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2023 DIGILAW 727 (KER)

P. Rahim, S/o. Cheria Bava v. A. R. M. Yakub

2023-09-19

C.S.DIAS

body2023
JUDGMENT : The appeals are filed questioning the legality and correctness of the common judgment passed by the Court of Session, Kozhikode Division (Appellate Court) in Criminal Appeal Nos.622, 623, 624, 636, 637 and 638 of 2009. The appellant was the first respondent, and the first respondent was the appellant before the Appellate Court. As the above appeals were disposed of by a common judgment, they were consolidated and jointly heard and are being disposed of by this common judgment. For convenience, the parties are referred to as per the status before the Trial Court. Relevant Factual Matrix 2. The complainant had filed C.C Nos.421, 422 and 423 of 2003 before the Judicial Magistrate of the First Class – V, Kozhikode (Trial Court) against the accused (first accused firm and its four partners), alleging them to have committed the offence under Sec.138 of the Negotiable Instruments Act (in short, ‘N.I Act’). The common case of the complainant in the three complaints was that he was doing business in sale of fish and the first accused was doing business in fish export. The Managing Partner of the firm, the third accused, had purchased fish from the complainant on credit. In the discharge of the legally enforceable debt, the third accused had issued Exts.P1 to P3 cheques in favour of the complainant. The accused Nos.2, 4 and 5 are the other partners of the firm, who also had control and responsibility in managing the affairs of the firm. The cheques, on presentation to the Bank for collection, got dishonoured due to insufficient funds in the bank account of the first accused. The complainant issued Exts.P11 to P13 statutory lawyer notices to the accused. Although the notices were served on the accused, only the fifth accused sent Ext.P16 series reply notices denying the allegations in the lawyer notices. As the accused failed to pay the demanded amount, they committed the offence under Sec.138 of the N. I Act. Accordingly, the complaints were filed. 3. During the pendency of the proceedings, the fourth accused died. Since the third accused had absconded, the cases against him were split up. The accused one, two and five pleaded not guilty to the substance of the accusations read over to them. In the trial, the complainant and the Bank Manager were examined as PWs.1 and 2 and Exts.P1 to P24 were marked in evidence. Since the third accused had absconded, the cases against him were split up. The accused one, two and five pleaded not guilty to the substance of the accusations read over to them. In the trial, the complainant and the Bank Manager were examined as PWs.1 and 2 and Exts.P1 to P24 were marked in evidence. The fifth accused was examined as DW1, and Exts.D1 to D5 were marked through him. Trial Court judgment 4. The Trial Court, after analysing the materials on record, by its common judgment, found the accused one, two and five guilty and convicted them for the offence under Sec.138 of the N. I Act and sentenced them in the following manner: (i). In C.C No.421/2003, the first accused was sentenced to pay a compensation of Rs.39,674/-to the complainant and accused two and five were sentenced to undergo simple imprisonment for six months. (ii). In C.C No.422/2003, the first accused was sentenced to pay a compensation of Rs.9,91,855/-to the complainant and the accused two and five were sentenced to undergo simple imprisonment for one year. (iii) In C.C No.423/2003, the first accused was sentenced to pay a compensation of Rs.90,000/-to the complainant and accused two and five were sentenced to undergo simple imprisonment for one year. (iv) The charge framed against the fourth accused was declared abated, and the cases against the third accused were split up and refilled as C.C Nos.952, 953 and 954 of 2009. 5. Aggrieved by the conviction and sentence passed by the Trial Court, the second and fifth accused filed the following appeals before the Appellate Court, namely: (a) the second accused filed Crl. A Nos.622, 623 and 624 of 2009 from which the present Crl.A Nos.298,294 and 297 of 2011 arise, and; (b) the fifth accused filed Crl. A Nos.636, 637 and 638 of 2009 from which Crl. A Nos.296, 295 and 293 of 2011 arise. 6. The first accused did not challenge the judgments passed by the Trial Court. Appellate Court judgment 7. The Appellate Court, after re-appreciating the materials on record, by the impugned common judgment allowed the appeals and set aside the conviction and sentence passed by the Trial Court in the three cases. 8. Aggrieved by the common judgment of the Appellate Court, the present criminal appeals are filed. 