M.M. Finance Corporation v. Mohammed Anz and State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.HARIPRASAD FRIDAY, THE 7TH DAY OF MARCH 2014/16TH PHALGUNA, 1935 CRL.A.No. 1439 of 2003 ( ) --------------------------CC 1187/1998 of JUDICIAL FIRST CLASS MAGISTRATE COURT - II (MOBILE), KOTTAYAM, CHENGANACHERRY APPELLANT(S)/COMPLAINANT: ------------------------ M.M.FINANCE CORPORATION, REPRESENTED BY ITS MANAGING PARTNER, SHRI JACOB MATHEW, M.M.FINANCE CORPORATION, DOCTORS TOWER, CHANGANACHERRY. BY ADV. SRI.V.PHILIP MATHEWS RESPONDENT(S)/ACCUSED & STATE: ---------------------------- 1. MOHAMMED ANZ, PALAKULATHU PUTHEN VEEDU, PATHIRICKAL P.O., PATHANAPURAM. 2. STATE OF KERALA, REPRESENTED BY ITS PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. R2 BY PUBLIC PROSECUTOR SHRI K.K.RAJEEV R1 BY ADV. SRI.S.RAJEEV R1 BY ADV. SRI.K.K.DHEERENDRAKRISHNAN THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 21-02-2014, THE COURT ON 07-03-2014 DELIVERED THE FOLLOWING: ## **A.HARIPRASAD, J.** ## **-------------------------------------Crl.Appeal No.1439 of 2003** **-------------------------------------Dated this the 7[th] day of March, 2014.** ## **JUDGMENT** Appeal under Section 378(4) of the Code of Criminal Procedure (for short, “Cr.P.C.”) against the acquittal of the accused in a complaint case, C.C.No.1187 of 1998 on the file of Judicial First Class Magistrate Court - II (Mobile), Kottayam. 2. Short facts necessary for disposal of the case are as follows: The complaint was filed against the 1[st] respondent/accused by a partnership firm through its Managing Partner, represented by his power of attorney holder. The offence alleged against the accused is one under Section 138 of the Negotiable Instruments Act (“Act”, for short). Admittedly, the accused borrowed money from the appellant/complainant firm for purchasing an autorickshaw. There was a hire purchase agreement between the complainant and the accused. Complainant proceeds on the footing that the accused issued Ext.P6 cheque in discharge of an outstanding liability of `32,000/- on 12.03.1998. The cheque was presented for collection and it was dishonoured due to insufficiency of funds. Exts.P7 and P8 are the documents produced to establish this fact. Thereafter, Ext.P9 lawyer notice was sent. It was returned as unclaimed, 2 Crl.Appeal No.1439/2003 as evidenced by Ext.P11. Ext.P12 is the certified extract of the account ledger pertaining to the accused. Thereafter, the complaint was lodged. 3. At the trial, two witnesses were examined on the side of the complainant and Exts.P1 to P13 were marked. At the instance of the accused, Managing Partner of the firm was examined as DW1. Ext.D1 is the copy of loan account kept by the firm in respect of the accused. 4. Heard the learned counsel for the appellant/complainant and the 1[st] respondent/accused. 5. On going through the impugned judgment, it can be seen that the learned Magistrate discussed the evidence threadbare and came to a conclusion that there was no proper notice required under proviso (b) to Section 138 of the Act before institution of the complaint. Ext.P1 is a power of attorney dated 20.07.2002. Admittedly the complaint was instituted on 18.05.1998. Hence, it goes without saying that Ext.P1 power of attorney could not have legally authorised the agent to institute a complaint on 18.05.1998. So the complainant relied on Ext.P14 power of attorney. Learned counsel for the appellant contended that it was not seen marked in the appendix to the judgment. However, the records show that Ext.P14 power of attorney had been admitted in evidence and marked through PW1. Learned Magistrate noticed that Ext.P14 power of attorney, though it is purported to be dated 19.01.1998, speaks about Ext.P6 cheque dated 3 Crl.Appeal No.1439/2003 12.03.1998. In other words, a power of attorney executed in the month of January, 1998 authorised an agent to initiate action in connection with a cheque issued in the month of March, 1998. This glaring improbability was also considered by the court below. Reckoning the entire facts, court below found that at the time of issuing Ext.P9 lawyer notice, the agent was not authorised to make a demand by way of a notice under proviso (b) to Section 138 of the Act. Apart from that, the contention of the accused that Ext.P6 cheque was issued at the time of availing loan as security and in spite of paying off the entire liability, the firm misused the cheque by writing an amount was also considered by the learned trial Judge. 6. Learned counsel for the appellant contended that the approach of the court below was totally erroneous. According to him, finding of the trial court that the notice was legally improper is wrong. Proviso (b) to Section 138 of the Act reads as follows: _“(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the 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”_ 7. Learned counsel for the appellant contended that the 4 Crl.Appeal No.1439/2003 requirements of the statutory provision mentioned above are that the payee or holder in due course of the cheque should make a demand for payment covered by the dishonoured cheque by giving a notice in writing and such demand shall be made within thirteen days of the information by him from the bank regarding the return of the cheque as unpaid. It is, therefore, contended that whether the power of attorney holder was authorised to make a demand or not is immaterial. In support of this contention, learned counsel for the appellant placed reliance on the decision in **Central Bank of India and another v. Saxons Farms and others((1999) 8 SCC 221)** . Supreme Court in the above decision held that the provisions of Section 138 proviso (b) does not prescribe any form for the notice in writing. This proposition is unquestionable. However, the facts in **Central Bank of India** 's