The High Court · 2025

Il,9 Stetg of Telangana, Req by its_ P.p. High Court at Hyderabad for the State of Telangana and the State of Andhripradesh ...Respondent / Accused No 3 ...Respondent / Respondent Counsel for the Appellant in All the Cases Sri Nageshwara Rao Pappu Senior Counsel Counsel for the Respondent No 1 in All the Cases Sri YVRaviPrasad, Senior Counsel Sri YVAnil Kumar Counsel for the Respondent No 2 in All the Cases Mrs S Madhavi Assistant Public Prosecutor The Cciurt delivered the following Common Judgment : THE HON'BLE SRI JUSTICE E.V.VENUGOPAI CRIMINAL APPEAL Nos.9O2 of2Ol 904 of2Ol4 and 9O5 of2Ol4 coMMON JUDGMENT: These Cr minal Appeals are filed under Section 378(4) of Cr.P.C., by the appe llant/ complainant aggrieved blr the judgments dated 10.07.2014 passed in Criminal Appeal Nos.25 t of 2O10, 250 of 20 1o arrd 252 of 2O 10, all on the lile of the learned lll Additional Metropolitan Scssions Judge, Hyderabad wherein itnd whereunder the findings of conviction and sentence imposed against the l't respondent/ accr rsed No.3 vide judgments dated 06 07.2OlO passed in CC Nos.587 r.f 2OO9,583 of 2009 and 585 of 2O09 by the learned XIV Additional Judge-cum-XVIII Additional Chief Melropolitan Magistrate, Hlderabad were set aside fou'ncling the 1't respondent/ acct tsed No.3 not guilty for the offence punishablc under Section 138 oI Negotiable Instruments Act.

2. In all three appeais, this Court heard Sri Nageshwar Rao Pappu, learned :.;enior counsel for the appellant, Sri YV Ravi Prasad, learned senior :ounsel representing Sri W Anil Kumar, Iearned counsel for the st respondent and Mrs.S.Madhavi, lt:arned Assistant Public Prosecutor, representing the 2"d respondent/ State' Since the carties to all these criminal appeals are one and the

3. same, these three appeals are disposed of by this corr'mon judgment'

4. As seen from the record, the lst respondent/complaint lodged a private complaint under Section 2O0 of Cr.P.C., requesting to take appropriate action against the accused under Section 138 of NI Act alleging that the accused No.1 company viz. M/s.You One Maharia (JV), to which one Vinod Goel/A2 was the Managing Director and PM Kumar/A3 the lst respondent herein was the Executive Director, was awarded a contract work for construction of a portion of National Highway No.7 ald in that process, by placing purchase order dated

03.03.2004, under 13 invoices ftoll:l O4-O3.2OO4 to 12.07.2OO4, rt took TMT rods amounting to Rs.55,14,3631- and in lieu of discharge of the said debt, on behalf of accused No. 1, accused Nos.2 and 3 issued cheque bearing Nos.7O4 14O dated O8.O4 '2OO4 for Rs.8,87,382/-, 7O4l3g dated 12'08.2OO4 for Rs.7,5O,00O/- and 894767 dated 15.O7 .2OO4 for Rs.38,76,981/- and that on presentation, the said cheques were returned for want of sufficient funds in the account of A1 and in-spite of receipt of legal notice, the accused failed either to repay the amounts covered under the cheques or to give any rePlY.

5. The trial Court took cognizance for the offence punishable under Section 138 of NI Act against the accused and after completing all the procedural formalities, proceeded with trial. During the course of trial, on behalf of the l"t respondent/ complainant, its Director viz' Anil Kumar Ke<lia u,as examined as PW1 and its Manager vtz Abraham as PW2 and got marked Exs.Pl to P9 in all the cases

6. After completion of prosecution evidence, since accused No.2 did not appear l:,efore the trial Court, the case against the accused Nos.1 and 2 was split-up and the present case was proceeded further against the accuscd No.3/the 1"t respondent herein.

7. The lst respondent/A3 denied the case of the prosecution mainly contending that he was not the Executive Dir.ctor o[ Al and that he is only an employee and hence, he is n,rl. liable to be prosecuted. Further, prosecution of A3, without A1 ccmpany, has no validity. In support of his defence, in CC Nos.2SO of 2C1O and 251 of 201O, he got examined himself as DWl and marked IDx.D\/GPA in his favour.

