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2013 Supreme(Mad) 3516
High Court of Judicature at Madras
M. VENUGOPAL, J.
M/s. Durairaj Mills Ltd. Represented by its Managing Director P.D. Damodaran Pethanaickenpalayam, Coimbatore
Versus
M/s. Siruvanee Clothing Company Rep by its Partner, Coimbatore & Others
Criminal Appeal No. 931 of 2004
Decided On : 03-10-2013
For the Appellant:P.M. Duraiswamy, Advocate.
For the Respondents:R. Karthikeyan for M/s. Krishnamoorthy, Advocates.
The main legal point established in the judgment is the application of 'Material Alteration' under Section 87 of the Negotiable Instrument Act and the liability of partners in a firm under the Indian Partnership Act in determining the validity of cheques and the culpability of the accused.
Headnote:
Cheque - Negotiable Instrument Act - Section 138, Section 139, Section 141, Section 87, Indian Partnership Act - [138, 139, 141, 87] - The court analyzed the legal provisions of the Negotiable Instrument Act, including Section 138, Section 139, and Section 141, and the Indian Partnership Act, particularly Section 87, to determine the validity of the cheques and the liability of the accused. The court highlighted the concept of 'Material Alteration' under Section 87 and its impact on the validity of the cheques, as well as the legal principles governing the liability of partners in a firm under the Indian Partnership Act.
Fact of the Case:
The Appellant/Complainant filed a Criminal Appeal against the judgment of Acquittal passed by the Trial Court in a case involving dishonoured cheques issued by the Respondents/Accused. The Appellant alleged that the cheques were issued to discharge a legal liability and accused the Respondents of committing an offence under Section 138 of the Negotiable Instrument Act.
Finding of the Court:
The Court found that the Trial Court had failed to properly scrutinize the evidence and legal provisions related to the case. It held that the Trial Court's acquittal of the accused was erroneous and resulted in a miscarriage of justice. The Court set aside the judgment and remitted the case back to the Trial Court for fresh disposal in accordance with the law.
Issues: The issues revolved around the validity of the cheques, the liability of the accused under Section 138 of the Negotiable Instrument Act, and the application of legal principles governing partnerships under the Indian Partnership Act.
Ratio Decidendi: The Court's decision was based on the failure of the Trial Court to properly consider the legal provisions related to 'Material Alteration' under Section 87 of the Negotiable Instrument Act and the liability of partners in a firm under the Indian Partnership Act. The Court emphasized the need for a fresh disposal of the case with the opportunity for both parties to present further evidence and legal arguments.
Final Decision: The Criminal Appeal was allowed, and the judgment of the Trial Court was set aside. The case was remitted back to the Trial Court for fresh disposal within a specified period, with the opportunity for both parties to present additional evidence and legal arguments.
1. 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, Industrial Finance Branch, Coimbatore. Rs.3,25,902
2. 20.04.2001 186588 State Bank of India, Industrial Finance Branch, Coimbatore. Rs.5,00,000
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, Industrial Finance Branch, Coimbatore. Rs.3,25,902
2. 20.11.2001 186588 State Bank of India, Industrial Finance Branch, Coimbatore. Rs.5,00,000
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 Negotiable Instrument Act.
10. Fu
