w w w . L a w y e r S e r v i c e s . i n

K. Easwaramoorthy, Proprietor, M/s. Brindhavan Finance & Investments v/s M/s.Premier Textiles, represented by its Partner, Thiru.R.Sundaramoorthy & Others

    Crl.A.Nos.136 to 138 of 2002

    Decided On, 25 November 2011

    At, High Court of Judicature at Madras


    For the Petitioner: V. Sairam, Advocate. For the Respondents: R1 & R2, D. Selvaraju, Advocate.

Judgment Text

(Prayer in all the appeals:- Criminal Appeals are filed under Section 378(4) of Criminal Procedure Code against the order of acquittal dated 01.08.2001, made in C.A.Nos.87, 88 and 89 of 2001, on the file of the II Additional Sessions Judge, Erode, reversing the judgment of Learned Judicial Magistrate No.II, Erode, in C.C.Nos.16,17 and 27 of 1998, dated 30.04.2001, respectively.)


All these appeals have been filed by the complainant against the acquittal of the accused from the charges constituting the offence punishable under Sections 138 and 142 of the Negotiable Instruments Act.

2. All the three appeals are arising out of three separate complaints filed by the same complainant against the same accused/individuals in their capacity as one of the partners of different firms. While the first accused in Crl.A.No.136 of 2002 is M/s.Premier Textiles, represented by A2-Sundaramoorthy, the first accused in Crl.A.Nos.137 and 138 of 2002 is M/s.Sekar & Co., represented by same A2-Sundaramoorthy. The accused/individuals A2 to A5 in all the three cases are one and the same. All the complaints filed by one K.Easwaramoorthy, Proprietor of M/s.Brindhavan Finance & Investments, represented by its Power Agent R.Thiyagarajan, proceeded as if the first accused is a partnership firm, having the second respondent as its Managing Partner and the respondents 3 to 5/accused as partners. In all the cases, A2-Sundaramoorthy, on behalf of the first respondent company, issued cheques for different amounts in favour of one Suresh Enterprises, M/s.Venkatesh Fabrics and M/s.Manian Fabrics and all the cheques are even dated for different amount and the cheques are issued towards discharge of the partnership firm liability to the respective companies and those cheques are discounted by the drawee of the cheques with the present complainant, for due consideration and the present complainant has thus become holder in due course of all the cheques in question for valid consideration and the cheques are, at the request of the accused, presented for collection on 11.11.1997 after getting the date of the cheque altered as 11.11.1997 by the accused. Thereafter, the cheques presented for encashment were returned unpaid on 11.11.1997 for want of sufficient funds. The legal notice issued by the complainant, though received by the accused, was not replied and the amount was also not repaid and all the accused thus committed the offence punishable under Section 138 of the Negotiable Instruments Act.

3. All the 3 cases are tried separately and the complainant, in order to establish his case, in each case, adduced separate set of oral and documentary evidence, by examining himself and his witnesses and by producing the power of attorney, cheques in question, bank memo, statutory notice, acknowledgment card, cheque discount copies and copy of the partnership deed and statement of accounts. The Trial Court, on the basis of the available records, accepted the complainant case and found the accused guilty of the offence under Section 138 r/w 142 and convicted and sentenced them. Aggrieved against the same, the accused preferred separate appeals and the accused, in their appeals, seriously questioned the correctness of judgment of conviction and the Lower Appellate Court, by having accepted the defence raised on the side of the accused, allowed the appeal and acquitted the accused. Aggrieved against the same, the complainant has preferred the present three appeals before this Court.

4. The learned counsel appearing for the appellant has raised serious but identical issues in all three cases. As such, this Court is, with the consent of both the learned counsel on record, proceeded to dispose of all the three appeals by common judgment.

5. As already referred to, the case of the complainant in all the three complaints, is in short A2 individual, on behalf of A1 Company issued cheques to three different companies, in order to discharge their liability and three drawee companies discounted the same with complainant for valid consideration and the complaint is filed by the complainant in his capacity as holder in due of the cheque for valid consideration.

