Allowed

Unnikrishnan Menon v. P.L.Lathi Kumar

Kerala HC5 Aug 2016Crl.Rev.Pet/2631/2009

Case brief

AI extract

What is this about?

The Kerala High Court allowed a criminal revision petition, setting aside conviction and sentence against two directors under Section 138 of the Negotiable Instruments Act. Relying on Aneeta Hada, the court held that prosecution under Section 141 requires arraignment of the company as an accused, which was not done in the instant case.

What did the court decide?

Conviction and sentence set aside; bail bonds cancelled; applicants set at liberty; amounts deposited refunded.

Unnikrishnan Menon Vs P.L.Lathi Kumar — Company and Corporate | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN

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FRIDAY, THE 5TH DAY OF AUGUST 2016/14TH SRAVANA, 1938

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Crl.Rev.Pet.No. 2631 of 2009 ( )

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AGAINST THE JUDGMENT IN CRA 1022/2007 of COURT OF SESSION, KOZHIKODEIII DATED 30-11-2007

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AGAINST THE JUDGMENT IN ST 3077/2003 of J.M.F.C.-V,KOZHIKODE DATED 30.11.2007

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REVISION PETITIONER(S)/PETITIONERS/APPELLANTS/ACCUSED:

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UNNIKRISHNAN MENON, S/O.A.PURUSHOTHAMA PANICKER, AGED 47 YEARS,, MANAGING DIRECTOR, MADHURAPURI CHITS AND, FINANCE COMPANY PRIVATE LIMITED,, MEESAKARAN BUILDING, M.M.ALI ROAD,, KOZHIKODE DISTRICT.

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A.B.SUJATHA, W/O.UNNIKRISHNA MENON, AGED 44 YEARS, DIRECTOR, MADHURAPURI CHITS AND, FINANCE COMPANY PRIVATE LIMITED,, MEESAKARAN BUILDING, M.M.ALI ROAD,, KOZHIKODE DISTRICT.

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BY ADVS.SRI.V.T.MADHAVANUNNI SRI.V.A.SATHEESH

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SRI.J.ABHILASH

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RESPONDENT(S)/PETITIONERS:

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P.T.LATHI KUMAR, S/O.P.T.KUMARAN, AGED 41 YEARS,, KULANGARAKANDY POYIL, POST CHELAVOOR,, KOZHIKODE-673 571.

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STATE OF KERALA, REP. BY PUBLIC PROSECUTOR,, HIGH COURT OF KERALA, ERNAKULAM.

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BY PUBLIC PROSECUTOR C.S.HRITHWIK R1 BY ADV. SRI.NIRMAL. S

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THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON 05-08-2016, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

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ANU SIVARAMAN, J.

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= = = = = = = = = = = = = Crl.R.P.No.2631 of 2009

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= = = = = = = = = = = = = = Dated this the 5^th day of August, 2016

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ORDER

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1.This revision arises from a private complaint filed by the 1^st respondent herein alleging an offence under Section 138 of the Negotiable Instruments Act. The revision petitioners were the accused. They are the Managing Director and Director respectively of Madhurapuri Chits and Finance Company Private Ltd. registered under the Companies Act. It was alleged that on 03.11.2001 the company had accepted a deposit of Rs.2 lakhs from the 1^st respondent. On maturity, two cheques for Rs.65,000/- each were issued, one drawn on the Dhanalakshmi Bank, Calicut and another drawn on the Oriental Bank of Commerce, Calicut in favour of the complainant. The complainant presented the said cheques for payment through the Canara bank, Cherooty Road Branch, Calicut. The cheques were returned as dishonoured on account of “insufficient funds”, along with debit advice dated 17.07.2003. The dishonour of cheques was intimated to the

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Crl.R.P.No.2631/09

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accused by notice dated 30.07.2003. Though notice was accepted on 01.08.2003, no payment was made within time and the complaint was lodged.

