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2007 DIGILAW 906 (AP)

Surana Securities Ltd. v. G. Kamalakar

2007-09-19

T.CH.SURYA RAO

body2007
Judgment :- The instant appeal is directed against the order of acquittal passed by the learned XVIII Metropolitan Magistrate, Hyderabad, by his judgment dated 30th October, 2001 in C.C.No.18 of 2000. The unsuccessful complainant which is a private limited company is the appellant. It filed the complaint under Section 138 of the Negotiable Instruments Act (for short, the Act’). The complainant’s case in nutshell is thus: The complainant is a member of the National Stock Exchange of India and a registered broker carrying on business in shares and securities. The accused was a client of the complainant company and used to trade in shares. In the process, he became liable to pay an amount of Rs.7, 21,174.47 ps. The accused after verifying his accounts with the complainant, admitted and acknowledged the liability and in discharge of the said liability issued six cheques, each for Rs.1, 00,000/- and another cheque for Rs.1, 21,174.47 ps, drawn on Andhra Bank on different dates as detailed in his letter dated 19.2.97 addressed to the complainant. When the first six cheques were presented for encashment wit the complainant’s bank on 18.9.97, they were dishonoured with an endorsement as ‘Funds Insufficient’ on the same date. The complainant upon receiving the said information under a memo dated 19.9.97 from the bank got a legal notice dated 23-09-1997 issued to the accused calling upon him to pay the amounts covered by the dishonoured cheques. After having received the said notice, the accused failed to pay the amount. The Board of Directors of the complainant company by its resolution authorized its Managing Director to appoint an agent to represent the complainant. Pursuant thereto, one, V. Shanker Prasad was appointed as an agent by executing a General Power of Attorney. Later, he was substituted by one, Ravinder Singh under another General Power of Attorney. The plea taken by the accused in his defense was that there was no proper authorization to prosecute the case against him and the complaint should fail, besides a general denial of the allegations leveled against him. During the course of trial, the said Ravinder Singh was examined as P.W.1 on behalf of the complainant and got Exs.P1 to P20 marked. No evidence was adduced on the side of the accused. During the course of trial, the said Ravinder Singh was examined as P.W.1 on behalf of the complainant and got Exs.P1 to P20 marked. No evidence was adduced on the side of the accused. The learned Magistrate formulated two points for determination viz., (1) Whether there is no proper authorization for filing the complaint on behalf of the complainant and the complaint as filed by P.W.1 was not tenable? And (2) Whether the complainant has proved the guilt of the accused for the offence under Section 138 of the Negotiable Instruments Act beyond all reasonable doubt? Appreciating the evidence adduced, the learned Magistrate on point No.1, was of the view that the complaint filed by Shanker Prasad was not maintainable. and consequently the accused was entitled to its benefit. On point No.2 the learned Judge was of the view that the accused was liable to pay the amount covered by the six cheques. However, in view of his finding on point No.1, the learned Magistrate dismissed the complaint and ordered acquittal of the accused. Sri D.Madhava Rao, learned counsel appearing for the appellant contends that the learned Magistrate erred in holding that the complaint was not maintainable and that finding cannot be sustained and inasmuch as on point No.2 the learned Magistrate was of the view that the first respondent was liable to pay the amount, it is a fair case where the appeal shall be allowed. Sri Ghanshyam Das Mandhani for Sri M.Sudheer, learned counsel appearing for the first respondent on the other hand represents that there is no legally enforceable debt and therefore the finding of the learned Magistrate on point No.2, shall have to be reversed and acquittal upheld. The Board of Directors of the complainant company passed a resolution dated 03-09-1997 under the original of Ex.P3 authorizing its General Manager to appoint an agent to represent the company. Accordingly under Ex.P4 General Power of Attorney dated 18-11-1997 one Shanker Prasad was authorized. Later he was substituted by P.W.1 Mr. Ravinder Singh, in whose favour Ex.P5 General Power of Attorney dated 28-09-2000 was executed. Exs.P3 to P5 thus clearly show that P.W.1 was duly appointed as an agent to represent the complainant company pursuant to a resolution passed by the Board of Directors of the Company. Therefore, I see no illegality in having appointed P.W.1 as the agent by the managing director. Exs.P3 to P5 thus clearly show that P.W.1 was duly appointed as an agent to represent the complainant company pursuant to a resolution passed by the Board of Directors of the Company. Therefore, I see no illegality in having appointed P.W.1 as the agent by the managing director. The finding of the lower Court, that it is established principle of law that persons authorized by company cannot delegate powers to others and they are not expected to execute such authorization and attend personally and as far as criminal cases are concerned both M.D, and Director are authorized by the company to file the cases and they cannot delegate their powers to their subordinates, cannot be sustained. In M.M.T.C. v. Medchl Chemicals And Pharma (P) Ltd. ( (2002) 1 SCC 234 ) an identical question had arisen for consideration. The appellant therein was a Government of India Company. Through its Manager of the Regional Office by name Lakshman Goel, the appellant lodged two complaints against the first respondent which is also a company, along with other respondents, who are the Directors of the first respondent company. The respondents filed a petition for quashing both the complaints. The High Court quashed the complaints on the ground that there was no proper authorization. Under such circumstances, the Apex Court placing reliance upon its earlier Judgments in Vishwa Mitter v. O.P. Poddar ( (1983) 4 SCC 701 ) and Associated Cements Co. Ltd. v. Keshvanand ( (1998) 1 SCC 687 ) set aside the Judgment of the High Court and allowed the appeal. In the former case it was held that no Court could decline to take cognizance on the sole ground that the complainant was not competent to file the complaint because anyone could set the criminal law into motion by filing a complaint of facts constituting an offence. In the former case it was held that no Court could decline to take cognizance on the sole ground that the complainant was not competent to file the complaint because anyone could set the criminal law into motion by filing a complaint of facts constituting an offence. In the later case it was held that when a complainant was made in the name of incorporeal person (like a company or corporation) it was necessary that a natural person represents such juristic person in the Court and that the Court looks upon the natural person to be the complainant for all practical purposes and that when the complainant is a body corporate it is the de jure complainant and it must necessarily associate a human being as a de facto complainant to represent the former in court proceedings and no Magistrate shall insist that the particular person whose statement has been taken on oath in the first instance alone could represent the company till the end of the proceedings. In view of this clear legal position, as discussed herein above the finding of the learned Magistrate on the first point in the impugned Judgment is not correct and is liable to be set aside. On the second point, the Court below had arrived at a clear conclusion that the first respondent was liable to pay the amount. In view of the order of acquittal the complainant filed the instant appeal. Having regard to the fact that the complaint was dismissed in sequel to the finding on the first point, obviously the first respondent had no opportunity to assail the finding of the learned Magistrate on the second point and the finding of the learned lower Court on the merits of the case remained unchallenged and unassailed. Under the circumstances, whether the accused can assail the finding of the lower Court on point No.2, while seeking to sustain the order of acquittal, or not is the moot question. The Criminal Procedure Code (for short the Code) has not envisaged any cross-appeal or cross-objections, unlike the Civil Procedure Code. The Code envisages an appeal qua the conviction or acquittal. In view of the order of acquittal passed eventually by the learned lower Court albeit on account of the conclusion reached on point No.1, no appeal need be filed by the accused, although on point No.2 the finding is against him. The Code envisages an appeal qua the conviction or acquittal. In view of the order of acquittal passed eventually by the learned lower Court albeit on account of the conclusion reached on point No.1, no appeal need be filed by the accused, although on point No.2 the finding is against him. It may perhaps be open to him to assail the adverse finding made inter alia in the judgment by invoking the revisional jurisdiction of either the Sessions Court or the High Court. Failure on the part of the accused in assailing the adverse finding will not come in his way or prevent him from canvassing against that finding while seeking to support the order of acquittal in the instant appeal. Code obviously does not prohibit such a course. Even otherwise when it comes to the knowledge of either the Sessions Court or the High Court during the course of hearing of an appeal filed by the State or the complainant as the case may be it is within the discretion of that Court to go into the correctness or otherwise of such a finding. Section 401 of the Code is germane in the context, which may shed light on the point, and reads as under: “401. High Court’s powers of revision. (1) In the case of any proceeding the record of which has been called for by itself or which otherwise comes to its knowledge, the High Court may, in its discretion, exercise any of the powers conferred on a Court of Appeal by Sections 386, 389, 390 and 391 or on a Court of Session by Section 307 and, when the Judges composing the Court of revision are equally divided in opinion, the case shall be disposed of in the manner provided by Section 392. (2) No order under this Section shall be made to the prejudice of the accused or other person unless he has had an opportunity of being heard either personally or by pleader in his own defence. (3) Nothing in this Section shall be deemed to authorize a High Court to convert a finding of acquittal into one of conviction. (4) Where under this Code an appeal lies and no appeal is brought, no proceeding by way of revision shall be entertained at the instance of the party who could have appealed. (3) Nothing in this Section shall be deemed to authorize a High Court to convert a finding of