M/S Binjusaria Metal Box Company Pvt. ... vs P.M. Kumar, Hyd And Anr
2025 Latest Caselaw 2473 Tel

Telangana High Court

M/S Binjusaria Metal Box Company Pvt. ... vs P.M. Kumar, Hyd And Anr on 21 February, 2025

         THE HON'BLE SRI JUSTICE E.V.VENUGOPAL
               CRIMINAL APPEAL Nos.902 of 2014,
                  904 of 2014 and 905 of 2014

COMMON JUDGMENT :

These Criminal Appeals are filed under Section 378(4) of

Cr.P.C., by the appellant/complainant aggrieved by the judgments

dated 10.07.2014 passed in Criminal Appeal Nos.251 of 2010, 250 of

2010 and 252 of 2010, all on the file of the learned III Additional

Metropolitan Sessions Judge, Hyderabad wherein and whereunder

the findings of conviction and sentence imposed against the 1st

respondent/accused No.3 vide judgments dated 06.07.2010 passed

in CC Nos.587 of 2009, 583 of 2009 and 585 of 2009 by the learned

XIV Additional Judge-cum-XVIII Additional Chief Metropolitan

Magistrate, Hyderabad were set aside founding the 1st

respondent/accused No.3 not guilty for the offence punishable under

Section 138 of Negotiable Instruments Act.

2. In all three appeals, this Court heard Sri Nageshwar Rao

Pappu, learned senior counsel for the appellant, Sri YV Ravi Prasad,

learned senior counsel representing Sri YV Anil Kumar, learned

counsel for the 1st respondent and Mrs.S.Madhavi, learned Assistant

Public Prosecutor, representing the 2nd respondent/State.

3. Since the parties to all these criminal appeals are one and the

same, these three appeals are disposed of by this common judgment.

Page 2

4. As seen from the record, the 1st respondent/complaint lodged a

private complaint under Section 200 of Cr.P.C., requesting to take

appropriate action against the accused under Section 138 of NI Act

alleging that the accused No.1 company viz. M/s.You One Maharia

(JV), to which one Vinod Goel/A2 was the Managing Director and PM

Kumar/A3 the 1st respondent herein was the Executive Director, was

awarded a contract work for construction of a portion of National

Highway No.7 and in that process, by placing purchase order dated

03.03.2004, under 13 invoices from 04.03.2004 to 12.07.2004, it

took TMT rods amounting to Rs.55,14,363/- and in lieu of discharge

of the said debt, on behalf of accused No.1, accused Nos.2 and 3

issued cheque bearing Nos.704140 dated 08.04.2004 for

Rs.8,87,382/-, 704139 dated 12.08.2004 for Rs.7,50,000/- and

894767 dated 15.07.2004 for Rs.38,76,981/- and that on

presentation, the said cheques were returned for want of sufficient

funds in the account of A1 and in-spite of receipt of legal notice, the

accused failed either to repay the amounts covered under the

cheques or to give any reply.

5. The trial Court took cognizance for the offence punishable

under Section 138 of NI Act against the accused and after completing

all the procedural formalities, proceeded with trial. During the course

of trial, on behalf of the 1st respondent/complainant, its Director viz.

Page 3

Anil Kumar Kedia was examined as PW1 and its Manager viz.

Abraham as PW2 and got marked Exs.P1 to P9 in all the cases.

6. After completion of prosecution evidence, since accused No.2

did not appear before the trial Court, the case against the accused

Nos.1 and 2 was split-up and the present case was proceeded further

against the accused No.3/the 1st respondent herein.

7. The 1st respondent/A3 denied the case of the prosecution

mainly contending that he was not the Executive Director of A1 and

that he is only an employee and hence, he is not liable to be

prosecuted. Further, prosecution of A3, without A1 company, has no

validity. In support of his defence, in CC Nos.250 of 2010 and 251 of

2010, he got examined himself as DW1 and marked Ex.D1/GPA in

his favour.

