THE HONOURABLE MR v. R.Prabakaran2.Ms.R.P.Sudha3.C.Dhanasekaran

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE : 22.01.2007CORAM:THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYANCrl.A.No.133 of 2000M/s Elgi Finance Limited, rep by its Asst. Manager – Legal and Authorised Representative Mr.P.N.Krishnamoorthy .. Appellant/Complainantvs.1.R.Prabakaran2.Ms.R.P.Sudha3.C.Dhanasekaran .. Respondents/Accused 2,4 & 5Prayer: This criminal appeal has been filed under Section 378(5) ofCRL PC against the judgment of acquittal in so far as therespondents/accused 2, 4 & 5 are concerned, dated 29.1.1999 made inC.C.no.447 of 1996 on the file of the Judicial Magistrate No.VI,Coimbatore.For Appellant : Mr.T.S.RamarathinamFor Respondents : Mr.AR.L.Sundaresan, Senior Cousel, for Mrs. A.L.Gandhimathi JUDGMENTThis appeal has been preferred against the judgment inC.C.No.447 of 1996 on the file of the Judicial Magistrate No.VI,Coimbatore. The complainant is the appellant herein. The appealhas been preferred against A2, A4 & A5 alone.2. The short facts as narrated in the private complaint preferredby the complainant under Section 200 of Cr.P.C relevant for thepurpose of deciding this appeal are as follow:-The complainant is working as a Deputy Manager and Legaladvisor of the de jure complainant. The accused have obtained aloan by availing bill discount facility to the tune ofRs.1,00,00,849/-. To discharge the above said loan the accused https://hcservices.ecourts.gov.in/hcservices/ have drawn a cheque for Rs.24,99,544/-. When the said cheque waspresented in Canara Bank Azhagapuram branch on 14.08.1996, the samewas returned with an endorsement that there is no sufficient fundsin the account of the accused. Even after knowing that the chequewas bounced, the accused have not cared to discharge the loan. Thecomplainant issued a notice on 23.08.1996 to the accused which wasreceived by the accused on 24.08.1996, but the accused have notchosen to send neither reply nor repaid the debt amount. Hence thecomplainant has preferred this complaint under Section138 of theNegotiable Instruments Act. 3. After taking the sworn statement of the defacto-complainant, thecomplaint was taken on file as C.C.No.147/1996 by the learnedJudicial Magistrate and on appearance of the accused copies underSection 207 of Cr.P.C. were furnished to the accused. When theoffence was explained to the accused they pleaded not guilty. Onthe side of the complainant P.W.1 was examined and Exs.P.1 to P.10were marked.4. P.W.1, defacto-complainant, would depose that he is working asan Assistant Manager of the de jure complainant-company and Ex.P.1is the power of attorney given in his name, attested by notarypublic, authorising him to prefer this complaint on behalf of thede jure complainant-company. He would depose that A2 to A5 areDirectors of the Company and only at the request of A2 to A5 onbehalf of the first accused bill discounting facility was providedto the accused by the de jure complainant-company and that afteravailing bill discounting facility to the tune of Rs.1,00,00,849/-,the accused have executed hundials No.11, 13 & 14 on 25.06.1996,but as per the terms and conditions of the said hundials theaccused failed to repay the debt and after repeated demand, A3 haddrawn a cheque for Rs.24,99,544/- in favour of the complainant andwhen the said cheque(Ex.P.2) was presented in Canara Bank on14.08.1996 the said cheque was returned by saying there is nosufficient funds in the accounts of the accused. Ex.P.3 is thememo to that effect issued by the Bank. Ex.P.4 is the debitadvoice dated 16.8.1996. Even after the fact of dishonouring ofthe cheque was informed to the accused through a notice dated23.08.1996 under Ex.P.5 the accused have not repaid the debtamount. Ex.P.6(series) is acknowledgments. Ex.P.7 to P.10 are thecertified copies of the hundial issued by the accused in favour ofthe de jure complainant-company.5. When incriminating circumstances were put to the accused,the accused denied their complicity with the crime.After goingthrough the available evidence the learned Magistrte has come to aconclusion that A1 and the signatory in Ex.P.2-cheque dated14.08.1996, which was dishonoured by the Bank i.e A3 alone areguilty of the offence under Section 138 of NI Act and consequentlyconvicted and sentenced A1 and A3 to pay a fine of Rs.12,500/- each https://hcservices.ecourts.gov.in/hcservices/ with default sentence and acquitted A2, A4 & A5. Aggrieved by thefindings of the learned trial Judge against A2 , A4 & A5 alone thisappeal has been preferred by the complainant.6. Now the point for determination in this appeal is whetherA2, A4, & A5 are also guilty under Section 138 of NI Act?7. I have heard the submissions of Mr.T.S.Ramarathinam,learned counsel for the appellant and Mr.AR.L.Sundaresan, SeniorCousel, appearing for the respondents and considered theirrespective submissions.8. The Point:-8(a) Against the conviction against them, A1 and A3have preferred an appeal in C.A.No.70/1999 before the AdditionalSessions Judge, Coimbatore, but the same was dismissed on1.10.1999. Against that no appeal was preferred. 