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2.The revision petitioners had taken up the specific contention that the non-arraignment of the company as accused was fatal to the case of the complainant, since the cheque had been issued by the company. It was contended that the revision petitioners had no connection with the company and the debt was also not duly proved. While these aspects were considered and findings entered, the specific contention of the revision petitioners that the complaint was bad for nonarraignment of the company does not appear to have been adverted to by the court below in its proper perspective. The revision petitioners were, therefore, sentenced to undergo simple imprisonment for three months each and were directed to pay compensation of Rs.1,30,000/- to the complainant.

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3.The revision petitioners took up the matter in appeal by filing Crl.Appeal No.1022 of 2007 before the Court of Session,

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Crl.R.P.No.2631/09

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Kozhikode. The specific contention taken by the revision petitioners as appellants was that the transaction in question was a financial transaction in respect of the company and that the revision petitioners had no independent liability to satisfy any amounts due to the complainant. The contention of the 1^st respondent was that he had made fixed deposits with the company and the accused being the Managing Director and Director of the aforesaid company respectively, they were liable to satisfy the amounts due to him. The lower appellate Court, relying on the evidence adduced by PW2, the Assistant Manager of Dhanalakshmi Bank, found that the revision petitioners are the account holders and that the cheques were issued by them. Accepting the contentions of the 1^st respondent herein that he had discharged his initial burden to prove that the cheque was issued in discharge of a legally enforcible debt under Section 138 of the Negotiable Instruments Act, the appeals were dismissed and the conviction and sentence was upheld. Aggrieved thereby this revision petition is filed.

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Crl.R.P.No.2631/09

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4.Heard the learned counsel for the revision petitioners and the learned counsel for the 1^st respondent.

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5.The learned counsel for the revision petitioners relies on the decision of the three Judge Bench of the Apex Court in Aneeta Hada v. Godfather Travels and Tours Private Ltd. [(2012) 5 SCC 661] to contend that the question with regard to maintainability of a complaint under Section 138 of the Negotiable Instruments Act against the Director or authorised signatory of a cheque without the company being arrayed as an accused stands covered against the complainant. The Hon'ble Supreme Court, after analysing the entire case law on the point held that, on an ultimate analysis, for maintaining prosecution, commission of offence by the company is an expressed condition precedent to attract the vicarious liability of others. It was therefore found that for maintaining prosecution under Section 141 of the Act, arraignment of the company as the accused is imperative. The other categories of offenders can only be brought in the drag-net of vicarious liability as the same has been stipulated in the provision itself.

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Crl.R.P.No.2631/09

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The decisions rendered by the Apex Court itself to the contrary were overruled.

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6.In the instant case, it is clear from a perusal of Exts.P1 and P2 cheques itself that the cheques are ones issued by the company. The revision petitioners, who are the Managing Director and Director of the company respectively, are the signatories of the cheques for and on behalf of the company. Ext.P9 account opening form would also show that the account had been opened in the name of the company by its signatories, the Managing Director and the Director.

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Though it was vehemently contended by the learned counsel for the 1^st respondent that the company is a private limited one, which is essentially run by the revision petitioners themselves and that the revision petitioners have personal liability to settle the amounts due in terms of the provisions of the Negotiable Instruments Act, in view of the binding decision of the Apex Court, I am of the opinion that such contentions cannot be countenanced in view of the fact that the Company

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Crl.R.P.No.2631/09

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was not made a party or arraigned as the accused before the trial court. The findings of the trial court and the lower appellate court with regard to the guilt of the accused for offence under Section 138 of the Negotiable Instruments Act are therefore unsustainable. The conviction and sentence entered by the trial court in S.T.No.3077 of 2003 as confirmed in Crl.Appeal No.1022 of 2007 is therefore set aside. Bail bonds executed by the revision petitioners shall stand cancelled and the revision petitioners shall be set at liberty. Amounts deposited by the revision petitioners pursuant to orders of this Court shall be refunded to them.

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This Crl.R.P is allowed.

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sd/-

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Anu Sivaraman, Judge

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sj5/8

Unnikrishnan Menon v. P.L.Lathi Kumar

Case brief

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Unnikrishnan Menon v. P.L.Lathi Kumar

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