Madras High Court
Date Of Reserving The Judgment vs V.Abdul Azeez on 18 February, 2015
Author: R.Mala
Bench: R.Mala
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 18.02.2015 CORAM : THE HONOURABLE MS.JUSTICE R.MALA Criminal Appeal No.581 of 2005 Date of Reserving the Judgment 09.02.2015 Date of Pronouncing the Judgment 18.02.2015 V.P.Sakhariya ... Appellant/Complainant Vs. V.Abdul Azeez ... Respondent/Accused Prayer: Criminal appeal filed under Section 378 Cr.P.C., against the judgment of acquittal dated 12.05.2005 made in C.C.No.47 of 2004 on the file of the learned Judicial Magistrate (Sub-Judge) at Mahe. For Petitioner : Mr.R.Natarajan For Respondent : Mr.C.D.Johnson J U D G M E N T
The complainant as an appellant challenging the judgment of acquittal passed by the learned Judicial Magistrate (Sub-Judge) at Mahe in C.C.No.47 of 2004 on 12.05.2005 acquitting the respondent/accused from charges under Section 138 of Negotiable Instruments Act, 1881 has preferred the present appeal.
2. The learned counsel for the appellant/complainant would submit that the appellant and the respondent entered into an agreement/Ex.D.2, dated 20.02.2003 by which the appellant agreed to invest a sum of Rs.6,00,000/- (Rupees Six Lakhs Only) in the business venture and the respondent/accused agreed to pay 35% of the profit within one year and if the business runs in loss, the respondent/accused agreed to return the money invested by the appellant with 22% interest. On the very same date of execution of the agreement, the respondent/accused issued Ex.P.1/Cheque for a sum of Rs.7,32,000/- without filling the date. Since the respondent/accused did not pay any money even after the time specified in the agreement, the appellant/complainant filled up the date and presented the Ex.P.1/Cheque for encashment. However, the said cheque was returned as 'insufficient funds'. The memo issued by the Union Bank of India is marked as Ex.P.2. Hence statutory notice under Section 138(b) of Negotiable Instruments Act, 1881 has been issued under Ex.P.3/Notice dated 03.03.2004 to the respondent, for which the respondent issued Ex.P.4/Reply dated 25.03.2004 stating that the respondent has no personal liability. The postal receipt is marked as Ex.P.5, Postal acknowledgment is marked as Ex.P.6 and the Statement of Account is marked as Ex.P.7. The appellant also preferred a complaint under Section 406 and 420 IPC and a case has been registered in Crime No.103 of 2004. The respondent/accused pleaded that he has not borrowed the money as alleged by the appellant but the appellant has only invested the amount in the business of a partnership firm 'Yes Coffee curing works' in the respondent/accused is one of the partner and to prove the same, Ex.D.1 to Ex.D.3 were marked.
3. The Trial Court, after considering the oral and documentary evidence has acquitted the respondent/accused, against which the present appeal has been preferred.
4. Challenging the judgment of acquittal passed under Section 139 of the Negotiable Instruments Act, the learned counsel appearing for the appellant would raise the following points:
(i) Once the issuance of cheque has been admitted, the appellant is entitled to invoke presumption under Section 118 and 139 of the Negotiable Instruments Act, 1981 and that presumption was not rebutted by the respondent. To substantiate the same, the learned counsel for the petitioner relied upon the following decisions:
(a) (2002) 1 Supreme Court Cases 234, M.M.T.C. Ltd., v. Medchil Chemicals & Pharma (P) Ltd.,
(b) (2001) 8 Supreme Court Cases 458, K.N.Beena v. Muniyappan and Another.
(c) (2002) 6 Supreme Court Cases 426, ICDS Ltd., v. Beena Shabeer and Another.
(ii) Merely because the appellant/complainant had already preferred a complaint under Section 406 and 420 IPC and a case has been registered in Crime No.103 of 2004, it will not amount to double jeopardy. To substantiate the same, the learned counsel relied upon the decision reported in (2012) 7 Supreme Court Cases 621, Sangeetaben Mahendrabhai Patel v. State of Gujarat and Another.
