Karnataka High Court
Smt. K. Vasantha Kumari vs D. Devendra Reddy on 25 September, 2007
Equivalent citations: 2008CRILJ1001, AIR 2008 (NOC) 696 (KAR.) = 2008 (1) AIR KAR R 398, 2008 CRI. L. J. 1001, 2008 (2) ALJ (NOC) 482 (KAR.), 2008 (1) AIR KANT HCR 398, (2008) 1 NIJ 474
Author: A.C. Kabbin
Bench: A.C. Kabbin
JUDGMENT A.C. Kabbin, J.
1. Challenging the acquittal of the respondent for the offence punishable under Section 138 of the Negotiable Instruments Act, in judgment dated 15-9-2003 passed by the learned XIII Additional Chief Metropolitan Magistrate, Bangalore, in CC No. 30685/2001, the complainant of that case has filed this appeal.
2. The case of the complainant in brief is as under:
The accused, the complainant and 4 persons were partners in a firm named Sri. Venkateshwara Finance Corporation: The main business of that firm was money lending. Due to persona] problems the complainant and 4 others were forced to retire from the abovesaid firm with effect from 27-6-1998. The accused agreed to continue the business of the firm in his individual capacity and to that extent an agreement was executed between the complainant and the accused along with 4 others on 27-6-1998. As per the agreement the accused agreed to return her capital and hand loan standing at the credit of the complainant as on 31-3-1998 after adjusting the amount due by her to the firm. The amount due to the complainant as on 31 -3-1998 was Rs. 1,58,200/ - being the capital amount and a sum of Rs. 46,800/- being the hand loan taken for the purpose of said business. The accused also undertook to pay the sum with interest at the rate of 24% per annum, on or before 31-8- 1998 and further agreed to pay the interest at the rate of 36% per annum, till the date of actual payment of the said amount of Rs. 2,05,000/-. In order to discharge the said legal liability, the accused executed two on demand promissory notes and two consideration receipts dated 27-6-1998 one for a sum of Rs. 1,58,200/- and another for a sum of Rs. 46,800/-. However, post-dated cheques as promised were not issued. On repeated requests by the complainant, the accused issued two cheques on 8-6-2001, one for Rs. 1,58,200/- and another for Rs. 46,800/-. On presentation, the said cheques were returned dishonoured with an endorsement insufficient funds'. The complainant issued a legal notice dated 26-6-2001 calling upon the accused to pay the cheque amount and also calling upon him to pay interest. The cover containing the said notice returned on 30-6-2001 as not claimed. The accused neither did comply with the demand nor did he reply to the notice. Hence the cause of action for the complaint arose and this complaint is filed within one month from the date of cause of action.
3. The accused/respondent pleaded not guilty and claimed to be tried. The complainant examined himself as P. W. 1. In his examination under Section 313 of Cr. P. C., the accused denied the claim of the complainant. In support of his contention, the respondent examined himself as D. W. 1. In his evidence, the accused contended that when the finance corporation was wound up, the task of collecting chit amount from those who had stopped paying was entrusted to him and therefore Ex. P-2 was executed and though he had not taken any money from the complainant, on the demand by the complainant for issuance of cheques as security, at the instance of other partners and upon their assurance cheques were given along with on demand promissory notes. No witness was examined on behalf of the accused.
4. After hearing arguments from both the sides, the learned trial Judge did not go into the claim of the complainant though observed that Ex. P-2 (Agreement), Ex. P-3 (Consideration Receipt) and Ex. P-4 (On Demand Promissory Note) had been executed by the accused, but went into the question of legality of the partnership firm operating without registration and observing that in view of the provisions of Section 69(2) of Indian Partnership Act, the firm being an unregistered firm, all transactions were illegal. He also observed that oral evidence of PW 1 was not in conformity with the documentary evidence i.e. Exs. P-l to P-12 and there were no sufficient materials to presume that the accused issued Exs. P-5 and P-6 to the complainant voluntarily. He also observed that the debt was not legally enforceable debt. On this ground he acquitted the respondent for the offence punishable under Section 138 of the Negotiable Instruments Act. It is this judgment of acquittal that has been challenged by the complainant in this appeal.
