Bangalore District Court
M/S Green Apple Productions vs M/S. Saffron Ganesha on 12 May, 2023
KABC0C0195822019
IN THE COURT OF XXXIV ADDL. CHIEF METROPOLITAN
MAGISTRATE, MAYO HALL UNIT, BENGALURU. (ACMM-34)
PRESENT: Smt.PARVEEN A. BANKAPUR,B.Com.LLB.
XXXIV ADDL. CHIEF METROPOLITAN
MAGISTRATE,
Dated : This the 12th day of May, 2023.
C.C.No.55404/2019
COMPLAINANT : M/s Green Apple Productions,
Rep. by its Proprietor,
Sri. Kevin Johnson,
No.513/13, 14th Main Road,
Gokula Mathikere,
Bengaluru - 54.
(By Sri Guru Ganesh
Associates - Advocates)
V/s
ACCUSED : 1.M/s. Saffron Ganesha
Entertainment LLP,
No.1002, Anmol Enclave CHS
Ltd., Off:SV Road,
Opp:Patel Petrol Pump,
Goregaon West Mumbai,
Mumbai - 400 062.
Also At:
Saffron Ganesha Entertainment
LLP,
No. 302, 3rd Floor, Swati
Building, Behind Kotak
Mahindra Bank, Above Power
House Gym, Santacruz Link
Road, Santacruz (W)
Mumbai -400 054.
Also At:
Saffron Ganesha Entertainment
LLP,
Tarapore Gardens, Mhada
Colony, Andheri West, Mumbai.
2 C.C.No.55404/2019
Maharashtra - 400 047.
2.Sri.Suresh Sriram K.
Designated partner,
Saffron Ganesha Entertainment
LLP, No.1002,
Anmol Enclave CHS Ltd.,
Off:SV Road,
Opp:Patel Petrol Pump,
Goregaon West Mumbai,
Mumbai-400062. (Abated)
Also at:
Suresh Sriram K.
Designated Partner
Saffron Ganesha Entertainment
LLP,
No. 302, 3rd Floor, Swati
Building, Behind Kotak
Mahindra Bank, Above Power
House Gym, Santacruz Link
Road, Santacruz (W)
Mumbai -400 054.
Also at
Suresh Sriram K.
Designatred Partner
Saffron Ganesha Entertainment
LLP,
Tarapore Gardens, Mhada
Colony,
Andheri West,
Mumbai,
Maharashtra - 400 047.
3.Sri.Prakash Nambiar
Ramachandran,
Designated partner,
Saffron Ganesha Entertainment
LLP, No.1002, Anmol Enclave
CHS Ltd., Off:SV Road,
Opp:Patel Petrol Pump,
3 C.C.No.55404/2019
Goregaon West Mumbai,
Mumbai-400 062.
Also at :
Prakash Nambiar
Ramachandran
Designated Partner
Saffron Ganesha Entertainment
LLP,
No. 302, 3rd Floor, Swati
Building, Behind Kotak
Mahindra Bank, Above Power
House Gym
Santacruz Link Road,
Santacruz Mumbai.
Also at:
Mr. Prakash Nambiar
Ramachandran,
Designated Partner,
Saffron Ganesha Entertainment
LLP,
Tarapore Gardens
Mhada Colony, Andheri West
Mumbai,
Maharashtra - 400 047.
4. Sri.Balakrishnan Krishna
Kumar,
Designated partner,
Saffron Ganesha Entertainment
LLP, No.1002, Anmol Enclave
CHS Ltd., Off:SV Road,
Opp:Patel Petrol Pump,
Goregaon West Mumbai,
Mumbai - 400 062.
Also at:
Sri.Balakrishnan Krishna
Kumar,
Designated Partner
Saffron Ganesha Entertainment
LLP No. 302, 3rd Floor,
Swati Building
4 C.C.No.55404/2019
Behind Kotak Mahindra Bank
Above Power House Gym,
Santacruz Link Road,
Santacruz (W),
Mumbai - 400 054
Also At:
Mr.Balakrishnan Krishna
Kumar
Designated partner,
Saffron Ganesha Entertainment
LLP,
Tarapore Gardens, Mhada
Colony, Andheri West
Mumbai.
Maharashtra -400 047.
Also at:
Mr. Balakrishnan Krishna
Kumar,
Designated Partner,
Saffron Ganesha Entertainment
LLP,
No. 463, Brindavan MES Road
Gokula Post,
Bengaluru -560 054.
(By Sri. Freud Richardson-
Adv.,)
1 Date of Commencement 28.04.2019
of offence
2 Date of report of offence 01.08.2019
3 Presence of accused
3a. Before the Court 30.01.2020
3b. Released on bail 30.01.2020
4 Name of the Complainant Sri.Kevin Jhonson
5 Date of recording of 1/8/2019
evidence
6 Date of closure of evidence 17/1/2023
7 Offences alleged U/s 138 of the Negotiable
Instruments Act.
