K. M. Gopalakrishnan Nair v. M/S Little Flower Tex & State of Kerala

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** **MONDAY, THE 19TH DAY OF MARCH 2018 / 28TH PHALGUNA, 1939** **CRL.A.No. 285 of 2016** **CRA 78/2014 of II ADDL.DISTRICT COURT,ERNAKULAM Crl.L.P.78/2016 of HIGH COURT OF KERALA, DATED 9.3.2016 ST.1705/2008 of JUDICIAL FIRST CLASS MAGISTRATE COURT-VII, ERNAKULAM** ## **APPELLANT/IST RESPONDENT/COMPLAINANT :** **K.M.GOPALAKRISHNAN NAIR, AGED 65 YEARS, S/O.LATE A.P.MADHAVAN PILLAI, AISWARYA, PALAKKARA, KADUTHURUTHY P.O., KOTTAYAM DISTRICT - 686 604.** **BY ADVS.SRI.V.G.ARUN SRI.T.R.HARIKUMAR SRI.ARJUN RAGHAVAN SRI.ADITHYA RAJEEV** ## **RESPONDENTS/APPELLANT/ACCUSED & STATE:** **1. M/S. LITTLE FLOWER TEX, REPRESENTED BY LAWRENCE C.ANTONY, AGED 49 YEARS, ELTHURUTH P.O., THRISSUR DISTRICT - 680 611.** **2. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, KOCHI - 682 031.** **R2 BY PUBLIC PROSECUTOR SRI.JESTIN MATHEW** **THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 19-03-2018, ALONG WITH CRL.APPEAL.286/2016 & CRL.APPEAL.287/2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **EL** ## **6.4.2018** **“C.R”** ## ALEXANDER THOMAS, J. ----------------------------- Crl.A.Nos.285, 286 & 287 Of 2016 --------------------------------- Dated this the 19th day of March, 2018. **==> picture [96 x 14] intentionally omitted <==** These three Criminal Appeals arise out of a common judgment dated 16.12.2015 rendered by the Sessions Court, Ernakulam in Crl.A.Nos.78, 79 & 80 of 2014, whereby the accused in the 3 complaints concerned has been acquitted by the said lower appellate court of the offence punishable under Sec.138 of the Negotiable Instruments Act. The 1st respondent has been arrayed as accused for offence punishable under Sec.138 of the N.I.Act in S.T.Nos.1705, 1807 & 1808 of 2008 on the file of the Judicial First Class Magistrate CourtVII, Ernakulam, instituted on the basis of said three complaints filed by the appellant herein. 2. Ext.P-1 dishonoured cheque dated 8.10.2007 is for Rs.2 lakhs, which is the subject matter of S.T.No.1705/2008 and Crl.A.No.78/2014. Ext.P-7 cheque for Rs.3 lakhs dated 18.1.2008 is the subject matter of S.T.No.1807/2008 and Crl.A.No.79/2014. Ext.P-17 dishonoured cheque for Rs.2 lakhs dated 14.1.2008 is the cheque ::2:: Crl.A.Nos.285, 286 & 287 Of 2016 involved in S.T.No.1808/2008 and Crl.A.No.80/2014. All the three complaints were jointly tried and the parties are the same. 3. The trial court as per the impugned common judgment dated 31.1.2014 had convicted the accused in all the three complaints. In S.T.No.1705/2008, the accused has been sentenced to undergo simple imprisonment for one month and to pay compensation of Rs.2,20,000/under Sec.357(3) of the Cr.P.C., and in default thereof to undergo simple imprisonment for a further period of one month. In S.T.No.1807/2008, the accused was sentenced to undergo simple imprisonment for one month and to pay compensation of Rs.3,30,000/under Sec.357(3) of the Cr.P.C and in default thereof to undergo simple imprisonment for a further period of one month. Whereas the accused was sentenced to undergo simple imprisonment for one month in S.T.No.1808/2008 and to pay compensation of Rs.2,20,000/- to the complainant under Sec.357(3) of the Cr.P.C., and in default thereof to undergo simple imprisonment for a further period of one month. Aggrieved by the said judgment of conviction and sentence the accused had preferred the above said three Criminal Appeals before the appellate Sessions Court. The appellate court as per the impugned common judgment dated 16.12.2015 has reversed the conviction and ::3:: Crl.A.Nos.285, 286 & 287 Of 2016 has acquitted the accused in all the 3 complaints on the ground that the cheques in question have been issued by a proprietary concern and that the sole proprietary concern has not been made as an accused in the complaints and therefore it warrants acquittal of the accused. 4. Aggrieved by the said judgment of acquittal rendered by the lower appellate court, the complainant had preferred petitions under Sec.378(4) of the Cr.P.C seeking leave of this Court to institute Criminal Appeals to impugn the said judgment of acquittal. This Court has granted leave in all those petitions and thus the Criminal Appeals have been instituted for impugning the said judgment of acquittal. 5. Heard Sri.T.R.Harikumar, learned counsel appearing for the appellant/complainant and Sri.Jestin Mathew, learned Prosecutor appearing for R-2 State. Though notice has been duly served on R-1 (accused) in all the 3 appeals, the said party has not entered appearance. 6. It is not in dispute that the 3 dishonoured cheques in question have been issued by “M/s. Little Flower Tex” through its proprietor. The lower appellate court has found that in such a situation, the individual proprietor of the said sole proprietary concern should have been arrayed as accused in the complaints and since all the 3 ::4:: Crl.A.Nos.285, 286 & 287 Of 2016 complaints have arrayed only “M/s. Little Flower Tex” represented by its proprietor “Sri.Lawrence C.Antony, aged 48 years, Elthuruth P.O., Thrissur District-680 611”, the complaints are not maintainable as the proprietor himself should have been clearly arrayed as accused in the complaints. 