IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD SATURDAY, THE TWENTYNINETH DAY OF OCTOBER TWO THOUSAND AND ELEVEN HON’BLE SRI JUSTICE G. BHAVANI PRASAD Criminal Appeal Nos.323 of 2008, 591 of 2008 and 638 of 2009 Crl.A.No.323 of 2008 Between: Employees’ State Insurance Corporation, Hyderabad .. Appellant AND M/s. Aakash Industries Ltd., represented by its Managing Director, Hyderabad and 2 others .. Respondents Crl.A.No.591 of 2008 Between: Employees’ State Insurance Corporation, Hyderabad .. Appellant AND M/s. Aakash Industries Ltd., represented by its Managing Director, Hyderabad and 3 others .. Respondents Crl.A.No.638 of 2009 Between: Employees’ State Insurance Corporation, Hyderabad .. Appellant AND M/s. Aakash Industries Ltd., represented by its Managing Director, Hyderabad and 2 others .. Respondents COMMON JUDGMENT: All the three Criminal Appeals are between the same parties involving the same question and therefore, at the request of the learned counsel for both parties, the appeals are being heard and decided together. The Appellant-Employees’ State Insurance Corporation prosecuted the accused in C.C.Nos.564 of 2006, 517 of 2006 and 521 of 2006 on the file of the I Additional Chief Metropolitan Magistrate, Hyderabad, for offences punishable under Section 138 read with Section 142 of Negotiable Instruments Act, 1881 (for short “the Act”) on the ground of the cheques issued by the accused in favour of the Corporation towards the statutory contribution being dishonoured by the concerned bank and returned with endorsements of dishonour. The Corporation claimed to have issued statutory notices to the respective accused calling upon them to pay the amounts under the dishonoured cheques within 15 days from the date of receipt of respective notices and the notices addressed to the 1st accused were served, while the notices addressed to the 2nd accused were returned in all the cases. As no amounts were paid even after expiry of the statutory period, the cases were filed, which were taken cognizance accordingly by the trial Court. Copies of documents were furnished on their appearance before the trial Court and the accused denied the offences and pleaded not guilty when they were examined under Section 251 of the Code of Criminal Procedure. One Abdul Gafoor, legal Inspector of the complainant Corporation, was examined as PW.1 in each of the cases and in C.C.No.564 of 2006, Exs.P.1 to P.9 and D.1 were marked, while in C.C.No.517 of 2006, Exs.P.1 to P.13 and Ex.D.1 were marked and in C.C.No.521 of 2006, Exs.P.1 to P.10 and D.1 were marked. The accused denied the incriminating circumstances appearing in the evidence against them when they were examined under Section 313 of the Code of Criminal Procedure. No other defence evidence was produced. The trial Court rendered identical judgments in all the three cases referring to the evidence of PW.1 in each case about issuance of the cheques by the respective accused towards contribution to the Employees’ State Insurance Corporation under the statute and the cheques being dishonoured on presentation through the concerned bank. It also referred to the evidence of PW.1 about issuance of statutory notices, which were served on the 1st accused and not on the 2nd accused. The non-compliance with the statutory notices was also noted. However, the trial Court referred to the admission of PW.1 about the readiness and willingness of the accused to pay the cheque amount by way of Demand Draft marked as Ex.D.1 in each case. The trial Court also referred to the absence of any objection for the Corporation to receive the amounts directly from the accused but for the Corporation Rules. The trial Court went on to consider the inability of PW.1 to withdraw the case directly from the Court while admitting that the Court has discretion to dismiss the complaint. The trial Court, therefore, opined that there was no need to go deep into the merits of the case as per the evidence of PW.1, who had no objection to receive Ex.D.1 in each case and consequently, concluded that the offence under Section 138 of the Act was not proved beyond reasonable doubt. The accused were accordingly acquitted by the trial Court. The acquittal on such a ground is the subject of challenge herein in all the three appeals with the Corporation contending that the subsequent readiness and willing of the accused to pay the cheque amount by way of Demand Draft and the readiness of the Corporation to receive the same cannot absolve the respective accused of the guilt under Section 138 of the Act, and therefore, there was no scope for extending any benefit of reasonable doubt to the accused. The Corporation, therefore, desired that in view of the existence of a legally enforceable liability against the accused towards which the cheques were issued and the dishonour of cheques and non-compliance with the statutory notices, the accused in each case ought to have been convicted. Smt. Pushpinder Kaur, learned standing counsel for the appellant-Corporation and Sri G. Ramakrishna, learned counsel representing Sri V. Hariharan, learned counsel for the accused/ respondents and Sri Rudresh Deshpande, learned counsel representing the learned Public Prosecutor are heard. The facts in each case are not disputed. The liability of the accused under the Employees’ State Insurance Act to pay the statutory contributions is not in dispute. The issuance of respective cheques towards discharge of such legal liability is also not in dispute. The dishonour of cheques by the concerned bank and the issuance of statutory notices are also not in dispute. It is seen from the evidence of PW.1, more particularly his cross-examination that what all the accused suggested to the sole witness for the prosecution in each case is that they were ready and willing to pay the cheque amount by way of Demand Draft marked as Ex.D.1 in each case. If so, the admitted and proved facts clearly appeared to make out an offence punishable under Section 138 of the Act and what all the trial Court considered and concluded in the impugned judgments is only about the absence of any need to go deep into the merits of the case in view of admission of PW.1 about the absence of any objection for receiving the Demand Drafts issued by the accused. Though the Corporation represented by PW.1 before the trial Court expressed such readiness, the same could not have erased the committal of the offence under Section 138 of the Act in each case on the admitted facts and it is not as though the parties are left without any remedy in the event of both parties agreeing to settle the liability towards the Employees’ State Insurance contribution by accepting the Demand Drafts delivered by the accused. Section 147 of the Act provides for every offence punishable under the Act being compoundable notwithstanding anything contained in the Code of Criminal Procedure, 1973 and therefore, the evidence of PW.1 positively indicates and proves that the parties compounded the offence. The expression of opinion by the trial Court in the impugned judgments that the offence was not made out beyond reasonable doubt may not technically and factually be correct and the appropriate course of action, which the trial Court could have taken, is to take recourse to Section 147 of the Act to acquit the accused without recording any finding of not guilty against the accused. Under the circumstances, the judgments in question have to be modified accordingly. The appellant-Corporation also sought for compensation and costs in the grounds of appeal, but the accused exhibited their bona fides by offering Ex.D.1 Demand Draft in each case and the same was accepted without any murmur by PW.1, who did not complain of any monetary or any other disadvantage to the Corporation which is liable to be compensated by the accused. These three Criminal Appeals, hence, have to be disposed of accordingly. Therefore, the judgments in C.C.No.564 of 2006, C.C.No.517 of 2006 and C.C.No.521 of 2006 on the file of I Additional Chief Metropolitan Magistrate, Hyderabad, dated 07-08-2007 are modified replacing the conclusion about the failure of the complainant to establish the guilt of the accused under Section 138 of the Negotiable Instruments Act and consequently, acquitting them under Section 255 (1) of the Code of Criminal Procedure with the conclusion that though the guilt of the accused under Section 138 of the Act has been proved by the complainant in each case, as the complainant and the accused have to be treated as compounding the offence involved within the meaning and scope of Section 147 of the Act, the accused are acquitted under Section 147 of the Negotiable Instruments Act read with Section 320 of the Code of Criminal Procedure. These three Criminal Appeals are ordered accordingly. _____________________ G. BHAVANI PRASAD, J Date: 29-10-2011 Ksn