Karnataka High Court
M/S Maxworth Realty India vs Sri V Srinivas on 15 September, 2023
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Crl.R.P. No.1061/2015
C/w. Crl.R.P. No.1256/2015
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 15TH DAY OF SEPTEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR
CRIMINAL REVISION PETITION NO.1061/2015
C/w.
CRIMINAL REVISION PETITION NO.1256/2015
CRL. R.P. NO.1061/2015
BETWEEN:
1. M/S MAXWORTH REALTY INDIA
LIMITED
REGISTERED OFFICE
NO.22/1
RAILWAY PARALLEL ROAD
NEHARUNAGAR
(OPP REDDY PETROL BUNK)
BANGALORE-560 020
REPRESENTED BY ITS MANAGING DIRECTOR SRI
KESAVA K
2. SRI KESAVA K
MANAGING DIRECTOR
MAXWORTH REALTY INDIA LIMITED NO.22/1
RAILWAY PARALLEL ROAD NEHARUNAGAR (OPP
REDDY PETROL BUNK) BANGALORE-560 020
...PETITIONERS
(BY SRI.VINAY KEERTHY M., ADVOCATE)
AND:
SRI V SRINIVAS
S/O LATE VENAKTASWAMAPPA
RESIDING AT NO.9
SNEHA
I MAIN ROAD
ANANDA GOKULA LAYOUT
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Crl.R.P. No.1061/2015
C/w. Crl.R.P. No.1256/2015
KAVERINAGAR
R T NAGAR POST
BANGALORE-560 032
...RESPONDENT
(BY SRI M S RAGHAVENDRA PRASAD, ADVOCATE)
THIS CRIMINAL REVISION PETITION FILED UNDER
SECTION 397 CR.P.C. R/W.401 Cr.P.C. THE ADVOCATE FOR
THE PETITIONER PRAYING THAT THIS HON'BLE COURT MAY BE
PLEASED TO SET ASIDE THE IMPUGNED JUDGMENT AND
ORDER OF CONVICTION DATED 23.07.2014 PASSED BY THE
XVIII ACMM, BANGALORE IN CC No.18419/2009 AND ALSO
JUDGMENT 30.09.2015 PASSED BY THE LXII ADDL.CITY CIVIL
JUDGE AND S.J.(CCH-63), BANGALORE IN CRL.A.922/2014
AND ACQUIT THE PETITIONER/ACCUSED.
CRL.R.P. No.1256/2015
BETWEEN:
1. MR Y BHASKAR
S/O.NARAYAN
AGED ABOUT 37 YEARS
R/A.NO.219, SAI KRUPA
2ND MAIN ROAD, KASTURINAGAR
EAST OF NGEF
BENGALURU 560 043.
2. D.M. AMBARISH
S/O.D.P.MUNIYAPPA
AGED ABOUT 30 YEARS
R/A.NO.59
SHANTHILAVANYA NILAYA
OPP. AMARJYOTHI ENGLISH SCHOOL
DEVASANDRA,K.R.PURAM
BANGALORE 560 036.
...PETITIONERS
(BY SRI.RAJ PRABHU S., ADVOCATE)
AND:
SRI V SRINIVAS
S/O.VENKATASWARNAPPA
AGED ABOUT 61 YEARS
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Crl.R.P. No.1061/2015
C/w. Crl.R.P. No.1256/2015
RESTING AT NO.9, SNEHA
1ST MAIN ROAD, ANANDAGOKULA LAYOUT
KAVERINAGARA, R.T.NAGAR
BANGALORE 560 032.
...RESPONDENT
THIS CRIMINAL REVISION PETITION FILED UNDER
SECTION 397 CR.P.C. R/W.401 Cr.P.C. THE ADVOCATE FOR
THE PETITIONER PRAYING THAT THIS HON'BLE COURT MAY BE
PLEASED TO SET ASIDE THE IMPUGNED JUDGMENT AND
ORDER OF CONVICTION DATED 23.07.2014 PASSED BY THE
XVIII ACMM, BANGALORE IN CC No.18419/2009 AND ALSO
JUDGMENT 30.09.2015 PASSED BY THE LXII ADDL.CITY CIVIL
JUDGE AND S.J.(CCH-63), BANGALORE IN CRL.A.913/2014
AND ACQUIT THE PETITIONER/ACCUSED.
