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IN THE HIGH COURT OF KERALA AT ERNAKULAM
A. BADHARUDEEN, J.
Padma Conductors Pvt. Ltd., Represented By Its Director Rajkumar Nair and Ors. – Petitioners
Versus
MIRC Electronics, Represented By Its Branch Accountant and Anr. – Respondents
Crl. Rev. Pet. No. 741 Of 2016
Decided On : 07-02-2024
N.I Act - Negotiable Instruments Act - Section 138 - 397, 401 - The court discussed the legal provisions under Section 138 of the Negotiable Instruments Act and the burden of proof on the complainant to establish the transaction and execution of the cheque. The court emphasized the requirement for the power of attorney holder to have witnessed the transaction or possess direct knowledge, and the insufficiency of evidence provided by the branch accountant in proving the transaction and execution of the cheque.
Fact of the Case:
The complainant alleged that the accused issued a cheque that was dishonored for want of funds. The trial court found accused 1, 2, and 6 guilty under Section 138 of the N.I Act, while the appellate court modified the sentence imposed against the 2nd accused.
Finding of the Court:
The court found that the evidence provided by the branch accountant, who did not have direct knowledge of the transaction, was insufficient to discharge the initial burden on the complainant to prove the transaction and execution of the cheque.
Issues: The key issue was whether the evidence provided by the branch accountant was sufficient to establish the transaction and execution of the cheque, as required under Section 138 of the N.I Act.
Ratio Decidendi: The court held that the burden to prove the issuance and execution of the cheque with certainty was upon the complainant, and the evidence provided by the branch accountant was insufficient to discharge this burden.
Final Decision: The conviction and sentence imposed by the trial court against the accused were set aside, and the matter was remanded back to the trial court for fresh consideration after permitting the complainant to adduce further evidence in respect of the transaction, issuance, and execution of the cheque.
अदालत ने स्पष्ट किया कि धारा 138 के तहत अभियोग में अभियोगकर्ता का प्रथम दायित्व है कि वह लेनदेन और चेक के निष्पादन को साबित करे (!) . इस मामले में, शाखा लेखाकार द्वारा प्रस्तुत साक्ष्य, जिसके पास सीधे लेनदेन या चेक के निष्पादन का ज्ञान नहीं था, उसे पर्याप्त नहीं माना गया ताकि वह इस दायित्व को पूरा कर सके (!) . अदालत ने कहा कि बिना सीधे ज्ञान के व्यक्ति का साक्ष्य लेनदेन और चेक के निष्पादन को प्रमाणित करने के लिए पर्याप्त नहीं हो सकता (!) . इस प्रकार, साक्ष्य की पर्याप्तता का आकलन करते समय यह देखा जाना चाहिए कि साक्ष्य देने वाला व्यक्ति लेनदेन का प्रत्यक्ष साक्षी हो या नहीं, क्योंकि इससे ही कानून के अनुसार लेनदेन और चेक के निष्पादन का प्रमाण स्थापित होता है (!) .
ORDER :
This Revision Petition has been filed under Sections 397 and 401 of the Code of Criminal Procedure. The revision petitioners are accused Nos.1,2 and 6 in C.C.No.1168/2009 on the files of the Judicial First Class Magistrate No.III, Palakkad. The revision petitioners assail judgment dated 05.10.2013 in the above case as well as the judgment in Crl.Appeal No.331/2013 before the Additional Sessions Court-V, Palakkad. The respondents herein are the complainant as well as the State of Kerala.
2. Heard the learned counsel for the revision petitioners as well as the learned counsel for the respondents in detail. Perused the lower court records.
3. I shall refer the parties in this Revision Petition as `complainant' and 'accused' for convenience.
4. The complainant lodged complaint alleging commission of offence punishable under Section 138 of the Negotiable Instruments Act (`N.I Act' for short) contending that the complainant used to supply electrical equipments and products to the 6th accused on behalf of accused 1 to 5 and the 1st accused issued cheque for Rs.7,83,929.50 dated 18.04.2009 drawn on South Indian Bank signed by the 2nd accused as the Director of the 1st accused for discharging the liability of the 6th accused, as on 18.04.2009. On presentation of the cheque, the same got dishonoured for want of funds. Consequently, notice of dishonour was issued and the amount covered by the cheque was demanded, but the accused did not heed the demand.