8. The trial Court, found the 1st respondent/A3 guilty for the

offence punishable under Section 138 of NI Act holding that having

admitted his position in A1 company as Executive Director by virtue

of Ex.D1/GPA and his evidence as DW1 and also his signatures on

the subject cheques along with A2, A3 cannot disown his liability, the

subject cheques were issued in lieu of a legally enforceable debt, in-

spite of receipt of statutory notice A3 kept quiet, and splitting up of

case against A1 and A2 cannot take away the case completely against

them. Accordingly, convicted the 1st respondent/ A3 in CC Nos.587 Page 4

of 2009, 583 of 2009 and 585 of 2009 and sentenced him to suffer

simple imprisonment for one year and to pay a compensation of

Rs.1,00,000/- in each case to be paid to the complainant, in default

to undergo simple imprisonment for six months and directed to run

the sentences consecutively in all CC Nos.587 of 2009, 583 of 2009

and 585 of 2009.

9. Aggrieved by the said findings of the trial Court, the

appellant/A3 preferred Criminal Appeal Nos.252 of 2010, 250 of

2010 and 251 of 2010 before the learned III Additional Metropolitan

Sessions Judge at Hyderabad mainly contending that the trial Court

erroneously found him guilty against the facts of the case and the

settled proposition of law. The appellate Court, upon perusing the

impugned judgments of the trial Court as well as the material placed

before it in the form of oral and documentary evidence, holding that

without prosecuting A1/company, its representatives or employees

like A3, who acted as per the directions of the company, cannot be

prosecuted as laid down under Section 141 of NI Act, without

convicting A1 company and A2 its Director, convicting A3 is not

proper and that A3 did not receive statutory notice in his individual

capacity and that Ex.P6 postal acknowledgment contained signature

of a third person not that of A3, found the 1st respondent/A3 not

guilty and set aside the impugned judgments passed in CC Nos.587

of 2009, 583 of 2009 and 585 of 2009.

Page 5

10. Aggrieved by the findings of the appellate Court in Criminal

Appeal Nos.252 of 2010, 250 of 2010 and 251 of 2010, the present

criminal appeals are preferred by the appellant/complainant against

the acquittal of the 1st respondent/A3 mainly contending that the

learned District Judge of the appellate Court without appreciating

the evidence on record in a right perspective and upon

misinterpretation of settled proposition of law and also the fact that

case against A1 company and A2 is not concluded exonerating their

liability, has erroneously set aside the well considered findings of the

trail Court. Further, the findings of appellate Court regarding the

statutory notice are contrary to the settled proposition of law laid

down by the Hon'ble Apex Court in C.C.Alavi Haji Vs. Palapetti

Muhammed 1 wherein it was held that notice sent to the correct

address of the drawer of the cheque by registered post with

acknowledgement due is sufficient to hold that there was deemed

service and that in the case of non-receipt of statutory notice, the

accused should have to repay the amount covered under the cheque

within 15 days from the date of receipt of summons from the Court.

Stating thus, he prayed to allow these criminal appeals.

11. In support of his case, learned counsel for the appellant/

complainant in all these three matters relied upon the decisions

(2007) 6 SCC 555 Page 6

rendered in Aneeta Hada Vs. Godfather Travels and Tours Private

Limited 2 and C.C.Alavi Haji (stated supra).

12. Per contra, learned counsel for the 1st respondent/A3

vehemently opposed the present criminal appeals mainly contending

that the appellate Court, upon finding the erroneous findings of

conviction of A3 by the trial Court, had rightly acquitted the 1st

respondent/A3 holding that he cannot be made liable for the acts

committed by his employer and hence, there is no need or necessity

for this Court to interfere with the said well considered findings. It is

also contended that mere description in the cause title as Director is

not sufficient to make liable A3 and it must be proved beyond

reasonable doubt. Negotiation for obtaining financial assistance on

behalf of the Company by its Directors itself is not an ingredient for

the purpose of constituting an offence under Section 138 of the

Negotiable Instruments Act. Furthermore, a vicarious liability on the

part of a person must be pleaded and proved. Stating thus, he relied

upon the decisions rendered in Sabitha Ramamurthy Vs. RBS

Channabasavaradhya 3, SMS Pharmaceutical Ltd., Vs. Neeta

Bhalla 4, National Small Industries Corp. Ltd., Vs. Harmeet Singh

Paintal 5, K.Srikanth Singh Vs.North East Securities Ltd., 6, KPG

(2012) 5 Supreme Court Cases

2006-Crimes (SC)-4-67

2007-BC(SC)2-521

2010-BCR(Crl.)-1-798

2007-SCC-12-788 Page 7

Nair Vs. Jindal Menthol India Limited 7, Pramod Vs.CK

Velayudhan and others 8, Hira Lal S/o.Kesho Ram Vs. State of

Haryana 9, State of Madras Vs. GV Parekh 10, MD Thomas Vs. PS

Jaleel and another 11, Sharad Kumar Sanghi Vs. Sangita Rane 12

and SK Goel and others Vs.State of Jharkhand and another 13.

