Bangalore District Court
Is A Proprietary Concern Represented By vs U/Sec.200 Of Cr.P.C For The Offence ... on 26 August, 2016
IN THE COURT OF THE II ADDL. SMALL CAUSES JUDGE
& XVIII ADDL. CHIEF METROPOLITAN MAGISTRATE,
BENGALURU CITY
Dated this the 26th day of August 2016
PRESENT :
SMT.PANCHAKSHARI M., M.Com., LL.B.
II Addl. Small Causes Judge &
XXVIII ACMM, Bengaluru.
CC NO.5567/2012.
JUDGMENT U/S 355 OF THE Cr.P.C.1973
1. Sl. No. of the case : C.C. No.5567/2012
2. The date of commission of
the offence : 21.12.2011
3. Name of the Complainant : M/s.Prime Security & Detective
Services,
A Proprietorship Concern,
having office at No.436/A,,
1st Stage, 2nd phase,
3rd "C" Main,
Manjunathanagara,
Bengaluru-560 010.
Represented by its Authorised
Representative-
Sri.J.Bharathesha,
Director-Operations:
(By Sri.Sitarama G.Hegde,
Advocate)
4. Names of the Accused: :1. Ramachandra T.,
SCCH-13 2 CC.NO.5567/12
2.Gangadhara,
Managing Directors,
Authorised Signatories,
M/s.Grade Exports
No.33, Suraj Towers,
80 feet road,
Narasimha Layout, Laggere,
Bengaluru-560 058.
(By Sri.C.Srinivasa, Advocate)
5. The offence complained : Under Section 138 of the
of or proves Negotiable Instruments
Act
6. Plea of the accused : Pleaded not guilty
his examination
7. Final order : Accused is
8. Date of such order : 26.8.2016
for the following :
JUDGMENT
Complainant is a Proprietary concern represented by its authorized representative.
Complainant had filed this complaint against the accused U/Sec.200 of Cr.P.C for the offence punishable under Sec.138 and 142 of Negotiable Instruments Act.
2. It is the case of the complainant that it is a Proprietorship concern, doing business of providing the 2 SCCH-13 3 CC.NO.5567/12 security services, House keeping and man0power services to the needy persons, concern, company, office etc. on monthly, quarterly, half yearly and yearly basis for fixed service charges/retainership fees. The accused are the Directors, authorized signatories of their concern. The accused along with other Director by name Mr.Devaraj H.R. are looking over the entire affairs including the day to day affairs, finance and other business transactions of their concern. During the month of March, 2011, the accused have approached, requested the complainant for providing 3 security guards and one security lady searcher to their concern/institution and as per the demand of the accused, the complainant has agreed to provide the said security services . The accused have agreed to pay a sum of Rs.6,200/- per month for each security guard and lady searcher as retainership fees/charges to the complainant and further they agreed to pay service tax on monthly bill to the complainant in this respect. A contract has been entered into between the accused and the complainant on 13.04.2011, wherein the accused had agreed the terms of the complainant pertaining to the said security services. 3 SCCH-13 4 CC.NO.5567/12
3. It is further contended by the complainant that as per the Order of the accused, the complainant has provided totally four security personnel to the accused from the beginning of July 2011 and the accused has admitted and agreed to pay the service charges/retainership fees to the said security services on or before 7th day of Next month, however, the accused has not made the payments to the bill raised/ issued by the complainant pertaining to July 2011 within their agreed period. The complainant has issued the Bill/Invoice No.68 dt.31.07.2011, for Rs.27,355/- which has been acknowledged by the accused towards the said providing of the security services. Thereafter, the complainant raised the bill/invoice No.76 dated: 31.8.2011 for Rs.27,355/- pertaining to the charges for August 2011 & bill No.86 dated: 30.9.2011 for Rs.4,103/- towards charges of September 2011. The accused have promised to the complainant that the said bill amount would be paid during September 2011, but they have not made the payments to the said bill. So, the bills pertaining July to September 2011 had not been paid by the accused, but 4 SCCH-13 5 CC.NO.5567/12 the accused in its letter dated:5.9.2011, had requested the complainant to withdraw the said service charges provided to it with effect from 5.9.2011 and as per request, the complainant had withdrawn the said security service provided to it. The accused have clearly admitted for payments of the said service charges/retainership fees to the complainant in its letter dated:5.9.2011 and promised to pay the same within three months, but they have failed to do so. All together, the accused are due for a sum of Rs.58,813/-. The complainant made several demands and requests with the accused for the payment of the said outstanding due, but they have not made any payments. Thereafter, the accused had issued a cheque bearing No.304806 dated 30.8.2011 for Rs.27,355/- drawn on Bank of India, Milk Colony Branch, Malleshwaram West, Bengaluru in favour of the complainant towards payment of said outstanding. The accused had requested the complainant to postpone the encashment for one month as it would have to arrange the amount only after one month. Thereafter the accused have issued another cheque bearing No.304810 dt.25.9.2011 for Rs.31,376/- 5 SCCH-13 6 CC.NO.5567/12 drawn on Bank of India, Milk Colony Branch, Malleshwaran West, Bengaluru in favour of the complainant towards part payment of remaining outstanding amount and at the time of issuance of the said cheque, the accused assured and promised that both the said cheques would be honoured without any default. Both said cheques have been signed by both the accused under the capacity as authorized signatories, however, another Director by name Mr.Devaraj.H.R. has not signed on the same. The accused issued the said cheques to discharge the liability as owed by both of them to the complainant.
