Media Exemplers Advertising and Marketing Consultants v. The Madras Advertising Co. Ltd., M.K. Narayanankutty, and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** **TUESDAY, THE 17TH DAY OF OCTOBER 2017/25TH ASWINA, 1939** **Crl.Rev.Pet.No. 1329 of 2003 (A) --------------------------------CRA.759/2001 of ADDITIONAL SESSIONS COURT (ADHOC), ERNAKULAM CC.72/1997 of ADDL.CHIEF JUDICIAL MAGISTRATE (E&O) COURT,ERNAKULAM** **REVISION PETITIONERS/(APPELLANTS/ACCUSED): ---------------------------------------** - **1 MEDIA EXEMPLERS, ADVERTISING AND MARKETING CONSULTANTS, DORAI SWAMY IYER ROAD, ERNAKULAM, REP. BY MANAGING PARTNER MR.JACOB VARGHESE.** - **2 JACOB VARGHESE, MANAGING PARTNER, MEDIA EXEMPLERS, ADVERTISING AND MARKETING CONSULTANTS, DORAI SWAMY IYER ROAD, ERNAKULAM, REP. BY JACOB VARGHESE.** **BY ADVS.SRI.V.J.MATHEW SRI.P.P.RAJESH** **RESPONDENTS(RESPONDENTS/COMPLAINANT & STATE: --------------------------------------------** - **1 THE MADRAS ADVERTISING CO. LTD., ANNA SALAI MADRAS-2 AND BRANCH OFFICE 41/416, HARI NIVAS, RAJAJI ROAD, ERNAKULAM, REP. BY ITS FINANCE MANAGER SAMPATH KUMAR.** - **2 M.K. NARAYANANKUTTY, PARTNER, MEDIA EXEMPLERS, ADVERTISING AND MARKETING CONSULTANTS, DORAI SWAMY IYER ROAD, ERNAKULAM.** - **3 STATE OF KERALA, REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. R4 BY PUBLIC PROSECUTOR SRI.SAIGI JACOB PALATTY** **THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON 17-10-2017, ALONG WITH CRL.RP.1330/2003, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **EL** ## **ALEXANDER THOMAS, J.** ---------------------------------------------Crl.R.P.Nos.1329 & 1330 of 2003 ----------------------------------------------Dated this the 17[th] day of October, 2017 ## _**O R D E R**_ The two petitioners in these two Criminal Revision Petitions are accused Nos.1 and 2 out of the three accused arrayed in C.C.No.71 of 1997 and C.C.No.72 of 1997 on the file of the Additional Chief Judicial Magistrate's Court (Economic Offences), Ernakulam. The said matters arose out of two complaints filed by the first respondent/complainant alleging offence punishable under Section 138 of the Negotiable Instruments Act. Both the complaints were jointly tried. 2. The specific case of the complainant is to the effect that for a total liability of Rs.3,60,111/- owed by the accused persons to the complainant Company, the accused had issued Exhibit P3 cheque dated 20.10.1994 for Rs.1,00,000/- and Exhibit P4 cheque dated 20.12.1994 for Rs.1,00,000/- drawn from the account of accused No.1 partnership firm, executed and signed by accused No.2 (Managing Partner of A1 firm) and accused No.3 (partner of A1 firm) and the cheques when presented for collection resulted in dishonour. Accused Nos.2 and 3 were sought to be prosecuted in view of the corporate vicarious liability as envisaged in Section 141 of the Negotiable Instruments Act. After Crl.R.P.Nos.1329 & 1330/03 : **:2::** the joint trial, the trial court, as per the common judgment dated 6.10.2001 in C.C.No.71 of 97 has convicted all the three accused for the offence punishable under Section 138 of the Negotiable Instruments Act and has sentenced accused Nos.2 and 3 to undergo simple imprisonment for three months each and to pay fine of Rs.55,000/- each with a default sentence clause of one month simple imprisonment for each of the said two accused. Out of the said fine amount, an amount of Rs.53,000/- each was directed to be disbursed as compensation to the complainant under Section 357(1) of the Cr.P.C. Since accused No.1 is a partnership firm, no separate sentence was awarded to A1 firm. As per the said common judgment rendered on 6.10.2001, the trial court in C.C.No.72 of 1997 has also convicted all the three accused for the abovesaid offence and has sentenced A2 and A3 to suffer simple imprisonment for three months each and to pay Rs.55,000/- each with a default sentence clause of simple imprisonment for one month for each of the said two accused and from the said fine amount so realised, an amount of Rs.53,000/- was directed to be disbursed as compensation to the complainant in terms of Section 357(1) of the Cr.P.C. No separate sentence was awarded to A1 partnership firm in C.C.No.72 of 1997 as well. 3. Accused Nos.1 and 2 had jointly preferred two Criminal Appeals for challenging the judgments in these