13. Learned Assistant Public prosecutor representing State/2nd

respondent contended that there is no need or necessity to interfere

with the well considered findings of the appellate Court and that

there is no apparent error on the findings made therein. Stating thus,

it is requested to dismiss the present criminal appeals.

14. This Court perused the judgments of both the trial Court as

well as the appellate Court and the material placed on record. It is

true that while deciding an appeal against acquittal, the Appellate

Court has to re-appreciate the evidence. After re-appreciating the

evidence, the first question that needs to be answered by this Court

is whether different views taken by the trial Court as well as

appellate Court are plausible views that could have been taken based

on evidence on record. Appellate Court can interfere with the order

of acquittal only if it is satisfied after re-appreciating the evidence

2001-SCC-10-218

2005 Crl.LJ 4572

1971 AIR (SC) 356

1971 Crl.LJ 418

(2009) 14 Supreme Court Cases 398

(2015) 12 Supreme Court Cases 781

2022 SCC OnLine Jhar 654 Page 8

that the only possible conclusion was that the guilt of the accused

had been established beyond reasonable doubt. The Appellate Court

cannot overturn order of acquittal only on the ground that another

view is possible. In other words, the judgment of acquittal must be

found to be perverse. Unless the Appellate Court records such a

finding, no interference can be made with the order of acquittal. The

order of acquittal further strengthens the presumption of innocence

of the accused.

15. The main ingredients to attract the offence under Section 138

of N.I. Act are that there must be existence of legally enforceable debt

due between the parties and the subject cheque must be given in

discharge of the said legally enforceable debt and upon its dishonour,

a notice must be given in writing demanding payment of the amount

of the cheque from the drawer within thirty days from the date of

receipt of information regarding return of the cheque unpaid and in

the event of failure of the drawer to pay the amount within fifteen

days of receipt of the notice, to lodge a complaint.

16. When the facts and circumstances of the case on hand are

scrutinized, the evidence on record, particularly the correspondence

between the parties would strengthen the presumption in favour of

the complainant with regard to existence of legally enforceable debt

and issuance of cheques in lieu of discharge of the same. It is also Page 9

established that upon dishonour of the said cheques for want of

sufficient funds, the complainant issued legal notices not only to the

accused but also to other three persons. However, except arraying

accused Nos.1 to 3 in the array of accused, the other three persons,

against whom legal notices were also issued, were not arrayed as

accused. In this regard it is pertinent to mention that A1 is a juristic

person and it was being represented by A2/its Managing Director

and A3/its Executive Director and they both have signed the subject

cheques. The other persons, who were not made as accused, are no

way connected with the payments of dues or they were the

signatories of the subject cheques.

17. When the contentions advanced on either side are meticulously

scrutinized, the main questions, to be decided herein are whether the

1st respondent/A3 is vicariously liable for the acts done by A1

company and whether there is any valid service of notice on A3.

18. Learned counsel for the appellant/complainant tried to draw

the attention of this Court to the law laid down under Section 141 of

NI Act contending that if the person committing an offence under

section 138 of the Act is a company/juristic person, every person

who, at the time the offence was committed, was in charge of, and

was responsible to the company for the conduct of the business of

the company, shall be deemed to be guilty of the offence and shall be Page 10

liable to be proceeded against. It is also contended that where any

offence under this Act has been committed by a company and it is

proved that the offence has been committed with the consent or

connivance of, or is attributable to, any negligence on the part of, any

director, manager, secretary or other officer of the company, such

director, manager, secretary or other officer shall also be deemed to

be guilty of that offence and shall be liable to be proceeded against

and punished accordingly.

19. Further, the vicarious liability is attracted when the ingredients

of sub-section 1 of Section 141 are satisfied. The Section provides

that every person, who at the time the offence was committed was in

charge of, and was responsible to the Company for the conduct of

business of the company, as well as the company, shall be deemed to

be guilty of the offence under Section 138 of NI Act. In the light of

sub-section 1 of Section 141, this Court perused the averments made

in the complaints of these three appeals. Admittedly, the 1st

respondent/A3 along with A2 is the signatory of the cheques, who

were then Managing Director and Executive Director respectively of

A1 company. During cross-examination A3 admitted that he, being

GPA Holder, had cheque issuing power at the time of issuance of

subject cheques. He also admitted that he was the Project Director of

work given to A1 company by National Highways Authority. A3 also Page 11

admitted in his evidence regarding the transaction between A1

company and the complainant and also issuance of subject cheques.