5. Sri. B.S. Satyanand, the learned advocate for the appellant (complainant) submits that Section 69(2) of the Indian Partnership Act has nothing to do with the present transactions, since it is not claimed on behalf of the partnership firm but was on termination of the partnership, certain obligations arose between the partners and in furtherance of which promissory note and consideration receipt has been executed and later these two cheques had been issued. He also submits that the observation of the learned trial Judge that the cheques Exs. P-5 and P-6 had not been issued voluntarily was not on the basis of any fact or reason assigned in the judgment and this observation of the learned Trial Judge is despite a specific admission on the part of the accused/respondent in the cross examination, wherein he admitted execution of the agreement Ex. P-2, consideration receipt, on demand promissory note, Exs. P-3 and P-4 and cheques Exs. P-5 and P-6. He submits that therefore the learned trial Judge erred in acquitting the accused though the materials clearly indicated that the offence punishable under Section 138 of the Negotiable Instruments Act had been committed by the respondent. On this ground he prays for setting aside the acquittal and for conviction of the respondent for the offence punishable under Section 138 of the Negotiable Instruments Act.
6. Replying to this Sri. B.N. Suresh, learned advocate for the respondent has taken up new plea i.e. regarding jurisdiction. He submits that Section 142(a) of the Negotiable Instruments Act stipulates that notwithstanding anything contained in Cr. P. C., no Court shall take cognizance of any offence punishable under Section 138 of the Negotiable Instruments Act except upon a complaint in writing made by the payee or holder in due course of the dishonoured cheque; and in the present case the complaint has been filed not by the payee but her husband who claims to be the holder of power of attorney. He submits that the provision is mandatory and though this contention was not taken before the Trial Court, it being a pure question of law relating to the jurisdiction of the trial Court, it can be raised before the appellate Court also. On that ground he submits that the appeal may be dismissed.
7. Now considering in the first instance, the contention of the learned Counsel for the respondent that the complaint itself was not maintainable under the provisions of Section 142(a) of the Negotiable Instruments Act, two decisions have been cited by the learned Counsel for the respondent. In the first decision K.R. Ramachander Rao v. State of A.P. and Anr. 2005 (2) DCR 178, the question of the complaint through holder of power of attorney of the payee in respect of the offence punishable under Section 138 of the Negotiable Instruments Act was considered by the Full Bench of the Andhra Pradesh High Court and it was held that since the act to be performed by the payee is not personal in character and is not annexed to any public office, does not involve fiduciary obligations, the power of attorney of a payee or holder in due course of a dishonoured cheque can file a complaint for an offence under Section 138 of the Negotiable Instruments Act after obtaining the permission from the Court, either before or after filing of the complaint. It is submitted by the learned Counsel for the respondent that in the present case no such permission having been sought for by the complainant and no permission having been given by the Court, the Trial Court had no jurisdiction to take cognizance of the complaint filed by the holder of power of attorney.
Second decision relied upon by the learned Counsel for the respondent is Jimmy Jahangir Madan v. Bolly Cariyappa Hindley (Dead) by L.Rs. . In that case the question was about the right of the L.Rs. of the deceased complainant to continue under Section 302 of the Cr.P.C. through their power of attorney the proceedings. Neither heirs of the complainant had filed an application under Section 302 of the Cr.P.C. to continue the prosecution nor any permission sought for by them from the competent Court that they should be allowed to continue the prosecution through their power of attorney holders. That being the position in that case the Hon'ble Supreme Court held that the Trial Court was not justified in allowing them under Section 302 of the Code to continue the proceedings and the High Court committed an error in confirming the said order. It may be observed that the wordings of Section 302 of Cr.P.C. and those of Section 142{a) of the Negotiable Instruments Act are not similar. Section 302 of the Cr.P.C, specifically stipulates that the prosecution cannot be continued without such permission. Therefore, in that case where even permission had not been sought for it was held that the order of the Trial Court confirmed by the High Court was not correct.
8. In the present case it is seen that the complaint is in the name of the payee only. The contents of the complaint also are in relation to payee but the complaint has been signed by the deed of holder of the power of attorney on the basis of the power of attorney granted by the payee. In this regard Sri. B.S. Satyanand, learned Counsel for the appellant has referred to the decision of this Court in Rajeev Indani v. D. Veerendra Heggade wherein following observations have been made by this Court.
In view of the law laid down by the Hon'ble Supreme Court and the view taken by the Kerala High Court, with which I respectfully agree, I hold that a duly constituted power of attorney of the respondent is entitled to file the complaint on behalf of the respondent under Section 142 of the Act. There is no specific bar under the provisions of Section 142 of the Act that a duly constituted power of attorney of the payee or the holder in due course of the cheque, is not entitled to maintain a complaint on behalf of the payee or the holder in due course of the cheque. I am, therefore, unable to accept the contention of the learned Counsel for the petitioner that the complaint filed by the special power of attorney of the respondent is not maintainable.
