Dismissed

P.Rahim v. A.R.M. Yakub and Anr.

Kerala HC19 Sept 2023CRL.A/295/2011

Case brief

AI extract

What is this about?

The High Court heard criminal appeals challenging an Appellate Court judgment that acquitted firm partners under the Negotiable Instruments Act. The Court upheld the acquittal, finding the accused were not in charge or responsible for the firm's business conduct and the officer who issued the cheque had done so without their knowledge.

What did the court decide?

The criminal appeals were dismissed, upholding the acquittal of the accused partner and the successful manager of the firm.

P.Rahim Vs A.R.M. Yakub and Anr. — Cheque Dishonour | Kerala HC (2023)

¶1

¶2

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶3

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶4

PRESENT

¶5

THE HONOURABLE MR.JUSTICE C.S.DIAS

¶6

TUESDAY, THE 19TH DAY OF SEPTEMBER 2023 / 28TH BHADRA, 1945

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CRL.A NO. 293 OF 2011

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AGAINST THE ORDER/JUDGMENT CRA 638/2009 OF THE COURT OF

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SESSIONS, KOZHIKODE

¶10

Crl.L.P. 75/2011 OF HIGH COURT OF KERALA

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APPELLANT/S:

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P.RAHIM, S/O.CHERIA BAVA, EHJAS MANZIL
THAYITHODI,BEYPORE.

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BY ADV SRI.K.A.SALIL NARAYANAN

¶14

RESPONDENT/S:

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1 A.R.M.YAKUB , C/O.UNIVERSAL TRADES CORPORATION,PB NO.287,SUI CEDNTRE 13/2,, MOULANA AZAD ROAD,MATTANCHERRY,KOCHI 682 002.

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2 STATE OF KERALA REP.BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA,ERNAKULAM. 682 031

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BY ADV SRI.V.VENUGOPALAN NAIR-R1

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Smt Seetha S , PUBLIC PROSECUTOR FOR STATE

¶19

THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON
19.09.2023 ALONG WITH CRL.A NOS. 294, 295, 296, 297 AND 298 OF
2011 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶20

¶21

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶22

IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

¶24

THE HONOURABLE MR.JUSTICE C.S.DIAS

¶25

TUESDAY, THE 19TH DAY OF SEPTEMBER 2023 / 28TH BHADRA, 1945

¶26

CRL.A NO. 294 OF 2011

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AGAINST THE ORDER/JUDGMENT CRA 623/2009 OF THE COURT OF

¶28

SESSIONS, KOZHIKODE

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Crl.L.P. 74/2011 OF HIGH COURT OF KERALA

¶30

APPELLANT/S:

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P.RAHIM, S/O.CHERIA BAVA, EHJAS MANZIL
THAYITHODI,BEYPORE.

¶32

BY ADV SRI.K.A.SALIL NARAYANAN

¶33

RESPONDENT/S:

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1 SAJITHA BANU , AGED 70 YEARS W/O.ABDULLA,8/2010,MOULANA AZAD ROAD,, MATTANCHERRY,KOCHI 682 002.

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

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BY ADV.K.S.SUMITHA-R1

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SMT.PUSHPALATHA.M.K, PUBLIC PROSECUTOR FOR STATE

¶38

THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON
19.09.2023 ALONG WITH CRL.A NOS. 293, 295, 296, 297 AND 298 OF
2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶39

¶40

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶41

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶42

PRESENT

¶43

THE HONOURABLE MR.JUSTICE C.S.DIAS

¶44

TUESDAY, THE 19TH DAY OF SEPTEMBER 2023 / 28TH BHADRA, 1945

¶45

CRL.A NO. 295 OF 2011

¶46

AGAINST THE ORDER/JUDGMENT CRA 637/2009 OF THE COURT OF SESSIONS, KOZHIKODE

¶47

Crl.L.P. 73/2011 OF HIGH COURT OF KERALA

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APPELLANT/S:

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P.RAHIM, S/O.CHERIA BAVA, EHJAS MANZIL
THAYITHODI, BEYPORE.

