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2006 DIGILAW 3441 (MAD)

Sri Valsa Agency & Others v. K. Balakrishnan

2006-12-12

R.REGUPATHI

body2006
Judgment :- 1. The second and third petitioners who are partners of the first petitioner firm are accused for an offence punishable under Section 138 of the Negotiable Instruments Act in C.C. No.327 of 2005 on the file of the learned Judicial Magistrate, Avinashi 2. The allegation in the Complaint is that the petitioners have borrowed a sum of Rs.9,50,000/- on 07.08.2005 and issued a cheque for repayment of the same on 17.08.2005. The cheque was dishonoured on the next day as "drawers signature differs and account closed". The complainant preferred the present Complaint after following the necessary formalities. 3. Learned counsel appearing for the petitioners submit that the account of the first accused-firm was closed on 30.06.2005 and a specific Complaint has been made to the bank stating that the particular cheque in question was found missing and the cheque was not issued to any one. It is the claim of the petitioners that no such transaction as alleged in the Complaint took place and the cheque in question has not been issued by the second petitioner. It has been further claimed that the second petitioner is not a partner of the firm, as he has resigned as early as on 21.05.2005. Even on the face of the allegation and averments made in the Complaint, no specific allegation has been made against the second petitioner. In such circumstances, sought to quash the proceedings. 4. Learned counsel appearing for the petitioners relied on a judgment reported in Shri Ishar Alloy Steels Ltd. v. Jayaswals NECO Limited, 2001 (1) CTC 616 : 2001 (3) SCC 609 wherein the following passage has been relied: "6. …… To achieve the objective of the Act, the legislature in its wisdom thought it proper to make provision in the Act for conferring such privileges to the mercantile instruments contemplated under it and provide special procedure in case the obligation under the instrument was not discharged. It has always to be kept in mind that Section 138 of the Act creates an offence and the law relating to the penal provisions has to be interpreted strictly so that no one can ingeniously or insidiously or guilefully or strategically be prosecuted." 5. Reliance was also placed on the judgment reported in Ramachandran v. K. Dineshan and another, 2005 Crl.L.J.1237. Reliance was also placed on the judgment reported in Ramachandran v. K. Dineshan and another, 2005 Crl.L.J.1237. "The basic principle of law is that any change in a written instrument which changes the legal identity or business character of the instrument, either in its terms or in the legal relation of the parties to it, is a material alteration and such a change invalidates the instrument against the person not consenting to the change. This principle of law is essential to the integrity and sanctity of contracts. By alteration, the identity of the instrument is destroyed. So, the effect of making a material alteration on a negotiable instrument without the consent of the party bound under it is exactly the same as that cancelling the instrument." 6. A case reported in Vinod Tanna and another v. Zaher Siddiqui and others, 2002 (7) SCC 541 has been relied on to substantiate that an offence will not be made out, if the signature is incomplete. 7. By relying on a judgment reported in P.N. Salim v. P.J. Thomas and another, 2004 (4) Crl.L.J 3096 the learned counsel appearing for the petitioners submit that at the time when he has closed the account, all the unused cheques have been returned to the bank and further, a specific mention has been made about the missing of the present cheque and in such circumstances, an offence under Section may not be made out. 8. By relying on the judgment reported in Urban Co-op. Credit Society v. State of Gujarat and another, 2003 Crl.LJ. 3292 it has been submitted that when an account has been closed long prior to the transaction, it should be presumed that there is no account at all in the name of the petitioners and in such circumstances, as the initial requirement is not satisfied, an offence punishable under Section 138 is not made out. 9. By relying on a judgment reported in Sabitha Ramamurthy and another v. R.B.S. Channabasavaradhya, 2006 (4) CTC 684 : 2006 (2) MLJ (Crl) 1152 it is submitted that on a perusal of the Complaint, there is no allegation with regard to the second petitioner as to how he is responsible for the offence and the role played by him has not been narrated. In detail, simply it has been stated that he is a partner. 10. In detail, simply it has been stated that he is a partner. 10. Reliance has been placed on the judgment reported in S.M.S. Pharmaceuticals Limited v. Neeta Bhalla and another, 2005 (5) CTC 65 : 2005 (8) SCC 89 wherein it has been held as follows: "19... (a) It is necessary to specifically aver in a Complaint under Section 141 that at the time 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 141 and has to be made in a complaint. Without this averment being made in a Complaint, the requirements of Section 141 cannot be said to be satisfied." 