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2022 DIGILAW 2875 (MAD)

P. Thangavel v. S. M. Jagannathan

2022-08-23

G.JAYACHANDRAN

body2022
JUDGMENT (Prayer: Criminal Appeal is filed under Section 378 of Criminal Procedure Code, to set aside the order of acquittal dated 18.03.2014 made in C.A.No.48 of 2012 on the file of the Learned Additional District and Sessions Court, Namakkal (Full Additional Charge) reversal of the conviction imposed in the judgment dated 19.10.2014 made in STC No.49 of 2012 on the file of the Learned Judicial Magistrate, Fast Track Court (at Magisterial level), Tiruchengode by allowing the Criminal Appeal.) 1. Acquittal by the Lower Appellate Court by reversing the judgment of conviction passed by the Trial Court, is the subject matter of this Appeal. 2. The Private Complaint filed under Section 138 of Negotiable Instrument Act, reads as below:- On 11/08/2006, the 2nd and 3rd accused as Managing Partner and Partner respectively, of first accused M/s “Sri Kumaran & Company”, a Partnership Firm borrowed Rs.5 Lakhs from the complainant. They promised to repay the money within 2 months with 18% interest. On the same day, A2 gave a post-dated cheque for Rs.5,00,000/- duly signed by him on behalf of the first accused partnership firm drawn on Karur Vysya Bank Ltd, Tiruchengode Branch. The complainant presented the cheque for collection on 27/11/2006 through his Banker Indian Overseas Bank, Tiruchengode Branch. The said cheque returned on the next day with an endorsement “Payment Stopped by the drawer”. Hence, after issuing statutory notice to the accused on 22/12/2006, the complaint was filed. 3. To prove his case, 3 witnesses and 12 Exhibits marked. On the side of the defence, 4 witnesses and 8 Exhibits were marked. 4. The Judicial Magistrate, Fast Track Court, Tiruchengode in S.T.C.No.49/2012 held the accused 2 and 3 are guilty of offence under Section 138 of Negotiable Instrument Act and convicted them to undergo 3 months S.I and to pay the cheque amount Rs.5 lakhs as compensation. On appeal by the accused, the Additional District and Sessions Judge, Namakkal in C.A.No.48/2012 reversed the finding of the trial Court and acquitted them. 5. The Judgement of Acquittal, is challenged in this Appeal. 6. The Learned Counsel appearing for the Appellant/complainant submitted that, the Lower Appellate court erred in reversing the well considered judgment of the trial Court. He also submitted that the accused admit the execution of the cheque and the signature. They failed to rebut the statutory presumption through reliable evidence. 5. The Judgement of Acquittal, is challenged in this Appeal. 6. The Learned Counsel appearing for the Appellant/complainant submitted that, the Lower Appellate court erred in reversing the well considered judgment of the trial Court. He also submitted that the accused admit the execution of the cheque and the signature. They failed to rebut the statutory presumption through reliable evidence. Without any reason, the Lower Appellate Court has disbelieved the evidence of P.W-1. On the date of borrowing and on the date of issuing the cheque, A-2 and A-3 were partners of the M/s.“Sri Kumaran & Company”. Subsequent to issuance of cheque, they have created record as if, they have retired from partnership Firm prior to institution of the complaint. The Trial Court rightly found that the retirement from the partnership Firm will not exonerate the guilt committed when they were partners. Whereas, the Lower Appellate Court erred in reversing the said finding. Further, for not disclosing the loan transaction in the Income Tax return, the Lower Appellate Court disbelieved the case of the complainant. 7. The respondents/accused through their Counsel, contended that, the Partnership Firm was initially had A2, A3 and one Thiru.Loganathan as its partners. The accounts of the Firm was maintained by Thiru.Senthil Raja and Thiru.Elango. Both of them are sons of Thiru.Sellamuthu. On demise of Thiru.Loganathan, the partnership deed was reconstituted with A2 and A3 alone. Later, Thiru.Sellamuthu and Tmt.Mohanasundari W/o.Senthilraja were inducted into the partnership and subsequently, A2 and A3 retired from the partnership with effect from 04/12/2006. When A2, A3 and one Loganathan were carrying on business in the name of M/s.“Sri Kumaran & Co.,” availed Thiru.Loganathan and Thiru.Senthil Raja for the personal loan from the complainant, the subject cheque was given. Later, Thiru.Loganathan died within one week of his marriage. He had financial transaction with the complainant and others. After his death, when the accounts were reconciled, they found 4 cheques missing. In the Panchayat, the complainant received Rs.4,20,000/- and returned two cheques. Since, the whereabouts of other two cheques not known, the bank was instructed stop payment. Senthil Raja, thereafter returned one cheque. There is no contract between the complainant and the accused A2 and A3. The cheque is not for any enforceable debt. 8. In the Panchayat, the complainant received Rs.4,20,000/- and returned two cheques. Since, the whereabouts of other two cheques not known, the bank was instructed stop payment. Senthil Raja, thereafter returned one cheque. There is no contract between the complainant and the accused A2 and A3. The cheque is not for any enforceable debt. 8. To prove their innocence and rebut the presumption, the accused relied upon, Ex.P-9 reply notice and Ex.D-1 to Ex.D-4 which are evidence to show that the said Partnership Firm with A2 and A3 entered on 05/04/2005 with effect from 01/04/2005. Thereafter, with effect from 01/11/2006, the Partnership was reconstituted by including with one Thiru.Sellamuthu and his daughter-in-law Tmt.Mohanasundari. Subsequently, A-2 and A-3, retired from the Partnership Firm with effect from 04/12/2006. In the reply notice, the retirement from the partnership firm duly informed to the complainant. However, instead of enforcing the debt against the partnership Firm and its present partners, the complaint was filed. The Lower Appellate, on re-appreciating the evidence, rightly set aside the judgment of the Trial Court. Therefore, there is no error in the judgment of the Lower Appellate Court. 