2008 ALL MR (Cri) JOURNAL 3
(ALLAHABAD HIGH COURT)
M.K. MITTAL, J.
Fragrant Leasing & Finance Company Ltd. & Anr.Vs.Jagdish Katuriya & Anr.
Criminal Appeal No.5944 of 2004
4th June, 2007
Petitioner Counsel: M. M. SAHAI, N. M. SAHAI
Respondent Counsel: SAMEER JAIN
(A) Negotiable Instruments Act (1881) Ss.138, 141 - Dishonour of cheque - Offence against company - Authority to file complaint - Without authorisation from Board of Directors no one was competent to file complaint - Complaint filed without authorisation - Defect not removed even during the trial - Complaint cannot be sustained. (Paras 15, 17, 18)
(B) Negotiable Instruments Act (1881) Ss.87, 138 - Material alteration in cheques - Cheques were admittedly in exclusive possession of complainant - Dates on cheque were mentioned by two different persons on different dates in different ink - Dates were altered to make cheques valid for presentation within six months - Held because of material alterations cheques were void and on their basis no action could be taken under S.138. (Paras 22 & 26)
K. N. Beena Vs. Muniyappan, 2002(1) ALL MR 277 (S.C.) =AIR 2001 SC 2895 [Para 11]
M/s. M.M.T.C. Ltd. Vs. M/s. Medchl Chemicals & Pharma (P) Ltd., 2002 ALL MR (Cri) 230 (S.C.) =AIR 2002 SC 182 [Para 16]
Samrat Shipping Co. Pvt. Ltd. Vs. Dolly George, 2003 SCC (Cri.) 1224 [Para PARA17]
M/s. Swastik Coaters Pvt. Ltd. Vs. M/s. Deepak Brothers, 1997 Cr.L.J. 1942 [Para PARA18]
L. C. Goyal Vs. Mrs. Suresh Joshi, (1993)3 SCC 376 [Para PARA21]
Jayantilal Goel Vs. Smt. Zubeda Khanum, AIR 1986 A.P. 120 [Para PARA22]
State of U.P. Vs. Lakhmi, ACC 1998(36) 522 [Para PARA23]
Mohan Singh Vs. Prem Singh, 2003 SCC (Cri.) 1514 [Para PARA23]
C. Antony Vs. K. G. Raghavan Nair, 2003 ALL MR (Cri) 130 (S.C.)=2003 SCC (Cri.) 161 [Para 25]
State of Goa Vs. Sanjay Thakran, 2007 ALL SCR 1861 : (2007)3 SCC 755 [Para PARA25]
-This appeal has been filed against the judgment and order dated 28-8-2004 passed by C.J.M., Varanasi in Criminal Complaint Case No.4015 of 2004 under Section 138, N.I. Act (hereinafter referred to as the Act] whereby learned Magistrate acquitted the accused of the charge for which he stood trial.
3. Brief facts of the case are that the appellants filed a criminal complaint under Section 138 of the Act alleging that complainant No.2 was the employee of the complainant No.1 Fragrant Leasing and Finance Company Limited and had been authorised to present the complaint. The complainant No.1 used to provide financial assistance after completing the requisite formalities required for adjustment of loan. Accused took a loan of Rs.11 lacs from complainant No.1 and in order to repay the loan issued two cheques Number 8630 dated 31-12-2001 and 8629 dated 1-4-2002 for Rs.6 lacs and 5 lacs (total 11 lacs) respectively with the clear understanding and stipulation that the cheques would be honoured and encashed on presentation. Complainant presented these two cheques at Central Bank of India, Lahurabeer Branch, Varanasi but the same were returned to the complainant on 1-7-2002 with the endorsement on covering memo 'exceeded arrangement' meaning thereby that the accused had issued the cheques knowing well that there was no sufficient fund in his account. It shows the dishonest intention of the accused to deceive the complainant. The complainant through legal registered notice dated 16-7-2002 called upon the accused to make payment of the amount of Rs.11 lacs with interest @ 24% per annum and the cost of the notice Rs.600/- within 15 days from the receipt of the notice but the accused did not make any payment. Thereafter the complaint was filed on 6-8-2002 as is clear from the order sheet.