20. The contention of the 1st respondent/A3 is that he had not

been served with the statutory notice and hence, he missed the

opportunity of denying the contents therein. It clearly shows that the

appellant failed to serve the statutory notice against the 1st

respondent, which is mandatory in order to bring home the guilt of

the accused under Section 138 of NI Act.

21. Section 27 of General Clauses Act says that where any Central

Act or Regulation made after the commencement of this Act

authorises or requires any document to be served by post, whether

the expression serve or either of the expression give or sent or any

other expression is used then unless a different intention appears,

the services shall be deemed to be effected by properly addressing,

pre-paying and posting by registered post a letter containing the

document and unless the contrary is proved to have been effected at

the time at which the letter would be delivered in the ordinary course

of post.

22. It may be that the address is correct and even the addressee is

available but a wrong endorsement is manipulated by the addressee.

In such a case, if the facts are proved, it may amount to refusal of

the notice. If the complainant is able to prove that the drawer of the Page 12

cheque knew about the notice and deliberately evaded service and

got a false endorsement made only to defeat the process of law, the

Court shall presume service of notice. This, however, is a matter of

evidence and proof. Thus even in a case where the notice is returned

with the endorsement that the premises has always been found

locked or the addressee was not available at the time of postal

delivery, it will be opened to the complainant to prove at the trial by

evidence that the endorsement is not correct and that the addressee,

namely the drawer of the cheque, with knowledge of the notice had

deliberately avoided to receive notice.

23. In the cases like under Section 138 of NI Act, the complainant

has to prove the guilt of the accused beyond all reasonable doubt by

satisfying all the essential ingredients. In the case on hand, the 1st

respondent/accused is disputing receipt of notice stating that the

same was not received by him personally but it was received by a

third party and the same is very much evident from Ex.P6 postal

acknowledgment. The appellant did not make any efforts to prove

the relationship or acquaintance of the 1st respondent with the said

third party and the that the appellant failed to establish that the

contents of the legal notice are very much known to the accused and

after having knowledge of the same, he evaded either repayment of

the same or issuing suitable reply. In such circumstances, we cannot

throw away the possibility of lack of knowledge of contents of the Page 13

notice to the 1st respondent. Though the appellant relied upon the

decision of Hon'ble Supreme Court in CC Alavi Haji Vs. Palapetty

Muhammed and another (cited supra), lack of knowledge of 1st

respondent cannot be brushed aside.

24. In a similar circumstance, the Hon'ble Apex Court in a case

between M.D.Thomas Vs.P.S.Jaleel and another (Crl.A.No.711 of

2009, arising out of SLP (Crl.) No.7828 of 2007) held that proviso

to Section 138 of NI Act specifies the conditions which are required to

be satisfied before a person can be convicted for an offence

enumerated in the substantive part of the section. Clause (b) of the

proviso to Section 138 of NI Act casts on the payee or the holder in

due course of the cheque, as the case may be, a duty to make a

demand for payment of the said amount of money by giving a notice

in writing, to the drawer of the cheque, within thirty days of the

receipt of information by him from the bank regarding the return of

the cheque as unpaid. When the notice of demand was served upon

the third party but not on the accused, held that there is no escape

from the conclusion that complainant had not complied with the

requirement of giving notice in terms of Clause (b) of proviso

to Section 138 of the Act.

25. In view of the above factual matrix, it can be safely held that

the present criminal appeals deserve for dismissal since the appellant Page 14

failed to establish the knowledge of the accused/1st respondent with

regard to his request for repayment of the cheques amount and

resultantly, the findings of the appellate Court in setting aside the

judgment of the trial Court reversing the conviction of the accused

and acquitting him for the offence punishable under Section 138 of

NI Act cannot be found fault with and the same is sustained.

26. In the result, these criminal appeals are dismissed.

Miscellaneous applications if any pending shall stand dismissed.

______________________ E.V.VENUGOPAL, J Dated :21-02-2025 Abb