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



M/s. Bethal Products (India), Represented by its Proprietor, A.V. Thomas, Bengaluru v/s Jayakumar, Director M/s. Organic Gold Pvt. Ltd., Bengaluru & Another


Company & Directors' Information:- ORGANIC INDIA PRIVATE LIMITED [Active] CIN = U74130DL1997PTC326085

Company & Directors' Information:- ORGANIC INDIA PRIVATE LIMITED [Active] CIN = U74130UP1997PTC021420

Company & Directors' Information:- R L GOLD PRIVATE LIMITED [Active] CIN = U52393MH2000PTC129981

Company & Directors' Information:- R K R GOLD PRIVATE LIMITED [Active] CIN = U27205TZ2006PTC013240

Company & Directors' Information:- A B GOLD PRIVATE LIMITED [Active] CIN = U36910KA2009PTC050184

Company & Directors' Information:- P P PRODUCTS PVT LTD [Active] CIN = U32305WB1991PTC051091

Company & Directors' Information:- S. M. GOLD LIMITED [Active] CIN = U74999GJ2017PLC098438

Company & Directors' Information:- N R GOLD PRIVATE LIMITED [Active] CIN = U27205MH2008PTC182034

Company & Directors' Information:- K K PRODUCTS LIMITED [Active] CIN = U31300DL1991PLC045521

Company & Directors' Information:- K B PRODUCTS PRIVATE LIMITED [Active] CIN = U51909MH2007PTC169627

Company & Directors' Information:- P T GOLD PRIVATE LIMITED [Active] CIN = U36910MH2004PTC147181

Company & Directors' Information:- M J GOLD PRIVATE LIMITED [Active] CIN = U28998UP2010PTC039881

Company & Directors' Information:- A V THOMAS AND CO LTD [Active] CIN = U51109KL1935PLC000024

Company & Directors' Information:- J THOMAS & CO PVT LTD [Active] CIN = U51909WB1947PTC015276

Company & Directors' Information:- K G PRODUCTS PRIVATE LIMITED [Active] CIN = U51909PB2007PTC031201

Company & Directors' Information:- S S P PRODUCTS PRIVATE LIMITED [Active] CIN = U22110WB1974PTC210201

Company & Directors' Information:- INDIA GOLD LIMITED [Active] CIN = U51101MH2010PLC210218

Company & Directors' Information:- M L B PRODUCTS PRIVATE LIMITED [Active] CIN = U74899DL1990PTC040990

Company & Directors' Information:- G M GOLD PRIVATE LIMITED [Active] CIN = U51109MH2011PTC222275

Company & Directors' Information:- M M PRODUCTS LIMITED [Strike Off] CIN = U28994DL1992PLC050955

Company & Directors' Information:- M P K PRODUCTS PVT LTD [Active] CIN = U26919AS1994PTC004183

Company & Directors' Information:- G K PRODUCTS PRIVATE LIMITED [Active] CIN = U74899DL1991PTC043260

Company & Directors' Information:- P GOLD PRIVATE LIMITED [Active] CIN = U45200GJ2011PTC067802

Company & Directors' Information:- N R PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51109AS1998PTC005561

Company & Directors' Information:- C L PRODUCTS INDIA LIMITED [Active] CIN = U51909DL2002PLC116975

Company & Directors' Information:- M. S. G. ORGANIC PRIVATE LIMITED [Converted to LLP] CIN = U74900UP2010PTC040048

Company & Directors' Information:- K. S. A. PRODUCTS PRIVATE LIMITED [Active] CIN = U51220PB2014PTC039023

Company & Directors' Information:- D. R. PRODUCTS PRIVATE LIMITED [Active] CIN = U52320DL2011PTC213508

Company & Directors' Information:- S GOLD PRIVATE LIMITED [Strike Off] CIN = U36912MH2013PTC241858

Company & Directors' Information:- R S PRODUCTS PRIVATE LIMITED [Active] CIN = U74899DL1989PTC036603

Company & Directors' Information:- R R PRODUCTS PRIVATE LIMITED [Active] CIN = U24249HR1999PTC034291

Company & Directors' Information:- K & K GOLD PRIVATE LIMITED [Active] CIN = U28121MH2012PTC237480

Company & Directors' Information:- I G PRODUCTS PRIVATE LIMITED [Active] CIN = U74999WB2012PTC183503

Company & Directors' Information:- S. O. GOLD PRIVATE LIMITED [Active] CIN = U74900GJ2013PTC074108