7. In the judgment in Shankar Finance and Investments v. State of Andhra Pradesh & ors ., reported in (2008) 8 SCC 536, the Apex Court dealt with a case wherein payee of the dishonoured cheque was M/s. Shankar Finance and Investments and the complaint was filed by “M/s. Shankar Finance and Investments, a proprietary concern of Sri Atmakuri Sankara Rao, represented by its power of attorney holder Sri.Thamada Satyanarayana”. A contention was raised by the accused that where the proprietary concern carries on business through a power of attorney holder, whether the power of attorney holder can lodge a complaint for offence under Sec.138 of the N.I.Act ? It was held therein by the Apex Court that the power of attorney holder is an agent of the grantor and when the grantor authorises the attorney holder to initiate legal proceedings and the attorney holder accordingly initiates legal proceedings, he does so, as the agent of the grantor and the initiation is by the grantor represented by his attorney holder, and not by the attorney holder in his personal capacity. Therefore, it was held that ::5:: Crl.A.Nos.285, 286 & 287 Of 2016 where payee is a proprietary concern, the complaint can be filed: (i) by the proprietor of the proprietary concern, describing himself as the sole proprietor of the “payee”; (ii) the proprietary concern, describing itself as a sole proprietary concern represented by its sole proprietor; and (iii) the proprietor or the proprietary concern represented by the attorney holder under a power of attorney executed by the sole proprietor. In this context, it is relevant to note the definition of “payee” in Sec.7 of the N.I.Act, which reads as follows: ' Sec.7: “Payee” .- The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the “payee”.' Further Sec.142 of the N.I.Act (which deals with cognizance of offences) provides in clause (a) of sub-sec(1) thereof that notwithstanding anything contained in the Code of Criminal Procedure, no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque. Therefore, it was held that in a case like the one in Shankar Finance and Investments' case (supra), a complaint could be validly instituted by describing the complainant/payee by any one of the following ways:- ::6:: Crl.A.Nos.285, 286 & 287 Of 2016 “Atmakuri Sankara Rao, sole proprietor of M/s. Shankar Finance & Investments” ## or “M/s. Shankar Finance & Investments, a sole proprietary concern represented by its proprietor Atmakuri Sankara Rao” or “ Atmakuri Sankara Rao, sole proprietor of M/s. Shankar Finance & Investments, represented by his attorney holder Thamada Satyanarayana” ## or “ M/s. Shankar Finance & Investments, a sole proprietary concern of Atmakuri Sankara Rao, represented by his attorney holder Thamada Satyanarayana.” ## 8. Further in the case in Milind Shripad Chandurkar v. Kalim M.Khan , reported in (2011) 4 SCC 275, the Apex Court dealt with a case where the payee of the cheque was “Vijaya Automobiles”, a proprietary concern, and the complainant had projected a case in his complaint that he is the proprietor of the payee proprietary concern of M/s. Vijaya Automobiles. It was held in para 16 of the said judgment that the appellant-complainant could not produce any documents to show as a matter of fact that he was the proprietor of M/s.Vijaya Automobiles inspite of the fact that the said issue was raised by the accused at every stage. Though the complainant had mentioned the name of the banker as his witness, the said banker has not been examined and proved by the complainant/payee proprietary concern. It was held by the Apex Court in para 9 of Milind Shripad Chandurkar's case (supra), that both the trial court and the lower appellate court have found that sole ::7:: Crl.A.Nos.285, 286 & 287 Of 2016 proprietary concern is not an independent legal entity and his identity remains inseparable from proprietor but in the facts of the case it was found that the complainant had not produced any documents to show that he was the proprietor of the proprietary concern. It was held in para 22 of the said judgment that in a case like the one involved in Milind Shripad Chandurkar's case (supra), a proprietor can sue in his own name and not in the trading name though others can sue him in the trading name and so far as Sec.142 is concerned, a complaint shall be maintainable in the name of the “payee” proprietary concern itself or in the name of the proprietor of the said concern. On facts, it was held that it was a case where there would be no dearth of material which could have been produced by the appellant to show that in fact he was sole proprietor of the said firm and he has failed to adduce any material evidence in that regard nor made any attempt to adduce additional evidence at the appellate stage in spite of the accused raising the said issue from the initiation of the proceedings. It was held that the accused is only to be acquitted as the complainant could not prove the basic fact that he was in fact the proprietor of the payee proprietary concern. It is relevant to note that the abovesaid 2 decisions of the Apex Court in Shankar Finance and Investments v. State of Andhra Pradesh & ors ., ::8:: Crl.A.Nos.285, 286 & 287 Of 2016 reported in (2008) 8 SCC 536 and Milind Shripad Chandurkar v. Kalim M.Khan , reported in (2011) 4 SCC 275, are cases where it was the complainant/payee, which happened to be a proprietary concern. 