IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF JULY, 2019 BEFORE THE HON'BLE MR. JUSTICE K. NATARAJAN CRIMINAL APPEAL No.975 of 2010 BETWEEN:
M/S. C.C.I. LTD., ADMINISTRATIVE OFFICE, TILE FACTORY ROAD, MANIPAL, REPRESENTED BY AUTHORISED SIGNATORY, SMT. SUSHEELA CHANDRA KUMAR.
... APPELLANT (BY SRI G. KRISHNAMURTHY, SENIOR ADVOCATE; ALONG WITH SMT. APARNA N., ADVOCATE) AND:
SRI SURESH M., S/O. MAHADEVA, AGED ABOUT 34 YEARS, HALLADAKERI, MYSORE.
... RESPONDENT (BY SRI K. DIWAKARA, ADVOCATE) THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C. PRAYING TO SET ASIDE THE JUDGEMENT AND ORDER DATED 06.08.2009 PASSED BY THE PRESIDING OFFICER, FAST TRACK COURT, UDUPI, IN CRL.A.No.88/2008 AND CONFIRM THE JUDGMENT AND DECREE DATED 27.02.2008 PASSED BY THE III ADDITIONAL CIVIL JUDGE (JR.DN) AND JMFC, UDUPI, IN C.C.No.7574/2003 ACQUITTING THE RESPONDENT ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT.
THIS CRIMINAL APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 28.06.2019 AND COMING ON FOR PRONOUNCEMENT, THIS DAY THE COURT PRONOUNCED THE FOLLOWING:
JUDGMENT This appeal is preferred by the appellant against the judgment of acquittal passed by the Fast Track Court, Udupi in Criminal Appeal No.88/2008 by acquitting the respondent for the offence punishable under Section 138 of the Negotiable Instruments Act (hereinafter referred to as ‘N.I.Act’ for the sake of brevity).
2. I have heard the arguments of learned counsel for the appellant as well as the respondent.
3. The appellant was the complainant and the respondent was the accused before the trial Court. The ranks of the parties are retained for the sake of convenience.
4. The case of the complainant before the Trial Court is that the complainant is a Public Limited Company registered under the provisions of Companies Act, 1956 (for short ‘the Act) and the complainant was the sole distributor for Goa State Lotteries, the respondent-accused was the stockist, the accused entered into an agreement with the complainant for the supply of lottery tickets as per Ex.P2 and as per clause 7(a) and (b) of the agreement, the stockist has to inform about the unsold lottery tickets one hour prior to draw time, on the draw date and has to furnish the details.
5. In pursuance of the supply of lottery tickets and to discharge the debt, the accused had issued a cheque for Rs.27,41,632.40/-. When the cheque was presented for encashment, it was dishonoured with an endorsement i.e., “Payment stopped by the drawer”. Then, the complainant issued a notice to the accused on 02.08.2003 and demanded to pay the cheque amount. The notice was served on the accused, but no reply was made. However, requested to grant time, but did not pay the cheque amount. Hence, the complainant filed a private complaint under Section 200 of the Code of Criminal Procedure, 1976 (for short ‘the Cr.P.C) before the III Additional Civil Judge (Jr.Dn.) and JMFC, Udupi, for the offence punishable under Section 138 of N.I.Act. The complaint came to be filed through Raghavendra Rao and the sworn statement has been recorded. The cognizance was taken by the trial Court and after registering the case in C.C.No.7574/2003, the accused was summoned to appear before the Court and later, he was released on bail and plea was recorded. He was pleaded not guilty. Then the evidence of the complainant has been adduced before the Court. Apart from that, the Accountant of the complainant Company was examined as PW.2 and got marked in all 14 documents. The accused also examined under Section 313 of Cr.P.C. The case of the accused was one of the total denial and had taken the contention that he has discharged the entire debt and there is no balance and in support of his case, the accused examined himself as DW.1 and also marked 5 documents as Exs. D1 to D5. After considering the arguments and evidence on record, the trial Court vide judgment dated 27.02.2008, convicted the accused for the offence under Section 138 of the N.I.Act and sentenced him to pay a fine of Rs.27,47,000/- and in default, to further undergo simple imprisonment for two years. Out of the fine amount, Rs.27,42,000/- was ordered to be paid to the complainant.
6. Assailing the judgment of conviction and sentence passed against the accused, the accused filed an appeal before the Sessions Court i.e., Fast Track Court, Udupi in Criminal Appeal No.88/2008 and after hearing the arguments, the learned appellate Judge accepted the contentions of the accused and acquitted the accused vide judgment dated 06.08.2009.