Company & Directors' Information:- J S R PRODUCTS PRIVATE LIMITED [Active] CIN = U31908DL2007PTC170841

Company & Directors' Information:- C F C PRODUCTS PRIVATE LIMITED [Active] CIN = U28129DL1998PTC095531

Company & Directors' Information:- M S PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U74899DL1993PTC055125

Company & Directors' Information:- B R PRODUCTS PRIVATE LIMITED [Active] CIN = U31909DL1999PTC100727

Company & Directors' Information:- S P B PRODUCTS LIMITED [Active] CIN = U51909DL1996PLC082631

Company & Directors' Information:- V-GOLD (INDIA) PRIVATE LIMITED [Active] CIN = U36910MH2004PTC146101

Company & Directors' Information:- G K D PRODUCTS PRIVATE LIMITED [Active] CIN = U15431WB1998PTC086840

Company & Directors' Information:- M B R PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U17111WB1993PTC060806

Company & Directors' Information:- P D PRODUCTS PRIVATE LIMITED [Active] CIN = U23201DL2000PTC108462

Company & Directors' Information:- S K M PRODUCTS PRIVATE LIMITED [Active] CIN = U18101DL1998PTC093415

Company & Directors' Information:- H R PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U74899DL1978PTC009183

Company & Directors' Information:- AVINDIA PRIVATE LIMITED [Strike Off] CIN = U74999MH1968PTC014022

Company & Directors' Information:- GOLD COMPANY LTD. [Amalgamated] CIN = U67120WB1928PLC006027

Company & Directors' Information:- THOMAS AND COMPANY PRIVATE LIMITED [Active] CIN = U45201DL1997PTC085284

Company & Directors' Information:- V S PRODUCTS PRIVATE LIMITED [Active] CIN = U36900DL2008PTC185445

Company & Directors' Information:- H K PRODUCTS LIMITED [Active] CIN = U51900GJ2015PLC085457

Company & Directors' Information:- S R K PRODUCTS PRIVATE LIMITED [Active] CIN = U51221KA1989PTC010032

Company & Directors' Information:- G M PRODUCTS PRIVATE LIMITED [Active] CIN = U74899DL1991PTC044687

Company & Directors' Information:- V T N PRODUCTS PVT LTD [Active] CIN = U51109WB1996PTC080094

Company & Directors' Information:- W S T Q PRODUCTS PRIVATE LIMITED [Active] CIN = U31300DL1999PTC102655

Company & Directors' Information:- J M K PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U24246OR2005PTC008446

Company & Directors' Information:- J. M. GOLD PRIVATE LIMITED [Active] CIN = U74900MH2015PTC269343

Company & Directors' Information:- A V GOLD PRIVATE LIMITED [Active] CIN = U74900PN2013PTC149133

Company & Directors' Information:- G S T PRODUCTS (INDIA) PRIVATE LIMITED [Strike Off] CIN = U31909TN2006PTC059575

Company & Directors' Information:- S M P PRODUCTS PRIVATE LIMITED [Active] CIN = U25200DL2009PTC190965

Company & Directors' Information:- S N S PRODUCTS PRIVATE LIMITED [Active] CIN = U15490DL2005PTC142749

Company & Directors' Information:- U B PRODUCTS PRIVATE LIMITED [Active] CIN = U51224DL2002PTC116457

Company & Directors' Information:- A AND A PRODUCTS PRIVATE LIMITED [Active] CIN = U21098MP2004PTC017128

Company & Directors' Information:- V J PRODUCTS PRIVATE LIMITED [Active] CIN = U36900GJ2011PTC065252

Company & Directors' Information:- S AND A PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51311DL1991PTC042938

Company & Directors' Information:- S AND G PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51909DL1982PTC014843

Company & Directors' Information:- B P PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U24241WB1999PTC089499

Company & Directors' Information:- D AND P PRODUCTS LIMITED [Amalgamated] CIN = U99999MH1951PTC008422

Company & Directors' Information:- S D H PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U55204KA2006PTC040734

Company & Directors' Information:- V M PRODUCTS PRIVATE LIMITED [Active] CIN = U24100DL2014PTC266679

Company & Directors' Information:- E C A PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U27209TN1987PTC014022

Company & Directors' Information:- R. K. A. ORGANIC INDIA PRIVATE LIMITED [Active] CIN = U24100DL2012PTC245941

Company & Directors' Information:- G S PRODUCTS LIMITED [Strike Off] CIN = U25191UP1989PLC010483

Company & Directors' Information:- A K GOLD PRIVATE LIMITED [Active] CIN = U51398KL2003PTC016563

