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TMI Blog2021 (4) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the complainant is the holder in due course. Whether the cheques have been issued for the discharge in whole or in part of any debt or other liability? - HELD THAT:- It is now well settled that the complainant is required to establish the case beyond reasonable doubt whereas the accused can discharge the burden on preponderance of probabilities. This can be done on the basis of cross examination of the witnesses of the complainant and any other material available on the record and it is not necessary for this purpose the accused should enter into the witness box - The question really is about the extent to which such presumption can operate and can the benefit of such presumption be availed then the case set up by the complainant is found to be not substantiated. Application of Money Lenders Act - HELD THAT:- A common proposition emerges that when offence under section 138 is in respect of a company section 141 comes into play. It is a penal provision creating vicarious liability and must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in the complaint that the director (arrayed as an accused)in charge of and responsible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 17-3-2021 - M.S. JAWALKAR, J. Shri V. Menezes and Shri A. Shirodkar, Advocates for the petitioner. Shri M. Amonkar, Advocate for the respondent no.1. Shri D. Dhond and Shri V. Amonkar, Advocates for the respondent nos. 3 and 4. Shri A. Kantak and Shri R. Kantak, Advocates for the respondent no. 6. Shri R. Chodankar and Shri V. Braganza, Advocates for the respondent no.9. Shri P. Arolkar, Advocate for the respondent no. 10. JUDGMENT There are 11 other connected matters wherein leave application to file appeal came up before this Court. By consent and at the request of the parties, leave applications as well appeals are taken together. As both of them are taken together leave is granted and appeals are treated as admitted. All the appeals are taken up together for decision to be decided by common judgment. 2. The present appeals are filed by the original complainant challenging the judgment of acquittal of the respondent/ original accused in complaint Other Act Case No.223/1998/C passed by the learned Judicial Magistrate First Class at Panaji under Section 138 of the Negotiable Instruments Act (for short NI Act ) dated 13.3.2018. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of accused no.1(company) signed by accused nos. 2 and 9 who were directors and authorised signatories at Goa on intrusions of accused no.2 who was Managing Director. On 11.6.1998, the complainant presented the cheque and that the cheque was returned unpaid by the bankers informing that Authority to sign withdrawn . By notice dated 18.6.1998, the complainant called up the accused and requested to make payment within 15 days. Notices were served accused nos.1, 3, 4, 7 on 24.6.1998 and accused nos.2 and 6 on 20.6.1998, accused no.9 on 23.6.1998, accused no. 10 on 19.6.1998. As no payment was made even after the expiry of 15 days, the complaints filed by the present complainant under Section 138 read with Section 141 of NI Act. It is also the case of the complainant that accused no.1 paid monthly interest at the rate of 24% on the loan amount upto February, 1997 and thereafter no interest has been paid to the complainant. Upon losing confidence with the accused persons the complainant on consultation with his Chartered Accountant Raghu Pikale decided to withdraw the loan amount against the cheque issued by the accused and accordingly presented the same to the bank for the clearanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement made to cover the said cheque. 8. The two contentions raised by the accused nos.1,3 and 4 that the cheque was invalid cheque as it was not signed by a person authorised to sign the same as the signatories had resigned from the company and for the reason that said cheque books which were issued by the concerned bank did not pertain to the period when the cheque were issud.. There is no evidence led by accused nos. 1, 3 and 4 to substantiate these two contentions. It is further contentions that accused no.3 does not deny that he was Managing Director of the company. Under Section 138 of the NI Act, the Managing Director stands on a different footing from other directors and he deem to be responsible for the affairs of the company. He is responsible for all transactions entered into by other directors. The learned JMFC failed to appreciate this law position and rendered a judgment of acquittal. 9. The another ground to challenge the judgment of acquittal is that the learned Magistrate ought to presume consideration unless the contrary is proved. The conclusion of learned JMFC is on wrong legal foundation that since there is no documentary evidence on record of the loan tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 512 4. Krishna P. Morajkar Vs Joe Domnic Ferrao and anr. 2014(2) Bom. C.R. (Cri.) 738. 