Madras High Court
M/S. Indo Asian Finance Ltd vs Suresh. S on 21 December, 2018
Equivalent citations: AIRONLINE 2019 MAD 16
Author: R.Suresh Kumar
Bench: R. Suresh Kumar
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 28.03.2018
Pronounced on : 21.12.2018
CORAM
THE HONOURABLE MR.JUSTICE R. SURESH KUMAR
Crl.A.No.532 of 2012
M/s. Indo Asian Finance Ltd.,
Rep. by Mr.Ravi Narayanan
S/o. undaravaradan
No.15, New Giri Road,
T.Nagar, Chennai - 17. ... Appellant / Complainant
Vs
Suresh. S ... Respondent / Accused
Criminal Appeal filed under Section 378 of the Criminal
Procedure Code, against the Judgment passed by the learned I
Additional Sessions Judge, City Civil Court, Chennai in C.A.No.222 of
2011, dated 21.06.2012 reversing the Judgment passed in C.C.No.125
of 2009, dated 10.10.2011 by XVIII Metropolitan Magistrate, Saidapet,
Chennai.
For Appellant : Mr.G.Dilip Kumar
For Respondent : Ms.R.Anitha & Mr.Rajkumar
for M/s.S.Ramasamy Law Associates
JUDGMENT
This Criminal Appeal has been filed against the Judgment made by the I Additional Sessions Judge, City Civil Court, Chennai in http://www.judis.nic.in C.A.No.222 of 2011, dated 21.06.2012 reversing the judgment and conviction made in C.C.No.125 of 2009, dated 10.10.2011 made by the XVIII Metropolitan Magistrate, Saidapet, Chennai. 2
2. The appellant herein is the complainant before the trial Court and the respondent herein is the accused before the trial Court. Accordingly both of them are called as complainant and accused respectively for the sake of convenience.
3. According to the complainant, namely M/s.Indo Asian Finance Ltd., Company, it is a Limited company and is dealing with finance business. During the course of the business, the accused availed a loan by entering in to an hire purchase agreement in I.A.H.P.04697, dated 15.05.2006 for the purpose of purchasing one AL Tipper vehicle (Lorry) bearing Registration No.TN 32 V 4284 for a sum of Rs.9,10,000/-. It is the further case of the complainant that, as per the repayment schedule, the accused paid only a sum of Rs.1,10,000/- and therefore the remaining due of Rs.8,00,000/- he had to pay, but he has failed to pay the same till the year 2008. Therefore a repeated request and demand had been made on behalf of the complainant company and in response to the same, the accused had issued a cheque, bearing No.233386, dated 04.04.2008 for a sum of Rs.8 lakhs drawn on HDFC Bank, Pondicherry Branch in favour of the complainant company to discharge the said liability. At the time of issuance of the cheque, the accused had promised that, the cheque would be honored on its presentation.
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4. On the said instructions of the accused, the complainant deposited the said cheque on 04.04.2008 at its Bank, i.e., Punjab 3 National Bank, Nungambakkam Branch, Chennai - 34. However the said cheque was dishonored through the accused Bank's Return Memo, dated 19.04.2008 with an endorsement "Funds Insufficient" and the said information regarding dishonour of the cheque had been intimated to the complainant through their Bank Debit Advice, dated 23.04.2018.
5. It is the further case of the complainant that, on receipt of the intimation about the dishonour of the cheque, the complainant issued a statutory notice under Section 138(b) of the Negotiable Instruments Act (herein after referred to as the "NI Act") on 03.05.2008, calling upon the accused to repay the said amount covered under the cheque. The said notice was received by the accused on 07.05.2008, however he had not come forward to repay the amount nor even has come forward to issue reply to the notice.
6. In view of the said facts that, the cheque issued by the accused was dishonoured and in spite of the statutory notice, which was duly received by the accused, since he did not come forward to repay the amount nor even has chosen to give any reply to the notice, the accused has committed offence punishable under Section 138 of the NI Act. Accordingly a complaint to that effect was filed by the complainant before the trial Court under Section 138 of the NI Act http://www.judis.nic.in seeking to punish the accused.
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7. The said complaint was taken on file in C.C.No.125 of 2009 on the file of the XVIII Metropolitan Magistrate, Saidapet, Chennai. On receipt of summons, the accused appeared before the trial Court, copies of the complaint and other documents under Section 207 of Cr.P.C., were furnished to the accused. On behalf of the complainant side, P.W.1 was examined and Exs.P.1 to P.7 were marked. On the side of the accused, no witnesses were examined and no Exhibits were marked.
