M/S.Three Star Exporters vs Shipping Corporation Of India
2021 Latest Caselaw 267 Ker

           IN THE HIGH COURT OF KERALA AT ERNAKULAM

                               PRESENT

            THE HONOURABLE MR.JUSTICE N.ANIL KUMAR

  WEDNESDAY, THE 06TH DAY OF JANUARY 2021 / 16TH POUSHA, 1942

                 Crl.Rev.Pet.No.2182 OF 2006(C)

          CRA 845/2005 OF SESSIONS COURT, ERNAKULAM

    CC 592/1999 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-I,
                           ERNAKULAM


REVISION PETITIONER/S:

      1     M/S.THREE STAR EXPORTERS
            1/1390, OPP.MOSQUE, PATTALAM, FORT COCHIN,,
            REPRESENTED BY ITS PARTNER, E.R.UNNIKRISHNAN.

      2     E.R. UNNIKRISHNAN, AGED 48 YEARS
            PARTNER, M/S. THREE STAR EXPORTERS, 1/1390,, OPP.
            MOSQUE, PATTALAM, FORT COCHIN.

            BY ADVS.
            SRI.PEEYUS A.KOTTAM
            SRI.ASHIK K.MOHAMMED ALI

RESPONDENT/S:

      1     SHIPPING CORPORATION OF INDIA, REPRESENTED BY ITS
            LOCAL AGENTS, M/S. JAIRAM AND SONS, 45/364, GV
            AIYER ROAD, WILLINGDON ISLAND, COCHIN-3.

      2     STATE OF KERALA
            REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT
            OF KERALA, ERNAKULAM.

            R1   BY   ADV. SMT.B.ANU
            R1   BY   ADV. SRI.ADARSH MATHEW
            R1   BY   ADV. SRI.DILJITH K.MANOHAR
            R1   BY   ADV. SRI.V.J.MATHEW SR.
            R1   BY   ADV. SRI.VIPIN P.VARGHESE
            R2   BY   PUBLIC PROSECUTOR

OTHER PRESENT:
             SR.PP.M.S.BREEZ

     THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD
ON 22-12-2020, THE COURT ON 06-01-2021 PASSED THE FOLLOWING:
 CRRP No.2182/2006
                                ..2..



                           O R D E R

This revision petition is directed against the

judgment dated 14.02.2006 passed in Crl.Appeal

No.845 of 2005 on the file of the Sessions

Court, Ernakulam, which was preferred by the

revision petitioners against the judgment of

conviction and sentence dated 05.10.2005 in CC

No.592 of 1999 on the file of the Judicial

First Class Magistrate Court-I, Ernakulam.

2. The revision petitioners were the accused in

CC No.592 of 1999 on the file of the Judicial

First Class Magistrate Court-I, Ernakulam

consequent to a private complaint instituted

by the 1st respondent (complainant) against the

revision petitioners/accused 1 and 2 alleging

commission of the offence punishable under

Section 138 of the Negotiable Instruments Act,

1881 (hereinafter referred to as 'the NI

Act'). Parties are hereinafter referred to as CRRP No.2182/2006 ..3..

'the complainant' and 'the accused' according

to their status in the trial court unless it

is otherwise stated.

3. The case of the complainant, in brief, is as

hereunder:-

The complainant, M/s Shipping Corporation of

India, is represented by its local agent, M/s

Jairam & Sons. The 1st accused, who is an

exporting firm, and the 2nd accused, who is its

partner, had approached the complainant

through its local agent and requested them to

ship their cargo from Kochi to Hamburg. All

the details of shipments were discussed in

detail including the payment of freight

charges etc. Accordingly, the accused shipped

400 bags of black pepper through the

complainant as per vessel "ACACIA-VOY.399"

from Kochi to Hamburg. Towards the freight

amount, the accused issued cheque No.509028

dated 26.05.1999 for Rs.79,160/- drawn on the CRRP No.2182/2006 ..4..

Karur Vysya Bank, Ernakulam Branch, Cochin-16.