Company & Directors' Information:- A R K PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U24231UP1978PTC004606

Company & Directors' Information:- S. M. PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U17299DL1966PTC004634

Company & Directors' Information:- R. M. R. PRODUCTS PRIVATE LIMITED [Active] CIN = U74999MH2017PTC298120

Company & Directors' Information:- S L GOLD PRIVATE LIMITED [Strike Off] CIN = U52599HP2013PTC000364

Company & Directors' Information:- P & Q PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51909DL2014PTC269162

Company & Directors' Information:- ORGANIC GOLD PRIVATE LIMITED [Strike Off] CIN = U15495KA2002PTC030479

Company & Directors' Information:- H T PRODUCTS PVT LTD [Strike Off] CIN = U29266WB1981PTC033424

Company & Directors' Information:- S. S. GOLD PRIVATE LTD. [Strike Off] CIN = U52399MH2006PTC164403

Company & Directors' Information:- PRODUCTS (INDIA) LTD [Strike Off] CIN = U31901WB1961PLC024991

Company & Directors' Information:- M PRODUCTS & CO PVT LTD [Strike Off] CIN = U51909WB1956PTC023215

    Criminal Appeal No.1060 of 2010

    Decided On, 19 November 2020

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE H.P. SANDESH

    For the Appellant: Prabhugoud B. Tumbigi, M/s. M.T. Nanaiah Associates, Advocates. For the Respondents: D. Nagaraja Reddy, Advocate (Amicus Curiae).