7. Being aggrieved by the acquittal of the accused, the appellant-complainant filed this present appeal.
8. The learned counsel for the appellant-complainant strenuously contended that the Trial Court, after considering the entire evidence on record and perusing the oral evidence as well as the documentary evidence rightly convicted the accused, whereas, the Appellate Court has not properly appreciated the evidence on record. The complainant is the Company, which is a legal entity. Previously, Raghavendra Rao represented the Company at the time of filing the complaint. After recording his own statement, he has left the job. Thereafter, Subramanya Karanth has represented the Company and thereafter, Susheela Chandra Kumar has been examined as witness. A GPA is also executed by the complainant Company represented by its Managing Director-Muralidahr Rao. But the accused had taken the contention that the said Muralidhara Rao was not the Managing Director of the Complainant Company, who executed the Power of Attorney in favour of Subramanya Karanth, PW.1-Susheela Chandra Kumar, which are not valid and no original resolution has been produced before the Court. The said contention was accepted by the Appellate Court, which is not correct. In fact, the accused himself filed a complaint to the Police against Muralidhara Rao mentioning him as a Managing Director. The Managing Director is authorized person who execute GPA in favour of PW.1. The resolution of the Company also produced and marked before the Court. The same was not properly appreciated by the First Appellate Court. Ex.P1 is the extract of the Minutes of the Meeting of the Board of Directors of the Company held on 16.05.2003. Ex.P12 is the authorization given to the Susheela Chandra Kumar. The document of the Company does not require any formal proof. As per Section 54 of the Companies Act, the CEO is empowered to issue documents. The Chief Executive Officer has issued Board resolution dated 05.12.2005 signed by the Managing Director, Muralidhar Rao. Hence, the complainant’s Company has been represented by duly authorized person, who lead the evidence before the Trial Court, but the Appellate Court has wrongly held that PW.1 was not authorized person to give evidence and Raghavendra Rao was not authorized person to file the complaint, which is erroneous. Even, the First Appellate Court has not considered the merits of the case, since point No.1 has been answered against the complainant holding that Raghavendra Rao, Subramanya Karanth and Susheela Chandra Kumar have no authority to prosecute the case and point No.2 has not been considered in respect of liability. Learned counsel for the appellant also relied upon the judgment of the Hon’ble Apex Court and judgments of various High Courts.
9. Per contra, the learned counsel for the accused- respondent contended that, previously Raghavendra Rao filed the complaint. Later, he has been replaced by Subramanya Karanth and subsequently, Susheela Chandra Kumar was examined. There is no proper authorization issued by the Board of Directors of the Company in the resolution. Therefore, the First Appellate Court has rightly held that the Company was represented by the unauthorized persons. Hence, the complaint came to be rightly dismissed and also contended that as per Exs.D3 and D4, the accused already paid the amount to the complainant Company and there is no due as such. Even the complainant has not maintained the proper account. The payment made by the accused was not shown as deduction in the ledger. The account extract was a fabricated one. It does not depict the exact transaction between the complainant and the accused. Therefore, he has supported the judgment of the Appellate Court and prayed for dismissing the appeal.
10. Having heard the arguments of the learned counsel for the respective parties, the point that arises for my consideration are:
a) Whether the complainant Company has duly authorized Raghavendra Rao, Subramanya Karanth and Susheela Chandra Kumar to prosecute the case in the trial Court?
b) Whether the judgment of the Courts below call for interference by this Court?
c) What order?
11. On perusal of the LCR, it is not in dispute that the complainant company is registered under the Companies Act and was agent for the Goa State Lotteries and the accused was the stockist and they have entered into an agreement for the supply of Lottery Tickets to the accused and in turn, the accused used to sell and return unsold lottery tickets at least one hour prior to drawing time as per Ex.P2-the agreement.
12. The complainant alleged that the accused was due for a sum of Rs.27,41,632.40/- as on 12.07.2003 and to discharge, the accused had issued the cheque and the same was presented to the bank, it was dishonoured due to the stoppage of payment issued by the accused. The defence of the accused is of two fold. One is PW.1 who was examined before the Magistrate prior to taking of cognizance and another witness has been examined after taking cognizance. All were not duly authorized by the Board of Directors by a resolution. Therefore, filing of the complaint itself is not in accordance with law. Therefore, the complaint required to be dismissed. Another fold of arguments of the learned counsel for the accused was that Ex.P13-Account Extract produced by the complainant was not genuine, as there was lot of manipulation. The payment made by the accused was not shown as deduction in the account and the accused has already paid the entire amount. The endorsement also issued by the complainant for having received the amount, but the same was not referred in the accounts and the cheque was given as security at the time of agreement entered into between the parties, which were misused by the complainant. Hence, prayed for dismissing the appeal.
