Bangalore District Court
Pvh Arvind Fashion Private vs M/S. Primus Retail Private on 25 November, 2022
2KABC020239542011
IN THE COURT OF THE VIII ADDL. SMALL CAUSES
JUDGE, BENGALURU CITY.
(SCCH5)
DATED THIS THE 25TH DAY OF NOVEMBER, 2022
PRESENT: SRI. MALAKARI RAMAPPA WADEYAR
B.A., LLB.,(Spl.)
VIII ADDL. SCJ & ACMM,
MEMBER MACT
BENGALURU.
C.C No.27733/2011
COMPLAINANT : PVH Arvind Fashion Private
Limited
(A company incorporated under the
provisions of the Companies Act,
2013)
Having its Registered Office at
The Arvind Mills Premises,
Naroda Road,
Railwaypura Post,
Ahmedabad - 380 025.
And having its Local Offices at
No.4, Bruton 1st Cross Road,
Near Old Passport Office,
Bengaluru - 560 025.
2 CC No.27733/2011
SCCH5
(Represented herein by its autorized
signatory
Sri. Dhruvaraj
(Head Commercial)
(By Induslaw Advocates)
V/s
ACCUSED : 1. M/s. Primus Retail Private
Limited
(A Company incorporated under the
Companies Act, 1956)
Having its registered office at:
No.7, 1st Cross, 3rd Main,
Ashwini Layout,
Ejipura,
Bengaluru - 560 047.
(Represented herein by its
Managing Director)
(By Sri.K.S.Venkata Ramana, Adv.,)
2. Sri. S. Jayakumar
Chief Operating Officer
M/s. Primus Retail Private Limited
Having offices at:
No.7, 1st Cross,
3rd Main, Ashwini Layout,
Ejipura,
Bengaluru - 560 047.
And also at:
Sri. S. Jayakumar
3 CC No.27733/2011
SCCH5
No.158, 2nd Floor, 29th Cross,
17th Main, Banashankari II Stage,
Bengaluru - 560 070.
(By Sri.Vamshi Krishna C. Adv.,)
3. Sri. Palepu Sudhir Rao
C/o. M/s. Primus Retail Pvt. Ltd.,
Having Offices at:
No.7, 1st Cross,
3rd Main, Ashwini Layout,
Ejipura,
Bengaluru - 560 047.
And also at:
No.12F, Regalia, No.3,
Sardar Patel Road,
Taramani,
Chennai - 600113,
Tamil Nadu.
(Dismissed for nonprosecution as
per order dated 17.06.2017)
(By Sri.K.S.Venkata Ramana, Adv.,)
4. Sri. Balaji Venugopal Bhat
Managing Director
C/o. M/s. Primus Retail Private
Limited
Having offices at:
No.7, 1st Cross, 3rd Main,
Ashwini Layout, Ejipura,
Bengaluru - 560 047.
And also at:
4 CC No.27733/2011
SCCH5
Sri. Balaji Venugopoal Bhat
No.302, Embassy Orchid,
8th Main, RMV Extension,
Bengaluru - 560 080.
(By Sri.K.S.Venkata Ramana, Adv.,)
5. Sri. Ajay Mittal
C/o. M/s. Primus Retail Private
Limited
Having offices at:
No.7, 1st Cross,
3rd Main, Ashwini Layout,
Ejipura,
Bengaluru - 560 047.
And also at:
Sri. Ajay Mittal
Flat No.343, 3rd Block,
4th Floor, Ranka Park Apartments,
Lalbagh Road,
Bengaluru - 560 027.
(By Sri.K.S.V. Adv.)
6. Sri. Raju Mohandas Mahtaney
C/o. M/s. Primus Retail Private
Limited
Having offices at:
No.7, 1st Cross,
3rd Main, Ashwini Layout,
Ejipura,
Bengaluru - 560 047.
And also at:
5 CC No.27733/2011
SCCH5
Sri. Raju Mohandas Mahataney
No.31, Epsilon,
Yemlur Main Road,
Off Airport Road,
Bengaluru - 560 037.
(By Sri.S.Giridhar, Adv.,)
(Quashed as per order passed in
WP No.17387/2022 dated
16.09.2022)
7. Smt. Pooja R. Mahtaney
C/o. M/s. Primus Retail Private
Limited
Having offices at:
No.7, 1st Cross,
3rd Main, Ashwini Layout,
Ejipura,
Bengaluru - 560 047.
And also at:
Smt. Pooja R. Mahtaney
No.31, Epsilon,
Yemlur Main Road,
Off Airport Road,
Bengaluru - 560 037.
(By Sri.Dhananjay Joshi, Adv.,)
(Quashed as per order dated
05.10.2015)
8. Sri. K E C Raja Kumar
C/o. M/s. Primus Retail Private
Limited
6 CC No.27733/2011
SCCH5
Having offices at:
No.7, 1st Cross,
3rd Main, Ashwini Layout,
Ejipura,
Bengaluru - 560 047.
(Quashed as per order passed in
Crl. Pt. No.5793/2012 dated
21.07.2015)
*****
::JUDGMENT::
The complainant has filed this private complaint under Section 200 of Cr.P.C. against the accused No.1 to 8 for the offence punishable under Section 138 of Negotiable Instrument Act,1881.
2. Initially, this case was filed before XIV Addl. C.M.M. Bengaluru, as per Special Notification No.ADM I/07/2015 dated 08.06.2015, this case is transferred to this court.
