N.A. Britto, J.@mdashThese revisions are filed by the accused who has been convicted and sentenced u/s 138 of the Negotiable Instruments Act, 1881 (''Act'' for short) and whose convictions and sentences have been upheld by the learned Session Judges.
2. Since the facts involved are almost common, by consent of Counsel they are being disposed of by this common judgment. The cases from which these revisions arise, pertain to the cheques of different dates given by the accused, with letter dated 20-7-1992. The accused was the Managing Director of the complainant which is a registered company. The details of the said cheques are as follows:
The case regarding the first cheque No. 0160171 dated 10-1-1993 finally ended in conviction against the accused by the judgment of the Hon''ble Supreme Court dated 20-11-2003 reported in
3. The case of the complainant which is a registered company and whose factory apparently came to be closed down, is that the said cheques were issued because the accused owed the complainant a certain amount and in order to pay the said amount, the accused had drawn the said post dated cheques. The cheques were presented for payment into the account of the complainant, and as far as Criminal Revision No. 4/2007 is concerned, the said cheque was returned on 12-5-1997 with remark ''present again''. The complainant thereafter sent the notice to the accused demanding the payment. However, the accused did not reply to the notice. Thereafter, the complaints came to be filed on different dates and in support of the case of the complainant, one I.B. Mulchandi came to be examined pursuant to a power of attorney purportedly given by Mr. Audhut Timblo, the Director of the complainant. The case of the accused, when examined u/s 313 of the Code of Criminal Procedure, 1973, was that he had issued the cheques under a mistaken belief that the amount was due. It was further his case that on finding a note (letter from Mr. Timblo) he had realised that he had not owed any money to the complainant and therefore he informed Mr. Audhut Timblo in writing that there was no liability due. The accused examined himself in support of his defence.
4. The learned trial Court in convicting the accused also referred to the first case
5. At the hearing of these revisions, Counsel appearing on behalf of both parties have also referred to the said judgment, in the first case in
6. To challenge the convictions, three points have been raised by Shri Diniz, the learned Counsel on behalf of the accused. The first is that the complaint was filed by a person who was not authorized by the company and that too in favour of a stranger who had no connections with the said company and without any resolution in his favour. The second is that the Bank''s endorsement ''present again'' would not satisfy the ingredients of the offence for the purpose of launching a prosecution u/s 138 of the Act. Thirdly, learned Counsel has submitted that both the Courts below had misdirected themselves in interpreting the provisions of Section 139 of the Act and has further submitted that there is no presumption in law that debt exists and in support of this submission learned Counsel has placed reliance on the cases of Rajendraprasad Gangabishen Porwal v. Santoshkumar Parasmal Saklecha and Anr. 2008 (1) Bom.C.R. (Cri.) 647 and
7. As regards the first objection, there is no dispute that the complainant in this case is a company registered under the Companies Act, 1956. On behalf of the complainant, the power of attorney purported to have been executed by Shri Audhut Timblo, the Director of the company was produced. The authority of Mulchandi/PW1 was questioned before the trial Court and the learned trial Court did not entertain any objection observing that the accused at no point of time had raised any grievance about the authority of Shri Mulchandi to file a complaint or depose on behalf of the complainant and said power of attorney clearly brought out that he was authorized by Shri Audhut Timblo, the Director of the company, pursuant to a resolution of the Board of Directors dated 30-6-1995. The first appellate Court also dealt with the said objection and the learned first appellate Court observed that Mr. Mulchandi/PW1 had not filed the complaint in his personal capacity and that the said power of attorney disclosed that Mr. Mulchandi/PW1 had been authorized by Mr. Audhut Timblo to make, sign, execute and affirm, present and file any application, written statement, plaint, reply complaints, affidavits, representations, declarations, cross objection, memos of appeal, revision, etc. and to make any statements, defences and to verify the same and further to give statements on oath or to depose on behalf of the said Company in any court of law and/or before the public authorities or authority. The learned first appellate Court also observed that since the said power of attorney was produced by Mr. Mulchandi/PW1 which authorized him to file the complaint and to depose on behalf of the complainant