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2022 DIGILAW 920 (KER)

P. Rasheedali, Son of Abdu v. Valiery Vaidyasala

2022-10-31

A.BADHARUDEEN

body2022
ORDER : Crl.R.P.No.65/2017 arises out of judgment in CC.No.2183/2015 dated 29.01.2016 on the file of the Special Judicial First Class Magistrate Court (N.I Act Cases), Kozhikode and the judgment dated 26.11.2016 in Crl.A.No.83/2016 on the file of the First Additional Sessions Court, Kozhikode. 2. Crl.R.P.No.66/2017 arises out of judgment in CC.No.2181/2015 dated 29.01.2016 on the file of the Special Judicial first Class Magistrate Court (N.I Act Cases), Kozhikode and the judgment dated 26.11.2016 in Crl.A.No.82/2016 on the file of the First Additional Sessions Court, Kozhikode. 3. Crl.R.P.No.67/2017 arises out of judgment in CC.No.2182/2015 dated 29.01.2016 on the file of the Special Judicial first Class Magistrate Court (N.I Act Cases), Kozhikode and the judgment dated 26.11.2016 in C.A.No.84/2016 on the file of the First Additional Sessions Court, Kozhikode. 4. The revision petitioner in all these cases is the sole accused in the above cases, who suffered conviction and sentence at the hands of the trial court as well as the appellate court. The 1st respondent in all these matters is the original complainant and the 2nd respondent is State of Kerala. 5. Heard the learned counsel for the revision petitioner as well as the learned counsel for the first respondent. The learned Public Prosecutor representing the second respondent also was heard. 6. I would like to refer the parties in these revision petitions as `revision petitioner’(accused) and the 'first respondent' (complainant), hereafter for convenience. 7. Short facts of the case: The complainant, a partnership firm `M/s.Valiery Vaidyasala', lodged separate complaints under Section 142 of the Negotiable Instruments Act (`N.I Act’ for short) through its Managing Director Dr. K.P.Saji Kumar when Ext.P3 cheque dated 24.11.2011, Ext.P10 cheque dated 30.11.2011, Ext.P17 cheque dated 08.12.2011, Ext.P24 cheque dated 06.01.2012, Ext.P32 cheque dated 22.12.2012, Ext.P39 cheque dated 02.12.2011, and Ext.P46 cheque dated 20.11.2011 were dishonoured, when the same were presented for collection. The complainant raised allegation in the complaint that the complainant through its Managing Director maintained business dealings with the 2nd accused, who has been running business under the name `M/s.Taj Pharmaceutical Distributors' and the above cheques were issued in discharge of the liability for purchase of medicines by the accused from the complainant. 8. The trial court tried all these 3 cases together. The trial court secured the presence of the accused for trial and tried the matter. 8. The trial court tried all these 3 cases together. The trial court secured the presence of the accused for trial and tried the matter. PW1 and PW2 examined and Exts.P1 to P57 were marked on the side of the prosecution. Though the accused was given opportunity to adduce defence evidence, no defence evidence adduced. The trial court appraised the evidence and finally convicted the accused for the offence punishable under Section 138 of the N.I.Act and sentenced him (the second accused) in C.C.No.2181/2015 to undergo imprisonment for 2 months and directed to pay fine of Rs.2 lakh; in C.C.No.2182/2015 to undergo imprisonment for 2 months and directed to pay fine of Rs.1,25,000/-and in C.C.No.2183/2015 to undergo imprisonment for 2 months and directed to pay fine of Rs.3 lakh. In default of payment of fine in all the 3 cases, the accused was sentenced to undergo simple imprisonment for one month and the fine was ordered to be paid as compensation under Section 357(1)(b) of Cr.P.C to the complainant. 9. On appeal, the learned Additional Sessions Judge confirmed the sentence, while modifying the substantive sentence in all the 3 cases to imprisonment for one day till rising of the court and ordered to pay fine of Rs.2 lakh in C.C.No.2181/2015, Rs.1,25,000/-in C.C.No.2182/2015 and Rs.3 lakh in C.C.No.2183/2015. The default sentence also was modified to 2 months in all the 3 cases. 10. While impeaching the veracity of the verdicts of the courts below, 2 points have been raised by the learned counsel for the revision petitioner to unsustain the concurrent verdicts. 11. First point argued is that, there is no proper legal notice in these cases. Therefore, the entire prosecution is vitiated. It is submitted by the learned counsel for the revision petitioner that, in the appellate common judgment, the appellate court found that in the notices sent in these cases, it was not specified that the notices were issued on behalf of the firm. Therefore, the entire prosecution is vitiated. It is submitted by the learned counsel for the revision petitioner that, in the appellate common judgment, the appellate court found that in the notices sent in these cases, it was not specified that the notices were issued on behalf of the firm. He pointed out that, as per Section 138(b) of the N.I Act, the cause of action to initiate prosecution alleging commission of offence punishable under Section 138 of the N.I.Act would arise only when the payee or the holder in due course of the cheque, as the case may be, shall make a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid and on failure to repay the amount within one month from the date of receipt of the said demand notice. Therefore, when notice is issued by a person other than a payee or the holder in due course of the cheque, it cannot be held that there is a proper legal notice within mandate under Section 138(b) of the N.I Act. Accordingly, it is submitted that the prosecution itself is non-est. In this connection, in order to substantiate this contention, the learned counsel for the revision petitioner placed decision of this Court reported in [ 2015(5) KHC 649 : 2016 (1) KLT 264 : 2015 (2) KLD 941], Jayakumar v. Devi Vilasom Kettuthengu Sangham & Another. In the said case, the prosecution was launched by one Devi Vilasom Kettuthengu Sangham on dishonour of a cheque issued in the name of one Karunakaran Nair. In the said case, this Court held that, since Devi Vilasom Kettuthengu Sangham is neither the payee nor a holder in due course of the cheque and therefore, Devi Vilasom Kettuthengu Sangham had no locus standi to file a complaint and accordingly, this Court set aside the conviction and sentence in the above case. 12. But the ratio of the said decision has no direct application in this case, since in this case the complaints have been filed by the 'Valiery Vaidyasala' as complainant represented by Dr. K.P.Saji Kumar. On perusal of the cheques, the same were issued in the name of 'M/s.Valiery Vaidyasala'. 12. But the ratio of the said decision has no direct application in this case, since in this case the complaints have been filed by the 'Valiery Vaidyasala' as complainant represented by Dr. K.P.Saji Kumar. On perusal of the cheques, the same were issued in the name of 'M/s.Valiery Vaidyasala'. Therefore, the respective complainants herein are the firm, in whose name these cheques were issued. 13. In this case, the specific challenge is that notices were issued by Dr. K.P.Saji Kumar, without representing the firm. Therefore, the notice is vitiated. 14. It is pointed out by the learned counsel for the revision petitioner further that, if the cheques were honoured and if amount was received by Dr. K.P.Saji Kumar in his individual capacity, whether it amounts to discharge of the liability towards the firm? In this connection, the learned counsel for the revision petitioner placed a decision of a Division Bench of this Court reported in [AIR 1981 Kerala 36], M.Rajagopal and others v. K.S.Imam Ali. In the said case, a suit filed by the firm on the basis of some promissory notes was considered, with particular reference to Section 28 of the Partnership Act and it was held as under: “When liability is sought to be fastened on an undisclosed principal on the strength of a negotiable instrument, it is not enough if the principal's name is disclosed in some way, but it must be disclosed in such a way that by any fair interpretation of the instrument it should be possible to hold that the undisclosed principal is the real person liable for the debt. When there is a conflict between Sections 19 and 22 of the Partnership Act on the one hand, and Ss.26, 27 and 28 of the Negotiable Instruments Act, the latter Act should prevail. A claim against a firm based on a written contract by one partner in the course of business with authority to act will be held to be binding on the firm. But when such a claim is made on the strength of a promissory note or a bill of exchange, court will have to be satisfied that the negotiable instrument discloses the liability of the firm clearly.” Based on this decision, it is fervently contended by the learned counsel for the revision petitioner that the liability of the firm should have been demanded in the notice and Dr. K.P.Saji Kumar in his individual capacity has no locus standi to make such a demand, since he is neither a 'payee' nor a 'holder in due course' of the cheque. 15. Refuting this contention, the learned counsel for the 1st respondent submitted that the purpose intended by notice is nothing but an intimation to the drawer to pay the cheque amount and there is no specific form of notice provided at all. In this connection, he has placed a decision of this Court reported in [ 2019 (3) KHC 105 : 2019 (2) KLT 895 : 2019 (3) KLJ 58 ], B.Surendra Das v. State of Kerala & anr. In the said decision, this Court held that there is no statutory mandate that notice shall narrate the nature of the debt or liability and therefore, the omission or error in the notice to mention the nature of the debt or liability did not render the same invalid. 16. Similarly, another decision reported in [ 2020 (3) KHC 336 ] Sukumara Pillai v. Baburaj & anr. has been placed by the learned counsel for the 1st respondent to contend that a complaint cannot be dismissed holding that statutory notice received by the accused did not contain the signature of the Advocate. The learned counsel for the revision petitioner placed a decision of this Court reported in [ 2021 (4) KHC 218 : 2021 (4) KLT 641 ], S. Satheesh v. State of Kerala & Ors. to buttress his point that the action of a partner or a document executed by a partner or other persons on behalf of the firm binds the firm only if it is relatable to an action done by partner or other person as a partner and that too on behalf of the firm or was as a result of a document executed by partner or other person as a partner and on behalf of the firm, expressing or implying an intention to bind the firm. The above legal position is not in dispute. 