P. Lakshmana Reddy, J.@mdashThis is an appeal filed against the order of acquittal, dated 10.7.2000 recorded by the Special Judicial First Class Magistrate (Mobile), Nellore in C.C.No.52 of 2000.
2. The appellant herein is the complainant and the first respondent herein is the accused before the Court below and, therefore, for the purpose of convenience, the parties to this appeal will hereinafter be referred in the judgment as complainant and accused.
3. The relevant facts in brief are as follows:
The complainant is the Company M.G.Brothers Auto Mobiles Private Limited engaged in selling TATA Vehicles i.e. trucks and spare parts and also engaged in effecting the repairs. One Sk.Mabu Khan, Assistant Works Manager in the said company filed private complaint against the accused styling himself as the representative of the said company. In the said complaint, it is alleged that the accused used to purchase vehicles from the complainant company on credit basis and likewise the complainant purchased four tippers from the complainant company out of which two vehicles were delivered on 22.11.1994 and the accused paid almost all the amounts except the balance of Rs. 1,32,989.10 and towards the said balance the accused issued cheque for an amount of Rs. 1,00,000/- on 20.11.1995 and when the same was presented before the bank it was dishonoured with an endorsement ''payment stopped by the drawer'' on 23.2.1996. Subsequent to the dishonour of the cheque the complainant company issued notice on 8.3.1996, which was duly served on the accused, and even after receipt of the notice, the accused has not paid the amount and, hence, the accused committed an offence punishable u/s 138 of the Negotiable Instruments Act (for short the Act).
4. On the said allegations, the learned Magistrate took the case on file and issued process to the accused and after his appearance furnished all copies of documents proposed to be relied on by the complainant and examined the accused u/s 251 Cr.P.C. The accused pleaded not guilty of the offence punishable u/s 138 of the Negotiable Instruments Act and claimed to be tried. The learned Magistrate conducted the trial during which one G.V.Kumar Dattu, Assistant Works Manager of the Complainant Company was examined as P.W. 1 and one P.S.A.Khan, Accounts Manager was examined as P.W. 2 and Exs.P-1 to P-5 were marked on behalf of the complainant company. After the prosecution evidence was over the learned Magistrate examined the accused u/s 313 Cr.P.C. wherein the accused stated that it is true that he purchased four tippers from the complainant company and also true that he issued cheque for Rs. 1,00,000/- in favour of the company but out of the four tippers purchased by him two tippers became defective which required repairs and that he informed orally and also in writing the Managing Director, Manager and the Sales Manager of the Company not to present the cheque in the bank. The accused did not examine any witness on his behalf nor did he file any documents.
5. Considering the evidence adduced on behalf of the prosecution and also the statement made by the accused during the course of 313 Cr.P.C. examination the learned Magistrate found that there is variation in the evidence of P.Ws.1 and 2 regarding the amounts paid by the accused and the sale transaction of four tippers. The learned Magistrate further found that P.W. 2 admitted that one of the four tippers containing Wipro Lifts was returned and still it remained with the complainant company. The learned Magistrate observed that the complainant did not come forward with clear facts and material regarding the transaction between the accused and the complainant and that P.Ws. 1 and 2 stated that they were not present at the time when the transactions between the accused and the complainant took place and that in view of lack of sufficient material, he is unable to hold that the accused has issued the said cheque towards the discharge of amounts liable to be paid to the complainant. The learned Magistrate further found that the Assistant Works Manager has no proper authorization to file the complaint and at the time of trial the complainant has not filed any memorandum or Articles of Association authorizing the Assistant Works Manager to represent the company to file complaint and, hence, the complaint is not maintainable. On such findings, the learned Magistrate found the accused not guilty of the offence punishable u/s 138 r/w Section 142 of the Act and acquitted the accused u/s 255(1) Cr.P.C.
6. Aggrieved by the said dismissal of the complaint, the complainant company preferred the present appeal contending as follows:
"1. The judgment of the lower Court is contrary to law and weight of evidence and probabilities.
2. The trial Court should have held hat the Ex. P-1 cheque was issued by the accused to the complainant towards the balance sale consideration of the four trucks purchased by him.