13. On perusal of the complaint filed by the Company before the Magistrate go to show that Raghavendra Rao was the Law Officer of the Complainant Company, who signed the complaint under Section 200 of Cr.P.C at the time of filing the complaint before the Magistrate. Ex.P12- the extract of the resolution of the Complainant Company, resolved that Raghavendra Rao, son of late P.R.Rao, Law Officer, M/s. CCI Limited, Tile factory road, Manipal, was authorized and represented the Company by superseding the earlier resolution dated 31.08.2000 wherein authorized Saraswathi Naik to represent the Company. The resolution was passed on 16.05.2003. Based upon Ex.P12, the Law Officer, Raghavendra Rao has filed a complaint at the initial stage. Subsequently, the said Raghavendra Rao left the Company, therefore, the Company authorized K. Subramanya Karanth to represent the Company in respect of the Court matters by superseding the resolution dated 16.05.2003. These resolutions were passed on 05.12.2005. Based upon Ex.P1, K.Subramanya Karanth filed affidavit on 28.02.2006 and also got marked 12 documents by examining himself as PW.1 and cross- examination was deferred at the request of the counsel for the accused. Later the said Subramanya Karanth also said to have been left the Company, therefore, Susheela Chandra Kumar was examined as PW.1 on behalf of the Company. She also filed an affidavit in view of the evidence on 28.06.2006. The learned counsel for the complainant also filed a memo along with the affidavit of the Susheela Chandra Kumar. Learned counsel for the accused prayed time for cross-examination.
14. The order-sheet of the trial Court dated 28.06.2006 reveals that on filing of the application by the complainant, the memo was allowed and permitted the said Susheela Chandra Kumar to examine as witness. Accordingly, the said Susheela Chandra Kumar examined as PW.1 and Ex.P1 to 12 has been marked and later, the case was adjourned for cross-examination.
15. The respondent-accused seriously disputed the locus standi of PW.1 for giving evidence that there is no Board resolution produced before the Court to show that the Company authorized PW.1-Susheela Chandra Kumar to give evidence. The First Appellate Court considered Ex.P1 and 12 which were not sufficient to prove until production of original resolution before the Court. The learned counsel for the complainant contended that at the first instance Raghavendra Rao was given authorization to file the complaint. Since he had left the Company, the Board of Directors authorized Subramanya Karanth to represent the Company. Ex.P1 clearly indicates the resolution passed by the Board of Directors having authorizing Subramanya Karanth by replacing Raghavendra Rao. On perusal of the entire documents, though PW.1-Susheela Chandra Kumar stated in her evidence filed by way of affidavit that she has been authorized by the complainant Company by replacing Subramanya Karanth, but marked only Ex.P1 which is a resolution authorizing Subramanya Karanth by replacing Raghavendra Rao and Ex.P12 is earlier resolution which was authorized Raghavendra Rao to represent the Company, but no document has been produced before the Court and marked the resolution of the Board of Directors or the authorization given by Muralidhar Rao who is said to be the Managing Director of the Company authorizing Susheela Chandra Kumar to give evidence and represent the Company in the said case. Even the date of authorisaton is also not mentioned by her in the examination-in-chief which was filed by way of affidavit.
16. Learned counsel for the appellant contended that once authorization has been given to a person, the Court cannot compel the same person to come and give evidence as he is no more the employee of the Company. Therefore, he has contended that though previously Raghavendra Rao has been authorized to give complaint, later, Subramanya Karanth has been authorized to continue the case as per Ex.P1 and one more GPA to PW.1-Susheela Chandra Kumar. In support of his contention the learned counsel for the complainant relied upon the judgment of the Hon’ble Apex Court in the case of Associated Cement Company Limited vs. Keshvanand reported in AIR 1998 SC 596; the judgment of this Court in the case of N.K. Ramaswamy Iyengar and Another vs. Bangalore District and Bangalore Rural District Co-operative Central Bank Limited reported in 2002 (6) KarLJ 458; judgment of the Hon’ble Apex Court in the case of Modi Cements Limited vs. Kuchil Kumar Nandi reported in AIR 1998 SC 1057 and in the case of M.M.T.C Limited and Others vs. Medchi Chemicals and Pharma (P) Ltd. and Others reported in AIR 2002 SC 182.
