Dismissed

D.Babu v. State of Kerala

Kerala HC20 Jan 2014CRL.A/132/2003

Case brief

AI extract

What is this about?

In three combined criminal appeals against acquittals under Section 138 NI Act, the High Court held that complaints filed against individual partners managing firm accounts, without impleading the partnership firm as an accused, are not maintainable per Aneeta Hada, dismissing the appeals.

What did the court decide?

The criminal appeals are dismissed. It is held that the complaint is not maintainable as the partnership firm maintaining the account was not impleaded as an accused.

D.Babu Vs State of Kerala — Company and Corporate | Kerala HC (2014)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE V.K.MOHANAN

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MONDAY, THE 20TH DAY OF JANUARY 2014/30TH POUSHA, 1935

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CRL.A.No. 132 of 2003 (E)

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AGAINST THE ORDER/JUDGMENT IN CC 356/1999 of J.M.F.C., RAMANKARI DATED 29-10-2002

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APPELLANT/COMPLAINANT::

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D.BABU, SECRETARY,

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KAINAKARY SERVICE CO-OPERATIVE BANK LTD.No.1437, THOTTUVATHALA P.O., KAINAKARI.

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BY ADV. SRI.M.K.CHANDRAMOHAN DAS

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RESPONDENTS/ACCUSED & STATE::

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STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR,

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HIGH COURT OF KERALA, ERNAKULAM, COCHIN-682 031.

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M.J.JACOB, MANAGING PARTNER, MOONUKANDATHIL RICE MILL, MOONUKANDATHIL VEEDU, WARD No.8, ARPPOOKKARA PANCHAYAT, ARPOOKKARA (W) P.O. KOTTAYAM-686 008.

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R2 BY ADV. SRI.M.J.THOMAS

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R1 BY PUBLIC PROSECUTOR SRI.N.SURESH

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THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON

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20-01-2014, ALONG WITH CRL.A.Nos.138 & 139 OF 2003 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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V.K.MOHANAN, J.

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Crl.A.Nos.132, 138 & 139 of 2003

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Dated this the 20^th day of January, 2014

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JUDGMENT

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As the above three appeals covered by identical question

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of law and facts and the parties to the above appeals are one and the same and the impugned judgment are identical in nature and issued by very same trial court, these appeals are heard together and being disposed of by this common judgment.

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The impugned judgment in the above appeals are dated 29/10/2002 of the court of the Judicial First Class Magistrate Court, Ramankary though in separate calendar cases. Crl.A.No.139 of 2003 is directed against C.C.No.355 of 1999 and Crl.A.No.132 of 2003 is against C.C.No.356 of 1999 whereas Crl.A.No.138 of 2003 is directed against C.C.No.357 of 1999. All the above cases are instituted upon separate private complaints filed at the instance of the appellant herein, who is the complainant therein, alleging the offence

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Crl.A.Nos.132, 138 & 139 of 2003

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punishable under Section 138 of the N.I. Act against the accused therein who is the respondent herein in these appeals.

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The allegation of the complainant in all the above cases is that, the accused purchased raw-paddy from the complainant on credit basis and for the discharge of the cost of paddy, the accused had drawn 11 cheques in favour of the complainant and when the said cheques were presented for payment, the same were dishonoured as there was no sufficient fund in the account of the accused and even though the complainant issued legal notice, no payment was made by the accused and thereby the accused has committed the offence punishable under Sections 138 of the N.I. Act and Section 420 of IPC. But in all the above cases the court below took cognizance against the accused only for the offence punishable under Section 138 of the N.I. Act.

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Thus, C.C.No.355 of 1999 covered by Crl.A.No.139 of 2003 is filed with respect to the cheque bearing Nos.726131, 726130 and 726133. In C.C.No.356 of 1999 covered by

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Crl.A.Nos.132, 138 & 139 of 2003

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Crl.A.No.132 of 2003 the disputed cheques are bearing Nos.726136, 726135 and 726136 whereas C.C.No.357 of 1999 covered by Crl.A.No.138 of 2003 covers two cheques bearing Nos.726128 and 726129.