However, it is open to the petitioner to raise the contention before the Trial Court that the power of attorney executed does not empower respondent to file the complaint or to give evidence, on production of the said power of attorney, if it does not contain any such specific authorisation before the Trial Court.
If the Power of Attorney empowers him to give evidence, the Power of Attorney can also give evidence on behalf of his Principal.
In view of the above mentioned direct decision of this Court in respect of complaint by the payee through his power of attorney holder, it has to be held that the complaint was maintainable. The learned Counsel for the appellant has objected to the right of the respondent to raise the question of jurisdiction for the first time in the appeal. But since the above mentioned decision of the Karnataka High Court settles the matter that the Trial Court had jurisdiction there is no need to consider the objection raised by the appellant.
9. Now coming to the ground on which the learned trial Judge has held that the offence has not been proved, the reference has been made by the learned Trial Judge to Section 69(2) of the Indian Partnership Act. The said provision provides no suit to enforce a right arising from contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners of the firm. Perhaps the learned Trial Judge did not read this provision properly. This was not a complaint on behalf of the firm or against the firm. This was not a suit to enforce a right arising from a contract on behalf of any person suing as a partner of the firm suing another partner of the firm. This was a complaint not on behalf or against the firm in respect of a contract with the firm to consider the claim under Section 69(1) or (2) of Section 69 of the Indian Partnership Act. On determination of the partnership, the agreement between the complainant and the accused had come into effect and the cheques were allegedly issued in furtherance of that agreement. The learned Trial Judge also overlooked Section 69(3)(a) of the Indian Partnership Act (reproduced below) which could have furnished proper interpretation of the matter in issue:
69. Effect of non-registration.- (1) x x x (2) x x x (3) The provisions of Sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect:
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm; or
(b) and (c) x x x
10. Now coming to the claim of the complainant that these cheques had been issued in furtherance of the promissory note and consideration receipt, the conclusion of the learned trial Judge is that they had not been voluntarily executed. No where in the judgment the reason as to why he comes to that conclusion has been given.
11. The contention of the accused with regard to the issuance of consideration receipt, demand notice, agreement and cheques as mentioned in his affidavit was as follows:
It was agreed by the other partner that they would take the amounts which were due to them from the said Finance Corporation, after I collected the same from the defaulter chit members and from those who had taken finance from the said Finance Corporation. But the complainant demanded for some security from me at the instance of the other partner of the said finance corporation and upon their assurance that the cheques given to the complainant along with on demand promissory notes were given to complainant on the same day when Ex. P2 were prepared. As on that day I even did not have any bank account in my name. The complainant forced me to open an account at Andhra Bank, Rajajinagar Branch and one Sri. Bhaskar Reddy introduced me to open the account. This account was also opened on the same day when Ex. P2 was prepared. Upon the support and the confidence of the five members i.e. partners I gave the cheque and on demand promissory notes to the complainant. The cheques were filled in by Sri. Sidda Reddy, father of one of the partners.
I do not owe any money to the complainant. The complainant has not given me any amount. The complainant was to get his dues from the Finance Corporation towards her share of capital amount profit and loss as per the balance sheet prepared as per Ex. P-2. The said Finance Corporation was unregistered finance corporation which was doing the business of money lending, pawn brokering and chit fund business. I have not taken any money from the complainant. Hence there was no consideration extended by the complainant to me.
12. This contention of the accused that though he did not owe any money he was asked to execute these documents on the assurance has not been substantiated by any evidence. In fact he admits in the cross-examination as follows:
It is true the signature appears on Ex. P-2 at page 3, item No. 1 is the signature of Ramadevi. It is true that Reddy Rani, Prashanth Reddy, Vasanthkumari and N.L. Prasad Reddy signed to Ex. P-2 agreement. It is true that I have executed on demand promissory note and consideration in favour of the complainant as per Exs. P-3 and P-4. It is true that I had given Exs. P-5 and P-6 to the complainant towards repayment.
These admissions clearly proved that Exs.P-5 and P-6 cheques in question had been issued by the accused/respondent in favour of the complainant in furtherance of the agreement, on demand promissory note with consideration receipt and despite clear admission. Though the respondent/accused had not adduced any evidence to substantiate his contentions denying the claim of the complainant, the learned Trial Judge has gone on to observe that the respondent/accused had issued Exs. P5 and P6 to the complainant not voluntarily. The observation of the learned Trial Judge that the debt is not legally enforceable debt also is not based on any factual aspect.
