City Software and Share Services (P) Ltd. v. Foreword Advertising & Marketing Private Limited and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN** **MONDAY, THE 22ND DAY OF JUNE 2020 / 1ST ASHADHA, 1942** ## **CRL.A.No.1831 OF 2005** **AGAINST THE JUDGMENT IN CC 27/2000 DATED 09-06-2005 OF ADDITIONAL CHIEF JUDICIAL MAGISTRATE (E&O),ERNAKULAM** ## **APPELLANT:** **CITY SOFTWARE AND SHARE SERVICES (P) LTD., 39/3586, M.G.ROAD, COCHIN-682 018, REPRESENTED BY ITS DIRECTOR P.P. ZIBI JOSE.** **BY ADVS. SRI.JOSEPH MARKOSE (SR.) SRI.MATHEWS K.UTHUPPACHAN** ## **RESPONDENTS:** - **1 FOREWORD ADVERTISING&MARKETING PRIVATE LIMITED, DIVISION NO.XXVIII, DOOR NO.455, CLUB LANE, KADAVANTHRA, KOCHI-20.** - **2 K.G. RAGHAVAN, MANAGING DIRECTOR FOREWORD ADVERTISING & MARKETING, PRIVATE LIMITED, RESIDING AT 34/502, CHAITANYA, PADIVATTOM, KOCHI-24.** - **3 MURALI MOHAN M.S, DIRECTOR, FOREWORD ADVIERTISING & MARKETING PRIVATE LIMITED, RESIDING AT MANNAPASSERIL, NANTHIAATTUKUNNAM, N. PARUR.** - **4 R. RAMACHANDRAN NAIR, DIRECTOR, FOREWORD ADVERTISING & MARKETING PRIVATE LIMITED, RESIDING AT KOCHUKARI HOUSE, MUTTATHIPARAMBU, CHERTHALA.** - **5 LYREX A.J, DIRECTOR, FOREWORD ADVERTISING & MARKETING PRIVATE LIMITED, RESIDING AT LYREX VILLA, ATTATHARA, KUNDANNUR, TRICHUR.** CRL.A.No.1831 OF 2005 2 - **6 GEORGE JOHN KOOLAS, DIRECTOR, FOREWORD ADVERTISING & MARKETING, PRIVATE LIMITED, RESIDING AT PUTHUPARAMBIL, EDAYAPPARA JN., KANGAZHA, KOTTAYAM.** - **7 THOMAS GEORGE, DIRECTOR, FOREWORD ADVERTISING & MARKETING PRIVATE LIMITED, RESIDING AT 81 APPASWAMY STREET, HARINGATTU ROAD, CHETPUT, MADRAS-31.** - **8 STATE OF KERALA, REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.** **R3-6 BY ADV. SRI.ALAN PAPALI R3-6 BY ADV. SRI.GILBERT GEORGE CORREYA R8 BY SR. PUBLIC PROSECUTOR SRI.B.JAYASURYA** **THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 22.06.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** CRL.A.No.1831 OF 2005 3 ## **JUDGMENT** ## **Dated this the 22nd day of June 2020** The above appeal is filed by the complainant in C.C.No.27/2000 on the file of the Additional Chief Judicial Magistrate, Economic Offences, Ernakulam. Respondent Nos.1 to 7 herein are the accused in the above case. (Hereinafter the parties are mentioned in accordance with their rank before the trial court). 2. This appeal came up along with Crl.A No.1832/2005 and Crl.A No.1474/2005. In all these appeals, the accused are the same. The prosecution was initiated by three separate companies under Section 138 of the Negotiable Instruments Act. All the appeals were admitted, and this Court issued notice to the respondents. But service was not complete to respondents Nos.1 and 2. When this appeal came up on 17.3.2020, the following order was passed by this Court: “The learned counsel for the appellant seeks time to take steps. Issue notice by speed post to respondents 1 and 2 in the correct address within two weeks from today. Post along with Crl.A.Nos.1474/05 & 1832/05 after summer vacation.” CRL.A.No.1831 OF 2005 4 3. Thereafter the case came up on 5.6.2020. But no steps were taken by the appellant to serve notice. Hence this Court passed the following order on 5.6.2020. “In all these appeals, this Court passed an order on 17.3.2020 by directing the appellants to take steps to the respondents to whom notice is not served. No steps are taken by the appellants. Therefore, these appeals will be posted for disposal on 17.6.2020 in the defect list.” 4. This is an appeal filed in 2005. Even now service of notice is not complete to respondent Nos.1 and 2. Now about 15 years elapsed after filing this Criminal Appeal. The learned counsel for the appellant again requested for time to serve notice to respondent Nos.1 and 2. This Court directed the appellant to argue the appeal, and if there is any merit, this Court observed that time could be granted to serve notice to respondents 1 and 2. Accordingly, the learned counsel for the appellant addressed his arguments. 