Companies Act Case Law Milind Shripad Chandurkar Vs Kalim M Khan Anr Respondents

 

 Companies Act Case Law

Milind Shripad Chandurkar Vs Kalim M Khan  Anr Respondents

 

IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 643 OF 2011

(Arising out of SLP(Crl.) No.3045 of 2008)

 

 

Milind Shripad Chandurkar … Appellant
Versus
Kalim M. Khan & Anr. … Respondents

 

 

J U D G M E N T

 

 

Dr. B.S. CHAUHAN, J.
1. Leave granted.
2. This appeal has arisen out of judgment and order dated
18.2.2008 passed by the High Court of Judicature at Bombay in
Criminal Revision No.656 of 2007 by which the High Court has set
aside the judgments and orders of the trial Court as well as of the
Appellate Court convicting the respondent no.1 for the offences
punishable under Section 138 of the Negotiable Instruments Act, 1881
(hereinafter called the Act 1881) and sentencing him for the period,
till the rising of the Court and to pay compensation of a sum of
Rs.7,00,000/-. Failing which, the respondent would serve simple
imprisonment for a period of six months.
3. The facts and circumstances giving rise to this case are that the
appellant/complainant claimed to be the sole proprietor of the Firm,
namely, Vijaya Automobiles, which had the business of supplying
fuel. The firm had supplied a huge quantity of diesel to respondent
no.1 in the month of March 2005. In order to meet the liability, the
Respondent no.1 made the payment vide Cheque No.490592 dated
28.4.2005 in the name of the said proprietary Firm drawn on
Development Credit Bank, Kurla Branch, Bombay for an amount of
Rs.7,00,000/- (Rupees seven lakhs only). The appellant/complainant
deposited the said cheque in the account of the said Firm in Bank of
India Uran Branch on 12.9.2005.
4. The Development Credit Bank returned the said cheque
mentioning “unpaid” with a Memorandum “funds are insufficient”.

 

 

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The appellant/complainant sent notice dated 11.10.2005 by Registered
A.D. post as well as under certificate of posting. The respondent
no.1/accused did not accept the notice sent by Registered A.D. post.
However, the notice sent by certificate of posting stood served upon
him as the respondent no.1 admitted the said fact in his statement
under Section 313 of the Code of Criminal Procedure, 1973
(hereinafter called Cr.P.C.). The respondent no.1/accused neither
replied to the notice, nor made the payment within 15 days of the
receipt of the notice.
5. The appellant/complainant filed a complaint case no.545 of
2005 before the Judicial Magistrate, First Class, Uran under section
138 of the Act 1881 on 22.11.2005. The case was tried, however, the
respondent no.1/accused did not enter the witness box and after
considering the case, the trial Court vide judgment and order dated
22.12.2006 concluded the trial convicting the respondent no.1 to
suffer simple imprisonment till rising of the court and to pay
compensation of Rs.7,10,000/- and in default of payment thereof, to
suffer simple imprisonment for six months. It was directed that out of
the aforesaid amount of compensation, a sum of Rs.10,000/- be
credited to Raigad District Legal Aid Committee.
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6. Being aggrieved of the aforesaid judgment and order, the
respondent no.1/accused filed Criminal Appeal No.85 of 2006. The
learned Sessions Judge vide judgment and order dated 18-19/9/2007
dismissed the said appeal, with the amount of compensation being
reduced from Rs.7,10,000/- to Rs.7,00,000/-. Thus, the direction to
credit the amount of Rs.10,000/- to Raigad District Legal Aid
Committee was set aside.
7. Being aggrieved, respondent no.1 preferred Criminal Revision
Application No.656 of 2007 before the High Court which has been
allowed vide judgment and order dated 18.2.2008 (impugned) only on
the ground that the appellant could not produce any evidence to
establish that he was the sole proprietor of the proprietary concern in
question. Hence, this appeal.
8. We have heard Shri Shekhar Naphade, learned senior counsel
for the appellant, Shri Viraj Kadam, learned counsel for respondent
no.1 and Shri Shankar Chillarge, Additional Advocate General for
respondent no.2 and perused the record.
All the three courts below have dealt with the issues elaborately
and recorded the following findings of fact:-

 

 