7 CC No.27733/2011
SCCH5
3. The brief facts of the case of the complainant is that;
The Complainant is a company incorporated under the provisions of Companies Act and engaged in the business of retailing the world renowned apparel brand "Tommy Hilfiger" in India, having head office at Ahmedabad and branch office at Bengaluru, which is entered into agreement on 07.05.2007 with Aryan Lifestyle Private Limited for opening and operating "Tommy Hilfiger' franchise stores in India, through deed dated 27.04.2009 A1 Company assumed all the rights and liabilities of the Aryan Lifestyle Private Limited under the National SubFranchisee Agreement dated 07.05.2007. Pursuant to this agreement, accused No.1 company is liable for performance of all the obligations of the said Aryan Lifestyle Private Limited under the National SubFranchisee Agreement. 8 CC No.27733/2011
SCCH5
4. Accused No.1 company was unable to fulfill its obligations under the National SubFranchisee Agreement and failed to make timely payments to the complainant company against the supply of goods and merchandise as made from time to time by the complainant company. Therefore, complainant company has constrained to issue several notices calling upon accused No.1 company to clear the outstanding dues despite the issuance of letters, then in order to settle the disputes thereby entered into settlement agreement dated 24.09.2010.
5. Again in order to settle all other disputes, there was Addendum Settlement Agreement in between the parties dated 24.03.2011 for an amount of Rs.2,95,38,603/ and issued the following cheques to pay the dues.
9 CC No.27733/2011
SCCH5
Sl.No. Cheque No. Date Amount
1. 595404 26.04.2011 Rs.20,00,000/
2. 595405 27.05.2011 Rs.20,00,000/
3. 595406 27.06.2011 Rs.20,00,000/
4. 595407 29.07.2011 Rs.20,00,000/
5. 595408 26.08.2011 Rs.20,00,000/
6. 595409 30.09.2011 Rs.1,43,84,023/
6. Out of the above said cheques, complainant has submitted cheque bearing No.595404 for an amount of Rs.20,00,000/ dated 26.04.2011 and cheque bearing No.595405 for an amount of Rs.20,00,000/ dated 27.05.2011 before his banker, but both the cheques are returned on 02.06.2011 with an endorsement that "Funds Insufficient".
7. Accused No.2 is Chief Operating Officer of the A1 company, he is managing affairs of the company, he has signed the above said cheques, hence accused No.2 is guilty jointly and severally along with accused No.1, 3 10 CC No.27733/2011 SCCH5 to 8 and they have committed an offence under Sec.138 R/w. Sec.141 of N.I. Act, 1881, inspite of knowing that not having the money in their account with dishonest intention to cheat the complainant, such cheques are issued.
8. Accused No.3 to 8 are Directors of the A1 company and they are jointly in charge of its operations, daytoday management and financial affairs. Accused No.2 to 8 are all responsible for the business of accused No.1 and they had participated in the above settlement discussions with the complainant and they had assured it that the terms of the Addendum Settlement Agreement would be duly honoured by accused No.1 by making payment in accordance with the commitments undertaken in the Addendum Settlement Agreement, as such, all these accused persons are also guilty, jointly and severally along with accused No.1 having committed 11 CC No.27733/2011 SCCH5 the offence punishable under Sec.138 R/w. Sec.141 of N.I. Act, 1881.
9. Deliberatly in order to avoid the payments, accused No.1 had issued said cheques, complainant company received the said cheques in good faith on the assurance and promise made by the accused, inview of dishonour of two cheques bearing No.595404 and 595405, the complainant was constrained to issue a statutory notice under Sec.138 R/w. Sec.141 of NI Act dated 16.06.2011 notices served on 17.06.2011 and 18.06.2011 on the residential address. The accused would have arranged for payment within 15 days from the date of service of the said notice, but inspite of service of notice, accused has not made arrangement to pay the money.
10. Accused No.5 has received the notice and replied to the legal notice with false story which cannot 12 CC No.27733/2011 SCCH5 be accepted. He continues to remain liable in respect of the offences described herein and cause of action arose to file this complaint against accused No.1 to 8. so that, prays to take cognizance for the offence punishable under Sec.138 of N.I. Act, register the criminal case and issue summons against accused.
11. On going through the same, PCR is registered against accused No.1 to 8, recorded sworn statement of complainant, cognizance is taken for the offence punishable under Sec.138 of N.I. Act against accused No.1 to 8 and registered criminal case against them. 12. A1 is a company, accused No.2, 4, 5, 6, 7 & 8 have appeared before this court and released on bail.
13. The proceedings of against A7 is quashed as per the order dated 05.10.2015, A8 is quashed in Crl. Pet. No.5793/2012 dated 21.07.2015. steps not taken against accused No.3 for service of summons, hence case 13 CC No.27733/2011 SCCH5 against accused No.3 is dismissed for nonprosecution on 17.06.2017. Further proceedings of this case against A6 is quashed in W.P.No.17387/2022 dated 16.09.2022.
14. The plea is recorded for the offence punishable under Sec.138 of N.I. Act, wherein accused No.2, 4 & 5 have denied the same and claimed to try the alleged guilt against them.
15. Meantime with leave of the court name of the complainant company is amended as Tommy Hilfiger Arvind Fashion Pvt. Ltd., in the place of Aravind Murjani Brands Pvt. Ltd., as per order dated 20.03.2020. further as per order dated 04.11.2022 with leave of the court name of the complainant company is again amended as PVH Arvind Fashions Pvt. Ltd.,
16. In order to prove their case, complainant Dhruvaraj has deposed his evidence as PW1 and marked 27 documents as per Ex.P.1 to 27 and closed his 14 CC No.27733/2011 SCCH5 evidence. On the other hand, accused No.5 has deposed his evidence as DW1, accused No.2 has deposed his evidence as DW2 and marked documents as per Ex.D.1 to Ex.D.21 and closed their evidence, rest of the accused have not deposed their evidence.
17. Heard the arguments submitted by counsel for complainant and received written arguments along with citations.
18. On the other hand, counsel for accused No.4 and 7 submitted that, they have no defence evidence and arguments. Counsel for A2 and A5 submitted their oral and written arguments and furnished citations.