3. The trial Court erred in observing that ''I do not understand as to why P.W. I has given vague statement about his knowledge of the transactions being the representative of the complainant company'' though P.W. I has not given any vague statements.
4. The trial Court erred in observing that the statement of P. W. 2 is in variance with the evidence of P.W. 1.
5. The trial Court failed to see that as per Section 139 of the Act, the presumption is in favour of the complainant/appellant that the cheque is received by the accused for the nature referred to in Section 138 namely for any debt or liability namely towards the balance sale consideration of four trucks.
6. The trial Court failed to see that the burden is very heavy on the accused that the cheque Ex. P-1 is given towards the repairs for the truck and the accused has not discharged the said burden by place any manner of evidence.
7. The trial Court should have held basing on the fact that the accused has not given any reply to the notice Ex. P-3 issued by the complainant demanding payment of Rs. 1,00,000/- covered by the bounced cheque Ex. P-1.
8. The trial Court failed to see that as per the provisions of Section 142 of the N.I.Actthe complaint is filed by payee M/s.M.G.Brothers Automobiles (P) Ltd. and not by the Assistant Works Manager in his individual capacity.
9. The trial Court erred in giving importance for an authorization by the complainant company to file a complaint since the complainant itself is payee.
10. The trial Court should have held that an offence u/s 138 of N.I.Act has been made out by the prosecution and should have convicted the accused/respondent u/s 138 of N.I.Act."
7. During the course of hearing of the appeal, the Learned Counsel for the appellant reiterated the contentions raised in the grounds of appeal. He submitted that the accused admittedly purchased tippers from the complainant and on the date of taking delivery, he issued cheque towards partial discharge of sale consideration and, therefore, the learned Magistrate grossly erred in holding that the cheque was not issued towards any discharge of legally enforceable debt and that even if it is assumed that the tipper purchased was found defective and it was sent back for repairs to the complainant company, it gives rise to a different cause of action and it cannot be said on that ground that the cheque issued was not towards any legally enforceable debt. He further submitted that as the complaint was filed in the name of the company though it is represented by the Assistant Works Manager, it cannot be said that the complaint is not maintainable. The learned Magistrate grossly erred in holding that as the Assistant Works Manager was not authorized to represent the company the complaint is not maintainable. In support of his contention the Learned Counsel relied upon a decision of this Court in Eenadu a Daily Newspaper, Vijayawada v. J.Shiva Shanker and another, 2004 (2) ALT (Crl.)254 (A.P.) wherein this Court held that when the complaint is filed in the name of the company, it cannot be said that the person who made the complaint was not an authorized officer to represent the company and that the order of the acquittal passed by the Court below on that ground is liable to be set aside.
8. On the other hand, the Learned Counsel for the respondent-accused submitted that as seen from the admission made by P. W. 2 - Accounts Officer, out of one of the four vehicles supplied to the accused one of the vehicles purchased was found defective and, therefore, it was returned. He further submitted that the accused personally informed the Manager of the company not to present the said cheque in the bank due to disputes and, therefore, the lower Court rightly held that the cheque was not issued towards the discharge of a legally enforceable debt. Regarding the maintainability, the Learned Counsel submitted that the Court below elaborately considered the position of law on the subject and relied on two decisions of this Court in
The points that arise for determination in this appeal are:
1. Whether the cheque dated 20.11.1995 in this case was issued by the first respondent-accused in favour of the appellant in discharge of any legally enforceable debt?
2. If so, whether the drawer of the cheque is liable for punishment for the offence punishable u/s 138 of the Negotiable Instruments Act on its dishonour on a complaint instituted in the name of the company by Assistant Works Manager of the company?
