M/s. Euro ASEAN Trade Links & M.A.K.Azad v. State of Kerala and M/s. Choice Transport & Logistics

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.ANIL KUMAR** **TUESDAY, THE 10TH DAY OF NOVEMBER 2020/19TH KARTHIKA, 1942** ## **Crl.Rev.Pet.No.2528 OF 2010** ## **AGAINST THE JUDGMENT IN CRL.APPEAL No.128/2008 DATED 31-05-2010 OF III ADDITIONAL SESSIONS COURT, ERNAKULAM** **CC 636/2003 DATED 23-01-2008 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-I, ERNAKULAM** ## **REVISION PETITIONERS/APPELLANTS/ACCUSED:** |**1**|**M/s.EURO ASEAN TRADE LINKS,**| |---|---| ||**HIG, AVENUE ROAD, PANAMPILLY NAGAR, KOCHI-36,**| ||**REP.BY ITS MANAGING PARTNER, M.A.K.AZAD.**| |**2**|**M.A.K.AZAD,**| ||**MANAGING PARTNER,**| ||**M/s.EURO ASEAN TRADE LINKS,**| ||**HIG, AVENUE ROAD, PANAMPILLY NAGAR, KOCHI-36.**| ||**BY ADVS.**| ||**SRI.VARGHESE C.KURIAKOSE**| ||**SRI.ADEEP ANWAR**| |**RESPONDENTS/RESPONDENTS/STATE & COMPLAINANT**<br>**:**|| |**1**|**STATE OF KERALA, REP.BY**| ||**PUBLIC PROSECUTOR, HIGH COURT OF KERALA,**| ||**ERNAKULAM.**| |**2**|**M/s.CHOICE TRANSPORT & LOGISTICS,**| ||**(A DIVISION OF CHOICE AND TRADING CORPORATION**| ||**LTD.), NIHAT HOUSE, BRISTOW ROAD, W/ISLAND,**| ||**KOCHI-3, REP.BY ITS POWER OF ATTORNEY HOLDER**| ||**SARI.S.NAIR.**| ||**R2 BY ADV. SRI.BIJISH B.TOM**| ||**R2 BY ADV. SMT.A.KARTHIKA KAIMAL**| ||**R2 BY ADV. SRI.V.J.MATHEW**| ||**R2 BY ADV. SRI.VIPIN P.VARGHESE**| ||**R1 BY SENIOR PUBLIC PROSECUTOR SRI.M.S.BREEZ**| |**THIS**|**CRIMINAL REVISION PETITION HAVING BEEN FINALLY**| |**HEARD ON 05-11-2020, THE COURT ON 10-11-2020 PASSED THE**|| |**FOLLOWING:**|| Crl.R.P.No.2528 of 2010 **==> picture [22 x 8] intentionally omitted <==** ## **ORDER** Dated this the 10[th] day of November, 2020 This revision petition is directed against the judgment dated 31.5.2010 passed in Crl.Appeal No.128/2008 on the file of the third Additional Sessions Court, Ernakulam which was preferred by the revision petitioners against the judgment of conviction and sentence dated 23.1.2008 in C.C.No.636/2003 on the file of the Judicial First Class Magistrate Court-I, Ernakulam. 2. The revision petitioners were the accused in C.C.No.636/2003 on the file of the Judicial First Class Magistrate Court-I, Ernakulam consequent to a private complaint instituted by the 2[nd] respondent (complainant) against the revision petitioners/accused 1 and 2 alleging commission of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the N.I.Act'). Parties are hereinafter Crl.R.P.No.2528 of 2010 **==> picture [22 x 8] intentionally omitted <==** referred to as 'the complainant' and 'accused' according to their status in the trial court unless it is otherwise stated. 3. The case of the complainant in brief is as hereunder:- The complainant, M/s.Choice Transport & Logistics, a division of Choice Trading Corporation Ltd. is doing business in the field of shipping and various other fields and is a steamer agent of M/s.Hyundai Merchant Marine Company Ltd. The 1[st] accused M/s.Euro Asean Trade Links is a partnership firm and the 2[nd] accused is the Managing Partner of the said partnership firm. The 2[nd] accused who is the Managing Partner of the 1[st] accused had approached the complainant to ship their cargo through the complainant and accordingly the complainant shipped their cargo which contained 2500 cartons of frozen ribbon fish in a container No.HDMU 5460715 through the complainant per vessel 'MV Eagle Sky' Voy- Crl.R.P.No.2528 of 2010 **==> picture [22 x 8] intentionally omitted <==** 384 from Cochin to Pusan as per bill of lading No.HDMU II BU 1003072 dated 31.10.2002. The freight and other charges for the shipment due from the accused to the complainant on receipt of the above shipment comes to Rs.2,52,009/-. The complainant raised a freight memo against the accused dated 01.11.2002 for Rs.2,52,009/-. For discharging the aforesaid liability, the 2[nd] accused on behalf of the 1[st] accused issued two cheques to the complainant. The cheques were dated 01.11.2002 for Rs.2,50,686/- and Rs.1,323/- respectively. When the complainant presented the above cheques, those cheques were returned with the endorsement 'exceeds arrangement'. Thereafter the complainant issued legal