17. On perusal of the judgment of the Hon’ble Apex Court in the case of Associated Cement Company Limited vs. Keshvanand reported in AIR 1998 SC 596 it has held as under:
“25. Be that so, we suggest as a pragmatic proposition that no Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the Company till the end of the proceedings. There may be occasions when a different person can represent the Company e.g. the particular person who represents the Company at the first instance may either retire from the Company’s services or may otherwise cease to associate therewith or he would be transferred to a distant place. In such cases, it would be practically difficult for the Company to continue to make the same person represent the Company in the court. In any such eventuality it is open to the de jure complainant Company to seek permission of the court for sending any other person to represent the Company in the court. At any rate, absence of the complainant envisaged in Section 249 or 256 of the new Code would include absence of the corporeal person representing the incorporeal complainant. For those reasons we are not persuaded to uphold the contention that Section 247 of the old Code (or Section 256 of the new Code) is not applicable in a case where the complainant is a Company or any other juristic person.”
18. The Hon’ble Apex Court clearly held that the Magistrate or the Trial Court shall not compel the Company to adduce the evidence of the same person, who was represented the Company while filing the complaint. Here in this case, Raghavendra Rao was initially authorized under Ex.P12 while filing the complaint. Subsequently, the said Raghavendra Rao left the Company and under resolution dated 05.12.2005 passed by the Company under Ex.P1 Subramanya Karanth, Accounts Manager of the Company was authorized to represent the Company in the Court, after superseding the earlier resolution dated 16.05.2003 for having authorized Raghavendra Rao and absolutely, there is no dispute in respect of the said Raghavendra Rao filed the complaint and subsequently, Subramanya Karanth has been authorized by the Company under Ex.P1 and Subramanya Karanth has filed an affidavit i.e., sworn in statement, before the Magistrate and on the basis of his sworn in statement, the learned Magistrate has taken the cognizance for the alleged offence against the accused.
19. The Hon’ble Apex Court in the case of M.M.T.C. Ltd. and others vs. Medchi Chemicals and Pharma (P) Ltd. and Ors. reported in AIR 2002 SC 182 at Para 12 held as under:
“Thus, even presuming, that initially there was no authority, still the Company can at any stage rectify that defect. At a subsequent stage the Company can send a person who is competent to represent the Company. The complaints could thus nor have been quashed on this ground.”
20. In view of the principle laid down by Hon’ble the Apex Court, in this case the said Raghavendra Rao who is the previous Law Officer filed the complaint under the authorization given by the Board of Directors under Ex.P12. After filing the complaint, he has left the post and subsequently, Subramanya Karath, Accounts Manager represented the Company with authorization of the Board of Directors under resolution dated 05.12.2005 which was produced and marked as per Ex.P1. Later, Susheela Chandra Kumar was examined as PW.1 and she has stated in her application that while seeking permission of the Court that the GPA has been given in her name. Even in the deposition, it was recorded that the GPA has been marked as Ex.P1 and on perusal of Ex.P1, it is not original General Power of Attorney executed by the Company. On the other hand, Ex.P1 is the extract of the resolution of the Board dated 05.12.2005.
21. It is submitted by the learned counsel for the appellant that the present Ex.P1 is the extract of the Board resolution dated 05.12.2005, which was actually marked when the Subramanya Karanth was examined prior to taking the cognizance. Subsequently, Susheela Chandra Kumar was examined as PW.1. The GPA has been executed by Muralidhar Rao, Managing Director of the complainant Company. She has produced the GPA before the Court which was marked as Ex.P1. Even in the evidence of PW.1, it was shown as ‘marked as Ex.P1’ and later the original GPA has been taken back by the complainant. The GPA has been duly executed by the Managing Director of the Company for authorizing Susheela Chandra Kumar to lead the evidence. Therefore, once the documents issued by the Managing Director which was given to PW.1 to represent the Company, that is sufficient for the complainant to prosecute the case in the Court. It is also argued by the learned counsel that though the respondent disputed the said Muralidhar Rao as Managing Director, but the same accused-respondent filed a private complaint before the Magistrate Court at Mysuru by showing Muralidhar Rao as Managing Director of the Company. That itself is an admission by the side of respondent which is sufficient to show Muralidhar Rao is the Managing Director of the Company. Ex.D2 marked by the accused in the trial Court which clearly reveals that Muralidhar Rao is the Managing Director. Learned counsel for the appellant also relied upon the judgment of this Court in the case of N.K.Ramaswamy Iyengar (supra).
22. Per contra, learned counsel for the respondent contended that though the GPA has been produced and marked, but there is no authorization given to the Managing Director for delegating the power to Susheela Chandra Kumar and therefore, the very Ex.P1-GPA is not acceptable in the eyes of law.