Judgment Text

(Prayer: This Criminal Appeal filed Under Section 397 read with Section 401 of Cr.P.C. praying this Court to set aside the judgment dated 06.07.2010 passed by the Additional S.J. and P.O., F.T.C.-III, Mayo Hall Unit, Bengaluru in Crl.A.No.657/2009 - Annexure-A and uphold the order dated 27.05.2009 passed by the XVII ASCJ and XXV ACMM, Mayo Hall Unit, Bengaluru in C.C.No.26376/2007 - convicting the respondent/accused for the offence punishable under Section 138 of N.I. Act.)Through Video Conference:1. Heard learned counsel for the appellant and learned counsel for the respondent.2. This appeal is filed challenging the judgment of acquittal passed in Crl.A.No.657/2009 dated 06.07.2010 on the file of the Fast Track Court-III, Presiding Officer and Additional Sessions Judge, Mayo Hall unit, Bengaluru.3. The parties are referred to as per their original rankings before the Trial Court as complainant and accused to avoid the confusion and for the convenience of the Court.4. The factual matrix of the case is that accused Nos.1 and 2 issued a cheque dated 02.08.2006 for Rs.2,30,00,000/- (Rupees two crores thirty lakhs) to the complainant towards discharge of debt. When the said cheque was presented, it was dishonoured with an endorsement 'funds insufficient' vide memo dated 03.08.2006. The complainant got issued a legal notice on 29.08.2006 both by RPAD and UCP and the same was served on the said accused persons but they have neither replied the notice nor complied the demand made in the legal notice. Hence, a complaint was filed and the accused were secured and denied the allegation and claimed trial.5. The complainant, in order to prove his case, he himself examined as PW1 and got marked Exs.P1 to P18. The statements of accused persons were recorded under Section 313 of Cr.P.C. and they got themselves examined as DW1 and DW2 and got marked document Ex.D1. The trial Court, after considering both oral and documentary evidence, convicted the accused persons directing them to pay fine of Rs.3,00,00,000/- (Rs.3 crores) and out of the said fine amount, Rs.2,99,95,000/- was awarded as compensation in favour of the complainant. Being aggrieved, the accused persons filed an appeal in Crl.Appeal.No.657/2009. The appellate Court has reversed the finding of the trial Court and acquitted the accused persons. Being aggrieved, the present appeal is filed by the complainant.6. The main contention of the learned counsel for the complainant is that issuance of cheque-Ex.P1 by the accused persons is not in dispute. That the accused persons have issued the said cheque jointly to discharge the debt payable to the complainant on behalf of Indo Global Spices Ltd. (for short 'IGSL') It is further contended that the appellate Court has committed an error holding that when the accused company was not at all due for any amount to the complainant, the respondents being the Directors cannot be held liable to pay the dues to the appellant's company and erroneously comes to the conclusion that the accused persons have not committed offence under Section 138 of the Negotiable Instruments Act, 1881 (for short 'NI Act') and acquitted them. That the learned appellate Court has also erred in coming to the conclusion that two suits are pending adjudication and further erred in coming to conclusion that the accused persons are not liable to pay the cheque amount and also erred in coming to the conclusion that the trial Court failed to consider the ingredients of Section 138 of the NI Act and so also presumption under Section 139 of the NI Act.7. Learned counsel appearing for the complainant in addition to the grounds urged in the appeal memo would submit that the accused persons have categorically admitted in their cross-examination that they have signed Ex.P1-Cheque which is not in dispute. Once the accused persons admit the issuance of cheque, the Court has to draw statutory presumption under Section 139 of the NI Act. The accused persons have to rebut the presumption by giving cogent evidence. The defence of the accused persons is that the subject matter of cheque collected through the employee of the former company was misused and the same has not been proved by the accused persons. Learned counsel would also submit that the accused persons have categorically admitted the documents-Exs.P17(A)(1) to P17(A)(5), liability and issuance of other cheques but they did not comply the conditions of the Exs.P17(A)(1) to P17(A)(5) and the same is emerged in the evidence of the accused persons - DWs.1 and 2. When such being the case, the appellate Court failed to appreciate both on the facts as well as the legal position. The counsel, in support of his contention, relied upon the judgment of the Madras High Court in the case of P.R.Shankar Rao vs. Joseph and Joseph Regis Kalingarayar, reported in 2001 Crl.L.J.2392 and brings to my notice paragraph No.18 of the judgment and submits that the above judgment aptly applicable to the case on hand. In the similar situation, the Madras High Court has held that once the cheque has been issued, the accused cannot contend that they are not liable to pay the cheque amount. He also relied upon the judgment of the Supreme Court in the case of ICDS Ltd. vs. Beena Shabeer and another reported in (2002)6 SCC 426 and brings to my notice paragraphs-9, 10 and 12 of the judgment and would submit that the Apex Court in detail has discussed with regard to liability and also the intent of the legislature. The words "any cheque" and "other liability" occurring in Section 138 of the NI Act are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the stature.8. Referring the above two judgments, learned counsel canvassed legal arguments before this Court that the appellate Court has committed an error in coming to the conclusion that there was no liability on the part of the accused company and the transaction is in respect of M/s.IGSL Company and the very finding of the appellate Court is erroneous.9. Per contra, the learned counsel appearing for the respondents would submit that it is the specific defence of the accused that the cheque was collected from the former employee of M/s.IGSL company and the same has not given for discharging liability. The other contention of the respondents' counsel is that the cheque is also not issued in respect of legally recovered debt or liability. Learned counsel would also submit that in respect of the liability is concerned, already two civil suits are filed and the same are pending adjudication and the appellate Court has also observed the said fact while reversing the finding of the trial Court. Learned counsel would also submit that what would emerge from the evidence of PW1 is that PW1 himself has got typed the cheque and used the said cheque. Learned counsel would also submit that as per section 141 of the NI Act, the liability should be paid on behalf of the company and not in respect of any other person. Merely because the Directors