M/S Samaskruti Builders Pvt Ltd vs Sri R Nilakanthan Iyer
2021 Latest Caselaw 6342 Kant

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 17TH DAY OF DECEMBER, 2021

                        BEFORE

      THE HON'BLE MR. JUSTICE V. SRISHANANDA

 CRIMINAL REVISION PETITION NO.268/2021
                  C/W
 CRIMINAL REVISION PETITION NO.255/2021

BETWEEN

1.    M/S SAMASKRUTI BUILDERS PVT. LTD.,
      A COMPANY INCORPORATED
      UNDER THE COMPANIES ACTS HAVING ITS
      REGISTERED OFFICE AT NO.12
      III FLOOR, R R HEIGHTS
      1ST MAIN, N S PALYA
      BANNERGHATTA ROAD
      BANGALORE-560076.
      REP. BY ITS DIRECTOR
      MR VENKAT CHALASANI

2.    SRI VAMSHI KRISHNA
      AGED ABOUT 38 YEARS
      S/O SRI ASIRVADAM
      NO.12, III FLOOR, R R HEIGHTS
      1ST MAIN, N S PALYA
      BANNERGHATTA ROAD
      BANGALORE-560076.

3.    SRI VENKAT CHALSANI
      AGED ABOUT 52 YEARS
                            2

      S/O SRI NARAYANA RAO
      NO.12, III FLOOR, R R HEIGHTS
      1ST MAIN, N S PALYA
      BANGALORE-560076.

                               ...COMMON PETITIONERS

(BY SRI BHEEMAPPA P. BENDIVADDARA,
FOR SRI B N JAYADEVA, ADVOCATES)

AND

SRI R NILAKANTHAN IYER
S/O LATE S RAMACHANDRA
AGED ABOUT 63 YEARS
R/AT NO.D-701
PLUMERIA TOWER-2
ADARSH PALM RETREAT
OUTER RING ROAD
DEVERABISENAHALLI
BENGALURU-560103.
                               ...COMMON RESPONDENT

(BY SRI R.NILAKANTHAN IYER, PARTY -IN-PERSON)

     THIS CRL.RP NO.268/2021 IS FILED U/S.397 R/W
401 CR.P.C PRAYING TO SET ASIDE THE JUDGMENT AND
SENTENCE     DATED      31.12.2019   PASSED     IN
C.C.NO.20066/2016 ON THE FILE OF THE HONBLE XXVI
A.C.M.M., AND JUDGE COURT OF SMALL CAUSES AT
BENGALURU CITY AND SET ASIDE THE JUDGMENT DATED
05.11.2020 PASSED IN CRL.A.NO.182/2020 ON THE FILE
OF THE HONBLE LXXV ADDITIONAL CITY CIVIL AND
SESSION JUDGE AT BENGALURU CONFIRMING THE
JUDGMENT IN C.C.NO.20066/2016 AND DISMISS THE
COMPLAINT IN C.C.NO.20066/2016 AND ALLOW THE
APPEAL IN CRL.A.NO.182/2020 AND ALLOW THIS RP AND
ACQUIT THE PETITIONERS.
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     CRL.RP NO.255/2021 IS FILED U/S.397 R/W 401
CR.P.C PRAYING TO SET ASIDE THE JUDGMENT AND
SENTENCE     DATED      31.12.2019   PASSED     IN
C.C.NO.13396/2016 ON THE FILE OF THE HONBLE XXVI
A.C.M.M., AND JUDGE COURT OF SMALL CAUSES AT
BENGALURU CITY AND SET ASIDE THE JUDGMENT DATED
05.11.2020 PASSED IN CRL.A.NO.181/2020 ON THE FILE
OF THE HONBLE LXXV ADDITIONAL CITY CIVIL AND
SESSION JUDGE AT BENGALURU CONFIRMING THE
JUDGMENT IN C.C.NO.13396/2016 AND DISMISS THE
COMPLAINT IN C.C.NO.13396/2016 AND ALLOW THE
APPEAL IN CRL.A.NO.181/2020 AND ALLOW THIS RP AND
ACQUIT THE PETITIONERS.

     THESE CRIMINAL REVISION PETITIONS COMING ON
FOR HEARING THIS DAY, THE COURT MADE THE
FOLLOWING:-

                                 ORDER

Heard Sri Bheemappa P. Bandivaddara, learned

counsel representing Sri B.N.Jayadeva, learned counsel for

the Revision Petitioner and Sri R.Nilakanthan Iyer-

Respondent, party-in-person and perused the records.