and as no challenge was made to the said power of attorney, it should be presumed to be admitted and therefore as proved. Counsel on behalf of the complainant has submitted that the Director of the company is also entitled to file the complaint. Since the complaint was filed by the company, it was necessary for the said Mr. Mulchandi/PW1 to prove before the Court that he had authority to appear on behalf of the company. Shri Diniz, the learned Counsel on behalf the accused has placed reliance on two decisions of this Court. The first is in the case of Alka Toraskar v. Vaishya Urban Co-op. Credit Society Ltd. and Anr. 2006 (2) Bom.C.R. (Cri) 717. That was a case where the complaint was filed by registered co-operative credit society registered under the Maharashtra Societies Co-operative Act, 1960 as applicable to the State of Goa. A resolution of the said Society was produced. When the said resolution was brought to the notice of the witness, who was examined on behalf of the complainant, the said witness had stated that the resolution authorized him to attend Court cases and not to depose on oath. This Court observed that the said resolution did not authorize Shri Gaurish P. Shirodkar, the recovery officer of the complainant/Co-operative Society either to file complaint on behalf of the complainant which is a separate legal entity or to depose in support of the complainant. This Court further observed that the complaint u/s 142 of the Act can be filed either by the payee or the holder in due course. The complainant/Co-operative Society was the payee in that case and the complaint was filed in its name. The authority produced did not sufficiently authorize Shri Gaurish P. Shirodkar either to file the complaint or to depose in support thereof. The complainant was not sufficiently represented before the Court, therefore, it could not be said that the complaint filed or the evidence given in support thereof was in accordance with Section 142 of the Act, which required that the Complaint has to be made by the payee or the case may be, by the holder in due course, of the cheque. In the absence of any power of attorney or the valid authority by the complainant in favour of the said recovery officer, the complaint itself could not have been entertained and conviction based on such a complaint was liable to be set aside.
8. The other is the case of
A Director, as an individual Director, has no power to act on behalf of a company. He is only one of a body of Directors called the Board of Directors and alone he has no power except such as may be delegated to him by the Board of Directors or given to him by the articles of association of a company. In the case at hand, the complaint was filed by one of the Directors and as already stated by a Director who had initially complained to the Police that the subject cheque was forged by the accused, and, without any resolution of the company or any authorization from the Board of Directors. The view held by me is consistent with the views expressed in decisions referred to herein above, namely, those of the Madras High Court in Ruby Leather Exports v. K. Venu 1995 82 Comp Cas 776, Andhra Pradesh High Court and Delhi High Court which is now confirmed by the view held by the Apex Court in Dale and Carrington Invt. (P) Ltd. and Anr. v. P.K. Prathapan and Ors. (supra) and therefore I hold that the complaint in this case was not filed by the company as required under Clause (a) of Section 142 of the Act and on such a complaint no process could have been issued much less a conviction imposed.
This decision is squarely applicable to the facts of the case at hand. It is quite interesting to know that in this case a Director has purported to prosecute a Managing Director! An incorporated company is a separate juristic person distinct from its Directors or Shareholders. It acts through the resolutions passed by its Board of Directors. Mr. Mulchandi/PW1 could have deposed on behalf of the complainant only in case there was a resolution of the Board of Directors or in case he was otherwise authorized by the articles of association of the company. A person who claims to represent another is expected to produce an authority or power which entitles him to so appear. Mulchandi/PW1 could have appeared and deposed on behalf of the company only in case he was authorized by a resolution of the Board of Directors or as already stated, by articles of the association of company. He had produced no such resolution and therefore the complaint filed on behalf of the company could not have been entertained and much less a conviction imposed. A Director alone could not have given a power of attorney to Mulchandi/PW1 to prosecute the accused or depose on behalf of company unless there was a resolution in his favour passed by the company at its meeting of the Board of Directors. The complaint which was entertained, based on a purported power of attorney, given by one of the Directors could not in law be entertained and the accused convicted.