9. Contrarily, the Learned Counsel appearing for the Appellant/complainant submitted that, the signature in the cheque issued on behalf of the partnership firm is not denied. On the date of issuance of the Cheque, these respondents were the partners of the Firm. The source of money is proved through Ex.P-10, the Bank Statement of the Complainant. The entry in the bank statement indicates that on 11/08/2006, a sum of Rs.5 lakhs drawn from the complainant’s Account. Besides, the Income Tax return of the Complainant and his wife for the Accounting Year 2007-2008 were marked as Ex.P-11 and Ex.P-12. The evidence on the side of the accused not sufficient to rebut the presumption. 10. As per the complaint, the loan was borrowed on 11/08/2006. The entry in the bank pass book of the complainant Ex.P-10, indicates on 11/08/2006, the complainant has withdrawn Rs.5 lakhs. The cheque No:250750 for Rs.5 lakhs is dated 11/10/2006. The presumption under Section 118 of the Negotiable Instrument Act, is:- the date the cheque bearing is the date of drawing the cheque. The cheque was presented on 27/11/2006. As per the defence documents, both the accused retired from the partnership firm only from 04/12/2006. That is much after the date of the cheque. The presumption under Section 118 of the Negotiable Instrument Act, is:- the date the cheque bearing is the date of drawing the cheque. The cheque was presented on 27/11/2006. As per the defence documents, both the accused retired from the partnership firm only from 04/12/2006. That is much after the date of the cheque. Therefore, these documents will not even by preponderance of probability rebut the statutory presumption under Section 139 Negotiable Instrument Act. 11. A2 (S.M.Jagannathan) who was examined as D.W-2 admits he signed Ex.P-1 cheque on behalf of M/s.“Sri Kumaran and Company”. He claims that, there was Panchayat after the demise of the partner Loganathan. Then, he mentioned about the missing of 4 cheques signed and given to Thiru.Loganathan. He got back 3 cheques from Senthil Raja. Remaining one cheque was not returned to him, so he gave instruction to the bank to stop payment. However, he as well as P.W-1, who had deposed about the Panchayat admits that, while reducing the retirement deed, no recital about the missing cheque was incorporated. 12. The Lower Appellate Court, had considered the plea of the accused, that the cheque was given when Loganathan was at the helm of the partnership affairs. After the demise of Loganathan and reconstitution of the partnership firm, the Statutory Notice should have been issued to all the partners including the new partners. The transactions between the parties in respect of another firm in the same name at Kumarapalayam, in which, the wife of the complainant is one of the partner. Therefore, the Lower Appellate Court has presumed that the complainant know the reconstitution of the partnership firm at Thiruchengodu and ought to have caused notice to the present partner. Further, the Lower Appellate Court has perused the Income Tax returns filed by the complainant held that the loan transaction is not reflected in the Income Tax returns and therefore, the cheque Rs.5,00,000/- alleged to have been given to discharge debt held not to be proved. 13. The accused in his attempt to rebut the presumption, had taken a plea that the cheque was not given to discharge the loan of the partnership firm, M/s.Sri Kumaran & Co., but was given by Thiru.Loganathan, to whom the signed cheques of partnership firm was entrusted. Thiru.Loganathan used those cheques for his personal necessity. One such cheque it is the subject cheque. Thiru.Loganathan used those cheques for his personal necessity. One such cheque it is the subject cheque. However, no document produced to prove Thiru.Loganathan was authorised to deal with the cheques of the Firm, in any of the capacity. In the alleged Panchayat/mediation held after the death of Loganathan, if really there was dispute regarding signed cheques was discussed, then there should have been something in writing. It is the defence case that Thiru.Loganathan alone was indebted to the complainant and not the accused. The Lower Appellate Court has given undue weightage to this submission. In fact, the cheque is drawn from the account maintained by M/s.Shri Kumaran & Co. The 2nd accused is the signatory to the cheque. The 3rd accused is also authorised to operate the accounts. On the date of the cheque (11/10/2006) these two accused were the partners of the Firm. On the date of presentation of the cheque (27/11/2006) also they both were partners. Relying upon Ex.D-7, the partnership reconstitution Deed dated 15/11/2006, by which A-2 and A-3, Sellamuthu and Mohanasundari have joined as partners, the Lower Appellate Court has come to the conclusion that, on the date when the intimation from the bank received, i.e., 28/11/2006, the company had 4 partners. So the complainant should have issued notice to all the 4 partners and if he had issued notice to the other two partners, who were newly inducted, they would have honoured the cheque. This presumptive suggestion is contrary to the sections 138 and 141 