4. The complainant examined Satish Kumar Saluja one of the directors of the limited company on 26-8-2002. The accused was summoned and he was examined by the learned Magistrate on 6-2-2003 and there he replied in affirmative to the question that in order to repay the loan taken by him, he had issued two cheques No.8630 and 8629 as mentioned above. He also replied that the notice was received by him and he had also given a reply thereof. However he also stated that he had issued post dated cheques as security for the loan and also admitted that he had not paid back the loan and would pay the same in instalments.
5. In support of its case, prosecution led evidence and examined P.W.1 Satish Kumar Saluja and P.W.2 Raj Kumar, the complainant No.2. They stated the prosecution case on oath. The complainant also filed two cheques, a memo of bank statement of account, the Memorandum and Articles of the association, the reply notice given by the accused and also a photocopy of the notice given by the complainant to the accused on 16-7-2002. The reply notice shows that the accused admitted having received the notice of the complainant dated 16-7-2002 on 19-7-2002. In reply notice, it has also been mentioned that he had issued two post dated cheques for the security of the loan amount and that he was ready to pay the amount in instalments. The accused was examined under Section 313, Cr.P.C. on 11-3-2004 and he denied having given any cheque. However, he did not adduce any evidence in defence.
6. Learned Magistrate on the basis of the evidence concluded that the complainant had not filed the carbon copy of the notice given to the accused and the notice had not been proved, the photocopy could not be taken into evidence and that the statement of the accused as given could not be read against him and that the cheques were given as security and not towards payment of the loan or debt. There was cutting in the dates of the two cheques and no explanation had been given in the complaint. Complaint is suspicious as P.W.2 could not prove the contents of the complaint and there was no authority letter for prosecuting the complaint. Consequently he acquitted the accused. Feeling aggrieved, the complainant has come up in this appeal.
7. Learned counsel for the appellants has contended that the learned Magistrate has erred in acquitting the accused and that the findings as given by him are perverse and are not based on evidence on record. He has contended that the cheques were not signed as security for loans. The accused had admittedly taken a loan and had issued two cheques towards payment of the loan as admitted by him in his first statement. He also contended that the fact that cheques were given was also admitted in the reply notice, although in his statement under Section 313, Cr.P.C. accused denied same fact. Learned counsel for the appellants has contended that the prosecution witnesses made positive statement and stated that the cheques were issued by the accused knowing that the money was not in his account and that the cheques could not be paid and, therefore, the cheques were returned back by the bank on the ground exceeds arrangements. He has contended that the cheques were not returned on the ground that there was any interpolation or that the signatures were not of the accused. Learned counsel for the appellants has contended that the complainant No.2 being employee of the company was entitled to present the complaint and the same was maintainable and the accused intentionally denied and cannot be absolved from his liability for the criminal act.
8. Learned counsel for the accused has contended that complaint itself was not maintainable as it was filed by an employee and even no date was mentioned on the body of the complaint. He has also contended that the appellants did not file the copy of the notice to show that the complaint was filed within period of limitation and that the photocopy of the notice was not admissible in evidence and the learned Trial Court rightly did not accept it. He has also contended that the statement or the accused under Section 313, Cr.P.C. could not be read against him to establish the prosecution case and that the cheques were given by the accused as security and not for payment of any debt or loan. He has also contended that material alteration was made in the cheques by introducing the dates and the cheques were void under Section 87 of the Act. He has also contended that the learned Magistrate has rightly acquitted the accused and that the appeal is devoid of any merits and the findings as recorded by the learned Magistrate cannot be set aside as they are based on facts and are not perverse and the appeal is liable to be dismissed.