19. The following points arose for my consideration;
::POINTS::
1. Whether the complainant proves that, accused No.2 is being the Chief 15 CC No.27733/2011 SCCH5 Operative Officer of A1 company, accused No.4,5,7 are the Directors of the accused No.1 company have issued the cheque bearing No.595404 for a sum of Rs.20,00,000/ dated 26.04.2011 and cheque bearing No.595405 for a sum of Rs.20,00,000/ dated 27.05.2011 drawn on Axis Bank Ltd., M.G.Road Branch, Bengaluru in favour of complainant towards discharge of their legally recoverable debt?
2. Whether complainant proves that, when the said cheques are presented for realization through their banker SBI Bank, Bengaluru, which are dishonoured for the reasons 'Funds Insufficient' and even after issuance of the legal notice, the accused were failed to repay the said amount and thereby committed an offence punishable under Sec.138 of N.I. Act?
3. What Order?
20. My findings to the above points are as follows;
Point No.1 : In the Affirmative Point No.2 : In the Affirmative Point No.3 : As per final order for the following:
16 CC No.27733/2011
SCCH5 ::REASONS::
21. Point No.1 and 2: It is case of the complainant that, A1 is the company, A2 is authorized signatory and accused No.3 to 8 are the Directors of the accused No.1 company. Complainant company is engaged in the business of retailing the world renowned apparel brand "Tommy Hilfiger" in India having head office at Ahmedabad and also having branch office at Bengaluru, which has executed sub franchise agreement with the accused company on 07.05.2007.
22. As per the agreement dated 27.04.2009, A1 company has assumed all the rights and liabilities of the said Aryan Life Style Pvt. Ltd., and agreed to fulfill all the obligations under the National Sub Franchise agreement with the complainant company. As per the agreement dated 24.09.2010 accused company agreed to settle the 17 CC No.27733/2011 SCCH5 bills for an amount for Rs.5,02,49,008/, again entered into addendum settlement agreement dated 24.03.2011 for an amount of Rs.2,95,38,603/ and issued the above said cheques with view to pay the settled amount, but both the cheques are bounced, inspite of issuance of notice and not made arrangement for payment of the cheque amount.
23. Complainant in this case has reiterated the above said facts in his evidence. Ex.P.1 is the copy of resolution dated 27.07.2011 authorizing the Mr.Ravi Rao and Mr.Dhruvaraj to file this complaint, Ex.P.2 is copy of power of attorney dated 23.05.2018 given by Ravi Rao in favour of the Dhruvaraj to file complaints pertains to this case, Ex.P.3 and Ex.P.5 are cheque No.595404 and 595405.. Ex.P.4 and Ex.P.6 are the endorsements issued by the SBI on 02.06.2011.
18 CC No.27733/2011
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24. Ex.P.7 is settlement agreement dated 24.09.2010, Ex.P.8 is Addendum agreement dated 24.09.2010, Ex.P.9 is authorization letter given by the Board of Directors in favour of one Mr.Shailesh Chaturvedi, Managing Director and CEO of the company and Mr.Ravi Rao, Chief Financial Officer on 21.12.2011 authorizing them to delegate their powers in favour of third person. Ex.P.10, 11, 12, 13 are the Form No.32, Ex.P.14 is Form No.20B, Ex.P.15 is copy of legal notice, Ex.P.16 is copies of postal receipts, Ex.P.17 is copies of postal acknowledgments.
25. Ex.P.18 is copy of judgment in CC No.26215/2012 dated 15.04.2019 passed by Hon'ble XXIII ACMM with regard to other cheque bearing No.595409 issued by the present accused in favour of present complainant. Ex.P.19 is evidence affidavit of CW 1 by name Mr.Dhruvaraj in the said case, Ex.P.20 is copy 19 CC No.27733/2011 SCCH5 of evidence affidavit filed by A5 by name Ajay Mithal, Ex.P.21 is copy of evidence of present A2 by name Jayakumar S. Ex.P.22 is copy of evidence of present A3 by name P.Sudhir Rao.
26. Ex.P.23 is copy of judgment in CC No.26351/2012 dated 15.04.2019 passed by Hon'ble XXIII ACMM with regard to other cheque bearing No.595406 issued by the present accused in favour of present complainant. Ex.P.24 is evidence affidavit by name Mr.Dhruvaraj, Ex.P.25 is copy of evidence affidavit filed by A5 by name Ajay Mithal, Ex.P.26 is copy of evidence of present A2 by name Jayakumar S. Ex.P.27 is copy of evidence of present A3 by name P.Sudhir Rao.
27. In crossexamination by counsel for A2 admits that, he know the facts of the case and filed this case as per the company resolution of the year 2011 marked at Ex.P.1. He has denied that, there is no authority to lodge 20 CC No.27733/2011 SCCH5 complaint under Ex.P.1, Ex.P.2 GPA is based upon the Ex.P.1 and which is passed in the year 2011, in the year 2011 name of the company was Arvind Mujrani Brands Pvt. Ltd., and now it is Tommy Hilfiger Arvind Fashions Pvt. Ltd., such changes are made on 06.01.2012, naturally letter head and seals will be changed inview of change of the company. He has admitted that, board of directors of the A1 company are Balaji Bhat, Sudhir Rao, Mohan Das, Mathani, Ajay Mithal, Pooja Mohantane and Rajakumar. Further admitted that, S. Jayakumar and Balaji Bhat have signed the disputed cheques. he admits that, in the year 2012, A1 company is closed.
28. Further admits that, their appeals are pending against the judgment passed in CC No.26352/2012, 26353/2012, further admits that, in CC No.26215/2012 and 26351/2012, A5 is released.