23. Upon hearing the rival contentions of both the learned counsel, it is worth to mention about the GPA which is said to have been executed by Muralidhar Rao, the Managing Director. The complainant produced the copy of the GPA which was already marked in the trial Court as Ex.P1, which go to show that the said GPA has been executed by the Managing Director, Muralidhar Rao and it also reveals that the Company has authorized by the Board of Directors by its resolution dated 06.03.2006. The GPA was not seriously disputed by the accused-respondent in the trial Court, but it is contended that Muralidhar Rao was not the Managing Director of the complainant Company and there was no authorization given to him and to show that he was the Managing Director of the Company. In my considered opinion, once the respondent- accused admits the said Muralidhar Rao as the Managing Director of the complainant Company who filed a private complaint before the III Additional Chief Judicial Magistrate at Mysuru by showing the said Muralidhar Rao as Managing Director, the accused is estopped from denying Muralidhar Rao as Managing Director. The said copy of private complaint marked as Ex.D2, which reveals that he has filed a private complaint which was numbered as 151/2005. The said complaint filed by him on 01.06.2005 which is much prior to the execution of the alleged GPA by Muralidhar Rao in favour of Susheela Chandra Kumar. It is undisputed fact that the accused filed the complaint against Muralidhar Rao stating that the said Muralidhar Rao was the Managing Director of the complainant Company and taken contention that he has misused the cheque. Now, the accused cannot take deviation that the Muralidhar Rao was not the Managing Director of the Company. He cannot blow hot and cold at the same time. He has estopped from taking such contention once he has admitted Muralidhar Rao as Managing Director. Apart from that, the respondent also disputed the execution of GPA, another resolution which were earlier marked as Ex.P1, the resolution dated 05.12.2005 and Ex.P12-GPA in favour of Raghavendra Rao, documents issued by the Company. Learned counsel for the appellant also argued that once the documents issued by the authorised person of the Company, the same cannot be disputed as per 54 of the Companies Act, 1956 (old Act).
24. A perusal of Section 54 of the Companies Act, 1956 (Old Act) or Section 21 of the Companies Act, 2013 (New Act) reads as under:
“ 21. Authentication of documents, proceedings and contracts – Save as otherwise provided in this Act,-
(a) a document or proceeding requiring authentication by a Company; or (b) contracts made by or on behalf of a Company, may be signed by any key managerial personnel or an officer of the Company duly authorized by the Board in this behalf.”
25. On perusal of the provisions of Section 21 of the New Companies Act which clearly shows that the document issued on behalf of the Company does not require any authentication of the Company in the proceedings before the Court.
26. A reliance has been placed in the case of N.K.Ramaswamy Iyer and another (supra) which reads as follows:
“ On the basis of the Section 141 of the Act though it contemplates a case where a Company is an accused, applying the same analogy even in case of a Company being the complainant it can be said that a person who can file a complaint on behalf of the Company would be a person who is in charge of or was responsible to the Company. In other words he must be a person whose action would be binding on the Company.
xxx xxx The principle evolved is that a duly authorized agent can also file a complaint, suit or any legal proceedings in the competent Court of law. In other words he must be such a person that his action would bind the Company which he represents whether he is called as a manager, secretary or by any other designation.”
The decision in above case is squarely applicable to the present case. Therefore, the very contention taken by the respondent-accused that the said Muralidhar Rao does not have authorization from the Company by resolution in his favour and also the contention that the original Board resolutions in favour of Subramanya Karanth and Raghavendra Rao including the resolution in favour of Susheela Chandra Kumar need not be produced before the Court. Ex.P1, Ex.P12 and new Ex.P1-GPA are enough for P.Raghavendra Rao, Subramanya Karanth and Susheela Chandra Kumar to represent the Company. Therefore, the very observation made by the First Appellate Court holding that the original resolutions were not marked before the trial Court cannot be acceptable. The production of extract of the Board resolutions, Ex.P1 and Ex.P12 and subsequent to the examination of Subramanya Karath, another Ex.P1- GPA executed by the Managing Director, Muralidhar Rao is sufficient to represent the Company by the authorized Legal Officers.
27. This Court has also taken similar view in the case of George Joseph vs. Hmt (International) Limited in Criminal Revision Petition No.129/2013 decided on 28.10.2014, which reads as under:
“However, the fact that that law requires a Company or a Company or a corporate body to carry on its affairs in a particular manner and the question whether the proceedings have been instituted and is prosecuted in conformity with such requirements, is a question of law that should be satisfied as a matter of course and ought not to depend upon whether an objection has been raised or a ‘plea’ taken, if you will. The infirmity if noticed should be cured. It certainly cannot be ignored as being a mere technically that would not vitiate the proceedings.
xxx This lack of authority could have been supplied even before the appellate court in the case of United Bank of India vs. Naresh Kumar (1996) 6 SCC 660.”