(iii) In case of the post dated cheque, even stop payment instruction issued by the Drawer to the Bank would attract Section 138 of the Negotiable Instruments Act. To substantiate the same, the learned counsel relied upon the decision reported in (2003) 3 Supreme Court Cases 232, Goaplast (P) Ltd., v. Chico Ursula D'Souza and Another.
(iv) The Trial Court has acquitted the respondent/accused on the basis that since the appellant/complainant had already preferred a complaint under Sections 406 and 420 IPC, he is barred from preferring a complaint under Section 138 of the Negotiable Instruments Act. The learned counsel would further submit that mere filing of the Civil Suit does not bar the appellant/complainant to file a complaint under Section 138 of the Negotiable Instruments Act. To substantiate the same, the learned counsel relied upon the decision reported in (2008) 8 Supreme Court Cases 505, D.Purushotama Reddy and Another v. K.Sateesh.
(v) The learned counsel would further submit that the Trial Court has dismissed the application stating that in the complaint, pleading was not in consensus with Section 138 of the Negotiable Instruments Act.
By raising the above points, the learned counsel for the appellant/complainant prayed for conviction and sentence.
5. Resisting the same, the learned counsel for the respondent would submit that the cheque has been issued as security in the business of a partnership firm. However, the other partners of the firm were not impleaded as parties. So the complaint itself is liable to be dismissed. The cheque has been issued on 20.02.2003 and it was subsequently filled up and presented on 13.02.2004. In the notice dated 03.03.2004, no details about the amount for which the cheque has been issued is mentioned. Since already a criminal complaint under Sections 406 and 420 IPC has been preferred, the complaint made under Section 138 of the Negotiable Instruments Act in respect of the very same transaction is only a replica. So, the complaint itself is not maintainable. The learned counsel would further submit that the appellate Court shall not set aside the judgment of acquittal unless it was found to be perverse. In the instant case, the Trial Court has considered all the aspects in proper perspective and came to a correct conclusion and hence, the judgment of the Trial Court does not suffer perversity. So, the judgment of acquittal does not suffer any irregularity and he prayed for dismissal of the appeal.
6. Considered the rival submissions made by both sides and perused the typed set of papers.
7. The case of the appellant is that the appellant herein has lent Rs.6,00,000/- on 20.02.2003 as per the Ex.D.2/Agreement, wherein in paragraph 2, it was stated as follows:
Out of the profits arising from the business venture conducted by the 1st party, the 2nd party will be eligible for 35% as profit and it will be paid by the 1st party within one year. If the business venture runs in loss, the 1st party will pay 22% as interest and it is hereby undertaken. The first party refers to the respondent/accused viz., Abdul Azeez and one V.Sainudheen and the second party refers to the appellant/complainant viz., V.P.Sakhariyya. So, a bare reading of the above clause would disclose that all the partners in the business venture are the necessary parties to the proceedings. Further, as security the respondent/accused has issued a Ex.P.1/Cheque for Rs.7,32,000/- to the appellant/complainant without specifying the date. Since, the respondent/accused did not pay any money out of the profit, the appellant/complainant filled up the Ex.P.1/Cheque and presented the same for encashment.
8. Now the point to be decided is whether the complaint is maintainable without impleading the other partners in the business venture?
At this juncture, it is appropriate to consider the Ex.P.1/Cheque. The said cheque has been issued by the respondent/accused in the capacity of Proprietor, Pachilakkad Coffee Agencies. However, in the Ex.D.2/Agreement, it has been stated that the respondent/accused has taken on lease a coffee Curing Works under the name and style of 'Yes Coffee' and the appellant/complainant has agreed to invest Rs.6,00,000/- in the said business. So, it is not the case of the appellant/complainant that he had lent money to this respondent for his individual business. But the Ex.P.1/Cheque has been issued on behalf of the Proprietor, Pachilakkad Coffee Agencies. Further, the appellant/complainant has not preferred the complaint against the proprietor of the Company but only in his individual capacity.
9. It is appropriate to incorporate Section 141 of the Negotiable Instrument Act, 1881.
141. Offences by companies.- (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was incharge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
[Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty or that offence and shall be liable to be proceeded against and punished accordingly.