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29. In crossexamination by counsel for A4 and 5 deposed that, as per Ex.P.13 on 11.04.2014 A1 was not director of the company, but as on the date of settlement agreement he was director of the company, A5 was nominal director of the Unit Trust of India, but he do not know the designation given by A5. Further deposed that, he has appeared in all the CC No.26215/2012, 26351/2012, 26352/2012 and 26353/2012. Further admitted that, Ex.P.15 notice is part of the above said cases, as per Ex.P.1 powers are confirmed with Ravirao and as per Ex.P.8 Ravirao has signed Ex.P.2/GPA. Further admits that, at the time of signing Ex.P.8 cheques are given.
30. On the other hand, accused No.5 Ajay Mithal has filed evidence affidavit as DW1 stating that, he was working with the Unit Trust of India as Assistant General Manager under employment code No.2283 and deputed 22 CC No.27733/2011 SCCH5 to Venture Capital Funds Division and promoted as Vice President of Unit Trust of India Venture Funds Management Company Ltd., then he has given resignation to the said Unit Trust of India which is accepted on 28.02.2002, he has invested the money with A1 company, during incorporation of the accused company as per the provisions and goverance of Security and Exchange Board of India, the Unit Trust of India Venture Fund Management Company Pvt. Ltd., has appointed him as Manager and taking care of investment with the accused company.
31. Earlier one Mr.Rajakumar K.E.C. was appointed as Director of A1 company through government investment company. He is withdrawn on 12.12.2009. he has discharged his duties in good faith, he was only employee of the said company on the basis of salary and he had been receiving all the allowances, he is 23 CC No.27733/2011 SCCH5 nowhere connected to the management and business of the A1 company, he was only nominee director of the said company and the said company is having 18.24% stake and the UTI Assessment Management Company has adding upto 72.96%, so that, he is not liable for any transaction of A1, question of commission of the offence punishable under Sec138 of NI Act does not arise.
32. In support of his case relied upon copy of office order No.242/200102 is marked as Ex.D.1, copy of letter dated 12.12.2009 issued by UTI Venture is marked as Ex.D.2, copy of offer employment dated 11.02.2022 is marked as Ex.D.3, copy of memorandm of association of UTI Venture Funds is marked as Ex.D.4, copy of articles of association of UTI Venture Funds is marked as Ex.D.5, copy of Details of shareholders of UTI Venture Funds is marked as Ex.D.6, copy of Certificate issued by UTI Ventures is marked as Ex.D.7.
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33. In crossexamination deposed that, he cannot say date of entry in the above said company, at the time of his entry as nominee director, Sudhir Rao, Balaji Bhat, Raju Mithal were directors of the said company, they are accused No.3, 4 & 6 in this case, he has issued notice against them to attend the meeting, normally Balaji Bhat and Sudhir Rao were attending the meeting, he know the transactions of the company, Unit Trust of India Venture Fund Management Company has invested an amount of Rs.50 to 60 crores, discrepaneies were going upon the expenditures, after verification they were invested money in the A1 company, after knowing the financial capacity of A1 company, they have conducted meetings once in 3 months, Managing Director Balaji Bhat had been discussing about the transactions, S.Jayakumar/A2 was Chief Operating Officer, he had been discussing with the Balaji Bhat about the affairs of the company, he cannot 25 CC No.27733/2011 SCCH5 say about the settlement deeds, he has not received any remuneration, he do not know about the loans availed by this company, A1 company was situated at Koramangala address which is shown in the cause title of the Complaint. Further denied all other obligations.
34. A2 has also deposed his evidence as DW2 denying case of the complainant. In his chief examination deposed that, A1 Company is liquidated in the year 2012, as per the directions of the board of directors, he has signed on the cheques, complainant has filed this complaint based upon the authorization dated 27.11.2011 marked at Ex.P.1, as per Ex.P.1 only Ravi Rao had authority to lodge the complaint, but not this Dhruvaraj, as per Ex.P.2 dated 23.05.2018 complainant has made efforts to rectify the mistakes, but which is not permissible under law. Ex.P.1 and 9 are the board resolutions which are not helpful to the case of the 26 CC No.27733/2011 SCCH5 complainant, further addresses mentioned under Ex.P.1 and 9 are not one and the same, without any auhtority this complaint is filed by the complainant, which is not maintainable. There is no any ill intention, complaint is not maintainable.
35. In support of his case he has relied upon letter of appointment and salary break up with terms and conditions dated 18.04.2003 marked as Ex.D.8, letter of appointment and salary break up with terms and conditions dated 01.05.2003 is marked as Ex.D.9, duty joining report dated 17.05.2003 is marked as Ex.D.10, promotion and confirmation letter dated 01.09.2003 is marked as Ex.D.11, confirmation as Regional Manager and increment in salary dated 01.11.2003 is marked as Ex.D.12, redesignation letter with salary increment as business head, sought and west dated 01.07.2004 is marked as Ex.D.13, promotion letter dated 05.05.2005 is 27 CC No.27733/2011 SCCH5 marked as Ex.D.14, increment letter in salary dated 10.11.2005 marked as Ex.D.15, letter of office which has been prescribed in Form No.1 and details of eshop option in form No.IA is marked as Ex.D.16, salary increment letter dated 31.03.2006 is marked as Ex.D.17, Grade and designation change as business head for factory outlets, dated 15.03.2007 is marked as Ex.D.18, redisignation letter as sales head dated 20.05.2008 is marked as Ex.D.19, increment letter in salary dated 09.06.2010 is marked as Ex.D.20, resignation letter addressed to CEO, email dated 07.02.2012 is marked as Ex.D.21.
