IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS MONDAY, THE 6TH DECEMBER 2010 / 15TH AGRAHAYANA 1932 Crl.Rev.Pet.No. 1088 of 2004() ------------------------------ CRA.418/2003 of ADDL.SESSIONS COURT (SPL.COURT), KOTTAYAM CC.107/1998 of JUDL.MAGISTRATE OF FIRST CLASS-III, KOTTAYAM .................... REVN. PETITIONER(S): APPELLANTS.ACCUSED. ---------------------------------------- 1. P.K.SADANANDAN, SECRETARY, CENTRAL KERALA GENERAL MARKETING AND PROCESSING CO-OPERATIVE SOCIETY LTD.NO.898, KOTTAYAM -1,(RESI DING AT PUTHENPARAMBU HOUSE, NATTAKOM P.O. KOTTAYAM). 2. P.N.SOMASUNDRAM, TREASURER, C.K.C.M. & PROCESSING CO-OPERATIVE SOCIETY NO.898 KOTTAYAM-1,(RESIDING AT PUTHUPARAMBU HOUSE, NATTAKOM P.O. KOTTAYAM). BY ADV. SRI.MATHEW JOHN (K) SRI.SUJESH MENON V.B. RESPONDENT(S): COMPLAINANT AND NOT PARTY. ----------------------------------------- 1. M.E.KESAVAN NAMBOOTHIRI,MANAGALATHU ILLOM, OLASSA P.O. KOTTAYAM. 2. STATE OF KERALA, REP. BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. ADV. SRI.P.N.PURUSHOTHAMA KAIMAL FOR R1 SRI.GANAPATHY BHATTATHIRI FOR R1 R2 BY PUBLIC PROSECUTOR SHRI. MUHAMMED PUZHAKKARA THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON 30/11/2010, THE COURT ON 06/12/2010 PASSED THE FOLLOWING: ORDER ON CRL.M.A. 4391/04 IN CRL.R.P.No.1088 of 2004 DISMISSED 6.12.2010 SD/- M.L.JOSEPH FRANCIS, JUDGE /TRUE COPY/ M.L. JOSEPH FRANCIS, J. - - - - - - - - - - - - - - - - - - - - - - Crl.R.P.No. 1088 of 2004 - - - - - - - - - - - - - - - - - - - - - - Dated this the 6th day of December, 2010 O R D E R This revision petition is filed by accused 1 and 2 in C.C. No. 107 of 1998 on the file of the Judicial First Class Magistrate Court - III, Kottayam. The first respondent herein was the complainant in that case, which was filed against accused 1 and 2 alleging commission of the offence under Section 138 of the N.I. Act, involving a cheque for Rs.7,526/- 2. The case of the first respondent/complainant is briefly as follows. The first petitioner is the Secretary of a Co-operative Society registered under the Co-operative Societies Act engaged in the business of Marketing and Processing of Agricultural items. The second petitioner is the Treasurer of the society. Towards cost of paddy purchased by the Society, petitioners Crl.R.P.No. 1088 of 2004 2 issued a cheque dated 26.4.1997 for Rs.7,526/- drawn on the District Co-operative Bank, Kottayam in favour of the first respondent. The cheque was presented for collection by the first respondent, but the same was dishonoured for want of funds. The statutory notice was issued to the petitioners, but the petitioners did not pay the amount. Thus the petitioners committed the offence punishable under Section 138 of the Negotiable Instruments Act. 3. In the trial court, both the accused were found guilty under Section 138 of the N.I. Act and they are sentenced to undergo simple imprisonment for 3 months each and they are directed to pay an amount of Rs.7,526/- jointly to PW1 as compensation under Section 357 Cr.P.C. In the appeal filed by the accused as Cr. Appeal No.418 of 2003 before the Additional Sessions Court, Kottayam, the conviction was confirmed and the sentence was modified as simple imprisonment for one month each and the order to pay compensation was retained. Against that judgment accused 1 and 2 filed this revision petition. Crl.R.P.No. 1088 of 2004 3 4. Heard the learned counsel for the revision petitioners and the learned counsel for the 1st respondent. 5. Admittedly accused 1 and 2 are convicted and sentenced under Section 138 of the N.I. Act, as they issued the cheque in question as the Secretary and Treasurer of the Central Kerala General Marketing and Processing Co-operative Society Ltd. In this case, no notice under Sec.138(b) of the N.I. Act was given to that society and the society is not arrayed as an accused. 6. Dishonour of the cheque by itself does not give rise to a cause of action, because payment can be made in receipt of notice of demand contemplated in clause(b) of Section 138 of the N.I. Act and in that event, there is no offence. Failure to pay the amount within 15 days of receipt of the notice is the cause of action. 7. Section 141 of the N.I. Act reads as follows. “Offences by companies - (1) If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, Crl.R.P.No. 1088 of 2004 4 was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.” A reading of Section 141 of the N.I. Act makes it clear that when the company is the principal offender under Section 138 of the N.I. Act, the remaining persons are made offenders by virtue of the legal fiction created by the Legislature as per the section. Hence actual offence should have been committed by the company and then alone the other two categories of persons can also become liable for the offence. 8. In the decision reported in Mahesh Kumar v Taxu Drivers Co-operative Society Ltd. (2010 (4) KLT 544), it was held that: “None of the accused can be convicted for offence under S.138 of Negotiable Instruments Act, 1881 since no notice is issued to the society (A1) under S.138(b), the society cannot be convicted for offence under S.138 of N.I. Crl.R.P.No. 1088 of 2004 5 Act. The main offender is the society and it cannot be convicted. No person who is stated to be in charge of the society can also be convicted. It is only if the society is found guilty under S.138 of N.I. Act, the person who are referred to in S.141 also will be deemed to be guilty of offence under S.138 of N.I. Act. No notice is issued under S.138(b) of N.I. Act to the Society and in the absence of issuance of such notice no offence will lie against society under S.138 of the N.I. Act. Since society is not liable, the President ad Secretary also cannot be made liable.” 9. In the present case, the Society has not committed the offence under Section 138 of the N.I. Act, as no notice was issued to that Society as contemplated under Section 138(b) of the N.I. Act. Since the society is not liable, accused 1 and 2 herein cannot be convicted and sentenced under Section 138 of the Act as the Secretary and Treasurer of that Society. 10. Accordingly this revision petition is allowed. The conviction ad sentence of the revision petitioners, who are accused 1 Crl.R.P.No. 1088 of 2004 6 and 2 in C.C.No. 107 of 1998 on the file of the Judicial First Class Magistrate Court -III, Kottayam, under Section 138 of the N.I. Act is set aside. They are found not guilty and they are acquitted and set at liberty. The bail bonds are cancelled. (M.L. JOSEPH FRANCIS) Judge tm