of other company have issued the cheque, the accused company cannot be made vicariously liable to pay the cheque amount. It is further contended that the earlier company M/s.IGSL has not made as a party in the complaint and hence there cannot be any liability on the part of the accused company. It is further contended that the appellate Court considering the aspect of the liability has rightly come to the conclusion that the accused persons are not liable to pay any amount as there was no transaction between the complainant and the accused company and hence no interference is required by this Court.10. Having heard the arguments of learned counsel for the complainant and learned counsel for the accused and on perusal of the material available on record and keeping the grounds urged in the appeal, the points that would arise for consideration of this Court are:1. Whether the appellate Court has committed error in reversing the finding of the trial Court in coming to the conclusion that the accused ppersons-DWs.1 and 2 are not liable to pay the amount to the complainant?2. What order?Point No.111. Having heard the submissions of the respective counsels and on perusal of the materials available on record, it is appropriate to consider the evidence available on record and thereafter this Court can consider whether the principles laid down in the judgments referred to by the learned counsel for the complainant is applicable to the case on hand.12. Perused the evidence of PW1 wherein the complainant has reiterated the contents of the complaint vide affidavit dated 29.10.2007. The complainant got marked the documents Exs.P1 to 18 except 17(A)(1) to (A)(5). In the cross- examination, PW1 has categorically admitted that the complainant company is a proprietary concern and that he has not sponsored Rs.2,30,00,000/- (Rupees Two Crores and thirty lakhs Only) to the accused company and further admits that he has not given any amount to the accused company and he admits that he was a Technical Director of M/s.IGSL company. It is his evidence that he was a Technical Director in M/s.IGSL company for 1 years and he was the signing authority with accused No.2-Nelson in M/s.IGSL company. The complainant, after cross-examination, filed an additional affidavit dated 22.11.2007 and in the said affidavit has categorically stated that the cheque in question is a debt legally due and payable by the sister concern of the accused company and that the accused has agreed to discharge the debt and with that assurance cheque has been issued. PW1 was subjected to further cross- examination and in the cross-examination it is elicited that two suits are already filed prior to filing of the criminal complaint. He also admits that the contents of cheque Ex.P1 are got typed in his office. The document Ex.D1-complaint was also confronted to him wherein the complainant admits that there is a mention in ExD1 that the accused have issued three blank cheques but cheque numbers are not mentioned.13. DW1 in his affidavit he states that he was not owing any amount in favour of the complainant either in his individual capacity or as a Director of the company. Further, DW1 in his sworn affidavit has deposed that there was a transaction between the complainant and accused No.2 and when dispute arose, many civil and criminal cases were filed. It is also sworn to affidavit that two suits are filed for which he has given details. DW1 was subjected to cross-examination. In the cross- examination, he has admitted that he has not paid any amount to the accused company and further admits that the complainant is one of the Director to the M/s.IGSL company. Further, he admits that Ex.P1- the cheque bears his signature and Ex.P1(a) and Ex.P1(b) bears the signature of accused No.2. He also admits that Exs.P17(A)(1) is the MOU and it bears his signature and the same pertains to M/s.IGSL company. Signature of accused No.2 and another person by name Rajkumar Thambuchetty bears on the said document. He also admits that Ex.P17(A)(3) also bears signature and he is also aware of the contents and further he admits that there is mention at Ex.P17(A)(1) that the complainant has to invest 1.15 crores but he claims that he has not invested. It is suggested that in terms of Ex.P17(A)(3), they have agreed to pay shares worth of Rs.50 lakhs to the complainant and the balance amount by way of post dated cheques. Further, he states that he does not know whether post dated cheques are issued in favour of the complainant as per Ex.P(17)(A)(4). He admits that during the relevant period he was a Director of the accused company and the address mentioned is correct. He also admits that he has signed Ex.P16-reply notice.14. The other witness is accused No.2 and in his affidavit also he has reiterated the very same averments that there was no transaction between the accused company and the complainant and also referred the two suits filed by the complainant. He was subjected to cross-examination. In the cross-examination, he has categorically admits that before M/s.IGSF company, he was a Director and it is true to suggest before joining M/s.IGSF, he was the Director of M/s.STFL Company. He also admits that the complainant was depositing funds with the M/s.STFL. M/s. IGSL started in the month of June 1997. He further admits that when they started the Company there were three Directors including him and other two Directors. Accused No.1 joined M/s. IGSL in the year 1998 as a Director. He also admits that there is one MOU between the complainant and M/s. IGSL, but he claims that there is only one MOU and denied other two MOUs. He admits that Ex.P.17(A)(1) is the MOU and in the context of complaint, the complainant has joined as Director. He also put his signature on Ex.P.17(A)(2) and written something on Ex.P.17(A)(3). He also admits that there is mention of liability of M/s. IGSL to the tune of Rs.86,69,000/- on various accounts. He also admits that in terms of Ex.P.17(A)(4), ten cheques have been issued by M/s. IGSL and further admits that he was one of the signatory for one of the cheques. He also admits that Ex.P.1(b) is his signature in Ex.P.1 cheque. The witness volunteers that the cheque was misused by the Company through the employee of M/s. IGSL. He also admits that the cheques which are issued by M/s. Organic Gold are verified by them. He also admits that he was the Managing Director for M/s. IGSL from 2002 to 2006. He also admits that the Company will be liable consisting of Board of Directors and not the Managing Directors for the transaction of the Company i.e., M/s. IGSL. He also admits that he is one of the signatory to the cheques issued in favour of the complainant in terms of MOU and the said cheques are not honoured.15. Having considered both oral and documentary evidence available on record, there is no dispute with regard to the fact that the subject matter of the cheque - Ex.P.1 contains the signature of accused Nos.1 and 2. Both