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



V. Prabhakaran Nair & Another v/s Malayinkil Service Co-Operative Bank, Represented by its Secretary, K. Sreekantan Nair


Company & Directors' Information:- B S AND SERVICE PRIVATE LIMITED [Active] CIN = U92419MH1946PTC004912

Company & Directors' Information:- BANK OF INDIA LIMITED [Active] CIN = U99999MH1906PLC000243

Company & Directors' Information:- CO-OPERATIVE COMPANY LIMITED [Active] CIN = U51226DL1910PLC299886

Company & Directors' Information:- CO-OPERATIVE COMPANY LIMITED [Active] CIN = U51226UP1910PLC000093

Company & Directors' Information:- OPERATIVE INDIA PRIVATE LIMITED [Active] CIN = U74300KA2008FTC048079

Company & Directors' Information:- N BANK LTD [Strike Off] CIN = U65191WB1924PLC000442

Company & Directors' Information:- SERVICE CORPORATION LIMITED [Dissolved] CIN = U93090KL1946PLC001075

Company & Directors' Information:- P N N BANK LIMITED [Strike Off] CIN = U65921TZ1948PLC000153

Company & Directors' Information:- CORPORATION BANK LTD [Dissolved] CIN = U99999KA1901PLC000893

Company & Directors' Information:- CORPORATION BANK LIMITED [Strike Off] CIN = U99999KA1972PLC001067

Company & Directors' Information:- K AND C BANK LIMITED [Dissolved] CIN = U65191KL1928PLC000529

Company & Directors' Information:- CORPORATION BANK LIMITED [Not available for efiling] CIN = U99999MH1936PTC002552

    Crl. Rev. Pet. No. 3338 of 2006

    Decided On, 23 October 2020

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE N. ANIL KUMAR

    For the Petitioners: Pirappancode V.S. Sudheer, Advocate. For the Respondents: R1, R.T. Pradeep, S.V. Premakumaran Nair, R2, Sr. Public Prosecutor M.S. Breez, Advocates.