4. It is further contended by the complainant that the above said two cheques bearing Nos.304796 dated 20.8.2011 for Rs.27,355/- and cheque bearing No.304810 dated: 25.9.2011 for Rs.31,376/- have been presented by the complainant for encashment through its banker-Apex Co-op Bank Ltd., Basaveshwara Nagara, Bengaluru, but the same were return 'funds insufficient' vide endorsement dt.18.10.2011. The accused have deliberately not arranged sufficient funds in its account 6 SCCH-13 7 CC.NO.5567/12 and thus, both the accused have totally failed and neglected to keep up their words in respect of honouring of the said two cheques. Both the accused being the Directors and authorized signatories of their said establishment and day to day affairs financial matters etc. of their concern are solely responsible to discharge the said debt to the complainant. Hence, the complainant had issued legal Notice dated:11.11.2011 through its counsel to the accused by registered post acknowledgement due, intimating such dishonour of the said two cheques and also making demand with the accused for payment of Rs.58,731/- being the cheque amounts. The said notice has been duly served on the accused on 16.11.2011 and the accused have failed and neglected to pay the total due amount of Rs.58,731/- being the amount of two cheques respectively. Thus, the accused have committed an offence punishable under Sec.138 of Negotiable Instruments Act.
5. After taking the cognizance of the offence, on being served the summons, the accused appeared before the court through his counsel and released on bail. Plea 7 SCCH-13 8 CC.NO.5567/12 of the accused under Sec.138 of N.I. Act was recorded. The accused pleaded not guilty and claims to be tried.
6. The complainant, to prove its case, got examined its authorized representative as PW.1 and got marked Exs.P.1 to P.14 and closed its side. Statement of Accused under Section 313 of Cr.P.C. was recorded. In defence, accused No.1 has been examined as DW.1.
7. Heard both sides.
8. With these version of pleadings of both the parties, the following points arises for my consideration:
1. Whether the complainant proves that cheques bearing Nos.304796 dated 20.08.2011 for Rs.27,355/- and cheque bearing No. 30,4810/-
dt.25.09.2011 for Rs.31,376/-both drawn on Bank of India, Milk Colony Branch, Malleshwaram West, Bengaluru issued in favour of the complainant towards discharge of legal debt, were returned unpaid for reason 'sufficient funds' and failed to make payment of dishonoured cheque amount in spite of intimating the same through legal notice and thereby, the accused have committed an offence punishable under Sec.138 of Negotiable Instrument Act?