THESE CRIMINAL REVISION PETITIONS ARE COMING ON
FOR ADMISSION ON 17.07.2023 AND THE SAME HAVING BEEN
HEARD AND RESERVED FOR PRONOUNCEMENT OF ORDER,
THIS DAY, THE COURT PASSED THE FOLLOWING:
ORDER
Appellants/accused Nos.1 and 2 have preferred Crl.Revision Petition No.1061/2015 and accused Nos. 3 and 4 independently have preferred Crl. Revision Petition No.1256/2015 under Section 397 of Cr.P.C., challenging the judgment of conviction and sentence passed against them by the XVIII ACMM, Bangalore in CC No.18419/2009 dated 23.07.2014 which is confirmed by Judgment dated 30.09.2015 passed by the LXII Addl. City Civil Judge and S.J.(CCH-63), Bangalore in CRL.As.913/2014 and 922/2014 and prayed to acquit the petitioners/accused for -4- Crl.R.P. No.1061/2015 C/w. Crl.R.P. No.1256/2015 the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the 'N.I. Act', for brevity).
2. Parties to these appeals are referred to as per their rank before the Trial Court.
3. Since in both these revisions arise out of single judgment, parties are same, facts are same, the grounds made out in the revision petition are same, hence, both petitions are taken up together for disposal with the consent of both the parties.
Brief facts of the case
4. Respondent-complainant (in both the petitions) filed a private complaint against the accused persons alleging accused no.1-Company is a Real Estate Company, accused no.2 is the Managing Director, accused nos. 3 and 4 are the Directors of the Company. Accused No.1- Company through accused No.2 and other Directors of the Company purchased immovable property - land comprised in Survey No.33/20 totally measuring 1 acre situated at -5- Crl.R.P. No.1061/2015 C/w. Crl.R.P. No.1256/2015 Sriramanahalli Village, Hesaraghatta Hobli, Bangalore belongs to the complainant under a registered Sale Deed dated 4.8.2008 for valuable consideration of Rs.65,34,000/-. Towards part payment sale consideration, accused no.1 company issued a cheque dated 5.10.2008 for Rs.20,00,000/- drawn on Corporation Bank, Vasanthanagar Branch, Bangalore.
5. It is alleged that the said cheque for Rs.20,00,000/- was dishonoured with an endorsement `funds insufficient'. Hence, the complainant got issued demand notice to the accused which was duly served on them. To the said notice, accused gave evasive reply. To that complainant issued rejoinder to the accused. As cheque amount was not paid, complainant was constrained to file a complaint against the accused persons for the offence punishable under Section 138 of the Act.
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6. To prove his case, the complainant himself entered the witness box and was examined as PW.1. On his behalf Ex.P.1 to Ex.P.11 were marked.
7. To rebut the evidence of the complainant, DWs.1 to DW.3 were examined and Ex.D.1 to Ex.D.14 are marked.
8. Learned Magistrate on hearing the arguments of both the side and on perusal of the records found the accused persons guilty of offence under Section 138 of N.I. Act and sentenced all the accused persons as under:
"Acting under Section 255(2) of Cr.P.C, accused Nos. 1 to 4 are convicted for the offence punishable under Section 138 of Negotiable Instruments Act, 1881. Each of the accused Nos. 2 to 4 are sentenced to pay fine of Rs.10,86,667/- (Rupees Ten Lakhs Eighty Six Thousand Six Hundred and Sixty Seven Only) and in default to undergo simple imprisonment for six months.
Acting under Section 357(1) (b) of Cr.P.C., out of the fine amount the complainant is entitled for Rs.20,00,000/- (Rupees Twenty Lakhs only) Cheque amount Rs.12,00,000/- (rupees Twelve -7- Crl.R.P. No.1061/2015 C/w. Crl.R.P. No.1256/2015 Lakhs only) towards interest and Rs.10,000/- (Rupees Ten Thousand only) towards cost as compensation. In all Rs.32,10,000/- (Rupees Thirty Two Lakhs Ten Thousand only).
Acting under Section 357(1)(a) of Cr.P.C. the balance amount of Rs.50,000/- (Rupees Fifty thousand only) is defrayed to the State for the expenses incurred in the prosecution."
9. This judgment of conviction and sentence passed by the learned Magistrate was challenged by the accused persons before the learned LXII Additional City Civil and Sessions Judge (CCH-63), Bengaluru in Criminal Appeal Nos.913/14 C/w.922/14. The learned Sessions Judge by judgment dated 30.09.2015 dismissed the said appeals confirming the judgment of conviction and sentence dated 23.07.2014 passed by the learned trial Judge in CC No.18419/2009. This is how appellants are before this Court by way of these revision petitions.