5. The complainant's case in brief is as follows: The complainant is a company engaged in the business of software development ad rendering of consultancy services and represented by its Director and authorised representative Zibi Jose. The first accused is the company engaged in the business of advertising, second accused is its Managing Director, and accused 3 to 5 are all time Directors and accused Nos.6 and 7 are the directors who are CRL.A.No.1831 OF 2005 5 also in charge of the company and responsible for the affairs of it. In September, 1996 the first accused company through its directors approached the complainant for financial assistance towards working capital, with an undertaking to repay interest for the loan @24% per annum. In pursuance of the understanding, an amount of Rs.70,000/- was paid to the accused on 19.12.1996. The complainant demanded repayment of the sum of Rs.70,000/- on 24.12.1997. The accused to discharge the amount demanded, issued a cheque dated 29.12.1997 for Rs.70,000/- drawn on the Bank of India, M.G.Road, Ernakulam duly signed by the Director V.N.Sreekanth and the second accused K.G Raghavan who were the authorised signatories. The complainant presented the cheque through SBI Shanmugham Road Branch, Ernakulam and it was returned dishonoured on account of payment stopped by the drawer and 'account closed' vide memo dated 22.1.1998. The complainant thereupon issued a notice dated 2.2.1993 demanding payment which was accepted by the accused. But no payment was made. The accused thereby committed the offence punishable under Section 138 of the Negotiable Instruments Act. 6. To substantiate the case the prosecution examined PW1 and marked Exts.P1 to P13. The defence also adduced evidence. 7. On going through the evidence and the documents, the CRL.A.No.1831 OF 2005 6 lower court found that the accused has not committed the offence and hence the accused were acquitted. Aggrieved by the acquittal order, this Criminal Appeal is filed. 8. The learned counsel for the complainant submitted that the order of acquittal passed by the trial court is per se illegal. The learned counsel submitted that the accused were acquitted mainly for the reason that the accused issued stop payment instruction to the bank before the date on which the alleged cheque is issued. Therefore the counsel relied on the judgment of the Hon'ble Supreme Court in **Rangappa v. Sri Mohan (2010 KHC 4325)** and **Goaplast (P) Ltd. v. Chico Ursula D'Souza and another [(2003) 3 SCC 232].** The counsel also relied on the Division Bench judgment of this Court in **Vathsan v. Japanari [2003(3) KLT 972]** . The counsel submitted that in the light of the above judgments, even if a cheque is issued against an account that has been closed prior to the date of drawal of the cheque, it comes within the fold of Section 138 of the Negotiable Instruments Act. The counsel also submitted that the learned Judge wrongly relied Ext.P10. The counsel vehemently argued that the other finding of the trial court are also unsustainable. 9. The learned counsel for accused Nos.3 to 7 submitted that the trial court considered all the aspects and acquitted the CRL.A.No.1831 OF 2005 7 accused. There is nothing to interfere with the acquittal order passed by the trial court. 10. After hearing both sides, the point for consideration is whether the accused committed the offence under Section 138 of the Negotiable Instruments Act. 11. It is true that, simply because the instruction is given to the bank for stop payment before the issuance of the cheque, there cannot be an acquittal of an accused holding that no offence under Section 138 of the Negotiable Instruments Act is made out, in the light of the judgment of the Apex Court in **Goaplast (P) Ltd.** (supra) and **Rangappa** (supra). The point was considered by the Division Bench of this Court also in **Vathsan'** s case (supra). 12. The learned Magistrate acquitted the accused not because of that reason alone. The learned Magistrate found that one witness examined on the side of the complainant is Zibi Jose. He is the power of attorney holder of the complainant company. He frankly admitted that he was the power of attorney holder of the accused company. According to him, the accused company started functioning with the help of him. At this juncture, the case of the accused is to be considered. According to the accused company, while their company was functioning in the office complex of the complainant company, the 2[nd] accused had kept CRL.A.No.1831 OF 2005 8 signed