Judgment Text

1. The revision petitioners 1 and 2 were the Secretary and the Treasurer of an association constituted for the benefit of the Government Secretariat staff, Thiruvananthapuram known as the Kerala Secretariat Canteen Managing Committee, Government Secretariat, Thiruvananthapuram (hereinafter referred to as 'the Committee'). The Committee issued five cheques bearing Nos.296085 dated 07.05.1999, 296089 dated 14.7.1999, 296091 dated 17.8.1999 and 296088 dated 10.6.1999 and 296095 dated 26.12.1999 for a sum of Rs.48,953/-, Rs.56,992/-, Rs.56,902/-, Rs.59,377/- and Rs.61,629/- respectively in favour of the Malayinkeezhu Service Co-operative Bank, the complainant herein (hereinafter referred to as 'the complainant').2. The complainant is the supplier of consumer goods, provision and other articles and the 1st accused is the Committee. The 2nd and 3rd accused purchased goods from the complainant for and on behalf of the 1st accused for a total sum of Rs.2,83,853/-. For consideration received, the accused 2 and 3 issued five cheques, for and on behalf of the 1st accused, drawn on the Treasury Savings Bank, Thiruvananthapuram. On presentation of the cheques, all the cheques were dishonoured for the reason 'insufficient funds'. The complainant issued registered notice to the accused Nos.1 to 3 calling upon them to pay the amount covered under the cheques within the statutory time. The notices were returned as 'unserved'. The accused 1 to 3 did not make payment to the complainant. The complainant on 4.1.2000 and 18.2.2000 filed three complaints before the Chief Judicial Magistrate Court, Thiruvananthapuram against the revision petitioners/accused Nos.2 & 3 and the Committee/1st accused under Section 138 read with Section 141 of the Negotiable Instruments Act (hereinafter referred to as the N.I.Act). The learned Chief Judicial Magistrate took cognizance of the offence under Section 138 of the N.I.Act and registered the cases as C.C.No.335/2000, C.C.No.336/2000 and C.C.No.63/2001 and made over the cases to Judicial First Class Magistrate Court-IV, Thiruvananthapuram and Judicial First Class Magistrate Court-V, Thiruvananthapuram resepctively.3. The complaints relate to 5 cheques for an amount of Rs.1,62,847/- + Rs.59,377/- + Rs.61,629/-= Rs.2,83,853/-. Three instances of dishonour for an amount of Rs.1,62,847/- (Rs.48,953/- + Rs.56,992/- + Rs.56,902/-=Rs.1,62,847/-) were brought in C.C.No.335/2000 whereas two instances of dishonour for an amount of Rs.59,337/- and Rs.61,629/- were brought in C.C.No.336/2000 and C.C.No.63/2001 respectively as separate complaints. The learned Judicial First Class Magistrate-V, Thiruvananthapuram conducted joint trial in C.C.Nos.335/2000 & 336/2000 and disposed of the case by virtue of common judgment dated 24.10.2002. The learned Judicial First Class Magistrate-V, Thiruvananthapuram conducted separate trial in C.C.No.63/2001 and delivered the judgment on 09.07.2003.4. In the prosecution relating to three cheques for for an amount of Rs.1,62,847/- (Rs.48,953/- + Rs.56,992/- + Rs.56,902/- =Rs.1,62,847/-), the complainant was examined as PW1 in C.C.No.335/2000 and marked Exts.P1 to P8 on the side of the complainant. DW1 was examined and marked Exts.D1 to D3 on the side of the accused 1 to 3. In C.C.No.336/2000 relating to an amount of Rs.59,377/-, the complainant was examined as PW1 and marked Exts.P1 to P8 on the side of the complainant. DW1 was examined on the side of the accused and marked Exts.D1 to D3. In C.C.No.63/2001 relating to Rs.61,629/-, PWs.1 and 2 were examined on the prosecution side and marked Exts.P1 to P8. DWs.1 to 3 were examined and marked Exts.D1 to D4(b) on the side of the accused. Exts.C1 to C3 were marked as Court Exhibits.5. Challenging the judgment in C.C.No.335/2000, C.C.No.336/2000 and C.C.No.63/2001, revision petitioners 1 and 2 preferred Crl.A.Nos.436/2002, 437/2002 and 352/2003 before the Sessions Court, Thiruvananthapuram. Both the trial court and the appellate court concurrently came to the conclusion that all the ingredients of the offence punishable under Section 138 of the N.I. Act have been established.6. Heard Sri.Pirappancode V.S.Sudheer, the learned counsel for the revision petitioners/accused 2 & 3, Sri.R.T.Pradeep, the learned counsel for the 1st respondent and Sri.M.S.Breez, the learned Public Prosecutor for the 2nd respondent-State.7. Sri.Pirappancode V.S.Sudheer, the learned counsel appearing on behalf of the revision petitioners contended that the evidences let in the above cases, even if given face value and taken to be correct, do not constitute an offence alleged against the revision petitioners in terms of Section 138 read with Section 141 of the N.I.Act. It was further submitted that, in any event, the revision petitioners ceased to be the Secretary and the Treasurer of the Committee by the time statutory notice was issued, calling upon them to pay the amount covered under the cheques within fifteen days from the date of receipt of the statutory notice. Relying on the decision in Kairali Marketing And Processing Co-operative Society Ltd. vs Pullengadi Service Co-Operative Society Ltd. [2007 (1) KLT 287], the learned counsel for the revision petitioners contended that the offence under Section 138 of the N.I.Act must be held to be committed on that day when the bank, on which the cheque is drawn, returns the cheque unpaid for the reasons referred to in Section 138 of the N.I.Act. Thus, it is contended that the revision petitioners, who had signed the cheques in their capacity as Secretary and Treasurer of the Committee, were admittedly not the Secretary and Treasurer resepctively on the date on which the cheques were returned unpaid by the bank. For the reasons aforementioned, the learned counsel for the revision petitioners contended that the allegations made in the complaint do not disclose any offence against the revision petitioners herein.8. Sri.R.T.Pradeep, the learned counsel appearing on behalf of the 1st respondent on the other hand would submit that a person not holding any office or designation in a Committee may be liable if he satisfies the main requirements of being in charge of and responsible for conducting the business of a Committee at the relevant time. Thus, it is contended that the Secretary and Treasurer of the Committee who, at the time when the cheques were issued, were responsible to the Committee for the conduct of the business of the Committee as well as the Committee shall be deemed to be guilty of the offence under Section 138 of the N.I.Act.9. The 2nd accused had given evidence by examining himself as DW1 invariably in all the cases that he had ceased to be a member of the Committee even on the date the cheques were presented. He had also testified that the statutory notices were addressed to the Secretary and the Treasurer of the Committee respectively and no notices were received by him. Again, the 2nd accused had stated that during September, 1999, the Committee was dissolved by the Government and they had handed over the charge with assets and liabilities to the Ad hoc Committee. DW2 was examined to show that by virtue of Ext.D2, subsidy was granted by the Government to the Committee. The 1st accused through DW3 proved that she took charge of the Canteen from 11.10.1999 and at the relevant time, the Canteen was managed by the Ad hoc Committee. Based on the above legal and factual position, it is contended that both the revision petitioners were not members of the Committee on the date of issuance of the statutory notices