When the complainant presented the above

cheque for collection through their banker,

State Bank of India, Willington Island,

Cochin, the same was dishonoured with an

endorsement 'Exceed Arrangement' as per memo

dated 18.05.1999 issued by the Karoor Vysya

Bank, Ernakulam. Thereafter, the complainant

sent a registered notice on 11.06.1999,

demanding the amount covered under the cheque.

The accused acknowledged the above notice on

14.06.1999. Even after receipt of the demand

notice, the accused failed to pay the amount

covered under the cheque. Hence, the

complaint.

4. On service of summons, the accused appeared

before the trial court. Particulars of the

offence were read over and explained to the

accused, to which the accused pleaded not

guilty. Thereafter, the officer of the CRRP No.2182/2006 ..5..

complainant was examined as PW1 and marked

Exts.P1 to P10. After PW1 was examined, the

accused was questioned under Section 313(1)(b)

of the Cr.P.C. for the purpose of enabling him

to explain any circumstance appearing in the

evidence against him. DW1 was examined on the

side of the accused.

5. On appreciation of the evidence, the learned

magistrate held that the execution of the

cheque was admitted by the accused and that

the cheque was proved by the complainant that

the cheque was dishonoured for the reason

'Exceed Arrangement'. Hence, the learned

magistrate concluded that the cheque was

issued by the accused for the discharge of a

debt or liability.

6. Heard Sri.Ashik A. Mohamed Ali, the learned

senior counsel for the revision petitioners;

Sri.Vipin P. Varghese, the learned counsel for

the 1st respondent; and Sri.M.S.Breez, the CRRP No.2182/2006 ..6..

learned Senior Public Prosecutor for the 2nd

respondent-State.

7. Sri.Ashik A. Mohamed Ali, the learned counsel

appearing for and on behalf of the revision

petitioners, contended that the evidence in

the above case, even if given face value and

taken to be correct, do not constitute an

offence alleged against the accused in terms

of Section 138 read with Section 141 of the NI

Act. It was further submitted that, in any

event, the bill of lading as well as the

averments in the complaint clearly spells out

that the complainant is a public sector

company owned by the Government of India and

the company cannot issue a letter authorizing

somebody to represent in a legal proceeding.

It was further contended that the person, who

received power from M/s Shipping Corporation

of India, is a complete stranger and no

contract of agency subsists between the CRRP No.2182/2006 ..7..

complainant and the so called representative.

It was further contended that legal notice was

not issued within time.

8. The learned counsel appearing on behalf of the

1st respondent, on the other hand, would submit

that the accused issued the cheque in favour

of the complainant pursuant to a transaction

between them and the cheque, on presentation,

was dishonoured for the reason 'Exceed

Arrangement'. It is contended that the privity

of contract is between the complainant and the

accused and the technical contention under

Section 230 of the Contract Act is taken to

avoid payment due to the complainant.

9. In order to determine the question whether an

offence punishable under Section 138 of the NI

Act is made out against the accused, it is

necessary to examine the penal provision of

Section 138 of the NI Act and the presumptions

to be raised as envisaged by the provisions of CRRP No.2182/2006 ..8..

Sections 118 and 139 of the NI Act. Section

118 of the NI Act provides certain

presumptions to be raised laying down some

special rules of evidence relating to

presumptions. The presumption, therefore, is a

matter of principle to infuse credibility to

negotiable instruments including cheques and

to encourage and promote the use of negotiable

instruments in financial transactions. Section

118 of the NI Act provides presumptions to be

raised until the contrary is proved, (i) as to

consideration, (ii) as to date of instrument,

(iii) as to time of acceptance, (iv) as to

time of transfer, (v) as to order of

indorsements, (vi) as to appropriate stamp and

(vii) as to holder being a holder in due

course. That apart, Section 139 of the NI Act

provides that it shall be presumed, unless the

contrary is proved, that the holder of a

cheque received the cheque of the nature CRRP No.2182/2006 ..9..

referred to in Section 138 of the NI Act for

the discharge, in whole or in part, of any

debt or other liability. Applying the

definition of the word 'proved' in Section 3

of the Evidence Act to the provisions of

Sections 118 and 139 of the NI Act, it becomes

evident that in a trial under Section 138 of

the NI Act, a presumption will have to be made

that every negotiable instrument was made or

drawn for consideration and that it was

executed for discharge of debt or liability

once the execution of negotiable instrument is

either proved or admitted. Needless to say

that, as and when the complainant discharges

the burden to prove that the cheque was

executed by the accused, the rules of

presumptions under Sections 118 and 139 of the

NI Act are very much available to the

complainant and the burden shifts on the

accused. However, this presumption is CRRP No.2182/2006 ..10..