5. Pramod Building s and Developers Pvt. Ltd Vs. Shanta Chopra, (2011)4 SCC 741. 6. Mr. Carlos Tavora Vs. M/s Skyline Aquatech Exports Ltd., in Criminal Case No. 223/OA/98/C. 7. Goa plast Pvt. Ltd. Vs Chico Ursula D'Souza, (2004)2 SCC 235. 10. Shri Dhond, the learned counsel alongwith Shri V. Amonkar counsel for the respondent nos.3 and 4 submitted that the applicant has been unable to fulfill the mandatory ingredients and requirements of Section 138 of the NI Act. The applicant has miserably failed to produce any material to establish that he had advanced a loan amount to the tune of ₹ 20 lakhs or any part thereof to the respondent no.1's company. Secondly the applicant has not produced a single document in respect of the alleged loan transaction of the said amount, neither the said amount is reflecting in the income tax returns nor in the books of accounts. There is nothing mentioned as to whom the amount of ₹ 20 lakhs has been paid or on which date the said amount paid or received. As per the complainant, the alleged recipient of the said am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Shri D. Dhond, the learned counsel for the respondent nos. 3 and 4 relied on following judgments. 1. Sanjay Mishra Vs Ms. Kanishka Kapoor @Nikki and anr., 2009 Cri. L. J. 3777 2. Vassudeo Ramchand Ahuja Vs. Vilas Shripad Kamble and anr., 2006 ALL Mr(Cri) 3203 3. Kishor L. Purohit Vs. Prem Saxena and anr., 2017 ALL MR(Cri) 148 4. Shri Datta S. Nadkarni, Vs. Mr. Salvador Fernandes and anr., Criminal Appeal No. 46 of 2013. 5. K. Subramani VS K. Damodara Naidu, 2015 ALL Mr.(Cri) 789(S.C.) 6. Shri Vikas Gopi Bhagat, Vs. Shri Shivdas Pednekar and anr. Criminal Appeal No. 37 of 2014. 7. Shri Rajendra Pangam, Vs. Shri Paresh B. Naik and anr., Criminal Appeal No. 13 of 2013. 8. Krishna Janardhan Bhat Vs. Dattatraya G. Hegde, 2008 ALL MR (Cri) 1164 (S.C.) 9. Smt. Kiran Yugalkishore Bhattad VS Suhila Ramcharan Kattamwar, 2010 ALL Mr (Cri) 1147. 10. Nitin s/o Bapurao Mankar Vs. Shri Vyankatesh Housing Agency and anr. 2010 ALL MR (Cri) 1441. 11. M/s Kalpana Mines and Minerals Vs. M/s. Muneer Enterprises, 2016 ALL Mr(Cri.)5316 12. Ashish Parikh Vs. State of Maharashtra, Criminal Application No. 1883 of 2007. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committed he was not the employee also. 19. The complainant admitted that accused no.9 was not the director. Even though he had signed six cheques, he was arrayed as an accused in all the complaints in respect of 12 cheques. Complainant was not having any registration under the Money Lenders Act nor intimated about the loan transactions as per the provisions of Money Lenders Act. He submitted that the appeal is liable to be dismissed. 20. Shri R. Chodankar, the learned counsel for respondent no. 9 relied on following judgments:- 1. Harshendra Kumar D. Vs. Rebatilata Koley etc, AIR 2011 SC 1090 2. DCM Financial Services Ltd. Vs. J. N. Sareen and anr. 2008 ALL MR (Cri) 2272 (S.C. 3. Ashok Mal Bafina Vs. M/s Upper India Steel Mfg. Engg. Co. Ltd., 2017 ALL SCR (Cri) 1358. 4. Baba Chandrashekhar Radhakrishnan and ors. Vs The State of Maharashtra and anr. 2018 ALL MR (Cri.) 4533. 5. Mrs. Anita Malhotra Vs. Apparel Export Promotion Council and anr. AIR 2012 SC 31. 6. Mr. Shehzad Valimohammad Merchant Vs Mr. Saiyed Ghulam Abbas Zaidi and anr. 2019 ALL MR(Cri) 5001. 7. M/s SIL Import, USA Vs. M/s Exim Aides Silk Exporters, Bangalore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any debt or other liability; (iii) That cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier, (iv) That cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank; (v) The payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (vi) The drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice. 26. It appears that the cheque bears a word Self in place of payee's name. The learned trial Judge held that even self cheque would come within the ambit of Section 138 of the NI Act and held that the complainant is the hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of the accused that there was no sufficient funds in the account of accused no.1. He has also admitted that he has not confirmed by going to the bank whose authorisation withdrawn and at what point of time even after he received reply to his legal notice informing withdrawal of the authority by the concerned accused. 