36. In crossexamination admits that, since 2003 he was Area Sales Manager of this company, then in the year 200910 he has become Chief Operating Officer, as per the oral instructions of the CEO Balaji Bhat/A4, CFO Mr.'Biju he had been running the company, further once 28 CC No.27733/2011 SCCH5 in a week, he had been discussing with the Balaji Bhat, further he had been taking care of the retail store operations, meantime A3 was director of the said company. Further stated that, he had capacity to sign the cheques only upto Rs.10,00,000/, but deposed that, there was no such any written instructions and not produced such documents, himself and Balaji Bhat had authority to sign the cheques, accordingly they were signing all the cheques of A1 company.
37. Further as per the instructions of board of directors, he has signed on the agreement, further as per the instructions of board of directors, he has signed on addendum agreement, further after reading the above said agreements, he has signed for the same and for the various time they have discussed with the Ravi Rao, addendum agreement bears his signature, as per the addenudum agreement marked at Ex.P.8, disputed 29 CC No.27733/2011 SCCH5 cheques are marked at Ex.P.3 and Ex.P.5 are given to the complainant company. Further he has seen and identified the signatures appearing on the cheques marked at Ex.P.3(a) and Ex.P.5(a). He has signed the said cheqaues at the time of signing Ex.P.7 and 8 by Balaji Bhat and Sudhir Rao as directors of accused company, Ex.P.3 and 5 are pertains to Axis Bank, he do not know the balance available in the account maintained by the A1 company at Axis Bank, everything was within the knowledge of company CEO Biju, there is no payment in favour of complainant company, every thing is discussed with CEO,.
38. During argument counsel for complainant argued that, A2 is the Chief Operating Officer of A1 company, he has signed disputed cheques marked at Ex.P.3(a) and Ex.P.5(a), said fact is admitted in cross examination, further issuance of disputed cheques under 30 CC No.27733/2011 SCCH5 the agreement and addendum agreement marked at Ex.P.7 and 8 is not disputed, Ex.P.13 Form No.32 speaks that, A5 was Managing Director of the company, he has signed Ex.P.3 and Ex.P.5 along with A2 at the time of issuing in favour of the complainant, further signing of Ex.P.7 and Ex.P.8 is not dipsuted, bouncing of the cheques, service of notice is not disputed, case is filed well within time.
39. On the other hand, counsel for A4 and A5 submitted that, he has no argument, counsel for A7 has not appeared and submitted anything, counsel for A2 argued that, transactions in between the complainant and accused company is not disputed, liability is also not disputed, execution and signing of agreement and addendum agreement marked at Ex.P.7 and 8 are not disputed, issuance of cheque as per Ex.P.3 and 5 and 31 CC No.27733/2011 SCCH5 signatures are not disputed, further submitted that, he will not dispute above said facts.
40. Argued that, accused company is liquidated in the year 2012, so that, question of liability does not arise. Further argued that, A2 has signed the cheques as per the directions of board of directors, very case is filed on the basis of the Ex.P.1/copy of resolution dated 27.07.2011, accordingly only Ravi Rao had authority to file complaint and Dhruvaraj had no authority to file this complaint, hence complaint filed by the Dhruvaraj without authorization is not maintainable in the eye of law. Further argued that, in crossexamination PW1 admitted that, on the basis of Ex.P.1, he has filed this complaint, only in order to outcome from the mistakes occurred in Ex.P.1, Ravirao has executed Ex.P.2/power of attorney in favour of the Dhruvaraj on 23.05.2018, on that basis very complaint is not maintainable, Ex.P.9 is 32 CC No.27733/2011 SCCH5 also a resolution passed by board of directors authorizing the Ravi Rao and another person on 21.12.2011 to delegate their powers, very complaint is filed on 29.07.2011, so that, authorization given on 21.12.2011 by the board of directors as per Ex.P.9 is not helpful to the case of the complainant, office address in Ex.P.1 and Ex.P.9 are not one and the same, without authorization this complaint is filed, so that, very complaint is not maintainable, accordingly prays to dismiss the complaint.
41. On going through the contentions of both the parties, it is clear that, entire case of the complainant is admitted by the accused persons, transactions in between both the parties and signing on Ex.P.7 and Ex.P.8 is admitted, issuance of Ex.P.3 and 5 with signature of A2 and A5 is admitted, bouncing of cheques is admitted, service of notice against them is admitted, 33 CC No.27733/2011 SCCH5 nonpayment of cheque amount even after service of notice is admitted, liability to pay the cheque amount is admitted.
42. With regard to endorsement issued by the banks as per Ex.P.4 and 6 counsel for complainant submitted that cheques are bounced, further cited citation reported in (2017) 5 SCC 737 in between N.Parameswaran Unni V/s. G. Kannan and another and also relied upon Sec.27 of N.I. Act about the presumption with regard to service of notice, in this regard he has relied upon citation reported in (2007) 6 SCC 555 in between C.C.Alavi Haji V/s. Palaetty Muhammed.
43. With regard to nonpayment of money even after service of notice, he has relied upon a decisions reported in AIR 2010 SC 1898 in between Rangpapa 34 CC No.27733/2011 SCCH5 V/s. Sri. Mohan, (2001) 6 SCC 16 in between Hiten P. Dalal V/s. Bratindranath Banerjee and (2009) 2 SCC 513 in case of Kumar Exports V/s. Sharma Carpets.
44. The accused 4 and 6 have not denied the case of the complainant by way of deposing their evidence, in this regard relied upon citation reported in 2007 (4) Kar U489 in between Ramaraj V/s. Iliyaz Khan and argued that, all the requirements of the Sec.138 of N.I. Act are complied. Further relied upon Sec.41 of N.I. Act to prove his defence and argued about the offence committed by the company, further submitted that, accused No.2 is Chief Operating Officer, other accused are directors of the said company.