8 Opinion of Judge Accused are found guilty.
5 C.C.No.55404/2019
JUDGEMENT
The Private Complaint is filed by the complainant under Section 200 of Cr.P.C against the accused persons alleging that they have committed the offence punishable under Section 138 of Negotiable Instruments Act.
2. The brief facts of the complaint are as follows:
The complainant submits that it is a Proprietorship firm.
The Accused are known to him from past few years. The Accused No.1 is a Limited Liability Partnership incorporated under the Indian Partnership Act, 2008, the Accused Nos.2 to 4 are its designated partners and authorized signatories and they are responsible and in charge of its day to day business.
The Accused No.1 to 4 are independently engaged in the business of production, distribution and marketing of cinematographic films, including features films, motion pictures, advertisement films etc. It is further submitted by the Complainant that during the month of June 2017, the Accused No.1 to 4 approached him expressing their wish to produce a motion picture in Hindi language tentatively titled as 'Haryana Roadways' and invited 6 C.C.No.55404/2019 the Complainant to co-produce the said film along with the Accused by providing the seed funds for which a specific share in the rights in the film as well as the profits arising there from shall be shared between the Complainant and Accused. The Accused asked a sum of Rs.1.5 Crore as seed investment for the project and Rs.90 Lakhs was to be paid initially and balance amount depending on the development of project. The Complainant has also agreed for the said invitation of the Accused and paid Rs.94,50,000/- to the Accused. The said amount was paid on various dates as per the details mentioned below;
Sl.No. Amt. Date
1 Rs.5,00,000/- 05.08.2017
2 Rs.5,00,000/- 07.09.2017
3 Rs.38,00,000/- 03.10.2017
4 Rs.20,00,000/- 03.10.2017
5 Rs.10,00,000/- 10.10.2017
6 Rs.10,00,000/- 31.10.2017
7 Rs.6,50,000/- 03.11.2017
It is further submitted by the Complainant that, in pursuance of their said oral agreement, the Complainant and the Accused have also entered into a Memorandum of 7 C.C.No.55404/2019 Understanding dated: 23.12.2017, wherein it is mentioned that the seed funding made by the Complainant will be utilized towards signing of the actor R. Madhavan, Director Ajit Sinha, Actress Elena Eazan, write Mahendra Jakhar, Associate director Ragini Gunjan, Executive producer Shahin Ezaz, Technicians and towards initial office administrations and pre- production expenses.
The Complainant further submits that, the Complainant to arrange the said seed funds amount has availed loan facility from various banks and obtained a loan of Rs.90 Lakhs.
It is further submitted by the Complainant that, in the said MOU it was mentioned that in the event of Accused is unable to arrange the remaining funds for production of the said film, it will return the seed funding amount paid by the Complainant on or by 1st April 2018. Further it also admitted by the Accused that he will bear half of the EMI currently being made by the Complainant on the seed funds on a monthly basis between 25th and 30th of every month.
The Complainant further states that despite receipt of the said amount of Rs.94,50,000/- from the Complainant the Accused was unable to start the production work of the film 8 C.C.No.55404/2019 and were not showing any interest towards production of film, when the Complainant questioned about the said inaction, the Accused responded stating that they will bear the EMI amount to the banks from which the Complainant has availed the loan and accordingly, the Accused have paid Rs.1,75,000/- on 9.1.2018, Rs.1,00,000/- on 9/3/2018, Rs.50,000/- on 13/3/2018, Rs.1,00,000/- on 17/3/2018, Rs.1,00,000/- on 26/3/2018, Rs.3,50,000/- on 27/4/2018, Rs.5,00,000/- on 22/6/2018, Rs.3,00,000/- on 23/6/2018, Rs.3,50,000/- on 8/8/2018, Rs.2,00,000/- on 31/8/2018, Rs.5,00,000/- on 28/9/2018, Rs.2,00,000/- on 1/10/2018, Rs.75,000/- on 31/1/2019 and Rs.3,50,000/- on 26/2/2019 and the said amount were adjusted towards EMI to the Bank.
It is further submitted that, as agreed between the parties the said Film was proposed to go on floor in February 2018 and if not the accused were liable to refund the seed funds provided by the complainant not later than 1/4/2018. It is further submitted that, however the accused have not performed their duties as agreed and also not paid EMI's as agreed. It is further submitted that, after several negotiations finally during the month April 2019 accused No.1 to 4 have agreed for full and 9 C.C.No.55404/2019 final settlement of all the dues to the complainant and issued two cheques bearing No.000039 dated 28/4/2019 for Rs.26,66,000/- and another cheque bearing No.000040 dated:
6/10/2019 for Rs.65,50,169/- duly signed by the accused with promise to maintain sufficient balance in their Bank Account. It is further submitted that, as per the instructions and request of the accused, the complainant presented both cheques through his banker on 21/6/2019 which were returned with endorsement that "Funds Insufficient" . It is further submitted that, immediately after the complainant approached the accused and questioned about dishonour of the cheque but accused were not inclined to repay the amount, then the complainant has got issued legal notice though his counsel under RPAD on 25/6/2019, which was duly served upon on 28/6/2019. After service of notice the accused has got issued an untenable reply on 17/7/2019. Hence, the Complainant has filed present complaint against the Accused persons for the offence punishable u/Sec.138 of N.I. Act.
