@JUDGMENTTAG-ORDER
Alexander Thomas, J.—The petitioners are the accused for offence under Section 138 of the Negotiable Instruments Act, in S.T.No.1830/2010 on the file of the Judicial First Class Magistrate Court-IV (Mobile), Thiruvananthapuram, instituted on the basis of a complaint filed by the 1st respondent herein. The trial court as per the impugned judgment rendered on 1.4.2016 had convicted the petitioners for the above said offence and had sentenced the 1st petitioner partnership firm (accused No.1) to pay fine of Rs. 5000/- and the 2nd petitioner herein (A-2-Managing Partner of the firm) to undergo simple imprisonment till the rising of the court and that he should pay compensation of Rs.2,06,750/- to the complainant under Section 357(3) of the Cr.P.C. and in default thereof, the 2nd petitioner (A-2) should undergo simple imprisonment for a further period of 2 months. Aggrieved by this verdict, the petitioners had preferred a criminal appeal as Crl.Appeal No.108/2016, before the Sessions Court, Thiruvananthapuram. The appellate court concerned (Court of Addl. Sessions Judge-II, Thiruvananthapuram), as per the impugned judgment rendered on 1.12.2016 has dismissed the appeal and has thereby confirmed the impugned conviction and sentence. It is aggrieved by these concurrent verdicts of both the courts below that the petitioners have filed the instant revision petition by taking recourse to the remedies provided under Section 397 read with Section 401 of the Cr.P.C.
2. Heard Sri. Ajith G. Anjarlekar, learned counsel appearing for the revision petitioners (accused) and Sri. Saigi Jacob Palatty, learned Prosecutor appearing for R-2 State. In the nature of the orders that are proposed to be passed in this revision, notice to R-1 (complainant) will stand dispensed with.
3. The gist of the prosecution case is that in discharge of a legally recoverable liability, the revision petitioners accused had issued the instant cheque (Ext.P-2 dated 5.9.2009) for amount of Rs. 2,06,750/- in favour of the complainant. The complainant had presented the said cheque for encashment before his collection bank, which resulted in the instant dishonour. The complainant had issued the requisite statutory demand notice as envisaged under Section 138 proviso (b) of the Negotiable Instruments Act as per Ext.P-4, which was duly received by the petitioners. It appears that the petitioners had not given reply to the said notice and thereupon, since the demanded amount covered by the cheque was not paid by the petitioners, the 1st respondent herein had preferred the instant complaint alleging offence under Section 138 of the Negotiable Instruments Act, against the petitioners, which resulted in the instant trial.
4. During the trial, the power of attorney holder of the complainant company was examined as PW-1, through whom Exts.P-1 to P-7 documents were marked. The defence had not adduced any evidence.
5. The basic case set up by the complainant is that the complainant is a company incorporated under the Companies Act and that the company is represented by a power of attorney holder. That the revision petitioners, who are partnership firm concerned as well as the managing partner of the firm, had availed equipment loan from the complainant bank (HDFC Bank, Vazhuthakkad, Thiruvananthapuram), agreeing to repay the amount together with interest. That the accused had defaulted to pay various EMIs and towards partial discharge of the debt, accused No.2, as the managing partner of the partnership firm, had executed and issued Ext.P-2 cheque dated 5.9.2009 for and on behalf of the 1st accused partnership firm, drawn on State Bank of Travancore, Thiruvananthapuram, for an amount of Rs.2,06,750/- in favour of the complainant company. The cheque when presented was defaulted on the ground that "exceeds arrangement" on 12.12.2009. The statutory demand notice as per Ext.P-4 was sent on 5.1.2010 calling upon the accused to repay the cheque amount within 15 days as required under the provisions of the Act, which was not paid, etc.