28. In the case of Sagar Cement Ltd., vs. P.Srinivas, Prop. Varalaxmi reported in 2004 (1) ALD CRI 907, it has held as under:
“If that is so, the complainant Company was rightly represented by the person who was permitted by the Court itself. Further, the Court found that the Managing Director has no power to redelegate any power, which derived from the resolution of the Board of Directors. The trial Court misled the power of delegation conferred on the Managing Director and has not understood the purport of the same.
In the above circumstances and in view of the case law discussed above, I am of the considered opinion that the coarse of action adopted by the trial Court in negating the complaint filed by the complainant on the ground of legal infirmity that as no authorized person represented the Company, the same is not maintainable, is not supported by any provision of law under Cr.P.C. Therefore, I am of the view that the judgment of the trial Court does not stand the scrutiny of law and it requires to be set aside, and accordingly, the same is set aside.”
29. In view of the judgments of this Court and the said Muralidhar Rao, being the Managing Director, has clearly stated in the GPA that as per the resolution of the Board of Directors dated 06.03.2006, he has executed the Power of Attorney in favour of Susheela Chandra Kumar for representing the Company in this case. Previously, the Law Officers and Accounts Officer represented the Company under old Ex.P1 and Ex.P12. Therefore, PW.1- Susheela Chandra Kumar and the previous Law Officer, Raghavendra Rao and subsequently, Subramanya Karath are all authorized persons to represent the Company.
30. Therefore, the findings of the First Appellate Court in holding that the Company was represented by the unauthorised persons cannot be acceptable. Therefore, the findings of the First Appellant Court on point No.1 is answered against the accused–respondent and in favour of the complainant Company.
31. As regards to the merits of the case, the learned counsel for the appellant contended that the First Appellate Court has given findings on issue No.1, that there is no necessity for considering the appeal on merits and therefore, the Trial Court committed error in dismissing the appeal without considering it on merits.
32. On perusal of the judgment of the First Appellate Court, it has raised two points and the first point is with regard to the authority to represent the case by the GPA holders and the second point is that, if point No.1 is answered in favour of the complainant, then only the complainant required to prove the case beyond all reasonable doubt in respect of issuing the cheque and discharging the legally enforceable debt. While answering point No.1 in the negative, it held that the point No.1 does not survive for consideration. In my view, the First Appellate Court committed error in dismissing the appeal without considering the merits. The Appellate Court dismissed the appeal only on the technical grounds of authorization.
33. Learned counsel for the respondent argued that the First Appellant Court has not considered the matter on merits. Hence, the matter be remanded back to the First Appellate Court for fresh disposal. However, both the learned counsel argued the case on merits before this Court. Therefore, instead of remanding the matter back to the First Appellate Court, this Court heard the arguments on merit, as remanding of the matter would further delay in disposal of the case and there is again another chance to come back to this Court even on merits.
34. It is a case of the complainant that the accused was a stockist and he used to receive the lottery tickets from the complainant and there was an agreement entered into between the complainant and the accused as per Ex.P2. It is an admitted fact that both the parties have entered into an agreement on 01.07.2000. The terms of the agreement are also not in dispute. As per the terms of the agreement in respect of non-receipt of payment on due date as follows:
“(c) Non-receipt of payment on due date:
Failure on the part of the Stockist to remit payments on the due date will invite immediate suitable curtailment of their basic quota of tickets for subsequent draws. In addition, if the payment of a particular draw is not received within 7 days from the date of the draw, internet @ 24% per annum will be charged on the total dues of that draw, from the due date of payment.
(d) Continued inability of a stockist to adhere to the terms and conditions stipulated in para 6 above may result in the termination of stockistship without prior intimation.”