3. Based on the complaint, the sworn statement affidavit, and documents etc., the court took cognizance of an offence punishable Under Section 138 of N.I. Act by following the 10 C.C.No.55404/2019 guidelines of Apex Court issued in Indian Bank Association case and ordered to be registered a criminal case against the accused for the offence punishable Under Section 138 of N.I. Act.
4. After issuance of summons, accused were appeared before the court and enlarged themselves on bail. Plea was recorded, read over and explained to the accused persons, who pleads not guilty and claims to be tried. Hence, the case is posted for complainant's evidence.
5. The Complainant company himself examined as PW-1 and got marked documents Ex.P-1 to Ex.P26 and closed his side.
6. Accused was examined U/S 313 of Cr.P.C.
Incriminating evidence appearing in the complainant's evidence was read over and explained to the accused persons who denies the same. The learned counsel for the accused submits that no defence evidence. Hence its side closed.
7. Heard the learned Counsel for Complainant and Accused.
11 C.C.No.55404/2019
8. The learned counsel for complainant relied below citations:
1. 2021(1) KCCR 545 (SC) in the case of M/s Kalamani Tax and another V/s P.Balasuabramanian.
2. AIR 2019 SC 2446 in the case of Birsingh V/s Mukeshkumar.
3. AIR 2019 SC 4003 in the case of M/s.
Shree Daneshwari Traders V/s Sanjay Jain and another.
4. 2019(4) SCC 271 in the case of Sicajen India Ltd., V/s Mahendra Vadineni and others.
5. 2013 (1) SCC 177 in the case of MSR Leathers V/s S.Palaniyappan and another.
9. Accused No.4 has filed his written argument and relied on below citations:
1. Judgement of Hon'ble Supreme Court of India in SLP(Criminal) No.10396/2019 between Sunitha Palita and others V/s M/s.Panchami Stone Quarry.
2. (1999) 4 Supreme Court Cases 567 in the case of SIL Import, USA V/s Exim Aides Silk Exporters, Bengaluru.
3. 1997 (3) APLJ 399 (HC) in the case of K.Muralidhar Rao and the State of AP and another.
10. Upon hearing the arguments and on perusal of the materials placed on record, the following points arise for my consideration.
12 C.C.No.55404/2019
1) Whether complainant proves beyond all reasonable doubts that accused in discharge of legally recoverable debt has issued 2 Cheques bearing bearing No.000039 dated 28/4/2019 for Rs.26,66,000/- and another cheque bearing No.000040 dated:6/10/2019 for Rs.65,50,169/- both are drawn on Kotak Mahendra Bank, S.V. Road, Mumbai in favour of the complainant which came to be dishonoured with an endorsement "Funds Insufficient" on 21/6/2019 and in spite of receipt of notice accused have not paid the Cheques amount and thereby committed an offence under Section 138 of N.I.Act?
2) What Order?
11. My findings on the above points is:
Point No.1: In the Affirmative.
Point No.2: As per final order for the following:
REASONS
12. Point No.1: Existence of legally recoverable debt is a sine qua non for prosecuting the case under Section 138 of Negotiable Instruments Act. For convenient purpose the essential ingredients to constitute offence under section 138 of N.I.Act is summarized as below:
(i) That there must be a legally enforceable debt.
(ii) That the cheque was drawn from the account of bank for discharge in whole or in part of any 13 C.C.No.55404/2019 debt or other liability which presupposes the legally enforceable debt.
(iii) That the cheque so issued had been returned due to "funds insufficient".
13. It is core contention of the complainant that, complainant is a Proprietorship firm. The Accused are known to him from past few years. The Accused No.1 is a Limited Liability Partnership incorporated under the Indian Partnership Act, 2008, the Accused Nos.2 to 4 are its designated partners and authorized signatories and they are responsible and in charge of its day to day business. The Accused No.1 to 4 are independently engaged in the business of production, distribution and marketing of cinematographic films, including features films, motion pictures, advertisement films etc. It is further submitted by the Complainant that, during the month of June 2017, the Accused No.1 to 4 approached him expressing their wish to produce a motion picture in Hindi language tentatively titled as 'Haryana Roadways' and invited the Complainant to co-produce the said film along with the Accused by providing the seed funds for which a specific share in the rights in the film as well as the profits arising there from shall be shared between the Complainant and Accused. The 14 C.C.No.55404/2019 accused asked a sum of Rs.1.5 Crore as seed investment for the project and Rs.90 Lakhs was to be paid initially and balance amount depending on the development of project. The Complainant has also agreed for the said invitation of the Accused and paid Rs.94,50,000/- to the Accused.