11. A case reported in Sulochana and others v. Kulasekaran 2003 Crl. L.J. 4373 has been relied on to substantiate that the deed of the partnership was not produced before the Court in spite of specific denial in the reply that the second petitioner is not a partner of the firm on the date of issuance of the cheque. To substantiate the same point, the learned counsel for the petitioner relied on the judgment reported in Monaben Ketanbhai Shah and another v. State of Gujarat and others, 2004 (4) CTC 317 : 2004 (7) SCC 15. 12. Per contra the learned counsel for the respondent relied on a judgment reported in S. V. Muzumdar and others v. Gujarat State Fertilizers Co. Ltd and another, 2005 (3) CTC 380 which reads as follows: "Section 141 covers three types of persons viz., (a) Company who committed offence (b) Everyone who was in charge of and was responsible for business of Company (c) Any other person who is director or manager or secretary or officer of Company with whose connivance or due to whose neglect Company has committed offence — Section 141(l) enables accused to prove his innocence by discharging burden which lies on him — Such matters can be decided only on trial and petition to drop proceedings cannot be maintained." 13. A case reported in S.A. Nanjundeswara v. Varlak Agrotech (P) Limited, 2002 (10) SCC 249 was also relied on, wherein it has been held as follows: "Quashing of proceedings in exercise of power under Section 482, Cr. A case reported in S.A. Nanjundeswara v. Varlak Agrotech (P) Limited, 2002 (10) SCC 249 was also relied on, wherein it has been held as follows: "Quashing of proceedings in exercise of power under Section 482, Cr. P.0 — Held, would be justified only if High Court comes to the conclusion that statements made in the Complaint, even taken at face value, do not make out any offence — On facts held, High Court erred in quashing proceedings against respondent-accused." 14. I have heard the submissions made by the counsel and perused the materials available on record. 15. It has been mentioned in Para-1 of the Complaint as follows "the second and third accused are husband and wife" – They are complainant's friend and doing day to day affairs of the firm". Apart from this, there is no specific allegations and averments against the second petitioner. It is the case of the second petitioner that he was not a partner on the date of the issuance of the cheque and he has resigned on 21.05.2005 itself. In such circumstances, the complainant would have filed a partnership deed along with the complaint to show that the second petitioner is also a partner of the firm on the date of issuance of the cheque. No other materials have been furnished in this regard. Strangely the drawer of the cheque is also not mentioned. However, it is admitted that the 3rd petitioner, drawer of the cheque. Civil disputes are treated as an offence punishable under Section 138 of the Negotiable Instruments Act by fiction of law. In such circumstances, the formalities required under law may have to be strictly followed. 16. It has been repeatedly held by the Apex Court that there must be some specific averments to attract an offence against a partner or a Director. In the instant case, I do not find any other materials to implicate the second petitioner in the case. In such circumstances, the cases cited by the petitioner in this regard is relevant. I am of the view that the offence is not made out against the second petitioner. Therefore, the proceedings against the second accused alone is quashed. 17. In the instant case, I do not find any other materials to implicate the second petitioner in the case. In such circumstances, the cases cited by the petitioner in this regard is relevant. I am of the view that the offence is not made out against the second petitioner. Therefore, the proceedings against the second accused alone is quashed. 17. In so far as the 3rd petitioner is concerned, though it has been claimed that the account has been closed long prior to the issuance of the cheque and the signature of the cheque does not tally, they are all matters for evidence. As it has been disputed by the parties, the same may have to be agitated only during the course of the trial. It has been held by the Apex Court that an account holder can be proceeded with even though the account is closed. In the instant case the cheque has been returned with an endorsement "drawers signature differ". The judgments cited by the learned counsel for the petitioners deal with material alterations. Signature of a person may differ from time to time and there may be some improvement or shortage in the signature. This may have to be looked into by comparing the same with the available admitted signatures of the person concerned. In such circumstances, it is purely a question of fact and the same may have to be decided only during the course of trial. Therefore, I do not find any merit in the Petition to quash the proceedings against the 3rd petitioner as the 3rd petitioner is the partner of the first petitioner firm. Learned Magistrate may proceed against the first and third petitioner after deleting the second petitioner. The Petition is ordered accordingly. Consequently, connected Crl.M.P.s are closed.