6. Both the courts below have found that the complainant has complied with the various formalities for the initiation of the complaint. There have been no serious arguments advanced by the revision petitioners as to the correctness of those findings. As regards the main issue as to whether the dishonoured cheque in question has been issued in discharge of a legally enforceable debt or liability, the trial court found that the complainant, who is P.W-1, has proved the execution of the cheque as well as about the transaction. Ext.P-7 is the statement of accounts of loan transaction. The main attempt made by the defence, while cross examining the P.W-1, was that the accused had issued 60 signed blank cheques at the time of executing the loan agreement and the instant complaint has been foisted against the petitioners by misusing one of such cheques. P.W-1 has stoutly denied that the company has received any such cheques from the accused as alleged. The further submission was that Ext.P-2 was issued as a security and this was also firmly denied by P.W-1 The trial court found that the accused had admitted the transaction with the complainant. It was also found that the cheque in question has been issued from an account of the 1st accused partnership firm and that there was no serious dispute that it bears the signature of the 2nd accused, who is the managing partner of the firm. Acceptance of Ext.P-4 demand notice has also been duly proved. The revision petitioners had not cared even to send any reply to Ext.P-4 demand notice. As regards the defence suggestion that the cheque in question was misused from out of the 60 blank signed cheques given at the time of executing the loan agreement and further that the cheque in question was given by the accused as security, etc., trial court found that, apart from making such suggestions, which were firmly denied by P.W-1, no clinching factual circumstances have been brought out by the accused in evidence so as to even remotely vindicate such suggestions. No independent defence has also been adduced in order to fortify or establish any such suggestion. The complainant in this case is a leading private sector bank (M/s. HDFC Bank, Vazhuthakkad Branch, Thiruvananthapuram) and the transaction was pertaining to an equipment loan taken on behalf of the accused partnership firm, which was conducting a hospital. On a cumulative judicial evaluation of all the evidence on record, the trial court came to the considered conclusion that the evidence adduced on behalf of the complainant is credible and believable. Whereas the trial court also found that the contra claims made by the defence while cross examining P.W-1 remained only in the realm of suggestions and that it has not been vindicated even remotely in any manner. The trial court thus firmly overruled the defence contention that the cheque was issued as security, etc. Accordingly, the said factual findings made by the trial court have also been affirmed by the impugned judgment of the appellate court. Both the courts below have come to the considered conclusion that the execution and issuance of the cheque as well as the transaction, which led to the issuance of the cheque, have been amply proved and that the accused have not vindicated their defence suggestions even as a probable case. In the light of all these aspects, the trial court, as affirmed by the appellate court, has found that the petitioners are liable for conviction under Section 138 of the Negotiable Instruments Act.
7. Before the trial court the petitioners herein had raised the contention for the first time that A-2 was prosecuted as Managing Partner of the firm and that there are no averment in the complaint that the A-2 (2nd petitioner herein) was managing the affairs of the business of the firm at the time of commission of the offence in question. As noted herein above, such a contention has never been raised before the trial court at any point of time but raised for the first time before the appellate court. However, the appellate court held that such requirement of standard of pleading is not required in a case where the other partners, who are sought to be arrayed as accused in a Section 138 offence, happens to be the managing partners of the firm. Correctness of this view is seriously contested by the learned counsel appearing for the revision petitioners.
8. Section 141 of the N.I. Act reads as follows :
''Sec.141.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 has exercised all due diligence to prevent the commission of such offence.
Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.
(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 or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation: For the purposes of this Section,-
(a) "company" means any body corporate and includes a firm or other association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm.''
9. A Three Judge Bench of the Apex Court in the celebrated case S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & anr. reported in (2005) 8 SCC 89 has considered the following question and has rendered answers to such issues as can be seen from a reading of paras 1 and 19 of that judgment. Paras 1 and 19 of the said judgment in the case in S.M.S. Pharmaceuticals'' case (supra) at pages 93-94 & 103, read as follows :
''1. This matter arises from a reference made by a two-Judge Bench of this Court for determination of the following questions by a larger Bench :
"(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company.
(b) Whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary.
(c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against."''
"19. In view of the above discussion, our answers to the questions posed in the reference are as under :
(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.
(b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that 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.
(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141."