2. These two Revision Petitions are filed by the

accused persons/Revision Petitioners, who have suffered

an order of conviction as depicted below:

Crl.RP. CC.No. Criminal Offence Sentence Fine in Rs.

No.                       Appeal No.

268/      20066/          182/2020       138 of       Simple imprisonment    38,00,000/-
2021      2016            dt.5.11.20     NI Act       for three months.
          dt.31.12.16

255/      13396/          181/2020       138 of       Simple imprisonment    28,50,000/-
2021      2016            dt.5.11.20     NI Act       for three months.
          dt.31.12.16

3. Brief facts of the case are as under:

The complainant filed two complaints seeking action

against the accused persons for the offence punishable

under Section 138 of N.I. Act. It is contended that the

cheques issued by the Revision Petitioners came to be

dishonored and statutory notice returned with an

endorsement as 'addressee refused'. Left with no

alternate, complainant approached the jurisdictional

Magistrate seeking action against the accused

persons/Revision Petitioners.

4. Learned magistrate after completing the initial

formalities, took cognizance of the offence and summoned

the accused. Accused persons appeared before the learned

magistrate and plea was recorded. Accused pleaded not

guilty and as such, trial was held.

5. In order to prove the case of the complainant,

the complainant examined himself as PW.1 and relied on

19 documents, which were exhibited and marked as

Exs.P1 to P19.

6. On conclusion of the prosecution evidence, the

learned trial Magistrate recorded the accused statement as

contemplated under Section 313 of Cr.P.C., The accused

has denied all the incriminatory materials found in the case

of the prosecution. However, for the reasons best known

to the accused persons they did not chose to examine

themselves as witnesses nor placed any written submission

as is contemplated under Section 313(5) of Cr.P.C.

Thereafter, learned trial Magistrate heard the arguments in

detail and passed an order of conviction and sentence as

referred to in the above table.

7. Being aggrieved by the same, the accused

preferred two appeals in District Court in

Crl.A.No.182/2020 and Crl.A.No.181/2020 as referred to

supra in the table.

8. Learned judge in the First Appellate Court after

securing the records and hearing the arguments of parties

in detail, by order dated 05.11.2020 dismissed both the

appeals confirming the order of conviction and sentence

passed by the trial magistrate. Being aggrieved by the

same, the accused persons are before this Court in these

revision petitions.

9. In both the revision petitions, the following

grounds have been raised by the revision petitioners.

"1. The Learned Trial Judge and the Learned Appellate Judge failed to notice the following submissions of the Petitioners made before them:

a. That the above complaint is not maintainable both in law and on facts.

b. That, the complaint as filed is not maintainable in law and is liable to be dismissed.

c. That, the complaint is against a private limited company which is a legal person and not a natural person and also against two others whose role in the said company is not pleaded in the complaint.

d. That, though the complainant has arrayed the company as Accused No.1 represented by its director Sri Venkata Chalsani, the complainant has neither arrayed him as an Accused nor pleaded the role of Sri Venkata Chalsani in the said company and whether he is responsible for running the day to day affairs of the company and in the absence of pleading in that regard either in the notice or in the complaint, the present complaint is not sustainable in law as held by Hon'ble Supreme Court in several cases wherein it has categorically ruled that whenever complaint is filed for an offence under 138 of NI Act, in respect of cheque issued by a company, it is necessary to plead the role of the person who has issued the cheque and to establish that he is responsible for running the day to day affairs of the company. It is submitted nowhere in the notice or in the complaint, any reference is there with regard to the role of Sri Venkata Chalsani in the company and his responsibility for the cheque issued by the company.

e. That, though the Complainant has arrayed the company as Accused No.1, since, Accused No.1 is a legal person and not a natural person, even if it is found by this Hon'ble Court that cheque has been issued by the first Accused, no sentence could be passed against Accused No.1 as it is not a natural person which could be punished with a sentence.

f. That, though the Complainant has arrayed the company as Accused No.1, represented by its director Sri Venkata Chalsani, since Sri Venkata Chalsani is not arrayed as an Accused in the complaint, and since offence under Section 138 NI Act, can only by a person specific, as held by the Hon'ble Supreme Court, no sentence could be passed against Sri Venkata Chalsani the Third Petitioners herein as Sri Venkata Chalsani is not an accused before and therefore the complaint is defective and is liable to be rejected. In this regard reliance is placed on the judgment reported in (2018) 13 SCC

663.

