Madras High Court
R.Baskar vs M/S.Rite Steel Industries Pvt Ltd on 24 June, 2025
Author: M.Nirmal Kumar
Bench: M.Nirmal Kumar
Crl.R.C.Nos.1447 & 1448 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RERSERVED ON : 17.04.2025
PRONOUNCED ON : 24.06.2025
CORAM
THE HONOURABLE MR.JUSTICE M.NIRMAL KUMAR
Crl.R.C.Nos.1447 & 1448 of 2019
R.Baskar,
Proprietor and authorized signatory,
MSP Steel Agencies,
Door No.12, Amman Koil Street,
Vadapalani, Chennai – 600 026. ... Petitioner in both petitions
Vs.
M/s.Rite Steel Industries Pvt Ltd.,
Rep,by Director Mr.P.Vaidyanathan,
101, A& B SIDCO Industrial Estate,
Kakalur,
Thiruvallur District-602003. ... Respondent in both petitions
PRAYER in Crl.R.C.No.1447 of 2018: Criminal Revision Case is filed
under Sections 397 & 401 of Code of Criminal Procedure, to call for the
records in Court of the I Additional District and Sessions Judge,
Tiruvallur in C.A.No.19/2018 dated 13.09.2019 confirming the judgment
and sentence passed by the Fast Track Court, Magisterial Level,
Tiruvallur in S.T.C.No.13 of 2016, dated 12.12.2017 and to set aside the
same.
Page No.1 of 17
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PRAYER in Crl.R.C.No.1448 of 2018: Criminal Revision Case is filed
under Sections 397 & 401 of Code of Criminal Procedure, to call for the
records in Court of the I Additional District and Sessions Judge,
Tiruvallur in C.A.No.18/2018 dated 13.09.2019 confirming the judgment
and sentence passed by the Fast Track Court, Magisterial Level,
Tiruvallur in S.T.C.No.12 of 2016, dated 12.12.2017 and to set aside the
same.
For Petitioner : Mr.K.Rahavan in both petitions
For Respondent : Mr.A.Vivekanandan in both petitions
COMMON ORDER
The petitioner in Crl.R.C.No.1447 of 2019 was convicted vide
judgment, dated 12.12.2017 in S.T.C.No.13 of 2016 by the learned
Judicial Magistrate, Fast Track Court, Magisterial Level at Tiruvallur
(trial Court) and sentenced to undergo Simple Imprisonment for one year
and to pay a compensation of Rs.8,64,506/- to the respondent for offence
under Section 138 of Negotiable Instruments Act, 1881. Challenging the
same, the petitioner preferred an appeal before the learned I Additional
District and Sessions Judge, Tiruvallur in Crl.A.No.19 of 2018 (lower
appellate Court). The lower appellate Court, by judgment, dated
13.09.2019 partly-allowed the appeal modifying the sentence directing
the petitioner to pay compensation of Rs.8,64,506/- in default to undergo
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Simple Imprisonment for four months. Aggrieved over the same,
Crl.R.C.No.1447 of 2019 is filed.
2.The petitioner in Crl.R.C.No.1448 of 2019 was convicted vide
judgment, dated 12.12.2017 in S.T.C.No.12 of 2016 by the learned
Judicial Magistrate, Fast Track Court, Magisterial Level at Tiruvallur
(trial Court) and sentenced to undergo Simple Imprisonment for eight
months and to pay a compensation of Rs.4,58,562/- to the respondent for
offence under Section 138 of Negotiable Instruments Act, 1881.
Challenging the same, the petitioner preferred an appeal before the
learned I Additional District and Sessions Judge, Tiruvallur in
Crl.A.No.18 of 2018 (lower appellate Court). The lower appellate Court,
by judgment, dated 13.09.2019 partly-allowed the appeal modifying the
sentence directing the petitioner to pay compensation of Rs.4,58,562/- in
default to undergo Simple Imprisonment for four months. Aggrieved
over the same, Crl.R.C.No.1448 of 2019 is filed.
3.Earlier, the petitioner has not shown interest in proceeding with
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the present revisions, hence this Court by order, dated 23.04.2024
dismissed both revisions for non-prosecution, thereafter, the petitioner
filed Crl.M.P.Nos.1729 & 1731 of 2025 in Crl.R.C.Nos.1447 & 1448 of
2019 to restore revisions on file. Finding that the revisions dismissed for
non prosecution, not on merits and to give one more opportunity to the
petitioner, this Court on 04.02.2025 restored both revisions on file.
Thereafter, the learned counsel for the petitioner and learned counsel for
the respondent advanced their arguments.