The said view of the Apex Court has consistently been followed in a catena of decisions of the Apex Court as well as that of the various High Courts. Therefore, a reading of the above said paragraphs in S.M.S. Pharmaceutical''s case (supra) that it is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company and this averment is an essential requirement of Section 141 and such averment has to be necessarily made in the complaint and without such averment being made in a complaint, the requirement of Section 141 cannot be said to be satisfied. However, the Apex Court has held that merely being a director of a company alone would not make a person liable under Section 141 and that a director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that 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 and this has to be averred as a fact as there is no deemed liability of a director in such cases. However, the Apex Court has made it clear in unambiguous and unequivocal terms as can be seen from para 19 (c) of the S.M.S. Pharmaceuticals'' case (supra) that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business and when that is so, holders of such positions in a company become liable under Section 141 of the Act, and by virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company and such persons in those position as managing director or joint managing director would get covered under Section 141, etc. The said position has again been reiterated by the Apex Court in the judgment in National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal reported in (2010) 3 SCC 330 para 39 (SCC report p.p. 345-346, etc.). A mere reading of para 39(v) would make beyond shadow of doubt that "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". This position has again been reiterated in para 12 of the judgment of the Apex Court in Mainuddin Abdul Sattar Shaik v. Vijay D. Salvi reported in (2015) 9 SCC wherein it has been held by the Apex Court that in case of managing director of a company, there is no need or specific averment in the complaint that he was in charge of and responsible for the conduct of business of the company, in view of the legal position settled by the Apex Court in the case National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal reported in (2010) 3 SCC 330 para 39(v), etc. Parliament while enacting Section 141, has also appended explanation to the said provision and the said explanation provides that "for the purposes of this Section,- (a) "company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm". Therefore the above said provision in the statute book makes it clear that the provision made in Section 141 would also apply with equal vigour in the case of a partnership firm. In the light of this position flowing from the statute, the above said legal principles laid down by the Apex Court in relation to Managing Director of a company would also apply with equal vigour in case of Managing Partner of a partnership firm. In the light of these aspects, the appellate court is fully right in convicting accused No.2, who was admittedly the managing partner of the firm and the complainant cannot be said to be vitiated for not having given sufficient averments that A-2 was actually in charge of and responsible for the affairs of the partnership firm for the offence under Section 138 of the N.I. Act, etc.
10. However, the learned counsel for the petitioners would raise a new contention which has not been raised either before the appellate court or before the trial court to the effect that apart from the 2nd petitioner, there are other partners in the 1st accused firm and that those 2 partners would also be equally responsible, who were in charge of the affairs of the partnership firm, and therefore non impleadment of such partners as accused in the complaint would lead to the situation that the complaint should be necessarily thrown out on the ground of non arraying of all the accused. For fortifying this contention the learned counsel for the petitioners would argue that the mandate of Section 141 of the N.I. Act is that 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 therefore non arraying of all the responsible partners would lead to the situation of necessarily throwing out the complaint. Prima facie, this Court is of the view that the said contention is not tenable. The Supreme Court in the decision in Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd. reported in (2015) 5 SCC 661, has held that where the drawer of the cheque is a company, the aspects arising out of Sec.141 of the Negotiable Instruments Act will come into play and that therefore the principal accused/offender in such a case is only the company and that without impleading the company, which is the principal offender, the prosecution is bound to fail against any such complaint as the drawer and the principal offender, who has committed the offence, is the company. The petitioners'' contention is that though the partnership firm and the managing partner have been arrayed as accused, non inclusion of the other partners in the accused array would lead to the situation of throwing out the complaint. Without going more into those aspects, it is to be noted that the 2nd petitioner has not laid down any factual foundation about this aspect at any stage of the impugned criminal complaint. They have not cared to send a reply notice to the statutory demand notice. The contention that, apart from the managing partner, 2 other partners are responsible and in charge of the business of the partnership firm at the time of committing the offence under Sec.138 of the N.I. Act, has never been raised in the reply notice (which has never been sent) or while cross-examining PW-1 or at the stage of Sec.313 questioning of the accused or even by giving defence evidence in that regard. In the absence or raising such a factual foundation, this Court is totally disabled from entertaining such a legal plea as it is not within the cognizance of this Court based on the materials available on record as to whether other partners were actually responsible for and in charge of affairs of the business of the firm apart from the 2nd petitioner, who is the managing partner. Therefore, in the absence of such a factual foundation, the petitioner cannot be permitted to raise such a contention. Moreover, such contention, which has never been raised before the trial court or appellate court cannot be permitted to be raised at the revisional stage. Therefore the said contention raised by the petitioners will also stand overruled. Thus the upshot of the above discussion is that the factual findings rendered by the trial court as well as the appellate court are based on judicial evaluation and appreciation of the evidence on record and the findings thereon rendered by both the courts below that the revision petitioners are liable to be convicted for the offence under Sec.138 of the N.I. Act cannot be said to be palpably perverse and unreasonable. No crucial and relevant evidentiary aspects have been shut out by both the courts below. The learned counsel for the petitioners has not been able to convince this Court that any grave illegality or impropriety has been committed in the rendering of the above said impugned judgments of both the courts below. When that is the position, this Court is constrained to hold that the revision petitioners have not been able to establish any cogent grounds so as to make interference at the hands of this Court while exercising revisional jurisdiction.