13. The Supreme Court in Hiten P. Dalai v. Bratindranath has observed that it is obligatory on the Court to presume the liability of the drawer for the amount of cheque in every case where the factual basis for such presumption is established. Such a presumption can be rebutted by the drawer by proving on evidence that the holder of the cheque had not received the same towards the discharge of any liability. In the present case no such rebuttal evidence had been adduced by the accused. In K.N. Beena v. Muniyappan and Anr. the Supreme Court has observed that the accused has to prove by cogent evidence that there is no debt or liability payable. Initial presumption has to be raised in favour of the complainant, under Section 118 of the Negotiable Instruments Act. In the present case there being absolutely no rebuttal evidence, the execution of Exs. P-2 to P-8 having been proved, the amount mentioned in the cheques were liable to be paid by the accused.
14. As regards notice the learned Counsel for the respondent has raised a contention that the notice at Ex. P9 made a demand for Rs. 4,26,400/- though the cheque amounts were only to the extent of Rs. 2,05,000/- and that therefore the notice was bad in law. In K.R. Indira v. G. Adinarayana it is held that if the consolidated notice is found to provide sufficient information envisaged by the statutory provision and there was a specific demand for the payment of the sum covered by the cheque dishonoured, mere fact that it was a consolidated notice and/or that further demands in addition to the statutorily envisaged demand was also found to have been made may not invalidate the notice. In Suman Sethi v. Ajay K. Chiriwal it is held that if the notice if read as a whole indicates the demand regarding the cheque amount, the notice is not invalidated. In the present case it specifies the cheque amount and therefore though adding interest to the demand for Rs. 2,05,000/- there being demand for payment of cheque amount, the notice is not invalidated.
15. As regards the service of notice, admittedly the notice was returned with an endorsement of the postal officer noting the dates on which he had gone to the respondent's address and information had been delivered. The cover containing notice was returned as not claimed. It had been prepaid and properly addressed. Therefore a presumption arises that when the notice had been sent to the respondent at his current address and it had been properly addressed, when it was not claimed by him, it is deemed to have been served on the respondent.
16. Therefore the ingredients of the offence punishable under Section 138 of the Negotiable Instruments Act having been proved in the present case accused was liable to be convicted.
For the above said reasons the appeal is allowed and setting aside the acquittal of the respondent in Judgment dated 15-9-2003 passed by the learned XIII Additional Chief Metropolitan Magistrate, Bangalore in CC No. 30685/2001, he is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act.
At the request of the appellant's counsel, the case is adjourned to 3-10-2007 to hear regarding sentence.
ORDER REGARDING SENTENCE
17. The respondent is present. Heard the respondent, his counsel and the complainant's counsel regarding sentence.
It is argued by the learned Counsel for the respondent that after the Judgment of conviction, there was settlement of the matter out of Court between the appellant and the respondent and the appellant has agreed to receive the cheque amount of Rs. 1,00,000/- in cash and the remaining amount to be paid later as per the promissory note executed by the respondent in favour of the appellant promising to repay the balance by March, 2008.
18. Learned Counsel for the appellant disputes about settlement. He submits that According to the appellant Rs. 1,00,000/-have been paid in cash and in respect of the remaining amount of cheque, a promissory note has been given in the hands of the appellant. He submits that the appellant has not agreed to that arrangement.
Whether or not the contention of the respondent is true, the acquittal of the respondent having been set aside and he having been convicted, the fine cannot be confined to cheque amount of Rs. 2,05,000/-. The fine may extend to double the amount of cehque and the compensation that can be awarded to the complainant has to be with interest on cheque amount and also costs incurred by the complainant.
19. Taking into consideration the submission made by the learned Counsel for the apellant that the respondent had given the cheque on behalf of other partners and he is not able to pay the whole amount, I am of the opinion that the present case does not call for imprisonment. Excluding the amount of Rs. 1,00,000/- already paid by the respondent, if the respondent pays another Rs. 2,52,600/- which includes costs and interest, that would satisfy the claim of the appellant.
Having regard to the efforts made by the respondent to pay the amount to the appellant, a lenient view is taken and the respondent is sentenced to pay a fine of Rs. 2,53,000/- in default he shall undergo S.I for six months. If the amount of fine is paid, an amount of Rs. 2,52,600/- shall be paid as compensation to the appellant.
Three months' time is granted to the respondent to pay the fine amount in the trial Court to surrender to undergo the default sentence.