8(b) The learned counsel appearing for the appellantwould contend that A2, A4 & A5 are all the other Directors of A1-company and only at their request they were given bill discountingfacility to the tune of Rs.1,00,00,849/- and after availing thesaid bill discounting facility, they have executed Ex.P.7 to P.10hundials and hence they are also to be held guilty under Section138 of NI Act. Section 138 of NI Act runs as follows:-"Dishonour of cheque for insufficiency, etc., offunds in the account -Where any cheque drawn by a person on an accountmaintained by him with a banker for payment of anyamount of money to another person from out of thataccount for the discharge, in whole or in part, of anydebt or other liability, is returned by the bank unpaid,either because of the amount of money standing to thecredit of that account is insufficient to honour thecheque or that it exceeds the amount arranged to be paidfrom that account by an agreement made with that bank,such person shall be deemed to have committed an offenceand shall, without prejudice to any other provision ofthis Act, be punished with imprisonment for a term whichmay extend to two year, or with fine which may extend totwice the amount of the cheque, or with both"Provided that nothing contained in this sectionshall apply unless -(a) the cheque has been presented to the bankwithin a period of six months from the date on which itis drawn or within the period of its validity, whicheveris earlier;(b) the payee or the holder in due course of thecheque, as the case may be, makes a demand for thepayment of the said amount of money by giving a noticein writing, to the drawer of the cheque, within thirty https://hcservices.ecourts.gov.in/hcservices/ days of the receipt of information by him from the bankregarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make thepayment of the said amount of money to the payee or, asthe case may be, to the holder in due course of thecheque within fifteen days of the receipt of the saidnotice.Explanation – For the purpose of this section,'debt or other liability' means a legally enforceabledebt or other liability.The learned counsel also had drawn the attention of this Court toSection 141 of the NI Act and contended that every person who, atthe time the offence was committed, was in charge of, and wasresponsible to the company for the conduct of the business of thecompany, as well as the company, shall be deemed to be guilty ofthe offence and shall be liable to be proceeded against andpunished accordingly.8(c) On the other hand learned senior counsel appearingfor the respondents/accused 2, 4 & 5 would contend that even thecomplaint was preferred against the accused only under Section 138of the NI Act and except at para 2 of the complaint that A2, A4 &A5 are directors of the company, there is no specific averment inthe complaint regarding the overtact of A2, A4 & A5. The trialCourt has held that A3 guilty on the ground that, he as one of theDirectors has signed in Ex.P.2-cheque dated 14.8.1996. The learnedsenior counsel for the respondent relying on 2005 SCC (Cri) 1975(S.M.S. Pharamaceuticlas Ltd., Vs. Neeta Bhalla and another),contended that it is necessary to aver in the complaint that at thetime the offence was committed the person accused was in charge of,and responsible for the conduct of business of the company andwithout averment being made in the complaint the requirements ofSection141 cannot be said to be satisfied. The exact observationin the above said judgment runs as follows:-"The normal rule in the cases involving criminalliability is against vicarious liability, that is, noone is to be held criminally liable for an act ofanother. This normal rule is, however, subject toexception on account of specific provision being made inthe statutes extending liability to others. Section 141of the Act is an instance of specific provision which incase an offence under Section 138 is committed by acompany, extends criminal liability for dishonour of acheque to officers of the company. Section 141 containsconditions which have to be satisfied before theliability can be extended to officers of a company.Since the provision creates criminal liability, theconditions have to be strictly complied with. Theconditions are intended to ensure that a person