two complaints and it Crl.R.P.Nos.1329 & 1330/03 : **:3::** also appears that accused No.3 had also preferred the separate Criminal Appeals for challenging the common judgment of conviction to the extent it affected him. Thus four Criminal Appeals were so filed before the appellate court concerned [Court of the Additional Sessions Judge, (Adhoc-I), Ernakulam] as Criminal Appeal No.758, 759, 807 and 808 of 2001. The appellate court, as per the common judgment rendered on 11.4.2003, has elaborately re-appraised the entire evidence and has dismissed all the said four Criminal Appeals filed by the respective accused, confirming the conviction and sentence of the trial court imposed in this case. 4. Criminal Revision Petition No.1329 of 2003 has been preferred by accused Nos.1 and 2 to challenge the abovesaid impugned judgments of the appellate court as well as the trial court relatable to C.C.No.72 of 1997. Whereas accused Nos.1 and 2 have preferred the instant Criminal Revision Petition No.1330 of 2003 to challenge the abovesaid impugned judgments of the appellate court and the trial court in relation to the matter in C.C.No.71 of 1997. These two Criminal Revision Petitions were filed as early as on 9.6.2003. This Court had admitted these two revision petitions on 12.6.2003 and had passed interim orders dated 12.6.2003 directing execution of bond and solvent sureties and further directed that the petitioners should deposit the entire fine amount within a period of one month. The trial court : **:4::** Crl.R.P.Nos.1329 & 1330/03 concerned [Court of the Additional Chief Judicial Magistrate (Economic Offences), Ernakulam], has now intimated the Registry that an amount of Rs.55,000/- has been remitted by the petitioners in Crl.R.P.No.1330 of 2003 before the trial court on 11.8.2003 and that they have been granted bail. So also, the said trial court has also separately informed the Registry that in Crl.R.P.No.1329 of 2003, the petitioners have deposited Rs.55,000/- before the trial court on 11.8.2003 and bond has also been executed and bail granted to them. Further the Registry has also noted separately in both these cases that notice initially sent with hearing date 12.8.2003 through the Circle Inspector of Police, Ernakulam South, for respondents 1 and 2 have not been returned and that service is not so far complete on R1 and R2, even though P.P. has taken notice for R3/State. Even till date, the petitioners have not bothered to take proper steps to ensure due service of notice on R1 and R2 in these two revision petitions. The first respondent herein is the complainant and the second respondent is accused No.3. The said conduct of the revision petitioners is nothing short of grave abuse of the process of court. On the short ground that the petitioners have not cured the defect of non service of notice on R1 and R2, this Court could have dismissed these revision petitions for non prosecution, as the revision petitioners have not bothered to take proper steps for curing the defect in these revision petitions which have been filed as early as on : **:5::** Crl.R.P.Nos.1329 & 1330/03 9.6.2003. However, this Court is proceeding to consider the merits of the matter in these cases. 5. During the joint trial, PWs 1 and 2 have been examined on behalf of the complainant Company and they have marked Exhibits P1 to P21 documents. The defence has adduced evidence of DW1 and DW2 and has marked Exhibits D1 to D5. 6. The evidence on behalf of the complainant is to the effect that the complainant is a Company doing business in advertising and that the first accused is a partnership firm and that accused Nos.2 and 3 are its partners. The first accused partnership firm had entered into business deal with the complainant Company for publishing advertisements on their behalf and the business was run on a credit basis. Accordingly, the complainant Company had published advertisements of M/s.GPP Narayaneeyam Trust and Ezhuthachan's Electronics (P) Ltd. as per the request of the accused persons and in that transactions, a sum of Rs.3,06,974/- was due from the accused. In discharge of the said liability, the accused had issued Exhibit P3 cheque dated 20.10.1994 for Rs.1,00,000/- and Exhibit P4 cheque dated 20.12.1994 for Rs.1,00,000/- drawn from the account of accused No.1 partnership firm and