11. As regards the sentence it is to be noted that the cheque amount was for an amount of Rs.2,06,750/-. The trial court, as affirmed by the appellate court, has imposed on the 2nd petitioner (A-2) only imprisonment till the rising of the court and to pay compensation of Rs.2,06,750/-, which is the cheque amount, by the 2nd petitioner. The 1st accused partnership firm was ordered to pay a fine of Rs.5,000/-. The above said sentence and payment of fine and payment of compensation amount cannot be said to be disproportionate or highly excessive. Going by the tone and tenor of the contentions raised by the learned counsel for the petitioners regarding the effect of non inclusion of other partners in the accused array, it appears that the partnership firm is now facing financial difficulties and that the 2nd petitioner (A-2) appears to be under the impression that it is highly inequitable and that he should be made mainly liable to pay the entire compensation amount due as liability of all the partners. But this aspect of the matter does not fully come within the realm of present criminal proceedings. However, it is made clear that if the 2nd petitioner has any such contention regarding the liability of partnership firm and that of the other partners in respect of the amounts that he will have to expend for paying compensation amount, it will be open to the 2nd petitioner to initiate appropriate proceedings in that regard and those aspects need not detain further attention of this Court in this criminal revision proceedings. Suffice to say, due to the confirmation of the orders passed by the courts below, the 1st petitioner (A-1, who is the partnership firm) is liable to pay a fine of Rs.5,000/- and the 2nd petitioner (A-2 who is the managing partner of the firm) is liable to undergo imprisonment till the rising of the court and also to pay Rs.2,06,750/- with default clause, etc.
12. Faced with the situation, Sri. Ajit G. Anjarlekar, learned counsel appearing for the revision petitioners, submits that if this Court is inclined to upheld the conviction and sentence in this case, then this Court may grant at least 10 months time to the 2nd petitioner to pay the compensation amount. It is pointed by the learned counsel for the petitioners that the petitioners are now facing financial difficulties and that sufficient time may be granted to make the payment. In view of the submission that the petitioners are facing financial difficulties, this Court is inclined to grant 8 months'' time to the petitioners to make the compensation amounts. Accordingly, the following orders and directions are issued:
(i) The impugned conviction and sentence imposed on the petitioners for the offence under Sec.138 of the N.I. Act as per the impugned judgments of both the courts below will stand confirmed.
(ii) However, the petitioners are given 8 months'' time from 15.3.2017 to pay the fine and compensation amount as stipulated in the impugned judgments of both the courts below.
(iii) The 2nd petitioner (A-2) shall personally appear before the trial court at 11:00 a.m. on 18.11.2017 to receive the sentence of imprisonment till rising of the court and to satisfy the trial court about payment of compensation amount of Rs.2,06,750/-. However, it is made clear that it will be open to the petitioners to pay the compensation amount directly to the 1st respondent bank, upon which the 1st respondent will issue necessary receipts in that regard and the 2nd petitioner shall produce such receipt before the trial court to satisfy the trial court about such payment. Needless to say, on default of the 2nd petitioner to pay the above said compensation amount, the 2nd petitioner will have to suffer simple imprisonment for a further period of 2 months.
(iv) It is also made clear that the 1st petitioner is also liable to pay fine amount of Rs.5,000/- (Rupees Five Thousand only) and in case of non payment of fine amount by A-1, then it is for the trial court to proceed against A-1 in accordance with law.
(v) Until 18.11.2017 all coercive steps that may be pending against the petitioners in pursuance of the execution of the impugned sentence will stand deferred.
With these observations and directions, the Crl.R.P. stands finally disposed of.