31. For the sake of convenience a chart showing cheque number, amount date on cheque, date of presentation, signatories to the cheque and cheque book date. So also the date of resolution by which signing authorities of the company's cheque were declared. SR NO CHEQUE NO. AMOUNT RS. DATED PRESENTED ON CHEQUE SIGNATURES CHEQUE BOOK DATE 1 607093 1,00,000 26/12/1997 8/6/1998 FREDRICK S.KUMAR 17/08/1995 2 946154 5,00,000 26/12/1997 11/6/1998 FREDRICK S.KUMAR 14/2/1996 3 05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otiable Instruments is presumed to have been made on the date shown on the instrument. The same presumption can be rebutted only by a person denying it by entering into a witness box. The learned counsel also relied on the same judgment in support of his contention that it is the accused to prove that he was not managing the affairs of the company. 33. The learned counsel for the respondent nos. 3 and 4 Shri Dhond pointed out from the same judgment and submitted that the presumption are rebuttable and the accused is not required to tender evidence or bear burden of proof of the same magnitude as the prosecution. The standard of proof is preponderance of probabilities and inference of preponderance of probabilities can be drawn while rebutting the presumption not only from the material on record, but also by reference to the circumstances upon which the accused relies. 34. The learned Counsel Shri Menezes for the appellant also relied on S. M. S. Pharmaceuticals Ltd (supra) in support of his contentions, that Managing director or joint managing director admittedly in charge of company and responsible to the company for the conduct of its business. When that is so, holders of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act is not required to be obtained by the complainant to continue with the present proceeding. 37. The learned counsel placed reliance on Rangappa (supra) in support of his contention that once the accused has admitted that the signature on the impugned cheque was indeed his own Section 139 of the Act mandates a presumption that the cheque pertained to a legally enforceable debt or liability. This presumption is of rebuttal nature and the onus is then shifts on the accused to raise a probable defence. 38. The learned counsel Shri Dhond for the respondent nos.3 and 4 submitted that in the same judgment in para 10 the Division Bench of this Court relying on Krishna Janaradhan Bhat Vs Dattatraya G. Hegde, (2008) 4 SCC 54 observed at paragraphs 30, 34 and 45 thus:- 30. The proviso appended to the said section provides for compliance with legal requirements before a complaint petition can be acted upon by a Court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra), wherein the complainant alleging that the accused had taken friendly loan of ₹ 5 lakhs from him. Cheque issued in repayment was dishnoured. As the complainant was unable to produce the document to show that there was enforceable debt against accused. The said amount admittedly was not shown in income tax returns and also did not reflect in the books of accounts. The Hon'ble High Court upheld the trial's Court verdict that the defence of the accused that there was no legally enforceable debt on the date of presentation of the cheque and dismissed the complaint. 40. Similarly the learned counsel relied on Kishor L. Purohit (supra), wherein the Hon'ble Bombay High Court held that the complainant's case that the accused had issued cheque towards part payment of friendly loan. However, it is unbelievable that a businessman like the complainant would advance a loan of ₹ 3.40 lakhs to a stranger like respondent that too without receiving any acknowledgment. The plea of complainant that receipt was obtained, however, it was handed over back to the respondent, not inspiring confidence of Court. This Court held that legally enforceable liability, not prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Apex Court in case of Rohitbhai Jivanlal Patel Vs. State of Gujarat and another 2019 SCC Online SC 389 wherein Hon'ble Apex Court held that ordinarily the Appellate Court will not be upsetting the judgment of the acquittal if the view taken by trial court is one of the possible view of the matter and unless the Appellate Court arrives at a clear finding that the judgment of the trial court is perverse that is not supported by the evidence on record or contrary to what is regarded as normal or reasonable or is wholly unsustainable in law. However, such restrictions needs to be visualised in the context of the particular matter before the Apex Court and the nature of the inquiry therein. The same rule with same rigour cannot be applied in a matter relating to the offence under section 138 of the NI Act. 45. On similar proposition he relied on Rajendra Pangam (supra). In this matter also though it was possible to examine the Chartered Accountant or atleast produced the accounts maintained in order to establish that amount of ₹ 75000/- was advanced was not produced by the complainant and, therefore, the appeal of the complainant was dismissed. 