9. Before entering into discussion, it will be useful to mention the relevant portion of the statement of the witnesses as recorded by the learned Magistrate. P.W.1 Satish Kumar Saluja has stated that he is director of this company which gives loan to needy persons. Accused Jagdish Kumar Suria had also taken loan from him and for payment thereof had issued two cheques number 8630 dated 31-12-2001 and 8629 dated 1-4-2002 for Rs.6 Lacs and Rs.5 Lacs respectively and had assured that if the cheques were deposited the payment would be made by his bank. They were returned with the endorsement exceeds arrangement. Jagdish Kumar Suriya knowing that money was not in his account gave the cheques. He gave notice but no payment was made. The cheques were given to him in his office. In cross-examination witness has stated that there was no written agreement while giving the loan and his company is registered body with the Registrar of Companies, Kanpur. The loan was given after taking the cheques for its re-payment. Both cheques were given by the accused on 15-9-2001 but he did not remember the date when the loan was given. The cheques remained in his custody. The cheques were presented on 30-6-2002 but were returned on 1-7-2002. He does not know when his notice was served on the accused. There is no mention of this fact in the complaint and the date of the complaint is also not mentioned therein. Carbon copy of the notice was prepared. He had seen the original copy of the carbon copy of the notice. A photocopy of the notice has been filed. The complainant No.2 was authorised to file the complaint. The accused did not meet him after giving the cheques on 15-9-2001. He has denied suggestion that he entered the date in the cheques himself to make them valid for payment.
10. P.W.2 Raj Kumar has stated that he is simply an employee of the company and the accused had taken loan and given cheques for Rs.6 Lacs and Rs.5 Lacs and had said that the payment would be made if presented in the bank. Cheques were of September, 2001 and the accused had corrected the cheques in December, 2001 and April, 2002 and had also put his signature. When the cheques were presented in the Bank, they were returned for want of money. Legal notice was given which was served on the accused and the accused had also given reply. But he did not make any payment and then the complaint was filed. He also referred to the balance sheet of the company filed in the case. In cross-examination he has stated that he does not know if any agreement was entered into between the accused and company at the time of taking of the loan. He also does not know as to what was the mode of return agreed between the parties. He is illiterate person and is a peon in the company. He had signed the complaint as he was asked by his master. He was authorised by his master to file the complaint. No authority letter was on record. He could not tell about the statement of account filed by him. He denied suggestion that the cheques were not issued for payment of debt. He also denied suggestion that the dates 3-12-2001 and 1-4-2002 were entered by them and that the signatures of the accused were forged. He also denied suggestion that no notice was given within time.
11. Contention of learned counsel for the appellant is that the learned Magistrate has erred in holding that the cheques were given by the accused as security for the loan and that he did not admit his liability to pay the loan. In this connection, he has referred to the statement of the accused as made in the Court on 6-2-2003 wherein he admitted that he had given the two cheques. In his statement, he also stated that he had given the cheques as security for the loan taken by him and that lie was ready to pay the amount in instalments. In his statement under Section 313, Cr.P.C. recorded on 11-3-2004, he denied having given any cheque. The relevancy of the statement as given by the accused shall be considered at a later stage but as far as the question whether the cheques were given towards security or for payment of loan is concerned, the burden is on the accused to establish that the cheques were given as security. According to Section 139 of the Act there is presumption to the effect that unless the contrary is proved the holder of the cheques received the cheque of the nature referred to under Section 138 of the Act for the discharge in whole or in part of any debt or any other liability. Therefore, if any cheque is given under Section 138 of the Act, the presumption will be in favour of the holder and in case the accused denies that it was not given towards the discharge of any debt or any liability, he has to prove it. In this connection, it will be useful to refer the case of K. N. Beena Vs. Muniyappan, AIR 2001 SC 2895 : [2002(1) ALL MR 277 (S.C.)] where the Hon'ble Apex Court has held that the burden of proving that the cheque had not been issued for any debt or liability is on the accused. Denial/averments in reply by accused are not sufficient to shift the burden of proof on to the complainant. Accused has to prove in trial by leading cogent evidence that there was no debt or liability. In the instant case, accused has not given any such evidence and, therefore, his contention that the cheques were issued as security cannot be accepted. Therefore, I am of the opinion that the finding in this regard as recorded by the learned Magistrate is not correct.