and the date of dishonour of the cheques.10. The administration of the canteen is vested with the Committee, constituted by the Government and the Committee consists of a representative of each of the service associations nominated by the service associations from among the members of such service associations and that their term of office will be a period of three years from the date of their nomination. The committee being responsible for the proper and efficient management of all the affairs connected with the canteen, may elect a President, Secretary and also a Treasurer from among the members of the Committee. The 2nd and 3rd accused who were nominated to the Committee by the Government as representatives of two service associations were later elected as the Secretary and the Treasurer by the Managing Committee. The savings bank account of the Committee was in the joint names of the Secretary and the Treasurer and the accused 2 and 3 signed and issued the cheques on behalf of the Committee of the Canteen. The cheques in question were issued in their capacity as the Secretary and Treasurer of the Canteen. Duties in connection with the Committee have no nexus or connection with the official duties of the 2nd and 3rd accused as Government servants. Both are different.11. Apart from the Committee, as noticed hereinbefore, the Secretary and Treasurer were also made as accused in the case. Admittedly, they issued the cheques. The cheques on presentation were dishonoured for the reason 'insufficient fund'. Statutory notices were issued to the accused 2 and 3 which were refused to be accepted. A person would be vicariously liable for commission of offence on the part of a company only in the event the conditions precedent laid down under Section 138 read with Section 141 of the N.I. are satisfied. The above principle has been dealt with in detail by the Supreme Court in M/s.Kusum Ingots & Alloys Ltd. v. M/s.Pennar Peterson Securities Ltd. and others [(2000)2 SCC 745] as follows:-“10. On a reading of the provisions of Section 138 of the NI Act it is clear that the ingredients which are to be satisfied for making out a case under the provision are:(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;(ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;(iii) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the 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 the bank;(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.”12. For creating criminal liabilities in terms of Section 138 of the N.I.Act, the complainant is obliged to show that a cheque was issued; the same was presented; but, it was dishonoured; a notice in terms of the said provision was served on the person sought to be made liable; and despite service of notice, neither any payment was made nor other obligations, if any, were complied with within fifteen days from the date of receipt of the statutory notice.13. Section 141 of the N.I.Act provides constructive liability on the part of the Directors of the company or other persons responsible for the conduct of the business of the company. Though the heading of Section 141 of the N.I.Act reads “Offences by companies”, as per the Explanation to that Section “company” means “any body corporate and includes a firm or other association of individuals”; and “director” in relation to a firm, means a “partner” in the firm. Thus the association of individuals should be of similar nature as companies and partnership firms. Hence the 1st accused-committee is coming within the purview of company as defined under the Explanation to Section 141 of the N.I.Act. On a combined reading of Section 138 and 141 of the N.I.Act, accused 2 and 3, who issued the dishonoured cheques in their capacity as Secretary and Treasurer respectively in charge of the day-to-day affairs of the Committee, are prima facie liable for the offence punishable under Section 138 of the N.I.Act. Their liability is joint and several. Consequently, therefore, when the offence is alleged to have been committed by the Committee, every person who, at the time the offence was committed, was in charge of and was responsible to the firm for the conduct of its business as well as the firm shall be deemed to be guilty of the offence and shall be liable to be proceeded under Section 138 of the N.I.Act. A close reading of the evidence would show that it was the specific case of the complainant that the revision petitioners were actively participating in the conduct of the canteen of the committee and were looking after its affairs and day-to-day administration. The complainant adduced evidence to show that the accused 2 and 3 purchased goods from the complainant and issued cheques for the discharge of a legally enforceable debt. Where there are clear evidence suggesting knowledge and consent of the accused 2 and 3 as Secretary and Treasurer of the Committee in purchasing consumer items from the complainant and issuing number of cheques towards payment without actual payment, it would be difficult to believe that the accused 2 and 3 issued those cheques under the bonafide belief that the Committee or the future office bearers nominated by the Government or the Government by way of subsidy would clear off the payment actually due to the complainant. The belief is against the legal mandate contemplated under Section 141 of the N.I.Act. Section 141 of the N.I.Act provides that the company as well as the person in charge of and responsible to the company for the conduct of business of the company will be liable to punishment.14. In Kairali's case (supra) this Court considered the question as to whether the prosecution of accused 1 and 2 therein without arraying the then Secretary who allegedly signed the cheques along with the 2nd accused is bad in law in as much as the 2nd and the 3rd accused must be held to have joint and several liability under Section 141 of the N.I.Act. In paragraph 12 of the judgment, it is stated that the person who has signed the cheques will undoubtedly be a person in charge of and responsible to the company for the conduct of its affairs and would consequently be personally liable under Section 141 read with Section 138 of the N.I.Act. The learned Single Judge answered the question with reference to S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla & another [(2005) 8 SCC 89] and held that a signatory to the cheque can be held to be a person liable under Section 141 of the N.I.Act. Moreover, the decision in Anil Hada v. Indian Acrylic Ltd [(2000) 1 SCC 1] makes the position clear that the omission to prosecute the coaccused in a prosecution under Section 138 of the N.I.Act cannot deliver any advantage to the indictee facing prosecution. That was a case where the company was not prosecuted. The signatory of the cheque alone was prosecuted under Section 141 of the N.I.Act. Hence the learned Single Judge held in Kairali's case (supra) that prosecution of the company alone (i.e., without prosecuting any person with the aid of Section 141) or prosecution of the person in charge under Section 141 or one of such persons only (i.e. without prosecuting the company or other such persons including a co-signatory) cannot be held to be vital defects which would vitiate such prosecutions, in the absence of any special circumstances indicating prejudice against the accused.15. The conclusions drawn by the trial court and the appellate court to convict the accused 2 and 3 are perfectly legal. The cheques in question were drawn for consideration and th