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BY ADV SRI.K.A.SALIL NARAYANAN

¶51

RESPONDENT/S:

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1 A.R.M. YAKUB , C/O.UNIVERSAL TRADES CORPORATION, PB NO.287, SUI CENTRE 13/2,MOULANA AZAD ROAD,MATTANCHERRY, KOCHI 682 002.

¶53

2 STATE OF KERALA REP.BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA,ERNAKULAM.682 031 BY ADV SRI.V.VENUGOPALAN NAIR-R1

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Smt Seetha S , PUBLIC PROSECUTOR FOR STATE

¶55

THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON
19.09.2023 ALONG WITH CRL.A NOS. 293, 294, 296, 297 AND 298 OF
2011,, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶56

¶57

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶58

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶59

PRESENT

¶60

THE HONOURABLE MR.JUSTICE C.S.DIAS

¶61

TUESDAY, THE 19TH DAY OF SEPTEMBER 2023 / 28TH BHADRA, 1945

¶62

CRL.A NO. 296 OF 2011

¶63

AGAINST THE ORDER/JUDGMENT CRA 636/2009 OF THE COURT OF

¶64

SESSIONS, KOZHIKODE

¶65

Crl.L.P. 71/2011 OF HIGH COURT OF KERALA

¶66

APPELLANT/S:

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P.RAHIM, S/O.CHERIA BAVA, EHJAS MANZIL
THAYITHODI, BEYPORE.

¶68

BY ADV SRI.K.A.SALIL NARAYANAN

¶69

RESPONDENT/S:

¶70

1A.R.M.YAKUB ,
C/O.UNIVERSAL TRADES CORPORATION,, P.B.NO.287, SUI
CENTRE 13/2, MOULANA AZAD ROAD,, MATTANCHERRY,
KOCHI-682 002.
2STATE OF KERALA REPRESENTED
BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA,,
ERNAKULAM.682 031
BY ADV SRI.V.VENUGOPALAN NAIR – R1
SMT.PUSHPALATHA.M.K, PUBLIC PROSECUTOR FOR STATE

¶71

THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON
19.09.2023 ALONG WITH CRL.A NOS. 293, 294, 295, 297 AND 298 OF
2011,,, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶72

¶73

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶74

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶75

PRESENT

¶76

THE HONOURABLE MR.JUSTICE C.S.DIAS

¶77

TUESDAY, THE 19TH DAY OF SEPTEMBER 2023 / 28TH BHADRA, 1945

¶78

CRL.A NO. 297 OF 2011

¶79

AGAINST THE ORDER/JUDGMENT CRA 624/2009 OF THE COURT OF SESSIONS, KOZHIKODE

¶80

Crl.L.P. 76/2011 OF HIGH COURT OF KERALA

¶81

APPELLANT/S:

¶82

P.RAHIM, S/O.CHERIA BAVA, EHJAS MANZIL
THAYITHODI, BEYPORE.

¶83

BY ADV SRI.K.A.SALIL NARAYANAN

¶84

RESPONDENT/S:

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1SAJITHA BANU , AGED 70 YEARS
W/O.ABDULLA,8/2010,MOULANA AZAD ROAD,,
MATTANCHERRY,KOCHI 682 002.

¶86

2STATE OF KERALA REP.BY PUBLIC
PROSECUTOR,HIGH COURT OF KERALA,ERNAKULAM. 682 031

¶87

BY ADVS.
S.GOPAKUMAR
LIJITTA G.MATHEW
R.SANJITH
Smt Seetha S , PUBLIC PROSECUTOR FOR STATE

¶88

THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON
19.09.2023 ALONG WITH CRL.A NOS. 293, 294, 295, 296 AND 298 OF
2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶89

¶90

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶92

PRESENT

¶93

THE HONOURABLE MR.JUSTICE C.S.DIAS

¶94

TUESDAY, THE 19TH DAY OF SEPTEMBER 2023 / 28TH BHADRA, 1945

¶95

CRL.A NO. 298 OF 2011

¶96

AGAINST THE ORDER/JUDGMENT CRA 622/2009 OF THE COURT OF

¶97

SESSIONS, KOZHIKODE

¶98

Crl.L.P. 72/2011 OF HIGH COURT OF KERALA

¶99

APPELLANT/S:

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P.RAHIM, S/O.CHERIA BAVA, EHJAS MANZIL
THAYITHODI, BEYPORE.