14. It is further submitted by the Complainant that, in pursuance of their said oral agreement, the Complainant and the Accused have also entered into a Memorandum of Understanding dated:23.12.2017, wherein it is mentioned that the seed funding made by the Complainant will be utilized towards signing of the Actor, Director, Actress, Writer, Associate Director, Executive producer, Technicians and towards initial office administrations and pre-production expenses. It is further submitted by the Complainant that, in the said MOU it was mentioned that in the event of Accused is unable to arrange the remaining funds for production of the said film, it will return the seed funding amount paid by the Complainant on or by 1st April 2018. Further it also admitted by the Accused that he will bear half of the EMI currently being made by the Complainant on the seed funds on a monthly basis between 25th and 30th of every month.
15 C.C.No.55404/2019
15. The Complainant further states that despite receipt of the said amount of Rs.94,50,000/- from the Complainant, the Accused was unable to start the production work of the film and were not showing any interest towards production of film, when the Complainant questioned about the said inaction, the Accused responded stating that they will bear the EMI amount to the banks from which the Complainant has availed the loan and accordingly, the Accused have paid Rs.1,75,000/- on 9.1.2018, Rs.1,00,000/- on 9/3/2018, Rs.50,000/- on 13/3/2018, Rs.1,00,000/- on 17/3/2018, Rs.1,00,000/- on 26/3/2018, Rs.3,50,000/- on 27/4/2018, Rs.5,00,000/- on 22/6/2018, Rs.3,00,000/- on 23/6/2018, Rs.3,50,000/- on 8/8/2018, Rs.2,00,000/- on 31/8/2018, Rs.5,00,000/- on 28/9/2018, Rs.2,00,000/- on 1/10/2018, Rs.75,000/- on 31/1/2019 and Rs.3,50,000/- on 26/2/2019 and the said amount were adjusted towards EMI to the Bank.
16. It is further submitted that, as agreed between the parties the said Film was proposed to go on floor in February 2018 and if not the accused were liable to refund the seed funds provided by the complainant not later than 1/4/2018. It 16 C.C.No.55404/2019 is further submitted that, however the accused have not performed their duties as agreed and also not paid EMI's as agreed. It is further submitted that, after several negotiations finally during the month April 2019 accused No.1 to 4 have agreed for full and final settlement of all the dues to the complainant and issued two cheques bearing No.000039 dated 28/4/2019 for Rs.26,66,000/- and another cheque bearing No.000040 dated: 6/10/2019 for Rs.65,50,169/- in favour of complainant, which were dishonoured with reason funds insufficient. It is further submitted that, the complainant has got issued legal notice though his counsel under RPAD on 25/6/2019, which was duly served upon on 28/6/2019. After service of notice the accused has got issued an untenable reply on 17/7/2019. Hence, the Complainant has filed present complaint against the Accused persons for the offence punishable u/Sec.138 of N.I. Act.
17. In order to bring home the guilt of the accused, the Proprietor of the complainant examined as PW1 and reiterated the contents of the complaint. PW1 has relied Ex.P1 Original cheque bearing No.000039 dated: 28/4/2019 and cheque 17 C.C.No.55404/2019 bearing No.000040 dated: 10/6/2019 at Ex.P1 and 2, Bank Endorsement at Ex.P3, Legal Notice issued by the complainant to the accused through his counsel dated: 25/6/2019 at Ex.P4, 13 postal receipts were marked at Ex.P5, Postal Acknowledgments were marked at Ex.P6 to 8, Reply Notice of the accused dated:17/7/2019 at Ex.P9, 8 returned postal covers were marked at Ex.P10 to 17, Bank Statements at Ex.P18 and 19, Letter issued by IDFC First Bank at Ex.P20, Letter issued by HDFC Bank at Ex.P21, Loan Sanction Letter at Ex.P22, Loan Application at Ex.P23, Tata Capital Loan Application at Ex.P24, IIFL Loan Application at Ex.P25 and Original MOU at Ex.P26.
18. The documents produced by the complainant of course established that the complainant meets out the procedural requirements of Section 138 of Negotiable Instrument Act, but it is to be considered whether all these documents establish the offence committed by the accused.
19. On perusal of the oral and documentary evidence placed by the complainant, it reveals that the present complaint is filed well within time in accordance with the provisions of 18 C.C.No.55404/2019 Negotiable Instruments Act. Moreover, there is no dispute with regard to taking cognizance of the offence punishable under Section 138 of N.I. Act.