who issought to be made vicariously liable for an offence of https://hcservices.ecourts.gov.in/hcservices/ which the principal accused is the company, had a roleto play in relation to the incriminating act and furtherthat such a person should know what is attributed to himto make him liable. In other words, persons who hadnothing do do with the mater need not be roped in. Acompany being a juristic person, all its deeds andfunctions are the result of acts of others. Therefore,officers of a company who are responsible for acts donein the name of the company are sought to be madepersonally liable for acts which result in criminalaction being taken against the company. It makes everyperson who, at the time the offence was committed, wasin charge of, and was responsible to the company for theconduct of business of the company, as well as thecompany, liable for the offence."So it is clear from the above said dictum that it is to be provedby the complainant that every person who at the time when theoffence was committed was in charge of the company, and wasresponsible to the company for the conduct of business of thecompany as well as the company, to rope into the offence. Even aperusal of hundials in the case on hand viz. Ex.P.7 to P.10, wouldgo to show that A3 has signed in each of those hundials and not theother Directors viz. A2, A4 & A5. 8(d) The learned senior counsel for the respondentsrelied on 2006(4) CTC 489 (Sabitha Ramamurthy and another Vs.R.B.S.Channabasavaradhya), and contended that the averments in thecomplaint must be to show that all the Directors are responsible toclear liability under dishonoured instrument and if the complainthas not satisfied the requirements of law, the complaint is to bequashed. The exact observation in the above said judgment runs asfollows:-"Section 141 raises a legal fiction. By reason ofthe said provision, a person although is not personallyliable for commission of such an offence would bevicariously liable therefor. Such vicarious liabilitycan be inferred so far as a company registered orincorporated under the Companies Act, 1956 is concernedonly if the requisite statements, which are required tobe averred in the Complaint Petition, are made so as tomake the accused therein vicariously liable for theoffence committed by the company. Before a person canbe made vicariously liable, strict compliance of thestatutory requirements would be insisted."In the case on hand also there is absolutely no averment in thecomplaint against A2, A4 & A5 regarding their involvement in theoffence under Section 138 of the NI Act. https://hcservices.ecourts.gov.in/hcservices/ 8(e) While deciding an appeal against acquittal, as perthe ratio decidendi laid down in 2003 SCC (Cri) 161 (C.Antony Vs.K.g.Raghavannair), we have to see whether the findings of the trialCourt is perverse or contrary to the materials on record. Theexact observation of the Honourable Apex Court in the above saiddictum runs as follows:-"The High Court had lost sight of the fact that itwas sitting as an appellate court against a judgment ofacquittal passed by the trial Court, therefore, therewas an obligation on the part of the High Curt to cometo a definite conclusion that the findings of the trialCourt are either perverse or the same are contrary tothe material on record because the High Court could nothave substituted its finding merely because anothercontrary opinion was possible based on the material onrecord. It was the duty of the High Court tohave first come to the conclusion that the conclusionsarrived at by the trial Court for good reasons areeither unreasonable or as stated above, contrary to thematerial on record. In the absence of any such findingin our opinion, the High Court was in error in taking acontra-view merely because another view was possible onthe material on record."In view of the above discussion, I am of the considered opinionthat it cannot be said that A2, A4 & A5 are also guilty underSection 138 of the NI Act. The learned trial Judge has consideredall those point and has come to a correct conclusion that the otherDirectors except A3 are in no way connected with the offence andhas rightly dismissed the complaint against A2, A4 & A5, which doesnot warrant any interference from this Court. Point is answeredaccordingly.11. In the result, the appeal is dismissed confirming thejudgment in C.C.No.447 of 1996 on the file of the JudicialMagistrate No.VI, Coimbator.SsvSd/Asst.Registrar/true copy/Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ To, 1. The Judicial Magistrate No.VI, Coimbatore.2. - DO – THRO The Chief Judicial Magistrate Coimbatore+ one cc to Mrs. A.L. Gandhimathi, Advocate sr no. 4164NG(CO)NM(12.02.07)Crl.A.No.133 of 2000