8. The trial Court, found the l"t respondent/A3 guilly for the offence punishablc under Section 138 of NI Act holding that having admitted his posi'ion in Al company as Executive Director by virtue of Ex.D1/GPA and his evidence as DWI and also his signatures on the subject chequrs along with A2, A3 cannot disown his liability, the subject cheques vrere issued in lieu of a legally enforceable debt, in- spite of receipt of statutory notice A3 kept quiet, and splitting up of case against A1 and ,A2 cannot take away the case completely against them. Accordinglr, convict.ed the l"t respondent/ A3 in CC Nos.587 of 2OO9,583 of 2009 and 585 of 2OO9 and sentenced him to suffer simple imprisonment for one year and to pay a compensation of Rs.1,O0,OOO/- in each case to be paid to the complainant, in default to undergo simple imprisonment for six months and directed to run the sentences consecutively in all CC Nos.587 of 2OO9,583 of 2009 and 585 of2OO9.

9. Aggrieved by the said findings of the trial Court, the appellant/A3 preferred Criminal Appeal Nos.252 of 2O10, 250 of 2010 and 257 of 2O1O before the learned III Additional Metropolitan Sessions Judge at Hyderabad mainly contending that the trial Court erroneously found him guilty against the facts of the case and the settled proposition of law. The appellate Court, upon perusing the impugned judgments of the trial Court as well as the material placed before it in the form of oral and documentary evidence, holding that without prosecuting A1/company, its representatives or employees like A3, who acted as per the directions of the company, cannot be prosecuted as laid down under Section 14 I of NI Act, without convicting A 1 company and A2 its Director, convicting A3 is not proper and that ,{,3 did not receive statutory notice in his individual capacity and that Ex.P6 postal acknowledgment contained signature of a third person not that of A3, found the I"t respondent/A3 not guilty and set aside the impugned judgments passed in CC Nos.587 of 2OO9, 583 of 2OO9 and 585 of 2OO9. Pago 5

10. Aggrieved by the findings of the appellate Crrurt in Criminal Appeal Nos.2.52 of 2010, 25O of 2OlO and 251 of 2(1 10, the present criminal appeal:; are preferred by the appellant/ complainant against the acquittal of the I'r respondent/A3 mainly conlending that the Iearned District,ludge of the appeilate Court withrlut appreciating the evidence on record in a right perspective and upon misinterpretation of settled proposition of law and also the fact that case against Al company and A2 is not concluded exonerating their Iiability, has erroneously set aside the well considere,i findings of the trail Court. Fur-ther, the findings of appellate Cou-t regarding the statutory notice :rre contrary to the settled proposition of law laid down by the Hon ble Apex Court in C.C.AIavi Haji Vs. Palapetti Muhammedr u'irerein it was held that notice senl to the correct address of the drawer of the cheque by registr:red post with acknowledgemen t due is sufl-rcient to hold that there was deemed service and that in the case of non-receipt of statutory notice, the accused should lrave to repay the amount covered under the cheque within 15 days from the date of receipt of summons from the Court. Stating thus, he r;rayed to allow these criminal appeals.

11. In support of his case, learned counsel for the appellant/ complainant in ,rll these three matters relied upon the decisions ' (2007) 6 scc 555 rendered in Aneeta Hada Vs. Godfather Travels and Tours Private Limited2 and C.C.Alavi Haji (stated supra).

12. Per contra, learned counsel for the 1"t respondent/A3 vehemently opposed the present criminal appeals mainly contending that the appellate Court, upon hnding the erroneous hndings of conviction of A3 by the trial Court, had rightly acquitted the 1 st respondent/A3 holding that he cannot be made liable for the acts committed by his employer and hence, there is no need or necessitS/ for this Court to interfere with the said well considered hndings. It is also contended that mere description in the cause title as Director is not sufhcient to make liable A3 and it must be proved beyond reasonable doubt. Negotiation for obtaining hnancial assistance on behalf of the Company by its Directors itself is not an ingredient for the purpose of constituting an offence under Section 138 of the Negotiable Instruments Act. Furthermore, a vicarious liability on the part of a person must be pteaded and proved. Stating thus, he relied upon the decisions rendered in Sabitha Ramamurthy Vs. RBS Channabasavaradhya3, SMS Pharmaceutical Ltd., Vs. Neeta Bhallaa, National Small Industries Corp. Ltd., Vs. Harmeet Singh Paintals, K.Srikanth Singh Vs.North East Securities Ltd.,6, KPG ' 1zotz], s Supreme court Cases r 2006-Crimes (SC)4-67 o 2oo7-BC( sc 12-521 ' zo ro-scR(ca.)- t -zef '- u 2oo7-scc-12-78E Nair Vs. Jin dal Menthol India LimitedT, Pramod Vs.CK Velayudhan and otherss, Hira Lal S/o.Kesho Ram Vs. State of Haryanae, State of Madras Vs. GV Parekhlo, MD Thomas Vs, PS Jaleel aud anotherrr, Sharad Kumar Sanghi Vs. Sangita Rane12 and SK Goel and others Vs.State of Jharkhand and anotherr3.