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(i) The cheque had been issued by the respondent no.1 in favour of
the Firm concerned towards discharge of pre-existing liability
and not as security.
(ii) The substantive sentence of imprisonment in default of
payment could be imposed.
So far as the findings on the aforesaid two issues are concerned,
the same are not under challenge before us. Learned counsel
appearing for the respondents have accepted the aforesaid findings.
9. The only issue involved herein is as to whether the appellant
owns the said firm i.e., whether he is the proprietor of the said firm?
The trial Court as well as the Appellate Court have held that a sole
proprietary concern is no independent legal entity and its identity
remains inseparable from its proprietor. But it merely remains a legal
proposition. None of the said courts held that the appellant was the
sole proprietor of the said firm.
10. The High Court has set aside the judgments of the trial Court as
well as the Appellate Court in Revision only on the ground that as the
appellant did not produce any evidence to show that he was the
proprietor of the Firm, he had no locus standi to file the complaint.

 

 

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11. The trial Court held that the complainant had deposed that he
was proprietor of the Firm, namely, “Vijaya Automobiles” which had
the business of supplying fuel etc. and the Firm had supplied the fuel
on credit to respondent no.1/accused. The Court also took note of the
pleadings taken by the respondent no.1/accused that he had given the
cheque to the appellant for Vijaya Automobiles but it was as a
security and not to meet any legal liability. Therefore, the respondent
no.1/accused had admitted that the appellant had actual control over
the said firm. The respondent no.1/accused admitted his signature on
the cheque and execution of the cheque. Therefore, the presumptions
under sections 118 and 139 of the Act 1881 were attracted.
12. Dealing with the issue involved herein, the Appellate Court has
noted that perusal of the cross-examination indicated that the
appellant did not produce any documentary evidence to show that he
was the proprietor of Vijaya Automobiles. Rather it was admitted by
the appellant in the cross-examination that he did not have any
documentary evidence to show that the complainant was the owner of
the petrol pump.

 

 

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13. In spite of making the aforesaid observations, the appeal was
dismissed on the ground that admittedly diesel had been supplied to
the respondent no.1/accused, and the said respondent had issued the
cheque to meet the liability, which could not be encashed for want of
funds. All other requirements in law, i.e., issuance of notice etc. also
stood completed.
14. Relevant part of the affidavit filed by the appellant/complainant
before the trial Court reads as under:
“I, Shri Milind Shripad Chandurkar, Aged about

37 years, Indian Inhabitant, Occ. Business,

Proprietor of M/s. Vijay Automobiles, having

address at Sector-29, Dronagiri Node, Uran, Dist.

Raigad, take oath and state on solemn affirmation

as under…..
I state that in due discharge of legal liability of the

accused as mentioned in foregoing paras, the

accused issued one cheque dtd. 28.4.2005 in my

name i.e. in the Name M/s. Vijaya Automobilies

which was drawn on Development Credit Bank,

Kurla Branch, Mumbai-70 bearing Cheque

No.490592, for Rs.7,00,000/- (Rupees Seven Lakhs

only).”
Relevant part of his cross-examination reads as under:-
“It is true that till today I had not produced any

documentary evidence to show that I am owner of

Vijaya Automobiles……Till today I had not

produced any documentary evidence to support.”
7
15. The complainant had also examined Shri S.K. Sharma, owner
of M/s. Vikas Travels under whom the respondent no.1 had been
working as a sub-contractor. In his cross-examination, Shri S.K.
Sharma also stated as under:-
“I have no documentary evidence to show that

complainant Milind Shripad Chandurkar owns the

petrol pump.”
16. Thus, from the above, it is evident that the
appellant/complainant could not produce any document to show that
he was the proprietor of Vijaya Automobiles in spite of the fact that
the issue had been agitated by the respondent no.1/accused at every
stage. It is also evident from the documents on record that in the list
of witnesses the complainant had mentioned the name of his banker as
a witness, however, the said banker was not examined.
17. It may also be pertinent to mention here that appellant did not
make any attempt to adduce additional evidence at the appellate stage
also. No document has ever been filed to substantiate his averment in
this regard.
18. Section 7 of the Act 1881 defines “Payee” as the person named
in the instrument, to whom or to whose order the money is by the
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instrument directed to be paid. Section 8 defines “the holder of the
cheque” as any person entitled in his own name to the possession
thereof and to receive or recover the amount due thereon from the
parties thereto. Section 9 defines “holder in due course” as any person
who for consideration became the possessor of a cheque if payable to
a bearer or the payee or endorsee thereof.
Section 138 provides for penalties in case of dishonour of
certain cheques for insufficiency of funds in the accounts. However,
exception contained in clause (c) thereof reads as under:
“The drawer of such cheque fails to make the

payment of the said amount of money to the payee

or, as the case may be, to the holder in due course

of the cheque, within fifteen days of the receipt of

the said notice.” (Emphasis added)
19. Section 142 provides for taking cognizance of the offence
notwithstanding anything contained in Cr.P.C. which reads as under:
“(a) 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.” (Emphasis added)
20. This Court in Shankar Finance and Investments v. State of
Andhra Pradesh & Ors., (2008) 8 SCC 536, dealt with the issue