9. Heard; Sri. Salil Narayanan. Appellate Court judgment 7. The Appellate Court, after re-appreciating the materials on record, by the impugned common judgment allowed the appeals and set aside the conviction and sentence passed by the Trial Court in the three cases. 8. Aggrieved by the common judgment of the Appellate Court, the present criminal appeals are filed. 9. Heard; Sri. Salil Narayanan. K.A, the learned counsel appearing for the appellant/complainant; Sri.R.Sanjith, the learned counsel appearing for the first respondent/second accused in three appeals; and Sri.V.Venugopalan Nair, the learned counsel appearing for the first respondent/fifth accused in the other three appeals and the learned Public Prosecutor appearing for the second respondent/State in all the appeals. 10. Sri. Salil Narayanan vehemently argued that the Appellate Court had gone wrong in reversing the conviction and sentence against the accused Nos.2 and 5. He submitted that the complainant has specifically averred in Exts.P11 to P13 lawyer notices that the accused Nos.2 to 5 were in charge and were responsible for the conduct of the business of first accused firm when the offence was committed. The above assertion is also specifically pleaded in the three complaints. In view of the said pleading and proving the five concomitants prescribed under Section 138 of the N.I.Act, the complainant had discharged his initial onus of proof. The learned Counsel drew the attention of this Court to clauses (viii) (xii) of Ext.P20 partnership deed of the first accused firm, which shows that the accused Nos.3 to 5 are the managing partners of the firm and that all the partners are equally responsible for the day-to-day affairs of the firm. He further submitted that the oral testimony of PW1 read with Exts.P1 to P24, the assertions in the lawyer notices and complaints, and the covenants in Ext P20 deed are sufficient to hold that the accused 2 and 5 were also responsible for the affairs of the firm. He drew the attention of this Court to the decision of the Honourable Supreme Court in S.P.Mani and Mohan Dairy vs. Dr.Snehalatha Elangovan [2022 (6) KHC 215] to buttress his contention that the primary responsibility of the complainant is to plead in the complaint that the accused are vicariously liable for the firm committing the offence and that there is no legal requirement for the complainant to establish every transaction. He also relied on the decision in Sunitha Palitha Vs. He also relied on the decision in Sunitha Palitha Vs. Panchami Stone Quarry [ 2022 (5) KHC 201 ] and contended that there is no necessity to establish that the managing partners were carrying on the day-to-day administration of the firm because the law presumes so. The Appellate Court has erroneously reversed the finding of guilt, conviction and sentence imposed by the Trial Court. He prayed that the appeals be allowed. 11. Sri.R.Sanjith supported the impugned judgment by contending that the Appellate Court was correct in concluding that the accused 2 and 5 were not in charge or responsible for the affairs of the first accused firm. He submitted that, as Ext.P20 partnership deed, the second accused was not a managing partner of the firm. Moreover, there was nothing on record to establish that the second accused, an 84-year-old lady and the mother of the accused 3 to 5, was in charge and responsible for managing the firm. He brought to the notice of this Court the decision in Biju Jacob vs. Annie Mathews and others [ 2004 (2) KLT 634 ] to bolster his submission. He urged this Court not to interfere with the impugned judgment. 12. Sri.V.Venugopalan Nair, after referring to S.P.Mani (supra), argued that even if there is an averment in the complaint that the accused were in charge and responsible for the conduct of the business of the firm, the accused can very well establish that they were not in charge and responsible for the affairs of the firm. In the instant case, the fifth accused gave evidence as DW1 and issued Ext.D1 letter unambiguously stating that the cheques were not issued towards a legally enforceable debt. Moreover, in the oral testimony of DW1, he has controverted the assertions made by the complainant that he was not in charge of the affairs of the firm and that it was the third accused who issued Exts.P1 to P3 cheques. He submitted that the complainant and the third accused were hand in glove and were fraudulently attempting to pass the liability to accused 2 and 5. He submitted that the complainant and the third accused were hand in glove and were fraudulently attempting to pass the liability to accused 2 and 5. The Appellate Court, after appreciating the oral testimony of DW1 read with Exts.D1 to D5 and the decision of the Honourable Supreme Court in SMS Pharmaceuticals Ltd. vs. Neeta Bhalla [ 2005 (4) KLT 209 SC], has concluded that the accused 2 and 5 were not in charge of the affairs of the firm. Hence, he prayed that the appeals be dismissed by confirming the impugned judgment. 