9. There is another aspect which needs to be looked into. Shri Diniz, learned Counsel on behalf of the accused has contended that the said power of attorney in favour of Mulchandi/PW1 does not authorize him to file a complaint. Learned Counsel particularly refers to Clause 3 of the said power of attorney which authorizes "to make, sign, execute and affirm, present and file any application, written statement, plaint, reply complaints, affidavits, representations, declarations, cross objection, memos of appeal, revision, etc. and to make any statements, defences and to verify the same and further to give statements on oath or to depose on behalf of the said company in any Court of law and/or before the public authorities or authority". Shri Usgaonkar on the other hand submits that the plaint referred to in the said Clause could be understood only as a plaint as defined under the CPC and the complaint referred to therein could be understood with reference to the Code of Criminal Procedure, 1973 and therefore the expression "reply complaints" could be understood only as a complaint as contemplated under the Code of Criminal Procedure, 1973. A bare reading of the said Clause 3 shows that it refers to "reply complaints" and not to any complaints. One does not know what the principal exactly meant by the said expression. Nevertheless, in Capt. Harcharanjit Singh Thind v. Deeksha Thind and Ors. unreported judgment of this Court dated 22-2-2008 in Appeal from Order No. 89/2006 this Court had referred to Halsbury''s Laws of England wherein it was stated that:
An instrument conferring authority by deed is termed a power of attorney. The person conferring the authority is termed the donor of the power, and the recipient of the authority, the donee. A power of attorney is construed strictly by the Courts, according to well-recognised rules, regard first being had to any recitals which, showing the general object, control the general terms in the operative part of the deed.
That the power of attorney must be strictly construed to confer an authority given expressly or by necessary implications is a view which can also be found at page 75 of Bowstead on Agency and at page 2118 of Pullock and Mulla. Viewed in that light, since the power of attorney confers power both of filing the plaint and written statement, as well as the complaint and reply, it could be understood that it does by necessary implication authorized the said Mulchandi to file a complaint as well. Nevertheless the matter cannot be allowed to end there.
10. Mulchandi/PW1 stated in his evidence that he had the power of attorney of the complainant and produced the same and which was marked as Exhibit I. As already stated the complainant is a registered company and the said power is purported to have been given by the said Mr. Audhut Timblo. Mulchandi/PW1 however, did not even identify the signature of the said Mr. Audhut Timblo on the said power of attorney to show that it was issued by the said Mr. Audhut Timblo. It was the duty of Mulchandi/PW1 to have prima facie proved that he had entered the witness box pursuant to the power given by the said Mr. Audhut Timblo. In the circumstances, it must be stated that the said power of attorney was not at all proved and much less the endorsement made thereon that it was issued pursuant to the resolution of the Board of Directors dated 30-6-1995 regarding which Mulchandi/PW1 also remained silent. It was for Mulchandi/PW1 to have, prima facie, proved that he was authorized to depose on behalf of the complainant, or on behalf of the Director to whom he purported to represent. There was no resolution from the Board of Directors authorizing Mulchandi/PW1 to depose on behalf of the company. Likewise, the power of attorney produced by him was not proved by him as having been executed by the said Audhut Timblo. The question of further cross-examination by the accused could have been insisted only in care Mulchandi/PW1, had, prima facie proved either that he had authority from the Company or from the said Mr. Audhut Timblo. Counsel on behalf of the complainant has placed reliance on a decision of this Court in
I am unable to accept these submissions. The said Bank undoubtedly is a legal entity. But it can only act through its officers. Mr. Bratindranath Baneriee is admittedly a Director of the said Bank and an officer of that Bank. On a plain reading of the complaint, it is clear that it has been filed by Mr. Bratindranath Banerjee as a Director of the said Bank and not as an individual. In fact the accused himself understood that this is a complaint by the said Bank. This is clear from Application No. 15 of 1992 which has been filed by the accused. In this application, in para 1 the accused himself states that he has received a copy of the complaint filed on behalf of the said Bank. Also there is no challenge to the statement of Mr. Banerjee was that he was authorized to file this complaint. There is also no challenge to the deposition of Mr. Banerjee that the complaint was filed on behalf of the said Bank. The contents and substance of the complaint also make it clear that it is by the said Bank. Accordingly I hold that the complaint is maintainable and is not barred u/s 142(a) of the Negotiable Instruments Act.
