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2023 (10) TMI 1399 - HC - Indian LawsDsihonour of Cheque - insufficiency of funds - accused denied the incriminating questions in the examination under Section 313 of the Code of Criminal Procedure - HELD THAT - In the case on hand, admittedly, the complainant is a firm. The complaint is filed by the firm in its name and is represented by its Branch Manager, who has been authorised as per Ext.P10 resolution. There is also a specific assertion in the complaint that PW1 is competent to represent the firm - this Court is of the view that the finding of the learned Magistrate that PW1 is incompetent to file the complaint is erroneous and unsustainable in law. In K. BASHEER VERSUS C.K. USMAN KOYA AND ORS. 2021 (3) TMI 1228 - KERALA HIGH COURT , this Court has held that no particular form is prescribed under the Act concerning a notice under Section 138(b) of the Act, except that the payee or holder in due course should make a demand for the payment of the amount of money within 30 days from the receipt of intimation from the bank regarding the return of the cheque and the Court cannot legislate by prescribing a particular form and cannot require that the nature of the transaction leading to the issuance of cheque be disclosed in the notice when the statute does not provide for it. In the present case, at the risk of repetition, it is reiterated that the complainant had instituted the complaint through PW1, who is authorised to file the complaint. In the trial, the complainant examined PWs1 and 2 and marked Exts.P1 to P12. PW2, in clear terms, testified that he is aware of the transactions between the complainant firm and the accused - the complainant has discharged its initial onus of proof by satisfying the concomitants constituting the ingredients under Section 138 of the Act and has shifted the reverse onus of proof onto the shoulders of the accused. Admittedly, the accused had not sent a reply notice. Instead, the accused has marked Ext.D1 receipts in evidence to substantiate his payments to the complainant. Ext.D1 receipts corroborate the testimonies of PWs. 1 and 2 and Ext.P11 statement that the accused had business transactions with the complainant. On a comprehensive re-appreciation of the materials placed on record, particularly the oral testimonies of PWs 1 and 2 and Exts.P1 to P12, this Court finds that the accused has failed to discharge the reverse onus of proof under Section 139 of the Act and, therefore, the finding of the learned Magistrate is erroneous. Consequently, the accused is liable to be convicted for the offence under Section 138 of the Act. In DAMODAR S. PRABHU VERSUS SAYED BABALAL H. 2010 (5) TMI 380 - SUPREME COURT , the Honourable Supreme Court has held that, unlike other forms of crime, the punishment under Section 138 of the Act is not a means of seeking retribution but a means to ensure payment of money. The complainant's interest lies primarily in recovering the money rather than seeing the accused being incarcerated. While passing an order of sentence for the offence under Section 138, the courts must keep the compensatory aspect in mind rather than giving priority over the punitive part. This Court deems it justifiable to sentence the accused to undergo imprisonment for one day and pay compensation to the complainant with a default sentence - the impugned order is set aside - appeal is allowed.
Issues Involved:
1. Applicability of the directions in Narayanan A.C v. State of Maharashtra and others. 2. Competence of the complainant's representative to file and prosecute the complaint under Section 138 of the Negotiable Instruments Act. 3. Requirement of specific assertion of knowledge by the power of attorney holder in the complaint. 4. Whether the accused is guilty of the offence under Section 138 of the Negotiable Instruments Act. 5. Appropriate sentencing and compensation for the offence under Section 138 of the Negotiable Instruments Act. Issue 1: Applicability of the Directions in Narayanan A.C v. State of Maharashtra and others The court examined whether the directions in Narayanan A.C v. State of Maharashtra [2013 (3) KHC 885] and Shibu L.P v. Neelakantan [2022 KHC 548] apply to a complaint filed by a power of attorney of a company/firm. The court noted that in TRL Krosaki Refractories Ltd. v. SMS Asia Private Limited [2022 (2) KHC 157], the Supreme Court distinguished Narayanan A.C in the context of complaints filed by companies/firms, indicating that the requirement of a specific assertion of knowledge by the power of attorney holder does not apply in the same manner to companies/firms. Issue 2: Competence of the Complainant's Representative to File and Prosecute the Complaint The complainant, a firm, was represented by its Branch Manager, who was authorized by a resolution (Ext.P10). The court emphasized that the complaint explicitly stated the complainant's status as a firm and the Branch Manager's competence to represent it. The court found the Magistrate's conclusion that PW1 was incompetent to file the complaint erroneous and unsustainable in law. Issue 3: Requirement of Specific Assertion of Knowledge by the Power of Attorney Holder The court referred to TRL Krosaki Refractories Ltd., which clarified that in complaints filed by companies/firms, a specific assertion regarding the knowledge of the power of attorney holder need not be in a particular manner. The court concluded that the assertion in the complaint and the authorization of the Branch Manager were sufficient for the Magistrate to take cognizance and issue process. Issue 4: Whether the Accused is Guilty of the Offence under Section 138 of the Negotiable Instruments Act The complainant provided evidence, including Ext.P1 and Ext.P2 cheques, Ext.P11 statement of accounts, and testimonies of PWs 1 and 2, establishing the accused's liability. The accused failed to rebut the presumption under Section 139 of the Act. The court found that the accused did not discharge the reverse onus of proof and was therefore guilty of the offence under Section 138. Issue 5: Appropriate Sentencing and Compensation for the Offence under Section 138 of the Negotiable Instruments Act The court referred to Damodar S. Prabhu v. Sayed Babalal H [2010 (2) KHC 428], emphasizing the compensatory aspect over punitive measures. The court sentenced the accused to imprisonment for one day (till the rising of the court) and to pay compensation of Rs. 2,00,000/- to the complainant within two months. The court directed the accused to appear before the Trial Court to undergo the sentence and pay the compensation, with provisions for execution of the sentence and recovery of the compensation if the accused fails to comply. Conclusion: (i) The appeal is allowed, and the impugned order is set aside. (ii) The accused is found guilty and convicted for the offence under Section 138 of the Negotiable Instruments Act. (iii) The accused is sentenced to undergo imprisonment for one day and pay a compensation of Rs. 2,00,000/- to the complainant within two months. (iv) The accused is directed to appear before the Trial Court on 17.12.2023 to undergo the sentence and pay the compensation amount. (v) The Trial Court is directed to execute the sentence and recover the compensation if the accused fails to appear. (vi) The compensation amount, if recovered, shall be paid to the appellant/complainant under Section 357(3) of the Code. (vii) The execution of the sentence is deferred till 17.12.2023. (viii) The Registry is directed to forward a copy of this order to the Trial Court for compliance.
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