blank cheques therein, and without his knowledge and consent, PW1 obtained the same and got signed and filled up the same and presented before the bank falsely to institute the present case. Considering this defence, the learned Magistrate observed like this: “13. PW1 during his cross examination has frankly admitted that the accused company started functioning at Sreekandom by using the address of his Info Tech company wherein he was the Director. Ext.D3 is showing the address particulars of the registered office of the accused company. PW1 admitted that the address shown in Ext.D3 is that of the address of his company. Ext.D4 is one copy of the Memorandum of Association of the accused company, wherein he has made necessary corrections and insertions and also put his signature. Ext.D5 is the copy of Articles of Association wherein also he has put his signature. He went to the extent of saying that he was the person who presented Ext.D5. Ext.D6 is the letter sent by Neelgiri Tea Estate in the name of PW1. The demand draft mentioned in the Ext.D6 was Meant for the accused company. Ext.D7 is the copy of letter sent by Choice Trading Corporation regarding the printing charges meant for the accused company which is also seen in the name of PW1. Ext.D8 is a copy of letter of advice addressed to Raghavan Managing Director of the accused company. In Ext.D8 he had expressed his anxious and dissatisfaction about the way of functioning of the accused company. If he was not involved in the affairs of the company and not holding any post he would not have issued such a letter to the accused company. He admitted that a case has been instituted against himself and others for having stolen cheque leaves from the accused company which is CC.1016/98 before the Judl. I Class Magistrate Court-I, Ernakulam. From this it could be seen that he had got every access of the day to day affairs of the accused company and the signed cheques were obtained in one way or other and misused and instituted the present complaint also cannot be ruled out. 14. The learned counsel appearing for the complainant submitted that as far as the cheque was issued by the drawer of the cheque, the presumption U/S.139 of the NI Act would follow and thereby even if stoppage of CRL.A.No.1831 OF 2005 9 payment was issued will not preclude action U/S.138 of the Act by the drawee or the holder of the cheque in due course. In this context it is pertinent to note that in the present case the stop payment was issued prior to the issuance of the cheque which is evidenced from Ext.P3 and D10. As far as the stop payment was issued even before the issuance of cheque and the cheque was presented for collection after a considerable lapse of 23 days and the other attended circumstance disclosed the fact that PW1 had got ample access in the day to day affairs of the company and in that context the contention of the defence that the cheque was obtained in collusion with Sreekanth who is one of the signatories of Ext.P3 and misused the same cannot be discarded. Thus the presumption available in favour of the complainant U/S.139 of the Act was successfully discharged by the accused and on that ground they cannot be held liable. The point is answered accordingly.” 13. In the light of the above findings of facts by the trial court based on the evidence adduced by the complainant, I see no reason to interfere with the acquittal order of the trial court in an appeal against acquittal. The stop payment memo issued by the accused must be considered in the light of the above factual situation. It is a finding of facts. Of course, as rightly pointed out by the learned counsel for the appellant, there is some factual error committed by the trial court while considering the balance sheet of the accused company with the alleged amount due to the complainant. But in the light of the specific findings of fact by the trial court, which is extracted above, I think there is nothing to interfere in an appeal against acquittal. Hence this Criminal Appeal is dismissed, confirming the CRL.A.No.1831 OF 2005 10 judgment dated 9.6.2005 in C.C.No.27/2000 on the file of the Additional Chief Judicial Magistrate, Economic Offices, Ernakulam. **Sd/-** **P.V.KUNHIKRISHNAN** **JUDGE** ab