8. The trial Court, after having considered the merits of the case and after hearing the arguments of both sides, has given its Judgment and conviction by Judgment, dated 10.10.2011, whereby the trial Court has found the accused guilty of the offence punishable under Section 138 of the NI Act and accordingly convicted him and sentenced him to undergo three months SI and further directed to pay compensation of Rs.16,00,000/- (Rupees Sixteen Lakhs only), i.e., double the amount of cheque, in default three months SI also was imposed.
9. As against the said Judgment and conviction made against the accused, he preferred appeal to the first appellate Court, i.e., before the I Additional Sessions Court at Chennai, where the appeal filed by the accused, i.e., C.A.No.222 of 2011 was taken up for hearing http://www.judis.nic.in and after hearing both sides and having considered the evidence, the learned Appellate Court Judge, by his Judgment, dated 21.06.2012, 5 allowed the appeal by setting aside the conviction and sentence made in C.C.No.125 of 2009, dated 10.10.2011 of the trial Court, ie., XVIII Metropolitan Magistrate Court, Saidapet, Chennai and accordingly, the accused was acquitted. Aggrieved over the said reversing Judgment of the first appellate Court, the complainant has preferred this Appeal.
10. It is the case of the complainant before the trial Court that, it is a limited company and it has been dealing with finance, from whom the accused availed a loan of Rs.9,10,000/- for purchasing a Tipper lorry by way of hire purchase and accordingly, the said loan amount of Rs.9,10,000/- was released, utilising the same, the accused had purchased the lorry.
11. As per the Repayment schedule, which was marked as Ex.P.2 before the trial Court, the accused had paid only a sum of Rs.1,10,000/- till 26.03.2007 and thereafter no amount seems to have been paid. According to Ex.P.2, the total due was Rs.8,00,000/- and in order to make the said payment, the cheque in question, dated 04.04.2008 was issued by the accused. On the same day, the cheque was presented at the drawees branch, i.e., at complainant's branch at Chennai, which was dishonoured and intimation to that effect by debit advice notice of the drawees bank was given on 23.04.2018 intimating that the cheque was dishonoured with the banks note "Funds http://www.judis.nic.in Insufficient" and based on which, the complainant issued a notice under Section 138(b) of the NI Act on 03.05.2008, which was received 6 by the accused on 07.05.2008 and in this regard, the copy of the legal notice, dated 03.05.2008 as well as the postal acknowledgment card, dated 07.05.2008 has been marked as Ex.P.6 and Ex.P.7 before the trial Court. However the accused did not come forward even to reply to the said notice.
12. On behalf of the complainant, the Marketing Executive of the company, one Ravi Narayanan was examined as P.W.1. In fact on behalf of the complainant company, he only filed the complaint. Through the P.W.1, Ex.P.1 to Ex.P.7 were marked. However on the side of the accused, no one was examined as witness and no documents / Exhibits were filed and marked.
13. The defence taken by the accused before the trial Court was that :
(1) the complaint was filed by the Marketing Executive, one Ravi Narayanan of the complainant company and since he was not specifically authorised to file the complaint and depose before the Court, the complaint itself was not maintainable.
(2) since the cheque was issued by the accused at Pondicherry, since his Bank was in Pondicherry and the residence of the accused is in Cuddalore, the complaint should not have been filed before the XVIII Metropolitan Magistrate, Saidapet at Chennai, as the http://www.judis.nic.in said Court does not have any jurisdiction to try the case.7
14. It is also the defence taken by the accused that, the cheque was issued as an empty cheque at the time of availing the loan from the company, however the same was misused by the complainant company after some years.
15. In respect of the first defence, i.e., with regard to the maintainability of the complaint on the ground that, the Marketing Executive of the complainant company had not been authorised is concerned, the complainant side filed the extract of the Board Resolution of the complainant company, dated 30.10.2004, which was marked as Ex.P.1, which reads thus :
"Extract of the Meeting of the Board of Directors of Indo Asian Finance Ltd., held on 30th October 2004 at the Registered Office at No.15, New Giri Road, T.Nagar, Chennai - 600 017.
It is hereby resolved to authorized Mr.R.Ravi Narayanan, Marketing Executive, S/o.