12. Learned counsel for the appellant has submitted that the learned Magistrate has erred in not accepting the notice given by the complainant on the ground that the carbon copy of the notice was not filed and that the photocopy as filed was not admissible in evidence. Learned Magistrate has also held that in the complaint, it has not been mentioned as to when the notice was given and when this notice was served on the opposite party. Learned counsel for the accused appellant has contended that the photocopy as filed by the complainant was not proved and was not admissible and learned Magistrate has recorded the correct finding in this regard. It is correct that in the complaint, the complainant did not mention the date when the notice was issued to the accused and also the date when it was served on the accused. Only this much has been mentioned that the notice dated 16-7-2002 was issued. Although in the complaint the date of filing of the complaint has not been mentioned but the order sheet shows that the complaint was riled on 6-8-2002. According to the complainant the cheques were returned on 1-7-2002 and on this basis, learned counsel for the complainant has contended that notice was given in time as it was issued on 16-7-2002. The fact that notice was issued by the complainant and was received by the accused has been admitted by the accused in his reply notice. In his statement given in the Court also the accused admitted that he received the notice and also gave reply thereof. It is correct that the complainant could not file the carbon copy of the notice given by him and that photostat copy was not admissible in evidence. But in the circumstances and the admission as made by the accused that notice was received by him and he also gave the reply and he also filed the reply notice, the complaint cannot be said to be defective on the ground of notice and in this connection the finding as recorded by the learned Magistrate is not acceptable.
13. Learned counsel for the appellant has contended that the complaint was filed by Raj Kumar on behalf of the company and the learned Magistrate has erred in holding that he could not prove the complaint and that the complaint itself is suspicious. In this connection, learned counsel for the accused opposite party has contended that the complaint was required to be filed by an authorised person and Raj Kumar, the complainant No.2 was not an authorised person to file the complaint on behalf of the company.
14. Section 142 (a) of the Act provides that no Court shall take cognizance of any offence punishable under Section 138 of the Act except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque. Since the cheque was issued in the name of the company, therefore, the company was the holder and payee of the cheque. Company being de-jure person could not file the complaint itself and, therefore, it could authorise some person to file the complaint on its behalf. In this case, the complainant No.2 Raj Kumar claimed that he was authorised and an allegation has also been made in para-1 of the complaint that complainant No.1 Fragrant Leasing and Finance Company Limited has authorised the complainant No.2 to present the complaint. Complainant No.2 has been examined at P.W.2 and he has stated in cross-examination that he is a peon in the company and he does not know what is written in the complaint. Owner has gone to the counsel to get the complaint drafted. He, knows that one should not sign the papers without reading or without hearing after getting it read by someone. He had signed the complaint as he was asked by owner. It was the duty of the owner to file the complaint. The owner had written the authority letter for filing the complaint. Authority letter is not on the file.
15. P.W.1 Satish Kumar Saluja who is one of the directors has stated in his cross-examination that the complainant No.2 was authorised to file the complaint and this fact has been mentioned in the complaint also. The complainant filed the Memorandum and Articles of Association. Paras 48 and 51 of the Articles of the Association provide that the Chairman, Managing Director, Executive Directors(s), Director(s) of any other person appointed by the Board of Director(s) to carry on the business can initiate/defend legal proceedings of any kind on behalf or the company of against the company. Therefore, this Article makes it clear that unless there is authorisation from the Board of Director(s) no one is competent to initiate the legal proceedings on behalf of the company. The complainant did not file any document to show that Raj Kumar was authorised to file the complaint. Statement of Raj Kumar as referred above shows that he had no knowledge about the complaint itself. Although section 142 of the Act provides that no cognizance can be taken by the Magistrate but, if any, complaint is filed which is defective, the defect can be removed at a later stage.
16. Learned counsel for the appellant has contended that if the complaint is filed on behalf of the company, it cannot be quashed and in support of the contention, he has cited the case of M/s. M.M.T.C. Ltd. Vs. M/s. Medchl Chemicals & Pharma (P) Ltd., AIR 2002 SC 182 : [2002 ALL MR (Cri) 230 (S.C.)]. In that case, the complaint was dismissed by the Magistrate at the initial stage on the ground that there was no authority given by the company to file the complaint. In that matter the Hon'ble Apex Court has held that under inherent powers the complaint could not be dismissed at the initial stage and it was open to the company to seek permission of the Court for sending any other person to represent the company in the Court. The defect was curable.
17. In the case of Samrat Shipping Co. Pvt. Ltd. Vs. Dolly George, 2003 SCC (Cri.) 1224, it was observed by the Hon'ble Apex Court that the dismissal of the complaint at the threshold by the learned Magistrate on the ground that the individual through whom the complaint was filed, failed to produce the certified copy of the resolution of the Board of Directors authorising that person to represent the company before the Magistrate was not justified. In both these cases, complaints were dismissed at the initial stage for want of authority letter and it was held that the defect was curable but in the instant case, the defect has not been removed even during trial as no authority letter was filed by the complainant.