45. The learned counsel for the complainant has further relied upon citation reported AIR 2008 SC 2357 in between Paresh P. Rajda V/s. State of Maharashtra 35 CC No.27733/2011 SCCH5 and another, with regard to responsibility of the board of directors, manager and secretary and other any officer of the company. Further relied upon 2011 (4) Scale 614 in between Rallis India Ltd. V/s. Poduru Vidya Bhusan and others with regard to discharge of liability by the directors of the company, further relied upon citation reported in (2005) 8 SCC 89 in between S.M.S. Pharmaceuticals Ltd., V/s. Neeta Balla, wherein it is held that signatory of cheques is responsible for the consequences under Sec.141(2) of N.I. Act.
46. On going through the above citations with reference to the case of the complainant it is noticed that, complainant has proved all other aspects required for filing of this complaint with reference to the above cited citations. Furthermore during argument, counsel for accused has not disputed the said facts, hence above 36 CC No.27733/2011 SCCH5 citations are not much important to decide the case in hand.
47. Only defence of the A2 is that, complainant by name Dhruvaraj had no authority to lodge this complaint as on the date of complaint dated 29.07.2011. He had no authority under Ex.P.1 dated 27.07.2011. On perusal of Ex.P.1 it is noticed that, authorization is given in favour of the Dhruvaraj and Ravi Rao as follows;
"The company shall present a complaint under the relevant provisions of the NI Act 1881, before the competent jurisdictional Magistrate, in connection with the offence committed by M/s. Primus Retail Pvt. Ltd., and all its directors and officers in default (as identified in the statutory demand notice issued on behalf of the company) in connection with the unlawful dishonour of cheques bearing No.595404 and 595405.37 CC No.27733/2011
SCCH5 Mr.Ravi Rao, Vice President - Finance be and is hereby authorized to sign and execute any document pertaining to the complaint to be filed by the Company against M/s.Primus Retail Private Limited and its Directors and officers in default, in respect of the above offence and also any other litigation in connection with the recovery of amounts due to the company from M/s. Primus Retail Pvt. Ltd., It is specifically clarified that Mr.Ravi Rao be and is hereby duly authorized to sign and present the criminal complaint proposed to be filed against M/s.Primus Retail Private Limited and its directors and officers in default, under Sec.138 of the N.I. Act.
Mr. Ravi Rao, Vice President - Finance and Mr.Dhruvaraj, ManagerCommercial, be and are hereby authorized to attend the proceedings of the court in respect of the matter stated above and to give evidence and sign any document 38 CC No.27733/2011 SCCH5 during and related to such proceedings, on behalf of the company".
48. On perusal of the above document it is clear that, in 1st para authorization is given to Ravi Rao and Dhruvaraj for all the purposes, in 2nd para and 3rd para of the said document specifically authorization is given to Ravirao to file this complaint against the accused company, in 4th para authorization is given to Dhruvaraj along with Ravi Rao to attend the court with regard to this matter, give evidence and sign documents". Under such circumstances, Ravi Rao and Dhruvaraj had authority to sign and lodge this complaint with reference to para No.1 of the Ex.P.1, but with reference to para No.2 and 3, only Ravi Rao had authority to file this complaint and Dhruvaraj had authority to asssist him, in this regard there was some ambiquity in between the 39 CC No.27733/2011 SCCH5 parties, so that, as per Ex.P.9 dated 21.12.2011 one more resolution is passed by the board of directors authorizing the Ravi Rao and other person to delegate their powers and functions in favour of one or more persons of the company. Then during pendency of the complaint, as per Ex.P.2 Ravirao has executed power of attorney in favour of Dhruvaraj on 23.05.2018 to conduct this case along with other cases.
49. In this regard counsel for A2 relied upon following citations;
i) 2013 SCC ONLINE KAR 10450 in between Canara Workshops Ltd., V/s. Mantesh, wherein at para No.28 of the judgment Hon'ble Supreme Court of India held that, "when a director filed petition on behalf of company without power of authorization, the invalidity cannot be cured by later rectification 40 CC No.27733/2011 SCCH5 and therefore, such petition is not maintainable".
ii) 1996 SCC Online AP 902 in between Satish & Co. V/s. S.R.Traders and Ors. wherein Hon'ble High Court of Andhra Pradesh at para No.24 and 25 of the judgment observed as follows;
"where proper authorization letter or power of attorney was not filed along with a complaint, the court could not have taken cognizance of the offence since it was not a proper complaint in terms of Sec.142(a) of the Act".
iii) 2007 SCC Online KAR 474 in between Om Sakthi SC/ST and Minority Credit Cooperative Society Ltd., wherein at para No.9 of the judgment held that, 41 CC No.27733/2011 SCCH5 "when a complainant deposing on behalf of the companynonproduction of resolution authorizing the director of the company to establish that, the director has been authorized to depose for and on behalf of the company is fatal to the complainant and the complainant cannot be entertained in the absence of authorization or a power of authority".
iv) 2007 SCC Online Kar 210 in between Director, Maruti Feeds and Farms Private Ltd., Dharwad V/s. Basanna Pattekar, wherein it is held that, "when director of the company has deposed his evidence without authorization and admitted in crossexamination under such circumstances, his complaint is not maintainable".
42 CC No.27733/2011
SCCH5
v) 1998 SCC Online Mad 40 in between Sakthi Concrete Industries Ltd., Hyderabad V/s. Valuable Steels (India) Ltd., Chennai, wherein Hon'ble High Court of Madras held that, "When complaint filed by some other person by the company without having authorization, further said person is neither a manager or a director of the company. Under such circumstances, he is not competent to file complaint without having any authorization by the company".