10. Thus, in the above provision it has been specifically stated that if the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was incharge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence. Admittedly, Pachilakkad Coffee Agencies has not been impleaded as a party and no reason whatsoever has not been assigned for not impleading the company. It is not the case of the appellant that he had lent money to Pachilakkad Coffee Agencies, but his definite case is that he had lent money for 'Yes Coffee curing works'. It is also not his case that on behalf of 'Yes Coffee curing works', Pachilakkad Coffee Agencies has issued the cheque for Rs.7,32,000/-.
11. At this juncture, it is appropriate to consider the oral evidence of P.W.1/Sakhariya. P.W.1 in his evidence has admitted the Ex.D.2/Agreement. In his cross-examination, he has stated that in Ex.D.2/Agreement, one Sainudeen and the accused is the first party and he is the second party. P.W.1 in his cross-examination has further stated that on the same day of execution of Ex.D.2/Agreement, he gave the amount of Rs.6,00,000/- and the respondent/accused also issued the Ex.P.1/Cheque without affixing the date. P.W.1 has also deposed that he do not know whether Noushad received Rs.3 lakhs from Yes Coffee on his direction for doing Continental Coffee Works. So, the evidence of P.W.1/ Sakhariya itself would reveal that he had invested the amount of Rs.6 lakhs only in the 'Yes Coffee' and not in 'Pachilakkad Coffee Agencies'.
12. Furthermore, as per Ex.D.2/Agreement, the first party is not only the respondent/accused but also one Sainudeen. However, the notice under Section 138 of the Negotiable Instruments Act, 1881 was not issued to the said Sainudeen, but it was issued only to the respondent/accused. In such circumstances, I am of the view that the complaint itself is not maintainable.
13. Before adverting to the facts of the case, it would be appropriate to consider the decisions relied on by the learned counsel for the appellant.
13.1. The learned counsel for the appellant would submit that once the issuance of the cheque is admitted, he is entitled to invoke presumption under Section 118 and 139 of the Negotiable Instruments Act, 1981, which is a rebuttable presumption. However, the said presumption has not been rebutted. To substantiate the same, the learned counsel relied upon the decision reported in (2002) 1 Supreme Court Cases 234, M.M.T.C. Ltd., v. Medchil Chemicals & Pharma (P) Ltd., wherein it was held that the complaint need not allege existing of a subsisting debt or liability against which the cheque is issued. The burden of proving non-existence of any debt or liability is on the accused and the same has to be discharged at the time of trial. The learned counsel relied upon paragraphs 15 to 17 of the said decision and the same is extracted here under:
15. In the case of Maruti Udyog Ltd. v. Narender reported in (1999) 1 SCC 113, this Court has held that, by virtue of Section 139 of the Negotiable Instruments Act, the Court has to draw a presumption that the holder of the cheque received the cheque for discharge of a debt or liability until the contrary is proved. This Court has held that at the initial stage of the proceedings the High Court was not justified in entertaining and accepting a plea that there was no debt or liability and thereby quashing the complaint.
16. A similar view has been taken by this Court in the case of K. N. Beena v. Muniyappan reported in 2001 (7) SCALE 331, wherein again it has been held that under Section 139 of the Negotiable Instruments Act the Court has to presume, in a complaint under Section 138, that the cheque had been issued for a debt or liability.
17. There is therefore no requirement that the Complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on basis of averments in the Petitions filed by them the High Court could not have concluded that there was no existing debt or liability. But the above citation is not applicable to the facts of the present case because in the quash proceedings it was held that even when the cheque is dishonoured by reason of stop-payment instructions, the same will attract Section 138 and discharge can be proved at the time of trial.