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BY ADV SRI.K.A.SALIL NARAYANAN

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RESPONDENT/S:

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1SAJITHA BANU , AGED 70
W/O.ABDULLA, 8/2010 MOULANA AZAD ROAD,,
MATTANCHERRY, KOCHI-682 002.
2STATE OF KERALA REPRESENTED BY
PUBLIC PROSECUTOR, HIGH COURT OF KERALA,, ERNAKULAM.

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BY ADVS.
S.GOPAKUMAR
LIJITTA G.MATHEW
R.SANJITH
SMT.PUSHPALATHA.M.K, PUBLIC PROSECUTOR FOR STATE

¶105

THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON
19.09.2023 ALONG WITH CRL.A NOS. 293, 294, 295, 296 AND 297 OF
2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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¶107

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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“CR”

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C.S DIAS,J.

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Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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-----------------------------

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Dated this the 19^th day of September, 2023

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COMMON JUDGMENT

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The appeals are filed questioning the legality and correctness of the common judgment passed by the Court of Session, Kozhikode Division (Appellate Court) in Criminal Appeal Nos.622, 623, 624, 636, 637

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and 638 of 2009. The appellant was the first respondent, and the first respondent was the appellant before the Appellate Court. As the above appeals were disposed of

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by a common judgment, they were consolidated and

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Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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jointly heard and are being disposed of by this common

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judgment. For convenience, the parties are referred to

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as per the status before the Trial Court.

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Relevant Factual Matrix

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The complainant had filed C.C Nos.421, 422 and 423 of 2003 before the Judicial Magistrate of the First Class – V, Kozhikode (Trial Court) against the accused (first accused firm and its four partners), alleging them to have committed the offence under Sec.138 of the Negotiable Instruments Act (in short, ‘N.I Act’). The common case of the complainant in the three complaints was that he was doing business in sale of fish and the first accused was doing business in fish

¶124

¶125

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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export. The Managing Partner of the firm, the third accused, had purchased fish from the complainant on credit. In the discharge of the legally enforceable debt, the third accused had issued Exts.P1 to P3 cheques in favour of the complainant. The accused Nos.2, 4 and 5 are the other partners of the firm, who also had control and responsibility in managing the affairs of the firm. The cheques, on presentation to the Bank for collection, got dishonoured due to insufficient funds in the bank account of the first accused. The complainant issued Exts.P11 to P13 statutory lawyer notices to the accused. Although the notices were served on the accused, only the fifth accused sent Ext.P16 series reply

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Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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notices denying the allegations in the lawyer notices. As the accused failed to pay the demanded amount, they

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committed the offence under Sec.138 of the N. I Act. Accordingly, the complaints were filed.

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During the pendency of the proceedings, the fourth accused died. Since the third accused had absconded, the cases against him were split up. The

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accused one, two and five pleaded not guilty to the substance of the accusations read over to them. In the trial, the complainant and the Bank Manager were examined as PWs.1 and 2 and Exts.P1 to P24 were marked in evidence. The fifth accused was examined as

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DW1, and Exts.D1 to D5 were marked through him.

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¶135

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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Trial Court judgment

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The Trial Court, after analysing the materials on

¶138

record, by its common judgment, found the accused

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one, two and five guilty and convicted them for the offence under Sec.138 of the N. I Act and sentenced them in the following manner:

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(i). In C.C No.421/2003, the first accused was

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sentenced to pay a compensation of Rs.39,674/- to the complainant and accused two and five were sentenced to undergo simple imprisonment for six months.

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(ii). In C.C No.422/2003, the first accused was

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sentenced to pay a compensation of Rs.9,91,855/- to the

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Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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complainant and the accused two and five were sentenced to undergo simple imprisonment for one year.

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(iii) In C.C No.423/2003, the first accused was

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sentenced to pay a compensation of Rs.90,000/- to the complainant and accused two and five were sentenced to undergo simple imprisonment for one year.

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(iv) The charge framed against the fourth accused

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was declared abated, and the cases against the third accused were split up and refilled as C.C Nos.952, 953 and 954 of 2009.