4.Gist of the case in STC.No.13 of 2016 is that the respondent
engaged in a business of manufacturing and selling rods and bars and the
petitioner purchased bars and rods TMT weighing about 9.950 metric
tonnes from the respondent vide Invoice No.560, dated 20.09.2013 for
Rs.4,14,400/- and purchased bars and rods weighing about 10.980 metric
tonnes vide Invoice No.610 dated 08.10.2013 for Rs.4,50,106/- and thus
totally liable to pay Rs.8,64,506. When the respondent demanded the
said amount of Rs.8,64,506/-, the petitioner issued cheque (Ex.P2), dated
24.03.2014 bearing No.012378 drawn on Tamil Nadu Mercantile Bank
Limited, Chekkadu Branch for a sum of Rs.8,64,506/- towards discharge
of liability and instructed the respondent to present the cheque on the
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same day. The respondent presented the cheque on 24.03.2014 in Bank
of Baroda, Tiruvallur Branch and the same was deposited in Royapettah
Branch, Chennai, but the cheque (Ex.P2) was returned dishonored on
26.03.2014 for the reason “Funds Insufficient” and the same was
intimated to the respondent. Thereafter, the respondent issued a legal
notice (Ex.P4) dated 04.04.2014 but the petitioner returned the notice on
07.04.2014 with a postal endorsement “intimation delivered”. Since the
petitioner failed to pay the cheque amount, the respondent lodged a
private complaint under the Negotiable Instrument Act, 1881.
5.Gist of the case in STC.No.12 of 2016 is that the respondent
engaged in a business of manufacturing and selling rods and bars and the
petitioner purchased bars and rods TMT weighing about 10.950 metric
tonnes from the respondent vide Invoice No.626 (Ex.P1) dated
14.09.2013 for Rs.4,58,562/-. When the respondent demanded the said
amount of Rs.4,58,562/-, the petitioner issued cheque (Ex.P2) bearing
No.012379 drawn on Tamil Nadu Mercantile Bank Limited, Chekkadu
Branch for a sum of Rs.4,58,562/- towards discharge of liability and
instructed the respondent to present the cheque on the same day. The
respondent presented the cheque on 17.01.2014 in Bank of Baroda,
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Tiruvallur Branch and the same was deposited in Royapettah Branch,
Chennai, but the cheque was returned dishonored on 18.01.2014 for the
reason “funds insufficient” and the same was intimated to the respondent.
The respondent issued a legal notice (Ex.P4) dated 14.02.2014, but the
petitioner deliberately returned the notice on 24.02.2014 with a postal
endorsement “intimation delivered”. Since the petitioner failed to pay
the cheque amount, the respondent lodged a private complaint under the
Negotiable Instrument Act, 1881.
6.The learned counsel for the petitioner in both revisions submitted
that the respondent Company for supply of rods and bars was having
business relationship with the petitioner. During the course of business,
blank promissory note and blank cheque obtained from the petitioner as
security. The admitted case of the respondent is that one Mugunthan was
Sales Manager who was dealing with the petitioner in the business. It is
admitted by the respondent that 15 days grace period was given for
payment after supply of goods. In this case, the three invoices (Ex.P1) (2
Nos.) are dated 14.09.2013, 20.09.2013, 08.10.2013 through which the
goods were supplied. In discharge of said invoice liability, the cheques
(Exs.P2) (2 Nos.) issued by the petitioner. It is admitted by the
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respondent that through cheque No.1012371, dated 19.09.2013 a sum of
Rs.4,51,875/-, through cheque No.1012371, dated 23.09.2013 a sum of
Rs.5,39,631/- and through cheque No.1012386, dated 18.11.2013 a sum
of Rs.75,000/- paid and credited to the account of the respondent, thereby
the entire dues to the invoices cleared. This fact known to Mugunthan,
Sales Manager of the respondent Company. Taking advantage of
Mugunthan not in service of the respondent Company, the cheques
(Ex.P2) (2 Nos) issued as security, filled up and projected as though the
cheques issued in discharge of liability.
7.He further submitted that the petitioner closed his business long
back, knowing the same, to the closed address, statutory notice (Ex.P4)
(2 Nos.) issued to ensure service of notice which is not proper. In this
case, the authorization given to the respondent, who is the Director of the
Company, is not a valid authorization since the authorization not signed
by other Directors and no corresponding resolution produced. On this
score alone, the judgment of Courts below to be set aside. He further
submitted that in this case, authorized signatory to MSP Steel Agency
alone arrayed as accused, not MSP Steel Agency. MSP Steel Agencies is
the drawer of the cheque, in view of the same, no prosecution can be
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proceeded against authorized signatory in the absence of drawer. These
facts not considered by the trial Court. The lower appellate Court found
that it is only a business transaction and the petitioner has made some
payments and also examined the bank officials (DW1 & DW2), marked
Exs.R1 to R4 to show there have been payments, modified the
punishment setting aside the jail sentence and confirming the payment of
compensation for the cheque amount into fine sentence.