payable in favour of the complainant Company. But the cheques when presented for encashment resulted in dishonour. The details regarding the statutory formalities initiated by the complainant Crl.R.P.Nos.1329 & 1330/03 : **:6::** need not be reiterated here. 7. A contention has been raised by accused No.2 (Second revision petitioner in these petitions) contending that Annexure-A3 would establish that A2 was inducted as a partner of the partnership firm on 24.8.1994 and that he had retired from the partnership on 24.2.1995 as per Annexure-A4, etc, and that therefore, accused No.2 cannot be imputed with the corporate vicarious liability as envisaged in Section 141 of the Negotiable Instruments Act. Even going by the case of the said accused, that he was inducted as a partner on 24.8.1994 and retired on 24.2.1995. In the instant two cases, Exhibit P3 cheque for Rs.1,00,000/is bearing date 20.10.1994 and Exhibit P4 cheque for Rs.1,00,000/- is bearing date 20.12.1994. It is also not in dispute that those two cheques have been dishonoured as per Exhibit-P5 on 31.10.1994 and Exhibit-P6 on 22.12.1994. Therefore, even going by the contention set up by the petitioner, he continued to be in the partnership firm at the time of the issuance and dishonour of the two cheques in question. Therefore, the said contention raised by the petitioner is only to be overruled and it is accordingly so ordered. 8. It is brought to the notice of this Court that accused No.3 in these two complaints had separately filed Criminal Revision Petition No.2202 of 2003 (pertaining to C.C.No.72 of 1997) and Criminal Revision Petition No.2205 of 2003 (pertaining to C.C.No.71 of 1997) : **:7::** Crl.R.P.Nos.1329 & 1330/03 before this Court to challenge the very same impugned judgments of the courts below. The first respondent in those revision petitions is the complainant Company and the second respondent therein is the State of Kerala. This Court as per a detailed common order rendered on 7.10.2015 in Criminal Revision Petition Nos.2202 and 2205 of 2015 has come to the considered conclusion that the impugned judgments of the courts below do not suffer from any illegality, impropriety or perversity and that the conviction is not liable to be interfered with. The sentence has been suitably modified. It will be profitable to refer to paragraphs 6 to 12 of the said order, which read as follows : _“6. The learned counsel mainly contended that since the memo to stop payment towards Exts.P3 and P4 was given to the Bank at the time when fund was available in the Bank, at the discretion of the Manager, the offence under Sec. 138 will not be attracted. Secondly, it is contended that the complainant/company has drawn and directly issued bills to the customers of the accused, namely, M/s. G.P.P. Narayaneeyam Trust and Ezhuthachan Electronics (P) Ltd., instead of sending the same to the 1[st] accused/company for payment. Unless the bills are not issued in favour of the 1st accused/company, the 1[st] accused/company is not liable to pay the amounts due under Exts.P3 and P4 cheques._ _7. The question to be considered in these revision petitions is, whether there is any illegality or impropriety in any of the findings under which the conviction has been entered against the accused and sentenced them thereunder._ _8. The scope of interference under the revisional jurisdiction is very limited and confined to examination of legality, propriety and correctness of the findings entered by the courts below only. There is no scope for re-appreciation of the evidence, unless it is found that the findings are perverse and unacceptable and even if an alternative view is possible, the revisional court is not inclined to substitute its own views in lieu_ : **:8::** Crl.R.P.Nos.1329 & 1330/03 _of the concurrent findings arrived at by the inferior courts._ _9. With the above yardstick, I have examined the legality, propriety and correctness of the findings of the courts below in the impugned judgments under challenge._ _10. Admittedly, Exts.P3 and P4 cheques were dishonoured owing to the instruction 'not to honour the cheques issued by the accused to the bank'. According to the accused, the cheques were issued as security only and the original bills were drawn and issued to the customers by name M/s.G.P.P. Narayaneeyam Trust and Ezhuthachan