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2025 DIGILAW 1070 (TS)

Kumbham Srinivas Reddy v. P. V. B. Sai

2025-09-22

LAXMI NARAYANA ALISHETTY

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JUDGMENT : E.V.VENUGOPAL, J. CRIMINAL APPEAL Nos.902 of 2014, 904 of 2014 and 905 of 2014 These Criminal Appeals are filed under Section 378(4) of Cr.P.C., by the appellant/complainant aggrieved by the judgments dated 10.07.2014 passed in Criminal Appeal Nos.251 of 2010, 250 of 2010 and 252 of 2010, all on the file of the learned III Additional Metropolitan Sessions Judge, Hyderabad wherein and where under the findings of conviction and sentence imposed against the 1 st respondent/accused No.3 vide judgments dated 06.07.2010 passed in CC Nos.587 of 2009, 583 of 2009 and 585 of 2009 by the learned XIV Additional Judge-cum-XVIII Additional Chief Metropolitan Magistrate, Hyderabad were set aside founding the 1st respondent/accused No.3 not guilty for the offence punishable under Section 138 of Negotiable Instruments Act. 2. In all three appeals, this Court heard Sri Nageshwar Rao Pappu, learned senior counsel for the appellant, Sri YV Ravi Prasad, learned senior counsel representing Sri YV Anil Kumar, learned counsel for the 1 st respondent and Mrs.S.Madhavi, learned Assistant Public Prosecutor, representing the 2 nd respondent/State. 3. Since the parties to all these criminal appeals are one and the same, these three appeals are disposed of by this common judgment. 4. As seen from the record, the 1st respondent/complaint lodged a private complaint under Section 200 of Cr.P.C., requesting to take appropriate action against the accused under Section 138 of NI Act alleging that the accused No.1 company viz. M/s.You One Maharia (JV), to which one Vinod Goel/A2 was the Managing Director and PM Kumar/A3 the 1st respondent herein was the Executive Director, was awarded a contract work for construction of a portion of National Highway No.7 and in that process, by placing purchase order dated 03.03.2004, under 13 invoices from 04.03.2004 to 12.07.2004, it took TMT rods amounting to Rs.55,14,363/- and in lieu of discharge of the said debt, on behalf of accused No.1, accused Nos.2 and 3 issued cheque bearing Nos.704140 dated 08.04.2004 for Rs.8,87,382/-, 704139 dated 12.08.2004 for Rs.7,50,000/- and 894767 dated 15.07.2004 for Rs.38,76,981/- and that on presentation, the said cheques were returned for want of sufficient funds in the account of A1 and in-spite of receipt of legal notice, the accused failed either to repay the amounts covered under the cheques or to give any reply. 5. 5. The trial Court took cognizance for the offence punishable under Section 138 of NI Act against the accused and after completing all the procedural formalities, proceeded with trial. During the course of trial, on behalf of the 1 st respondent/complainant, its Director viz. Anil Kumar Kedia was examined as PW1 and its Manager viz. Abraham as PW2 and got marked Exs.P1 to P9 in all the cases. 6. After completion of prosecution evidence, since accused No.2 did not appear before the trial Court, the case against the accused Nos.1 and 2 was split-up and the present case was proceeded further against the accused No.3/the 1 st respondent herein. 7. The 1 st respondent/A3 denied the case of the prosecution mainly contending that he was not the Executive Director of A1 and that he is only an employee and hence, he is not liable to be prosecuted. Further, prosecution of A3, without A1 company, has no validity. In support of his defence, in CC Nos.250 of 2010 and 251 of 2010, he got examined himself as DW1 and marked Ex.D1/GPA in his favour. 8. The trial Court, found the 1 st respondent/A3 guilty for the offence punishable under Section 138 of NI Act holding that having admitted his position in A1 company as Executive Director by virtue of Ex.D1/GPA and his evidence as DW1 and also his signatures on the subject cheques along with A2, A3 cannot disown his liability, the subject cheques were issued in lieu of a legally enforceable debt, in- spite of receipt of statutory notice A3 kept quiet, and splitting up of case against A1 and A2 cannot take away the case completely against them. Accordingly, convicted the 1st respondent/ A3 in CC Nos.587 of 2009, 583 of 2009 and 585 of 2009 and sentenced him to suffer simple imprisonment for one year and to pay a compensation of Rs.1,00,000/- in each case to be paid to the complainant, in default to undergo simple imprisonment for six months and directed to run the sentences consecutively in all CC Nos.587 of 2009, 583 of 2009 and 585 of 2009. 9. 