Shri.R.Sundaravaradan residing at No.11, 14th Cross Street, Chrompet, Chennai-44 to engage advocates, solicitors as counsel for the Company in all legal matters before the judicial, semi-judicial and quasi-judicial authorities. "Resolved Further that Mr.R.Ravi Narayanan is authorized to brief the counsel for the Company in such matters. Further resolved that Mr.R.Ravi Narayanan is also authorised to appear and give http://www.judis.nic.in evidence on behalf of the company in all legal proceedings relating to the Company".
Certified True Copy of Extract of the Minutes For INDO ASIAN FINANCE LTD., 8 S.B.CHANDRASEKAR Chief Executive. "
16. On perusal, it discloses that, the complainant company resolved that, Mr.R.Ravi Narayanan was also authorised to appear and give evidence on behalf of the company in all legal proceedings relating to the company.
17. Since the said authorisation has been given by the company, pursuant to the resolution passed by the Board Meeting, dated 30.10.2004, the defence taken by the accused that, the said Marketing Executive has not been authorised to file this complaint and depose before the trial Court cannot be accepted.
18. With regard to the second defence that, the cheque was issued from the Bank of the accused at Pondicherry and his residence is only at Cuddalore and merely because the Headquarters of the complainant company is at Chennai and his bank is located in Chennai, the complaint ought not to have been entertained at Chennai for want of jurisdiction, is concerned, the said issue has been considered by the First Appellate Court, of course by taking into account the law laid down by the Hon'ble Apex Court in K.Bhaskaran's case, i.e., K.Bhaskaran v. Sankaran Vidhyan Balan & another, reported in (1999) 7 SCC 510.
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19. In the said decision, the Hon'ble Apex Court has mentioned about five acts, i.e., (1) Drawing of the cheque; (2) Presentation of the cheque to the Bank; (3) Returning of the cheque 9 unpaid by the drawee Bank; (4) Giving of notice in writing to the drawer of the cheque demanding payment of the cheque amount; (5) Failure of the drawer to make payment within 15 days of the receipt of the notice. By citing these five acts, the Apex Court has held that, the complainant could choose any one of those Courts having jurisdiction of any one of the local area within the territorial limit of any one of the aforesaid five acts, the components of the offence took place.
20. Here in the case in hand, the complainant company having Headquarters at Chennai, the cheque was issued in favour of the complainant, which was presented at its Bank at Chennai and the notice under Section 138(b) was issued from Chennai. Therefore more than one act had been taken place within the jurisdiction of Chennai and therefore filing the complaint before the trial Court at Chennai cannot be said to be without jurisdiction and therefore the second defence taken by the accused shall not stand in the legal scrutiny.
21. Before dwell in to the third defence that, the cheque was given as empty cheque at the time of availing the loan, which was misused subsequently by the complaint is concerned, we shall take in to the other aspects of the issue.
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22. It is a settled legal proposition that, once a complaint is filed under Section 138 of the NI Act, where there had been a cheque 10 executed and signed by the accused and the said cheque was issued or executed for the legally enforceable debt and these aspects has been projected prima facie by the complainant, there is a statutory presumption in favour of the complainant under Sections 118 and 139 of the NI Act.
23. Though such a statutory presumption is a rebuttable one, it is for the accused to rebut the same by bringing proper reason for such rebuttal and if the reason brought by the accused is acceptable to the Court, then certainly the initial presumption created in favour of the complainant would stand rebutted and then the burden will shift on the shoulders of the complainant to further establish its case.
24. Here in the case in hand, the accused did not deny the availing of loan from the complainant company for a sum of Rs.9,10,000/- for purchasing a Tipper lorry, for which Registration Number is also given and it is an admitted fact that, the accused after having availed loan from the complainant company had purchased the lorry and had been plying the lorry for hire. A Hire purchase agreement also had been entered into between the complainant and the accused. In this regard, Ex.P.2, i.e., Hire Purchase Repayment schedule has been filed and marked on behalf of the complainant, according to which, till 26.03.2007, the accused had paid only a sum http://www.judis.nic.in of Rs.1,10,000/- and there had been a balance of Rs.8 lakhs in the principal itself. Though this Ex.P.2 has been denied by the accused, 11 that too by way of written arguments filed on his behalf to state that, he has not paid any amount as claimed by the complainant in the repayment schedule, the fact remains that, the accused did not come forward to prove his case that, the Rs.9,10,000/- loan he availed from the complainant company had been repaid by him.