g. That, as the complaint before the Hon'ble Trial Court was split up and is not being proceeded with as against the Second Accused and since it is claimed by Complainant that the cheque in question is signed by Accused No.2 and as Accused No.2 is not before the Court, no finding could be given in his absence either against Accused No.1 or against Accused No.2.

h. That, the complaint is silent with regard to the role of the Third Accused and it is not stated as to how Accused No.3 is responsible for discharging the dues if any of he First Accused and as Accused No.3 is not due any amount even according to the Complainant, no prosecution could be there as against Accused No.3.

i. That, it is the case of complainant that he and his wife have paid money to the first accused, for purchase of a site in the layout that is said to be agreed to be sold to the complainant and his wife and it is further alleged that the Agreement was cancelled by first Accused under a Cancellation Deed signed

between the first Accused and the complainant and his wife and according to complainant, the amount to be refunded belongs to him and to his wife, in the absence of his wife before the Court in the above case, and in the absence any authorisation by his wife to the complainant to prosecute the above case and to recover the money which is due to her the above complaint is not maintainable.

j. Further, even according to the Complainant, the money is due to him and to his wife and as such the amount that is subject matter of the cheques in question does not belong to complainant alone and as it belongs to complainant and his wife and the liability even according to complainant of the first Accused if even if it there it is towards Complainant and his wife and as the wife of the Complainant, is not before the Court and as entire money does not belongs to complainant and as first accused is not due the entire amount to complainant only, the cheque in question cannot be said to been issued towards the liability of the first Accused and therefore, the complaint is liable to be dismissed.

k. That, the Deed of Cancellation of Agreement of Sale has not been produced in C.C.No.13396/2016 and the Complainant having not produced documents on which the relies upon to establish the liability of the first Accused for the amount for which the cheques are said to have been issued and therefore the complaint is liable to be dismissed. This para is to be included in 181 only and to be deleted in 181.

2. The Learned Trial Judge, having noticed that the Third Petitioners has not been arrayed as an Accused before the Court and

having correctly not imposed any fine on him, has erred in sentencing him to undergo simple imprisonment in default of payment of payment of fine by the First and Third Accused. The Learned Appellate Judge erred in confirming the said finding.

3. The Learned Trial Judge, failed to notice that the Complainant having not issued any notice to the Third Petitioners as required under Section 138 of N.I. Act, calling upon him to pay the cheque amount, the Complainant cannot maintain a complaint against the Third Petitioners and cannot seek for any sentence being passed on the Third Petitioners. The Learned appellate Judge erred in confirming the said finding.

4. The Learned Trial Judge, failed to notice that the Third Petitioners is not a Accused before the Trial Court and therefore no sentence could be passed against him. The Learned Appellate Judge erred in confirming the said finding.

5. The Learned Trial Judge and the Learned Appellate Judge failed to notice that the Third Petitioner is a natural person, who is independent, distinct and different from the First Accused which is a legal person and therefore, erred in passing a sentence against the Third Petitioner.

6. The Learned Trial Judge having noticed that the First Accused is a legal entity and the Third Petitioner is a natural person, erred in passing a sentence on the Third Petitioner against whom there is no complaint under Section 138 of the N.I Act.

7. The Learned Trial Judge and Learned Appellate Judge failed to notice that the Complainant, having failed to array the Third Petitioner as an Accused after complying with the requirements of Section 138 of the N.I. Act, by issuing pre requisite notice, cannot maintain an action against the Third Petitioner, who happens to represent the First Accused which is a limited company incorporated under the Companies Act.

8. The Learned Trial Judge, and Learned Appellate Judge failed to notice that no allegations have been made either in the notice or in the complaint that the Third Petitioner or the Third Accused are responsible for running the day to day affairs of the company and in the absence of pleadings in that regard a complaint under Section 138 of N.I. Act is not maintainable.

9. The Learned Trial Jude and Learned Appellate Judge failed to notice erred in not noticing that no averments are their regarding the role of the Third Accused to attract the provisions of 138 of the N.I.Act and therefore erred in convicting the Third Accused.

10. The Learned Appellate Judge in the absence of any pleading or evidence erred in concluding that the Third Petitioner herein, is the Managing Director of the First Accused though the Complainant has not pleaded and stated on oath that the Third Petitioner is the Managing Director of the First Accused.

11. The Learned Appellate Judge, wrongly held that the Third Accuse has not adduced any evidence that there are other directors of the First Accused when such

requirement is there only on the complainant and not on the Accused.

12. The Learned Appellate Judge, wrongly concluded that as the Third Petitioner is a Director of the First Accused, he should be held as responsible for the Management of the affairs of the company.

