2020 (8) TMI 215 - HC - Indian Laws

Dishonor of cheque - insufficiency of funds - acquittal of accused - Section 141 of the Negotiable Instruments Act - HELD THAT - Explanation (a) to Section 141 of the Negotiable Instruments Act clearly says that 'Company' means any body corporate and includes a firm or other association of individuals. Explanation (b) says that 'Director' in relation to a firm means a partner in the firm. The 2nd accused also contented that there is no evidence in this case to prove the execution of the cheque. Therefore, even though this is an appeal against the acquittal, an accused can take any contention in his favour before this Court. It is an admitted case that, the 1st accused in this case is M/s. Sea Wings Shipping Others, Willingdon Island represented by its Managing Partner Mr. Varghese Philip. Mr. Varghese Philip is the 2nd accused - Since 1st accused is a firm, only fine was imposed. The conviction and sentence imposed on the 1st accused is not challenged by the 1st accused. 1St accused is represented by the 2nd accused. The conviction and sentence imposed on the 1St accused became final. In such circumstances, the 2nd accused, who is actually representing the 1st accused cannot contend in an appeal against acquittal of the 2nd accused to the effect that, the execution of the cheque is not proved, especially when the conviction and sentence against the 1st accused under section 138 of the Negotiable Instruments Act became final. The 2nd accused also committed an offence under section 138 of the Negotiable Instruments Act. The trial Court imposed a fine of ₹ 5,000/- to the 1st accused because 1st accused is a partnership firm. 2nd accused is the Managing Partner of the firm - the 2nd respondent/2nd accused is convicted under section 138 of the Negotiable Instruments Act - appeal allowed.

Summary

Issues:
1. Appeal against order of acquittal of the 2nd respondent under Section 138 of the Negotiable Instruments Act.
2. Interpretation of Section 141 of the Negotiable Instruments Act regarding liability of Managing Partner in a firm.
3. Requirement of specific averments in a complaint for liability under Section 141.
4. Evidence required to prove execution of a cheque in a criminal complaint.

Analysis:

1. The appeal was filed against the acquittal of the 2nd respondent in a case under Section 138 of the Negotiable Instruments Act. The complainant alleged that the accused issued a dishonored cheque and refused to pay the amount despite a statutory notice, leading to the complaint.

2. The main contention revolved around the interpretation of Section 141 of the Act regarding the liability of the Managing Partner of a firm. The counsel for the complainant argued that the Managing Partner is responsible under Section 141, citing relevant case laws and the need for specific averments in the complaint.

3. The court referred to the Supreme Court's decision in S.M.S. Pharmaceuticals Ltd. case, emphasizing the necessity of specific averments in a complaint under Section 141. It was clarified that being a director in a company does not automatically imply liability under Section 141, and specific averments are crucial to establish liability.

4. Regarding the evidence required for proving the execution of a cheque, the court noted that the 2nd accused, who was the Managing Partner, could not escape responsibility merely due to lack of averments in the complaint. The court also highlighted the definitions of 'Company' and 'Director' under the Act to support the applicability of the principles laid down in the S.M.S. Pharmaceuticals Ltd. case.

5. Ultimately, the court set aside the order of acquittal of the 2nd accused and convicted him under Section 138 of the Negotiable Instruments Act. The 2nd accused was sentenced to undergo imprisonment till rising of the Court and to pay compensation to the complainant, with provisions for simple imprisonment in case of default.

This detailed analysis of the judgment highlights the key legal issues, interpretations of relevant sections of the law, and the court's decision in the case.