the accused who have been examined as D.Ws.1 and 2 have categorically admitted their signatures available on Ex.P.1. The main defence of the accused is that the said cheque was collected through the former employee of M/s. IGSL and in order to prove the said defence, nothing was substantiated before the Trial Court. The main contention urged by the accused Company is that there was no transaction between the complainant and the accused. There is no dispute with regard to the said fact. P.W.1 also admits in the cross-examination that there was no transaction between the complainant and the accused Company. The very claim of the complainant is that the accused persons have issued the subject matter of the cheque in order to discharge the liability of M/s. IGSL. D.Ws.1 and 2 in their respective cross- examination have not disputed the fact that they are the Directors of M/s. IGSL. It is the specific admission of D.W.2 i.e., accused No.2 that he was the Managing Director of M/s. IGSL from 2002 to 2006. It is also important to note that they have not denied that they have signed the said document. The main contention put forth by the accused persons is that there is no privity of contract between the complainant and the accused Company. When there was no transaction, the question of issuing Ex.P.1 does not arise.16. The Trial Judge considering both oral and documentary evidence placed on record and also the answers elicited from the mouth of P.W.1, D.Ws.1 and 2 and considering the factual aspect, comes to a conclusion that Ex.P.1 - cheque is issued in discharge of the liability in respect of M/s. IGSL, wherein the accused Nos.1 and 2 were the Directors of the said Company. No doubt on perusal of Ex.P.1, the cheque is issued in the name of the accused Company and not in the name of M/s. IGSL. It has to be noted that when the cheque has been issued and signature has been admitted on Ex.P.1, in view of the judgment of the Apex Court in the case of RANGAPPA v. MOHAN reported in AIR 2010 SC 1898, the presumption has to be drawn. However, it is settled law that when the presumption is drawn, if the accused rebut the evidence of the complainant by either of two modes i.e., by stepping into the witness box and leading cogent evidence and another mode by way of destroying the evidence of complainant in his cross- examination, it is enough for rebutting the evidence of the complainant.17. The Apex Court in the case of M/S. KUMAR EXPORTS v. M/S. SHARMA CARPETS reported in AIR 2009 SC 1518 has also laid down the same principles. It is settled law that the accused has to lead plausible evidence before the Court to substantiate the defence. In the case on hand, in order to prove the defence of the accused that the cheque was collected through the former employee of M/s. IGSL, nothing is placed before the Court to substantiate the defence and the defence remains as defence only. In the cross-examination of P.W.1 also, nothing is elicited with regard to this aspect except suggesting the same to the P.W.1. There is no plausible evidence to support the case of the accused with regard to misuse of the cheque of accused Nos.1 and 2 collecting the same from the former employee. It is also important to note that this Court has to examine whether the evidence of the complainant has been rebutted by the accused.18. The other contention of the accused is that the subject matter of the said cheque is not issued for legally recoverable debt. The said contention cannot be accepted for the reason that they have not disputed the issuance of cheque and also no dispute with regard to the fact that there was no transaction between the complainant and the accused Company. However, it is the specific case of the complainant that in order to discharge the liability of M/s.IGSL in which accused Nos.1 and 2 are the Directors, have issued the cheque. Though the accused disputed the fact that they are not the Directors, in the cross- examination, they have categorically admitted that they were the Directors of M/s. IGSL. When there are categorical admission available before the Court in respect of Ex.P.17 to Ex.P.17(A)(5), the MOU and other documents which came into existence between the complainant and the accused admitting the liability and the transaction in terms of Ex.P.17(A)(4) certain cheques are issued and both of them are signatories to the said documents as well as cheque, the accused cannot contend that the cheque was not issued in respect of legally recoverable debt. No doubt, two suits are filed and the same is emerged in the evidence that the said suits are pending and the finding of the Appellate Court that the suits are pending and hence Section 139 of the Act cannot be invoked, is an erroneous approach of the Appellate Court in coming to such a conclusion. The accused has to discharge the burden, once they have issued the cheque.19. The other contention is that P.W.1 admitted in the cross-examination that he only got typed the contents of Ex.P.1 and the said contention cannot be accepted in view of the recent judgment of the Apex Court and the handwriting of different persons and typing the same through the complainant on Ex.P.1 is immaterial once the cheque has been admitted and issued the cheque in favour of the complainant.20. The other contention of the accused is that under Section 141 of the Act, there must be existence of Company liability. This Court had discussed above with regard to the issuance of cheque and also comes to the conclusion that the cheque is issued to discharge the liability in respect of M/s. IGSL. When such being the case, the contention of the accused cannot be accepted. The contention that, merely because the Directors of the accused Company have issued the cheque, the accused Company cannot be held liable, the said contention cannot be accepted for the reason that both accused Nos.1 and 2 have not denied the fact that they were the Directors of M/s. IGSL and there was existence of MOU between the complainant and the accused in terms of Ex.P.17(A) to Ex.P.17A(5). Though they denied that they executed only one MOU, the admission elicited from the mouth of D.W.2 is clear that they are the signatories and the documents are in their handwriting. When such being the case, the contention of the accused cannot be accepted considering the factual aspects of the case.21. With regard to liability is concerned, the learned counsel for the complainant brought to the notice of this Court the judgment of Madras High Court in the case of P.R.Shankar Rao (supra). Paragraph Nos.18 and 19 of the said judgment reads as follows:"18. The third and last contention raised by the petitioner is that the dues were in respect of Accused No.3 company, viz., M/s. Karthick Fisheries and the cheque was issued by a different entity, i.e. Accused No.5, M/s. Karthick Multi Packs Pvt. Ltd. It is contended by the learned counsel for the petitioner that such liability is not a legally enforceable