2019 (4) TMI 1628 - HC - Indian Laws

Dishonor of cheque - insufficiency of funds - section 138 of NI Act - HELD THAT - The accused No.1/Firm not only made party but it is also proved by the complainant that accused No.1/Firm has committed the offence punishable under Section 138 of the Negotiable Instruments Act. Accused No.2 being the Managing Director, who issued the cheque, was held responsible. Therefore, impugned judgment of Additional Sessions Judge, Akola in Criminal Appeal No. 120 of 2013 is liable to be quashed and set aside. In the present case, accused Nos.3 and 4 were not the incharge and responsible for the conduct and business of the company. Accused No.2 issued cheques in favour of the complainant. He was the responsible persons for the act of accused No.1/Firm. He was managing the affairs of the firm/accused No.1. Therefore, learned JMFC has rightly convicted accused No.2 and acquitted accused Nos.3 and 4. The complainant has made firm as accused No.1 in the complaint itself. Learned JMFC has recorded his findings in para 51 that the complainant has proved that offence is committed by accused No.1/Firm. However, failed to prove that accused Nos.3 and 4 are vicariously liable for the act of accused No.1/Firm because accused Nos.3 and 4 were not the acting partners of the firm. Therefore, it is clear that accused No.2 issued cheques (Exhs.146 and 147) on behalf of accused No.1/Firm towards discharge of legal debt and liability - accused No.2 was held guilty of the offence punishable under Section 138 of the Negotiable Instruments Act. Accused No.2 was managing the affairs of accused No.1/Firm. He himself has signed the cheques (Exhs.146 and 147). The said cheques were not encashed. Criminal revision application allowed.

Issues Involved:
1. Legality of the conviction of accused No.2 under Section 138 of the Negotiable Instruments Act.
2. Interpretation of the judgment in Aneeta Hada v. Godfather Travels and Tours Private Limited.
3. Acquittal of accused Nos.3 and 4.
4. Remand for retrial by the Additional Sessions Judge.

Detailed Analysis:

1. Legality of the conviction of accused No.2 under Section 138 of the Negotiable Instruments Act:
The Judicial Magistrate First Class (JMFC) convicted accused No.2 for the offence punishable under Section 138 of the Negotiable Instruments Act, sentencing him to one month of simple imprisonment and a fine of ?5,000, with an additional one-month imprisonment if the fine was not paid. The JMFC also ordered accused No.2 to pay ?30,00,000 within two months, failing which he would suffer another month of simple imprisonment.

2. Interpretation of the judgment in Aneeta Hada v. Godfather Travels and Tours Private Limited:
The Additional Sessions Judge set aside the JMFC's judgment, relying on the Supreme Court's decision in Aneeta Hada v. Godfather Travels and Tours Private Limited, arguing that the conviction was illegal because accused No.1/Firm was not convicted. The High Court found that the Additional Sessions Judge misinterpreted the Supreme Court's ruling. The Supreme Court in Aneeta Hada emphasized that to fix criminal liability for cheque dishonor, the company must be made an accused. The High Court noted that the JMFC had indeed made the firm an accused and found it guilty, thus the conviction of accused No.2 was valid.

3. Acquittal of accused Nos.3 and 4:
The complainant challenged the acquittal of accused Nos.3 and 4. The High Court upheld the JMFC's decision to acquit them, referencing the Supreme Court's judgment in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another. The court noted that liability under Section 141 of the NI Act is vicarious and requires a clear case against the person sought to be made liable. Accused Nos.3 and 4 were not in charge of or responsible for the conduct of the business of the firm at the time of the offence, and thus were rightly acquitted.

4. Remand for retrial by the Additional Sessions Judge:
The Additional Sessions Judge had remanded the matter for retrial, which was contested. The High Court held that the remand was unnecessary as the JMFC's judgment was legal and correct. The High Court referenced the Supreme Court's decision in Mohd. Hussain alias Julfikar Ali v. State (Govt. of NCT), Delhi, which cautioned against routine retrials. The High Court concluded that the JMFC had correctly applied the law and the facts, thus the retrial order was unwarranted.

Conclusion:
The High Court quashed and set aside the Additional Sessions Judge's judgment, restoring the JMFC's original judgment. The High Court dismissed the criminal appeals and revisions filed by the accused, affirming the conviction of accused No.2 and the acquittal of accused Nos.3 and 4. Each party was ordered to bear their own costs.

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