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MADRAS HIGH COURT
M. Venugopal, J.
M/s. Durairaj Mills Ltd. —Petitioner
versus
M/s. Siruvanee Clothing Co. —Respondent
Criminal Appeal No.931 of 2004
Decided on 3.10.2013
IMPORTANT POINT
A formal alteration which is insignificant or superfluous would not affect instrument in any manner.
Headnote:(A) Negotiable Instruments Act, 1881—Section 87—Negotiable instrument—Material alteration—Material alteration of negotiable instrument would render instrument void—In order to avoid instrument, alteration should be with regard to material particulars and should be in such a way which would vary rights, liabilities or legal position of parties ascertained by deed in its original state or otherwise varies legal effect of instrument as originally expressed—Alteration by drawer of a purported place of drawing inserted by an acceptor, who has accepted a Bill before it being signed by drawer is not Material Alteration—A formal alteration which is insignificant or superfluous would not affect instrument in any manner—Legally permissible completion of an inchoate instrument cannot be construed as ‘Material Alteration’ of a negotiable instrument—A party consenting to an alteration cannot at a later point of time turn around and say that instrument suffers from material alteration. (Paras 39 to 41)
(B) Negotiable Instruments Act, 1881—Section 138 read with Section 87—Criminal Procedure Code, 1973—Sections 255(1) and 378—Dishonour of cheque—Acquittal— Material alteration of cheque—Unless condition set out in Section 138 of negotiable instrument Act are satisfied, no criminal liability can be saddled on accused—If there is Material Alteration in cheque which renders instrument void, no criminal prosecution can be launched based on such claim—For cheque or other negotiable instrument to remain valid despite material alterations, material alteration must be with consent of other party—Trial Court had not considered legal issues relating to Section 87 of Negotiable Instrument Act, 1881, pertaining to ‘Material Alteration’ coupled with salient features and relevant provisions of Indian Partnership Act, 1932, in a proper and real perspective, which ultimately resulted in miscarriage of justice—Impugned judgment set aside and entire gamut of subject matter in issue remitted back to Trial Court for fresh disposal. (Paras 45, 47, 51, 52 , 57 and 58)
(C) Evidence Act, 1872—Section 34—Books of Account—Evidentiary value— Ordinarily, original documents/books of accounts are to be produced/filed—Liability cannot be saddled only on the basis of sole statement of accounts—If such statement is produced and if entries are proved by means of corroboration evidence, then Court of Law may accept the same—An entry in account book is an admission by maker thereof in his own favour—However, it is accepted as evidence only if it strictly complies with requirements of being kept regularly and in ordinary course of business. (Paras 48 and 49)
(D) Partnership Act, 1932—Sections 18 and 22—Offence by partnership firm—Act of Partner of firm can very well be construed as an act on behalf of all Partners—It cannot be gainsaid that Section 22 of Partnership Act, provides that in order to bind an act or instrument done or executed by a Partner on behalf of firm, act should be done or instrument should be executed in name of firm or in any other manner expressing or implying an intention to bind the firm. (Paras 43 and 44)
M. Venugopal, J.—The Appellant/Complainant has preferred the instant Criminal Appeal as against the judgment of Acquittal dated, 06.04.2004 passed in C.C.No.624 of 2002 by the Learned Judicial Magistrate No.1, Coimbatore.
2. The Learned Judicial Magistrate No.1, Coimbatore, while delivering the judgment in C.C.No.624 of 2002 on 06.04.2004, has acquitted the Respondents 1 to 3/A1 to A3 under Section 255(1) of Cr.P.C., in respect of an offence under Section 138 of the Negotiable Instrument Act.
3. The case of the Appellant/Complainant is that it was a Textile Mill registered under the Indian Companies Act and carried on business at Pethanaickenpalayam, Pongalur Post, Avinashi Taluk, Coimbatorte District. The first Respondent/A1 was a Partnership Firm and the Respondents 2 and 3/A2 and A3 were its Partners. The Respondents 2 and 3/A2 and A3 were looking after the day-to-day affairs of the First Respondent/A1 Company and carried on all its business transactions. The Respondents 2 and 3/A2 and A3 were signatories of the cheques issued in respect of the First Respondent/A1 Company. The Appellant/Complainant and the Respondents/Accused had business transactions till the year 2001. The Appellant/Complainant was maintaining true and proper account under the head M/s.Siruvanee Clothing Company.
4. According to the Appellant/Complainant, the Respondents/Accused used to purchase yarn from it. The Appellant/Complainant used to supply yarn as per the order and delivered it as per the directions of the Respondents/Accused. The Respondents/Accused used to issue cheques in favour of the Appellant/Complainant for the transactions. As per the books of accounts of the Appellant/Complainant as on 11.01.2001, a sum of Rs. 8,25,092/- was outstanding from the Respondents/Accused.
5. The stand of the Appellant/Complainant is that it demanded the Respondents/Accused to clear the outstanding dues and the Respondents 2 and 3/Accused 2 and 3 issued two cheques on behalf of the first Respondent/A1 Company for Rs.5,00,000/- and Rs.3,25,902 each totalling for Rs.8,25,902/- in its favour to discharge the legal liability. The details of the cheques are given below:
Sl. No. Date Number Drawn on Amount
1. 15.04.2001 186587 State Bank of India, Rs.3,25,902
Industrial Finance
Branch, Coimbatore.
2. 20.04.2001 186588 State Bank of India, Rs.5,00,000
Industrial Finance Branch,
Coimbatore.
6. Later the aforesaid two cheques were revalidated by the Respondents/Accused as follows:
Sl. No. Date Number Drawn on Amount
1. 15.11.2001 186587 State Bank of India, Rs.3,25,902
Industrial Finance Branch,
Coimbatore.
2. 20.11.2001 186588 State Bank of India, Industrial Rs.5,00,000
Finance Branch, Coimbatore.
7. The Appellant/Complainant presented the aforesaid two cheques to its banker, State Bank of India, Industrial Financial Branch, Trichy Road, Coimbatore for collection on 11.05.2002. However, the two cheques were returned unpaid by the bank through their memo dated 11.05.2002 for the reason ‘Account Closed’. The banker informed the Appellant/Complainant as regards the dishonour cheques on the same day.
8. The Appellant/Complainant caused a legal notice to the Respondents/Accused on 21.05.2002, calling upon them to pay the entire amount within 15 days of the receipt of the legal notice. The first Respondent/A1 received the notice on 27.05.2002. The second Respondent/A2 received the notice on 24.05.2002. The third Respondent/A3 returned the notice and sent a reply notice dated 05.06.2002, admitting the issue of cheques, but with false averments.
9. The prime stand taken behalf of the Appellant/Complainant is that the cheques in its favour were issued by the Respondents/Accused in order to discharge their legal liability. As a matter of fact, they issued cheques and revalidated the same and later closed the account, with an intention to cheat and defraud it. Therefore, the Respondent/Accused had committed an offence punishable under Section 138 of the N