8.In support of his submissions, the learned counsel for the
petitioner relied on the decision of the Hon'ble Apex Court in Bijoy
Kumar Moni v. Paresh Manna & Anr., reported in 2024 SCC OnLine
SC 3833 wherein the Hon'ble Apex Court held that in 138 case, the first
and foremost ingredient is that the person who is to be made liable
should be the drawer of the cheque. Further, it had held that the
authorized signatory acting on behalf of principal cannot be said to be the
drawer of the cheque and further, prosecuting a person in the individual
capacity without arraying the drawer is not sustainable. He further
placed relied on the decision of this Court in M.C.Baby v. M/s.Sastha
Home Tech reported in MANU/TN/2776/2023 wherein it had held that
the complainant right to file the complaint and give evidence on behalf of
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the holder of the cheque must be with proper authorization of the
company. In this case, the authorization letter produced is not as per law.
9.Making the above submissions and relying on the decisions, the
learned counsel for the petitioner prays for setting aside the judgment of
the Courts below.
10.The learned counsel for the respondent in both revisions
submitted that it is admitted by the petitioner that the petitioner having
business relationship with respondent purchasing steel bars and rods. It
is not in dispute 15 days grace period given for payment after supply of
goods. In this case, the goods supplied on cover of invoices marked as
exhibits (Ex.P1). In discharge of liability, the cheques (Ex.P2) (2 Nos.)
issued. The point raised by the petitioner is that after invoice period
subsequent payments made, hence there is no liability, is not proper. The
respondent further examined himself and produced Ex.P7 (STC.No.13 of
2016) and Ex.P8 (STC.No.12 of 2016) to demonstrate, that the
petitioner's claim of payments made for invoices produced, is not proper.
Ex.P7 (STC.No.13 of 2016) and Ex.P8 (STC.No.12 of 2016) would
prove the payments were made for the other invoices and not for the
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invoices produced in this case.
11.He further submitted that Mr.P.Vaidyanathan is the Director of
the respondent Company and Mugunthan was Sales Manager, who left
the service, is not disputed. As a Director of the Company,
Mr.P.Vaidyanathan is authorized to file complaint under Section 138 of
Negotiable Instruments Act against the petitioner, prosecute the case.
The respondent produced the authorization letters Ex.P6 (STC.No.13 of
2016) and Ex.P7 (STC.No.12 of 2016) attested by the Directors. The
contention of the petitioner that the authorization letters does not contain
the signature and no resolution produced, is a ground presently raised.
The authorization not questioned or disputed during trial or during
appeal. The Hon'ble Apex Court in Bhupesh Rathod v. Dayashankar
Prasad Chaurasia and Anr., reported in (2022) 2 SCC 355 clearly held
that the authorization letter would form part of the minutes of the board
meeting. The authorization extracts produced in this case considered by
the trial Court and lower appellate Court and both confirmed
authorization was proper and valid. Further, the address of respondent
Company and its Director are one and the same, hence there is nothing to
discredit the authorization. In this case, the petitioner neither disputed
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his signature in the cheque (Ex.P2) (2 Nos.) nor the genuineness of
invoices (Ex.P1) (2 Nos.). His only defence is that the amount paid in
cash through Mugunthan, Sales Manager but no corresponding materials
produced. The other defence raised is that the cheques (Ex.P2) (2 Nos.)
given as security in advance for supply of goods. Referring to the
invoices, the respondent submitted that the goods were supplied with 15
days grace period for payment, thereafter only, the payments by way of
cheques received. In such circumstances, advance payment procedure is
not followed. Now such claim is made in defence to wriggle out from
the liability. Such ground taken by the petitioner rightly disbelieved by
the Courts below.
12.He further submitted that in this case, the statutory presumption
comes into play coupled with the material evidence of invoice
confirming liability of the petitioner to pay the cheque amount, proved.
The trial Court held that the defence exhibits (Exs.R1 to R4) fortified the
case of the respondent/complainant. Thus, the respondent proved his
case beyond all reasonable doubt and the trial Court rightly convicted the
petitioner. Though the lower appellate Court confirmed the conviction, it
had set aside the jail sentence. This further embolden the petitioner not
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to comply with the judgment and filed revisions before this Court,
thereafter not shown any interest to proceed with the revision cases.