of the Negotiable Instrument Act. 14. The liability for the return of cheque for want of fund can be only against the drawer who draws the cheque from the account maintained by him or as the natural representative of the juristic body. In case of Company, Partnership Firm etc., apart from the signatory, the persons who are all responsible for the administration of the Firm or Company and had knowledge about the issuance of cheque for clearing the debt will also be liable. In this case, the specific complainant is against A2 and A3 as partners who borrowed money. The cheque is signed by one of them as partner. Retirement from the partnership firm subsequent to presentation of cheque will not exonerate the accused persons who had given the cheque when they were at the helm of affairs of the company on the date of presentation of cheque. The cheque is signed by one of them as partner. Retirement from the partnership firm subsequent to presentation of cheque will not exonerate the accused persons who had given the cheque when they were at the helm of affairs of the company on the date of presentation of cheque. The cheque was returned on the instruction of the accused to stop payment. Therefore, omission to issue statutory notice to other partners, who came to be inducted in between issuance of cheque and collection of the money, cannot be a reason for acquitting the accused, when it is specifically pleaded that they had actively participated in the transaction and issued the cheque. 15. In the said circumstances, it is necessary to look at the recital of the retirement deed, whether it immunes the outgoing partners from all past, present and further debts or not; and how the present partners has to understand about the existing liability. In the reply notice Ex P-8 dated 04/01/2007, given on behalf of the accused, it is informed to the complainant that the partnership has been reconstituted and they have retired from the partnership. In the said reply notice, the accused has reiterated that Sellamuthu and Mohanasundari, the existing partners alone are liable to comply the demand and not the retired partners. 16. This stand of the accused negatived by the trial court. Whereas, it was accepted by the Lower Appellate Court as rebuttal of the presumption. Since, the recital of the retirement deed dated 04/12/2006 explicitly say that the retiring partners will have no responsibility on the existing debts. The penultimate clause in the recital of Ex.P-8 (retirement deed), says that from 01/12/2006 onwards, they are not responsible for any debts of the Firm. Therefore, after disclosing to the complainant that he has to cause notice to the present partners who have taken over the partnership firm with all assets and liability, the complainant for the reason best known, had not proceeded against the existing partners. In view of this Court, the Lower Appellate Court erred in holding so Chellamuthu one of the partner of M/s.Sri Kumaran & Co., has been examined as defence witness D.W.4. In view of this Court, the Lower Appellate Court erred in holding so Chellamuthu one of the partner of M/s.Sri Kumaran & Co., has been examined as defence witness D.W.4. He, in the chief examination and the cross examination has not said anything about the cheque or the liability or who is liable or responsible for the cheque issued by A-2 when he was partner of the firm, but retired after bouncing of the cheque. The testimony of DW-4 in view of this Court is detrimental to the accused. Section 138 Negotiable Instrument Act says, any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of his account for the discharge, in whole or part, of any debt or other liability, is returned by the bank unpaid, such person shall be deemed to have committed an offence. 17. In the instant case, the cheque of M/s.Sri Kumaran & Co., is dated 11/10/2006. On that day, the 2nd and 3rd accused were partners of the first accused Firm. The account of M/s.Sri Kumaran & Co., was operated by them. Ex.P-1 Cheque was signed by A-2. He being the drawer of the cheque Ex.P-1, he has instructed his bank to stop payment. Under these circumstances, the cheque presumed to be given for discharge of debt. The said statutory presumption not rebutted through the evidence marshalled by the defence. The non-disclosure of the transaction to the Income Tax Department may be an actionable wrong for the Income Tax Department, but cannot be a shield for the accused under Section 138 of Negotiable Instrument Act. 18. The statutory notice is issued to the Firm and its two partners. The two partners, who are the accused had replied saying that, they are no more partners of the firm. To the notice addressed to the Firm, no reply by the existing partners, who were administering the company. D.W-4, who is one of the existing partners had mounted the witness box but had admitted that, he have no knowledge about the partnership Firm or its partners. 19. Therefore the Lower Appellate Court judgment acquitting the accused by reversing the well considered judgment of the Trial Court is liable to be set aside for being contrary to law and facts. 20. In the result, the Criminal Appeal is Allowed. 19. Therefore the Lower Appellate Court judgment acquitting the accused by reversing the well considered judgment of the Trial Court is liable to be set aside for being contrary to law and facts. 20. In the result, the Criminal Appeal is Allowed. The judgment of the Lower Appellate Court in C.A.No.48 of 2012 dated 18.03.2014 is hereby set aside. The order of the trial Court in S.T.C.No.49 of 2012 dated 19.10.2012 is restored. The accused are to be secured and committed to prison to undergo the sentence imposed.