Bail Slip The Petitioner/ Accused namely A. Sakthivel was directed to be released on bail as per order of this court dated 1.2.2006 and made in Crl.M.P.Nos.524 to 531/2006 in Crl.R.C.Nos.93 to 96/2006. IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 29.04.2011 CORAM THE HONOURABLE MS. JUSTICE R. MALA Crl.R.C.Nos.93 to 96 of 2006 A.Sakthivel .. Petitioner/Accused in all Crl.R.Cs. ..Vs.. K.R.Navaneetha Krishnan .. Respondent/Complainant in all Crl.R.Cs. Prayer:The Criminal Revisions are filed under Sections 397 read with 401 Cr.P.C., praying against the judgment dated 19.01.2006 made in C.A.Nos.399 to 402 of 2004, on the file of VI Additional Sessions Judge, Chennai, confirming the judgment of conviction dated 31.05.2004 made in C.C.Nos.650 of 2000 and 4384, 4386 and 5635 of 1999 on the file of XVIII Metropolitan Magistrate Court, Saidapet, Chennai and to set aside the same. For Petitioner : Mr.V.Madhavan For Respondent : Mr.A.Thiagarajan C O M M O N O R D E R The criminal revisions arise out of the judgment of conviction and sentence, dated 19.01.2006, in C.A.Nos.399 to 402 of 2004, passed by the learned VI Additional Sessions Judge, Chennai, whereby the accused was convicted for the offence under Section 138 of Negotiable Instruments Act and sentenced to undergo simple imprisonment for six months and to pay a compensation of Rs.3,50,000/-, Rs.2,00,000/-, Rs.2,50,000/- and Rs.2,00,000/- (in all the four cases) to the respondent/complainant within three https://hcservices.ecourts.gov.in/hcservices/ months, in default, to undergo three months' simple imprisonment, confirming the judgment of conviction and sentence dated 31.05.2004 in C.C.Nos.650 of 2000 and 4384, 4386 and 5635 of 1999 passed by the learned XVIII Metropolitan Magistrate, Saidapet, Chennai. 2.The brief facts of the case in Crl.R.C.No.93 of 2006: The petitioner/accused borrowed money from the respondent/complainant and in respect of the same, he issued Exs.P1 to P3 promissory notes and issued Exs.P4 to P6 three cheques bearing Nos.079329, 079330 and 079331 for Rs.1,00,000/-, Rs.1,00,000/- and Rs.1,50,000/-, dated 23.09.1998, 24.09.1998 and 25.09.1998 respectively, for discharging legally enforceable debt. When the cheques were presented in the Bank for encashment under Exs.P7 to P9 challans, they returned as "insufficient funds" and the return memo was marked as Ex.P10 and debit advice was marked as Ex.P11. After that, the respondent/complainant herein has issued a statutory notice to the petitioner/accused under Ex.P12 and an acknowledgment card was marked as Ex.P13. After receipt of the said notice, the petitioner/accused neither repaid the amount nor sent any reply. Hence, the respondent/complainant preferred a complaint against the petitioner/accused under Section 138 of Negotiable Instruments Act. 3.The brief facts of the case in Crl.R.C.No.94 of 2006: The petitioner/accused borrowed money from the respondent/complainant and in respect of the same, he issued Exs.P1 and P2 two cheques bearing Nos.125677 and 125678 for Rs.1,00,000/- and Rs.1,00,000/-, dated 30.10.1998 and 31.10.1998 respectively, for discharging legally enforceable debt. When the cheques were presented in the Bank for encashment, they returned as "insufficient funds" and the return memo was marked as Ex.P3 and debit advice was marked as Ex.P4. After that, the respondent/complainant herein has issued a statutory notice to the petitioner/accused under Ex.P5 and an acknowledgment card was marked as Ex.P6. After receipt of the said notice, the petitioner/accused neither repaid the amount nor sent any reply. Hence, the respondent/complainant preferred a complaint against the petitioner/accused under Section 138 of Negotiable Instruments Act. 4.The brief facts of the case in Crl.R.C.No.95 of 2006: The petitioner/accused borrowed money from the respondent/complainant and in respect of the same, he issued Exs.P1 and P2 promissory notes and issued Exs.P3 and P4 two cheques bearing Nos.079400 and 125676 for Rs.1,50,000/- and Rs.1,00,000/-, dated 28.10.1998 and 29.10.1998 respectively, for discharging legally enforceable debt. When the cheques were presented in the https://hcservices.ecourts.gov.in/hcservices/ Bank for encashment under Ex.P5 challan, they returned as "insufficient funds" and the return memo was marked as Ex.P6 and debit advice was marked as Ex.P7. After that, the respondent/complainant herein has issued a statutory notice to the petitioner/accused under Ex.P8 and an acknowledgment card was marked as Ex.P9. After receipt of the said notice, the petitioner/accused sent a reply notice under Ex.P10, but he has not repaid the cheque amounts. Hence, the respondent/complainant preferred a complaint against the petitioner/accused under Section 138 of Negotiable Instruments Act. 5.The brief facts of the case in Crl.R.C.No.96 of 2006: The petitioner/accused borrowed money from the respondent/complainant and in respect of the same, he issued Exs.P1 and P2 promissory notes and issued Exs.P3 and P4 two cheques bearing Nos.079327 and 079328 for Rs.1,00,000/- and Rs.1,00,000/-, dated 21.09.1998 and 22.09.1998 respectively, for discharging legally enforceable debt. When the cheques were presented in the Bank for encashment under Exs.P5 and P6 challans, they returned as "insufficient funds" and the return memo was marked as Ex.P7 and debit advice was marked as Ex.P8. After that, the respondent/complainant herein has issued a statutory notice to the petitioner/accused under Ex.P9, but the cover was returned and the same was marked as Ex.P10. Since the petitioner/accused has not repaid