11. In my view, the said observations would be inapplicable to the facts of this case and disclosed hereinabove. The complaint was filed by registered company and firstly it was necessary for a company by resolution to have authorized Mulchandi/PW1 to file a complaint against the accused and depose in support of it. No such authority was produced by Mulchandi/PW1. Secondly, Mulchandi/PW1 did not even prima facie prove that the said power of attorney was given by the said Audhut Timblo by identifying his signature. He stated that it was given by the complainant when in fact it was not. What follows from the aforesaid discussion is that the company itself did not authorize Mulchandi/PW1 to file a complaint and depose in support thereof. Secondly, Audhut Timblo being only a Director could not have authorized Mulchandi/PW1 to depose on behalf of the company. Thirdly, the power of attorney produced by Mulchandi/PW1 was not prima facie proved as having been given by Mr. Timblo. In such a situation, and, as observed by this Court in Ashok G. Bagi (supra), since the complaint was not filed by the company as required under Clause (a) of Section 142 of the Act, on such a complaint no process could have been issued and no conviction could have been imposed. In the absence of prima facie proving that Mulchandi/PW1 had an authority to depose on behalf of the company, the accused had the right to maintain profound silence. The question to cross-examine would have come only in case the authority produced was prima facie proved.
12. As regards the second objection, what follows from the evidence of Ulhas Narkar/PW2 is that on 15-3-1993 the accused had issued stop orders for the payment of 10 cheques. The accused at the time of issuing the said stop order did not have sufficient funds into his account. Although the cheques ought to have been returned with the endorsement that the accused had stopped payment, one fails to understand as to why the cheques were returned with endorsement "present again". Ulhas Narkar/PW2 has stated that generally they give that reason when they expect the funds to be deposited by the customer into the account. Learned Counsel on behalf of both the parties have not been able to throw any light as to why in spite of the stop instructions from the accused, the Bank returned the cheque with the said endorsement "present again", inasmuch as, the said Ulhas Narkar himself has not been able to give any explanation. Since the cheques were returned unpaid because of the said stop instructions from the accused, nevertheless it cannot be said that no offence was committed by the accused on that count. This matter has already been dealt by the Apex Court in the said case of
Once the cheque is issued by the drawer a presumption u/s 139 of the Act must follow and merely because the drawer issues a notice to the drawee or to the bank for stoppage of the payment, it will not preclude an action u/s 138 of the Act by the drawee or the holder of a cheque in due course.
Even if it was a case of ''present again'' the complainant was not bound to wait to present the same again and since the complainant had issued the notice and called upon the accused to make the payment of the dishonoured cheque, the complainant was certainly entitled to proceed with the prosecution of the accused. The second objection therefore needs to be rejected.
13. As regards the merits of the case, at the very outset it must be stated that the handing over the letter dated 20-7-1992 along with the 10 cheques is a transaction which took place between the accused on one hand, as the Managing Director of the Company, and the said Mr. Audhut Timblo who was one of the Directors of the said company. The said Director Mr. Audhut Timblo has not stepped in the ''Witness box. Who was purportedly authorized was Mulchandi/PW1, who could not even claim to be associated with the said company either as an employee or otherwise. He does not appear to have had any knowledge about the said transaction inasmuch as he could not have deposed beyond the documents he produced.