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In each case during the trial of the case, the complainant is examined as PW.1 and Exts.P1 to P7 were produced and from the side of the defence, DWs.1 and 2 were examined and Exts.D1 to D5 were produced. The trial court after having considered the rival contentions and the evidence and materials on record, found that, the evidence on record clearly shows that the cheques are given not as a consideration of the cost of paddy purchased from the complainant but as security and therefore the present cases are not maintainable against the accused. The trial court has also found that as per the evidence, the defence side admitted that there is business transaction between the complainant and the accused. According to the defence, as part of the said transaction, the accused had entrusted 11 blank cheques as security, with the

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Crl.A.Nos.132, 138 & 139 of 2003

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complainant and the accused has already discharged the entire liability connected with the above transaction. But when the cheques were demanded back, the same were not returned.

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It appears that, the trial court has accepted the contention of the defence that the value of the raw-paddy purchased from the complainant is not mentioned anywhere in the complaint and what mentioned is only the total weight of the paddy. But the learned Magistrate has found that, as per the prosecution version, the present cheque amount is the balance amount of cost of paddy and its interest and it is further found that, but the total value of the paddy and the rate of interest with the accused consented to pay the complainant is not mentioned anywhere in the complaint. The learned Magistrate has also referred to the defence contention and it is referred that in the complaint in paragraph 3 it is mentioned that the accused purchased raw-paddy net weight 1699.65kg.

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from the complainant during March, 1999 and as consideration of the cost of paddy the accused has paid

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Crl.A.Nos.132, 138 & 139 of 2003

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6,51,955.80 and for the balance amount of 50,000/- and its interest from May, the accused executed 11 cheques for a sum of 50,000/-. After considering the above case of the accused, in paragraph 7, the learned Magistrate has found that, if one go through the averments in paragraph 3 of the complaint one can very well understand that this is a false and frivolous case. If the balance amount is only 50,000/- then why the accused executed 11 cheques for a sum of `50,000/- to the complainant and this aspect is not satisfactorily explained by the prosecution. The learned Magistrate has also found, there is paucity of evidence from the part of the complainant to substantiate the allegation against the accused. On the basis of the above discussion and finding, the learned Magistrate acquitted the accused under Section 255(1) of Cr.P.C. in all the above cases. It is against the above finding and order of acquittal, these appeals are preferred.

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Heard Sri.M.K.Chandramohan Das, the learned

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counsel for the appellant and Sri.M.J.Thomas, the learned

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Crl.A.Nos.132, 138 & 139 of 2003

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counsel for the 2^nd respondent/accused.

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The learned counsel appearing for the respondent after having invited my attention to the three bench decision of the Supreme Court reported in Aneeta Hada Vs. Godfather Travels and Tours Private Limited [(2012) 5 SCC 661] and the decision of the learned single Judge of this Court in the order dated 12/7/2013 in Crl.R.P.No.3523 of 2010 reported in Chacko Mathew Vs. State of Kerala [2013 (4)KLT SN 90 (C.No.87), it is submitted that, the complaint preferred by the appellant before the court below is not maintainable since the account holder of the cheque in question, namely, the firm is not made as an accused in all the above complaints. Mr.M.K.Chandramohan Das, the learned counsel for the appellant on the other hand submitted that, the above legal question is not raised by the accused before the trial court and therefore it is not proper in raising such a question for the first time before this Court in Appeal or else it is submitted that the matter may be remanded back to the trial court for

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Crl.A.Nos.132, 138 & 139 of 2003

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considering the above legal question. After having handed over to me a certified copy of the order dated 23/8/2000 in C.M.P.No.4128 of 2000 in C.C.No.358 of 1999 of the court below, the learned counsel for the respondent/accused submitted that, the defence has already referred the above legal question before the court below and the court below has overruled that objection on the strength of the decision reported in Anil Hada Vs. Indian Acrilic Ltd. [(2000) 1 SCC Page No.1]. According to me, the above order of the learned Magistrate is incorrect and upholding the objection raised, the accused ought to have been acquitted.