25. The only defence the accused has taken was that, if at all the due has to be recovered from the accused, the complainant company, pursuant to the hire purchase agreement, can seize the vehicle, as the vehicle itself stands in the name of the complainant company, being the hire purchaser and accordingly can bring the vehicle for sale and after realizing the sale proceeds, if at all any amount to be still repayable by the accused, only for recovering that amount, he can be proceeded.
26. This defence would no way helpful to the accused to rebut the initial statutory presumption created in favour of the complainant. Moreover on perusal of the records, it shows that, the accused did not come forward to reply to the statutory notice issued under Section 138(b) of the NI Act. Though it was not absolute necessity to the accused to examine himself as one of the witness, there was absolutely no evidence on the side of the accused as no one was examined on his behalf and no documents had been filed. http://www.judis.nic.in
27. The aforesaid three defences taken by the accused side, was taken only at the written arguments filed before the trial Court by 12 the accused side.
28. In the said written argument, the accused side counsel has made the following averments :
"The accused further submits that the complainant had used one blank signed cheque given by the accused to the complainant for security purpose at the time of entering in the Hire Purchase Agreement."
29. If at all, this is the stand of the accused that, the empty cheque signed and issued by the accused was subsequently misused by the complainant company, the said defence could have been taken by giving a reply notice to the statutory notice issued by the complainant company, which was received and acknowledged by the accused.
30. In the absence of any evidence either document wise or orally to rebut the statutory presumption created in favour of the complainant, such a statutory presumption under Sections 139 and 118 of the NI Act has not been successfully rebutted by the accused side in the case in hand.
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31. However while appreciating these aspects, the learned trial Court Judge has committed some error in reaching the conclusion 13 by stating that, the cheque was returned for the reason "account closed", while the fact remains that, the cheque was dishonoured for the reasons "Funds insufficient". Like that, the trial Court Judge has stated that, the accused has failed to prove the case of the complainant, hence, the presumption under Section 139 prevails.
32. These two mistakes though occurred in the decision of the trial Court Judge, this Court feels that, these two mistakes are only an error, as the words used in that context were not suitably employed.
33. However the said errors committed by the learned Judge of the trial Court have been projected by the first appellate Court and it has been specifically mentioned by the learned Judge of the first appellate Court in the Judgment impugned, which reads thus :
"A reading of the judgment it is found that the learned XVIII Metropolitan Magistrate, Saidapet, Chennai without appreciating the legal position and misdirected her with the facts of the case had rendered the decision.
According to the respondent / complainant Ex.P.3 cheque was returned for the reasons "INSUFFICIENT FUNDS". But the learned Magistrate described that Ex.P.3 cheque was returned for the reasons "ACCOUNT CLOSED".
http://www.judis.nic.in Further, to render the decision that the accused / appellant has failed to prove his case no reasoning / justification has been given by the learned Magistrate but, the learned Magistrate's 14 finding is as follows :
"It is decided that the accused has failed to prove the case of the complainant".
The said decision is apparently an error since it is not for the appellant / accused to prove the case of the complainant. It is only the respondent / complainant has to prove their case. Merely because, the appellant / accused failed to prove the case of the complainant presumption u/s 139 of the N.I. Act will not prevails. The presumption u/s 139 of N.I.Act prevails, where the accused admits the issuance of the cheque for legally enforceable debt and the same was dishonoured when presented for realization."
34. However the first appellate Court, though rejected the defence taken by the accused side with regard to the jurisdiction of the Court, by relying upon the principle laid down in the K.Baskaran's case (cited supra) and has held that, the jurisdiction Court at Chennai having jurisdiction to entertain the complaint, however, has accepted the defence taken by the accused side with regard to the plea raised by the accused side that, the Marketing Executive, i.e., P.W.1 was not properly authorised by the complainant company to file the complaint and depose before the Court.
35. The first appellate Court has not accepted, Ex.P.1 as the http://www.judis.nic.in authorisation, but this Court has given its reasons for accepting Ex.P.1 as a proper authorisation given to P.W.1 to file the complaint. 15
36. It is also the reasons given by the first appellate Court that, the Ex.P.2, i.e., Hire Purchase Repayment Schedule cannot be accepted as a genuine document and one cannot come to a conclusion that, there was a legally enforceable debt, which the accused owe to pay to the complainant. In fact the appellate Court has gone to the extent of saying that Ex.P.2 was a fabricated document.
37. It is to be noted that, the accused has accepted availing of the loan from the complainant company under Hire Purchase Agreement to the extent of Rs.9,10,000/- to purchase Tipper lorry. The accused also accepted that, by availing the loan, he purchased the lorry and was plying. Even though the accused claimed that, he had paid the amount, no proof whatsoever has been filed before the trial Court in this regard and not even the accused had chosen to make the oral evidence to that effect as no evidence on the side of the accused had been produced or marked before the trial Court.
