Dismissed

Mathoor Pookoya Thangal v. P.Muhammed Alavi

Kerala HC3 Mar 2021CRL.A/774/2006

Case brief

AI extract

What is this about?

In a criminal appeal against a conviction under Section 138 of the Negotiable Instruments Act, the Kerala High Court held that the offence was committed by the company because the cheque was drawn on a company account. Since the company was not a party to the proceedings, the appeal was dismissed.

What did the court decide?

The criminal appeal was dismissed, and the order of the court below was confirmed.

Mathoor Pookoya Thangal Vs P.Muhammed Alavi — Company and Corporate | Kerala HC (2021)

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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 T.R.RAVI

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WEDNESDAY, THE 03RD DAY OF MARCH 2021 / 12TH PHALGUNA, 1942

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CRL.A.No.774 OF 2006

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AGAINST THE ORDER/JUDGMENT IN ST.NO.2513/2004 DATED 03-10-2005 OF JUDICIAL FIRST CLASS MAGISTRATE, NILAMBUR

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AGAINST THE ORDER/JUDGMENT IN Crl.L.P. 152/2006 DATED 21-03-2006 OF HIGH COURT OF KERALA

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APPELLANT/COMPLAINANT:

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MATHOOR POOKOYA THANGAL S/O SEETHIKOYA THANGAL, KATTUMUNDA AMSOM, DESOM, NILAMBUR TALUK.

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BY ADV. SRI.DEEPU THANKAN

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RESPONDENTS/ACCUSED & STATE:

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1 P.MUHAMMED ALAVI S/O MUHAMMED, CHEMBRATHINGAL HOUSE, KOODOOR AMSOM, CHEMMAMKADAVU DESOM.

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2 STATE OF KERALA, REP. BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. R1 BY ADV. SRI.V.S.HARIKRISHNAN VAZHUTHACAUD R1 BY ADV. SRI.K.M.SATHYANATHA MENON R2 BY SMT. SYLAJA, PUBLIC PROSECUTOR

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THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 03.03.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

CRL.A.No.774 OF 2006

JUDGMENT

Dated this the 3^rd day of March 2021

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The appeal is filed by the complainant in S.T.No.2513/2004 of

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the Judicial First Class Magistrate Court, Nilambur against the judgment dated 03.10.2005 whereby the complaint filed by the appellant against the 1^st respondent for an offence under Section 138 of the Negotiable Instruments Act was dismissed finding that the 1^st respondent was not guilty.

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According to the appellant, the appellant and the 1^st respondent had acquaintance for several years and the appellant had advanced a sum of Rs.6,49,500/- to the 1^st respondent for the purpose of construction of his house. When the amount was demanded, the 1^st respondent had in discharge of the above debt, issued a cheque for the above said amount, drawn on the South Indian Bank, Perinthalmanna Branch. The cheque when presented for payment was returned dishonored with an endorsement “insufficient funds”. It is thereafter that the complaint under Section 138 of the Negotiable Instruments Act has been filed.

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The 1^st respondent denied the transaction complained of. The Court below after considering the evidence on record found that, the cheque in question has been issued from the account of M/s. Gramy

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CRL.A.No.774 OF 2006

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Rubbers India Limited (hereinafter referred to as the company) and that it has been signed for and on behalf of the company by its Managing Director, P. Muhammed Alavi who is the 1^st respondent. A contention is advanced by the appellant that the loan that was advanced was a personal loan to Mr.Muhammed Alavi and it was not a transaction between the complainant and the Company and as such there was no requirement of making the Company a party to the proceedings. The Court below by judgment dated 03.10.2005 found that the prosecution under Section 138 of the Negotiable Instruments Act ca n be launched only a gainst the drawer of the cheque and in the case on hand, the drawer of the cheque is a Company against which the complainant has no case that there is a legally enforceable debt.

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Heard Sri Deepu Thankan on behalf of the appellant and Smt.Sylaja, Public Prosecutor.

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The counsel for the appellant contended that the appellant does not have a case against the company and that the cheque had been issued to discharge a liability which the signatory of the cheque owed to the appellant and it so happened that the signatory was also the Managing Director of the company. It is hence contended that the complaint is hence maintainable against the person who signed the cheque and for that purpose the company need not be made a party

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CRL.A.No.774 OF 2006

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to the proceedings. It is the contention that only in cases where the liability is that of a company that Section 141 of the Negotiable Instruments Act, comes into play. I cannot agree with the contentions put forward on behalf of the Appellant.

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In Anil Gupta v. Star India (P) Ltd., reported in [ (2014) 10 SCC 373] , the Hon'ble Supreme Court in paragraph 8 after extracting Section 138, states thus.

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“8. Section 138 of the Act deals with dishonour of cheque for insufficiency, etc. as follows:

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“ 138. Dishonour of cheque for insufficiency, etc., of funds in the account .—Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an arrangement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:

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P rovided that nothing contained in this section shall apply unless—

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(a) the cheque has been presented to the bank within a

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CRL.A.No.774 OF 2006

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period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

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(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.”

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From the aforesaid provision, it is clear that only the drawer of the cheque falls within the ambit of Section 138 of the Act whether human being or a body corporate or even a firm.

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In the case on hand, the cheque in question is signed by the respondent for and on behalf of the company and the cheque is issued on an account maintained by the company with the bank. As such, the drawer of the cheque can only be the company and not the signatory, who has affixed the signature on behalf of the company. A reading of Section 138 extracted above clearly shows that it is the drawer of the cheque who is deemed to have committed the offence under the section. It follows therefore that the offence if at all, in the case on hand can be said to have been committed only by the company. In

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CRL.A.No.774 OF 2006

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Mainuddin Abdul Sattar Shaikh v. Vijay D.Salvi, reported in (2015) 9 SCC 622, the apex Court in paragraph 9 held that for maintaining a complaint under Section 138 of the Negotiable Instruments Act, it is necessary that that the person who is to be made liable should be the drawer of the cheque and he should have drawn the cheque on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for discharge in whole or part, of any debt or other liability. If the company is deemed to have committed the offence, necessarily, going by Section 141 of the Negotiable Instruments Act, the company should have been made a party to the proceedings and it is only on finding that the company has committed the offence, that the Managing Director could have been made liable for the offence.

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Applying the legal principles referred above to the facts of this case, the appellant is not entitled to contend that the offence has been committed by the Managing Director. Admittedly, the cheque is not drawn on a personal account maintained by the respondent. The cheque specifically states that it has been issued for and on behalf of the company. As such the company alone can be treated as the drawer of the cheque who can be deemed to have committed the offence under Section 138. Admittedly, the appellant does not have a case

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CRL.A.No.774 OF 2006

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that the company owes any amount to him. As such the cheque is not issued for discharging any debt or liability. In such circumstances, I do not find any reason to interfere with the judgment of the court below. The appeal fails and is dismissed confirming the order of the court

below.

Sd/-

T.R.RAVI, JUDGE

Mathoor Pookoya Thangal v. P.Muhammed Alavi

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Mathoor Pookoya Thangal v. P.Muhammed Alavi

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