9. In the case in N.Vaidyanathan Deepika Milk Marketing v. Dodla Dairy ltd., reported in CDJ 1999 MHC 614, the Madras High Court dealt with a case where the drawer of the cheque M/s.Deepika Milk Marketing represented by its proprietrix Mrs.Revathi Vaidyanathan, who was arrayed as accused in a complaint for offence under Sec.138 of the N.I. Act. It was held in para 19 thereof that proprietorship concern by itself is not legal entity apart from its proprietor and that the proprietary concern and the proprietrix are one and the same person and to put it differently, the prosecution against the proprietrix representing proprietorship concern or proprietorship concern represented by proprietrix are one and the same as both these things sink, sail and merge with only one entity. It was also observed in para 21 thereof that both proprietorship and proprietrix are one and the same and it can be put in the cause title of the complaint, while prosecuting ::9:: Crl.A.Nos.285, 286 & 287 Of 2016 the drawer, either as proprietorship concern represented by Proprietrix or the Proprietrix representing the proprietorship concern, as both the things convey the same meaning. 10. This Court is of the view that the legal principles laid down by the Apex Court in the aforesaid judgments are in cases wherein the proprietary concern is the payee/complainant, which would apply with equal vigor where the proprietary concern is the drawer of the cheque or the accused. In other words, the proprietor representing the proprietorship concern or proprietorship concern represented by proprietor has same substance and essence and same entity even in a case where the drawer of the cheque is a proprietary concern, which is not having any corporate legal existence, as conceived in Sec.141 of the N.I.Act. So the accused in this case could be arrayed as shown in Shankar Finance and Investments' case (supra), dealt with by the Apex Court. 11. The Bombay High Court in Nateshaq Securities v. Vinayak Waman Mokashi , reported in 2008 KHC 5465, has dealt with a case ::10:: Crl.A.Nos.285, 286 & 287 Of 2016 where the drawer of a cheque was “Natesha Securities” represented through its proprietor Shirish Suresh Welling, etc. The complainant had arrayed the said proprietor concerned in the said manner as arrayed in the complaint. It was held by the Bombay High Court in paras 26 and 28 of the said judgment in Nateshaq Securities' case (supra), as follows: “26. It is further to be noticed that the N. I. Act permits issuance of cheque by the proprietorship concern under the signature of its proprietor. The cheque can be issued in favour of proprietor of the concern without showing the name of the proprietor. The bank account can be opened in the name of the proprietorship concern to be operated by its proprietor. In the commercial world, the establishment and the running of business in the trade name by the proprietor is not only permissible but well recognised. If the object of the amendment to the provisions of N. I. Act, which relates to incorporation of Chapter XVII is to effect expeditious recovery of the cheque through criminal prosecution and if the complaint filed against the trade name through its proprietor is held to be not maintainable as canvassed by Mr. Gupte, then, in my view, the very purpose of the amendment to the N. I. Act would be defeated. One fails to understand, if the suit can be filed against the proprietorship concern through its proprietor then why not the complaint under S.138 of the N. I. Act. xxx xxx xxx 28. Alternatively, considered from another angle, had the complainant described Mr. Shirish Welling alone as accused, then, according to Mr. Gupte, such a complaint would be very much maintainable. If this is so, without accepting the submission made, at the most, it could be said to be a case of misdescription of the accused but nonetheless the real accused was knowing full well that he is being prosecuted for his own act and that he has defended his case with full understanding that he is an accused in the case. The applicant accused has not suffered any prejudice because of misdiscription, if any. At least, no prejudice suffered by the accused is brought to the notice of the Court. In this view of the matter, objection raised by Mr. Gupte leading to the tenability of the complaint stands overruled. 