46. The learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used. 51. The learned counsel relied on John K. Abraham (supra) herein it is held by the Hon'ble Apex Court that conviction of the accused not proper. The Hon'ble Apex Court held that for drawing presumption under Section 118 read with Section 139 of NI Act burden is heavily upon the complainant to have shown that he had required funds for having advanced the money to the accused; that the issuance of the cheque in support of the said payment advanced was true and that the accused was bound to make the payment as had been agreed while issuing. The complainant not sure as to who wrote cheques nor aware as to where and when existing transaction took place for which cheque were issued by the accused. Thus defect in the evidence of the complainant as noted by the trial Court was proper. Specific averments about directors in charge 52. In N. K. Wahi (supra), wherein Hon'ble Supreme Court held that it is necessary to specifically aver in a complainant under Section 141 that at the time when the offence was committed the person accused was in charge of and responsible for the conduct of business of the company. This averment is an essential requirement of Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter before the Hon'ble Apex Court in the similar set of facts it was held that proceedings against the appellant liable to be quashed. It is further held that a person would vicariously liable for commission of an offence on the part of the company only in the event the conditions precedent laid down therefor in Section 141 of the Act stands satisfied. 59. The learned counsel on relied on K. Shrikanth Singh (supra), wherein the Hon'ble Apex Court held that to attract vicarious liability of a director of a company under Section 141 it must be pleaded and shown that the director was responsible for the conduct of business of the company at the time of commission of the offence. Only being a director not enough to cast a criminal liability. Vicarious liability must be pleaded and proved and cannot be merely inferred. 60. The learned counsel for the respondent no.9, Shri R. Chodankar, relied on Harshendra Kumar D. (supra), wherein Hon'ble Apex Court held that a director whose resignation has been accepted by the company and that has been duly notified to the Registrar of the company cannot be made accountable and fasten with liability for anything done by the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder of a cheque and the said cheque has been issued for the discharge in whole or in part of any debt or other liability. As it is an offence against the company, it is also require to be established that the accused is the person responsible for affairs of the company he was in charge and having the control over the company's affiars at the time of commission of the offence. A person who has already resigned or whose authority is withdrawn at the time of commission of the offence can not be made accountable and fasten with liability for anything done by company after acceptance of his resignation or after withdrawal his authority to sign the cheque. In the present matter as discussed earlier though the complainant is having cheques in his possession it doesn t bare the name of the payee. Even if it is considered as a held by the learned JMFC that the cheque is though a self cheque the word or bearer is not cancelled. It can be assumed that the complainant is the holder in due course, however he will not be exempted from discharging his other burden. 65. To establish that there was a loan transaction it is necessary for the complainant to establish that he was having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any. Thus it transpires that complainant himself is not sure as to who were the directors and responsible person. As per his deposition he incurred information in respect of directors of a company from the chartered Accountant Shri Raghu Pikale. however, the said Raghu Pikale was not examined. Failure to establish this fact that he was having capacity to pay the amount of 20 lakhs cash as a loan or failure to show that he has received 24% interest per annum from the company the complainant failed to established that cheques were issued in discharge of any legal liability or part thereof. The accused respondents have established their defence on the basis of preponderance of probabilities that neither any such amount is paid to the company nor it is reflecting in the any account of the complainant nor the complainant is able to establish his capacity. As such, the acquittals of the respondents herein is perfectly justified. It reveals from the record that accused nos.3, 4,5 and 6 are not the signatories to the cheques in dispute. There are no specific averments against these accused that they are connected or responsible to the affairs of the company. The signatories were already re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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