HONOURABLE SRI JUSTICE S.RAVI KUMAR CRIMINAL REVISION CASE No.2209 OF 2005 Dated 23-7-2014 Between:
M/s.Sumithra Agro Chemicals, represented by its Managing Partner, Vemula Smitha, Advaipale, Palkollu, West Godavari District and others.
Petitioners.
And:
M/s. Reco Agrotech Limited, represented by its Customer Service Manager, Mr.Gudapati Koteswararao and another.
…Respondents.
HONOURABLE SRI JUSTICE S.RAVI KUMAR CRIMINAL REVISION CASE No.2209 OF 2005 ORDER:
This revision is preferred against judgment dated 21-12-2005 in Criminal Appeal No.140 of 2001 on the file of VII Additional District and Sessions Judge (Fast Track Court) Krishna, at Vijayawada whereunder judgment dated 15-11-2001 in C.C.No.1475 of 1999 on the file of V Metropolitan Magistrate, Vijayawada is confirmed.
Brief facts leading to filing of this revision are as follows:
First respondent herein filed a complaint under Section 200 Cr.P.C. for the offence under Section 138 of Negotiable Instruments Act against revision petitioner alleging that the complainant is carrying on business in pesticides, Micro-Fertilizers and growth promoters etc., with wide marketing network and having its Regional Office at Vijayawada and the accused is a partnership firm and the accused 2 to 4 are the partners of the1st accused. The accused are also carrying on business on pesticides at Adavipalem, purchased goods from the complainant from time to time on credit basis. There is a running katha to the transactions and as per the katha as on 6-9-1999, a sum of Rs.5,19,899/- was due from the petitioner towards principal amount and A.3 issued a cheque bearing No.125248 dated 8-9-1999 for Rs.5,19,899/- drawn on the State Bank of Hyderabad, Palakol Branch in favour of the complainant and the same is presented for collection in Karnataka Bank Limited, Vijayawada on 11-9-1999 and the same was dishonoured with an endorsement “Insufficient funds”. After receipt of intimation from the Bank, a statutory notice dated 30-9-1999 was issued demanding payment of cheque amount within 15 days from the date of receipt of notice and notices were served to A.2 to A.4 but A.1 did not choose to receive the said notice and returned unserved. After receiving notices, accused did not choose to pay any amount and therefore, they are liable for punishment under Section 138 read with 142 of Negotiable Instruments Act. On these allegations, trial court examined one witness and marked twenty documents on behalf of the complainant and on behalf of accused, one witness is examined and seven documents are marked. On an over all consideration of oral and documentary evidence, trial court found the accused guilty for the offence under Section 138 read with 142 of Negotiable Instruments Act and sentenced A.1 to pay a fine of Rs.3,000/-, A.2 to A.4 to suffer one year imprisonment each with a fine of Rs.2,000/- each. Aggrieved by the same, they preferred an appeal to the Sessions Court and the VII Additional District and Sessions Judge, (Fast Track Court), Vijayawada and on a reappraisal of evidence, confirmed both conviction and sentence. Aggrieved by the same, present revision is preferred.
Heard both sides.
Advocate for revision petitioner submitted that courts below erred in appreciating the evidence on record and have failed to see that ingredients of Section 138 read 142 of Negotiable Instruments Act are not made out by the complainant. He further submitted that cheque in question was not issued towards any legally enforceable debt or liability and it was only issued as security. He further submitted that courts below failed to see that complainant has no authorisation to file the complaint. He further submitted that trial court and appellate court have failed to appreciate Ex.D.3 which would support the defence version that the cheque was issued as a security which is further supported and corroborated with cheque book counterfoils.
On the other hand, advocate for first respondent submitted that all the objections now raised are considered by both trial court and appellate court and both courts on proper appreciation of evidence found the accused guilty and that there are no grounds to interfere with the concurrent findings.
Now the point that would arise for my consideration in this revision is whether the Judgments of the Courts below are legal, proper and correct?
POINT:
Advocate for revision petitioner mainly stressed on two points in challenge of judgments of courts below. The first objection of the advocate for revision petitioner is that the cheque is not issued in discharge of any debt or legally enforceable liability and it is only issued as a security and the letter issued by Umamaheswararao, an employee of complainant would clearly support this plea of the accused but both the courts have not considered this letter and the supporting counterfoils of the cheque book with reference to date on the disputed cheque.