3. Whether the order of the acquittal passed by the Court is not sustainable in law?
4. To what result? Points No. 1
9. It is not disputed that the accused issued cheque Ex. P-1 on 20.11.1995 for Rs. 1,00,000/- in favour of M.G.Brothers Automobiles Ltd. P.W. 1 - Senior Works Manager in M.G.Brothers Automobile Private Limited stated that the accused purchased four Telco tippers two in the year 1994 for Rs. 10,03,782.60 and other two vehicles in the year 1995 for Rs. 11,74,489.10 and towards sale consideration of the said vehicles, the accused paid Rs.8 lakhs at one time and Rs.9 lakhs at another time and towards partial discharge of the balance amount the accused issued the cheque Ex. P-1 for Rs. 1,00,000/- on 24.11.1995 and that when they presented the cheque through their bankers Andhra Bank, Dargamitta Branch, Nellore for collection, the said cheque was returned on 23.2.1996 with an endorsement "payment stopped by the drawer" and then the company got issued a legal notice to the accused on 8.3.1996 but the accused did not give any reply though he received the same. The returned cheque is Ex. P-1 and the cheque return memo is Ex. P-2, dated 23.2.1996. The copy of the legal notice is marked as Ex. P-3 and the postal acknowledgement is marked as Ex. P-4.
10. P.W. 2-Accounts Manager in the complainant''s company gave some more details about the amounts due by the accused. He stated that the accused used to purchase the tippers and lorries of TATA company from the complainant''s company on credit basis and that on 17.11.1994 the accused paid an amount of Rs.8 lakhs towards the value of two vehicles which were delivered on 21.11.1994 and thereafter the accused issued cheque for Rs.3 lakhs on 13.3.1995 and the said cheque was honoured and that again on 30.12.1994 the accused again paid an amount of Rs.9 lakhs towards the purchase of another two vehicles which costs about Rs. 11.74,489.10 leaving balance of Rs.2,74,489.10 and that on 14.4.1995 the accused paid an amount of Rs. 1,41,500/- towards the partial discharge of the debt by cheque and the said cheque was also honoured. He further stated that the accused was still due an amount of Rs. 1,32,989.10 towards purchase of other two vehicles which were delivered on 20.11.1995 and towards partial discharge of that balance amount, the accused issued the cheque Ex. P-1 for Rs. 1,00,000 on 20.11,1995 i.e. on the date of taking the delivery of the vehicles and the said cheque was dishonoured. P.W. 2 has given the vehicle numbers also. He stated that the accused did not give any letter requesting to supply Telco company only for the said vehicles. He stated that the accused used to bring the vehicles for effecting repairs. Though he admitted that one of the four vehicles supplied to the accused is now kept in the compound of the complainant''s company, he stated that the same was remained with their company for purpose of repairs. As against the said evidence, the accused did not adduce any evidence. He did not choose to get himself examined and state on oath that he did not issue the cheque towards and legally enforceable debt. In fact, he did not give any reply to the notice issued by the Company. Admittedly, the accused took delivery of the vehicles on 20.11.1995 and on that date towards balance sale consideration he issued the cheque Ex. P-1. Therefore, it cannot be said that as on the date of issuance of cheque there was no legally enforceable debt due to the company by the accused. As seen from Section 139 of the Negotiable Instruments Act when the issuance of cheque is admitted the presumption shall be drawn that the holder of the cheque received the cheque for the discharge in whole or part of any debt or any other liability, unless the contrary is proved. Therefore, the burden is on the accused that the said cheque was not issued towards any legally enforceable debt but in the instant case the accused miserably foiled to discharge his burden. The lower Court on insignificant variations in the evidence of P.Ws.1 and 2 held that the cheque was not issued for legally enforceable debt. Even if the suggestions put to P.Ws. 1 and 2 by the accused that one of the tippers was returned complaining some defects and it still lying with the company are taken as true, it cannot be said that the cheque issued on 20.11.1995 was not issued towards legally enforceable debt. Because if any defect was noticed subsequent to the delivery, it is altogether a different cause of action and the accused is entitled to proceed against the complainant company in accordance with law.
11. The learned Magistrate unnecessarily gave importance to insignificant and irrelevant variations in the evidence of P.Ws.1 and 2 to hold that the cheque was not issued towards the legally enforceable debt. In fact, it is not even the case of the accused that no debt was subsisting as on the date of issuance of cheques. Under those circumstances, the learned Magistrate grossly erred in pointing out some minor variations in the evidence of P.Ws. 1 and 2 about the actual amount due by the accused towards the sale consideration of the amount. Therefore, I have no hesitation to hold that the findings of the learned Magistrate in this regard are not sustainable in law and are liable to be set aside. Thus, this point is found in favour of the complainant and against the accused.