Electronics Pvt. Ltd. Therefore, they have no liability to honour the cheques, which were issued as security only. As regards the above reason for issuing the stop memo, it is seen that neither in the statement under Sec.313 of the Cr.P.C. nor in Ext.P13 reply notice sent by the accused, the accused have raised this contention denying the liability to honour the cheques for the aforesaid reason. In Ext.P13 reply notice, the contention raised by the accused was that the cheques were issued as security for the payment, and the business transactions were conducted on credit basis. In short, the cheques were not issued with an intent to make payment, when those cheques were drawn. That apart, going by Ext.P18 letter sent by the accused to the complainant, it is stated that in spite of the best efforts, M/s.G.P.P.Narayaneeyam Trust and Ezhuthachan Electronics Pvt. Ltd. have not paid up the amount so far to them. Thus, during the course of trial, the accused had not raised a contention that they are not liable to pay the amount due under the cheques as the bills were drawn and issued directly to M/s.G.P.P.Narayaneeyam and Ezhuthachan Electronics Pvt. Ltd. Needless to say, the said contention does not find a place in the evidence on record and the same is put forward without any bona fides in these revision petitions._ _11. As regards the contention that the cheques were issued as security, the courts below have rightly rejected the contention relying on the decision of the Apex Court in ICDS Ltd. v. Beena Shabeer and another_ _[2006 SCC 426 = 2002 (3) KLT 218 (SC)]. As rightly observed by the appellate court, in that case, the Apex Court held that the liability under Section 138 of the N.I. Act cannot be avoided even if the cheques stand returned by the banker as unpaid and the cheques issued as security for the payment in cash also would fall under the mischief within the purview of Section 138 of the N.I. Act, in case, the cheque is_ : **:9::** Crl.R.P.Nos.1329 & 1330/03 _dishonoured and returned for want of sufficient funds. Therefore, I find that even if the defence taken by the accused during the course of trial is taken at its face value and admitted, that contention does not absolve the accused from the liability under Section 138 of the N.I. Act._ _12. Thirdly, going by the depositions of D.W.1 and P.W.2, the then Bank Manager and former Bank Manager, they admitted that at the time when the cheques were presented for encashment, the credit facility available to the accused stood beyond its limit and according to the agreement between the bank and the accused the honouring of the cheque was within the discretion of the Manager only. Ext.P21 cash credit agreement of the accused shows that on the date of presentation of the cheques the account of the accused stood beyond the cash limit and the accused had no right to withdraw any amount as of right. So, the accused has no right to claim for honouring the cheques as of right. In my view, unless sufficient amount is made readily available in the account of the drawer to withdraw or to pay by order, as of right, the drawer is liable to be prosecuted and punished for the offence under Section 138 of the N.I. Act. Put it differently, it was obligatory upon the drawer of the cheque, before issuing the same, to make sure that there is sufficient funds in his account to honour the cheque and the encashment of a cheque on pay order shall not be a matter left with the discretion of the Manager, when the drawer issues that cheque. Therefore, the evidence given by D.W.1 and P.W.2 to the effect that they could have honoured the cheques in exercise of their discretionary power goes without any value. There is no illegality or impropriety in any of the findings whereby the conviction was entered and the sentence was imposed on the revision petitioner. I do not find any perversity in the appreciation of evidence and I confirm the impugned judgments under challenge.”