rebuttable. Under the circumstances, it is the

duty of the accused before the court by

adducing evidence to show that the cheque was

not supported by consideration and that there

was no debt or liability to be discharged as

alleged. It is necessary on the part of the

accused to set up a probable defence for

getting the burden of proof shifted to the

complainant. Once such rebuttable evidence is

adduced and accepted by the court, the burden

shifts back to the complainant.

10.PW1 is the Manager of M/s Jairam & Sons. The

firm has issued Ext.P1 power of attorney in

favour of PW1. When examined before the court,

he stated that he is the Manager of the firm.

The complainant is M/s Shipping Corporation of

India. It is represented by M/s Jairam & Sons,

one of the local steamer agents of the

Shipping Corporation of India. The complaint

is signed by the power of attorney holder of CRRP No.2182/2006 ..11..

the firm, M/s Jairam & Sons. The person, who

signed in the complaint, is the Manager of the

firm, M/s Jairam & Sons.

11.During the trial, the accused entered

appearance before the court and denied the

accusation levelled against him. Another case

of the same nature between the same parties

was pending before the very same court as CC

No. 593 of 1999. Hence, joint trial was

ordered and the evidence was taken in CC No.

592 of 1999. Against the judgment dated

05.10.2005, the accused preferred this

Crl.R.P. It is seen from the records that the

accused in CC No. 593 of 1999 preferred Crl.

Appeal No. 846 of 2005 before the Sessions

Court and the same was dismissed. However, no

revision is seen filed challenging the

judgment in Crl. Appeal No. 846 of 2005.

Hence, it appears from the facts and

circumstances that the judgment in Crl. Appeal CRRP No.2182/2006 ..12..

No. 846 of 2005 has become final between the

parties on identical matters.

12.The learned counsel for the revision

petitioners/accused contended that the

complainant is only an agent for the principal

and an agent cannot personally enforce a

contract under Section 230 of the Contract

Act. It is contended that the transaction

covered is not enforceable through court by

the complainant.

13.The complainant, M/s Shipping Corporation of

India, is doing business through its agent. In

connection with the shipment, they are issuing

bill of lading. It is the duty of its agent to

collect the freight charges and deposit the

same to the account of the Corporation. They

are collecting freight charges as part of

their business as steamer agents. Collecting

freight charges for and on behalf of the M/s

Shipping Corporation of India is not a case of CRRP No.2182/2006 ..13..

delegation. Ext.P3 would show that shipment of

the cargo of the accused was conducted through

the vessel of M/s Shipping Corporation of

India. According to the accused, the cheque

was not issued to M/s Jairam & Sons, but it

was issued to M/s Leap Forwarders Pvt. Ltd.

Ext.P3 series, on the other hand, would show

that shipment was made through M/s Jairam &

Sons. The cheque was issued for shipment of

the cargo of the accused also. Even if the

shipment was through M/s Leap Forwarders Pvt.

Ltd., it would be payment to the shipping

company or the agents, through whom the

shipment was made. In this case, no evidence

was adduced to show that it was given through

M/s Leap Forwarders Pvt. Ltd. The evidence

adduced would show that the freight charge of

the shipment was made after issuing Ext.P3

series of bills of lading for a legally

enforceable debt. In this case, the cheque was CRRP No.2182/2006 ..14..

drawn in the name of M/s Shipping Corporation

of India and notice was issued in the name of

M/s Jairam & Sons, their local agent.

14.Apart from the 1st accused partnership firm,

the partner of the 1st accused was also made as

an accused in the case. Admittedly, they

issued the cheque, which, on presentation, was

dishonoured for the reason 'Exceed

Arrangement'. A person would be vicariously

liable for commission of offence on the part

of the partnership firm only in the event the

conditions and stipulations prescribed under

Section 138 read with Section 141 of the NI

Act are satisfied with. The above principle

has been dealt with in detail by the Supreme

Court in M/s Kusum Ingots & Alloys Ltd. v. M/s

Pennar Peterson Securities Ltd. and others

[(2000)2 SCC 745] as follows:-

"10. On a reading of the provisions of Section 138 of the NI Act it is clear that the ingredients which are to be satisfied for making out a case under the provision are:

CRRP No.2182/2006 ..15..