10. It is argued by the learned counsel for the appellants-accused Sri. Vinay Keerthy M.,. that, accused- Company is a Real Estate Company, accused nos.2 is the -8- Crl.R.P. No.1061/2015 C/w. Crl.R.P. No.1256/2015 Managing Director and accused nos. 3 and 4 are Directors of the accused No.1 Company. It is further submitted that the Courts below have failed to appreciate that the sale transactions were absolutely carried out individually by the complainant and accused nos. 3 and 4 by misusing the seal of the company and cheque of the company. He would submit that, complainant and accused nos. 3 and 4 were in hand in glove and cheated the appellants in the said transaction while transferring the amount from the company bank account to some other account owned by accused no.3 as per Ex.D5 and 6. Intentionally they left the company and started a new company in the name of `New Infotech'.
11. He submits that, there is no application of mind by the Trial Court. It is submitted that the contents of the reply notice themselves answer the case of the complainant.
12. In support of his submission, the learned counsel for appellants/accused persons relied upon the -9- Crl.R.P. No.1061/2015 C/w. Crl.R.P. No.1256/2015 evidence so adduced by both the side and would submit that, the documents produced by the accused by way of defence evidence, clinchingly falsifies the case of the complainant. He relies upon the findings of the Trial Court and appellate Court which according to him are perverse and capricious and without application of mind. Therefore, he prays to allow the revision petitions and acquit the accused persons.
13. As against this submission, the learned counsel for the complainant Sri M.S.Raghavendra Prasad also relies upon the admission of DW.1 and also the documents so produced by both the sides. It is submitted that, learned Trial Court and first appellate Court have rightly appreciated the evidence and have come to the conclusion that the accused persons have committed the offence as alleged in the complaint.
14. I have given my anxious consideration to the arguments of both sides. Meticulously perused the records.
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015
15. This is a revision petition filed under Section 397 of Cr.P.C. The law is very much settled that in the Revision, the High Court cannot sit as an appellate Court and re-appreciate the evidence.
16. Before adverting to other aspects of the case, the admitted facts between both the sides have to be narrated in this judgment.
17. In this case the complaint was filed by the complainant by invoking the penal provisions of Section 138 of N.I. Act. Section 138 of N.I. Act reads as under:
"Dishonour of cheque for insufficiency, etc., of funds in the accounts:
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for [a term which may be extended to two years,] or with fine which may extend to twice the amount of the cheque, or with both:
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PROVIDED that nothing contained in this section shall apply unless-
a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability."
18. On perusal of the provisions of Section 138 of N.I. Act, it is very much clear that, the ingredients with regard to the proof of offence under Section 138 of N.I. Act have been complied with by the complainant. Section 139 of N.I. Act speaks with regard to the presumption in favor of the holder of a cheque. The word 'i.e.' used shall be presumed, unless the contrary is proved.
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015
19. Meaningful reading of provisions of N.I. Act particularly Sections 20, 87 and 139 of N.I Act, make it amply clear that, a person who signs a cheque and makes it over, payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of debt or in discharge of a liability.
20. Presumption is very much available to the complainant which is not rebutted by the accused.
21. The complainant in his evidence has spoken in line with contents of his complaint. In support of his evidence he relies upon Ex P1to P11.
22. Ex P1 is a cheque stated to have been issued by the accused persons on behalf of the accused No.1 Company signed by authorized signatory. The said cheque was presented by the complainant through his banker. As per the endorsement issued by the banker as per Ex.P2, the said cheque came to be dishonoured for want of sufficient funds in the account of accused company. The complainant got issued a legal notice as per Ex.P3 calling
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015 upon the accused company to pay the cheque amount. The said notice was duly served upon the accused as per the postal acknowledgement marked at Ex.P3. It is the case of the complainant that to this notice accused company issued evasive reply setting up a plea that major portion of the sale consideration would be paid after compliance of the undertaking given by the complainant as there was a dispute regarding a road so situated in the schedule property purchased by the accused company. As per the case of the complainant, there was no undertaking given by the complainant either at the time of agreement of sale or at the time of the sale deed. According to complainant, just to evade the payment of money a false plea has been taken in the reply notice which according to him is false. Therefore, according to his evidence, he replied rejoinder to the accused company as per Ex.P6 stating that at any point of time, there was no such undertaking given by the complainant. The said notice was duly served on the Advocate of the accused company. To that effect postal acknowledgment is produced at Ex.P6.
