IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.K.MOHANAN WEDNESDAY, THE 31ST AUGUST 2011 / 9TH BHADRA 1933 CRL.A.No. 379 of 2006() ----------------------- ST.528/2005 of on the file of the Special Judicial First Class Magistrate Court (Marad cases) Kozhikode .................... APPELLANT(S): COMPLAINANT ------------------------- K.BALAKRISHNAN, S/O.CHIRUKANDAN, KELACHAN VEETTIL (SHIBAS), P.O.GURUVAYOORAPPAN COLLEGE, KOZHIKODE-14. BY ADV. SRI.P.NARAYANAN SRI.M.C.RATNAKARAN RESPONDENT(S): ACCUSED ---------------------- 1. SANJAY KUMAR CHAKRABORTHY, S/O.MADANMOHAN CHAKRABORTHY, PARTNER, HOTEL KOLKOTTA DURBAR, ARATHI NIKETHAN, 29/1256, KANDIYIL PARAMBA, P.O.KOTTOOLI, KOZHIKODE-16. 2. PUBLIC PROSECUTOR, HIGH COURT OF KERALA. PUBLIC PROSECUTOR SRI.K.S.SIVAKUMAR THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 31/08/2011, THE COURT ON 31/08/2011 DELIVERED THE FOLLOWING: V.K.MOHANAN,J ------------------------------ Crl. A.No.379 of 2006 ---------------------------------------- Dated this the 31st day of August, 2011 JUDGMENT The complainant in a prosecution for the offence punishable u/s. 138 of the NI Act is the appellant, as he is aggrieved by the judgment dated 30.12.2005 in ST No.528/2005 of the court of Special Judicial First Class Magistrate (Marad Cases) Kozhikkode, by which the learned Magistrate acquitted the accused u/s.255(1) of Cr.P.C. 2. The case of the complainant is that, the 1st accused is a partnership firm and A2 and A3 are brothers and A2 is the Managing partner and A3 is the ordinary partner of the firm. According to the complainant on 4.11.2005, the accused borrowed an amount of Rs.1,00,000/- for business purpose with a promise to repay the amount within 6 months and the complainant when demanded for the payment from the firm, the 2nd accused issue a cheque dated 15.6.2004 drawn on the account of the 1st accused, maintained on State Bank of Travancore, Kozhikkode main Branch. According to the complainant when the said cheque was presented for Crl. A.No.379 of 2006 2 encashment, it was dishonoured for the reason 'exceeds arrangements'. According to the complainant, thereafter, on receipt of the dishonour memo, registered lawyer notice was issued to the accused informing the dishonour of the cheque and demanding the amount covered by it. According to the complainant, only A3 accepted the notice. Notice sent to the 1st accused returned with postal endorsement “closed down”. The 3rd accused sent reply denying the liability, thus according to the complainant and accused has committed the offence punishable u/s.138 of the NI Act and with the said allegation by filing a complaint, the complainant approached the Chief Judicial Magistrate, wherein cognizance was taken for the said offence and instituted ST No.413/2005. Thereafter, the case was made over to the present trial court wherein the case is renumbered as ST 528/2005. In the trial court, only the 3rd accused alone was appeared. Thus, A3 alone faced the trial during which the complainant himself examined as PW1 and beside him, PWs.2 and 3 were examined. The complainant also produced Ext.P1 to P5 documents. Though no witness was examined, Ext.D1 was produced from the side of the defence. In the light of the Crl. A.No.379 of 2006 3 particular provision contained in Section 141 of the NI Act and in the light of the pleadings of the party and evidence and materials on record, the trial court has formulated 5 points for its consideration, among which the second point is that whether the 3rd accused, was in charge and responsible to the firm for the conduct of business at the time of offence was committed and the 3rd point was whether the 3rd accused proved that the offence was committed without his knowledge or that he exercised all due deligence to prevent the commission of the offence. After an elaborate consideration the evidence and materials on record particularly on the basis of Ext.D1 dissolution deed dated 13.05.2004 which is marked without any objection from the complainant, the trial court has specifically found that the same was executed between A2 and A3 and the account of the firm is settled and the firm was dissolved and all the liabilities past, present and future in respect of the firm are taken over by the 2nd accused and the 2nd accused has also undertaken to indemnify the 3rd accused in case of any liability. Thus, the trial court has found that from 13.5.2004 onwards the 1st accused firm has been dissolved and the cheque in question was issued on 15.6.2004 it Crl. A.No.379 of 2006 4 is a date after the dissolution of the firm. Thus, according to the learned Magistrate the liability as per the cheque was confined to the 2nd accused only and finally concluded that A3 is not responsible when the offence was committed. Thus, accordingly, the learned Magistrate concluded that the offence u/s.138 of NI Act is not attracted against the 3rd accused and accordingly, he is entitled to get the acquittal and accordingly, he is acquitted u/s.255(1) of Cr.P.C. It is the above finding and order of acquittal he is challenged in this appeal. 