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2015 DIGILAW 1424 (KER)

Vijaya Lekshmi (Dr. ) v. Indian Bank, TVM

2015-10-12

K.HARILAL

body2015
ORDER : K. Harilal, J. The revision petitioner is the accused in ST No. 1220/2008 on the files of the Judicial First Class Magistrates Court-III, Thiruvananthapuram. She is the Director of M/s Women Empowerment and Human Resources Development Centre of India, a Society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955 (for short the TCLSCSR Act). She was prosecuted for the offence punishable under Section 138 of the Negotiable Instruments Act (for short the Nl Act), on a complaint filed by the 1st respondent herein. After trial, the learned Magistrate found the revision petitioner guilty for the said offence and convicted thereunder. She was sentenced to pay a fine of Rs. 5,000/- and in default, to undergo simple imprisonment for one month, Aggrieved by the conviction and sentence, the accused preferred Criminal Appeal No. 274/2012 and the complainant preferred Crl RP No. 65/2011 alleging inadequancy of sentence before the Court of Sessions, Thiruvananthapuram. After hearing both the appeal and revision together, the learned Sessions Judge concurred with the findings of the Trial Court, as regards conviction; but enhanced the sentence, by directing the revision petitioner to pay a fine of Rs. 3 lakhs will a default clause of two months simple imprisonment and thereby allowed the revision petition and dismissed the appeal, by the impugned common order The legality, proprietary and correctness of the findings, whereby the Appellate Court confirmed the conviction and enhanced the sentence, are under challenge in this revision petition. 2. The Society had availed a loan from the complainant Bank and in discharge of that liability, in part, the accused had drawn and issued Ext. P2 cheque dated 29/09/2008 for an amount of Rs.3 lakhs and when the complainant presented the cheque for encashment, the same was dishonoured and returned with an endorsement that the payment stopped by the drawer and thereby the accused committed the offence punishable under Section 138 of the Nl Act. 3. In the oral evidence given as DW1, she denied the entire allegations and stated that a one term settlement was arrived at between the complainant and the Chairman of the Society, after resolving the entire disputes and consequent on that settlement, Ext. P2 cheque was issued; but the complainant latter withdrew from the settlement. Hence, she gave a stop payment letter to the Bank and the cheque was dishonoured and returned on her instruction. P2 cheque was issued; but the complainant latter withdrew from the settlement. Hence, she gave a stop payment letter to the Bank and the cheque was dishonoured and returned on her instruction. She maintained the above stand, when she was questioned under Section 313 of the CrPC also. 4. After evaluating the evidence given by the accused, the Court below concurrently found that the complainant had successfully discharged the initial burden; but the accused had miserably failed to rebut the presumptions which stood in favour of the complainant and thereby she is liable to be punished under Section 138 of the Negotiable Instruments Act. This is the factual matrix from which this revision petition has come up, before this Court. 5. Though, this revision petition has been filed on various grounds, challenging the concurrent findings of the Court below, on merits, the learned counsel for the revision petitioner mainly contended that the prosecution itself was not maintainable, as the complaint was filed without arraigning the Society, the drawer of the cheque, as an accused in the complaint. According to the learned counsel, the learned Magistrate ought to have dismissed the complaint at the threshold itself, on the ground that the drawer of the cheque was not made an accused in the complaint. 6. The sum and substance of the arguments advanced by the learned counsel for the revision petitioner is that the company contemplated under Section 141 of the Negotiable Instruments Act includes the Society registered under the TCLSCSR Act as the same is an association of persons coming under Section 141 of the Negotiable Instruments Act. Therefore, unless the society is also made an accused in the complaint, no prosecution would lie against the Directors of the Company alone, where the dishonoured cheque is one drawn and issued by the Society. In support of the above proposition, the learned counsel cited the decision in Aneeta Hada v. Godfather Travels and Tours Private Ltd. 2012 KHC 4244 : (2012) 5 SCC 661 : 2012 (2) KLD 16 : 2012 (2) KHC SN 36 : 2012 (4) SCALE 644 : 2012 (2) KLJ 456 : 2012 (2) KLT 736 : AIR 2012 SC 2795 : 2012 CriLJ 2525. That apart, in Sukumaran v. Kadakavoor O. A. Devaswom 1989 KHC 84 : 1989 (1) KLT 341 : 1989(1) KLJ 163 : 1989 (1)KLN 123 . That apart, in Sukumaran v. Kadakavoor O. A. Devaswom 1989 KHC 84 : 1989 (1) KLT 341 : 1989(1) KLJ 163 : 1989 (1)KLN 123 . and Sree Narayana Dharma Samajam v. Mohandas 2005 KHC 999 : 2005 (3) KLT 438 this Court held that society registered under the Societies Registration Act enjoys the status of a separate legal entity apart from the members and is capable of suing and being sued. 7. Per Contra, the learned counsel for the respondent contends that the society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955 is not a juristic person capable of suing or being sued. In support of the said contentions, the learned counsel for the respondent cited the decision in Illachi Devi and Others v. Jain Society, Protection of Orphans India and Others 2003 KHC 1614 : (2003) 8 SCC 413 : AIR 2003 SC 3397 : JT 2003 Sup 1 SC 428. According to the learned counsel for the respondent, even if the Society is not made an accused in the complaint, the prosecution would lie against the Director of the Company as the person who had drawn and issued the cheque for and on behalf of the Society. 