K.S. Subbaraman vs Iyyammal

M. Karpagavinayagam, J.—The conviction u/s 138 of the Negotiable Instruments Act, 1881, in C. C. No. 99 of 1994 on the file of the

learned Judicial Magistrate, Palani, thereby sentenced to undergo imprisonment till the rising of the court and to pay a fine of Rs. 3,000 in default to

undergo R. I. for six weeks, is the subject-matter of the challenge in this revision filed by the petitioner.

One Iyyammal, the respondent herein, filed a complaint against K.S. Subbaraman of Madurai Chits and Investments (P.) Limited, Ottanchat-

ram, the petitioner herein, alleging that the cheque issued in favour of the complainant by the petitioner towards the discharge of the balance chit

amount to be paid, was dishonoured and that despite the notice, the cheque amount was not paid by the petitioner. Originally, the complaint was

filed against the petitioner, the managing director of the company and his wife Pavanthai, the director of the said company. The trial court acquitted

the second accused holding that there was no material to hold that the said director Was in charge and responsible for the affairs of the company.

However, the petitioner was convicted as referred to above holding that the offence was proved against him. Hence, this revision.

Natarajan, though raised several points, would, at the end, confine himself to the points given below :

(i) The complaint was not maintainable, since the cheque was deposited in the complainant''s bank for collection after the expiry of the validity

period, namely, six months ;

(ii) The cheque was issued by the petitioner on behalf of Madurai Chits and Investments (P.) Limited. In the absence of the inclusion of the

company as an accused, the complaint against the managing director alone is not sustainable.

Sundararajan, learned counsel for the respondent would repel the submissions by pointing out that these submissions are not valid and the

reasoning given by the trial court for rejecting these contentions are proper.

I have heard counsel for the parties and perused the records.

As regards the first point, it must be noted that the cheque was issued on June 25, 1993, and the same was presented on December 27, 1993.

As per the provision, the cheque was valid only for six months. The said period expired on December 25, 1993. Therefore, the presentation of the

cheque on December 27, 1993 admittedly, is only after the expiry of six months. But, even in the complaint the said position has been clarified

stating that the dates December 25, 1993 and December 26, 1993, were holidays and the next working day was December 27, 1993, and so, on

that date the said cheque was presented. The relevant portion in the complaint is this :

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A reading of Section 25 of the Negotiable Instruments Act would clearly show that if the day on which the cheque period expires, is a public

holiday, the cheque shall be deemed to be due on the next preceding business day. In the said section, the Explanation would indicate that the

expression ""public holiday"" includes Sunday. Under this provision, though the presentation of the cheque was made on December 27, 1993, after

two days of the expiry, since December 25, 1993, and December 26, 1993, were public holidays, it shall be held that the cheque was valid and

the six months'' period expired only on the date of presentation of the cheque and as such, the complaint is sustainable.

As regards the second point, namely, non-inclusion of the company as the co-accused, the trial court has followed the judgment of this court

rendered in N. Doraisamy v. Archana Enterprises [1995] Crl. LJ 2306 (Mad) ; [1995] MLJ (Crl.) 482 ; [1999] 97 Comp Cas 129 and that of

the Kerala High Court in M.O.H. Iqbal v. M. Uthaman [1994] 2 Cri 72 ; [1995] 82 Comp Cas 726 and held that when the offence is committed

by a company, either the company alone, or the person in charge of the business of the company alone or both of them together, can be

prosecuted for the offence u/s 138.

The judgment rendered by this court, reported in N. Doraisamy v. Archana Enterprises [1995] ML] (Crl.) 482 ; [1999] 97 Comp Cas 129

interpreting the sections on first principles and following the judgment of the apex court in Sheoratan Agarwal and Another Vs. State of Madhya

Pradesh, , while dealing with the aspect elaborately, concluded that the managing director of the company can be prosecuted even without

including the company as a co-accused. The gist of the proposition given in the decision referred to above is that the prosecution proceedings

against the persons in charge of and responsible to the company for the conduct of its business, or, the persons, with whose consent or connivance

of, or an act attributable to, or due to any neglect on their part, the offence had been committed, are maintainable irrespective of whether the

company is prosecuted or not. In this decision, Honourable Janarthanam J. held that the earlier decision rendered by this court on this point is

contrary to the said view and that the said proposition of law was not correctly laid down in the light of the Supreme Court decision in Sheoratan

Agarwal and Another Vs. State of Madhya Pradesh, , I am in entire agreement with the view expressed in the said decision.

In this case, the petitioner has been made an accused not in the indi vidual capacity, but in the capacity of managing director of the company. It

is also admitted that the cheque was issued by him. Therefore, the petitioner cannot escape from his liability by stating that the company has not

been made an accused. In fact, the company functions only through the human agency. There is no dispute with regard to the fact that the petitioner

is the managing director through whom the entire functions of the company are being performed. Therefore, this ground also would not appeal to

me, as the trial court has correctly followed the decision of this court stated supra.

Under these circumstances, I do not find any merit in this revision. Consequently, the revision is dismissed.