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Going by the complaint it can be seen that the name of the accused is shown as M.J.Jacob, Managing Partner, Moonukandathil Rice Mill, Moonukandathil Veedu, Ward No.8, Arppookkara Panchayat, Arppookkara(W)P.O., Kottayam -686008. In paragraph 2 of the complaint, there is a specific averment and description about the accused. Thus, it is stated :-

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Crl.A.Nos.132, 138 & 139 of 2003

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“2. പ�ത� ക��ടയ� ആര��കര �ഞ�യത�ല പ�വരത�ച� വര�ന, ന�ല ! ന"�ത"�യ� വ�ങ� അര�യ�ക� സ�സകര�ച! വ�ല�� ടത�ന സ��"�യ ക��ടയ� ആര��കര "*ന��ണത�ല "�ല �ന, "�ക�ജ��ഗ ��രടണറ� �, "�ല �ന, പ�വരത�ത�ന, "�ഴ�വ 2 ഉതരവ�ദ�ത5വ�� ഏന7ട�ത�ട�ള ആള�� "�ല �ന, സ�മത�� ഇട��ട�ന, �*ര<"�യ ഉതരവ�ദ�ത5വ�� വഹ�ച� വര�ന ആള�"�ണ.”

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From the above averment contained in the second paragraph of the complaint it is crystal clear that the transaction of the complainant was with the partnership firm of which Mr.M.J.Jacob, who is the accused, in the above complaint, is the Managing Partner. The explanation for the purpose of Section 141 of the N.I. Act is extracted hereunder for convenience which reads as:-

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“ 141. 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, was in charge of, and was responsible to the company

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Crl.A.Nos.132, 138 & 139 of 2003

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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:

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Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

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[Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.]

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(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director,

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Crl.A.Nos.132, 138 & 139 of 2003

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manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

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Explanation.- For the purposes of this section,-

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(a) “company” means any body corporate and includes a firm or other association of individuals; and

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(b) “director”, in relation to a firm,

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means a partner in the firm.]

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Thus, on a reading of explanation, it can be seen that, company mentioned in explanation (a) includes a firm or other association of individuals; and (b) “director”, in relation to a firm, means a partner in the firm.

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In a recent decision of the Hon'ble Apex Court in Aneeta Hada Vs. Godfather Travels and Tours Private Limited reported in [(2012) 5 SCC 661] it is held:-

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“64. Keeping in view the anatomy of the aforesaid provision, our analysis pertaining to Section 141 of the Act would squarely apply to the 2000 enactment. Thus adjudged, the Director could not have been held liable for the offence under

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Crl.A.Nos.132, 138 & 139 of 2003

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Section 85 of the 2000 Act. Resultantly, Criminal Appeal No.1483 of 2009 is allowed and the proceeding against the appellant is quashed. As far as the Company is concerned, it was not arraigned as an accused. Ergo, the proceeding as initiated in the existing incarnation is not maintainable either against the company or against the Director. As a logical sequitur, the appeals are allowed and the proceedings initiated against Avnish Bajaj as well as the Company in the present form are quashed.”

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Thus, the legal position is that, as far as a prosecution for the offence punishable under Section 138 of the N.I. Act is concerned the criminal proceedings against the director without impleading the company as an accused and in case of a partnership firm without impleading the partnership firm as an accused, a complaint respectively against the Director or partner is not maintainable.