liability and the cheque was not issued for legally enforceable debt. In the instant petition, the petitioner had conceded that he is a Director of both A3 and A5 companies. He admits that Accused No.1, the person issued the cheque, was also a Director of both the companies.19. Section 138 of the Negotiable Instruments Act and the explanation thereto recites as under:-"138. Dishonour of cheque for insufficiency, etc., of funds in the accounts where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both:Provided....Explanation : For the purpose of this section, debt or other liability "means a legally enforceable debt or other liability."The requirement for offence to be made out under this section is that the cheque must be drawn "for the discharge, in whole or in part, of any debt or other liability". This section does not say that the cheques should have been drawn for the discharges of any debt or other liability of the drawer towards the payee. Even in Section 139 of the Negotiable Instruments Act, by which a legal presumption is created, the Parliament has only fixed the presumption that the cheque was issued "for the discharge, in whole or in part, or any debt or other liability". This would mean that the debt or other liability includes the due from any other person. It is not necessary that the debt or liability should be due from the drawer himself. It can be issued for the discharge of any other man's debt or liability. Legally enforceable debt or liability would have a reference to the nature of the debt or liability and not the person against whom the debt or liability can be enforced."22. Having read the principles laid down in the judgment referred supra, it is aptly applicable to the case on hand in view of the contentions raised by the accused. The cheque has been issued in respect of the liability of M/s. IGSL and D.Ws.1 and 2 have categorically admitted that they were also Directors of M/s. IGSL. When such being the case, both on the factual aspect and also legal aspects, the complainant has made out the case.23. The learned counsel for the complainant also brought to the notice of this Court the judgment of the Apex Court in the case of ICDS Ltd. (supra). Paragraph Nos.9 to 12 of the judgment reads as follows:"9. As noticed hereinbefore, the principal reason for quashing of the proceeding as also the complaint by the High Court was by reason of the fact that Section 138 of the Act provides for issuance of a cheque to another person towards the discharge in whole or in part of any debt or liability and on the factual context, the High Court came to a conclusion that issuance of the cheque cannot be co-related for the purpose of discharging any debt or liability and as such complaint under Section 138 cannot be maintainable.10. The language, however, has been rather specific as regards the intent of the legislature. The commencement of the Section stands with the words "Where any cheque". The above noted three words are of extreme significance, in particular, by reason of the user of the word "any" - the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment.11. The issue as regards the co-extensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act, neither the same calls for any discussion therein. The language of the Statute depicts the intent of the law- makers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act: "Any cheque" and "other liability" are the two key expressions which stands as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the Statute. Any contra-interpretation would defeat the intent of the legislature. The High Court, it seems, got carried away by the issue of guarantee and guarantor's liability and thus has overlooked the true intent and purport of Section 138 of the Act. The judgments recorded in the order of the High Court do not have any relevance in the contextual facts and the same thus does not lend any assistance to the contentions raised by the respondents.12. It is to be noted, however, that both the parties during the course of arguments have made elaborate submissions on Sections 126 and 128 of the Contract Act, but in our view, by reason of the specific language used by the legislature, question of consideration of the matter from the point of view of another Statute would not arise, neither would we like to express any view since that may have some effect as regards the merits."24. The Apex Court in the judgment referred supra discussed in detail with regard to purview of Section 138 of the Act. The language of the statute depicts the intent of the law- makers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability, there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act. It is further observed that "any cheque" and "other liability" are the two key expressions which stand as clarifying the legislative intent so as to bring factual context within the ambit of the provisions of the statute. Any contra-interpretation would defeat the intent of the legislature.25. Having considered the principles laid down in the judgment, the factual aspects of the case and legal effect, it is clear that the Court has to see the wisdom of the legislature in bringing the enactment and while interpreting the law, the Court has to take note of the object and statement in bringing the enactment and the courts are meant to interpret the law with the object of special enactment.26. The learned counsel for the accused reiterated the principles laid down in the judgment of Apex Court in the case of SABITHA RAMAMURTHY v. RBS CHANNABASAVARADHYA reported in (2007) BC 210 (SC) with regard to Section 141 of the Act, which is referred by the First Appellate Court in page No.9 of its judgment. The Apex Court held that vicarious liability can be inferred so far as Company registered or incorporated under the Companies Act only if requisite statement, which are required to be averred in complaint petition, made so as to make the accused therein vicariously liable for offence committed by the Company.27. The judgment is not applicable to the case on hand for the reason that the accused persons are the Directors of the accused Company and the facts and circumstances of the case are different. In the case on hand, accused Nos.1 and 2 have not disputed that they are not the Directors of the earlier company M/s. IGSL. In both the Companies they are the Directors and their earlier liability is admitted and cheque has been issued. Though accused Nos.1 and 2 disputes that the same is not towards the liability, the fact that they continued the business and entered into the MOU with the complainant with regard to the liability in terms of Ex.P.17(A)(1) to Ex.P.14(A)(5) is not in dispute. When such being the facts and circumstances of the case, the contention of the accused cannot be accepted.28. Having perused both oral and documentary evidence placed on record and also the admissions elicited from the mouth of D.Ws.1 and 2, this Court has