(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;

(ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(iii) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;

(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;

(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice."

15.For creating criminal liabilities in terms of

Section 138 of the NI Act, the complainant is

obliged to show that a cheque was issued; the

same was presented; but, it was dishonoured; a

notice in terms of the said provision was

served on the person sought to be made liable; CRRP No.2182/2006 ..16..

and despite service of notice, neither any

payment was made nor other obligations, if

any, were complied with within fifteen days

from the date of receipt of the statutory

notice.

16.Section 141 of the NI Act provides

constructive liability on the part of the

Directors of the company or other persons

responsible for the conduct of the business of

the company. Though the heading of Section 141

of the NI Act reads "Offences by companies",

as per the Explanation to that Section

"company" means "any body corporate and

includes a firm or other association of

individuals"; and "director" in relation to a

firm, means a "partner" in the firm. Their

liability is joint and several. Consequently,

therefore, when an offence is alleged to have

been committed by the partnership firm, every

person who, at the time the offence was CRRP No.2182/2006 ..17..

committed, was in charge of and was

responsible to the firm for the conduct of its

business as well as the firm shall be deemed

to be guilty of the offence and shall be

liable to be proceeded under Section 138 of

the NI Act. In S.M.S Pharmaceuticals Ltd. v.

Neeta Bhalla & another [(2005) 8 SCC 89], it

was held that a signatory to the cheque can be

held to be a person liable under Section 141

of the NI Act. It has come out in evidence

that the 2nd accused issued the cheque in

favour of the complainant for a legally

enforceable debt. The cheque in question was

drawn for consideration and the holder of the

cheque received the same in discharge of an

existing debt. Ex.P3 bill of lading is not

sufficient to indicate that the amount was due

to M/s Shipping Corporation of India and the

complainant was actually the steamer agent of

M/s Shipping Corporation of India. It has come CRRP No.2182/2006 ..18..

out in evidence that the accused issued cheque

to the complainant and the complainant

received the same. Although the complainant

issued legal notice to the accused, no reply

was issued denying the liability. Ext.P5

cheque dated 26.05.1999 is for an amount of

Rs.79,160/-. The said cheque was presented

before the State Bank of India, Willington

Island, Kochi on 04.06.1999. Ext.P6 cheque is

dated 18.05.1999 and is for an amount of

Rs.79,325/-. Ext.P8 notice was issued on

11.06.1999. Hence, statutory notice was issued

right in time. When the cheque was issued in

the name of the complainant, it is illogical

to contend that the amounts due on account of

the shipping were made through M/s Shipping

Corporation of India, for whom M/s Jairam &

Sons stood as an agent. The accused had not

offered any explanation as to why they had

issued Ext.P5 cheque to M/s Shipping CRRP No.2182/2006 ..19..

Corporation of India.

17.The conclusions drawn by the trial court and

the appellate court to convict the accused 1

and 2 are perfectly legal. The cheque in

question was drawn for consideration and the

holder of the cheque received the same in

discharge of an existing debt. Thereafter, the

onus shifts on the accused to establish a

probable defence so as to rebut such

presumption, which onus has not been

discharged by the accused. Once the cheque is

proved to be issued, it carries statutory

presumption of consideration under Sections

118 and 139 of the NI Act. Then, the onus is

on the accused to disprove the presumption at

which they have not succeeded.