8. Heard the learned counsel for the petitioner and the learned counsel for ; the respondent in exten so and have given my anxious considerations to the rival submissions made at the Bar. 9. In view of the submissions made at the Bar, the question to be considered is, whether the complaint alleging the offence punishable under Section 138 of the Negotiable Instruments Act is maintainable against the Director of a Society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955, who has signed and issued the cheque, for and on behalf of the Society, unless the society is arraigned as an accusedin the complaint. 10. Going by Section 138 of the Nl Act, it is pertinent to note that the word person is employed in the above provision to show the status of the drawer of the cheque as well as the payee of the cheque. 10. Going by Section 138 of the Nl Act, it is pertinent to note that the word person is employed in the above provision to show the status of the drawer of the cheque as well as the payee of the cheque. Similarly, according to Section 141 of the Negotiable Instruments Act, if the person committing an offence under Section 138 is a company, every person who, at the time of offence was committed, was in charge of, and was responsible for the company for the conduct and the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Here also the company is given the status of a person. 11. In the Explanation to Section 141, it is stated that for the purpose of this Section (a) "company" means any body corporate and includes a firm or other association of individuals and (b) "director", in relation to a firm, means a partner in the firm. So, the point to be considered is, whether the society registered under the TCLSCR Act would fall under the Explanation (a) to Section 141 of the Nl Act. It can never be a firm or body corporate. The status of a juristic person is not contemplated under the above provision, as argued by the learned counsel for the respondent and a mere association of individuals is sufficient to fall under the term company. Thus, a very wide meaning is given to the expression company. So, the next point to be considered is, whether the society is an association of individuals as contemplated under Section 141 of the Nl Act. The concept of juristic person or the question whether the society is a juristic person does not arise for consideration, particularly when the expression company is specifically described under Section 141 (a) of the Nl Act, without any ambiguity. In this view of the matter, the arguments advanced by the learned counsel for the respondent relying on the decision laid down in lliachi Devi and Others v. Jain Society, Protection of Orphans India and Others 2003 KHC 1614 : (2003) 8 SCC 413 : AIR 2003 SC 3397 : JT 2003 Sup 1 SC 428. also does not require consideration. 12. also does not require consideration. 12. In the above context, the relevant provisions in the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act assumes significance. According to Section 3, the Society can be formed by Memorandum of Association and registration thereunder. Any seven or more persons associated for any literary, scientific or charitable purpose or for any such purpose as is described in Section 32 of the said Act, may by subscribing their names to Memorandum of Association and filing the same with the register, form themselves into society under the said Act. Further, according to Section 4, the Memorandum of Association shall contain tie name and object of the society; the names, addresses and occupation of the Governors, Council, Directors or other governing body to whom, by the Rules of the society management of its affairs is entrusted. As per Section 9, every society may sue and be sued in the name of President, Chairman, or Principal, Secretary or Trustees, as shall be determined by the rules. It means in a lis, the society can f be the complainant or the accused, as the case may be and the Society must be represented by President, Chairman or Principal or the Secretary or Trustees, heedless to say, as an association of the individuals, the society itself gets a legal entity different from that of the President and the Secretary and that legal entity is capable of suing and being sued. That apart, the basic concept of a Co-operative Society is nothing other than the collective working of individuals. 13. Coming to the bye-laws of the Society, as per Clause (8), assets of the society will be in the name of the society and Clause (16) says that the members of the society shall not be liable for any of the liabilities incurred by the society. According to Clause 16, the members of the society shall not be entitled to or permitted to share the income or profits as the assets of the society and they shall not be liable for any of the liabilities incurred by the society. According to Clause 16, the members of the society shall not be entitled to or permitted to share the income or profits as the assets of the society and they shall not be liable for any of the liabilities incurred by the society. Similarly, as per Clause 19 of the bye-law, if upon the dissolution of the society, there shall remain after satisfaction of all its debts and liabilities, any property, whatsoever, the same shall not be paid to or distributed among the members of the society or any of them and the property shall be transferred to some other society which has for its objects, the furtherance of aims similar, as near as may be, to the object of dissolved Society. 14. The provisions referred above found in the Act as well as in the bye-laws of the Society support the view that a Society registered under Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act gets separate legal entity different from that the Directors or members and that entity is nothing other than an association of individuals. 15. If Society is an association of individuals contemplated under the Explanation (a) to Section 141 of the Nl Act, it follows that the Society would get the status of a company as contemplated under Section 141 (a) of the Negotiable Instruments Act also. 16. In Aneeta Hada v. Godfather Travels and Tours Private Ltd. 2012 KHC 4244 : (2012) 5 SCC 661 : 2012 (2) KLD 16 : 2012 (2) KHC SN 36 : 2012 (4) SCALE 644 : 2012 (2) KLT 736 : AIR 2012 SC 2795 : 2012 CriLJ 2525. on a reference, three-Judge Bench of the Supreme Court, has considered question whether the prosecution under Section 138 read with Section 141 of the Negotiable Instruments Act is maintainable against a Director or Managing Director as authorised signatory of a cheque is maintainable, unless the company is also made as an accused. In this decision the Court held as follows: "58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. In this decision the Court held as follows: "58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be obvious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicated. 