8 SCCH-13 9 CC.NO.5567/12
2. What order?
9. My findings on the above points are as under:
Point No.1: In the negative Point No.2: As per final order for the following:
REASONS
10. Point No.1: It is the case of the complainant that it is doing business of providing the security services, house keeping and man-power services to the needy persons, concern, company, office etc. on monthly, quarterly, half- yearly and yearly basis for fixed service charges/retainer ship fees. The accused are the Directors, authorized signatories of the concern by name M/s Grade Exports. The accused along with other director by name Devaraj.H.R. are looking over the affairs including finance and other business transactions of their concern. During the month of March, 2011, the accused had approached and requested the complainant for providing three security guards and one security lady searcher to their concern and as per the demand of the accused, the complainant had agreed to provide the said security 9 SCCH-13 10 CC.NO.5567/12 services. The accused had agreed to pay a sum of Rs.6,200/- per month for each security guard and lady searcher as retainer ship fees to the complainant. A contract has been entered into between the accused and the complainant on 13.4.2011 and the complainant has provided totally four security personnel to the accused from the beginning of July 2011. The complainant had issued the bill/Invoice No.68 dated:31.7.2011, for Rs.27,355/- towards providing said security services. The accused had promised the complainant that the said bill amount would be paid during September 2011, but they have failed to make the payment. Thereafter, the complainant had raised the bill/invoice No.76 dated:
31.8.2011 for Rs.27,355/- pertaining to the charges for the month of August 2011 and invoice No.86 dated:
30.9.2011 for Rs.4,103/- towards charges for September 2011. The accused having promised to the complainant that the payments would be made during September 2011, failed to make payments of said invoice amount.
Later, on several repeated requests and demands, the accused issued cheque bearing No.304806 10 SCCH-13 11 CC.NO.5567/12 dated:30.8.2011 for Rs.27,355/- drawn on Bank of India, Milk Colony Branch, Malleshwaram West, Bengaluru, but the accused had requested the complainant for encashment for postponement of presentation of the said cheque for encashment for one month as they would arrange the amount only after one month. Thereafter, the accused issued another cheque bearing No.304810 dated:25.9.2011 for Rs.31,376/- drawn on Bank of India, Milk Colony Branch, Malleshwaram West, Bengaluru in favour of the complainant towards part payment of remaining outstanding amount. At the time of issuance of the said cheque, the accused assured that both the said cheques would be honoured without any default. Both said cheques have been signed by both the accused as authorized signatories, however, Director by name Mr.Devaraj.H.R. has not signed the same. The accused issued the said cheques towards discharge of liability. When the said two cheques have been presented by the complainant for encashment through the banker of the complainant that is, Apex Co-operative Bank Ltd., Basaveshwara Nagara, Bengaluru, but the accused had 11 SCCH-13 12 CC.NO.5567/12 intentionally and willfully not arranged for sufficient funds in their account so as to honour the cheques, so the said two cheques came to be disohonoured by an endorsement dated:18.10.2011 as 'funds insufficient'. Hence, the complainant had issued legal Notice dated:11.11.2011 through registered post intimating dishonour of said two cheques and also making demand for payment of Rs.58,731/- being the cheque amount. The notice has been duly served on the accused on 16.11.2011. Even after receipt of the demand notice, the accused had failed and neglected to make payment of the cheque amount of Rs.27,355 and Rs.31,376/-.
11. In order to substantiate the contentions of the complainant, authorized representative of the complainant concern by name J.Bharatesha has been examined as PW.1 and in his affidavit filed for examination-in-chief, he has reiterated the plaint averments. To make out that he has authority to depose on behalf of the complainant- concern, he has produced the Authorization letter dated:
2.11.2011 which is marked as Ex.P.1. The Proprietrix of the complainant concern had authorized PW.1 to 12 SCCH-13 13 CC.NO.5567/12 represent in the legal matters. Ex.P.2 is the letter addressed by the accused company which is signed by authorized signatory. In the said letter, it is very much made out that Mr.Devaraj.H.R., Mr.Ramachandra.T. and Mr.Gangadhar are the Directors of the company by name Grade Exports. In the said letter, a request was made for making arrangement of the security staff to their company and it is agreed that a sum of Rs.6,200/- p.m. will be paid as charges for the staff. Ex.P.3 is the agreement which is entered between the complainant concern and the company of the accused which is said to have been signed by Ex.P.3 by Mr.Devaraj.H.R. and Mr.Ramachandra.T..
Ex.P.4 to P.6 are the invoices. Ex.P.7 is the letter said to have been sent from the company of the accused for withdrawn of security service. Ex.P.8 & P.9 are the cheques in question. Ex.P.10 is the legal notice whereby accused No.1 and 2 herein that is Mr.Ramachandra.T. and Mr.Gangadhara has been shown as authorized signatories.