case (supra) and that in this case are totally different. The question here is whether the power of attorney holder, at whose instance the notice was issued, was authorised to make a demand on behalf of the payee or holder in due course. Another decision cited by the learned counsel for the appellant is **Sri Satyanarayana Gowda v. Rangappa (1996 Cri.L.J. 2264)** . Karnataka High Court on the facts of that particular case found that a notice issued under Section 138 proviso (b) of the Act through a lawyer and despatched without bearing his signature is not invalid ipso facto. This case can be easily distinguished on facts. Principle 5 Crl.Appeal No.1439/2003 in that decision cannot be simply lifted and applied in this case. 8. Learned counsel for the accused contended that proviso (b) to Section 138 of the Act would show that only the payee or the holder in due course can make a demand by giving a notice in writing. The contention of the complainant that the power of attorney holder was the Manager of the firm will also not help him, contended the learned counsel for the 1[st] respondent/accused. According to him, the authority said to have been given to a Manager to manage the affairs of the firm cannot include the exercise of a statutory right conferred on a payee or a holder in due course under proviso (b) to Section 138 of the Act. To support this contention, the decision in **Surindera Steel Rolling Mills v. Sh.Sanjiv Kumar and another (2009 KHC 575)** was pressed into service. That was a case wherein a criminal complaint under Section 138 of the Act was filed by a firm through its manager. It was revealed in evidence that the manager was not authorised to file the said complaint against the accused. In that context, it was held that he cannot represent either the payee or the holder in due course of the cheque as required under proviso (b) to Section 138 of the Act. In this case, facts would reveal that Ext.P14 power of attorney was executed before the issuance of Ext.P6 cheque. Further the appearance and tenor of Ext.P14 would show that the details of Ext.P6 cheque were later interpolated therein. Therefore, the trial court was absolutely right in 6 Crl.Appeal No.1439/2003 holding that Ext.P14 power of attorney cannot be taken into consideration to find that the power of attorney holder was duly authorised to make a demand as required under proviso (b) to Section 138 of the Act. 9. PW1 is the power of attorney holder of the Managing Partner of the complainant firm. When cross-examined, he admitted that he was authorised to act on behalf of the firm as agent with effect from 20.07.2002. He would further depose that in each case, separate power of attorney would be given by the firm. It is his definite version that Ext.P6 cheque was given by the accused on 12.03.1998. PW1 would depose that the cheque was not a blank or postdated cheque as contended by the accused. But, the contention of the accused that at the time of availing loan he had issued cheques by way of security is probabilised by the evidence of PWs 1 and 2. PW2 is the Secretary of a Service Co-operative Bank. Ext.P6 cheque was drawn on that bank. During cross-examination, PW2 admitted that cheques issued to the accused bearing numbers later than Ext.P6 were collected long before coming up of Ext.P6 for collection. Ext.P6 cheque though have a previous number, came up for collection later. This probabilises the case of the accused that the cheque handed over at the time of availing loan was used later. This has to be appreciated in the light of testimony of DW1 and Ext.D1 account statement maintained by the firm in respect of the accused. Managing Partner of the firm was 7 Crl.Appeal No.1439/2003 examined as DW1. According to his deposition, after availing loan of `40,000/-, the accused had repaid `35,200/-. Ext.P6 cheque was not credited to Ext.D1 account. It is pertinent to note that the accused has a further case that for the default of repayment of loan, the firm repossessed the vehicle and sold it out. However, this contention of the accused is denied by DW1. 10. Learned counsel for the appellant contended that even if we assume that Ext.P6 cheque was issued as a security for payment of loan, the complainant can maintain a complaint under Section 138 of the Act. To support this contention, decisions in **I.C.D.S. Ltd. v. Beena Shabeer (2002 (3) KLT 218(SC))** and **Mohanachandran Nair v. P.C.Cheriyan & another (2012 (4) KLJ 110)** were pressed into service. Although this proposition is indubitable, the facts of the case would show that the complainant has no case that Ext.P6 cheque was issued as a security for the loan. Further, if we accept the case of the accused that Ext.P6 cheque was issued at the time of availing loan, it was impossible for the firm to ascertain the sum that would be payable on 12.03.1998 anticipating default. Considering the entire facts and circumstances, I find that the court below was perfectly correct in finding that the agent was not authorised to make a demand and lodge a complaint on behalf of the payee or the holder in due course. Further, there is reconcilability in 8 Crl.Appeal No.1439/2003 respect of Exts.P1 and P14 powers of attorney. Apart from that, case of the accused that Ext.P6 cheque was issued at the time of availing loan as a security and not for discharge of any liability is probabilised by the evidence on record. Further there is no case for the complainant that it was authorised by the accused to fill up a cheque duly signed by the accused. Hence, I find that the trial court is legally right in dismissing the complaint and acquitting the accused. I find no reason to interfere with the finding of the trial court. In the result, the appeal is dismissed. All pending interlocutory applications will stand dismissed. ## **A. HARIPRASAD, JUDGE.** **cks**