17. The above legal position is not in dispute. 17. Coming back to the discussion, no doubt, in order to take cognizance of an offence punishable under Section 138 of the N.I. Act, the cause of action would arise only when failure by the drawer to pay the cheque amount within one month from the date of receipt/deemed receipt of notice of demand, in writing, issued within the mandate under Section 138(b) of the N.I.Act. 18. While allaying the controversy, I am inclined to refer the notices issued in these cases, copies of which are marked as Ext.P26 series. Ext.P26 series would go to show that the notice starts with “I have been instructed by my client Dr. K.P.Saji Kumar, S/o. Damodharan Vaidyar, Valiery Vaidyashala, Pavannur.P.O, Narikkuni, Kozhikode District, to issue a lawyer notice as here under”. 19. In view of the said description of the party's name and address, who issued the notice is the pertinent question. 20. The learned counsel for the revision petitioner argued that notices were issued by Dr. K.P.Saji Kumar, in his individual capacity, and not on behalf of the firm. According to him, the firm cannot prosecute the revision petitioner on the basis of notices issued by Dr. K.P.Saji Kumar in his personal capacity and therefore, the said notices are not sufficient to cognize the offence for and on behalf of the firm. It is urged by the learned counsel further that Dr. K.P.Saji Kumar in his individual capacity is not either the 'payee' or a 'holder in due course'. He had read out the definition of `payee’ and `holder in due course’ as en-grafted under Sections 7 and 9 of the N.I Act. In fact, Section 7 of the N.I.Act defines who is `payee’; Section 8 defines who is `holder’ and Section 9 defines who is `holder in due course’, which are as shown below: “Payee : The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the “payee”. “Holder : The “holder” of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. “Holder : The “holder” of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction.” “Holder in due course :--“Holder in due course” means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in t he title of the person from whom he derived his title.” 21. Going by the definitions, 'payee' means a person named in the instrument to whom or to whose order the money is by the instrument directed to be paid. So, in order to come under the definition of `payee’, the instrument should contain the name of the payee. Here, admittedly the cheques were issued in favour of M/s.Valiery Vaidyasala and not in the name of Dr. K.P.Saji Kumar. Therefore, Dr.K.P.Saji Kumar is not the 'payee' and the 'payee' is M/s.Valiery Vaidyasala. As such, Dr. K.P.Saji Kumar, in his individual capacity, cannot be held as payee in the cheques. `Holder in due course' means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque, if payable to bearer. `Holder' means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. 22. In this context, it is apposite to refer Section 118 of the NI Act dealing with presumptions as to the negotiable instruments. As per Section 118 of the NI Act, until the contrary is proved, starting from (a) 'consideration' to (g) 'that the holder is a holder in due course' shall be presumed. That is to say presumption shall be made until the contrary is proved. Going by Section 118(g) of the NI Act, the holder of a negotiable instrument is also a holder in due course. 23. That is to say presumption shall be made until the contrary is proved. Going by Section 118(g) of the NI Act, the holder of a negotiable instrument is also a holder in due course. 23. It is settled that no form of notice is contemplated under Section 138(b) of the N.I Act and what is intended is to make a demand for the payment of money consequent to the dishonour of cheque within the period provided under Section 138(b) of the N.I Act. 24. In the decision reported in [1999 KHC 622 : 1999 (3) KLT 484 : 1999 (8) SCC 221 : AIR 1999 SC 3607 : 1999 CriLJ 4571 : 1999 AIR SCW 3621 : 1999 (3) Crimes 221 : JT 1999 (8) SC 58 : 1999 (6) SCALE 402 : 1999 SCC (Cri) 1411 : 1999 (8) Supreme 617 ], Central Bank of India and Another v. M/s. Saxons Farms and others, the Apex Court considered the essentials of a notice and it was found that the words used in the notice, “kindly arrange to make payment to avoid unpleasant action” are sufficient notice under Section 138(b) of the N.I Act. Apart from that, the learned counsel for the 1st respondent placed decision reported in [2000 KHC 319 : 2000 (2) KLT 59 : 2000 (1) KLJ 561 : ILR 2000 (2) Ker. 650 : 2000 CriLJ 2155], S.G.Pandalai v. Jacob C. Alexander and Another and [2006 KHC 1654 : 2006 (3) KLJ 692 : 2006 (4) KLT 800 ], P.R.Lekha v. K.N. Manickan & anr. to contend that the description of the name of the accused in the notice is of no consequence. 