acquittal into one of conviction. (4) Where under this Code an appeal lies and no appeal is brought, no proceeding by way of revision shall be entertained at the instance of the party who could have appealed. (5) Where under this Code an appeal lies but an application for revision has been made to the High Court by any person and the High Court is satisfied that such application was made under the erroneous belief that no appeal lies thereto and that it is necessary in the interests of justice so to do, the High Court may treat the application for revision as a petition of appeal and deal with the same accordingly.” It is manifest from the above excerpted provision that the High Court in the case of any proceeding the record of which has been called for by itself or which otherwise comes to its knowledge may in its discretion exercise any of the powers conferred on a Court of Appeal by Sections 386, 389, 390 and 391. Similar powers have also been conferred upon the Sessions Judge under Section 399 and the provisions of sub-sections (2), (3), (4) and (5) of Section 401 shall apply to the proceedings before the Sessions Judge. Such powers are required to be exercised as per the requirements of the justice. Sub-section (1) of Section 401 of the Code confers wide and untrammeled discretion on the High Court, which undoubtedly to be exercised judiciously. Turning to the law on the point It is appropriate here to recall the articulations of Sundara Iyar, J., made in National Bank of India v. Kothandarama Chetti (14 Cr.L.J. 529)thus: “I would be strongly inclined to hold that no hard and fast limitation should be placed on the exercise of our powers of superintendence over the proceedings of inferior Courts. I would hold with Woodroffe, J. in Lekhraj Ram v. Debi Pershad (7 Crl.L.J. 499)that there is no species of injustice which this Court would be powerless to correct under the Charter where its interference is called for” In well neigh an identical situation the Madras High Court in Emperor v. Panchaksharam (AIR 1938 Madras 723) had taken a similar view. According to the matrix of that case the accused Panchaksharam was charged under Section 304 of the Indian Penal Code for allegedly cutting the deceased Munuswami with a toddy drawer’s knife on the head, back and abdomen. In the trial, it was found that although he did cause the injuries, the requisite intention or knowledge was absent. Eventually, it was found that he voluntarily caused grievous hurt under a grave and sudden provocation and was convicted under Section 335 of the Indian Penal Code. The accused did not file the appeal. However, the Crown filed the appeal qua the order of acquittal under Section 304 of the Indian Penal Code. On behalf of the Crown, it was sought to be contended that the finding of fact reached by the Sessions Court must be accepted and that the arguments of the accused must be confined to combating the arguments with regard to the nature of the offence committed. It was held by the Madras High Court thus: “It is however clear that in an appeal against acquittal, the accused is entitled to ask the Court to consider all the evidence before it and all the possible grounds which may be raised against the conviction. If therefore the learned counsel for the accused is entitled to argue on the facts of the case to show that the accused has not committed an offence under Section 304 of the Indian Penal Code, then although the acceptance of those arguments may not automatically set aside the conviction under Section 335 of the Indian Penal Code, yet if this Court were satisfied that no offence was committed, it would undoubtedly exercise suo motu its powers under Section 439 (1), Criminal P.C., (Section 401 of the new Code) and set aside the conviction.“ In State Government, Madhya Pradesh v. Sheo Dayal Gurudayal (AIR 1956 Nagpur 8) following the judgment of the Madras High Court referred to above it was held thus: “In an appeal by the Crown against his acquittal of the charge for a major offence, the High Court has power under Section 439 (1), to acquit the accused where the facts found are incompatible with his guilt even for the minor offence. In this connection, the powers of the High Court under Sub-Section (1) of Section 439 are not trammeled by Sub-Section (5) which only negatives the right of the accused to come up in revision when he could have preferred an appeal.” That was a case where the respondent Sheo Dayal was prosecuted under Section 376 of the Penal Code. At the end of the trial, he was acquitted of that charge, however was convicted under Section 354 of the Penal Code. He did not prefer an appeal, but the State Government, however, came up in appeal against his acquittal of the Charge under Section 376 of the Penal Code. In that appeal, considering the evidence, the High Court set aside the conviction and the sentence passed on the respondent under Section 354 of the Indian Penal Code and acquitted him of the charge. In Public Prosecutor v. Pannadi (AIR 1960 Madras 240) a Division Bench of the Madras High Court followed both the judgments referred to supra. That was again a case where the respondent Pannadi was charged under Section 302 of the Indian Penal Code. At the end of trial, he was acquitted of that charge; instead he was convicted under Section 304 (part II) and sentenced to R.I. for five years. The respondent, however, did not appeal against his conviction. But, the State filed an appeal against acquittal of the charge under Section 302 of the Indian Penal Code. The Division Bench quoted