9. Aggrieved by the said findings of the trial Court, the appellant/A3 preferred Criminal Appeal Nos.252 of 2010, 250 of 2010 and 251 of 2010 before the learned III Additional Metropolitan Sessions Judge at Hyderabad mainly contending that the trial Court erroneously found him guilty against the facts of the case and the settled proposition of law. The appellate Court, upon perusing the impugned judgments of the trial Court as well as the material placed before it in the form of oral and documentary evidence, holding that without prosecuting A1/company, its representatives or employees like A3, who acted as per the directions of the company, cannot be prosecuted as laid down under Section 141 of NI Act, without convicting A1 company and A2 its Director, convicting A3 is not proper and that A3 did not receive statutory notice in his individual capacity and that Ex.P6 postal acknowledgment contained signature of a third person not that of A3, found the 1 st respondent/A3 not guilty and set aside the impugned judgments passed in CC Nos.587 of 2009, 583 of 2009 and 585 of 2009. 10. Aggrieved by the findings of the appellate Court in Criminal Appeal Nos.252 of 2010, 250 of 2010 and 251 of 2010, the present criminal appeals are preferred by the appellant/complainant against the acquittal of the 1 st respondent/A3 mainly contending that the learned District Judge of the appellate Court without appreciating the evidence on record in a right perspective and upon misinterpretation of settled proposition of law and also the fact that case against A1 company and A2 is not concluded exonerating their liability, has erroneously set aside the well considered findings of the trail Court. Further, the findings of appellate Court regarding the statutory notice are contrary to the settled proposition of law laid down by the Hon’ble Apex Court in C.C.Alavi Haji Vs. Palapetti Muhammed, (2007) 6 SCC 555 wherein it was held that notice sent to the correct address of the drawer of the cheque by registered post with acknowledgement due is sufficient to hold that there was deemed service and that in the case of non-receipt of statutory notice, the accused should have to repay the amount covered under the cheque within 15 days from the date of receipt of summons from the Court. Stating thus, he prayed to allow these criminal appeals. 11. Stating thus, he prayed to allow these criminal appeals. 11. In support of his case, learned counsel for the appellant/ complainant in all these three matters relied upon the decisions rendered in Aneeta Hada Vs. Godfather Travels and Tours Private Limited , [(2012) 5 Supreme Court Cases] and C.C.Alavi Haji (stated supra). 12. Per contra, learned counsel for the 1 st respondent/A3 vehemently opposed the present criminal appeals mainly contending that the appellate Court, upon finding the erroneous findings of conviction of A3 by the trial Court, had rightly acquitted the 1st respondent/A3 holding that he cannot be made liable for the acts committed by his employer and hence, there is no need or necessity for this Court to interfere with the said well considered findings. It is also contended that mere description in the cause title as Director is not sufficient to make liable A3 and it must be proved beyond reasonable doubt. Negotiation for obtaining financial assistance on behalf of the Company by its Directors itself is not an ingredient for the purpose of constituting an offence under Section 138 of the Negotiable Instruments Act. Furthermore, a vicarious liability on the part of a person must be pleaded and proved. Stating thus, he relied upon the decisions rendered in Sabitha Ramamurthy Vs. RBS Channabasavaradhya 2006-Crimes (SC)-4-67 , SMS Pharmaceutical Ltd., Vs. Neeta Bhalla , [2007-BC(SC)2-521] , National Small Industries Corp. Ltd., Vs. Harmeet Singh Paintal , [2010-BCR(Crl.)-1-798] , K.Srikanth Singh Vs.North East Securities Ltd., , [2007-SCC-12-788] , KPG Nair Vs. Jindal Menthol India Limited 2001-SCC-10-218 , Pramod Vs.CK Velayudhan and others , [2005 Crl.LJ 4572] , Hira Lal S/o.Kesho Ram Vs. State of Haryana , [1971 AIR (SC) 356] , State of Madras Vs. GV Parekh , [1971 Crl.LJ 418] , MD Thomas Vs. PS Jaleel and another , [(2009) 14 Supreme Court Cases 398] , Sharad Kumar Sanghi Vs. Sangita Rane , [(2015) 12 Supreme Court Cases 781] and SK Goel and others Vs.State of Jharkhand and another , [2022 SCC OnLine Jhar 654] 13. Learned Assistant Public prosecutor representing State/2nd respondent contended that there is no need or necessity to interfere with the well considered findings of the appellate Court and that there is no apparent error on the findings made therein. Stating thus, it is requested to dismiss the present criminal appeals. 