18.It is well settled law that when concurrent

findings of facts rendered by the trial court

and appellate court are sought to be aside in

revision, the High Court does not, in the CRRP No.2182/2006 ..20..

absence of perversity, upset factual findings

arrived at by the two courts below. It is not

for the revisional court to re-analyse and

reinterpret the evidence on record in a case,

where the trial court has come to a probable

conclusion. Unless the contrary is proved, it

is presumed that the holder of a cheque

received the cheque of the nature referred to

in Section 138 of the NI Act for the

discharge, in whole or in part, of any debt or

other liability. In the case at hand, the

accused has no case that he has not signed the

cheque or parted with under any threat or

coercion. That apart, the accused has no case

that unfilled cheque had been lost

irrecoverably or stolen. The accused failed to

prove in the trial by leading cogent evidence

that there was no debt or liability. In Bir

Singh v. Mukesh Kumar [(2019) 4 SCC 197], the

Supreme Court held that in view of Section 139 CRRP No.2182/2006 ..21..

of the NI Act read with Section 118 of the NI

Act thereof, the Court has to presume that the

cheque has been issued for discharging a debt

or liability. Paragraphs 39 and 40 of the

above case are relevant in this context and

the same are extracted below for convenience

of reference:-

"39. It is not the case of the respondent- accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative.

40. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."

19.In view of the above, both the trial court and

the appellate court rightly held that the

burden was on the accused to disprove the

initial presumption under Sections 118 and 139 CRRP No.2182/2006 ..22..

of the NI Act. The accused was examined as DW1

in this case. He stated that the cheque was

entrusted to M/s Leap Forwarders as a blank

signed one. No evidence was let in to prove

the alleged entrustment with M/s Leap

Forwarders as contended. The burden is not

discharged rightly. Hence, the conviction of

the accused for the offence under Section 138

of the NI Act is only to be upheld.

20.Coming to the question of sentence, the trial

court convicted and sentenced the 1st accused

to pay a fine of Rs.5,000/- each and 2 nd

accused to undergo simple imprisonment for

three months each in CC Nos. 592 and 593 of

1999 on the file of the Judicial First Class

Magistrae Court-I, Ernakulam. Further, it was

ordered to pay a sum of Rs.1,19,000/- in CC

of 1999 to the complainant under Section

357(3) of Cr.P.C. and default of payment of CRRP No.2182/2006 ..23..

fine to undergo simple imprisonment for three

months each more. The amount involved in CC

No. 592 of 1999 is Rs.79,160/- as per cheque

bearing No. 509028 dated 26.05.1999. This

revision is confined to an amount of

Rs.79,160/- only. So far as CC No. 593 of 1999

is concerned, the accused preferred Crl.

Appeal No. 846 of 2005 before the Sessions

Court, Ernakulam. Crl. Appeal 845 of 2005

arising out of CC No. 592 of 1999 and Crl.

of 1999 were heard together by the learned

Sessions Judge and pronounced a common

judgment on 14.02.2006. The accused challenged

the judgment in Crl. Appeal 845 of 2005 before

this Court. Regarding the other case, no

submission was advanced by the learned counsel CRRP No.2182/2006 ..24..

for the revision petitioner. The only logical

inference is that on identical facts, Crl.

Appeal No. 846 of 2005 has become final

between the parties.

21.In view of the discussion made herein above,

the concurrent conviction under Section 138 of

the NI Act is sustained. Section 138 of the NI

Act provides sentence of imprisonment or with

fine or with both. Sentence of imprisonment is

not compulsory. The object is to pay the

amount covered under the cheque. Hence, the

mandatory term of imprisonment awarded by the

trial court, which was confirmed in appeal, is

liable to be set aside. The conviction and

sentence as against the 1st accused stand

confirmed. While confirming the conviction of

the 2nd accused, in modification of the

sentence, the 2nd accused is sentenced to pay a

fine of Rs.79,160/- and in default of payment

of fine to undergo simple imprisonment for a CRRP No.2182/2006 ..25..

period of three months. If the amount is paid

as compensation, the same shall be given to the

complainant as compensation under Section

357(3) of Cr.P.C.

With the above modification, the Crl.R.P. is

allowed in part. In view of the situation

prevailing in the country due to the outbreak

of Covid-19 pandemic, this Court is inclined to

grant six months time from today to the

revision petitioners/accused 1 and 2 to deposit

the compensation and the fine amount before the

trial court, failing which the learned

Magistrate shall take necessary steps to

execute the sentence against the revision

petitioners/accused 1 and 2 in accordance with

law.

The Registry is directed to forward the entire

records to the trial court forthwith.

Sd/-

N.ANIL KUMAR

JUDGE Bka/-