13.2. In this regard, the learned counsel for the appellant also relied on the decision reported in (2001) 8 Supreme Court Cases 458, K.N.Beena v. Muniyappan and Another, wherein it was held that the Trial Court has erroneously proceeded on the basis that the burden of proving consideration for a dishonoured cheque is on the complainant. It is appropriate to incorporate paragraph 6 of the said decision:
6. 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 burden of proving that a cheque had not been issued for a debt or liability is on the accused. There is no quarrel over the said proposition. But as per the dictum laid down by the Apex Court in the said decision, once the issuance of the cheque is admitted, the holder is entitled to invoke presumption under Section 118 and 139 of the Act which is a rebuttable presumption. The said presumption has to be rebutted by the respondent/accused either by way of cross-examining the complainant or by letting in independent witness. Once the respondent proves the discharge, then the burden shifts on the appellant/complainant. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused.
13.3. The next decision relied on by the learned counsel for the appellant is reported in (2002) 6 Supreme Court Cases 426, ICDS Ltd., v. Beena Shabeer and Another wherein it was held that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act. It is appropriate to incorporate Paragraphs 10 and 11 of the said decision:
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 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.
11. The issue as regards the co-extensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act, neither the same calls for any discussion therein. The language of the Statute depicts the intent of the law-makers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act: 'Any cheque' and 'other liability' are the two key expressions which stands as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the Statute. Any contra interpretation would defeat the intent of the legislature. The High Court, it seems, got carried away by the issue of guarantee and guarantor's liability and thus has overlooked the true intent and purport of Section 138 of the Act. The judgments recorded in the order of the High Court do not have any relevance in the contextual facts and the same thus does not lend any assistance to the contentions raised by the respondents. But the above citation is not applicable to the facts of the present case because it is not the case of the appellant hat he received the cheque from this respondent for discharging the legally subsisting liability of 'Yes Coffee'. In paragraph 1 of his pleadings, the appellant/complainant has stated that he paid Rs.6 lakhs to this accused for business activities in which the accused was the actual participant and the accused has agreed to pay 35% of the profit from the business venture to the appellant/complainant. In the event of the business running into loss, the accused agreed to pay 22% interest for the amount of Rs.6 lakhs invested by the appellant/complainant. The accused also issued a cheque for Rs.7,32,000/- without specifying the date in it. In such circumstances, the above citation will not be applicable to the given case on hand. Further, P.W.1/Sakhariya himself has stated that the respondent/accused issued the Ex.P.1/Cheque on the very same date of execution of the Ex.D.2/Agreement. Thus, on the said date there was no legally subsisting liability.
13.4. The learned counsel appearing for the appellant by relying upon the decision reported in (2008) 8 Supreme Court Cases 505, D.Purushotama Reddy and Another v. K.Sateesh would submit that filing of criminal complaint for recovery of the amount is not a bar for filing complaint under Section 139 of the Negotiable Instruments Act, 1881. It is appropriate to incorporate paragraph 9 of the said decision:
9. A suit for recovery of money due from a borrower indisputably is maintainable at the instance of the creditor. It is furthermore beyond any doubt or dispute that for the same cause of action a complaint petition under terms of Section 138 of the Act would also be maintainable. There is no quarrel over the said proposition. So, the filing of the suit in O.S.No.46 of 2004/Ex.D.4 is not a legal bar to file an application under Section 138 of the Negotiable Instruments Act. The Trial Court has erroneously held that filing of the civil suit is a legal bar to prefer a complaint under Section 138 of the Negotiable Instruments Act, 1881.
13.5. The learned counsel for the appellant also relied upon the decision reported in (2003) 3 Supreme Court Cases 232, Goaplast (P) Ltd., v. Chico Ursula D'Souza and Another and submit that in case of the post dated cheque, even stop payment instruction issued by the Drawer to the Bank would attract Section 138 of the Negotiable Instruments Act. It is appropriate to incorporate the relevant portion in paragraph 3 of the said decision:
3. ..... The penal provisions contained in Sections 138 to 142 of the Act are intended to ensure that obligations undertaken by issuing cheques as a mode of payment are honoured. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. A cheque is a well-recognized mode of payment and post-dated cheques are often used in various transactions in daily life. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque. If stoppage of payment of a post-dated cheque is permitted to take the case out of the purview of Section 138 of the Act, it will amount to allowing the party to take advantage of his own wrong. There is no quarrel over the said proposition. But even according to the evidence of P.W.1/ , the Ex.P.1/Cheque was issued on the very same date of execution of Ex.D.2/Agreement on 20.02.2003, but he filled up the cheque and presented it for encashment on 13.02.2004. In such circumstances, I am of the view that the Ex.P.1/Cheque cannot be construed to be a post-dated cheque. Hence, the above citation is not applicable.