38. When that being the position, on what basis the first appellate Court has come to the conclusion that, the Ex.P.2 was a fabricated one.
39. When the accused had accepted the signature of the cheque and also accepted the debt, it can be easily presumed that, the initial presumption under Sections 139 and 118 of the NI Act has been successfully created by the complainant side. http://www.judis.nic.in
40. This is because, in the written argument, the accused has 16 also stated that, as on date the vehicle was not seized by the complainant. He has also stated that, if at all there is any due, the only course of action available to the complaint was to seize the vehicle and to sell it by auction. The relevant portion of the written argument on behalf of the accused reads thus :
"The accused further states that the complainant admits from the beginning no EMI was paid by the accused. When there is a default in the repayment it is duty of the complainant to seize the vehicle and sell it by the Auctioner.
The accused further submits that even as on date the vehicle was not seized the complainant. Apparently, the ownership of the vehicle lies in the hands of the complainant."
41. Except the written argument, no other averments, documents or evidence available on the side of the accused to spell out his stand. Therefore taking into account the said written arguments filed on behalf of the accused before the trial Court, the stand of the accused was that, since the vehicle was in hire purchase, that could at any time be seized by the complainant company in order to realise the debt. If really the accused has fully settled the loan and wiped out the same, he would not have taken the said stand. Once he has taken a stand that, for the debt payable by the accused, recovery http://www.judis.nic.in mode to be adopted by the complainant company was to seize the vehicle and sell it and only thereafter still some amount due to be payable, that can be recovered from the accused, therefore it makes 17 abundantly clear that, the accused did not repay the loan availed by him and therefore such loan availed from the complainant company for purchasing the lorry by way of hire purchase agreement is certainly a legally enforceable debt.
42. When there is a clear proof that, there is a legally enforceable debt and issuance of the cheque has not been denied and in fact it has been accepted by the accused, absolutely there is no other evidence required for the Courts to come to a conclusion that, the complainant has created an initial presumption in favour of the complainant and since the same has not been shattered or rebutted by the accused by any evidence, the conclusion arrived at by the trial Court to find the accused guilty and to punish him can be accepted.
43. In this regard, the reasoning given by the first appellate Court to set aside the Judgment of the trial Court is in fact misdirected and not in consonance with the settled legal position. However assuming that, if the accused is guilty, whether the punishment given including the compensation awarded under Section 138 of the NI Act to the extent of Rs.16 lakhs on the accused is justifiable or not if we looked into, this Court feels that, such a quantum of punishment by way of compensation may not be justified.
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44. The reason being that, admittedly the vehicle was not 18 seized by the complainant company and since it is a hire purchase vehicle, as per the said document, definitely the complainant company can seize and sell the vehicle. Once the vehicle is sold like that, the entire sale proceeds can be taken by the complainant company and thereafter, still there is any due from the accused, only that part of loan can be repaid or compensated by the accused. Therefore in the present case, the compensation awarded by the trial Court, that too double the amount of the cheque amount is wholly unjustifiable and therefore it requires interference.
45. In the result, the following order is passed in this Appeal:
(i) The impugned Judgment made by the first appellate Court in C.A.No.222 of 2011 on the file of the learned I Additional Sessions Judge, City Civil Court, Chennai is hereby set aside.
(ii) At the same time, the Judgment and conviction given by the trial Court in C.C.No.125 of 2009 on the file of the XVIII Metropolitan Magistrate, Saidapet, Chennai is modified to the effect that, the sentence of three months S.I awarded against the accused is confirmed. However, the compensation of Rs.16 lakhs imposed against the accused is hereby set aside.
http://www.judis.nic.in 19 With these modifications, this Criminal Appeal is Allowed to the term indicated above. The trial Court is directed to execute the modified punishment against the accused by taking appropriate steps.
21.12.2018
Index : Yes
Speaking Order
tsvn
To
1. The I Additional Sessions Judge,
City Civil Court, Chennai.
2. The XVIII Metropolitan Magistrate,
Saidapet, Chennai.
3. The Public Prosecutor
High Court of Madras, Chennai.
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20
R.SURESH KUMAR, J.
tsvn
Judgment
in
Crl.A.No.532 of 2012
http://www.judis.nic.in
21-12-2018