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015 Thus, on reading all the aforesaid admitted documents, the complainant has complied the provisions of Section 138 of the NI Act with regard to dishonour of a cheque, issuance of statutory notice within the prescribed period stipulated under the Act. Thus, this fact is not disputed by the accused persons.
23. It is the defence of the accused that, so far as the other cheques are concerned, they have been honoured and there was payment. As there was an undertaking with regard to resolving of an issue of a road situated in the schedule property, therefore, they have withheld the cheque amount. Thereby, accused company admits the liability towards the sale consideration to be paid to the complainant. The other documents are produced with regard to Form-32 etc., The most important document is Ex.P10, the agreement of sale dated 2.7.2008. So also, the sale deed so produced by the accused themselves.
24. On reading of these two documents, there is no recital with regard to the so called undertaking alleged to
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015 have been given by the complainant to resolve the dispute with regard to the road situated in the schedule property so purchased by the accused company. If really such an issue was there as contended by the accused, these two documents would have contained the same which are vital documents entered into in between complainant and accused company. Except these documents, there are no documents entered into between both. In the absence of such a recital in these documents, it appears that as rightly contended by the complainant, the bald contentions must have been taken by the accused so as to evade the payment.
25. Though this PW.1 was intensively cross- examined by the counsel for the accused, he has withstood the test of cross-examination. The other defence set up by this accused is that, there was no resolution being passed by the Board of Directors to execute the sale deed etc... But, the evidence spoken to by the witnesses on behalf of the accused falsifies such a defence. Most of
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015 the documents produced by the complainant have been admitted by the accused.
26. So far as the evidence of DW.1 is concerned, he is a signatory to a Cheque Ex.P1 arrayed as accused no.2. He states that complainant has executed an agreement of sale as per Ex.P10 in his favour. It is his evidence that the property was registered in the individual capacity of accused no.3 and 4 on 4.8.2008 without the knowledge of company and himself. Thus, he contends that complainant has executed the sale deed without his knowledge. It is his further evidence that within another four days on 8.8.2008, accused nos. 3 and 4 have sold the property to one Srinivas Reddy without his knowledge. Subsequently, Srinivas Reddy executed GPA in favour of accused no.3 wherein accused no.4 was shown as witness. Thereafter, by virtue of the GPA accused nos. 3 and 4 sold the property to another person in the year 2009.
27. As per his evidence, he has no knowledge about the said transaction entered into by accused nos. 3 and 4 with complainant. According to his evidence, even he has
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015 not given any instructions to issue reply notice. He has produced Ex.D1 the certified copy of the sale deed. He admits that the schedule property owned by the complainant was agreed to be sold to the accused company by the complainant for a valuable consideration of Rs.65,34,000/- as per Ex.P10. Three months' time was stipulated. But, the sale deed was executed without his knowledge in favour of accused nos. 3 and 4 for Rs.47,00,000/- To that effect, he has produced the sale deed dated 29.1.2009 marked at Ex.D3. He has been thoroughly cross-examined. The text of his evidence is that, he cast burden on accused nos.3 and 4. This DW.1 is a MBA Graduate and admits that, as per the Articles of Association of the Company, he is responsible for the affairs of the company. It is he who has signed the cheque Ex.p1. But, now denies the very transaction with the company.
28. DW.2 Ambarish being accused no.4 has come before the Court to speak that he was not authorized to sign the cheques of the company. It was accused no.2
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015 who was authorized to sign the cheques of the company. Even he deposes ignorance with regard to the sale transaction dated 4.8.2008. According to him, he left the accused no.-1 Company. He too has been cross-examined at length. It is not in dispute that when the said sale transaction has been taken this DW.2 was a director of the company.
29. DW.3 Bhaskar Narayan has come before the Court to say that he was also one of the Directors of the Company and because of attitude of accused no.2, he resigned from his Directorship on 20.5.2009. Thus, when the sale transaction took place in between accused and complainant he was the director of the Company but, alleges that it was accused no.2 who was empowered to sign the cheques. He is also B.Com graduate. He denies the suggestion that after sale deed as per Ex.P2 the company has received Rs.47,00,000/-. He admits that the said amount was credited to the account of the company but, says that the said amount of Rs.47,00,000/- was with regard to different transaction.
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30. On scrupulous reading of all this evidence, it do demonstrate that, there is a internal dispute with regard to the transactions of the company in between these accused persons. As it is a inter se dispute between the Directors of the accused Company, the accused nos.1 to 4 cannot take advantage of the inter se dispute and deprive the complainant of his legitimate claim so set up by him in the complainant.