14. Learned Assistant Public prosecutor representing State/2nd respondent contended that there is no need or necessity to interfere with the well considered findings of the appellate Court and that there is no apparent error on the findings made therein. Stating thus, it is requested to dismiss the present criminal appeals. 14. This Court perused the judgments of both the trial Court as well as the appellate Court and the material placed on record. It is true that while deciding an appeal against acquittal, the Appellate Court has to re-appreciate the evidence. After re-appreciating the evidence, the first question that needs to be answered by this Court is whether different views taken by the trial Court as well as appellate Court are plausible views that could have been taken based on evidence on record. Appellate Court can interfere with the order of acquittal only if it is satisfied after re-appreciating the evidence that the only possible conclusion was that the guilt of the accused had been established beyond reasonable doubt. The Appellate Court cannot overturn order of acquittal only on the ground that another view is possible. In other words, the judgment of acquittal must be found to be perverse. Unless the Appellate Court records such a finding, no interference can be made with the order of acquittal. The order of acquittal further strengthens the presumption of innocence of the accused. 15. The main ingredients to attract the offence under Section 138 of N.I. Act are that there must be existence of legally enforceable debt due between the parties and the subject cheque must be given in discharge of the said legally enforceable debt and upon its dishonour, a notice must be given in writing demanding payment of the amount of the cheque from the drawer within thirty days from the date of receipt of information regarding return of the cheque unpaid and in the event of failure of the drawer to pay the amount within fifteen days of receipt of the notice, to lodge a complaint. 16. When the facts and circumstances of the case on hand are scrutinized, the evidence on record, particularly the correspondence between the parties would strengthen the presumption in favour of the complainant with regard to existence of legally enforceable debt and issuance of cheques in lieu of discharge of the same. 16. When the facts and circumstances of the case on hand are scrutinized, the evidence on record, particularly the correspondence between the parties would strengthen the presumption in favour of the complainant with regard to existence of legally enforceable debt and issuance of cheques in lieu of discharge of the same. It is also established that upon dishonour of the said cheques for want of sufficient funds, the complainant issued legal notices not only to the accused but also to other three persons. However, except arraying accused Nos.1 to 3 in the array of accused, the other three persons, against whom legal notices were also issued, were not arrayed as accused. In this regard it is pertinent to mention that A1 is a juristic person and it was being represented by A2/its Managing Director and A3/its Executive Director and they both have signed the subject cheques. The other persons, who were not made as accused, are no way connected with the payments of dues or they were the signatories of the subject cheques. 17. When the contentions advanced on either side are meticulously scrutinized, the main questions, to be decided herein are whether the 1 st respondent/A3 is vicariously liable for the acts done by A1 company and whether there is any valid service of notice on A3. 18. Learned counsel for the appellant/complainant tried to draw the attention of this Court to the law laid down under Section 141 of NI Act contending that if the person committing an offence under section 138 of the Act is a company/juristic person, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against. It is also contended that where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. 19. 19. Further, the vicarious liability is attracted when the ingredients of sub-section 1 of Section 141 are satisfied. The Section provides that every person, who at the time the offence was committed was in charge of, and was responsible to the Company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence under Section 138 of NI Act. In the light of sub-section 1 of Section 141, this Court perused the averments made in the complaints of these three appeals. Admittedly, the 1 st respondent/A3 along with A2 is the signatory of the cheques, who were then Managing Director and Executive Director respectively of A1 company. During cross-examination A3 admitted that he, being GPA Holder, had cheque issuing power at the time of issuance of subject cheques. He also admitted that he was the Project Director of work given to A1 company by National Highways Authority. A3 also admitted in his evidence regarding the transaction between A1 company and the complainant and also issuance of subject cheques. 