14. Referring to the said documents, it can be seen that by the said letter dated 20-7-1992 addressed to the complainant/company, the accused handed over the said 10 cheques stating that he was refunding the amount due and payable to Goa Plast Pvt. Ltd. The said letter is as short as that. Thereafter, the accused wrote to the said Director by his letter dated 12-2-1993 recalling the issue of the cheques for Rs. 4 lacs at his request. In the said letter, the accused stated that the Director had told him that the accounts had showed an unexplained expenditure of that amount and it was his duty as a Managing Director to see that the accounts were in order and it was for him to have checked the assets and liabilities position every month. The accused also categorically stated that the said letter dated 20-7-1992 was drafted by Mr. Rajan Kinnerkar at his instance and handed over to him and he was asked to give his letter exactly in line to the said draft, which he did in the said letter. In the said letter, the accused stated that he had told him that he was not good at accounts and that he had required an accountant to whom the above task could have been entrusted and he had entrusted the work to Mr. Rajan Kinnerkar and he had told the accused that he had no knowledge of such an arrangement and had asked him to prove the same or pay the said difference of Rs. 4 lacs. The accused also stated that after about 6 months he had managed to search and find out the said paper in his handwriting and sent the same along with the said letter. The accused further stated that he would recall with the said note that he was not liable to make good the said amount of Rs. 4 lacs. The said letter of the accused, was replied to, on behalf of the company, by advocate''s letter dated 31-5-1993 and in this letter it was stated on behalf of the company, that Mr. Timblo had never denied that Mr. Rajan Kinnerkar was appointed in his professional capacity of chartered accountant to review the accounts and monthly assets and liabilities position. It was accepted that the accounts were reviewed and monthly assets and liabilities statements were prepared by him but what was stated was that the accused had not disagreed with the said statements. In the said letter dated 31-5-1993 it was also mentioned that the accused had given an excuse as an afterthought and the allegation of the accused that the letter dated 20-7-1992 was drafted by Mr. Rajan Kinnerkar at the instance of Mr. Audhut Timblo was totally false. In this letter, it was also stated that Mr. Audhut Timblo had consented for the appointment of Mr. Rajan Kinnerkar at the instance of the accused in the capacity of the Managing Director and on that occasion it is the accused who had specified what would be the various duties of Mr. Rajan Kinnerkar which Mr. Audhut Timblo had noted for his records. It was also stated that Mr. Audhut Timblo was surprised that the accused would have the said noting in original-in his possession. It was reiterated that the innocence of the accused along with that of Mr. Rajan Kinnerkar and Mr. Afonso had remained in serious doubt. In other words, this letter dated 31-5-1993 was a clear indication that the Director Mr. Timblo had pointed out the needle of suspicion against three persons including the accused for the shortage of money of the company after its factory had to be closed down on 6-7-1992.
15. The accused again wrote a letter dated 22-7-1973 denying the contents of letter dated 31-5-1993. In this letter, addressed to the advocate of the company, the accused stated that as regards his innocence being in serious doubt he had already written to Mr. Audhut Timblo. In his letter dated 22-7-1993, the accused wrote to Mr. Audhut Timblo and told him that in case he had not asked the accused to stop going to M/s Goa Plast then he should be informed as to when he should resume his duties and in case he did not wish the accused should resume his duties, he should inform whether he would like him to resign from the company. The last letter written by the said Audhut Timblo to the accused and produced on behalf of the complainant is the letter dated 1-9-1993. In this letter the said Shri Audhut Timblo informed the accused that he would spare some time to meet him, but before that he would like to have a written statement regarding the subiect on which the meeting was to be held. Shri Timblo also reminded the accused that he had promised a frank letter of facts and ''in case he wished to redeem himself and seek clemency that was necessary. This letter sent by Shri Audhut Timblo, on behalf of the company, shows that he was not ready to have any explanation on the part of the accused as regards the shortage of funds regarding which the accused had already given letter dated 22-7-1992 unless the accused had admitted his liability and sought his clemency.