18. In the case of M/s. Swastik Coaters Pvt. Ltd. Vs. M/s. Deepak Brothers and others, 1997 Cr.L.J. 1942 AP High Court, it has been held that where the company is drawee, it being a legal person is the holder of the cheque and the Director(s) of the said company would not be holder in due course. The complaint by Director without proper authorisation was held to be not maintainable. In the instant case, although one of the director examined himself as witness but he specifically stated that the complainant No.2 Raj Kumar was authorised to file the complaint. In the circumstances there was defect for want of authority letter and the complaint itself was not competent and the finding as recorded by the learned Magistrate cannot be said to be without any basis and incorrect.
19. Learned counsel for the accused has vehemently argued that interpolation was made in the cheques as dales were changed without any authorisation from the accused and in view of the provisions of Section 87 of the Act, the cheques became void and no action could be taken on their basis under Section 138 of the Act. Section 87 provides that any material alteration of a Negotiable Instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties. In this case the cheques were admittedly given on 15-9-2001. They were presented in the bank on 30-6-2002 which shows that the validity of the cheques had expired after 6 months from the initial date of issue i.e. on 15-9-2001. In these cheques initial dates were scored out and instead dates 31-12-2001 and 1-4-2002 were mentioned and from these changed dates the validity continued and when the cheques were presented at the bank they were returned with the endorsement exceed arrangement. Contention of the learned counsel for the accused is that this change in the dates was made by the complainant company without any consent or authorisation from the accused and it is a material alteration and makes the cheques void.
20. Learned counsel for the appellant has contended that dates were changed by the accused himself and he had also put up his signatures on the cutting and the bank returned the cheques on the ground that funds were not available and not on the ground that there was any interpolation in the cheques and, therefore, the provisions of Section 87 of the Act are not attracted in the matter. The witness P.W.1 has stated that the accused had issued the cheques dated 31-12-2001 and 1-4-2002 with the assurance that the payment would be made whenever they would be presented in the Bank. But when they were presented they were returned by the Bank. In cross-examination he has stated that he had received both the cheques on one date i.e. 15-9-2001. It shows that the statement as made by this witness in his examination-in chief that the cheques dated 31-12-2001 and 1-4-2002 were issued by the accused is not correct. Again this witness has stated in his cross-examination that these two cheques remained in his possession from the date he received them and that these cheques were never handed over to any other person. They were presented on 30-6-2002. It shows that from 15-9-2001 i.e. when the cheques were given to him on 30-6-2002 i.e. when they were presented to the Bank, the cheques remained in his custody. This witness has not explained as to how the dates 31-12-2001 and 1-4-2002 came to be noted on these cheques after cutting the date 15-9-2001. It is very material that the complaint also does not disclose anything about the change in the dates. Therefore, not giving any explanation in the complaint as well as in the statement on oath by P.W.1, complainant could not discharge the burden to show that this alteration in the date was in the knowledge of the accused and was with his consent and that it was done to carry out the common intention of the parties.
21. Learned counsel for the appellant has cited the case of L. C. Goyal Vs. Suresh Joshi (Mrs.) and others, (1993)3 SCC 376, where it has been held by the Hon'ble Apex Court that where the drawer denies his signature and pleads that he could not be held responsible unless opinion of handwriting expert was obtained and if the cheques are dishonoured on the ground of insufficient funds the plea of forged signature could not be accepted. But the facts of this case are different and this ruling does not help the appellant. Although in the instant case also the cheques were returned on the ground that 'exceed arrangement' and signature of drawee was not disputed, but the fact remains that there is interpolation in the dates which is very material.