 

 

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involved herein elaborately and held that where the “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 the sole
proprietary concern represented by its proprietor; and (iii) the
proprietor or the proprietary concern represented by the Attorney
Holder under the power of attorney executed by the sole proprietor.
However, it shall not be permissible for an Attorney Holder to file the
complaint in his own name as if he was the complainant. He can
initiate criminal proceedings on behalf of the principal.
In a case of this nature, where the “payee” is a company or a
sole proprietary concern, such issue cannot be adjudicated upon taking
any guidance from Section 142 of the Act 1881 but the case shall be
governed by the general law i.e. the Companies Act 1956 or by civil
law where an individual carries on business in the name or style other
than his own name. In such a situation, he can sue in his own name
and not in trading name, though others can sue him in the trading
name. So far as Section 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.
1
The Court placing reliance on earlier judgments, particularly,
in Janki Vashdeo Bhojwani v. Indusind Bank Ltd., (2005) 2 SCC
217, held that the general principles of company law or civil law
would apply for maintaining the complaint under Section 138 of the
Act 1881.
21. In National small Industries Corporation Ltd. v. State (NCT
of Delhi) & Ors., (2009) 1 SCC 407, this Court held as under:
“The term “complainant” is not defined under the

Code. Section 142 of the NI Act requires a

complaint under Section 138 of that Act to be

made by the payee (or by the holder in due

course)…”
22. Thus, in view of the above, the law stands crystallised to the
effect that a person can maintain a complaint provided he is either a
“payee” or “holder in due course” of the cheque.
23. In the instant case, it is evident that the firm, namely, Vijaya
Automobiles, has been the payee and that the appellant cannot claim
to be the payee of the cheque, nor can he be the holder in due course,
unless he establishes that the cheques had been issued to him or in his
favour or that he is the sole proprietor of the concern and being so, he
could also be payee himself and thus, entitled to make the complaint.
1
The appellant miserably failed to prove any nexus or connection by
adducing any evidence, whatsoever, worth the name with the said
firm, namely, Vijaya Automobiles. Mere statement in the affidavit in
this regard, is not sufficient to meet the requirement of law. The
appellant failed to produce any documentary evidence to connect
himself with the said firm. It is evident that the firm had a substantial
amount of business as in one month it sold the diesel to respondent no.
1 – a single party, for a sum of Rs. 7 lakhs. The appellant would, in
addition, have also been carrying out business with other persons.
Thus, a person with such a big business must have had transactions
with the bank and must have been a payee of income tax, sales tax etc.
Thus, in such a fact-situation, there would be no dearth of material
which could have been produced by the appellant to show that he was
the sole proprietor of the said firm. The appellant failed to adduce any
evidence in this regard, nor made any attempt to adduce any
additional evidence at the appellate stage, in spite of the fact that the
respondent is raising this issue from the initiation of the proceedings.

 

 

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24. In view of the above, we do not see any cogent reason to
interfere with the impugned judgment and order of the High Court.
The appeal is devoid of any merit and, accordingly, dismissed.

 

 

………

……………………..J.

(P. SATHASIVAM)
……………………………..J.

(Dr. B.S. CHAUHAN)

New Delhi,

March 3, 2011

 

 

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NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
Special Leave Petition (Criminal) No.3122 of 2008
Milind Shripad Chandurkar … Appellant
Versus
Naimulla M. Khan & Anr. … Respondents
WITH
Special Leave Petition (Criminal) No.3124 of 2008
J U D G M E N T
Dr. B.S. CHAUHAN, J.
1. In view of the judgment in Criminal Appeal No. 643 of 2011
arising out of Special Leave Petition (Criminal) No. 3045 of 2008, the
above Special Leave Petitions are dismissed.
………

……………………..J.

(P. SATHASIVAM)

 

 

……………………………..J.

(Dr. B.S. CHAUHAN)

New Delhi,

March 3, 2011

 

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