35. The contention of the complainant is that the accused was due for a sum of Rs.27,41,632.40/-. To discharge the said amount, the accused issued a cheque dated 12.07.2003 for the above said amount. When the cheque-Ex.P3 presented to their Bank for encashment, it was dishonored for the reason that the accused ordered to stop the payment and the complainant also issued legal notice to the accused on 31.07.2003 as per Ex.P6. Admittedly, no reply has been given by the accused by denying the issuance of cheque or the liability of payment payable to the complainant. The accused took contention before the trial Court in the cross-examination that a blank cheque has been given by the accused for security purpose, but the same was misused by the complainant. To support his contention, the accused also examined himself as DW.1 and got marked 5 documents. Ex.D1 is the acknowledgment dated 07.05.2003 issued by the complainant Company, for having return of the price winning tickets for the value of Rs.19,61,335/- for the settlement of draw numbers between 21/04 and 27/04 and as per Ex.D3, he has contended that Rs.27,32,281.96/- has been settled on 12.06.2003. The said amount was not shown as credit in the account of the complainant company in Ex.P13. Ex.D4 is the acknowledgment for the settlement of draw between 28.04.2003 and 04.05.2003 for Rs.12,73,215/- was also not shown as settlement in the books of accounts. Ex.D5 is the copy of the notice issued to the complainant on 02.08.2004 stating that there was no such amount due as on the said date. They have paid the amount to the complainant and acknowledgment has been issued, but it was not shown in the ledger of the complainant. It is also contended that the appellant used the blank cheque given by the respondent at the time of agreement, which was filled and presented to the Bank in order to make a false claim. The documents Exs.D1, 3 and 4 were admitted by PW.2, the accounts officer in the cross- examination. But he was unable to clarify, why the said amounts were not reflected in the books of accounts in Ex.P13. Even during the course of arguments, the learned counsel for the appellant strenuously argued that the said amount was not received by the appellant, it is only value of price winning tickets and it was adjusted not in one entry, but in different entries. However, learned counsel for the appellant contended that there was a wrong claim made by the respondent in the bill for Rs.12,23,745/-, therefore, Rs.6,11,872.50/- has been levied towards penalty of 50% of the price amount of ticket and a copy of the letter has been produced before this Court along with the copy of the ledger. It is a definite case of the appellant that as on 12.07.2003, respondent was due of Rs.27,41,032.40/- and to discharge the liability, the respondent had issued cheque-Ex.P3 in question. Whereas, the contention of the respondent is that though he has made various payments as well as returned price winning tickets as per Exs.D1, D3 and D4, but contended that those amounts were not reflected in the books of accounts by showing deduction. On careful perusal of Ex.P13 and the evidence of PW.2, who is an Accounts Officer, Sri Yadava Sherigar has admitted in the cross- examination that, the accused required to pay the amount immediately after the receipt of lottery tickets and he can retain the balance only 10 to 15% of the amount and the price amount was less then Rs.5,000/-. Respondent himself can claim the said price winning amount from the appellant and further, he has admitted that at the time of presenting the cheque, the amount of Rs.27,41,632.40/- was available in the accounts of the accused. He also admitted that Ex.D1 is the acknowledgment for having receipt of the amount from the accused and further admitted that filing of the complaint by the accused as against the complainant as per Ex.D2 for having misused the cheque which was issued towards the security purpose. Exs.D1, D3 and D4 were not controverted by the complainant and it was not explained in the evidence of PW.2 as to whether the said amount has been actually shown as credit in the accounts of the accused. On perusal of Ex.P13, the ledger extract, the entry dated 07.05.2003 wherein Ex.D1 had admittedly issued by the appellant Company for having receipt of price winning tickets for the worth of Rs.19,61,335/-. On careful perusal of ledger entry dated 07.05.2003, it was not reflected, however, the entry dated 20.05.2003 where an amount of Rs.10,50,945/- has been shown as deduction vide receipt No.047232 which is Ex.D1. Even though respondent- accused made the payment or returned the price winning tickets for worth of Rs.19,61,335/-, but the payment shown deduction only 10,50,945/-. The same was not properly explained by PW.2 who is the Accounts Officer of the complainant Company.
36. That apart, Exs.D3 and D4 have been marked by the accused in his evidence stating that he has paid the amount which was not shown as deduction in the account. The appellant only denied the evidence of DW.1 in respect of Exs.D1, D3 and D4.
37. Even on perusal of Ex.D3 which is the receipt issued by the complainant Company for having receipt of Rs.27,32,281.96/- as on 12.06.2003 by showing as short settlement, but it was made a request to pay the balance immediately without further delay. For convenience, Ex.D3 is extracted as follows:
CCI Ltd Date:12.06.2003 To SAGAR ENTERPRISES, MYSORE.
Sir, Sub: Short settlement of Rs.2732281.96 from you.
There is an amount of Rs.27,32,281.96 (Rupees Twenty Seven Lakh Thirty Two Thousand Two Hundred Eighty One and Paise Ninety Six only) short settled by you which is stated in the Statement enclosed.
We request you to settle the balance immediately without further delay.
Thanking you, Yours faithfully, CHIEF EXECUTIVE Encl: As above.
Registered Office: “SYNDICATE HOUSE” MANIPAL – 576 119. INDIA.
38. The case of the accused is that the said amount has not been shown as deduction by the appellant. On perusal of Ex.P13 dated 12.06.2003, there was no entry for receipt of Rs.27,32,281.96/- which was shown in Ex.D3, whereas on 12.06.2003, the outstanding balance was shown as Rs.29,01,885.46/- and as on 16.06.2003, the sum of Rs.1,71,786/- shown as credited for excess billing for the year 2003 and credited back to the accused account daily schemes from 01.04.2003 to 11.06.2003. From this entry, it is clear case and the accused is able to prove his contention that in spite of making the payment of Rs.27,32,281.96/- as on 12.06.2003 under Ex.D3, the same was not shown as deduction or credited in his accounts in Ex.P13.