12. Accused No.1 Mr.Ramachandra.T. who had put in his appearance through his advocate has contested the 13 SCCH-13 14 CC.NO.5567/12 case. On perusal of the ordersheet, it makes out that after appearance of accused No.1, that no summons and warrant were issued to accused No.2 Mr.Gangadhara and his presence was not secured. But later, on 17.9.2014, complainant had filed a memo stating it will proceed only against accused No.1. On perusal of the said Memo wherein it is stated that the dishonoured cheques have been signed by two accused under the capacity of authorized signatories, the joint account in the name of accused that is M/s Grade Exports is maintained by them at its bank and both the accused being the authorized signatories have signed on the said cheque. So, the complainant now chose to prosecute the case against accused No.1 Mr.Ramachandra.T. and sought permission of the court to prosecute the case against accused No.1. The order was passed on 3.2.2015 wherein Hon'ble Court by relying upon the ruling reported in 2009 Crl.L.J.224 held :
" In this case according to accused No.1, the complainant has received the amount from accused No.2 and only with an intention to harass the accused No.1, he has filed this memo. There are no 14 SCCH-13 15 CC.NO.5567/12 grounds to reveal that the complainant has received the cheque amount in question from accused No.2. Only after trial, it will reveal whether the accused No.1 alone is liable for prosecution or not. The burden lies on the complainant to prove that accused No.1 is liable to pay the cheque amount in question."
13. Accused No.1 had led defence evidence whereby he having examined himself as DW.1 has stated that he was running a company namely, Grade Exports along with Mr.Gangadhara and Mr.Devaraj.H.R.. Mr.Gangadhara was maintaining the account and DW.1 and Mr.Devaraj.H.R. are sleeping partners. It is also deposed by him that in the month of March 2011, they requested the complainant to provide security guards, accordingly, the complainant provided in the month of April to June 2011 for which they had an agreement with the complainant, at the time of agreement, the complainant had collected two blank cheques for which DW.1 and Mr.Gangadhara have signed, they have made payments for the security guard provided for the months April to June 2011. It is also stated by him that the complainant has not provided security guards for the month of July to 15 SCCH-13 16 CC.NO.5567/12 September 2011. He has also denied that he and Mr.Devaraj.H.R. having signed Ex.P.7. He has also stated that he and Mr.Devaraj.H.R. have not signed Ex.P.7. Further, he has stated that he has not been served with the legal notice before filing this case. It is Mr.Gangadhara who had signed Ex.P.12. When he enquired with Mr.Gangadhara, he informed that all the payments are made. He has denied the suggestion put forward in the cross-examination that all the three partners are managing the day to day affairs of the firm but he admits that he and Mr.Gangadhara are the authorized signatories to the firm. He has also admitted that he having signed the agreement entered with the complainant at Ex.P.3. Further, he has admitted that it had been signed by Mr.Devaraj.H.R.. As DW.1 has admitted Ex.P.3 whereby it makes out the said agreement is for proving security service for agreed monthly retainership/fee of Rs.6,200/- per person plus service tax. Said agreement is dated: 13.4.2011. So, as per the said agreement, DW.1 says that when they made payment for security guards provided for the month of April to June 16 SCCH-13 17 CC.NO.5567/12 2011. Ex.P.2 is dated: 29.3.2011 and the contents of the complaint also makes out that complainant had received letter dated: 29.3.2011 and the agreement was entered on 13.4.2011. PW.1 has stated that complainant had been provided with totally four security personnel from the beginning of July 2011. Though Ex.P.4 to P.6 are produced complainant had not placed any material to make out that the said notice is received by the accused company. Though it is stated by the complainant that Ex.P.7 is signed by the accused company, it is a Xerox copy which is endorsed as 'received' by the complainant concern. If accused had addressed the said letter, then complainant should have received the original copy of the same. The counsel on behalf of the accused has submitted in his argument that Ex.P.7 is a concocted document whereby letter head does not tally with Ex.P.2 letter head. It is submitted that the complainant itself created said document.