20. The contention of the 1 st respondent/A3 is that he had not been served with the statutory notice and hence, he missed the opportunity of denying the contents therein. It clearly shows that the appellant failed to serve the statutory notice against the 1st respondent, which is mandatory in order to bring home the guilt of the accused under Section 138 of NI Act. 21. Section 27 of General Clauses Act says that where any Central Act or Regulation made after the commencement of this Act authorises or requires any document to be served by post, whether the expression serve or either of the expression give or sent or any other expression is used then unless a different intention appears, the services shall be deemed to be effected by properly addressing, pre-paying and posting by registered post a letter containing the document and unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of post. 22. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice. 22. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice. If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the Court shall presume service of notice. This, however, is a matter of evidence and proof. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be opened to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice. 23. In the cases like under Section 138 of NI Act, the complainant has to prove the guilt of the accused beyond all reasonable doubt by satisfying all the essential ingredients. In the case on hand, the 1st respondent/accused is disputing receipt of notice stating that the same was not received by him personally but it was received by a third party and the same is very much evident from Ex.P6 postal acknowledgment. The appellant did not make any efforts to prove the relationship or acquaintance of the 1 st respondent with the said third party and the that the appellant failed to establish that the contents of the legal notice are very much known to the accused and after having knowledge of the same, he evaded either repayment of the same or issuing suitable reply. In such circumstances, we cannot throw away the possibility of lack of knowledge of contents of the notice to the 1st respondent. Though the appellant relied upon the decision of Hon’ble Supreme Court in CC Alavi Haji Vs. Palapetty Muhammed and another (cited supra), lack of knowledge of 1 st respondent cannot be brushed aside. 24. In such circumstances, we cannot throw away the possibility of lack of knowledge of contents of the notice to the 1st respondent. Though the appellant relied upon the decision of Hon’ble Supreme Court in CC Alavi Haji Vs. Palapetty Muhammed and another (cited supra), lack of knowledge of 1 st respondent cannot be brushed aside. 24. In a similar circumstance, the Hon’ble Apex Court in a case between M.D.Thomas Vs.P.S.Jaleel and another (Crl.A.No.711 of 2009, arising out of SLP (Crl.) No.7828 of 2007) held that proviso to Section 138 of NI Act specifies the conditions which are required to be satisfied before a person can be convicted for an offence enumerated in the substantive part of the section. Clause (b) of the proviso to Section 138 of NI Act casts on the payee or the holder in due course of the cheque, as the case may be, a duty to make a demand for 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. When the notice of demand was served upon the third party but not on the accused, held that there is no escape from the conclusion that complainant had not complied with the requirement of giving notice in terms of Clause (b) of proviso to Section 138 of the Act. 25. In view of the above factual matrix, it can be safely held that the present criminal appeals deserve for dismissal since the appellant failed to establish the knowledge of the accused/1st respondent with regard to his request for repayment of the cheques amount and resultantly, the findings of the appellate Court in setting aside the judgment of the trial Court reversing the conviction of the accused and acquitting him for the offence punishable under Section 138 of NI Act cannot be found fault with and the same is sustained. 26. In the result, these criminal appeals are dismissed. Miscellaneous applications if any pending shall stand dismissed.