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to draw the presumption in favour of the complainant under Section 139 of the Act. Accused Nos.1 and 2 have stepped into the witness box and adduced the evidence. The answers elicited from the mouth of D.Ws.1 and 2 is clear that they have issued the subject matter of cheque Ex.P.1 in discharge of the liability in respect of M/s. IGSL, wherein they were the Directors. The accused persons though set up the specific defence that the cheque was misused by collecting the same from the former employee of M/s. IGSL, the same has not been substantiated by placing any cogent evidence before the Court. The accused failed to place any plausible evidence before the Court to rebut the evidence of the complainant and hence the accused persons have failed in discharging their liability and discharging their burden rebutting evidence of the complainant. The Appellate Court has committed an error in coming to the occlusion that there was no legally recoverable debt and there was no transaction between the complainant and the accused and the admitted document is in respect of Rs.86,00,000/- and the cheque is for an amount of Rs.2,30,00,000/-. It is emerged in the evidence that they agreed to pay interest at the rate of 9% and in terms of memorandum to pay an amount of Rs.36,00,000/- and also to issue the shares in respect of Rs.50,00,000/-.29. Having taken note of the admission in Ex.P.17(A)(1) to Ex.P.17(A)(5), the Appellate Court failed to consider all these facts. It is the burden on the accused to show as to under what circumstances he has issued the cheque to the tune of Rs.2,30,00,000/-, if there was no liability and the same is also not discharged and the accused has not explained in his evidence what made them to issue the cheque to the tune of Rs.2,30,00,000/-. When such being the case, the Appellate Court ought not to have proceeded to make such an observation and acquit the accused. The Appellate Court failed to draw the presumption and nothing has been discussed with regard to the presumption available in favour of the complainant and whether the accused has rebutted the presumption has also not been discussed in the judgment. Hence, the impugned judgment of the Appellate Court requires to be interfered with and liable to be set aside. As a result, judgment of the Trial Court has to be restored.30. The learned counsel would submit that the Trial Court has directed the accused to pay Rs.3,00,00,000/- and the same is on the higher side. Having taken note of the fact that the cheque was issued in 2006 and now we are in 2020, it is not appropriate to interfere with the judgment of the Trial Court. Hence, I do not find any reasons to interfere with regard to the quantum of amount to be paid, as directed by the Trial Court.31. In view of the discussions made above, I pass the following:ORDER(i) The appeal is allowed.(ii) The impugned judgment of acquittal dated 06.07.2010 passed in Criminal Appeal No.657/2009, is hereby set aside.(iii) The judgment of the Trial Court dated 27.05.2009 passed in C.C.No.26376/2007, is restored.(iv) The Registry is directed to pay the amount of Rs.3,000/- in favour of amicus curiae, since this Court vide order dated 29.09.2020 had appointed the amicus curiae.(v) The Registry is directed to transmit the Trial Court records to the Trial Court forthwith.
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