59. In view of our aforesaid analysis, we arrive at the irresistable conclusion that for maintaining the prosecution under Section 141 of the Act arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C. V. Parekh ; (State of Madras v. C. V. Parekh, (1970) 3 SCC 491 ) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (Sheoratan Agarwal v. State of M. P., (1984) 4 SCC 352 : 1984 SCC (Cri) 620) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1 ) is overruled with the qualifier as stated in para 51. The decision in Modi Distillery (Pollution Control Board v. Modi Distillery, (1987) 3 SCC 684 ) has to be treated to be restricted to its own facts as has been explained by us herein above." (emphasis supplied) 17. I am of the opinion that the above proposition laid down by the Supreme Court is applicable to a Society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955, as the Society is an association of individuals coming under Explanation (a) to Section 141 of the Nl Act. 18. I am of the opinion that the above proposition laid down by the Supreme Court is applicable to a Society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955, as the Society is an association of individuals coming under Explanation (a) to Section 141 of the Nl Act. 18. The proposition which lays down above in this decision is supported by Sree Narayana Dharma Samajam v. Mohandas 2005 KHC 999 : 2005 (3) KLT 438. T In this decision this Court held as follows: "A society registered under Act 12 of 1955 is a legal entity capable of suing and being sued and therefore represents the cause of the members who constituted it and accordingly held that a judgment or decree passed by a Court in a suit or other civil proceeding where the society is on the party array will bind the society and in such suits provisions of Order 1, Rule 8 have no relevance. The very purpose behind the Act 12 of 1955 was to introduce provisions for improving the legal condition of literary, scientific and charitable societies then existing in the Travancore-Cochin areas of the Kerala State. Under Section 3 of the Statute any 7 or more persons associated for any literary, scientific or charitable purpose or for any such purpose as is described in Section 32 of the Act may be subscribing their names to a memorandum of association and filing the same with the Registrar, form themselves into a Society under this Act. Under Section 6 of the Statute the properties of the society shall be vested in the governing body of the society and in all proceedings civil and criminal shall be described as the property of the governing body of the society by their proper title." 19. The learned counsel for the respondent cited the decision in Raghu Lakshminarayanan v. Fine Tubes 2007 (2) KHC 540 : JT 2007 (5) SC 552 : (2007) 5 SCC 103 : AIR 2007 SC 1634 : (2007) 2 SCC (Cri) 455 : 2007 (3) KLT 54 : 2007 (3) KLJ 390 : 2007 CriLJ 2436 : 2007 (215) ELT 19 : 2007 (5) Mah LJ 399. In the above decision the question, which considered by the Supreme Court was, whether the society registered under Societies Registration Act will make the Society a distinct from association of persons Entitling the benefit under Sections 223 and 236 of the Succession Act. There, the point considered was the Society under the Societies Registration 1 Act would fall under the Company registered under the Companies Act. But, company-explained under Section 141(a) of the NI Act need not be a company registered under the Companies Act and a wide meaning is given to the company in the NI Act. Here the point is, whether the Society under the TCLSCSR Act would fall under association of individuals contemplated under the Explanation (a) to Section 141 of the Negotiable Instruments Act. Needless to say, the matters in issue are different and distinct and the proposition laid down in the above decision cannot be imported to the instant case. It is to be borne in mind that the definitions contemplated under each enactment must be interpreted in accordance with the context under which the definitions are made in that Enactment. 20. In the above analysis, I find that unless the society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955 is made an accused in a complaint, no prosecution under Section 138 of the Negotiable Instruments Act would lie against the Director of the said Society who has signed and issued the cheque for an on behalf of the society alone. In the instant case, the society by name Woman Empowerment and Human Resources Developments Centre (WHO) of India is the drawer of the cheque and admittedly the cheque had been issued from the account maintained by the Society in the Bank. In short, the drawer of the cheque is not made an accused in the complaint filed under Section 138 of the Negotiable Instruments Act. If the drawer is not made an accused, no prosecution can be launched against the officers or other persons responsible to the Society for the conduct of the Society alone. 21. To sum up, the present complaint filed against the revision petitioner as Director of the Company, who issued Ext. P2 cheque, for and on behalf of the society, is not maintainable under law as the society is not made an accused in the complaint. 21. To sum up, the present complaint filed against the revision petitioner as Director of the Company, who issued Ext. P2 cheque, for and on behalf of the society, is not maintainable under law as the society is not made an accused in the complaint. If that be so, the conviction and sentence imposed on the petitioner is liable to be set aside and do so. The petitioner is acquitted of the offence under 138 of the Negotiable Instruments Act. This revision petition is disposed of accordingly.