22. In the case of Jayantilal Goel Vs. Smt. Zubeda Khanum, AIR 1986 Andhra Pradesh 120, cited by the learned counsel for the accused; it has been held that it is settled law that the person who is in custody of document subsequent to its execution, should there be any alteration has to discharge the burden of establishing that it is not altered. In the istant case, Satish Saluja, P.W.1 did not give any explanation and rather made a specific statement that the cheques remained in his custody from 15-9-2001 till presentation to the bank and, therefore, the accused had no occasion to alter the dates. In the circumstances, the only conclusion is that the date in the cheques were altered by the complainant in order to make the cheques valid for their presentation within six months. Although there is alleged signature of the accused on the cutting but no expert opinion was taken. However, on perusal of the dates as mentioned in the two cheques, it is apparently clear that these two dates have been mentioned by two different persons on different dates and in different ink. These dates apparently do not appear to have been written by the accused and rather they could not be written by the accused as the cheques were in the exclusive custody of the P.W.1 as admitted by him. Therefore, I come to the conclusion that there was material alteration in the cheques making the cheques void as provided under Section 87 of the Act and on their basis no action could be taken under Section 138 of the Act. Learned Trial Court has rightly held that there is material alteration within the meaning of Section 87 of the Act.
23. Learned counsel for the appellant has contended that the accused admitted having given the cheque in his statement and now he is bound by it. It is correct that the accused admitted having given the cheques but he does not say that he altered the dates. Rather in his statement under Section 313, Cr.P.C. he has stated that complainant has fictiously noted the dates on the cheques. As far as the relevancy and sufficiency of the statement under Section 313, Cr.P.C. to base the conviction of the accused thereon is concerned it will be useful to refer to the law on the point as laid down by the Hon'ble Apex Court. In the case of State of U.P. Vs. Lakhmi, ACC 1998(36) page 522, it has been held that if the accused admits any incriminating circumstance appearing in evidence against him there is no warrant that those admissions should altogether be ignored merely on the ground that such admissions were advanced as a defence strategy. It was also observed in this case that "we make it clear that answers of the accused, when they contain admission of circumstances against him are not by themselves de-linked from the evidence, be used for arriving at a finding that the accused had committed the offence." Thereafter in case of Mohan Singh Vs. Prem Singh and another, 2003 SCC (Cri.) 1514 it has been held by the Hon'ble Apex Court that "statement of the accused under Section 313, Cr.P.C. is not a substantive piece of evidence. It can be used for appreciating evidence led by the prosecution to accept or reject it. It is, however, not a substitute for the evidence of the prosecution. As held in the case of Nishi Kant by this Court, if the exculpatory part of his statement is found to be false and the evidence led by the prosecution is reliable, the inculpatory part of his statement can be taken aid of to lend assurance to the evidence of the prosecution. If the prosecution evidence does not inspire confidence to sustain the conviction of the accused, the inculpatory part of his statement under Section 313, Cr.P.C. cannot be made the sole basis of his conviction."
24. Therefore, the statement of the accused be referred while appreciating the prosecution evidence but it cannot be made a substitute or the sole basis for conviction of the accused. In the instant case the statement as given by the accused only says that he gave the cheques but it does not speak about any changes in the dates and, therefore, appellant cannot get any benefit out of this statement. It was for the appellant to have established that the changes in the dates were made with the consent of the accused to carry out common intention of the paties.
25. Learned counsel for the accused has also contended that learned Magistrate has based his finding on facts and they cannot be held to be perverse and, therefore, the finding of acquittal cannot be set aside. In this connection, he has referred the case of C. Antony Vs. K. G. Raghavan Nair, 2003 SCC (Cri.) 161 : [2003 ALL MR (Cri) 130 (S.C.)] wherein it has been held that sitting as an appellate Court against the judgment of acquittal passed by the Trial Court, High Court is under an obligation to come to a definite conclusion that the finding of the Trial Court is either perverse or contrary to the material on record. In a recent case of State of Goa Vs. Sanjay Thakran and another, (2007)3 SCC 755 : [2007 ALL SCR 1861] Hon'ble Apex Court while considering the scope of Sections 386, 378, Cr.P.C. held that the Appellate Court can review the evidence and interfere with the order of acquittal only if the approach of lower Court is vitiated by some manifest illegality or the decision is perverse and the Court has committed a manifest error of law and ignored the material evidence on record.
26. In the instant case, learned Trial Court has recorded a finding of material interpolation on the basis of the evidence and the same cannot be said to be perverse or manifest with any error of law. I come to the conclusion that the learned Trial Court has rightly acquitted the accused and I do not find any ground to interfere in the order of acquittal and the appeal is liable to be dismissed.
Appeal is hereby dismissed.