14. Now, coming to the cross-examination of PW.1 whereby he has admitted that the accused company is represented by three directors. Further he has admitted 17 SCCH-13 18 CC.NO.5567/12 that, the complaint is filed only against two directors. On perusal of the cause-title, it makes out the company had not been made as a party and all the directors had not been made as party. Apart from that, for non-securing the presence of accused No.2, Mr.Gangadhara, later, complainant had opted to proceed against accused No.1 Mr.Ramachandra.T., without giving any proper reasons. Though the Memo filed on behalf of the complainant was allowed, the court had clearly held that the burden is on the complainant to prove that accused No.1 is liable towards payment of the cheque amount. Further, it is also the defence on behalf of accused that accused No.1 had not at all been served with the legal notice, hence, he is not responsible for dishonour of cheque. On perusal of Ex.P.10 legal notice, it makes out that it is addressed in the name of Mr.Ramachandra.T. and Mr.Gangadhara but Ex.P.12 RPAD acknowledgement, there is only signature of accused No.2. Further, PW.1 has also admitted that before complaint was lodged, they have not issued separate notice to both the directors. Further on perusal of Ex.P.8 and P.9 cheque it can be made out that it bears 18 SCCH-13 19 CC.NO.5567/12 the signature of both the accused that is accused No.1 Mr.Ramachandra.T. and accused No.2 Mr.Gangadhara. PW.1 has admitted that Ex.P.8 & P.9 bears signature of accused No.1 Mr.Ramachandra.T.. Further, in the cross- examination of PW.1, it is made out that he is not aware from which month they have provided security service. He has stated that they have provided security service for 7-8 months. The complainant had not given the particulars of the security men who had been sent for the service of the accused company. So, it is suggested in the cross- examination of PW.1 that as the complainant had not provided any security persons from the month of July to September 2011, the complainant had not furnished any particulars of security persons. Even PW.1 in his cross- examination has deposed that he has already stated in his evidence affidavit that for what reason, they have deleted accused No.2 Mr.Gangadhara from the case.
15. Now, from over all evidence which is available on record, it can be made out that as per Ex.P.2 and also from the evidence of DW.1, that accused company had 19 SCCH-13 20 CC.NO.5567/12 sought for security staff by addressing a letter as per Ex.P.2. Further, as per agreement Ex.P.3 on record which makes out that an agreement had been entered on 13.11.2011 as it is the contention of the accused that Ex.P.8 and P.9 cheques were issued at the time of entering into agreement as security cheques. It is for the complainant to prove that the said cheques are in connection with Ex.P.4 to P.6. Though it is stated by the complainant that Ex.P.8 and P.9 cheques came to be dishonoured for insufficient funds, it had not opted to produce the cheque return memo. The copy of the cheque return memo without signature of the authorized signatory of the bank can be seen in the case file. On perusal of Ex.P.8 and P.9 cheque, it clearly makes out that t6he said cheque is signed on both the accused No.1 Mr.Ramachandra.T. and accused No.2 Mr.Gangadhara as authorized signatory. The offence under Sec.138 of N.I.Act can be made out only when intimation of dishonour of cheque is communicated to the person who had issued the same. Here, in the present case, the complainant have given up accused No.2 Mr.Gangadhara 20 SCCH-13 21 CC.NO.5567/12 and case is proceeded only against accused No.1 Mr.Ramachandra.T. and Ex.P.12 does not bear the signature of Mr.Ramachandra.T. and it is specific contention of the accused No.1 that he had not been served with the legal notice.
16. The complainant having relied on the decision reported in ILR 2003 Kar. 4617 wherein it is held that "..........The complainant being a stranger to the company, firm or association of individuals, will not be in a position to know the management or internal affairs or arrangements of such company, firm or association of individuals for the conduct of its business at the time of transaction. So, when legal notice was issued, as required under law, it will be for the persons, who were issued/served with such notice, to make it clear not only that they were not in charge of and responsible for the conduct of the business of the company, firm or association of individuals but also to come out specifying the person(s) in charge of and responsible for the conduct of its business/affairs."
Here in the present case, accused No.1 who had contested the case had not been served with the legal notice. On the 21 SCCH-13 22 CC.NO.5567/12 other hand, the complainant who at the initial stage having filed complaint against both the signatories of the cheque, later opted to give up the case against accused No.2 for no reasons and as legal notice is not served on accused No.1, he had no occasion of issuing any reply notice to make out the business management of the company.