the cheque amounts, the respondent/complainant preferred a complaint against him under Section 138 of Negotiable Instruments Act. 6.The trial Court, after furnishing copies to the accused, since he pleaded not guilty, examined the witnesses P.W.1 to P.W.3 and perused the documentary evidence under Exs.P1 to P15, P1 to P9, P1 to 12, P1 to P12 and Exs.D1 and D2, D1 to D6, D1 to D5 and D1 to D5 in all the four cases, convicted the accused for the offence under Section 138 of Negotiable Instruments Act and sentenced him as indicated above, against which, the accused preferred an appeal in C.A.Nos.399 to 402/2004. The learned VI Additional Sessions Judge, after hearing the arguments of both sides counsel, confirmed the judgment of conviction and sentence passed by the trial Court, against which, the petitioner/accused has come forward with the revisions. 7.Challenging the said conviction and sentence, the learned counsel for the petitioner/accused submitted that both the Courts below have not considered that the respective cheques were issued for money borrowed by the partnership firm namely, M/S.M.V.K. Silk Sarees for its business purpose. The petitioner/accused has no https://hcservices.ecourts.gov.in/hcservices/ personal liability to pay the amounts and he is not an authorised signatory of that account. When the case of the respondent/complainant is that the amounts were borrowed by the firm for its business purpose, then the initial burden is cast upon the respondent to prove that the cheques were issued by the accused in discharging of legally enforceable liability of the partnership firm. Only when the initial burden is discharged by the complainant, the presumption under Section 139 of Negotiable Instruments Act can be made use against the accused. He further submitted that both the Courts below have failed to point out that no statutory notice was issued to the firm. Hence, he prayed for allowing of the revisions and acquittal of the petitioner/accused. To substantiate his arguments, he relied upon various decisions of the Apex Court and this Court. 8.Refuting the same, the learned counsel for the respondent/complainant submitted that the evidence of P.W.1, the respondent/complainant herein has clearly proved that the accused borrowed money and executed promissory notes and the accused issued the respective cheques to discharge the legally enforceable debt. Since the cheques were presented in the Bank for encahsment and returned as "insufficient funds", a statutory notice was issued to the petitioner/accused under Section 138(b) of Negotiable Instruments Act. But the petitioner/accused has not repaid the amounts. Hence, the respondent/complainant lodged a complaint under Section 138 of Negotiable Instruments Act. He further submitted that since the petitioner/accused has admitted his signature in the cheques, the respondent/complainant can invoke the presumption under Sections 118 and 139 of Negotiable Instruments Act and the petitioner/accused has not rebutted the presumption by way of let in oral and documentary evidence. Though the firm M/S.M.V.K. Silk Sarees is not an accused, that itself does not absolve the liability of the accused, who is a Partner and also a signatory of the cheque. Hence, the petitioner/accused is liable for the return of the cheque due to "insufficient funds". He further submitted that one can issue a cheque for discharging of liability of another. Hence, he prayed for confirming the judgment of conviction and sentence passed by both the Courts below. To substantiate his arguments, he relied upon various decisions of the Apex Court and this Court. 9.Considered the rival submissions made on both sides and the materials available on record. 10.Admittedly, promissory notes and cheques were alleged to be executed by the revision petitioner/accused herein. The signature https://hcservices.ecourts.gov.in/hcservices/ in the cheques and promissory notes are never disputed by the revision petitioner/accused. The argument of the learned counsel for the petitioner/accused is that the petitioner is not an authorised signatory for dealing with the accounts of M/S.M.V.K. Silk Sarees. While perusing the promissory notes, they were issued on behalf of the firm M/S.M.V.K.Silk Sarees. In the said promissory notes, it was stated as "for M/S.M.V.K. Silk sarees, partner. So the petitioner/accused borrowed money on behalf of M/S. M.V.K. Silk sarees and issued cheques for discharging of the promissory notes, which were returned as "insufficient funds". Statutory notices were issued on behalf of the partner of M/S.M.V.K. Silk Sarees and the same were received by the petitioner/accused. But, the petitioner/accused neither repaid the amount nor sent any reply. At the time of questioning under Section 313 Cr.P.C., the petitioner/accused never stated that he is not an authorised signatory. To prove the same, the petitioner/accused filed the Register of cheque book issued. On 02.08.1999, M/S.M.V.K.Silk Saress and its partners sent a letter to the Manager, Indian Overseas Bank, for closing account of the firm. But, Advocate notice was issued on 25.03.1999 and the same was received on 01.04.1999. After that only, the petitioner's father and one of his brother have issued a communication to the Manager of the Bank for closing account of the firm. So it will not absolve from the criminal liability of the petitioner/accused. 