Point No.2:
12. It is not disputed that the complainant is filed in the name of payee company viz. M.B.Brothers Automobiles Ltd. But it is not disputed that the Assistant Works Manager who filed the complaint representing the company is not authorized by the company to file a criminal complaint against the accused on behalf of the company. It is also not disputed that neither articles of association nor bye-laws of the company have been filed to show that the Assistant Works Manager is competent to represent the company in civil or criminal proceedings. In fact, it is not even the case of the complainant that bye-laws or articles of association of the company authorised the Assistant Works Manager to represent the company. Of course, even in the absence of bye laws or articles of association the company is empowered to authorize any of its employees to represent the company. P. W. 2 -Accounts Manager also admitted in his cross-examination that Manager has to give authorization if any other wanted to file cases on behalf of the complainant company. Admittedly, there is no such authorization given by the company to the Assistant Works Manager to file the criminal complaint against the accused representing the company. Therefore, the fact remains that a person not authorized by the company filed the criminal complaint against the accused. So it has to be seen whether on such a complaint the accused can be convicted for the offence punishable u/s 138 of the Negotiable Instruments Act. As long back as in the year 1977 similar point arose before this Court in M/s.Satish and Company''s case (2 supra) wherein Justice B.S.Raikote considered the provisions contained in Sections 142A, 141,26 and 27 of Negotiable Instruments Act and also Order XXIX Rule 1 of C.P.C. and held that even if the cause title of the company describes the Company as the complainant through the Manager, such manager shall necessarily be an authorized manager in order to file a complaint on behalf of the company. In the cited case it was held that the Manager was not authorized to file the complaint and, therefore, conviction on such a complaint is not maintainable. The learned Judge considered the object of law that the complaint or suit shall be filed by a person duly authorized and observed that civil or criminal proceedings Will definitely have financial consequences on the company so as to bind the company for the actions of such persons and, therefore, specific authorization is necessary so as to bind the company for the actions of such person and that a company which suffered a decree or order, at the hands of such a person, who was not duly authorized, may repudiate the order and decree of a competent Court as not binding. The learned Judge further observed that even in criminal cases an aggrieved person may file a suit for malicious prosecution in case of a false complaint filed and even in such cases also the company may take up a plea that it was not bound by the actions of a particular officer on the ground that he was not duly authorised in that behalf and, therefore, any legal proceedings whether criminal or civil shall be instituted by the company through its authorized officers so as to bind the company. The said decision of this Court was followed in the subsequent decision in Swastick Coalers'' case (supra). The facts of the cited cases are similar to the facts of the instant case. In fact, the accused in the instant case stands on much better footing than the accused in the first cited case. Because in the said case though at the time of filing of the complaint the person who filed the complaint on behalf of the company was not authorized to file a complaint, but subsequently during the pendency of the trial the company issued authorized to file a complaint, but subsequently during the pendency of the trial the company issued authorization, and in spite of that this Court held that conviction cannot be sustained. In the instant case, even after filing of the complaint or during the pendency of the trial the complainant did not issue any authorization authorizing the Assistant Works Manager who filed the complaint to initiate the criminal proceedings against the accused. Thus, the accused in the instant case stands on much better footing than the accused concerned in the first cited case. The learned Magistrate placed reliance on these two decisions of this Court and held that the conviction cannot be recorded against the accused as the Assistant Works Manager was not authorized to file the complaint on behalf of the complainant company.
13. The learned Magistrate observed that even at the time of trial also the complainant has not filed any memorandum or articles of association authorizing the said Assistant Works Manager to represent the company. Following the above cited decision of this Court, the learned Magistrate held that the accused cannot be convicted on such a complaint and dismissed the complaint on the ground that the person who filed the complaint in the name of the company was not authorized by the company to represent the same in the criminal complaint.