13.6. The learned counsel for the appellant also relied upon the decision reported in (2012) 7 Supreme Court Cases 621, Sangeetaben Mahendrabhai Patel v. State of Gujarat and Another and submit that merely because the appellant/complainant had already preferred a complaint under Section 406 and 420 IPC and a case has been registered in Crime No.103 of 2004, it will not amount to double jeopardy for quashing the said proceeding under IPC. In the said decision, the Hon'ble Apex Court by relying upon the decision reported in (2011) 2 Supreme Court Cases 703, Kolla Veera Raghav Rao v. Gorantla Venkateswara Rao has held that once conviction under Section 138 of the NI Act has been recorded, the question of trying the same person under Section 420 IPC or any other provisions of IPC or any other statute is not permissible being hit by Article 20(2) of the Constitution and Section 300(1) CrPC.
But the above citation is not applicable to the facts of the present case because here no conviction has been so far fascinated and the case in Crime No.103 of 2004 is pending and the complaint preferred under the NI Act ended in acquittal.
14. On the basis of the facts of this case, on the side of the respondent D.W.1 to D.W.3 was examined. D.W.2/Venugopal is the Accounts Officer, BSNL, Madikkeri. He was examined to prove that the Telephone number used in the office of Yes Coffee stands in the name of Sainudheen and the bill was also paid by him for the period from 11.02.2003 to 07.10.2003. However, on 23.10.2003 the said landline was transferred in the name of one Suresh.
15. D.W.3/Raju who was working in Yes Coffee has deposed that the said company was owned by one Kalappa and Suresh. D.W.3 had also deposed that the said Yes Coffee was taken on lease by Sainudheen along with Abdul Azeez and Sakhariya and he worked under the said management from the beginning to end of the lease period. So, P.W.1/Sakhariya, D.W.1/Abdul Azeez , D.W.2/Venugopal, D.W.3/Raju has rebutted the presumption that Sainudheen is one of the partner of 'Yes Coffee'. However, the appellant/complainant has not impleaded all the necessary parties. So, the complaint itself is not maintainable under Section 141 of the NI Act.
16. Furthermore, even as per the evidence of P.W.1/Sakhariya, the Ex.P.1/Cheque was issued on the very same date of execution of Ex.D.2/Agreement without specifying the date. So, as on the date of issuance of the Ex.P.1/Cheque, there was no legally subsisting liability. It is also pertinent to note that P.W.1/Sakhariya in his cross-examination has deposed that he do not know whether Noushad, his borther-in-law received Rs.3 lakhs from Yes Coffee on his direction for doing Continental Coffee Works. So, the above evidence has clearly rebutted the presumption under Section 139 that the Ex.P.1/Cheque has not been issued for discharging the legally subsisting liability. So, the Trial Court has rightly considered the said aspect and acquitted the respondent/accused stating that the offence under Section 138 of the Negotiable Instruments Act, 1881 has not been made out.
17. It is a well settled dictum of the Hon'be Apex Court that the appellate Court shall not set aside the judgment of acquittal unless it was found to be perverse and the evidences both oral and documentary has not been properly considered. I do not find any perversity in the judgment of acquittal and hence, the appeal is liable to be dismissed.
18. In fine,
(i) The Criminal Appeal is dismissed.
(ii) The judgment of acquittal dated 12.05.2005 made in C.C.No.47 of 2004 on the file of the learned Judicial Magistrate (Sub-Judge) at Mahe is hereby confirmed.
18.02.2015 pgp R.MALA, J.
pgp To
1. The learned Judicial Magistrate (Sub-Judge), Mahe
2. The Public Prosecutor, High Court of Madras
3. Record Keeper, Criminal Section, High Court of Madras Pre-Delivery Judgment made in Crl.A.No.581 of 2005 Dated : 18.02.2015