13. The common point in the appeals is whether there is any illegality or error in the impugned common judgment. 14. Before proceeding to discuss the facts and the findings, this Court lodges a caveat on the scope and powers of this Court in deciding an appeal against an order of acquittal. 15. The law has crystallised through a string of precedents of the Honourable Supreme Court and this Court with the quintessence being that the Appellate Court should be slow and watchful in interfering with an order of acquittal. Unless the conclusion arrived at by the Trial Court is manifestly erroneous and unjustifiable, the Appellate Court shall not take a contrary view. 16. In Jafarudeen vs. State of Kerala [2022 KHC 6449], the Honourable Supreme Court, after referring to its earlier judgments, has laid down the broad principles to deal with appeals against orders of acquittal. It is apposite to refer to the relevant portion of the judgment, which reads as follows: “25. Scope of Appeal filed against the Acquittal: While dealing with an appeal against acquittal by invoking S.378 of the Cr.PC, the Appellate Court has to consider whether the Trial Court's view can be considered a possible one, particularly when evidence on record has been analyzed. The reason is that an order of acquittal adds up to the presumption of innocence in favour of the accused. Thus, the Appellate Court has to be relatively slow in reversing the order of the Trial Court rendering acquittal. Therefore, the presumption in favour of the accused does not get weakened but only strengthened. Such a double presumption that enures in favour of the accused has to be disturbed only by thorough scrutiny on the accepted legal parameters. 17. Thus, the Appellate Court has to be relatively slow in reversing the order of the Trial Court rendering acquittal. Therefore, the presumption in favour of the accused does not get weakened but only strengthened. Such a double presumption that enures in favour of the accused has to be disturbed only by thorough scrutiny on the accepted legal parameters. 17. Recently, in Rupesh Manger (Thapa) vs. State of Sikkim (MANU/SC/1014/2023), the Honourable Supreme Court has observed that an Appellate Court may reverse an order of acquittal if it is so perverse and the conclusion is not plausible. Just because another view is possible, on re-appreciation of the evidence, the Appellate Court shall not disturb the finding of acquittal and substitute its findings to convict the accused. 18. With the above observations in mind, let us examine the materials on record and the law. 19. The complainant's case was that the third accused had issued Exts.P1 to P3 cheques in his favour in discharge of a legally enforceable debt of the first accused firm. 20. Irrefutably, the cheques of the first accused firm were drawn by the third accused. The cheques were returned due to ‘insufficient funds’ in the first accused's bank account. The complainant had issued Exts.P11 to P13 lawyer notices to all the accused. On behalf of the accused, the fifth accused sent Ext.P16 reply notices stating that the cheques were not issued towards a legally enforceable debt. 21. In paragraph 2 of the three complaints, the complainant has specifically averred that the accused 2 to 5 were in charge and responsible for the conduct of the business of the firm and, therefore, they are vicariously guilty for committing the offence under Sections 138 and 141of the N.I.Act. 22. The complainant and the bank manager were examined as PWs1 and 2, and Exts.P1 to P24 were marked. 23. PW1, in his oral testimony, has in unequivocal terms admitted that the third accused issued the three cheques in his favour and he was the one who handed over a copy of Ext.P20 partnership deed. 24. The fifth accused, who gave evidence as DW1, testified that he and the second accused were not in charge and responsible for the conduct of the first accused firm's business and it was the third accused who had the transaction with the complainant and issued the cheques. 25. 24. The fifth accused, who gave evidence as DW1, testified that he and the second accused were not in charge and responsible for the conduct of the first accused firm's business and it was the third accused who had the transaction with the complainant and issued the cheques. 25. Even though the complainant has averred in the lawyer's notices and the complaints that the accused 2 to 5 were in charge and responsible for the conduct of the affairs of the first respondent firm, there is no material to corroborate the assertion. 26. The court below, after re-appreciating the materials on record and relying on the principles laid down in SMS Pharmaceuticals Ltd. (supra), concluded that accused 2 and 5 were not in charge and responsible for the conduct of the business of the first accused. 