition of the word 'proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the N.I. Act, it becomes evident that in a trial under Section 138 of the N.I. Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the Accused, the rules of presumptions under Sections 118 and 139 of the Act help him when the contrary is proved by the Accused, that is, the cheque was not issued for consideration and in discharge of any 127 Crl.Appeal.No.25057/2020 debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume"
and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over.
The accused in a trial under Section 138 of the Act has two options:
a) He can either show that consideration and debt did not exist; or 128 Crl.Appeal.No.25057/2020
b) that under the particular circumstances of the case the nonexistence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed.
To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The Accused may adduce direct evidence to prove that the note (in the present case the chequesExP1 and ExP2) in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the Accused should disprove the nonexistence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the Accused. Something which is probable has to be bought on record for getting the burden of proof shifted to the 129 Crl.Appeal.No.25057/2020 complainant. To disprove the presumptions, the Accused should bring on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt did not exist or their nonexistence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the Accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The Accused has also an option to prove the nonexistence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by 130 Crl.Appeal.No.25057/2020 the Court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under sections 118 and 139 of the Act will not again come to the complainant's rescue. I find force to my above opinion as per the decision of the Hon'ble Apex Court in the case of Vijay V/s Laxman & Another, reported in (2013) 3 SCC 86.
18.05. Applying the above preposition of law to the instant case at hand, it is seen that the Complainant Company has produced ExP31 to contend that an amount of Rs 1,61,77,043.54ps was due from the Accused No 1 Company.
The Accused No 2/present Appellant in one breath contends that Complainant Company has not cooperated for settlement of the Accounts; in another breath he contends that amounts pertaining to return of goods have not be considered by the Complainant Company; and still in another breath contends that all the dues has been paid by the Accused Company.
131 Crl.Appeal.No.25057/2020But the Accused Company has produced ExD4 Statement of Account, said to have been received by the Accused No 2 from Mr Gajendra Kumar Mishra, the employee of Complainant Company at Delhi Branch, but the same said statement is denied by the Complainant Company, which can be seen as per the cross examination of PW2, Page No 3, Line Nos 10 to 12, which reads as under:
".....ನಡ4 ರಕನಟ ಲಲ ಸಷಟ ಮಹಟ ಅಗರನತತದ ಎಹದರ ಸಕಯನ ಅದರಲ ನಮಮ ಕಹಪನಯ ಮಹರನ ಹಗನ ಸಹಬಹದಪಟಷವರ ಸಹ ಇದರ ಕರಣ ಅದನ ರಕನಟ ಲಲ ಸಷಟ ಮಹಟಆಗರನವದಲಲ ಎನನ ನ ತತರ. ....."
When the Complainant Company has denied it, then it was for the accused to prove the same, by cogent evidence, even by leading the evidence of Mr Gajendra Kumar Mishra, but the same is not done by the Accused/Appellant.
So also ExD4Statement will not state that the entire dues have been paid by the Accused Company to the Complainant Company.
Thus, the Accused/Appellant has failed to rebut the presumption available to the Complainant Company U/Sec 139 of NI Act.
132 Crl.Appeal.No.25057/202018.06. The Accused/Appellant has not proved the fact that there exist no dues to be paid by the Accused Company to the Complainant Company, muchtheless on the basis of preponderance of probabilities and to contend that the Cheques ExP12 to ExP19 were issued as Security. No material is brought out by the Appellant/Accused No 2, in this present case.
18.07. In this case there was really presumption available infavour of the Complainant Company, in terms of Section 138 & 139 of Negotiable Instruments Act, against the Accused Company and the Accused Company has not discharged its burden to rebut the said presumption. Rightly the Trial Court has concluded in its Judgment, at Para Nos 14,15 & 20.
Hence, I answer POINT NO.8 IN THE AFFIRMATIVE.