50. On the other hand, counsel for complainant relied upon a citation reported (2002) 1 SCC 234 in between M.M.T.C Ltd., and another V/s. Medchl Chemicals and Pharma (P) and another, wherein Hon'ble Supreme Court of India observed as follows; 43 CC No.27733/2011
SCCH5 "The only eligibility criterion prescribed by Sec.142 for maintaining a complaint under S.138 is that the complaint must be by the payee or the holder in due course. This criterion is satisfied as the complaint is in the name and on behalf of the appellant company. Therefore, even presuming, that initially there was no authority, still the company can, at any stage, rectify that defect. At a subsequent stage the company can sent a person who is competent to represent the company"
51. Further argued that, as per case of the accused he had authority to sign the cheques only for an amount of Rs.10,00,000/, but such defence will not come to aid of the accused to justify that, why the legally enforceable debt of the complainant has not paid. To prove the said facts, three is no evidence on record, such baseless ascertain shall be discarded by the court. In this 44 CC No.27733/2011 SCCH5 regard relied upon citation reported in (2001) 6 SCC 16 in between Hiten P. Dalal V/s. Bratindranath Banerjee.
52. Further as per case of the accused he is only nominee director in this case, but he has attended the meetings under his directions the affairs of the A1 company is running, so that, he is responsible for all things, even he filed petition under Sec. 482 of Cr.P.C and withdrawn.
53. Further argument of the counsel for A1 that, company is ordered to wind up vide order of Hon'ble High Court of Karnataka, so that, accused are entitled for discharge from the liability, but such defence is not helpful to the case of the accused, because after filing of this case, their company is wind up, so that, defence taken by the accused is not sustainable. In this regard, relied upon a citation reported in 2016 SCC Online Bom 45 CC No.27733/2011 SCCH5 4864 in between Indorama Synthetics (I) Ltd., V/s. State of Maharashtra and Others. Further relied upon another citation reported in 1998 SCC Online Bombay 248 in between Orkay Industries Ltd., and others V/s. State of Maharashtra and others, wherein Hon'ble Supreme Court of India observed as follows.
"As set out above, it is clear that there was no payment within the period of 15 days after receipt of the notice. Therefore, there was failure to make payment. Thus at the end of the period of 15 days, the offence is deemed to have been committed. The offence was therefore completed at that point of time. We are in agreement with the submission that a subsequent order appointing a Provisional Liquidator or winding up the company can have no bearing on the proceedings under Sec.138 of the N.I. Act once the offence is deemed 46 CC No.27733/2011 SCCH5 committed prior to such an order being passed. If prior to the order of winding up or appointment provisional liquidator an offence has already been committed then the subsequent order cannot absolve the company or its Directors of the offence nor give rise to any defence in the proceedings under Sec.138 of the Negotiable Instruments Act".
On going through the citations cited by the counsel for complainant and accused and also the written arguments furnished by them, this court is of the opinion that, accused have committed the offence punishable under Sec.138 of N.I. Act. Further under Ex.P.1 there was authority to file the complaint by the complainant, when accused have raised the objections about the validity and santity of the Ex.P.1 in other parallel cases very board of directors have executed Ex.P.9. Further in 47 CC No.27733/2011 SCCH5 order to clarify the same, once again Ravi Rao has executed power of attorney as per Ex.P.2 in favour of present complainant on the basis of Ex.P.9, as per the citations cited by the counsel for accused, mistakes cannot be corrected after filing of the complaint with regard to authority to file complaint, but as per the citations cited by the counsel for complainant such mistakes can be corrected even after filing of the complaint.
54. In this regard citations cited by the accused is of the year 2013 passed by the Hon'ble High Court of Karnataka in the case of the Canara Workshops Ltd., V/s. Mantesh reported in 2013 SCC Online Kar 10450. Judgment of Hon'ble High Court of Andhra Pradesh passed in the year 1996 in 1996 SCC Online AP 902 in between Satish & Co. V/s. S.R. Traders, another case 48 CC No.27733/2011 SCCH5 passed in the year 2007 in 2007 SCC Online Kar 474 in between Om Shakthi SC/ST and Minority Credit Co operative Society Ltd., V/s. Venkatesh, case of the the year 1998 in 1998 SCC Online Mad 40 in between Sakthi Concrete Industries Ltd., V/s. Valuable Steels (India) Ltd., but on the other hand, with regard to same subject matter citations cited by the complainant is of the year 2002 relied in (2002) 1 SCC 234 in between M.M.T.C Ltd., and another V/s. Medchl Chemicals and Pharma (P) and another.
55. Under such circumstances, this court is of the opinion that, judgment cited by the counsel for complainant is new and highest court judgment, which prevails over the judgments cited by the counsel for accused. Further this court is of the opinion that, when complainant has filed this complaint with the knowledge, 49 CC No.27733/2011 SCCH5 there is authorization under Ex.P.1, furthermore complainant has made efforts to rectify the minor mistakes by way of Ex.P.2 and Ex.P.9. Under such circumstances, this court is of the opinion that, only on the basis of such technical minor mistakes, case of the complainant cannot be denied. When all other aspects are proved with reference to Sec.138 and 141 of the N.I. Act, under such circumstances, dismissal of the complaint on such technical grounds may amounts to miscarriage of justice. Further if there is no any such resolution or authorization, defence of the accused may be considered, only on the basis of mere and minute technial iiregularities, case of the complainant cannot be washed out. With these views, this court comes to the conclusion that, complainant has proved that accused have committed an offence punishable under Sec.138 of N.I. Act. Under such circumstances, Accused are liable 50 CC No.27733/2011 SCCH5 for conviction for the offence punishable under Sec.138 of N.I. Act to the maximum extent as provided under law, further they are liable to pay compensation as provided under Section 357(1) (b) of Cr.P.C.
56. A1 is the company which will be convicted only by way of imposing fine and ordering for paying compensation. Case against A3 is dismissed for non prosecution, so that, A3 is not liable of any conviction and payment of compensation. Case against A6, A7 and A8 is quashed, so that, there will be no conviction order and imposition of fine against them.