31. Both the Courts have concurrently held that how the Company is liable to pay the cheque amount and accordingly found all the accused persons guilty of committing the offence.
32. The said cheque Ex.P1 was issued by accused no.2, DW.1 for and on behalf of the accused no.1 company in favour of the complainant towards the payment of sale consideration amount which is legally enforceable/recoverable from the accused persons by the complainant. Therefore, when such a claim is made by the complainant, we are very much concerned with two
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015 provisions of the NI Act. They are:- Section 138 and Section 141.
33. It is settled that Section 138 casts criminal liability punishable with imprisonment or fine and with both on a person who issues a cheque towards discharge of a debt or liability as a whole or in-part and the cheque dishonoured by the Bank on presentation.
34. Thus, under the provisions of Sec.138, any person who issues a cheque for discharge of liability and the said cheque is dishonoured, becomes criminally liable, if after the presentation of the cheque, it is dishonoured and payment not made after notice of demand is given to him to make the payment within fifteen days of the receipt of the said notice. If the person committing an offence under Section 138 is a company, then, vicarious liability is fastened on certain other persons as well. Since we are concerned with this vicarious liability in this case, it would be necessary to reproduce Section 141 of the NI Act.
"141. Offences by Companies - (1) If the person committing an offence under section 138 is a company, every : person who, at the time of the offence was
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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:
Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence;
Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.
Notwithstanding anything contained in sub-section 91), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly."
35. Thus, Section 141 extends such criminal liability in case of a company to "every person" who at the
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015 time of the offence, was in charge and was responsible for the conduct of the business of the Company. Sub-section (1) by using the expression "every person", does not limit this vicarious liability only to Directors, Managers, Secretary etc... Any person who meets the test of his being responsible for the conduct of the business of the Company and being in charge of the Company can be held liable. Sub-Section (2) of Section 141, however, makes specific provision in the case of any Director, Manager, Secretary or other Officer of the company. This is a deeming provision starting with non-abstente clause, i.e. irrespective of what is stipulated in sub-section (1) of Section 141. It stipulates that any Director, Manager, Secretary or other Officer of the Company shall also be deemed to be guilty of the offence if 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 the Director, Manager, Secretary or other Officer of the Company.
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36. Thus, the conjoint reading of sub-section (1) and (2) of Section 141 specifically demonstrate that for the conduct of the business of the Company every person who is in-charge and responsible for the Company at the time of commission of the offence under Section 138, shall be deemed to be guilty of the offence. He would be deemed to be guilty if offence is committed with his consent or connivance or his attributable to any neglect on his part.
37. In this case, it was within the knowledge of all the accused persons about purchase of the schedule property from the complainant for the purpose of accused no.1 company. To that effect, there was an agreement of sale and thereafter, there was a sale deed. These two documents do not contain any recital with regard to resolving dispute regarding road as set up by the accused. Thus, all the accused persons with regard to the deeming provisions in Section 141 of the NI Act make them criminally liable and there is no exception to the normal rule as all the accused are criminally liable vicariously.
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Crl.R.P. No.1061/2015C/w. Crl.R.P. No.1256/2015 These accused persons are coming within the description of Section 141.
38. Thus, the complainant has fulfilled or satisfied the conditions of Section 141 and because of this fulfillment of the conditions, the liability is extended to all the Directors of the Company. No doubt, the initial burden is on the complainant to show that accused persons were in charge of and responsible for the affairs of the company. This burden of proof on the complainant is properly discharged by the complainant. Now it is for the accused persons to discharge their onus of escaping the liability. But, in view of the evidence spoken to by all the witnesses examined as DW1 to 3, the said onus is not discharged by the accused persons. Thus, the complainant is able to establish the criminal liability of all the accused persons in paying the cheque amount as stated in Ex.P1. the said amount is a legally enforceable debt/payment towards the part of the sale consideration and accused cannot escape the liability.
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39. In view of the discussion made above, the Revision Petitions so filed by the respective accused persons have no merit for consideration. Resultantly, following order is passed:
ORDER
(i) Revision petitions filed by the petitioners/accused in Crl.Revision Petition 1061/15 and 1256/2015 are dismissed.
(ii) The judgment of conviction and sentence passed in CC No.18419/09 by the XVIII ACMM, Bangalore and confirmed in Crl.Appeals Nos. 913/2014 and 912/2014 are affirmed.
(iii) Send back the Trial Court and appellate Court records forthwith along with copy of this judgment.
Sd/-
JUDGE Sk/-