¶151

Aggrieved by the conviction and sentence passed by the Trial Court, the second and fifth accused

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¶153

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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filed the following appeals before the Appellate Court,

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namely:

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(a) the second accused filed Crl. A Nos.622, 623 and

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624 of 2009 from which the present Crl.A Nos.298,294

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and 297 of 2011 arise, and;

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(b) the fifth accused filed Crl. A Nos.636, 637 and 638

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of 2009 from which Crl. A Nos.296, 295 and 293 of

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2011 arise.

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The first accused did not challenge the judgments passed by the Trial Court.

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Appellate Court judgment

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The Appellate Court, after re-appreciating the

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materials on record, by the impugned common

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¶167

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶168

judgment allowed the appeals and set aside the conviction and sentence passed by the Trial Court in the

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three cases.

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Aggrieved by the common judgment of the Appellate Court, the present criminal appeals are filed.

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Heard; Sri. Salil Narayanan. K.A, the learned counsel appearing for the appellant/complainant; Sri.R.Sanjith, the learned counsel appearing for the first respondent/second accused in three appeals; and Sri.V.Venugopalan Nair, the learned counsel appearing

¶172

for the first respondent/fifth accused in the other three appeals and the learned Public Prosecutor appearing for

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the second respondent/State in all the appeals.

¶174

¶175

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶176

Sri. Salil Narayanan vehemently argued that

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the Appellate Court had gone wrong in reversing the conviction and sentence against the accused Nos.2 and

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He submitted that the complainant has specifically averred in Exts.P11 to P13 lawyer notices that the accused Nos.2 to 5 were in charge and were responsible

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for the conduct of the business of first accused firm

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when the offence was committed. The above assertion

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is also specifically pleaded in the three complaints. In view of the said pleading and proving the five concomitants prescribed under Section 138 of the N.I.Act, the complainant had discharged his initial onus

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of proof. The learned Counsel drew the attention of this

¶183

¶184

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶185

Court to clauses (viii) (xii) of Ext.P20 partnership deed of the first accused firm, which shows that the accused Nos.3 to 5 are the managing partners of the firm and that all the partners are equally responsible for the dayto-day affairs of the firm. He further submitted that the oral testimony of PW1 read with Exts.P1 to P24, the assertions in the lawyer notices and complaints, and the covenants in Ext P20 deed are sufficient to hold that the accused 2 and 5 were also responsible for the affairs of the firm. He drew the attention of this Court to the decision of the Honourable Supreme Court in S.P.Mani and Mohan Dairy vs. Dr.Snehalatha Elangovan [2022 (6) KHC 215] to buttress his contention that the

¶186

¶187

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶188

primary responsibility of the complainant is to plead in the complaint that the accused are vicariously liable for the firm committing the offence and that there is no legal requirement for the complainant to establish every transaction. He also relied on the decision in Sunitha Palitha Vs. Panchami Stone Quarry [2022 (5) KHC 201] and contended that there is no necessity to establish that the managing partners were carrying on the day-to-day administration of the firm because the law presumes so. The Appellate Court has erroneously reversed the finding of guilt, conviction and sentence imposed by the Trial Court. He prayed that the appeals be allowed.

¶189

¶190

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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Sri.R.Sanjith supported the impugned judgment

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by contending that the Appellate Court was correct in concluding that the accused 2 and 5 were not in charge or responsible for the affairs of the first accused firm.

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He submitted that, as Ext.P20 partnership deed, the second accused was not a managing partner of the firm.

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Moreover, there was nothing on record to establish that

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the second accused, an 84-year-old lady and the mother of the accused 3 to 5, was in charge and responsible for managing the firm. He brought to the notice of this Court the decision in Biju Jacob vs. Annie Mathews and others [2004 (2) KLT 634] to bolster his

¶196

¶197

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶198

submission. He urged this Court not to interfere with the impugned judgment.