133 Crl.Appeal.No.25057/202019. POINT NO.9:
As per the decision of the Hon'ble Apex Court, in the case of APS Forex Services Pvt. Ltd., V/s Shakthi International Fashion Linkers & Others, reported in 2020 (1) Apex Court Judgments 500 (SC), wherein it is held that;
"Once the Accused admits issuance of Cheque, which bears his signature, as security, for obtaining the loan, as per his contentions, initially there is presumption that there exists a legally enforceable debt or liability. Such presumption is rebuttable and the Accused is required to rebut such presumption on the basis of preponderance of probabilities. And to make his defence probable has to lead the evidence that, entire amount due and payable to the Complainant was paid. Section 139 of the Act, is an example of reverse onus clause and therefore once issuance of Cheque has been admitted and even the signature has been admitted, there is always a presumption infavour of the Complainant that there exist a legally recoverable debt or liability and thereafter it is for the Accused to rebut such presumption by leading evidence."134 Crl.Appeal.No.25057/2020
Further, as per the decision of the Hon'ble High Court, held in General Auto Sales Vs Vijayalakshmi, reported in 2005(1) KLT 478 in Paragraph No 8 thereof, that:
"Even if a blank signed cheque has been given towards liability or even as security, then the liability subsists and quantified, if the cheque is filled up and presented to the Bank, the person who had drawn the cheque, cannot avoid the criminal liability under Section 138 of NI Act".
The Trial Court has considered all the aspects, the grounds taken up by the Accused as defence. As well as the Order of the Trial Court in awarding compensation to the Complainant, is well reasoned. I do not find any irregularity or illegality, in the said order, granting compensation to the Complainant.
20. The Trial Court has passed the order on the application filed on behalf of the Accused Nos 1 & 2 U/Sec 259 of CrPC on 25.07.2018. Trial Court has rightly rejected the said application praying to hold the Trial of the case, as Warrant Trial. But the Trial Court has tried the case as Summons case. I 135 Crl.Appeal.No.25057/2020 find no fault with the Trial Court, in rejecting the said application and hold the trial of case, as Summon Trial case. I find force to my above view as per the decision of the Hon'ble High Court of Karnataka, in the case of M/s Mahatru Technologies Vs M/s Creative Infotech, (Criminal Petition No 1329 of2020, date of decision 19.11.2020), wherein it is held that, "Power of the Learned Magistrate to convert the Trial of the complaint U/Sec 138 of NI Act, under second proviso to subsection (1) of Section 143, is confined only to converting the case into a Summon triable case."
21. Further, when the Trial Court has conducted the present case akin to the procedure prescribed to try Summons case, as available U/Secs 251 to 255, then it should have convicted the Accused persons U/Sec 255(2) and not U/Sec 265, where conviction is prescribed in case of Summary Trial. Accordingly the order of Conviction passed by the Trial Court is to be modified, inorder to read the same as, "Accused convicted U/Sec 255(2) of Cr.PC.
136 Crl.Appeal.No.25057/202022. Apart from this no fault is committed by the Trial Court, in coming to the conclusion, convicting the Accused for the offence punishable U/Sec 138 of NI Act, interference, by this Court does not arise at all.
23. Thus, I am declined to interfere with the findings recorded by the Trial Court, subject to modification, referred supra.
24. Necessarily the prosecution succeeds. The conviction is therefore confirmed, subject to modification, as the accused are found guilty of the offence punishable under Section 138 of Negotiable Instruments Act., thereby sentenced to pay fine of Rs 2,00,00,000/ and indefault to pay the said fine, Accused No 2/Appellant being vicariously liable shall undergo Simple Imprisonment for a period of One year. Further directed to pay compensation to the Complainant, as ordered by the Trial Court.
Hence, for the above reasons I ANSWER POINT NO.9 IN THE NEGATIVE.
137 Crl.Appeal.No.25057/202025. POINT NO.10:
For the aforesaid reasons, I proceed to pass the following:
ORDER Acting U/Sec.386 of Cr.P.C., the Appeal preferred by the Appellant/Accused is hereby Dismissed.
In the consequences, the order passed by the Learned XVII Addl. Judge, Court of Small Causes & ACMM, Bengaluru, in C.C.No.55479 of 2017 dtd.20.01.2020, recording conviction of the Accused, is hereby confirmed.
The Trial Court shall execute its order, as per law.
No order as to costs.
In case, if the Accused has deposited the amount, as directed U/Sec. 148 of N.I. Act, the same may be dealt with, as per Law U/Sec. 143 of the said Act.138 Crl.Appeal.No.25057/2020
Remit the TCR to the Trial Court, on obtaining necessary acknowledgement, alongwith the copy of this Judgment.
(Dictated to the Judgmentwriter directly on the computer, corrected and pronounced in open court this the 10th day of February, 2021.) [AbdulRahiman. A. Nandgadi] LXXII Addl.City Civil & Sessions Judge, Bengaluru. (CCH73).