with approval a passage from Emperor’s case (supra). However, at the end, after re-appraisal of the evidence, the High Court was of the view that the conviction of the respondent under Section 304 (part-II) was correct and the sentence was appropriate. The Judgments referred to above stood the test of time. From the above it is obvious that the High Court has plenary powers of supervision and interference under the Code where it is needed to correct injustice. Exercising the supervisory or revisional jurisdiction, the High Court can look into the record untrammeled by any procedural constraints so as to remove the injustice. For the above reasons, I am of the considered view that it is open to the accused to canvass against the finding on point No. 2. Exercising the supervisory or revisional jurisdiction, the High Court can look into the record untrammeled by any procedural constraints so as to remove the injustice. For the above reasons, I am of the considered view that it is open to the accused to canvass against the finding on point No. 2. Even otherwise the High Court suo motu can look into the entire record in the process of examining the correctness or otherwise of the order of acquittal passed by the learned Magistrate, and examine simultaneously the correctness or otherwise of the finding of the learned lower Court on point No.2 so as to eventually reach a just conclusion in the case. Therefore in the instant appeal albeit preferred assailing the order of acquittal resulted on account of the finding on point No.1, this Court can look into the record so as to convince itself about the correctness or otherwise of the finding reached on point No.2 by the lower Court. Apropos the merits of the case, the learned counsel appearing for the respondent represents that the alleged debt is not legally enforceable. In view of the said contention, the evidence on the point needs to be considered. The plain case of the complainant is that the accused traded in shares and securities through the complainant, which is a registered broker carrying on business in shares and securities and became liable to pay an amount of Rs.7,21,174.47 ps. as on 19-02-1997. The accused after verifying his accounts with the complainant, admitted and acknowledged the said liability and in discharge of the said amount issued seven cheques as per the letter dated 19-02-1997 at the rate of Rs.1,00,000/- each under six cheques and for Rs.1,21,174.47ps. under the seventh cheque and that all the six cheques were dishonoured when presented to its banker for encashment with the endorsement as ‘funds insufficient’. P.W.1 in his evidence deposed that the accused admitted his liability and issued a letter dated 19-02-1997 in Ex.P6 and in discharge of the said liability, issued the cheques in question along with another. Exs.P7 to P10, P17 and P18 are the cheques and Ex.P11 is the memo dated 18-09-1997 of Andhra Bank, Secunderabad, where under the complainant was informed about the dishonour of the cheques. Ex.P16 is the statement of account of the accused dated 20-02-1997. Exs.P7 to P10, P17 and P18 are the cheques and Ex.P11 is the memo dated 18-09-1997 of Andhra Bank, Secunderabad, where under the complainant was informed about the dishonour of the cheques. Ex.P16 is the statement of account of the accused dated 20-02-1997. In the cross-examination, P.W.1 stated that the accused had more than one account and with the consent of the accused the amount in one account was transferred to another account. This witness was recalled on 27-06-2001 and re-examined. He filed Ex.P19 ledger extract of the company showing another account pertaining to the accused. He further deposed that the accused gave a consent to transfer of amounts from his one account to another account. Exs.P20 and P21 are ledger extracts pertaining to different accounts of the accused. With reference to Ex.P16, P19, P20 and P21, it is the contention of the learned counsel for the accused that there is no outstanding balance as per this account and therefore there is no legally enforceable debt in the instant case. As per Ex.P16 there is the debit balance of Rs.7,21,174.47 ps. This document shows that on 24-09-1996 on 06-11-1996, on 12-02-1997 and on 20-02-1997 there are debit entries. Under these entries amounts are shown to have been transferred to another account. As per this account the total debit is shown as Rs.10.06,892.47ps. and the total credit is shown as Rs.2,85,718.00. Therefore there is a debit balance of Rs.7,21,174.47 ps. Where as in Ex. P.20 account there is an entry showing on the credit side in an amount of Rs.7,22,824.20 ps. which appears to have come into this account by transfer from Ex.P.16. This according to the learned counsel has not been properly explained. Ex.P16 is obviously the account pertaining to the accused being maintained by the complainant. The balance in this case was struck on 20-02-1997. `In the absence of that entry there would have been debit balance. It is obvious therefore that Ex.P20 account is balanced. Ex.P19 account shows that the account is balanced. Ex.P21 shows again the account is balanced. It is obvious that all the accounts shown in Ex.P16, P19, P20 and P21 pertain to the accused. The learned counsel for the complainant seeks to explain that they are different accounts. While P16 pertains to GKK, P20 pertains to GJL, P19 pertains to GJL1 and P21 pertains to GKK1. Ex.P21 shows again the account is balanced. It is obvious that all the accounts shown in Ex.P16, P19, P20 and P21 pertain to the accused. The