TMI Blog2014 (5) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on him from the material brought on record by the complainant nor has he been able to show existence of circumstances from which it may be inferred that the cheques in question were without consideration. the firm was not arrayed as an accused and only Mr. Sumit Seth was the sole person prosecuted by the complainant/appellant Company. In fact the averment made in the complaint is that Mr. Sumit Seth was the Proprietor of M/s. Tarun Engineering Syndicate. Admittedly M/s. Tarun Engineering Syndicate is a partnership firm and Mr. Sumit Seth is its partner and not its proprietor. Despite his being a partner of the firm Mr. Sumit Seth cannot be convicted in the aforesaid complaint because the firm was not made an accused along with Mr. Sumit Seth. A firm is a Company within the meaning of Section 141 of the Negotiable Instruments Act and, therefore, the partner of a firm is only vicariously liable where an offence under Section 138 of the Act is committed by the firm, provided he was the person in charge of and responsible to the firm for conduct of its business at the relevant time. Unless the firm is prosecuted and convicted, a partner cannot be convicted with the aid of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. The complainant Company examined three witnesses in support of its case. CW1 is an official from Syndicate Bank who deposed with respect to dishonour of two (2) cheques - one of ₹ 6.56,633/- and the other of ₹ 4.00 lakh. His testimony is not relevant for the purpose of deciding the controversy involved in these appeals. CW2 Shri G.K. Pachauri in his affidavit by way of evidence stated that the accused purchased goods/material from the complainant Company and issued cheques in question which, on being presented to its bank were dishonoured. He also deposed with respect to issue of the demand notice and service of the said notice. He stated that the accused had failed to make payment of the dishonoured cheques. CW3 Shri Kishore Kumar inter alia stated that the accused firm had been purchasing material from the complainant Company and making payment on account basis. He further stated that against the purchases made by it, the accused had also issued Sales Tax Forms and C-Forms and that the cheques in question were issued as part payment of that material. He proved the Sales Tax Forms and C-Forms Ex.CW3/3 (Colly). He also proved the statement of account Ex.CW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man. In Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513, the Hon'ble Supreme Court, in this regard held as under: The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contempl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man'. 7. Since the accused did not lead any evidence at all, the question which arises for consideration is as to whether it has been able to bring on record such facts circumstances which would impel the Court to believe that the consideration did not exist or that its non-existence was so probable that a prudent man would in the facts circumstances of the case accept the plea that the consideration did not exist. In a case where no evidence is led by him the accused is required to show existence of circumstances which are so compelling as to shift the burden again on the complainant. Of course the accused is not required to prove his defence beyond reasonable doubt and he can discharge the onus placed on him by establishing, the proof required from him, on the standard of being preponderance of probabilities. 8. Ex.CW3/3/A which forms part of Ex.CW3/3 (Colly) is a CST Form purporting to be issued by Tarun Engineering Syndicate to the appellant/complainant Vijay Power Generation Limited. On the backside of this C-Form, Ex.CW3/3/A1, details of various bills making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction with the complainant/appellant. This is not the case of the accused that it had no dealing with the appellant/complainant at any point of time. In these circumstances there would be no reason to reject the statement of accounts filed by the appellant/complainant Company, which is admissible in evidence under Section 34 of the Evidence Act. A perusal of the statement of accounts would show that as on 1.4.1996 a sum of ₹ 35,83,390.02 was due to the appellant/complainant Company from the accused firm. Thereafter, there have been several credit entries as well as debit entries. The statement shows sale of goods to the accused firm on a number of dates including 23.5.1996, 5.11.1996, 13.11.1996, 26.11.1996, 27.11.1996, 28.11.1996, 11.12.1996, 12.3.1997, 28.3.1997, 18.4.1997, 25.4.1997, 26.4.1997, 3.5.1997, 7.5.1997, 15.5.1997, 16.5.1997, 21.5.1997, 13.6.1997, 14.6.1997, 16.6.1997, 18.6.1997, 19.6.1997, 14.7.1997, 17.3.1998, 5.8.1998. There are also entries of purchases made by the complainant/appellant Company such as local purchase on 6.8.1997 and 12.9.1997. The statement contains bill numbers in respect of the sales purporting to have been made to the accused fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng cross-examination of the witnesses of the complainant that the aforesaid cheques were not issued by it to the complainant/appellant Company. In these circumstances and also considering that neither any oral evidence has been produced by the accused nor has it produced its account books, I see no reason to reject the statement of accounts filed by the appellant/complainant Company or to doubt its authenticity. Considering that at the time cheques in question were issued, the amount due from the accused firm was much more than the amount of the cheques issued by it, it would be difficult to accept the contention that the aforesaid cheques were issued as advance payment for purchase of goods and not towards payments of the price of the goods which the accused firm had purchased from the appellant/complainant Company. 11. The C-Forms filed by the complainant/appellant purport to be signed by Smt. Mukta Seth, Partner of the accused firm. Neither Mrs. Mukta Seth was produced in the witness box to prove that the aforesaid C-Forms did not bear her signature nor did Shri Sumit Seth made such a specific claim in his statement under Section 313 of Cr.P.C. Therefore, it would be difficul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid legal proposition would not apply to the case before this Court. In Krishna Janardhan Bhat (supra) the Apex Court again noted that to discharge the burden placed on him the accused need not examine himself and he can discharge the same on the notice being issued to him. Since there is no material on record which would show, even applying the standard of preponderance of probabilities, that the cheques in questions were without consideration, the aforesaid judgement is of no help to the accused. In Indus Airways Pvt. Ltd. Ors. (supra), it was an admitted position that the cheques in question were issued while placing purchase orders for supply of certain aircraft parts and were meant to be advance payment. It was held by the Apex Court that for the purpose of Section 138 of the Act, the drawl of the cheque should be in respect of the existing or past adjudicated liability, if the cheque is issued as advance payment for purchase of goods and for any reason purchase order is not carried to its logical conclusion and the material or goods are not supplied the cheque cannot be said to have been drawn for an existing debt or liability. However, in the present case e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph 37. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove. 15. For the reasons stated hereinabove, Crl. A. No.1432/2013, against Shri Sumit Sethi is dismissed. Crl. A. Nos.1433/2013, 1434/2013, 1435/2013 1436/2013 are allowed and M/s. Tarun Engineering Syndicate is convicted under Section 138 of the Negotiable Instruments Act. The accused firm is fined of ₹ 16.00 lakh ₹ 16.00 lakh, ₹ 19.00 lakh and ₹ 16.00 lakh respectively in the complaints relevant to Crl. A. Nos.1433/2013, 1434/2013, 1435/2013 1436/2013. The accused firm is granted four (4) weeks from today to deposit the amount of fine, failing which it shall be open to the complainant/appellant Company to realize the same in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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