27. Clause (viii) of Ext.P20 partnership deed states that the accused 3 to 5 are the managing partners of the firm. Therefore, the finding of the Appellate Court that there was no incriminating material to hold that the second accused was responsible for the conduct of the business of the firm and had no complicity in the transaction is correct and justifiable. Hence, I confirm the said finding of the court below, acquitting the second accused. 28. Now, we move on to the role of the fifth accused in the transaction. 29. In S.P.Mani (supra), the Honourable Supreme Court, after a survey of all the earlier pronouncements on Section 141 of the N.I.Act, has succinctly summarized the law thus: “47. Our final conclusions may be summarised as under: a.) The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no legal requirement for the complainant to show that the accused partner of the firm was aware about each and every transaction. On the other hand, the first proviso to subsection (1) of Section 141 of the Act clearly lays down that if the accused is able to prove to the satisfaction of the Court that the offence was committed without his/her knowledge or he/she had exercised due diligence to prevent the commission of such offence, he/she will not be liable of punishment. b.) The complainant is supposed to know only generally as to who were in charge of the affairs of the company or firm, as the case may be. The other administrative matters would be within the special knowledge of the company or the firm and those who are in charge of it. In such circumstances, the complainant is expected to allege that the persons named in the complaint are in charge of the affairs of the company/firm. It is only the Directors of the company or the partners of the firm, as the case may be, who have the special knowledge about the role they had played in the company or the partners in a firm to show before the court that at the relevant point of time they were not in charge of the affairs of the company. Advertence to Sections 138 and Section 141 respectively of the NI Act shows that on the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. The existence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial to show that at the relevant time they were not in charge of the affairs of the company or the firm. c.) Needless to say, the final judgement and order would depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners ‘qua’ the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquittal. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquittal. d.) If any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court. 30. The law propounded above, casts the primary responsibility on the complainant to aver in the complaint that the accused were in charge and responsible for the conduct of the business of the firm when the offence was committed. Nevertheless, the complainant is not obliged to establish that the accused were aware of every transaction. Yet, merely by making a person an accused falling within the sweep of Section 141 of the N.I.Act would not lead to his automatic conviction. If the accused partner can substantiate with cogent evidence that he was not in charge and responsible for the day-to-day business and administration of the company/firm, certainly be cannot be fastened with criminal liability under the N.I.Act. 31. In the instant case, on an appreciation of the oral testimonies of PW1 and DW1, corroborated with the materials on record, especially Ext D1 letter, it is well established that it was the third accused, who issued the cheques, who was in charge and responsible for the day-to-day affairs of the first accused firm. PW1 has explicitly admitted that the transaction was with the third accused. Thus, the fifth accused has set up a probable defence and has successfully rebutted the reverse onus of proof under Section 139 of the N.I.Act that he had no role in the transaction. Viewed from the above angle, I have no hesitation to concur with the findings of the Appellate Court. 32. Thus, the fifth accused has set up a probable defence and has successfully rebutted the reverse onus of proof under Section 139 of the N.I.Act that he had no role in the transaction. Viewed from the above angle, I have no hesitation to concur with the findings of the Appellate Court. 32. On a total re-appreciation of the materials on record, this Court is of the definite view that the Appellate Court has rightly concluded that the accused 2 and 5 have not committed the offence under Sections 138 and 141 of the N. I Act and have set aside the conviction and sentence passed by the Trial Court. Given the above conclusion, the appeals have to necessarily fail. Consequentially, the appeals are dismissed.