57. Accused No.2, 4 and 5 are on record. In the case on hand, A4 has not deposed any evidence and not crossexamined the PW1, only counsel for A2 and 5 have crossexamined the PW1 and contested the case by way of deposing their evidence. Under such circumstances, this court is of the opinion that, accused No.1, 2, 4 and 51 CC No.27733/2011 SCCH5 5 are liable for conviction. With these views, I have answered above point No.1 and 2 in the affirmative.
58. Point No.3: For the reasons assigned and findings given on the above point No.1 and 2, this court proceed to pass following:
::ORDER::
Acting U/s.255(2) of Cr.P.C the Accused No.1, 2, 4 and 5 are hereby convicted for the offence punishable under Section 138 of Negotiable Instrument Act, hence accused No.2, 4 and 5 are sentenced to undergo simple imprisonment for one year and pay fine of Rs.20,000/ each, in default they shall further undergo SI for three months.
Further accused No.1 is sentenced to pay fine of Rs.20,000/.
Further accused No.1, 2, 4 and 5 are
directed to pay compensation of
52 CC No.27733/2011
SCCH5
Rs.40,00,000/ (Rupees Forty Lakhs Only) in favour of complainant within 60 days from the date of this order. In default, accused No.2, 4 and 5 shall undergo SI for further one year.
The bail bond executed by the Accused No.2, 4 and 5 shall stands cancelled.
Office is directed to supply certified copy of this judgment to the Accused immediately on free of cost.
(Dictated to the stenographer, transcript thereof, typed by her, thereof is corrected and then pronounced by me in the Open Court on this the 25th day of November, 2022) (MALAKARI RAMAPPA WADEYAR) VIII ADDL. SCJ & ACMM MEMBER - MACT, BENGALURU.
::A N N E X U R E::
LIST OF WITNESSES EXAMINED ON BEHALF OF THE COMPLAINANT:
PW1 : Sri. Dhruvaraj
53 CC No.27733/2011
SCCH5
LIST OF DOCUMENTS MARKED ON BEHALF OF THE COMPLAINANT:
Ex.P.1 : Copy of authorization or copy of
resolution letter
Ex.P.2 : Copy of GPA
Ex.P.3 : Original Cheque
Ex.P.4 : Cheque Return Memo
Ex.P.5 : Original Cheque
Ex.P.6 : Cheque Return Memo
Ex.P.7 : Copy of Settlement Agreement
Ex.P.8 : Copy of Addendum Settlement
Agreement
Ex.P.9 : Copy of Board Resolution dated
21.12.2011
Ex.P.10 to : Copy of Form No.32
Ex.P.13 (4 in Nos.)
Ex.P.14 : Copy of Form No.20B
Ex.P.15 : Copy of Notice
Ex.P.16 : Copy of Postal Receipts (14 in Nos.)
Ex.P.17 : Copy of Postal Acknowledgments
(13 in Nos.)
Ex.P.18 : Copy of Judgment in CC No.26215/2012
Ex.P.19 : Copy of evidence of complainant in
CC No.26215/2012
Ex.P.20 : Copy of evidence of accused No.1
Ex.P.21 : Copy of evidence of accused No.2
Ex.P.22 : Copy of evidence of accused No.3
Ex.P.23 : Copy of Judgment in CC No.26351/2012
Ex.P.24 : Copy of evidence of complainant in
CC No.26351/2012
Ex.P.25 : Copy of evidence of accused No.5
54 CC No.27733/2011
SCCH5
Ex.P.26 : Copy of evidence of accused No.2
Ex.P.27 : Copy of evidence of accused No.3
LIST OF WITNESSES EXAMINED ON BEHALF OF THE ACCUSED:
DW1 : Sri. Ajay Mittal DW2 : Sri. Jayakumar S.
LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE ACCUSED:
Ex.D.1 : Copy of Office Order No.242/200102 Ex.D.2 : Copy of Letter dated 12.12.2009 issued by UTI Venture Ex.D.3 : Copy of Offer Employment dated 11.02.2022 Ex.D.4 : Copy of Memorandum of Association of UTI Venture Funds Ex.D.5 : Copy of Articles of Association of UTI Venture Funds Ex.D.6 : Copy of Details of Shareholders of UTI Venture Funds Ex.D.7 : Copy of Certificate issued by UTI Ventures Ex.D.8 : Letter of Appointment and salary break up with terms and conditions, dated 18.04.2003 Ex.D.9 : Letter of Appointment and Salary break up with terms and conditions, dated 01.05.2003 Ex.D.10 : Duty Joining Report, 55 CC No.27733/2011 SCCH5 dated 17.05.2003 Ex.D.11 : Promotion and Confirmation Letter, dated 01.09.2003 Ex.D.12 : Confirmation as Regional Manager and increment in Salary, dated 01.11.2003 Ex.D.13 : Redesignation Letter with salary increment as business head, sought and west, dated 01.07.2004 Ex.D.14 : Promotion Letter, dated 05.05.2005 Ex.D.15 : Increment Letter in salary, dated 10.11.2005 Ex.D.16 : Letter of Officer which has been prescribed in Form No.I and details of eshops option in Form No.IA Ex.D.17 : Salary Increment Letter, dated 31.03.2006 Ex.D.18 : Grade and Designation change as business head for factory outlets, dated 15.03.2007 Ex.D.19 : Redesignation Letter as Sales head, dated 20.05.2008 Ex.D.20 : Increment Letter in Salary, dated 09.06.2010 Ex.D.21 : Resignation Letter addressed to CEO, Email dated 07.02.2012 (MALAKARI RAMAPPA WADEYAR) VIII ADDL. SCJ & ACMM MEMBER - MACT, BENGALURU.