11.At this juncture, it is appropriate to consider the decisions relied upon by the learned counsel for the petitioner/accused. (a) CDJ 2010 SC 971 (P.J.Agro Tech. Limited and others v. Water base limited) in paragraphs-8 and 9, it read as follows: "8. .. .. From a reading of the said Section, it is very clear that in order to attract the provisions thereof a cheque which is dishonoured will have to be drawn by a person on an account maintained by him with the 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. It is only such a cheque which is dishonoured which would attract the provisions of Section 138 of the above Act against the drawer of the cheque. 9.In the instant case, the cheque which had been dishonoured may have been issued by the Respondent No.11 for discharging the dues of the Appellant No.1 Company and its Directors to the Respondent No.1 Company and the Respondent Company may have a good https://hcservices.ecourts.gov.in/hcservices/ case against the Appellant No.1 Company for recovery of its dues before other fora, but it would not be sufficient to attract the provisions of Section 138 of the 1881 Act. The Appellant Company and its Directors cannot be made liable under Section 138 of the 1881 Act for a default committed by the Respondent No.11. An action in respect of a criminal or a quasi-criminal provision has to be strictly construed in keeping with the provisions alleged to have been violated. The proceedings in such matters are in personam and cannot be used to foist an offence on some other person, who under the statute was not liable for the commission of such offence." (b) CDJ 2009 SC 1411 (Jugesh Sehgal v. Shamsher Singh Gogi) in paragraph-9, it reads as follows: "9.It is manifest that to constitute an offence under Section 138 of the Act, the following ingredients are required to be fulfilled: (i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account; (ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability; (iii) that 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; (iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the 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 the bank; (v) the payee or the holder in due course of the cheque 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 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice; " https://hcservices.ecourts.gov.in/hcservices/ (c) (2008) 4 SCC 54 (Krishna Janardhan Bhat v. Dattatraya G.Hegde) in paragraphs-34, 35 and 44, it read as follows: "34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies. 35. A statutory presumption has an evidentiary value. The question as to whether the presumption whether stood rebutted or not, must, therefore, be determined keeping in view the other evidence on record. For the said purpose, stepping into the witness box by the appellant is not imperative. In a case of this nature, where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration. 44.The presumption of innocence is a human right. (See Narendra Singh v. State of M.P., Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and Rajesh Ranjan Yadav v. CBI) Article 6 (2) of the European Convention on Human Rights provides : "Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law". Although India is not bound by the aforementioned Convention and as such it may not be necessary like the countries forming European countries to bring common law into land with the Convention, a balancing of the accused's rights and the interest of the society is required to be taken into consideration. In India, however, subject to the statutory interdicts, the said principle forms the basis of criminal jurisprudence. For the aforementioned purpose the nature of the offence, seriousness as also gravity thereof may be taken into consideration. The courts must be on guard to see that merely on the application of presumption as contemplated under Section 139 of the Negotiable Instruments Act, the same may not lead to injustice https://hcservices.ecourts.gov.in/hcservices/ or mistaken conviction. It is for the aforementioned reasons that we have taken into consideration the decisions operating in the field where the difficulty of proving a negative has been emphasised. It is not suggested that a negative can never be proved but there are cases where such difficulties are faced by the accused e.g. honest and reasonable mistake of fact." (d) CDJ 2009 SC 776 (Ramrajsingh v. State of M.P. and another) in paragraphs-7, 8 and 14, it read as follows: "7.This provision clearly shows that so far as the companies are concerned if any offence is committed by it then every person who is a Director or employee of the company is not liable. Only such person would be held liable if at the time when offence is committed he was in charge and was responsible to the company for the conduct of the business of the company as well as the company. Merely being a Director of the company in the absence of above factors will not make him liable. 8. To launch a prosecution, therefore, against the alleged Directors there must be a specific allegation in the complaint as to the part played by them in the transaction. There should be clear and unambiguous allegation as to how the Directors are incharge and responsible for the conduct of the business of the company. The description should be clear. It is true that precise words from the provisions of the Act need not be reproduced and the court can always come to a conclusion in facts of each case. But still in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable. 14.The matter was again considered in Sabitha Ramamurthy and Anr. v. R.B.S.Channabasavaradhya and Anr. (2006 (9) SCALE 212) and Saroj Kumar Poddar v. State (NCT of Delhi) and Anr. (JT 2007 (2) SC 233). It was, inter-alia, held as follows: ".... Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the https://hcservices.ecourts.gov.in/hcservices/ requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. Before a person can be made vicariously liable, strict compliance of the statutory requirements would be insisted. ...." " He submitted that since the amounts were borrowed on behalf of the firm M/S.M.V.K. Silk Sarees, the complaint under Sections 138 and 141 of Negotiable Instruments Act is necessary. But, here, the complaint has been filed under Section 138 of Negotiable Instruments Act, which is not maintainable. 12.At this juncture, it is appropriate to consider the following decisions relied upon by the learned counsel for the respondent/complainant reported in (a)2000 Crl.L.J.373(1) (Anil Hada v. Indian Acrylic Ltd., ) in which, it reads as follows: "When a company, which committed the offence under S.138 eludes from being prosecuted thereof, on account of complaint against it being dropped because of winding up proceedings ordered by Court, the Directors of that company can be prosecuted for that offence. The effect of reading S.141 is that when the company is the drawer of the cheque such company is the principal offender under Section 138 of the Act and the remaining persons i.e. viz. everyone who was in-charge of and was responsible for the business of the company and any other person who is a director or a manager or a secretary or officer of the company, with whose connivance or due to whose neglect the company has committed the offence who are persons falling within categories second and third of S.141 (1) and (2) are made offenders by virtue of the legal fiction created by the legislature as per the section. Hence the actual offence should have been committed by the company, and then alone the aforesaid two categories of persons can also become liable for the offence. If the offence was committed by a company it can be punished only if the company is prosecuted. But instead of prosecuting the company if a payee opts to prosecute only the persons falling within the second or third category the payee can succeed in the case only if he succeeds in showing that the offence was actually committed by the company. In such a prosecution the accused can show https://hcservices.ecourts.gov.in/hcservices/ that the company has not committed the offence, though such company is not made an accused, and hence the prosecuted accused is not liable to be punished. The provisions do not contain a condition that a prosecution of the company is sine qua non for prosecution of the other persons who fall within the second and the third categories mentioned above. No doubt a finding that the offence was committed by the company is sine qua non for convicting those other persons. But if a company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in Section 141 of the Act. Even if the prosecution proceedings against the company were not taken or could not be continued, it is no bar for proceeding against the other persons viz. Director, in instant case, falling within the purview of sub- sections (1) and (2) of S.141 of the Act." (b) 2009 (5) CTC 81 (K.K.Ahuja v. V.K.Vora and another) in paragraph-20, it reads as follows: "20. The position under section 141 of the Act can be summarized thus : (i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the Company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix `Managing' to the word `Director' makes it clear that they were in charge of and are responsible to the Company, for the conduct of the business of the company. (ii)In the case of a Director or an Officer of the company who signed the cheque on behalf of the Company, there is no need to make a specific averment that he was in charge of and was responsible to the Company, for the conduct of the business of the Company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the Company, would give rise to responsibility under sub-section (2) of Section 141. (iii) In the case of a Director, Secretary or Manager (as defined in Sec. 2(24) of the Companies Act) or a https://hcservices.ecourts.gov.in/hcservices/ person referred to in clauses (e) and (f) of section 5 of Companies Act, an averment in the Complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the Company is necessary to bring the case under section 141(1). No further averment would be necessary in the Complaint, though some particulars will be desirable. They can also be made liable under Section 141(2) by making necessary averments relating to consent and connivance or negligence, in the Complaint, to bring the matter under that sub-section. (iv)Other Officers of a Company can not be made liable under sub-section (1) of section 141. Other officers of a Company can be made liable only under sub-section (2) of Section 141, be averring in the Complaint their position and duties in the Company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence." As per the dictum laid down in the apex Court, the partnership firm and the partners all are not necessary parties. The revision petitioner is the partner of M/S.M.V.K. Silk Sarees, who issued cheques for discharging legally enforceable debt, is liable for criminal prosecution. Hence, the argument advanced by the learned counsel for the petitioner that the complaint under Section 138 of Negotiable Instruments Act without impleading the firm M/S.M.V.K. Silk Sarees and other partners is not maintainable, does not merit acceptance. 13.The learned counsel for the petitioner/accused submitted that the petitioner is entitled to rebut the presumption under