6. The cursory glance at the disputed cheques reveals that the same was signed by R.Sundaramoorthy with the company seal and the cheques also contain one more signature of A3-Chandrasekar, along with the signature of A2-Sundaramoorthy and the correction is signed by A3-Chandrasekar. All the three cheques are originally dated as 09.10.1996, 30.10.1996 and 04.11.1996 and the original dates are corrected as 11.11.1997.

7. Though the complainant has come forward with a specific case in the complaint that the drawer of the cheques is A2-Sundaramoorthy, on behalf of A1-Company, a new theory sought to be introduced in the witness box by PW1 is that the the cheques are signed by two persons, A2-Sundaramoorthy and A3-Chandrasekar on behalf of drawer company. Further, the complainant has, in his complaint, nowhere mentioned that the dates originally mentioned in the cheques were subsequently altered as even date 11.11.1997. The complainant only proceeded, as if that the cheques issued by A2, on behalf of A1-Company to third party company, are even dated 11.11.1997. The statement of the complainant in two cases out of three cases as PW1 in the witness box is inconsistent with the averments raised in the complaint. In one of the cases, the complainant did not mention anything about the correction of the date. The complainant has also, as PW1 in the witnesses box, not come forward with definite case about the date on which the cheque was issued originally and the date on which the cheques are discounted and the date on which the dates are corrected as 11.11.1997.

8. In this context, two interesting points raised by the learned counsel for the respondents/accused herein are, whether such correction of the date can be made after the expiry of six months cheque validity period and whether any proceedings can be initiated on the basis of discount of such cheques presented after expiry of validity period. The question is directly answered in the judgment of the Supreme Court in VeeraExports v. T.Kalavathy (2002-1-L.W.(Crl.)361), wherein the Supreme Court has laid down the principle that it is always open to a drawer to voluntarily revalidate a negotiable instrument, including a cheque and the revalidation can be made by altering the date even after the expiry of the validity period of six months.

9. The facts involved in the present case is appreciated in the light of the legal position as stated above would give raise to further point for consideration by this Court as to who is authorised to revalidate the cheque. The same is also answered in the same judgment of the Supreme Court at para 10 by observing that the alteration can be made either by a drawer or by a drawee or the holder in due course and when the alteration is made by payee and the holder of the cheque, the same shall be with the consent of the drawer and the party, who consents for alteration as well as the party, who makes alteration is disentitled to complain against such alteration and to resist the right of the payee. The Supreme Court has further observed that it is always a question of fact whether alteration was made by the drawer himself or whether it is made with the consent of the drawer and whenever it is disputed, the same will have to be established on evidence through trial.

10. Here, in this case, a cursory glance at the cheques in questions would reveal that the drawer of the cheque was company through A2-Sundaramoorthy, on behalf of A1-Company, but the correction was not made by him and the signature endorsing the correction is that of one A3-Chandrasekar. It is sought to be argued by the learned counsel for the complainant, as A3-Chandrasekar, is also one of the drawer of the cheque, the correction of the date by one of the drawer is legal and valid. Such contention so raised by the complainant, is factually and legally not acceptable. Firstly, such contention is contrary to what is stated in the complaint, as if the drawer of the cheque is A2 on behalf of the A1 Company. It may be true that the cheque is signed by 2 persons but the other signature could not be identified as that of one Chandrasekar. If that is so, the contention that other signature is that of A3, will in no way advance the case of the complainant. As a matter of fact, no plea and proof is also adduced to show that A3 is also one of the signatories of the cheque, either as one of the drawer and also the person who made correction, amounting to revalidation. Such theory is not at all spoken by PW1, who has categorically stated in the witness box that the correction was made by A2-Sundaramoorthy and at the same time, PW1 admitted that the correction was not signed by A2-Sundaramoorthy. This contradiction in the evidence of PW1 about the person, by whom the cheque was drawn and about the person, who made revalidation of the same by correction of the date of the cheque, would only go to reject both theories.

11. The absence of detailed averments in the complaint and the failure of PW1 to depose any definite case in this regard would also lead to an inference that the complainant is not definite about his own case. The same also give raise to serious doubt, whether the other signature, which is claimed to be that of A3, is affixed along with A2 on the original date mentioned therein.