16. Be that as it may, Mulchandi/PW1 stated that the accused was the Managing Director of the Company and had withdrawn totally Rs. 7,17,171/- when he was the Managing Director during the financial year 1991-92 and the said cash was not there. Certainly this was not the case of the complainant in letter dated 31-5-1993. Mulchandi/PW1 produced two pages of the ledger book for the year 1991-92 which were taken on record and marked as Exhibit PW1/A stating that the said amount of Rs. 7,17,171/- was shown on the said ledger. He also produced the auditor''s report. Director''s report and the balance sheet which were taken on record collectively and marked Exhibit PW1/B. Thereafter, he produced the correspondence referred to hereinabove, and he stated that the accused had admitted the liability and had issued the said 10 cheques in the sum of Rs. 40,000/- each. When he was questioned as to why cheques of Rs. 4 lacs were received when the liability was about 7 lacs, Mulchandi/PW1 stated that the accused had accepted his liability for Rs. 4 lacs. He confirmed that the said forwarding letter and the cheques were received by Mr. Audhut Timblo on behalf of the company. Certainly, it was not his case that the said letter and the said cheques were received by Shri Timblo in his presence. When he was asked whether he attributed the liability to the accused only because he was the Managing Director and the sole trustee of the Company, Mulchandi answered stating that the accused was the Managing Director and had withdrawn the amount. When he was asked further whether he had personally withdrawn the said amount, he stated categorically in the affirmative. When he was further asked whether he had any documents to show whether the accused had personally withdrawn the said amount, he stated that the accused was authorized signatory of the Company. He further stated that he was aware that Mr. Cordeiro had made a statement in the first case that the accused was not responsible for the entire sum of Rs. 7,17,171/-. Next, he stated that the cash of Rs. 7,17,171/- was kept in the petty cash box and when he was asked whether he had checked the said petty cash box he stated that he had not personally checked the same, but that is what was stated by the auditors. Further he stated that the cheques were issued by the Managing Director and the amount was withdrawn by the accountant. As already stated, it can be seen that Mulchandi/PW1 did not have any first time knowledge of the transaction or the circumstances in which the subject cheques came to be issued along with the said letter dated 20-7-1992 to Mr. Audhut Timblo, the Director of the complainant.
17. On the other hand, the accused stated in his evidence that he was appointed by Mr. Audhut Timblo, as the Managing Director of the Company and he was incharge of marketing, sales and general administration, but accounts were looked after by Mr. Rajan Kinnerkar. He stated that he was operating their office at the Keith building while the head office of the Company was at Velho building, both at Panaji. He stated that he was looking after marketing, sales and general administration. He also stated that accounts of the company were handled at the head office. He stated that he had told Mr. Audhut Timblo that he would not handle the accounts to which he had agreed and he had given him a note in his own handwriting from which it was clear that Mr. Rajan Kinnerkar would look after the accounts directly under Mr. Audhut Timblo and he would keep him aware of the day to day information of the financial matters and present to him the monthly assets and liabilities position of the company. He referred to the correspondence exchanged between him and Mr. Audhut Timblo. As regards the letter dated 20-7-1992, the accused stated that Mr. Timblo called him and informed him that there was a shortfall of Rs. 4 lacs in the company as was revealed in the books of accounts and though he informed Mr. Audhut Timblo that he was not responsible for the accounts from the beginning, Mr. Audhut Timblo threatened to dismiss him and file Criminal Proceedings unless he gave 10 post dated cheques of Rs. 40,000/- each, which he did as he did not want to loose the job. The accused stated that at that point of time he had not found the noting in the hand writing of Mr. Timblo and though he knew that he was not liable, to protect his job he had issued the said cheques and when he found the noting, he sent the same to Mr. Audhut Timblo and asked him not to deposit the cheques and he also wrote to the Bank to stop the payment. He produced the letter to the Bank dated 15-2-1993. He stated that he did not owe any money to the company but had issued the said cheques and after giving the said cheques Mr. Auduth Timblo had asked him not to come to work unless he was called. In cross-examination, the accused admitted that in the letter dated 12-2-1993 he had admitted that there was some fund of the company which was missing and that was on the basis of what Mr. Audhut Timblo had told him that the accounts showed unexplained expenditure. He admitted that he had not denied the said letter at any time stating that there was no liability. In further cross-examination he admitted that in the absence of Mr. Rajan Kinnerkar he was placing orders for the raw materials but the payments were made by Mr. Rajan Kinnerkar. He also admitted that he used to be one of the signatories on the cheques issued to the suppliers along with Mr. Timblo, Mr. Afonso, Mr. Kinnerkar. He further stated that procuring of material comes under the accounts Section and it is not part of the administration. He denied the suggestion that he was placing orders sometimes and was also involved in the accounts. He further stated that normally Mr. Rajan Kinnerkar was making the payments, but in case he had placed the orders, Rajan Kinnerkar only was making the payments. A letter dated 7-9-1990 was brought to his notice and then he admitted that he had sent the payments for some materials but explained that it was just the covering letter with the cheque that was sent. In further cross-examination he stated that whenever he was going on official tours, he was receiving the money in advance from the said accountant (Mr. Rajan Kinnerkar) and he used to sign the vouchers. He admitted that he had signed letter dated 24-9-1991 as Managing Director of the Company and that by that letter he had made a payment by Demand Draft. In further cross-examination he admitted that he was involved in receiving money for goods supplied by them. He admitted that he had not written any letter to the company that he was threatened of dismissal and criminal proceedings unless he gave the said 10 cheques.