learned counsel for the complainant seeks to explain that they are different accounts. While P16 pertains to GKK, P20 pertains to GJL, P19 pertains to GJL1 and P21 pertains to GKK1. These letters have been written on the top of the account, although the account holder’s name is shown as G. Kamalakar i.e., the accused. From one account to another account there have been transfers which are shown as debit entries in the account from which they are transferred and as credit entries in the account to which they are transferred. Until it is thus explained by the learned counsel it eluded clarity as to why different sheets have been filed by the complainant. According to the evidence of P.W.1 that the accused gave consent to transfer amounts from one account to another account. He categorically deposed on oath about the consent for transfer. That statement of fact made by him on oath has not been controverter in the cross-examination. A suggestion was made in the cross-examination when he was recalled that Exs.P19 to P21 were got prepared for the purpose of this case. Not even a single suggestion has been put denying the alleged consent on the part of the accused for transfer of amounts from one account to another account. Ledger extract in Exs.P16, P19 to P21 do show such transferred entries. A question may arise as to whether the entries made in these accounts are true or not, but certainly the question as to whether there has been such a consent given by the accused for transfer of amounts from his one account to another account having not been controverter when deposed on oath by P.W.1.doesnot arise. Above all, in Ex.P6 letter dated 19-02-1997 addressed by the accused to the complainant he categorically stated inter alia that he had verified the account statements and stated that it was true and correct and pleaded to bear with him for the delay in payment. He further promised inter alia in the said letter to pay reasonable interest also after clearing the last cheque given to the complainant. He further promised inter alia in the said letter to pay reasonable interest also after clearing the last cheque given to the complainant. Inter alia in the said letter he has detailed seven cheques with reference to cheque numbers, amount and dates and name of the bank on which the cheques were drawn and confirmed the debit balance of Rs.7,21,174.47 ps. Ex.P6, therefore, is clinching on the point in controversy. In view of this letter it is not open to the accused to contend that there has been no debt by trying to show from the accounts that there has been no balance due to the complainant. There appears some discrepancy in the dates of Ex. P. 6 and the dates on which, the balance was struck in Ex. P.16, and 19 to 21 account statements. Ex. P. 6 precedes by one day from the date of striking of the balance in Ex.P16 account statement. But that is of no significance having regard to the fact that the contention in the instant appeal is not that there has been no existing debt but that debt is not legally enforceable. Therefore, the contention that there is no legally enforceable debt merits no consideration for the above reasons. From the oral testimony of P.W.1 and the documentary evidence in Exs.P6 to P21 it is clearly shown that the accused issued seven cheques and out of seven, six when presented were dishonoured for want of sufficient funds in the account and that the complainant got a legal notice dated 23-09-1997 issued to the accused who upon receiving the same did not pay the amount. This clearly brings home the offence under Section 138 of the Act to the accused. In that view of the matter, there is no illegality or material irregularity that has been committed by the lower Court in reaching its conclusion on point No.2. In view of the finding on point No.1 that the complaint cannot be thrown out on the ground of the alleged want of necessary authorization, the inescapable conclusion is that the respondent-accused is guilty of the offence and therefore the appeal deserves to be allowed. In the result, the appeal is allowed and the order of acquittal passed by the learned XVIII Metropolitan Magistrate, Hyderabad, under the impugned judgment is hereby set aside and the accused is convicted under Section 138 of the Negotiable Instruments Act. In the result, the appeal is allowed and the order of acquittal passed by the learned XVIII Metropolitan Magistrate, Hyderabad, under the impugned judgment is hereby set aside and the accused is convicted under Section 138 of the Negotiable Instruments Act. Heard the learned counsel for the accused on the quantum of sentence. The amount involved in this case is Rs.6,00,000/- and odd. Having regard to the fact that the offence pertains to the year 1997 and nearly one decade has been passed, since then during which period the respondent accused might have suffered any amount of agony due to the pendency of the case, I am of the considered view that it requires a lenient view to be taken in imposing the appropriate sentence. For the above reasons, it is not reasonable to send the first respondent any more to jail. Therefore, the sentence of imprisonment is not warranted in view of the facts and circumstances of the case. The first respondent is, therefore, sentenced to pay a fine of Rs.6,10,000/-, out of which an amount of Rs.6,00,000/- shall be paid to the appellant towards compensation and in default, he shall suffer simple imprisonment for a period of one month. The Court below shall take appropriate measures for recovery of the fine amount as per law.