notice calling upon the accused to pay the amount covered under the cheques. The accused received and acknowledged the notice on 19.4.2003. However, no reply was issued. Crl.R.P.No.2528 of 2010 **==> picture [22 x 8] intentionally omitted <==** 4. On service of summons, the accused appeared before the trial court. Particulars of the offence were read over and explained to the accused to which the accused pleaded not guilty. Thereafter the Legal Officer of the complainant company was examined as PW1 and marked Exts.P1 to P9 series. After PW1 was examined, the accused was questioned under Section 313(1)(b) of the Cr.P.C. for the purpose of enabling him to explain any circumstances appearing in the evidence against him. However no defence evidence was adduced. On appreciation of the evidence, the learned Magistrate held that the execution of the cheques was admitted by the accused and that it was proved by the complainant that the cheques were dishonoured for the reason 'exceeds arrangement'. Hence the learned Magistrate concluded that the cheques were issued by the accused for the discharge of debt or liability. Crl.R.P.No.2528 of 2010 ..6.. 5. Heard Sri.C.Varghese Kuriakose, the learned counsel for the revision petitioners, Sri.M.S.Breez, learned Senior Public Prosecutor for the 1[st] respondent-State and Sri.V.J.Mathew, the learned counsel for the 2[nd] respondent. 6. Sri.C.Varghese Kuriakose, the learned counsel appearing for and on behalf of the revision petitioners contended that the evidence let in in the above case, even if given face value and taken to be correct, do not constitute an offence alleged against the accused in terms of Section 138 read with Section 141 of the N.I.Act. It was further submitted that, in any event, the bill of lading as well as the averments in the complaint clearly spell out that the complainant is actually the steamer agent of M/s.Hyundai Merchant Marine Company Ltd. and the amounts are claimed as due on the account of the shipping done through the said steamer company. Crl.R.P.No.2528 of 2010 **==> picture [22 x 8] intentionally omitted <==** According to the learned counsel for the revision petitioners, Ext.P3 bill of lading very clearly indicates the same. If that be so, it was contended that the amount due was that of M/s.Hyundai Merchant Marine Company Ltd. for whom the so called complainant stood as an agent. Relying on Section 230 of the Indian Contract Act and various decisions of the Apex Court and the High Courts, the learned counsel contended that an agent cannot personally enforce contract on behalf of principal except in the circumstances mentioned in the said Section. It was further contended that there was no special contract between the principal and agent in this case and no legally enforceable debt was due to the complainant who was only an agent. 7. The learned counsel appearing on behalf of the 2[nd] respondent on the other hand would submit that the accused issued the cheques in favour of the complainant Crl.R.P.No.2528 of 2010 ..8.. pursuant to a transaction between them and the cheques on presentation were dishonoured for the reason 'exceeds arrangement'. It is contended that the privity of contract is between the complainant and the accused and technical contention under Section 230 of the Contract Act is taken to avoid payment due to the complainant. 8. In order to determine the question whether offence punishable under Section 138 of the N.I.Act is made out against the accused, it is necessary to examine the Penal provision of Section 138 of the N.I.Act and the presumptions to be raised as envisaged by the provisions of Sections 118 and 139 of the N.I.Act. Section 118 of the N.I.Act provides certain presumptions to be raised laying down some special rules of evidence relating to presumptions. The presumption, therefore, is a matter of principle to infuse credibility to negotiable instruments including cheques and to encourage and promote the use Crl.R.P.No.2528 of 2010 **==> picture [22 x 8] intentionally omitted <==** of negotiable instruments in financial transactions. Section 118 of the N.I.Act provides presumptions to be raised until the contrary is proved, i) as to consideration, ii) as to date of instrument, iii) as to time of acceptance iv) as to time of transfer v) as to order of indorsements, vi) as to appropriate stamp and vii) as to holder being a holder in due course. That apart, Section 139 of the N.I.Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 of the N.I.Act for the discharge, in whole or in part, of any debt or other liability. Applying the definition of the word 'proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the N.I.Act, it becomes evident that in a trial under Section 138 of the N.I.Act, a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed Crl.R.P.No.2528 of 2010 ..10.. for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. Needless to say that, as and when the complainant discharges the burden to prove that the cheque was executed by the accused, the rules of presumptions under Sections 118 and 139 of the N.I.Act are very much available to the complainant and the burden shifts on the accused. However, this presumption is rebuttable. Under the circumstances, it is the duty of the accused before the court by adducing evidence to show that the cheque was not supported by consideration and that there was no debt or liability to be discharged as alleged. It is necessary on the part of the accused to set up a probable defence for getting the burden of proof shifted to the complainant. Once such rebuttable evidence is adduced and accepted by the court, the burden shifts back to the complainant. Crl.R.P.No.2528 of 2010 **==> picture [28 x 8] intentionally omitted <==** 9. PW1 the Legal Officer of the complainant company was examined for and on behalf of the company by virtue of Ext.P1 authorization adduced evidence to show that the complainant company is doing business in the field of shipping and various other fields and is the steamer agent of M/s.Hyundai Merchant Marine Company Ltd. He would further testify that the 1[st] accused M/s.Euro Asean Trade Links is a partnership firm and the 2[nd] accused is the Managing Partner of the 1[st] accused firm. According to him, the 2[nd] accused in his capacity as the Managing Partner of the 1[st] accused approached the complainant to ship their cargo and accordingly shipped their cargo to Pusan on 31.10.2002 by Ext.P3 bill of lading dated 31.10.2002. The freight and other charges for the shipment due from the 2[nd] accused to the complainant on account of the above shipment comes to Rs.2,52,009/-. The complainant had raised Ext.P4 freight memo dated Crl.R.P.No.2528 of 2010 **==> picture [28 x 8] intentionally omitted <==** 01.11.2002 for the aforesaid sum. According to him, towards the freight and other charges, the 1[st] accused issued Ext.P5 series cheques for Rs.2,50,686/- and Rs.1,323/- respectively drawn on the South Indian Bank Ltd, Industrial Finance Branch, Ernakulam. When the aforesaid cheques were presented they were returned with the endorsement 'exceeds arrangement' by way of Ext.P7 series. Thereafter, the complainant issued Ext.P8 demand notice on 16.4.2003 which was acknowledged by the accused on 19.4.2003. The accused did not send any reply. 10. The learned counsel for the revision petitioners/accused contended that the complainant is only an agent for the principal and an agent cannot personally enforce a contract under Section 230 of the Contract Act. It is contended that the transaction covered is not enforceable through court by the complainant. In Crl.R.P.No.2528 of 2010 ..13.. support of his contention, the learned counsel for the revision petitioners/accused placed the following decisions for consideration:- 1. **Marine Container Services South Pvt. Ltd. v. Go Go Garments** [1998 KHC 843]. 2. **Virender Khullar v. American Consolidation Services Ltd. and Others** [2016 KHC 6552]. 3. **Cochin Frozen Food Exports (P) Ltd. (M/s.) v. M/s.Vanchinad Agencies and Others** [2016(4) KHC 233]. 4. **Inter Asia Impex, Chennai v. Freightscan Global Logistics Pvt. Ltd., Chennai** [2017 KHC 4617]. 5. **South Bihar Power Distribution Co.Ltd. v. Bhagalpur Electricity Distribution Co. Pvt. Ltd.** [2019 KHC 4167]. Crl.R.P.No.2528 of 2010 ..14.. 