12. Even assuming it to be true that the correction was made by A3-Chandrasekar, here the drawer being the Company, represented by authorised signatory A2 and A3, the burden is upon the complainant to establish that such correction is made by A3 with the approval of the company, having other managing partner and partners. No such case is pleaded in the complaint or spoken by PW1 in the witness box. The necessary pleadings and supporting evidence relating to the so-called revalidation is lacking in this case. On the contrary, the evidence available would disclose that the revalidation, by altering the date as 11.11.1997, after the validation period of six months, could not be with the consent of A1 Company. Even the statutory notice is silent on this aspect and the PW1 has neither in the complaint nor in the witness box made any definite statement in this regard. As such, no knowledge and consent can be attributed to A1 Company about the correction. On this ground alone, the complainant case has to fail.

13. The next important aspect to be gone into is the locus standi of the complainant to maintain the complaint in its capacity as holder in due course. The learned counsel for the appellant has, in support of their right to maintain the action, relied upon the endorsement at the back side of the cheque in question and the letter issued by one Sekar & Co. for discounting and copy of the statement of accounts purportedly maintained by the complainant. As far as the letter for discounting produced by the complainant, the same is addressed by Sekar & Co., who is the first respondent/Accused Company in Crl.A.Nos.137 and 138 of 2002. When the cheques in original are supposed to be in the custody of third party drawee company, from whom the present complainant received it for due and valid consideration, this Court is at loss to understand as to how one of the accused company had the custody of the cheques and as to under what circumstances, the request for discounting is made by the accused firm and not by the drawee company, who is competent to do so. Neither of the third party drawee company is brought into the witness box to explain the same. Further, when the specific case pleaded in the complaint is that the cheques in question were discounted by the drawer companies with the complainant, the evidence produced herein totally is contra to such theory.

14. Even otherwise, the cheques do not contain proper endorsement, except the signature of one of the partners of the so called drawee company on the reverse of the cheque, to constitute valid assignment of the liability in favour of the complainant as required under Section 48 of the Negotiable Instruments Act. As the endorsement is made only to constitute the person in whose favour the endorsement is made as holder in due course, the intention of the endorser about the same and only as the effect of endorsement, as laid down in Section 50, i.e., nature of the right conveyed in favour of other through such endorsement, the same shall be explicit in words without which indorsement and effect of indorsement cannot be presumed to hold that negotiation is completed in the case of law.

15. Our High Court, in M.N.Thangarajv. Sri Venkatachalapathi Textiles (2007(2) MWN(Cr.)80DCC), Jayaram Finance and another v. Jayaprakash (2010 (1) MWN (Cr.) DCC 110) and Palaniappa Mills v. A.Vaithiyalingam ((2011) 3 MLJ (Crl) 299) has laid down that mere signature of drawee on reverse or overleaf of cheque without any details is not sufficient to constitute proper endorsement and the complainant cannot be considered as holder much

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less holder in due course, so as to maintain any complaint. Applying the same ratio herein, this Court is of the considered view that in the absence of one such legally valid endorsement, the mere signature would not be sufficient to prove negotiation by endorsement as required under law and the same does not create any privity of contract between the complainant and the accused, so as to maintain any criminal action for any offence under Section 138 of Negotiable Instruments Act against the accused. Thus, want of any written endorsement over the cheque leaf to constitute valid endorsement as required under Sections 48 and 50 of the Negotiable Instruments Act and want of further proof to prove the factum of discounting would compel this Court not to recognise the complainant as holder in due course under law and complainant to lodge the complaint and the same renders the complaint arising out of which are the present appeals, to be legally not maintainable. 16. Thus, the Lower Appellate Court both on the question of maintainability of the complaint and on merits rightly held the accused not guilty and acquitted the accused in all the three cases. The complainant has not made out any legal and valid ground to reverse such well considered findings of the lower appellate Court, as such, the order of acquittal passed by the lower appellate Court deserves no interference by this Court. 17. In the result, all the appeals stand dismissed.