¶199

Sri.V.Venugopalan Nair, after referring to

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S.P.Mani (supra), argued that even if there is an averment in the complaint that the accused were in charge and responsible for the conduct of the business of the firm, the accused can very well establish that they

¶201

were not in charge and responsible for the affairs of the firm. In the instant case, the fifth accused gave evidence as DW1 and issued Ext.D1 letter unambiguously stating that the cheques were not issued towards a legally enforceable debt. Moreover, in the oral testimony of DW1, he has controverted the

¶202

¶203

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶204

assertions made by the complainant that he was not in charge of the affairs of the firm and that it was the third accused who issued Exts.P1 to P3 cheques. He submitted that the complainant and the third accused were hand in glove and were fraudulently attempting to pass the liability to accused 2 and 5. The Appellate Court, after appreciating the oral testimony of DW1 read with Exts.D1 to D5 and the decision of the Honourable Supreme Court in SMS Pharmaceuticals Ltd. vs. Neeta Bhalla [2005 (4) KLT 209 SC], has concluded that the accused 2 and 5 were not in charge of the affairs of the firm. Hence, he prayed that the

¶205

¶206

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶207

appeals be dismissed by confirming the impugned judgment.

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The common point in the appeals is whether there is any illegality or error in the impugned common judgment.

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Before proceeding to discuss the facts and the findings, this Court lodges a caveat on the scope and

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powers of this Court in deciding an appeal against an

¶211

order of acquittal.

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The law has crystallised through a string of precedents of the Honourable Supreme Court and this Court with the quintessence being that the Appellate Court should be slow and watchful in interfering with

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Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶215

an order of acquittal. Unless the conclusion arrived at

¶216

by the Trial Court is manifestly erroneous and unjustifiable, the Appellate Court shall not take a contrary view.

¶217

In Jafarudeen vs. State of Kerala [2022 KHC 6449], the Honourable Supreme Court, after referring

¶218

to its earlier judgments, has laid down the broad principles to deal with appeals against orders of acquittal. It is apposite to refer to the relevant portion of the judgment, which reads as follows:

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“ 25. Scope of Appeal filed against the Acquittal:

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While dealing with an appeal against acquittal by invoking S.378 of the Cr.PC, the Appellate Court has to consider whether the Trial Court's view can be considered a possible one, particularly when evidence on record has been analyzed. The reason is that an order of acquittal adds

¶221

¶222

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶223

up to the presumption of innocence in favour of the accused. Thus, the Appellate Court has to be relatively slow in reversing the order of the Trial Court rendering acquittal. Therefore, the presumption in favour of the accused does not get weakened but only strengthened. Such a double presumption that enures in favour of the accused has to be disturbed only by thorough scrutiny on the accepted legal parameters.

¶224

Recently, in Rupesh Manger (Thapa) vs.

¶225

State of Sikkim (MANU/SC/1014/2023), the Honourable Supreme Court has observed that an

¶226

Appellate Court may reverse an order of acquittal if it

¶227

is so perverse and the conclusion is not plausible. Just because another view is possible, on re-appreciation of the evidence, the Appellate Court shall not disturb the

¶228

finding of acquittal and substitute its findings to

¶229

convict the accused.

¶230

¶231

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶232

With the above observations in mind, let us examine the materials on record and the law.

¶233

The complainant's case was that the third accused had issued Exts.P1 to P3 cheques in his favour in discharge of a legally enforceable debt of the first

¶234

accused firm.

¶235

Irrefutably, the cheques of the first accused firm were drawn by the third accused. The cheques were returned due to ‘insufficient funds’ in the first accused's bank account. The complainant had issued Exts.P11 to P13 lawyer notices to all the accused. On behalf of the accused, the fifth accused sent Ext.P16 reply notices

¶236

¶237

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶238

stating that the cheques were not issued towards a legally enforceable debt.

¶239

In paragraph 2 of the three complaints, the

¶240

complainant has specifically averred that the accused 2 to 5 were in charge and responsible for the conduct of the business of the firm and, therefore, they are vicariously guilty for committing the offence under Sections 138 and 141of the N.I.Act.

¶241

The complainant and the bank manager were examined as PWs1 and 2, and Exts.P1 to P24 were

¶242

marked.

¶243

PW1, in his oral testimony, has in unequivocal

¶244

terms admitted that the third accused issued the three

¶245

¶246

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶247

cheques in his favour and he was the one who handed over a copy of Ext.P20 partnership deed.