_ This Court is in total agreement with the said considered reasonings arrived at in the common order of this Court in Crl.R.P.Nos.2202 and 2205 of 2003 dated 7.10.2015. This Court as per the common order dated 7.10.2015 has found that the substantive sentence of simple imprisonment for three months imposed on A3 in these two cases is : **:10::** Crl.R.P.Nos.1329 & 1330/03 ## rather excessive and would warrant interference. This Court has also observed in paragraphs 14 and 15 of the said order in those revisions, which read as follows : _“14. The Supreme Court, in the decision in Kaushalya Devi Massand v. Roopkishore [AIR 2011 SC 2566], held that the offence under Section 138 of the N.I. Act is almost in the nature of civil wrong which has been given criminal overtone, and imposition of fine payable as compensation is sufficient to meet the ends of justice. Further, in Vijayan v. Baby [2011(4) KLT 355], Supreme Court held that the direction to pay the compensation by way of restitution in regard to the loss on account of the dishonour of the cheque should be practical and realistic. So, in a prosecution under Section 138 of the N.I. Act, the compensatory aspect of remedy should be given much priority over punitive aspect._ _15. In the light of the above decisions, I find that the sentence imposed on the revision petitioner is not in conformity with the proposition laid down by the Apex Court in the above decisions. The substantive sentence of simple imprisonment for three months will stand reduced and modified to simple imprisonment for one day till rising of the court and the revision petitioner is given three months time to pay the fine amount. Consequently, in supersession of the sentence imposed by the trial court and confirmed by the appellate court, the revision petitioner will stand sentenced as follows:_ _i. The revision petitioner in each case shall undergo simple imprisonment for one day till rising of the court._ _ii. In each case, he shall pay a fine of Rs.1,00,000/- (Rupees One lakh only) within a period of three months from today and the same shall be given to the complainant as compensation under Section 357(1)(b) of the Cr.P.C. If the complainant is not available, to receive the compensation, as ordered above, the petitioner is at liberty to deposit the said amount in the trial court_ _within the specified time and in that event the complainant is allowed to realise the amount from the court on application._ _iii. He shall appear before the Trial Court to suffer the substantive sentence of simple imprisonment as ordered above on or before 08.01.2016 with sufficient proof to show payment of_ Crl.R.P.Nos.1329 & 1330/03 : **:11::** _fine._ _iv. If the accused pays the compensation together, the substantive sentence of simple imprisonment for one day will stand run concurrently._ _v. In default, he shall undergo simple imprisonment for a period of two months in each case._ _vi. If the revision petitioner had deposited any amount in the trial court, in compliance with the direction of this Court or appellate court, that amount shall be given credit to and the balance alone need be paid as compensation. In that event, the 1[st] respondent/complainant is allowed to realise such deposit, if any.”_ 9. Thus it can be seen that as against the substantive sentence of three months simple imprisonment imposed on A3 in C.C.Nos.71 and 72 of 1997, it has been ordered that A3 need to suffer only simple imprisonment for one day till the rising of the court. Further it can be seen that the fine amount of Rs.55,000/- imposed on A3 by the trial court has been enhanced to Rs.1,00,000/- by this Court in each of these two cases. The default sentence clause imposed on A3 is simple imprisonment for two months in each of these two cases. Further it has been also ordered that in case A3 pays the compensation amount as directed above, then the substantive sentence of simple imprisonment for one day imposed in these two cases will run concurrently. This Court is also inclined to adopt the same course of action as the one in the abovesaid criminal revision petitions filed by accused No.3. 10. The two dishonoured cheques for Rs.1,00,000/- each has been issued as early as on 20.10.1994 and 20.12.1994. More than 23 long years have elapsed after the issuance of those two cheques. Crl.R.P.Nos.1329 & 1330/03 : **:12::** Therefore, any reduction of the substantive sentence should be done in such a manner so that adequate justice is also meted out to the complainant, who has been patiently waiting for long 23 years. The complainant should get at least twice the cheque amount in these two cases. Accused No.3 has been ordered to pay compensation of Rs.1,00,000/- each in respect of these two cases. Therefore, the interest of justice warrants that the second petitioner herein (accused No.2) should also pay fine/compensation amount of Rs.1,00,000/- each in these two cases. 