5. The trial court took cognizance of this matter and issued summons to the accused and proceeded with trial on compliance of the legal formalities.
6. During trial PW1 examined and Exts.P1 to P21 were marked on the side of the complainant. Exts.D1 to D2 were marked as defence evidence.
7. On hearing both sides, the learned Magistrate found that accused Nos.3, 4 and 5 were not guilty, while holding that accused Nos.1, 2 and 6 were guilty for the offence punishable under Section 138 of the N.I Act and accused 1 and 6 were sentenced to pay compensation of Rs.7,83,929.50 equally to the complainant under Section 357(3) of Cr.P.C. The 2nd accused was sentenced to undergo simple imprisonment for a period of 2 years.
8. On appeal, the learned Sessions Judge concurred the finding of conviction while modifying the sentence imposed against the 2nd accused to 7 months.
9. While assailing concurrent verdicts of conviction and sentence, the learned counsel for accused 1, 2 and 6/revision petitioners submitted that in this matter, the transaction, issuance and execution of Ext.P2 cheque not at all proved, as mandated by law. The learned counsel also submitted that the complaint was filed by MIRC Electronics Limited represented by its Branch Accountant Albi. At the time of evidence, one Pradeep Menon, S/o. Achuthannair, was examined to prove the transaction, issuance and execution of the cheque and he was the power of attorney holder of the company and he did not have any direct knowledge regarding the transaction, issuance or execution of the cheque and, therefore, his evidence is quite insufficient to prove the transaction and execution of Ext.P2 by the accused as contended by the complainant and for the sole reason the complainant failed to discharge his initial burden in the matter of transaction led to execution of Ext.P2. Therefore, the conviction and sentence imposed by the trial court and modified by the appellate court deserve interference and accused 1, 2 and 6 are liable to be acquitted.
10. The learned counsel for accused 1, 2 and 6 placed decisions of this Court reported in [2016 (3) KHC 229 : 2016 (2) KLD 180 : 2016 (2) KLJ 792 : ILR 2016 (3) Ker. 243 : 2016 (3) KLT SN 62], Sukumaran P.N v. K.N.Madhavan Nair & Ors. and [2022 KHC 548 : 2022 (5) KHC SN 14 : 2022 (2) KLD 343 : 2022 KHC OnLine 548 : 2022(4) KLT 592 : 2022 (3) KLJ 573], Shibu L.P v. Neelakantan & another to buttress his argument in this line. In Shibu L.P v. Neelakantan & another's case (supra), in paragraph 15, this Cou
The burden of proof on the complainant to establish the transaction and execution of the cheque under Section 138 of the Negotiable Instruments Act.
A complainant must prove the execution of a cheque by direct knowledge or witness testimony; reliance solely on records fails to establish the burden of proof.
Managing partners are vicariously liable for offences committed by firms under Section 138 of the NI Act.
The court affirmed that a complaint under Section 138 requires valid authorization from a company’s board, and without it, the complaint is invalid regardless of other evidence.
Point of Law : Law is settled on point that a complaint alleging commission of offence under Section 138 of Negotiable Instruments Act can be presented through power of attorney holder and power of a....
Power of attorney holder with direct knowledge can testify; cheque endorsement for collection not transfer, upholding Section 138 NI Act prosecution.
The burden of proof shifts to the complainant once the accused discharges the initial burden of proof, and the presumption under Sections 118 and 139 of the N.I Act disappears.
A complainant under Section 138 of the NI Act must prove the execution of a cheque, relying on witnesses with direct knowledge of the transaction.
A Power of Attorney Holder may testify in a cheque dishonour case even if not named in the witness schedule, provided they have direct knowledge of the transaction.
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