¶248

The fifth accused, who gave evidence as DW1, testified that he and the second accused were not in charge and responsible for the conduct of the first accused firm's business and it was the third accused who had the transaction with the complainant and issued the cheques.

¶249

Even though the complainant has averred in the lawyer's notices and the complaints that the accused 2 to 5 were in charge and responsible for the conduct of the affairs of the first respondent firm, there is no material to corroborate the assertion.

¶250

¶251

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶252

The court below, after re-appreciating the materials on record and relying on the principles laid

¶253

down in SMS Pharmaceuticals Ltd. (supra), concluded that accused 2 and 5 were not in charge and responsible for the conduct of the business of the first accused.

¶254

Clause (viii) of Ext.P20 partnership deed states that the accused 3 to 5 are the managing partners of the firm. Therefore, the finding of the Appellate Court that there was no incriminating material to hold that the second accused was responsible for the conduct of the business of the firm and had no complicity in the transaction is correct and justifiable. Hence, I confirm

¶255

¶256

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶257

the said finding of the court below, acquitting the

¶258

second accused.

¶259

Now, we move on to the role of the fifth

¶260

accused in the transaction.

¶261

In S.P.Mani (supra), the Honourable Supreme

¶262

Court, after a survey of all the earlier pronouncements

¶263

on Section 141 of the N.I.Act, has succinctly

¶264

summarized the law thus:

¶265

“47. Our final conclusions may be summarised as under:

¶266

a.) The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no legal requirement for the complainant to show that the accused partner of the firm was aware about each and every transaction. On the other hand, the first proviso to subsection (1) of Section 141 of the Act clearly lays down that if the accused is able to prove to the satisfaction of the Court that the offence was committed without his/her knowledge or he/she

¶267

¶268

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

¶269

had exercised due diligence to prevent the commission of such offence, he/she will not be liable of punishment.

¶270

b.) The complainant is supposed to know only generally as to who were in charge of the affairs of the company or firm, as the case may be. The other administrative matters would be within the special knowledge of the company or the firm and those who are in charge of it. In such circumstances, the complainant is expected to allege that the persons named in the complaint are in charge of the affairs of the company/firm. It is only the Directors of the company or the partners of the firm, as the case may be, who have the special knowledge about the role they had played in the company or the partners in a firm to show before the court that at the relevant point of time they were not in charge of the affairs of the company. Advertence to Sections 138 and Section 141 respectively of the NI Act shows that on the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. The existence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial to show that at the relevant time they were not in charge of the affairs of the company or the firm.

¶271

c.) Needless to say, the final judgement and order would depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the

¶272

¶273

Crl A Nos. 293, 294, 295, 296, 297 and 298 of 2011

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partners ‘qua’ the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquittal.

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d.) If any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court.

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The law propounded above, casts the primary responsibility on the complainant to aver in the complaint that the accused were in charge and responsible for the conduct of the business of the firm

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when the offence was committed. Nevertheless, the complainant is not obliged to establish that the accused

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were aware of every transaction. Yet, merely by

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making a person an accused falling within the sweep of

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Section 141 of the N.I.Act would not lead to his automatic conviction. If the accused partner can substantiate with cogent evidence that he was not in charge and responsible for the day-to-day business and administration of the company/firm, certainly be cannot be fastened with criminal liability under the N.I.Act.

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In the instant case, on an appreciation of the oral testimonies of PW1 and DW1, corroborated with the materials on record, especially Ext D1 letter, it is well established that it was the third accused, who issued the cheques, who was in charge and responsible for the day-to-day affairs of the first accused firm. PW1

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has explicitly admitted that the transaction was with the third accused. Thus, the fifth accused has set up a probable defence and has successfully rebutted the reverse onus of proof under Section 139 of the N.I.Act that he had no role in the transaction. Viewed from the

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above angle, I have no hesitation to concur with the findings of the Appellate Court.

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On a total re-appreciation of the materials on record, this Court is of the definite view that the Appellate Court has rightly concluded that the accused

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2 and 5 have not committed the offence under Sections

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138 and 141 of the N. I Act and have set aside the conviction and sentence passed by the Trial Court.

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Given the above conclusion, the appeals have to

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necessarily fail.

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