18. Shri Diniz, the learned Counsel on behalf of the accused has submitted that the complainant had failed to prove that a sum of Rs. 7,17,171/- was missing and that the accused was responsible for the same. Learned Counsel further submits that it was necessary for the complainant to have proved the debt and in this context learned Counsel had placed reliance on a decision of the Apex Court reported in the case of
19. On the other hand, Shri Usgaonkar, the learned Counsel on behalf of the complainant, submits that both the Courts below have rightly considered the evidence produced and convicted the accused and therefore the scope in revisional jurisdiction is very limited against concurrent findings of facts. Learned Counsel further submits that interference by this Court would be called only in case the concurrent findings of both the Courts below can be shown to be perverse. Learned Counsel also submits that the version given by the accused is inconsistent with the correspondence exchanged by him earlier with the company and therefore the accused does not deserve to be believed. Learned Counsel also submits that the note sent by the accused is no evidence to prove that the financial matters were allotted to the said Mr. Rajan Kinnerkar and that allotting financial duties to the said Mr. Rajan Kinnerkar had nothing to do with the subject cheques issued by the accused. Learned Counsel further submits that the said letter dated 20-7-1992 contains an admission of liability that the accused owed to the company the said amount of Rs. 4 lacs and since the said letter was accompanied by the said cheques, the company was entitled to draw a presumption that the said cheques were issued in discharge of a debt or a liability. Learned Counsel further submits that the cross-examination of the accused brings out to light that the accused was handling the money of the company and that the accused in fact has not stated that there was no shortage. Learned Counsel also submits that the explanation for the said letter dated 20-7-1992 given by the accused is no explanation at all and therefore it cannot be accepted.
20. The Apex Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde (supra) observed that Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of a legally recoverable debt is not a matter of presumption u/s 139 of the Act. It merely raises a presumption in favour of holder of cheque that same has been issued for discharge of any debt or other liability. The Court also noted that the Courts below had proceeded on the basis that Section 139 raised a presumption in regard to existence of debt also and in that the Courts committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the Court was not correct. The Court also noted that an accused was discharging the burden on the basis of material already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different. In Rajendraprasad Gangabishen Porwal v. Santoshkamar Parasmal Saklecha and Anr. 2008 (1) Bom.C.R (Cri) 647 this Court observed that
Once it is found that the revision applicant was not required to examine himself or to adduce separate evidence in rebuttal, it is essential to see whether the material brought on record is sufficient to demolish the fact which can be presumed u/s 139 of the Negotiable Instruments Act.
The aforesaid observations of the Apex Court referring to Krishna Janardhan Bhat v. Dattatraya G. Hegde (supra) would make it manifest that existence of a legally recoverable debt is not a matter of presumption u/s 139 of the Negotiable Instruments Act. The trial Court as well as the first appellate Court erroneously proceeded on the footing that pre-existence of legally recoverable debt has to be presumed u/s 139 of the Negotiable Instruments Act because the cheque (Exhibit 21) admittedly, bears signature of the petitioner-Rajendraprasad. This is the error which altered the entire course of the trial and the decision making process of both the Courts.
21. The Apex Court in
Section 138 as well as Section 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn as noted in
It is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. The Court noted that it entrusts an exception to the rule as to the burden of proving in Criminal cases and shifts the onus on the accused. Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the Court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact.
The Apex Court further stated that:
In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, "after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists." Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man".
22. The presumptions available under Sections 138, 139 and 118 of the Act are all rebuttable presumptions and they can be rebutted by the accused either with the help of the evidence of the complainant or his own and they are required to be established by a lower standard of proof i.e. on the balance of probabilities and not by a higher standard which is always required of the prosecution being a standard beyond reasonable doubt. A more clearer statement of the law on this subject can be found from the case of Krishna Janardhan Bhat v. Dattatraya G. Hegde (supra) wherein the Apex Court referred to its earlier decision in the case of
Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption u/s 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who would be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising u/s 118(a) in his favour. The Court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt....