11. Apart from the 1[st] accused partnership firm, the Managing Partner of the 1[st] accused was also made as an accused in the case. Admittedly, they issued the cheques. The cheques on presentation were dishonoured for the reason 'exceeds arrangement'. A person would be vicariously liable for commission of offence on the part of the partnership firm only in the event the conditions precedent laid down under Section 138 read with Section 141 of the N.I.Act are satisfied. The above principle has been dealt with in detail by the Supreme Court in **M/s.Kusum Ingots & Alloys Ltd. v. M/s.Pennar Peterson Securities Ltd. and others [(2000)2 SCC 745]** as follows:- _“_ _**10.** On a reading of the provisions of Section 138 of the NI Act it is clear that the ingredients which are to be satisfied for making out a case under the provision are:_ - _(i) a person must have drawn a cheque_ - _on an account maintained by him in a bank for_ Crl.R.P.No.2528 of 2010 ..15.. _payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;_ _(ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;_ _(iii) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;_ _(iv) the payee or the holder in due course of the cheque 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 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;_ _(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of_ Crl.R.P.No.2528 of 2010 **==> picture [28 x 8] intentionally omitted <==** _the cheque within 15 days of the receipt of the said notice.”_ 12. For creating criminal liabilities in terms of Section 138 of the N.I.Act, the complainant is obliged to show that a cheque was issued; the same was presented; but, it was dishonoured; a notice in terms of the said provision was served on the person sought to be made liable; and despite service of notice, neither any payment was made nor other obligations, if any, were complied with within fifteen days from the date of receipt of the statutory notice. 13. Section 141 of the N.I.Act provides constructive liability on the part of the Directors of the company or other persons responsible for the conduct of the business of the company. Though the heading of Section 141 of the N.I.Act reads “Offences by companies”, as per the Explanation to that Section “company” means “any body corporate and includes a firm or other association of Crl.R.P.No.2528 of 2010 **==> picture [28 x 8] intentionally omitted <==** individuals”; and “director” in relation to a firm, means a “partner” in the firm. Their liability is joint and several. Consequently, therefore, when an offence is alleged to have been committed by the partnership firm, every person who, at the time the offence was committed, was in charge of and was responsible to the firm for the conduct of its business as well as the firm shall be deemed to be guilty of the offence and shall be liable to be proceeded under Section 138 of the N.I.Act. In **S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla & another [(2005) 8 SCC 89]** it was held that a signatory to the cheque can be held to be a person liable under Section 141 of the N.I.Act. It has come out in evidence that the 2[nd] accused issued the cheques in favour of the complainant for a legally enforceable debt. The cheques in question were drawn for consideration and the holder of the cheques received the same in discharge of an existing Crl.R.P.No.2528 of 2010 **==> picture [28 x 8] intentionally omitted <==** debt. Ex.P3 bill of lading is not sufficient to indicate that the amount was due to M/s.Hyundai Merchant Marine Company Ltd. and the complainant was actually the steamer agent of the company. It has come out in evidence that the accused issued cheques to the complainant and the complainant received the same. Although the complainant issued legal notice to the accused, no reply was issued denying the liability. When the cheques were issued in the name of the complainant, it is illogical to contend that the amounts due on account of the shipping was done through M/s.Hyundai Merchant Marine Company Ltd. for whom the complainant stood as an agent. The accused had not offered any explanation as to why they had issued Exts.P5 series cheques to the complainant. 