Reiterating the above grounds urged in the petitions,

learned counsel for the Revision Petitioners

Sri.Beemappa.B. Bandivaddara representing

Sri.B.N.Jayadeva vehemently contended that both the

Courts have wrongly convicted the accused for the offence

punishable under Section 138 of NI Act, which has resulted

in miscarriage of justice and sought for allowing the

Revision Petitions. He also contended that the sentence

and fine imposed by the trial magistrate is on the higher

side and sought for reduction of the fine amount.

10. Per contra, the respondent Sri.R.Nilakanthan

Iyer who has appeared party-in-person supported the

impugned judgments and contended that the transaction is

a commercial transaction and when the agreement stood

cancelled the revision petitioners are bound to pay the

amount with 18% interest and therefore, no leniency can

be shown and sought for dismissal of the Revision Petitions

in toto.

11. In view of the rival contentions and having

regard to the limited scope of revisional jurisdiction, the

following points would arise for consideration:

1. "Whether the findings recorded by the learned Magistrate that the accused persons are guilty of the offence punishable under Section 138 of NI Act, which is confirmed by the First Appellate Court in Crl.A. No.182/2020 and Crl.A.No.181/2020 are suffering from legal infirmity, patent factual defects, error of jurisdiction or perversity and thus calls for interference?

2. Whether the sentence is excessive?"

12. In the case on hand, the issuance of cheque

and signature of the revision petitioners in the cheques are

not in dispute. The cheques came to be issued on account

of the cancellation of the sale agreement and therefore,

the initial burden has been discharged by the complainant

by placing necessary oral and documentary evidence on

record. The trend of cross examination would only depict

that blank cheques have been misused by the respondent-

complainant. However, it is pertinent to note that till today

no action has been initiated against the complainant by the

accused for the alleged misuse. Nothing prevented the

revision petitioners to file a police complaint or to issue

legal notice or atleast to seek return of the blank cheques

or atleast after they came to know about the pendency of

the complaints before the learned magistrate. The inaction

on the part of the revision petitioners exposes the

hollowness in the defence raised by the accused. Over and

above, in order to rebut the presumption available to the

complainant, the accused did not step in to the witness

box to examine themselves to prove the defence.

13. Following the dictum of the Hon'ble Apex Court

in the case of INDIAN BANK ASSOCIATION AND

OTHERS Vs. UNION OF INDIA AND OTHERS reported

in (2014) 5 SCC 590, this Court is of the considered

opinion that the finding recorded by the trial magistrate

that accused is guilty of the offence punishable under

Section 138 of the NI Act and confirmed by the First

Appellate Court is based on sound and logical reasons and

none of the grounds urged in the revision petitions are

able to establish that the impugned judgments are

suffering from legal infirmity or perversity or patent factual

defects or atleast error of jurisdiction. Under such

circumstances, this Court has no hesitation whatsoever

held, in holding point No.1 in negative and accordingly,

point No.1 is answered in Negative .

14. As regards Point No.2, insofar as sentence is

concerned for the cheque amount of Rs.30,00,000/-, the

trial magistrate by using his discretion has imposed fine of

Rs.38,00,000/-. Likewise for the cheque amount of

Rs.22,00,000/- the trial magistrate has imposed fine of

Rs.28,50,000/-. There is no proper discussion in the

judgments rendered by the trial magistrate with regard to

imposition of fine of Rs.38,00,000/- and Rs.28,50,000/-

respectively. Under such circumstances, this Court is of the

considered opinion that as against the cheque amount of

Rs.30,00,000/- if sum of Rs.36,00,000/- is imposed as fine

and for the cheque amount of Rs.22,00,000/-, if sum of

Rs.25,00,000/- is imposed as fine, the same would meet

the ends of justice. Accordingly, point No.2 is answered

partly in affirmative and pass the following:

ORDER

i. Criminal revision petitions are allowed-in-part.

ii. While maintaining the conviction of the accused for the offence punishable under Section 138 of NI Act, the fine amount ordered by the trial magistrate in a sum of Rs.38,00,000/- and Rs.28,50,000/- is reduced to Rs.36,00,000/- and Rs.25,00,000/- respectively.

iii. Amount in deposit is ordered to be withdrawn by the complainant-respondent under due identification.

iv. Balance amount is ordered to be deposited within four weeks from the date of receipt of certified copy of this order.

v. Failure to deposit the balance fine amount within the prescribed period, the order of the Trial Magistrate stands automatically restored.

Office is directed to return the trial Court records

with a copy of this order forthwith.

Sd/-

JUDGE

KA/NS*