20. The Negotiable Instruments Act raises two presumptions. One contained in Section 118 and the other in Sec. 139 thereof. For the sake of convenience Sec 118(1) of the N.I. Act is extracted here below:
118. Presumptions as to negotiable Instruments ---
Until the contrary is proved, the following presumptions shall be made ;--
(a) of consideration that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
1. To (g) . . . . . . . . . . . .
Provided that where the instrument has been obtained from its lawful owner, or from an person in lawful custody thereof, by means of an offence of fraud, or has been obtained from the maker or accepter thereof by means of an offence of fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him". 19 C.C.No.55404/2019
Further Section 139 of the Negotiable Instruments Act reads as under;
"139, Presumption in favour of holder. It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in section 138, for the discharge, in whole or in part, of any debt or other liability."
21. Scope and ambit and function of the presumption U/s 118(a) and Sec 139 of NI Act came to be considered by the Hon'ble Apex Court of Indian in Krishna Janardhan Bhat Vs Dattatraya G.Hegde (2008 NIAR (Criminal 151) The Supreme Court has laid down the law in the following phraseology.
"D Negotiable Instruments Act 1881, Secs. 139, 138
--Presumption under-same arises in regard to second aspect of the matter provided under Sec 138
--Existence of legally enforceable debt is not a matter of presumption under Sec 139- It merely raises presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability - Merely an application of presumption contemplated under Section 139 of N.I.Act should not lead to injustice or mistaken conviction."20 C.C.No.55404/2019
22. Further, said decision was followed by Hon'ble High Court of Karnataka in Kempanarasimhaiah Vs P.Rangaraju & Others (2008 (5) KCCR 3371). Relevant paragraph of the said judgment reads as under: -
"12. As to the provisions of Sections 138 of N.I.Act, the following principles emerge from the above observations of Hon'ble Supreme Court at para Nos. 21, 23, 25, 26 and 34 of its Judgment in the above said case of Krishna Janardhan Bhat Vs Dattatraya G.Hegde, AIR 2008 SC 1325.
(i) Section 139 of the Act merely raises a presumption that the cheque was issued towards discharge in whole or in part in any debt or other liability, which presupposed legally enforceable debt. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability." (para 21)
(ii) The question as to whether the presumption stood rebutted or not, must be determined keeping in view the other evidences on record. Where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their 21 C.C.No.55404/2019 legal requirements are required to be taken into consideration. (para 26)
(iii) An accused, for discharging the burden of proof placed upon him under a statute, need not examine himself. He may discharge his burden on the basis of the materials already brought on records (para 23)
(iv) Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
Further more where as prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is "preponderance of probabilities'"
(para 23 & 25)
(v) Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies (para 25)
(vi) Other important principles of legal jurisprudence, namely presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be deliberately balanced (para 34)
23. Thus from the observations extracted above, it is clear that presumption Under Section 139 of the N.I,.Act is only to the extent that the cheque was drawn for discharge in full or in part of any debt or other liability and the said presumption do 22 C.C.No.55404/2019 not relate to the existence of legally enforceable debt or liability. Therefore, before drawing the presumption under section 139 of the N.I.Act, it is the duty of the Court to see whether or not the complainant has discharged his initial burden as to existence of legally enforceable debt. No doubt, as per Section 118(a) of the Act, there is a rebuttable presumption that every negotiable instrument, is accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration."
24. Factual matrix of the case is required to be tested on the anvil of principles emerging from the above-referred decisions.
25. The only defence taken by the accused is that disputed cheques were signed by only one partner and not signed by the other partners. In order to substantiate the claim of the complainant, the Proprietor of the complainant has examined as PW1 and reiterated the contents of the complaint.
26. In the cross examination he stated that he know the accused No.2 Suresh Sriram was died on 13/4/2021 and further he admits that Ex.P1 and 2 cheques were signed by the 23 C.C.No.55404/2019 accused No.2. He further admits that except stated in the complaint that, the accused No.2 and 4 are the designated partners and authorized signatories of accused No.1 respectively. As such they are the persons responsible and in charge of day today business of the accused No.1. Except this the complainant has not stated in the complainant in other parts that accused No.3 and 4 were responsible for the day today transaction of the Company.
27. It is admitted fact that, complainant and accused were working in Film Industry. It is also admitted that there is a agreement between complainant and accused for production of Film Hariyana Roadways for Rs.One Crore Fifty Lakh and another Film Anab Punjab for Rs.Fourty Lakhs. It is admitted by the PW1 that, the complainant and accused No.2 were signed on Ex.P26 MOU. It is further admitted that as per MOU the Budget of the Hariayana Roadways Film is Rs.10.5 Crore. It is further admitted that, complainant agreed to invest Rs.1.5 Crore. It is further admitted that complainant had invested Rs.94,50,000/- only and remaining Rs.55,50,000/- was not invested. He denied the suggestion of the learned counsel for accused No.3 that since complainant has violated the condition 24 C.C.No.55404/2019 of Ex.P26, therefore complying the agreement by the accused question does not arise.