Only after dismissal of revision cases for non-prosecution, the petitioner
filed restoration petitions. Now, the revisions taken up for final hearing
and heard the petitioner in detail on merits. The learned counsel for the
respondent/complainant prayed that jail sentence of trial Court to be
restored, with direction to pay the cheque amount as compensation.
13.This Court considered the rival submissions and perused the
materials available on record.
14.In this case, the petitioner used to purchase steel rods and bars
from the respondent Company for his business and both had business
relationship for ten years. It is admitted by the petitioner that Mugunthan
was the Sales Manager from the respondent Company who dealt with the
petitioner. In this case, the invoices (Ex.P1) (2 Nos.) for supply of goods
and issuance of cheques (Ex.P2) (2 Nos.) in discharge of the liability,
produced and marked as exhibits. Neither the invoices (Ex.P1) (2 Nos.)
nor the cheques (Ex.P2) (2 Nos.) disputed by the petitioner. The defence
taken is on two fold. One is invoice amount paid in cash in advance and
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other defence is after supply of goods, some payments made which
covered the invoices produced in this case. The respondent by Ex.P7
(STC.No.13 of 2016) and Ex.P8 (STC.No.12 of 2016) clarified and
confirmed that the invoice amount pertaining to the present cases not
paid. Further, Exs.R1 to R4 confirms the business transaction and
dishonour of the cheques (Ex.P2) (2 Nos.) in this case.
15.The contention of the petitioner that without arraying MSP
Steel Agency, the drawer of the cheque i.e., the authorized signatory
Mr.R.Baskar/petitioner arrayed as accused, hence the complaint to be
dismissed, is not sustainable. In this case, the petitioner is the Proprietor
and authorized signatory of MSP Steel Agency, is not in dispute. For
legal proceedings involving a Proprietorship concern, it can be proceeded
either in the name of the Proprietor or in the name of the Proprietorship
Firm. In this case, the petitioner is the Proprietor of MSP Steel Agency,
hence, initiation of proceedings against the petitioner is proper.
Likewise, the respondent, Director of M/s.Rite Steel Industries Private
Limited was authorized by the Company to prosecute and proceed
against the petitioner, is proved by the authorization letters Ex.P6
(STC.No.13 of 2016) and Ex.P7 (STC.No.12 of 2016). The same not
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questioned or disputed either during trial or during appeal, but now
raised belatedly which is not permissible.
16.The Hon'ble Apex Court in Bhupesh Rathod case (cited supra)
held that in the event of production of the copy of authorization letter, it
is not required to be signed by the Board Members as it would form a
part of the minutes of the Board Meeting. In this case, proper
authorization produced without any defects. The respondent address and
address found in the authorization letters are one and same. Finding that
the respondent proved its case beyond all reasonable doubt, the trial
Court convicted the petitioner and the lower appellate Court confirmed
the same. The only error committed by the lower appellate Court that
considering it is a business transaction and imposition of fine will suffice
and set aside the jail sentence, is not proper.
17.In view of the above, this Court finds restoration of jail
sentence imposed by the trial Court would only have desired effect and
would serve the purpose and object of the Act.
18.Accordingly, this Court set asides the judgment, dated
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13.09.2019 in Crl.A.Nos.18 & 19 of 2018 passed by the learned I
Additional District and Sessions Judge, Tiruvallur, restores and confirms
the trial Court judgment, dated 12.12.2017 in S.T.C.Nos.12 & 13 of 2016
passed by the learned Judicial Magistrate, Fast Track Court, Magisterial
Level at Tiruvallur.
19.Since the petitioner is facing two concurrent findings, this
Court directs the trial Court to issue conviction warrant against the
petitioner not waiting for the complainant to take steps. Once the
conviction warrant is issued by the trial Court, the Jurisdictional Police to
execute the conviction warrant without delay. It is the duty of the State
to execute the orders of the Magistracy and enforce the rule of law
without delay.
20.It is made clear that in the interregnum, if the petitioner comes
forward for settlement and discharge his liability, he can approach the
complainant for compounding the offence which can be entertained even
by the trial Court.
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21.In the result, Criminal Revision Cases are dismissed.
24.06.2025
Speaking Order/Non Speaking Order
Index : Yes/No
Neutral Citation: Yes/No
vv2
To
1.The I Additional District and Sessions Judge,
Tiruvallur.
2.The Judicial Magistrate,
Fast Track Court,
Magisterial Level at Tiruvallur.
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Crl.R.C.Nos.1447 & 1448 of 2019
M.NIRMAL KUMAR, J.
vv2
PRE-DELIVERY ORDERS IN
Crl.R.C.Nos.1447 & 1448 of 2019
24.06.2025
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