11. Accordingly, the following orders and directions are passed : In C.C.No.71 of 1997 (relatable to Crl.R.P.No.1330 of 2003), the following orders and directions are passed . - _(i) The impugned conviction imposed on the two petitioners herein (A1 and A2) for the offence punishable under Section 138 of the Negotiable Instruments Act in C.C.No.71 of 1997 will stand confirmed._ - _(ii) The substantive sentence of three months simple imprisonment imposed on accused No.2 will stand modified and reduced to imprisonment till the rising of the court. The fine amount of Rs.55,000/- imposed on A2 will stand enhanced to Rs.1,00,000/-._ - _(iii) The said amount in full shall be disbursed as compensation to the complainant in terms of Section 357(1)(b) of the Cr.P.C. The amount already deposited by the petitioners in relation to this case before the trial court shall be immediately released to the complainant after issuing him notice of intimation in that regard. The said amount so deposited shall be deducted from the total fine amount of Rs.1,00,000/- payable by A2 and he need to pay only the balance fine amount in that regard. The second revision petitioner/accused No.2 is given time till 17.2.2018, to pay the balance amount out of the total fine amount of Rs.1,00,000/-. On default on the part of A2 to pay the_ Crl.R.P.Nos.1329 & 1330/03 : **:13::** _said amount, he will have to suffer simple imprisonment for two months._ - _(iv) Accused No.2 shall personally appear before the trial court at 11 A.M. on any day on or before 17.2.2018 to receive the sentence of imprisonment till the rising of the court and to pay the balance amount out of the total payable fine amount of Rs.1,00,000/-._ - _(v) Until 17.2.2018, all further coercive steps for execution of the impugned sentence in this case will stand deferred._ The following directions and orders are passed in C.C.No.72 of ## 1997 (relatable to Crl.R.P.No.1329 of 2003). - _(i) The impugned conviction imposed on the two petitioners herein (A1 and A2) for the offence punishable under Section 138 of the Negotiable Instruments Act in C.C.No.72 of 1997 will stand confirmed._ - _(ii) The substantive sentence of three months simple imprisonment imposed on accused No.2 will stand modified and reduced to imprisonment till the rising of the court. The fine amount of Rs.55,000/- imposed on A2 will stand enhanced to Rs.1,00,000/-._ - _(iii) The said amount in full shall be disbursed as compensation to the complainant in terms of Section 357(1)(b) of the Cr.P.C. The amount already deposited by the petitioners in relation to this case before the trial court shall be immediately released to the complainant after issuing him notice of intimation in that regard. The said amount so deposited shall be deducted from the total fine amount of Rs.1,00,000/- payable by A2 and he need to pay only the balance fine amount in that regard. The second revision petitioner/accused No.2 is given time till 17.2.2018, to pay the balance amount out of the total fine amount of Rs.1,00,000/-. On default on the part of A2 to pay the said amount, he will have to suffer simple imprisonment for two months._ - _(iv) Accused No.2 shall personally appear before the trial court at 11 A.M. on any day on or before 17.2.2018 to receive the sentence of imprisonment till the rising of the court and to pay the balance amount out of the total payable fine amount of Rs.1,00,000/-._ - _(v) Until 17.2.2018, all further coercive steps for execution of the impugned sentence in this case will stand deferred._ However, it is also ordered that in case the second petitioner (A2) pays the entire balance amounts out of the fine amount as mentioned Crl.R.P.Nos.1329 & 1330/03 : **:14::** herein above, in respect of both these complaints, then the substantive sentence of imprisonment till the rising of the court will run concurrently. The Registry will forward copies of this order to the petitioners, first respondent/complainant and the trial court. With these observations and directions, the Criminal Revision Petitions will stand finally disposed of. **ALEXANDER THOMAS JUDGE** csl