23. At the cost of repetition it may be stated that the transaction in which the subject cheques came to be issued to the said Audhut Timblo by the accused was within the knowledge of the said Mr. Audhut Timblo and the accused alone, since otherwise it was not the case of the complainant or the accused that the said transaction took place in the presence of any other witness. The circumstances under which the said cheques came to be issued by letter dated 20-7-1992 have been explained by the accused in his evidence while no such evidence has come from the complainant. There is no doubt that the said letter did contain an admission as contended on behalf of the complainant. But nevertheless the accused had stepped in the witness box and has explained under what circumstances the said letter with cheques came to be issued and that is when said Mr. Audhut Timblo brought to the notice of the accused that there was shortage of fund of about Rs. 7,17,171/- of the company. In the absence of any evidence from the said Mr. Timblo, the explanation given by him, that he gave the said letter out of fear of being dismissed or prosecuted appears to be far more probable. The letter dated 31-5-1993, the note sent by the accused coupled with the evidence of the accused, shows that the finanacial aspects of the complainant were being looked after by the said Mr. Rajan Kinnerkar and the accused was being blamed only because, as a Manging Director, he had not disagreed with the account statements prepared by the said Mr. Rajan Kinnerkar. The said explanation does not appear to be improbable also considering that what was found missing was the total sum of Rs. 7,17,171/- and the sum which was attributed to the accused was much lesser i.e. Rs. 4 lacs. It was the case of the company itself that the shortfall was attributable to three persons including the said accountant Shri Kinnerkar, one Mr. Afonso and the accused. The accused might have been the Managing Director or one of the signatories to the cheques issued on behalf of the company. As per Mulchandi/PW1 the petty cash box from which some money disappeared was in the custody of one Uday Naik and one does not know why the needle of suspicion was not pointed towards him. The explanation of the accused given on oath in the absence of any evidence to the contrary, as regards the circumstances in which the letter dated 20-7-1992 came to be issued by him appears to be probable and that being so the accused had sufficiently rebutted the presumptions which the said cheques carried in favour of the complainant i.e. they were issued without consideration but out of fear of dismissal from service and prosecution. Having rebutted the said presumptions it was absolutely necessary for the complainant to succeed in the cases to have proved firstly that there was shortage of Rs. 7,17,171/- and secondly that Rs. 4 lacs were misappropriated by the accused. As already stated Mulchandi/PW1 had no knowledge about the transaction nor as regards any facts of the case except documents which he produced. Counsel on behalf of the complainant, has submitted that the complainant had produced the documents which are required to be filed under the Companies'' laws, and proved the amount of short fall. This submission is neither here nor there. In case the auditor had prepared a report then it was necessary for the complainant to have examined the author of the same. The same is the case with the Director''s report or the ledgers. Persons who prepared the said reports were not examined on behalf of the complainant and therefore the entire case of the complainant that even Rs. 7,17,171/- were found short is not free from doubt. The accused after having discharged the onus placed upon him by aforesaid Sections of the Act by explaining the circumstance in which he gave the said letter and the 10 cheques it was necessary for the complainant to have proved that in fact Rs.7,17,171/- were missing from the company and out of that the liability of the accused was Rs. 4 lacs.
24. In my view, the findings of the Courts as regards the first case which ended before the Hon''ble Supreme Court and reported in
Considering the evidence led by the accused, in my view, both the courts below were not justified in coming to the conclusion that the accused had not discharged the presumption available to the complainant in terms of Sections 138, 139 of the Act. The accused had discharged his onus and had rebutted the presumptions. The complainant had failed to prove that there was either any shortage of funds or any shortage was at all attributable to the accused and more so when the complainant itself had clearly stated that there were three persons to whom the said shortage could have been attributed.
25. Considering the above, these revisions are bound to succeed. The judgments of both the Courts below are hereby set aside and the accused acquitted u/s 138 of the Act in all the cases. The amount, if any, deposited by the accused shall be refunded to him after a period of six weeks. Bail bonds of the accused to be cancelled.