3. I have heard Sri.P.Narayanan, learned counsel appearing for the appellant. I have also perused the judgment of the trial court. 4. The learned counsel for the appellant vehemently submitted that the learned Magistrate has committed grave error in holding that by Ext.D1, the 3rd accused has established that offence was committed without his knowledge and after the dissolution of the firm, the liability as per the cheque is confined to the 2nd accused only. It is also the submission of the learned counsel that, learned Magistrate has failed to note that the cheque in question was issued to the complainant before effecting Crl. A.No.379 of 2006 5 any individual or public notice on the complaint regarding the dissolution of the firm. The learned counsel further submitted that even if the firm is dissolved, the partners continuous to be liable to third parties unless individual or public notice served on them, but the learned Magistrate miserably failed to consider the above aspect. Therefore, according to the learned counsel, the order impugned is liable to be set aside. 5. In the light of the above argument of the learned counsel for the appellant and in view of the findings of the court below based upon the materials and evidence referred to in the judgment, the question to be considered is whether the learned Magistrate is justified in his finding and acquitting the accused u/s.255(i) of Cr.P.C. 6. The crux of the allegation of the complainant is that the 2nd accused executed and issued the cheque from the account of the 1st accused firm towards the discharge of the liability due to the complainant and the said cheque when presented for encashment dishonoured the amount, for the reason “exceeds arrangements”. Admittedly, A1 is a partnership firm of which A2 is the managing partner. A3 is only an ordinary partner. A2 is Crl. A.No.379 of 2006 6 the person, who signed the cheque and issued the same on behalf of the 1st accused firm. Ext.P1 cheque is dated 15.6.2004. From the judgment of the trial court it appears that PW2, who is the relative of complainant stated that he was working under the accused and according to him, he had witnessed the payment of Rs.1,00,000/- by way of cheque by the complainant to accused No.2, on November 2003 and at that time accused No.2 and 3 and one Jabbar was present. PW3, is the said Jabbar. He had also stated that he saw the complainant paying Rs.1,00,000/- by way of cheque to the 2nd accused and at that time PW2 and 3 were present. 7. From the discussions that contained in the impugned judgment it appears that the 3rd accused who faced the trial after disputing the transaction, his contention is to the effect that the 1st accused firm has already dissolved and he has no liability. PW1 is specific in his deposition that it was the 2nd accused, who issued the cheque and that was on 15.6.2004. The accused has produced Ext.D1 dissolution deed dated 13.5.2004. The learned Magistrate has specifically found that Ext.D1 deed was produced and marked without any objection from the side of the Crl. A.No.379 of 2006 7 complainant. Ext.D1 is a deed executed between the Managing partner-A2 and ordinary partner-A3 of A1 firm. The learned Magistrate has recited the content of the deed in paragraph 9 of the judgment, according to which as per the deed all the accounts between the firm was settled on that day and the firm was dissolved and all the liabilities, past, present and future in respect of the firm were taken over by the 2nd accused, who undertaken to indemnify the 3rd accused also in case of any liability. Thus, as per Ext.D1 deed, the 1st accused firm stand dissolved with effect from 13.5.2004 and the 2nd accused is liable for all the liabilities of the 1st accused irrespective of the fact whether the liability is past or present or future. So, as per the terms of the deed itself, it can be seen that all the liabilities of the firm undertaken by A2, who will be responsible for the firms liability towards the third party. 8. Beside the above, it can be seen that Ext.P1 cheque is dated 15.6.2004 which is after the dissolution of the firm on 13.5.2004. Therefore, it cannot be said that at the time of issuing Ext.P1 cheque, the 3rd accused is anyway responsible for the conduct and business of the firm. Thus, by virtue of Ext.D1 Crl. A.No.379 of 2006 8 dissolution deed, no liability can be fastened against the 3rd accused, who already ceased to be a partner of the firm which dissolved on 13.5.2004. It cannot also be said that Ext.P1 cheque was issued by A2 with the knowledge or consent of A3. Therefore, the complainant is miserably failed to establish that A3 is anyway connected with liability if any arose out of Ext.P1 cheque and hence no offence is alleged against A3, the respondent herein. Under the above facts and circumstances, and in the light of the evidence and materials referred to above, I am of the view that the learned Magistrate is fully justified in his finding and acquitting the accused. Therefore, I find no reason to interfere with the judgment of the trial court and this appeal fails. In the result, this appeal is devoid of any merit and accordingly, the same is dismissed. V.K.MOHANAN, JUDGE. pm