14. The Learned Counsel for the complainant invited the attention of this Court to the later decision of this Court in Eenadu Daily Newspaper''s case (supra) wherein this Court held that when once the complaint is filed in the name of the company, even if the person who made the complaint was not an authorized officer to represent the company, conviction can be recorded for the offence punishable u/s 138 of the Act. It is true that the facts of the cited case are also similar to the facts of this case. It is also true that in the cited case my learned brother Justice Elipe Dharma Rao set aside the acquittal recorded by the trial Court on that ground. I have gone through the judgment of my learned brother Sri Justice Elipe Dharma Rao and found that the above cited earlier decisions rendered by this Court were not brought to the notice of my learned brother Sri Justice Elipe Dharmaa Rao and on the other hand a decision of the Apex Court in M/s. M.M.T.C. Ltd. and another''s case (supra) was cited before my learned brother though the facts of the said case before the Apex Court are not similar to the facts of the case in Eenadu Daily Newspaper''s case (supra). It is true that in the cited case the Apex Court held that when the complaint is filed in the name of the Company, such complaint cannot be quashed on the ground that the person who made the complaint was not authorized by the Board of Directors of the Company to sign and file the complaint on behalf of the company. But, the said decision was rendered not in an appeal filed against acquittal of the accused on such ground. The said decision was rendered in an appeal against quashing of a complaint by the High Court. In the case before the Apex Court, the accused had issued six cheques in favour of the complainant and those six cheques were dishonoured when presented for payment. Six separate complaints were filed u/s 138 of the Negotiable instruments Act. In four complaints, the accused filed separate applications for discharge and the learned Magistrate discharged the accused in those four cases and then the complainant approached the High Court by way of revision and the High Court allowed the revision and set aside the orders of discharge and directed the Magistrate to proceed with the trial in accordance with law. Special Leave Petitions were filed before the Apex Court and the Apex Court also dismissed those Special Leave Petitions in respect of those four complaints. In respect of remaining two complaints in between the very same parties, the High Court held that the complaints filed by the unauthorized persons are not maintainable and, hence, the complaints are liable to be quashed. On such facts, the Apex Court held that merely because the complaint is signed and presented by a person who is neither authorized person nor a personal Empowered under the articles of association or by any resolution of the company to do so,is no ground to quash the complaint and that it is open to the de jure complaint company to seek permission of the Court for sending any other person to represent the company in the Court and thus, even presuming that, initially there was no authority, still the Company can, at any stage, rectify that defect and that at a subsequent stage the Company can send a person who is competent to represent the company. Further at the end of the judgment the Apex Court observed that it is made clear that the setting aside of the impugned order will not tantamount to prevent the respondents-accused from taking, at the trial, pleas available to them including those taken in that Special Leave Petition. Therefore, it is clear that the Apex Court did not lay down the law that accused can be convicted for the offence punishable u/s 138 of the Negotiable Instruments Act on a complaint filed in the name of the company by a person not authorized by the Company to represent the company in the criminal complaint. The Apex Court held therein that on such ground complaint cannot be quashed. Such a decision was cited and my learned brother Justice E.Dharma Rao relying on such decision set aside the acquittal in Eenadu A Daily Newspaper''s case (supra). Further, as already observed supra, the earlier decisions of this Court are not brought to the notice of my learned brother Justice E.Dharma Rao. As the facts of the cited decision of Apex Court are not similar to the facts of the instant case, I prefer to follow the earlier decisions of this Court in M/s.Satish and Company''s case (supra) and M/s. Swastik Coaters'' case (supra) where elaborate reasons are given and which were relied on by the learned Magistrate. Hence, in my considered view the order of acquittal passed by the learned Magistrate on the ground that the person who made the complaint on behalf of the company is not authorized by the company to present the complaint against the accused is sustainable in law and needs no interference by this Court. Thus, this point is found against the appellant and in favour of the respondent-accused.
Point No.3:
15. In view of my finding on point No.2 the order of acquittal is to be confirmed and the appeal is to be dismissed. Thus, this point is held accordingly.
Point No.4:
16. In the result, the appeal is dismissed.