14. The conclusions drawn by the trial court and the appellate court to convict the accused 1 and 2 are Crl.R.P.No.2528 of 2010 **==> picture [28 x 8] intentionally omitted <==** perfectly legal. The cheques in question were drawn for consideration and the holder of the cheques received the same in discharge of an existing debt. Thereafter, the onus shifts on the accused to establish a probable defence so as to rebut such presumption, which onus has not been discharged by the accused. Once the cheque is proved to be issued, it carries statutory presumption of consideration under Sections 118 and 139 of the N.I.Act. Then the onus is on the accused to disprove the presumption at which they have not succeeded. 15. It is well settled law that when concurrent findings of facts rendered by the trial court and appellate court are sought to be aside in revision, the High Court does not, in the absence of perversity upset factual findings arrived at by the two courts below. It is not for the revisional court to re-analyse and reinterpret the evidence on record in a case where the trial court has Crl.R.P.No.2528 of 2010 ..20.. come to a probable conclusion. Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the N.I.Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. That apart, the accused has no case that unfilled cheque had been lost irrecoverably or stolen. The accused failed to prove in the trial by leading cogent evidence that there was no debt or liability. In **Bir Singh v. Mukesh Kumar [(2019) 4 SCC 197]** the Supreme Court held that in view of Section 139 of the N.I.Act read with Section 118 of the N.I.Act thereof, the Court has to presume that the cheque has been issued for discharging a debt or liability. Paragraphs 39 and 40 of the above case are relevant in this context and the same is extracted below for convenience of reference:- Crl.R.P.No.2528 of 2010 ..21.. “ _39. It is not the case of the respondentaccused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative._ _40. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”_ 16. In view of the above, both the trial court and the appellate court rightly held that the burden was on the accused to disprove the initial presumption under Section 118 and 139 of the N.I.Act. The burden is not discharged rightly. Hence, the conviction of the accused for the offence under Section 138 of the N.I.Act is only to be upheld. Crl.R.P.No.2528 of 2010 ..22.. 17. Coming to the question of sentence, the appellate court had considered everything in detail and reduced the sentence to one of imprisonment till the rising of the court by maintaining the compensation awarded by the trial court under Section 357(3) of Cr.P.C. The sentence of fine of Rs.5,000/imposed against the 1[st] accused was also maintained. The appellate court had maintained compensation amount for an amount of Rs.2,60,000/- although the amount covered under the cheques was only Rs.2,52,009/-. An amount of Rs.5,000/was imposed additionally as fine against the 1[st] accused. Thus, an amount of Rs.2,65,000/- (Rs.5,000 + Rs.2,60,000) is to be deposited by the accused 1 and 2 towards compensation and fine. Hence, it is just and proper to reduce the compensation amount to Rs.2,47,009/-. In case an amount of Rs.5,000/- is deposited by the 1[st] accused, the same shall be released to the complainant as compensation in addition to an amount of Rs.2,47,009/- as compensation. Thus, the complainant will get an amount of Rs.2,52,009/- as compensation towards the amount covered under Ext.P5 series cheques. Crl.R.P.No.2528 of 2010 ..23.. 18. With the above modification, the criminal revision petition is allowed in part. In all other respects, the conviction and sentence imposed by the appellate court is confirmed. In view of the situation prevailing in the country due to the outbreak of Covid-19 Pandemic, this Court is inclined to grant six months' time from today to the revision petitioners/ accused 1 and 2 to deposit the compensation and the fine amount before the trial court, failing which the learned Magistrate shall take necessary steps to execute the sentence against the revision petitioners/accused 1 and 2 in accordance with law. The Registry is directed to forward the entire records to the trial court forthwith. Sd/- **N.ANIL KUMAR, JUDGE** skj