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Crl.A.Nos.132, 138 & 139 of 2003

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In the present case, from the above extracted

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averment of the complaint, it can be seen that, the transaction of the complainant was with the partnership firm and it is also beyond dispute that the cheques in question are pertained to the account maintained by the above partnership firm. If that be so, in the light of the above decision and particularly in view of the order of the learned Judge of this Court referred to above, the complaint preferred by the appellant without impleading the partnership of which the accused is the Managing Partner is not maintainable and the trial court is wrong in rejecting the preliminary objection raised by the accused. As the maintainability of the complaint is based upon the above facts, the maintainability of the complaint and the legal question that arose thereon can be settled in this appeal itself particularly when those facts are admitted by the complainant and the matter need not be send back to the trial court. Thus, in view of the decision of the Hon'ble Apex Court referred above, the settled position as on today is that, without

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Crl.A.Nos.132, 138 & 139 of 2003

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being impleaded a company or a bank/society or a partnership firm as the case may be, as an accused, in case the transaction is with such statutory bodies and the cheque in question issued from an account maintained by such corporate entities, the complaint is not maintainable against the person alone those who issued the cheque and who involved in the regular business of such company, bank, society or firm. But in the present case, the firm, who maintained the account to which the cheques in question are pertained, is not made as an accused and therefore all the complaints in the above cases are not maintainable and therefore on that ground the respondent/accused is entitled to get an acquittal.

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As the complaint and all the further proceedings thereon are liable to be set aside and the accused is entitled to get an acquittal on the above legal issue, according to me, this Court need not consider the merits of the ground on which the learned Magistrate acquitted the accused.

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Crl.A.Nos.132, 138 & 139 of 2003

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The Hon'ble Apex Court in a recent decision reported in Mokkiah & Anr. Vs. State, Rep. by the Inspector of Police, Tamil Nadu [2013 (1) Supreme 88] , has held as

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follows:-

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“8. In a recent decision in Murugesan & Ors. vs. State Through Inspector of Police, 2012 (10) SCC 383, one of us Ranjan Gogoi, J. elaborately considered the broad principles of law governing the power of the High Court under Section 378 of the Code of Criminal Procedure while hearing the appeal against an order of acquittal passed by the trial Judge. After adverting to the principles of law laid down in Sheo Swarup vs. King Emperor, AIR 1934 PC 227 (2) and series of subsequent pronouncements in para 21 summarized various principles as found in para 42 of Chandrappa & Ors. vs. State of Karnataka, (2007) 4 SCC 415 as under:

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“42. From the above decisions, in our considered view, the following general principles regarding powers of the appellate court while dealing with an appeal against an order of acquittal emerge:

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(1) An appellate court has full power to review, re-appreciate and re-consider the evidence upon which the order of acquittal is founded.

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Crl.A.Nos.132, 138 & 139 of 2003

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(2) The Code of Criminal Procedure, 1973 puts no limitation, restriction or condition on exercise of such power and an appellate court on the evidence before it may reach its own conclusion, both on questions of fact and of law.

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(3) Various expressions, such as, 'substantial and compelling reasons', 'good and sufficient grounds', very strong circumstances', 'distorted conclusions', 'glaring mistakes', etc. are not intended to curtail extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of 'flourishes of language' to emphasise the reluctance of an appellate court to interfere with acquittal than to curtail the power of the court to review the evidence and to come to its own conclusion.

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(4) An appellate court, however, must bear in mind that in case of acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court.

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(5) If two reasonable conclusions are possible on the basis of the evidence on

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Crl.A.Nos.132, 138 & 139 of 2003

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record, the appellate court should not disturb the finding of acquittal recorded by the trial court.” (emphasis supplied).

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On examination of the facts and circumstances involved in the present case in the light of the above decision, it can be seen that, though the trial court has not accepted the contention raised by the accused about the maintainability of the complaint, this Court has found that, the complaint is bad as the firm, which maintained the account to which the cheques in question are pertained, not made an accused. If that be so, the double presumption already secured in favour of the accused cannot be disturbed.

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In the result, I find no merit in these appeals. Accordingly, the same are dismissed.

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V.K.MOHANAN, JUDGE

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skj

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True copy

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P.A. to Judge

D.Babu v. State of Kerala

Case brief

What is this about?

What did the court decide?

D.Babu v. State of Kerala

Case brief

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