28. Further it is admitted fact that accused No.1 is Limited Liability Partnership and accused No.2 to 4 are Designated Partners of the accused No.1. Learned counsel for accused No.4 argued that accused No.1 is Limited Liability Partnership, similar to accompany and is a separate legal entity. The position of the designated partner in an Limited Liability Partnership is similar to that of Director in a Limited Company. Learned counsel for accused draw the attention of the Court to nature of Limited Liability Partnership. As per section 3 of The Limited Liability Partnership Act, 2008:
(1) A Limited Liability Partnership is a Body Corporate formed and incorporated under this Act and is a legal entity separate from that of its partners.
(2) A Limited Liability Partnership shall have perpetual succession.
(3) Any change in the partners of a Limited Liability Partnership shall not affect the existence, rights or liabilities of the Limited Liability Partnership.
29. Further the learned counsel for accused draw the attention of the Court to Sec.8 of The Limited Liability 25 C.C.No.55404/2019 Partnership Act. As per Sec.8-Liabilities of Designated Partners:
Unless expressly provided otherwise in this Act, a Designated partner shall be-
(a) responsible for the doing all the acts, matters and things as are required to be done by the Limited Liability Partnership in respect of compliance of the provisions of this Act including filing of any document, return, statement and the like report pursuant to the provisions of this Act and as may be specified in the Limited Liability Partnership Agreement and
(b) Liable to all penalties imposed on the Limited Liability Partnership for any contravention of those provisions.
As per sec.26 of the Limited Liability Partnership Act:
Partner as agent-Every partner of a Limited Liability Partnership is for the purpose of the business of the Limited Liability Partnership, the agent of the Limited Liability Partnership but not of other partners.
30. The learned counsel for accused vehemently argued that the complainant during his evidence neither in his complaint does not even remotely state the role of the accused No.4 to fasten the criminal liability U/s 141 of the Negotiable Instrument Act. Even nothing is mentioned in cross 26 C.C.No.55404/2019 examination. The accused No.4 is Designated Partner does not ipso facto make his liable for the cheque issued by the deceased accused No.2. Further argued there is no averment in the complaint as to how accused No.4 was involved in the day today affairs of the accused No.1.
31. As per Ex.P26 it is executed between accused No.1 and complainant Firm. Ex.P6 signed by the designated partner Mr.Suresh, Shriram K. who was deceased Accused No.4, in the Ex.P6 it is mentioned that accused No.1 permitted assigns and represented by its designated partner. In Ex.P26 accused No.2 was signed by the within named SGE by designated partner of SGE.
32. As per Sec141 of Negotiable Instrument Act, offences by Companies-
(1) If the person committing an offence U/s.138 is a Company, every person who, at the time the offence was committed, was in charge 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:27 C.C.No.55404/2019
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 deligence 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 building 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) Not withstanding anything contained in sub section (1), where any offence under this Act has been committed by 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 guilt of that offence and shall be liable to be proceeded against and punished accordingly.
33. It is allegation of the complainant that, complainant is a Proprietor Ship Firm and accused No.1 is a Limited 28 C.C.No.55404/2019 Liability Partnership corporated under the Partnership Firm and 2 to 4 are Designated Partners and authorised signatory of accused no.1 and they have actively participated in the accused No.1. Accused No.1 to 4 are engaged in the business of Production, Distribution and Marketing of Cinematographic Films, including features Films, Motion pictures, advertisements films etc., Accused No.1 to 4 approached the complainant expressing to produce the motion picture in Hindi language by titled as Hariyana Roadways. As per the memorandum of understanding Ex.P6 complainant has paid sum of Rs.94,50,000/- to the accused as a seed funds required for the Film in various dates.
34. It is further alleged that, out of that funds it will utilized towards signing of the Actor, Director, Actress, Writer, Associate Director, Executive Producer, Technicians and towards initial office administration and re-production expenses. It is further alleged that, the complainant has arranged the said fund by availing loan from various banks, but after receiving of Rs.94,50,000/- from the complainant the accused were unable to start the production work of the Film and were not showing any interest towards production of Film. 29 C.C.No.55404/2019
35. Therefore by reading of above section of the Limited Liability Partnership Act and Sec.141 NI Act, it is clear that accused No.1 is Limited Liability Partnership and accused No.2 to 4 are Partners of the accused No.1 Firm and that Firm is formed for production and distribution of Films. As per the MOU there is a Agreement for production of motion picture titled as Hariyana Roadways. Therefore, MOU is signed by the accused No.2 on behalf of all accused as he represent the accused No.1 partnership Firm. Therefore, accused No.1, 3 and 4 are liable to the act of the accused No.2.