13. Learned 1\ssistant Public prosecutor representing State/2"d respondent contended that there is no need or necessity to interfere with the well considered findings of the appellate Court and that there is no apparent crror on the hndings made therein. Stating thus, it is requested to dismiss the present criminal appeals.

74. This Courr perused the judgments of both the trial Court as weli as the appelate Court and the material placed:n record. It is true that while ,leciding an appeal against acquittal, the Appellate Court has to re appreciate the evidence. After re-appreciating the evidence, the l-rrsr qucstron that needs to be answered by this Court is whether dilfe ren t vieu.s taken by the trial Court as well as appellate Court are plausible views that could have been taken based on evidence on rccorcl. Appellate Court can interfere with the order of acquittal only rf it is satished after re-appreciating the evidence '2oo t-scc- lo-z tt 8 2oo5 crt.LJ 4522 'l97t AIR (sc) 156 'o l97lcrl.LJat8 " (2009) tn Supreme Coun Cas.s j98 " (2015\ t2 Supreme tlourr Cascs 78 I 'r 2022 SCC Ont.ine Jhar /)-54 Page E that the only possible conclusion was that the guilt of the accused had been estabiished beyond reasonable doubt. The Appellate Court cannot overturn order of acquittal only on the ground that another view is possible. In other words, the judgment of acquittal must be found to be perverse. Unless the Appellate Court records such a finding, no interference can be made with the order of acquittal. Thc order of acquittal further strengthens the presumption of innocence of the accused.

15. The main ingredients to attract the offence under Section 138 of N.I. Act are that there must be existence of legally enforceable debt due between the parties and the subject cheque must be given in discharge of the said legally enforceable debt and upon its dishonour, a notice must be given in writing demanding payment of the amount of the cheque from ttre drawer within thirty days from the date of receipt of information regarding return of the cheque unpaid and in the event of failure of the drawer to pay the amount within fifteen days of receipt of the notice, to lodge a complaint.

16. When the facts and circumstances of the case on hand are scrutinized, the evidence on record, particularly the correspondence q between the parties would strengthen the presumption in favour of the complainant with regard to existence of legally enforceable debt and issuance of cheques in lieu of discharge of the same. It is also established that upon dishonour of the said che(lues for want of suflicient funds, the complainant issued legal notice s not only to the accused but als,o lcl other three persons. However except arraying accused Nos. I to 3 in the array of accused, the othr:r three persons, against whom legal notices were also issued, were not arrayed as accused. In thisr regard it is pertinent to mention thzLt A1 is a juristic person and it v.as being represented by A2/its Mzrnaging Director and A3/its Executive Director and they both have signed the subject cheques. The other persons, who were not made as accused, are no way connectcd with the payments of dues or they werb the signatories of the. subject cheques. 17 . When the <:ontentions advanced on either side eLre meticulously scrutinizrd, the main questions, to be decided herein are whether the 1st respondent/h3 is vicariously liable for the ac1.s done by A1 company and wh,:ther there is any valid service of noLce on A3.

18. [,earned coun sel for the appellant/ complainant tried to draw the attention of this Court to the law laid down under Section 14 1 of NI Act contendinq that if the person committing an offence under section 138 of the Act is a company/juristic person, 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, shatl be decmed to be guilty of the offenr:e. and shall be Page l0 liable to be proceeded against. It is also contended that where any offence under this Act has been committed by a company and it is proved that the offence has been comm.itted with the consent or connrvance of, or is attributable to, any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other oflicer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished according.ly. 19' Further' the vicarious liability is attracted when the ingredients of sub-section I of Section 147 are satisfied. The Section provides that every person, who at the time the offence was committed was in charge of' and was responsible to the company for the conduct of business of the company, as we, as the company, shan be deemed to be guilty of the offence under Section 13g of NI Act. In the light of sub-section I of Section 14l, this Court perused the averments made in the complaints of these three appeals. Admittedly, the I "t respondent/A3 along with ,{2 is the signatory of the cheques, who were then Managing Director and Executive Director respectively of Al company. During cross_examination 43 admitted that he, being GPA Holder, had cheque issuing power at the time of issuance of subject cheques. He also admitted that he was the project Director of work given to 41 company by National Highways Authority. A3 also Page I I admitted in hr s er.'idence regarding the transaction between A 1 company and ttre complainant and also issuance of subject cheques'

20. The contcnl ion of l.he 1"t respondent/A3 is that he had not been served wr th the statutory notice and hence, he missed the opportunity of ctenying the contents therein. It clearly' shows that the appellant failerl to serve the statutory notice against the 1"1 respondent, which is mandatory in order to bring home the guilt of the accused un<ler Section 138 of NI Act.