Second objection stressed by the advocate for revision petitioner is that A.1 is a firm and A.2, A.3, A.4 are partners and there is no whisper or any allegation against A.2 and A.4 as to their role into the day-to-day business of
A.1 firm. He further submitted that the cheque was issued by A.3 and even during evidence also, nothing is stated against A.2 and A.4, therefore, conviction against them is liable to be set aside.
For this advocate for complainant submitted that this objection was also raised before the appellate court and the learned appellate judge has rightly negatived the objection and that there are no grounds to interfere.
In order to appreciate the arguments and counter arguments, it may be necessary to refer to the provision relating to liability of directors of company or partners of a firm for an offence under 138 Negotiable Instruments Act case. Section 141 of Negotiable Instruments Act deals with the subject. It reads as follows.
Section 141 of Negotiable Instruments Act reads as follows:
“Offences by companies:-
(1) If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in-charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly;
Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub- section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part, of, any director, manager, secretary or other officer of the company, such director, manager, secretary of other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.”
From a reading of the above said provision, it is clear that every person in charge of and responsible to the day-to-day business of a company or a firm is liable for the offence committed by the company or firm. In the complaint, allegation is that A.3 issued cheque in dispute in the capacity of Managing partner. There is no pleading as to the role of the other partners i.e., A.2 and A.4. But, during evidence, P.W.1 deposed that the ledger extracts under Exs.P.3 and P.4 are signed by A.2 but so far, A.4 is concerned, he has not stated anything as to his role in the day-to-day affairs of the firm. When P.W.1 stated that the ledger extracts relating to the business transactions are signed by A.2, there is no cross-examination on behalf of accused in respect of that particular statement.
Advocate for petitioner relied on two Supreme Court decisions first one in A.K.SINGHANIA AND ORS. Vs. GUJARAT STATE FERTILIZER CO. LTD., AND
[1]
ANR.( ). In this decision, Honourable Supreme Court by
following the principles formulated by the Supreme Court i n NATIONAL SMALL INDUSTRIES CORPN.LTD., v. HARMEET SINGH PAINTAL (2010 3 SCC 330) observed that there must be essential averment in the complaint as to the role of director. In NATIONAL SMALL INDUSTRIES CORPN.LTD., v. HARMEET SINGH PAINTAL, referred to supra. after reviewing of the earlier judgments, Honourable Supreme Court summarized the legal position as follows:
(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction.
(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company.
(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.
(v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.
(vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint.
(vii) The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.”
Second decision relied on by petitioner is
MANNALAL CHAMARIA & ANR. v. STATE OF WEST
[2]
BENGAL AND ANR. ( ). In this decision, following the
decision of A.K.SINGHANIA vs. GUJARAT STATE FERTILIZER COMPANY LTD., 1st cited, Honourable Supreme Court observed as follows:
“The law on the subject is now very well-
settled by a series of decisions rendered by this Court and it is not necessary to repeat the views expressed time and again. Suffice it to say, that the law has once again been stated in A.K.SINGHANIA vs. GUJARAT STATE FERTILIZIER COMPANY LTD., 1 to the effect that it is necessary 1 for a complainant to state in the complaint that the person accused was in charge of and responsible for the conduct of the business of the company. Although, no particular form for making such an allegation is prescribed, and it may not be necessary to reproduce the language of Section 138 of the Negotiable Instruments Act, 1881, but a reading of the complaint should show that the substance of the accusation discloses that the accused person was in charge of and responsible for the conduct of the business of the company at the relevant time.”
As already referred above, in this case, there is neither pleading nor evidence as to the role of A.4.
From the principles laid down by Honourable Supreme Court in the above decisions, it can safely be said that there is no specific or even general allegation against A.4 attracting offence under Section 138 of Negotiable Instruments Act and therefore, conviction against A.4 recorded by trial court and upheld by appellate court is liable to be set aside.
So far as other accused i.e., A.1 to A.3 is concerned, both trial court and appellate court have rightly convicted them and that there are no grounds to interfere with the conviction and sentence recorded against them.
For these reasons, this Criminal Revision Case is partly allowed to the extent of A.4 and dismissed to the extent of A.1 to A.3. The trial Court shall take steps to apprehend the convicted accused to undergo the unexpired portion of the sentence.
As a sequel to the disposal of this revision, the Miscellaneous Petitions, if any, pending, shall stand dismissed.
JUSTICE S.RAVI KUMAR Dated 23-7-2014.
Dvs.
HONOURABLE SRI JUSTICE S.RAVI KUMAR Dvs CRIMINAL REVISION CASE No.2209 OF 2005 Dated 23-7-2014
[1] 2013 Law Suit (SC) 957
[2] 2014 LAW SUIT (SC) 194