36. At the time of argument it is submitted that accused No.2 was dead and accused No.2 only signed the Ex.P1 & 2 cheques and there is a no role of accused No.3 and 4. Hence, accused No.3 and 4 are not liable to pay the cheque amount as they are not responsible for the act of accused No.2. It is pertaining to note that as already stated above accused No.2 is represented the accused No.1 Firm, accused No.3 and 4 are the partners of the accused No.1. Hence accused No.3 and 4 are liable for the act of accused No.2.
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37. At the time of argument it is submitted that accused No.2 was dead. As per the provision of the Limited Liability Partnership Act where after the partner's death, the business is continued in the same Limited Liability Partnership name, the continued use of that name are of the deceased partner's name as a part thereof shall not of itself make his legal representative or his estate liable for any act of the Limited Liability Partnership done after his death.
38. The learned counsel for accused No.3 and 4 draw the attention of the Court to Sec.2(54) of the Companies Act, wherein Managing Director means a Director who, by virtue of the articles of the Company or an Agreement with the Company or a Resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of Managing Director by whatever name called.
39. But as above stated it is clear that accused No.1, 3, 4 are liable for the act of deceased accused No.2. Accused No.2 was signed the Ex.P26 on behalf of accused No.1,3 and 4. Even though cheques were signed by the deceased accused No.2 but 31 C.C.No.55404/2019 as per provisions of the Limited Liability Partnership Act and N.I. Act all the partners were equally liable to the Act of deceased accused No.2.
40. The accused taken defence that, both cheques are drawn on Kotak Mahendra Bank, SB Road, Mumbai. As per the defence of the accused that the complainant has presented the both cheques before Mumbai Branch and subsequently he presented before the Bengaluru Branch. He taken defence that for avoiding limitation the complainant represented the said cheques in Bengaluru and file present complaint against the accused. In this regard learned counsel for complainant relied (2019) 4 Supreme Court cases 271 in the case of Sicagen India Ltd., V/s Mahendra Vadineni and others. Wherein Hon'ble Supreme Court observed that:
Applying the above rule of interpretation and the provision of Sec.138, we have no hesitation in holding that the prosecution based on second or successive default in payment of the cheque amount should not impressible simply because no prosecution based on the first default which was followed by statutory notice and a failure to pay had not been launched. If the entire purpose underlying sec.138 of NI Act is to compel the drawer to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payments despite statutory notice served upon him should be immune to prosecution 32 C.C.No.55404/2019 simply because the holder of the cheque has not rushed to the Court with the complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for funds or for any others similar reason. There is in our opinion no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonoured for the second or successive time.
In the present case as pointed out earlier that cheques were presented twice and notices were issued on 31/8/2009 and 25/1/2010. Applying the ratio of MSR Leathers the complaint filed based on the second statutory notice is nor barred and the High Court, in our view, ought not to have quashed the criminal complaint and the impugned judgements are liable to be set aside.
41. In the present case also the complainant presented the both cheques before the Bengaluru Branch which were dishonoured by its memo dated:21/6/2019 and the complainant issued legal notice to the accused persons on 25/6/2019. Therefore the defence taken by the accused is not sustainable.
42. As per the complaint and evidence of the PW1, the accused have made payment of Rs.33,50,000/-. As per the complaint and evidence of PW1, accused have paid sum of Rs.1,75,000/- on 9/1/2018, Rs.1,00,000/- on 9/3/2018, Rs,50,000/- on 13/3/2018, Rs,1,00,000/- on 17/3/2018, 33 C.C.No.55404/2019 Rs.1,00,000/- on 26/3/2018, Rs,3,50,000/- on 27/4/2018, Rs.5,00,000/- on 22/6/2018, Rs,3,00,000/- on 23/6/2018, Rs.3,50,000/- on 8/8/2018, Rs,2,00,000/- on 31/8/2018, Rs,5,00,000/- on 28/9/2018, Rs,2,00,000/- on 1/10/2018, Rs,75,000/- on 31/1/2019 and Rs.3,50,000/- on 26/2/2019, in total the Accused have paid Rs.33,50,000/- to the Complainant, as they have paid EMI amount to the bank. In the cross-examination also learned Counsel for accused suggested to the Complainant that Rs.33,50,000/- was adjustment to the EMI.