25. Coming back to the discussion, plainly reading the definition of 'holder in due course', it is crystal clear that holder in due course means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque, if payable to bearer. Here, there is no dispute that Dr. K.P.Saji Kumar, who issued the notice, is the Managing Director of the firm and he had described his address in the notice itself as M/s.Valiery Vaidyasala, capable of knowing that the demand was made by Dr. K.P.Saji Kumar, M/s.Valiery Vaidyasala. If so, Dr.K.P.Saji Kumar, being the Managing Director, has right to possess the cheques for and on behalf of the firm. K.P.Saji Kumar, M/s.Valiery Vaidyasala. If so, Dr.K.P.Saji Kumar, being the Managing Director, has right to possess the cheques for and on behalf of the firm. To put it differently, suppose, on presentation of the cheques by Dr. K.P.Saji Kumar, being the bearer of the cheques before the Bank for collection, can the bank refuse to give the money, despite having sufficient money in the account to honour the cheques? The answer is, definitely 'no'. Similarly, if the Bank encashed the cheques and money was given to Dr. K.P.Saji Kumar, being the person who is the bearer of the cheques, can it be said that the liability of the firm was not discharged? The answer again is definitely 'no'. If so, I have no hesitation to hold that Dr. K.P.Saji Kumar, who is admittedly the Managing Director of the firm, can only do physical possession and actions on behalf of the firm and he is the person entitled to possess or bear anything for and on behalf of the firm. Therefore, the ratio of Rajagopalan's case (supra), if applied to the facts of this case, then also, it could not be held that on encashment of the above cheques, the liability of the firm would not be discharged. Therefore, when the cheques issued in favour of the firm were dishonoured, Dr. K.P.Saji Kumar is competent to send notices and non description of the fact that he had sent notices, as the Managing Director of the firm and representing the firm is of no legal consequence, since the accused got the due information and knowledge about the party, to whom, he had to discharge the liability. Therefore, the first contention as canvassed by the learned counsel for the revision petitioner cannot be sustained. 26. In this matter, the fine imposed by the trial court as well as the appellate court also are under challenge, since it is contended that the trial court imposed fine more than the amount of the cheques. In this connection, the decision of the Apex Court in R.Vijayan v. Baby and Another, [ AIR 2012 SC 528 ] is very relevant. 27. In this connection, the decision of the Apex Court in R.Vijayan v. Baby and Another, [ AIR 2012 SC 528 ] is very relevant. 27. In paragraph 16 of the judgment of the Apex Court directed that unless there are special circumstances, in all cases of conviction, uniformly exercise the power to levy fine upto twice the cheque amount (keeping in view the cheque amount and the simple interest thereon at 9% per annum as the reasonable quantum of loss) and direct payment of such amount as compensation. Direction to pay compensation by way of restitution in regard to the loss on account of dishonour of the cheque should be practical and realistic, which would mean not only the payment of the cheque amount but interest thereon at a reasonable rate. Uniformity and consistency in deciding similar cases by different Courts, not only increase the credibility of cheque as a negotiable instrument, but also the credibility of Courts of justice. No doubt, Section 138 of the NI Act permits imposition of fine twice the cheque amount. 28. In this connection, I shall refer the cheque amounts and punishment imposed by the trial court. 29. In this matter, in C.C.No.2181/2015, the total cheque amount would come to Rs.1,41,110/-(34,090+33,670+73,350). In C.C.No.2182/2015, the cheque amount is Rs.83,760/-and in C.C.No.2183/2015, the cheque amount is Rs.2,11,390/-(73,350+73,350+64,690). In C.C.No.2181/2015, the trial court imposed fine of Rs.2,00,000/-. Therefore, the said imposition of fine is within the statutory limit, since total cheque amount is Rs.1,41,000/-. In C.C.No.2182/2015, the trial court imposed fine of Rs.1,25,000/-where, the cheque amount is Rs.83,760/-. Therefore, the same is also within the statutory limit. Similarly, in C.C.No.2183/2015, the trial court imposed Rs.3,00,000/-as fine amount, when the total amount covered by the cheques would come to Rs.2,11,390/-. Therefore, the same also is within the statutory limit. 30. Thus, it has to be concluded that the sentence also is within the statutory limit, which was confirmed by the appellate court as well. Therefore, I am not inclined to interfere in the sentence also. Therefore, the sentence also stands confirmed. 31. In view of the matter, both revision petitions fail and are, accordingly, dismissed. 32. The revision petitioner in all these revision petitions is directed to appear before the trial court to undergo the sentence and to pay the fine within seven days from today. Therefore, the sentence also stands confirmed. 31. In view of the matter, both revision petitions fail and are, accordingly, dismissed. 32. The revision petitioner in all these revision petitions is directed to appear before the trial court to undergo the sentence and to pay the fine within seven days from today. On failure to do so, the trial court is directed to execute the sentence without fail. Registry is directed to forward a copy of this common order to the courts below concerned for information and compliance.