39. Apart from that, even on perusal of Ex.D4 another acknowledgment issued by the appellant Company as on 14.05.2003 for Rs.12,73,215/- for settlement of draw dated 28.04.2003 to 04.05.2003 was also not shown as deduction in Ex.P13. On the other hand, as per the memo produced by the learned counsel for the appellant Rs.6,11,872.50/- has been debited in the account of the accused as on 21.05.2003 vide receipt No.047269. Whereas, the next entry would goes to show that on the same receipt No.047269, a sum of Rs. 53,361/- has been debited but the credit was shown as Rs.49,470/- which is contrary to the receipt issued by the complainant under Ex.D4. If at all any penalty of Rs.6,11,872.50/- has been imposed on the accused, they have to show the receipt of Rs.12,73,215/-, thereafter, they have to debit Rs. 6,11,872.50/- the wrong claim, if any, by the accused. But the receipt 047269, the acknowledgment for having receipt of Rs.12,73,215/- was not been shown as deduction by the appellant in Ex.P13. Apart from that, there is no terms and conditions in Ex.P2-agreement for calculating penalty of 50% of the bill amount. Additional amounts were all wrongly calculated to make false claim in the cheque amount which cannot be acceptable.
40. On careful perusal of these documents, i.e., Exs.D1, D3 and D4 and comparing with Ex.P13 through which the payments made by the accused were not at all shown as credit in the accounts of the accused in the ledger of the complainant’s Company.
41. Even on perusal of the entries till 12.07.2003, where the respondent has made payment of Rs.27,32,281/- as on 12.06.2003 was not at all deducted, but they have shown deduction only Rs.1,71,786/- towards the excess billing by the appellant Company which was credited back to the account of the accused. If the said amount of Rs.27,32,281/- dated 12.06.2003 is deducted, then there would be no balance and subsequently, from 17.06.2003, there was some debit entries made which is only small amount like Rs.2,250/-, Rs.1,800/-, Rs.787/- and on 26.06.2003 for Rs. 44,240/-, again on 26.06.2003, Rs.1,24,425/- and thereafter, there is no purchase of tickets by the accused from the complainant Company. Whereas, the accused went on paying the amounts to the complainant Company from 30.06.2003 which was shown as deduction even if the amount of purchase is calculated after 12.06.2003, there was balance which does not cross Rs.2,00,000/- but the payments were made in respect of the said amounts. On perusal of entry dated 12.07.2003, an amount of interest calculated @ 24% to the tune of Rs.83,882.94/-. In my considered opinion, the entries made by the complainant Company in Ex.P13 is not correct and the payments made by the accused to the appellant in Exs.D1, D3 and D4 were not at all properly deducted or adjusted in the accounts of the accused. Therefore, Ex.P13 creates a doubt. The benefit of doubt shall be extended to the accused. No doubt, there is no recitals or there is no terms and conditions in Ex.P2 in the agreement about issuing the blank cheque by the accused to the complainant Company, nevertheless, during the business transaction, the vendors always used to collect blank cheque for security purpose and the accounts extract clearly depicts that there was manipulations and no deductions were shown on the payment made by the accused. Therefore, the contention of learned counsel for the appellant Company cannot be acceptable that the accused was due for Rs.27,41,632.40/- as on 12.07.2003 and issued cheque to clear the balance.
42. The presumption under the Act available to the complainant has been satisfactorily rebutted by the accused by way of oral as well as documentary evidence. Accused has also filed a private complaint against the complainant Company as per Ex.D2 for misusing the cheque by the complainant. Therefore, on merits, the complainant has failed to prove the accused is illegally liable to pay debt of Rs.27,32,000/- to the complainant. Therefore, though the First Appellate Court allowed the appeal of the accused on technical ground without considering on merit, but this Court after considering the entire evidence on record has come to the conclusion that the complainant has failed to prove the case against the accused in respect of the debt and issuance of cheque. Therefore, the judgment of conviction and order of sentence passed by the trial Court is liable to be set aside. Though the judgment of the Appellate Court acquitting the accused is not on merits, the same deserves to be confirmed. Therefore, I answer point No.2 in favour of the accused and against the complainant.
43. For the reasons stated above, the appeal filed by the appellant-complainant deserves to be dismissed. Accordingly, the appeal is dismissed.
SD/- JUDGE GBB