21. Section 2'/ ol General Clauses Act says that where any Central Act or Reguiarion made after the commencemont of this Act authorises or rt:quires any document to be served llv post, whether the expression servc or either of the expression give or sent or any other expressior.t is used then unless a different intention appears, the services shall be deemed to be effected by properly addressing, pre-paying and posting by registered post a letter containing the document and rtnless the contrary is proved to have been effected at the time at which the letter would be delivered in thc ordinary course of post.

22. It may be that the address is correct and even the addressee is availabie but a u'rong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amo'rnt to refusal of the notice. If thr: complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the Court shall presume service of notice. This, however, is a matter of evidence and proof. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be opened to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice.

23. In the cases like under Section 138 of NI Act, the complainant has to prove the guilt of the accused beyond all reasonable doubt by satisfying all the essential ingredients. In the case on hand, the l"t respondent/accused is disputing receipt of notice stating that the same was not received by him personally but it was received by a third party and tl'te same is very much evident from Ex.P6 postal acknowledgment. The appellant did not make any efforts to prove the relationship or acquaintance of the lst respondent with the said third party and the that the appellant failed to establish that the contents of the legal notice are very much known to the accused and after having knowledge of the same, he evaded either repayment of the same or issuing suitable reply. In such circumstances, we cannot throw away the possibility of lack of knowledge of contents of the notice to the 1"r respondent. Though the appellan: relied upon the decision of Hon'ble Supreme Court in CC Alavi Haji Vs. palapetty Muhammed and aaother (cited supra), lack of knowledge of lst respondent cannot be brushed aside.

24. In a similar circumstance, the Hon,ble Apex Court in a case between M.D.Thomas Vs.p.S.Jaleel and another .Crl.A.No.711 2009, arising orLt of SLp (Crl.) No.782g of 2OOZ) hr:ld that proviso to Section 138 of NI Act specihes the conditions whict. are required to be satished before a person can be convicted fcrr an offence enumerated in the substantive part of the section. Clause (b) of the proviso to Section 138 of NI Act casts on the payee cr the holder in due course of the cheque, as the case may be, a dut5i to make a demand for payment of the said amount of money by giving a notice in writing, to tht' drawer of the cheque, within thir5. days of the receipt of information by him from the bank regarding the return of the cheque as unJraid. When the notice of demand was served upon the third party but not on the accused, herd that ther: is no escape from the conclusicn that complainant had not complied with the of Clause (b.l of proviso requirement of giving notice in terms to Section 138 of the Act. 25- In view of the above factual matrix, it can be salely held that the present criminal appeals deserve for dismissal since the appellant I failed to establish the knowledge of the accused/ lst respondent with regard to his request for repayment of the cheques amount and resultantly, the findings of the appellate Court in setting aside the judgment of the trial Court reversing the conviction of the accused and acquitting him for the offence punishable under Section 138 of NI Act cannot be found fault with and the same is sustained.

26. In the result, these criminal appeals are dismissed Miscellaneous applications if any pending shall stand dismissed. //TRUE COPY// Sd/. T. SRINIVAS PUTY REGISTRAR ECTION OFFICER To, a The lll Additional Metropolitan Sessions Judge, at Hyderabad (with records, if any) The XIV Additional Judge-cum-XVlll Additional Chief Metropolitan Magistrate, Hyderabad Two CCs to the Public Prosecutor, High Court for the State of Telangana, Hyderabad [OUT] One CC to Sri Nageshwara Rao Pappu, Senior Counsel [OPUC]

4. One CC to Sri Y V Anil Kumar, Advocate [OPUC]

5. 6. TWo CD Copies VA/gh w -J;=- HIGH COURT DATED:21 tOzt2OZs COMMON JUDGMENT CRLA.Nos.902, 904 & 905 of ZO14 1trE S;.q .i I, P* U DISMISSING ALL THE APPEALS t-f"\ fr*