43. The contention of the Accused is that, when the Accused have paid Rs.33,50,000/- to the Complainant as EMI amount to the bank, then why the Accused have issued two Cheques for Rs.26,66,000/- and another Cheque for Rs.65,50,169/-. The Complainant stated that both Cheques are issued by Accused themselves and both Cheques are issued by the Accused persons in the month of April 2018 at Bombay. It is further admitted fact that, both Cheques are presented before the Bombay bank for encashment and re- presented both Cheques before Bengaluru branch. Therefore out of total Rs.95,50,000/- the Accused have paid 34 C.C.No.55404/2019 Rs.33,50,000/- to the Complainant. Remaining Rs.61 lakhs to be paid by the Accused persons. In the cross-examination Accused themselves suggested that out of Rs.94,50,000/-, after deducting Rs.33,50,000/- remaining amount is Rs.61 lakhs which is admitted by the Complainant. Therefore, out of total both Cheques amount, Accused persons have paid Rs.33,50,000/- to the Complainant and Accused persons are liable to pay remaining balance amount of Rs.61 lakhs.
44. Therefore, complainant has discharged his initial onus laid on him. When he has discharged his initial onus, it raises presumption U/s 118(a) and 139 of Negotiable Instruments Act. Accused have failed to rebut the presumption either by cross-examining PW-1 or by leading their evidence.
45. In the instant case also, accused have outstanding due balance from the complainant and have failed to keep up their promise which amounts to unjust enrichment for which complainant is to be compensated.
46. Hence, I conclude that complainant is able to prove beyond all reasonable doubts that accused have committed the offence punishable U/s 138 of NI Act.
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47. So, far as sentence and compensation is concerned, an offence punishable under section 138 of N.I. Act, is a civil wrong and compensatory in nature, punitive is secondary, considering, the above settled principal of law with facts and circumstances of the case, which clearly reveals that, the complainant gave hand loan to the accused and towards repayment of loan amount, cheque in question of issued by the accused to the complainant, therefore, it is issued for legally recoverable debt, therefore considering the nature of transaction, duration of pendency, litigation expenses, I am opinion that, if sentence of Fine of Rs.73,44,400/- (Rupees Seventy-three Lakhs Forty-four Thousand and Four Hundred only) is imposed that would meet the ends of justice, accordingly, the accused is hereby sentenced to pay a fine of Rs.73,44,400/- (Rupees Seventy-three Lakhs Forty-four Thousand and Four Hundred only), out of that, the complainant is entitled for sum of Rs.73,39,400/- (Rupees Seventy-three Lakhs Thirty-nine Thousand and Four Hundred only) as a compensation as per Sec.357(1) of Cr.P.C., remaining amount of Rs.5,000/-, is to be appropriated to the state, in case of default the accused shall undergo simple 36 C.C.No.55404/2019 imprisonment for a period of 1 year. Accordingly, the Point No.1 is answered in Affirmative.
48. POINT No.2 : In view of discussion held in Point No.1, I proceed to pass the following :
ORDER Acting U/S 255(2) of Cr.P.C., the accused are convicted for the offence punishable Under Section 138 of Negotiable Instrument Act.
Since the Accused No.2 was dead, case against Accused No.2 is abated.
Accused 3 and 4 are sentenced to pay fine of Rs.73,44,400/- (Rupees Seventy-three Lakhs Forty-four Thousand and Four Hundred only) in default to undergo simple imprisonment for 1 year.
Further, it is made clear that out of fine amount, Rs.73,39,400/- (Rupees Seventy-three Lakhs Thirty-nine Thousand and Four Hundred only) is to be paid to the complainant as compensation and Rs.5,000/- is ordered to be remitted to the State. Bail bond stands cancelled.
Supply the free copy of this judgement to the Accused forthwith.
(Dictated to the stenographer, transcribed by her, corrected by me and then pronounced in the open court on this 12th May, 2023) PARVEEN A Digitally signed by PARVEEN A BANKAPUR BANKAPUR Date: 2023.05.15 16:30:16 +0530 (PARVEEN A BANKAPUR) XXXIV ACMM, BENGALURU.
37 C.C.No.55404/2019ANNEXURE
1. Witnesses examined on behalf of Complainant:
P.W.1 Sri.Kevin Johnson
2. Documents marked on behalf of complainant:
Ex.P.1 & 2 Two Cheques Ex.P.3 Bank endorsement Ex.P.4 Office copy of Legal Notice Ex.P.5 13 Postal receipts Ex.P.6 to 8 Postal acknowledgements Ex.P.9 Reply Notice Ex.P.10 to 17 Eight Postal Covers Ex.P.18 & 19 Bank Statement Ex.P.20 Letter issued by IDFC First Bank Ex.P.21 Letter issued by HDFC Bank Ex.P.22 Loan Sanction Letter Ex.P.23 Loan Application Ex.P.24 Tata Capital Loan Application Ex.P.25 IIFL Loan Application Ex.P.26 Original MOU
3. Witnesses examined on behalf of Accused : NIL
4. Documents marked on behalf of Accused: NIL Digitally signed by PARVEEN A PARVEEN A BANKAPUR BANKAPUR Date: 2023.05.15 16:30:07 +0530 (PARVEEN A BANKAPUR) XXXIV ACMM, BENGALURU.