17. In the decision relied upon on behalf of the complainant reported in 2009 Crl.L.J. 224 it is held that :
".....the complainant can choose and either proceed against both the signatories or proceed against one of the signatories - complainant can not be compelled to proceed against both the signatories...."
In the above referred decision, during the course of trial, the complainant withdrew the claim against respondent No.2 on the ground that he was suffering from paralysis. The accused therein had contended that the cheque in question was not issued towards discharge of liability of Accused.1 firm. In the above referred case law, accused No.3 who had contested the matter had taken the contention that he is a sleeping partner and he cannot be 22 SCCH-13 23 CC.NO.5567/12 made liable. But in the said case, the firm had been made as accused No.1. But in the present case, accused company had not been made as a party. It is only two of the directors that is, Mr.Ramachandra.T. and Mr.Gangadhara had been made as accused and even one more director, Mr.Devaraj.H.R. had also not been made as a party. So, in the present case, as the company has not been made as party accused and the complainant having opted not to proceed against accused No.2 without any reason, accused No.1 cannot be personally made liable for the amount which is stated to be due by the company. On the other hand, in the present case, the complainant had not produced any particulars as to who are the persons who had been sent as security staff to the accused company. So, merely because two cheques which were said to have been signed by two of the directors, presumption under Sec.138 of N.I. Act cannot be arrived with regard to unenforceable debt or liability unless the complainant prove that there was debt due by accused No.1 alone as on the date of cheque. Here, in the present case, the complainant had opted to proceed against 23 SCCH-13 24 CC.NO.5567/12 accused No.1 Mr.Ramachandra.T., in his personal capacity and the company had not been made as party. Hence, unless the company having not made as party, any one of the director cannot be made personally liable for the act of the company. For the foregoing reasons, this court has held that the complainant had failed to prove that accused.No.1 is due towards complainant-concern in respect of Ex.P.8 and P.9 cheque and said cheque came to be dishonoured for the reason of 'insufficient fund' and thereafter, the same was intimated to accused No.1 calling upon him to make payment of the dishonoured cheque amount. In the circumstance, I hold point No.1 in the negative.
18. Point No.2: In view of the finding on the point No.1, I proceed to pass following:
ORDER Acting under Sec. 255(2) Cr.P.C., the accused is acquitted for the offence under Sec.138 of Negotiable Instrument Act. 24 SCCH-13 25 CC.NO.5567/12
The bail bond stands cancelled.
(Dictated to the Stenographer, transcription thereof corrected, signed & pronounced in open court on this the 26th August 2016.) (PANCHANKSHARI M) II Addl. Small Causes Judge & XXVIII ACMM, Bengaluru.
ANNEXURE LIST OF WITNESS EXAMINED ON BEHALF OF THE COMPLAINANT:
PW1 : Sri.J.Bharatesha LIST OF DOCUMENTS MARKED ON BEHALF OF COMPLAINANT:
Ex.P.1 : Authorization Letter Ex.P.2 : Letter of accused Ex.P.3 : Contract between the complaint and accused Ex.P.4 to : Three Cash/Credit bills Ex.P.6 Ex.P.7 : Letter of accused dt.05.09.2011 Ex.P.8 : Two cheques and Ex.P.9 Ex.P.8(a) : Signatures of accused and Ex.P.9(a) Ex.P.10 : Copy of legal notice Ex.P.11 : Postal Receipt Ex.P.12 : Postal Acknowledgement. Ex.P.13 : Bank endorsement dt.18.10.2011 Ex.P.14 : Bank endorsement dt.18.10.2011 25 SCCH-13 26 CC.NO.5567/12
LIST OF WITNESS EXAMINED ON BEHALF OF THE DEFENCE:
DW.1 : Ramachandra.T. LIST OF DOCUMENTS MARKED ON BEHALF OF DEFENCE:
-NIL-
(PANCHANKSHARI M) II Addl. Small Causes Judge & XXVIII ACMM, Bengaluru.26 SCCH-13 27 CC.NO.5567/12
ORDER Acting under Sec. 255(2) Cr.P.C., the accused is acquitted for the offence under Sec.138 of Negotiable Instrument Act.
The bail bond stands cancelled.
(PANCHANKSHARI M) II Addl. Small Causes Judge & XXVIII ACMM, Bengaluru.27