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e holder of the cheques received the same in discharge of an existing debt. Thereafter, the onus shifts on the accused to establish a probable defence so as to rebut such presumption, which onus has not been discharged by the accused. Once the cheque is proved to be issued, it carries statutory presumption of consideration under Section 118 and 139 of the N.I.Act. Then the onus is on the accused to disprove the presumption at which they have not succeeded.16. Coming to the question of sentence, the appellate court has considered the submission that civil suits are pending between the parties for realisation of the money covered under the very same transaction. Thus, while sustaining the conviction, the appellate court reduced the sentence from three months to imprisonment till the rising of the court and directed to take steps to recover the compensation amount from the 1st accused Managing Committee to the extent possible. The appellate court further stated that in case the compensation is not recoverable from the 1st accused/Managing Committee, the 2nd accused and 3rd accused shall undergo simple imprisonment for ten days each. The appellate court has considered the entire aspects in detail and awarded compensation amount equal to that of the amount covered under the cheques. Where the judgment of conviction and sentence recorded by the appellate court is reasonable, neither perverse, nor suffers from any infirmity, this Court is of the view that the conviction and sentence would not be interfered in revision.Consequently, these criminal revision petitions are dismissed upholding the common judgment of the learned Sessions Judge. Registry is directed to send back the records to the trial court for execution of sentence in accordance with law.
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