12. In the instant case, it is not in dispute that the drawer of the dishonoured three cheques is “M/s. Little Flower Tex” represented by its proprietor Sri.Lawrence C.Antony. In the complaint the accused has ::11:: Crl.A.Nos.285, 286 & 287 Of 2016 been described in the same manner as shown in the dishonoured cheque. It is not in dispute that the drawer of the cheque is only a proprietary concern which has no legal existence apart from the proprietor. In the evidence during cros-examination of PW-1 complainant, there was no objection raised by the accused that the cheque has been drawn from the account of the said proprietor. The only objection raised during cross-examination of PW-1 was to the effect that the accused did not have any direct transaction with the complainant and the transaction of the accused was with a third party. Not even a remote suggestion has been put by the accused either in cross-examination or at any other stage or even at the time of Sec.313 Cr.P.C questioning process that there has been improper arrayal of the accused in the complaint. Therefore, in these circumstances, the accused-drawer of the cheque could have been arrayed in any one of the manners as stated hereinabove and merely because the accused has not described Sri.Lawrence C.Antony as proprietor of the concern, will not lead to acquittal of the accused on that ground alone. The said reasonings and findings in the impugned appellate judgment are perverse and unreasonable and are liable to be set aside on that ground alone. ::12:: Crl.A.Nos.285, 286 & 287 Of 2016 13. Coming to the facts, the trial court discarded the evidence adduced by the accused and found that there is relationship between the complainant and accused which has led to the issuance of the cheque and regarding the various prior steps taken as required in the statute for setting the criminal complaint in motion in these cases. The lower appellate court has not considered any of those issues. On a consideration of the judgment of the trial court it can be seen that the findings and reasonings on the basis of which the impugned conviction has been rendered, cannot be branded as perverse or illegal. The vague suggestion of the defence that there was no transaction between the accused and the complainant has not ever been remotely established by the accused. So the conviction imposed by the trial court is legally correct. 14. But having regard to the facts and circumstances of these cases, this Court is of the view that the substantive sentence could have been modified by the court below. The findings and reasonings of the trial court are upheld. However, the substantive sentence imposed by the trial court will stand modified and reduced as simple imprisonment till the rising of the court and that the direction to pay the compensation amount and the default sentence clause will stand confirmed. ::13:: Crl.A.Nos.285, 286 & 287 Of 2016 15. In the result, the following directions are issued in S.T.No.1705/2008:- The accused is sentenced to undergo simple imprisonment till the rising of the court and to pay Rs.2.20 lakhs as compensation under Sec.357(3) of the Cr.P.C., and in default thereof the accused shall undergo simple imprisonment for a period of one month. 16. The following directions are issued in S.T.No.1807/2008:- The accused is sentenced to undergo simple imprisonment till the rising of the court and to pay Rs.3.30 lakhs as compensation under Sec.357(3) of the Cr.P.C., and in default thereof the accused shall undergo simple imprisonment for a period of one month. 17. The following directions are issued in S.T.No.1808/2008:- The accused is sentenced to undergo simple imprisonment till the rising of the court and to pay Rs.2.20 lakhs as compensation under Sec.357(3) of the Cr.P.C., and in default thereof the accused shall undergo simple imprisonment for a period of one month. 18. The accused/R-1 is given time till 3.11.2018 to pay the said total compensation amounts covered in these complaints by depositing the same before the trial court and on deposit of the same, the trial court will take steps to release the amount to the appellant/complainant. ::14:: Crl.A.Nos.285, 286 & 287 Of 2016 If the accused pays the compensation amount within the time limit as stipulated above, then the accused should undergo imprisonment till the rising of the court, which will run concurrently as envisaged in Sec.427 of the Cr.P.C. If on the other hand, the accused does not pay the compensation amount within the above said time limit, then the substantive sentence will run separately. R-1 accused shall personally appear before the trial court at 11:00 a.m. on any day on or before 3.11.2018 to receive the said sentence of imprisonment till the rising of the court as stated hereinabove. If the petitioner does not pay the compensation amount in any of the 3 cases, then he will have to undergo the default sentence as directed hereinabove. Until 3.11.2018, all further coercive steps taken against the petitioner in each of these 3 cases will stand deferred. The Registry will forward a copy of this judgment to the trial court concerned as well as to R-1 (accused). With these observations and direction, the above Criminal Appeals will stand allowed as indicated hereinabove. Sd/- ALEXANDER THOMAS, Judge. Bkn/- // True copy // P.A to Judge.