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Judgment
C.S. Karnan, J.—The brief facts of the case are as follows:-
The revision petitioner herein/complainant has filed C.C. No. 351 of 2001 against the respondent herein and three others stating that the
respondent had issued two Cheques each for a sum of Rs. 50,000/- dated 28.02.2001 and 30.03.2001 respectively in favour of the complainant
in order to partly discharge the legally enforceable debt of a sum of Rs. 5,82,000/-. Both the Cheques were presented for collection and were
returned with an endorsement ""exceeds arrangement"". Hence, the complainant subsequently observed all legal formalities and filed the said case u/s
138 of Negotiable Instruments Act. On questioning, the accused had pleaded not guilty and hence, the case has been proceeded with.
On the side of the complainant, the complainant was examined as P.W.1 and the Assistant Manager of the Bank was examined as P.W.2 and the
following documents were marked, viz., Cheques dated 28.02.2001 and 30.03.2001, bank memo returns, debit advice, advocate notice, postal
acknowledgment card, authorization letter, statement of accounts, agreement, deposit receipt and a letter. On the side of the accused, two
witnesses were examined viz., one Maheswaran and one Puttasami and seven documents were marked viz., auditors report, complaint dated
15.11.2000, deposit receipt acknowledgment document, daily register, notice regarding deposit of Rs. 6,00,000/- made on 31.03.2000, extract
of annual account register for the year 1998-1999 and document showing transfer of account from Mr. Ashok to Mr. Natarajan.
P.W.1 had adduced evidence that he is the proprietor of Ashok Agencies and he had supplied scrap materials in the year 1995 to the accused
and as such there was an outstanding of a sum of Rs. 10,00,000/-. In order to discharge a part of the legally enforceable debt, the accused had
issued two Cheques each for a sum of Rs. 50,000/- dated 28.02.2001 and 30.03.2001 respectively. P.W.1 further stated that both Cheques had
been deposited in his bank, viz., Bank of India, Ramanathapuram Branch. Both the Cheques were returned with an endorsement ""exceeds
arrangement"". P.W.1 further stated that he had issued a legal notice and the same was received by the accused. After receipt of the said legal
notice, the accused had neither replied nor made any payment. Supporting his evidence, he had marked the above mentioned documents as
exhibits.
P.W.2, the Bank Manager had adduced evidence that both the Cheques of the accused were presented at the Bank for collection and the same
were returned with an endorsement ""exceeds arrangement"".
R.W.1 had adduced evidence that he is the auditor of the first respondent Company and he had audited the company''s accounts and submitted
his report. The reports contained details regarding deposit, share application and share deposit particulars. R.W.2 is a partner in the first
respondent Company and he had stated that each of the three partners had contributed a sum of Rs. 13,75,000/-. He further adduced evidence
that one V. Subramaniam, was looking after the production, marketing and sales of the products in the said firm and that he was given the
responsibility of purchase of raw materials for the said firm. R.W.2 further stated that in the year 1999, one Mr. Mohiedu and Mr. Vijayakumar
had entered into the partnership and they had invested Rs. 17,75,000/- and Rs. 8,85,000/- respectively in the said firm. R.W.2 further stated that
in the month of June 1999, he left the company since the Directors had not extended their co-operation. Subsequently, the said Subramaniam had
paid 50% of the company and it was decided that the shares lying in the name of Vijayakumar would be bought by one C.R. Swaminathan for Rs.
4,45,000/-. R.W.2 further stated that it was decided that he should pay Rs. 6,82,500/- for the shares held by the V.K. Natarajan. He further
deposed that he had given seven Cheques to the V.K. Natarajan, out of which, six of them had been encashed and that he was liable to pay only
the amount due for the seventh Cheque for Rs. 58,750/-. He further adduced evidence that as per their agreement they have paid 90% of the
amount due and that as the transfer of shares had not been effected, they had withheld payment for the Cheques issued. R.W.2 further adduced
evidence regarding company transaction and affairs marked the above mentioned documents in support of his contentions.
After recording the evidence of witnesses and on hearing the arguments of the learned counsels on both sides and on perusing the documents
marked by them, the learned Magistrate held that proceedings for getting relief as per the Rules and Regulations and laws laid down as per the
administrative procedures is a separate proceeding and that the relief sought u/s 138 of Negotiable Instruments Act for Cheques dishonour is
altogether a separate one. The learned Magistrate on holding that the Cheque issued by the accused had been dishonoured and on observing that
the accused had neither paid the Cheque amount nor had replied to the legal notice of the complainant, held the accused guilty of offence u/s 138
of Negotiable Instruments Act. Therefore, the learned Magistrate imposed sentence on the first accused to pay compensation of a sum of Rs.
25,000/- and also ordered payment of compensation of a sum of Rs. 25,000/- by each of the accused 2, 3 and 4 and also sentenced them to a
period of one year simple imprisonment.
Against the conviction and sentence, the third accused had filed an appeal in C.A. No. 228 of 2004 before the Principal District and Sessions
Judge, Coimbatore. The learned judge after hearing the arguments of both sides and on perusing the trial Court judgment and also considering the
appeal grounds, set-aside the conviction and sentence passed in C.C. No. 351 of 2001, on the file of Judicial Magistrate-VI, dated 20.04.2004
and further directed the trial Court to conduct re-trial of the case to decide the aspects as to the nature of the complaint as per the terms of the
agreement in question by both parties concerned and then arrive at a conclusion as to the validity and legal enforceability of the Cheques in
question by letting in further evidence, if necessary after giving due opportunities to both parties and decide the case on merits.
Against the said order, the above revision has been filed by the complainant.
The learned counsel for the petitioner vehemently argued that the lower appellate Court has committed a grave error by remanding the case to
the trial Court for a fresh trial without finding out any issue for reconsideration and as such, the remand order is not sustainable under law and is an
arbitrary one. He further submitted that when the drawer of the Cheque admitted the signature, there is no dispute for issuance of the Cheque and
the same Cheques were dishonoured, as such, only limited issue arises in the instant case as per provision 138 of Negotiable Instruments Act. The
learned counsel further contended that as there is no lacuna in the trial Court judgment, retrial is not necessary in the said case. The remand order is
prejudicial to the complainant. The transaction had taken place in the year 2001. In order to create multiple proceedings, the remand order has
been passed without assigning relevant reasons pertaining to the case. The auditor''s report regarding the company transaction and profit and loss is
entirely different to issuance of the Cheques. Both Cheques had been issued, in order to discharge a part of the legally enforceable debt for the
outstanding amount since the complainant supplied raw materials viz., scrap. Therefore, the auditing report is not relevant in this case, but the
learned appellate Court judge had entirely acted upon the report, which is an erroneous one.
The learned counsel for the respondent vehemently argued that the auditor''s report clearly disclosed the companies transaction. As per the
companies reports and the accounts books of the company, the entire facts had been disclosed by the auditor and as such, there is no legally
enforceable debt payable by the accused. The partnership company, viz., the first accused company also made informal arrangement to transfer
the share holding to third parties. As per the contention of the complainant, the raw materials had been supplied to the first accused and not to the
respondent herein. Therefore, the remand order is appropriate to determine the veracity of the legally enforceable debt which is the main issue, in
the instant case. On this issue, no findings had been given and as such, there is discrepancy and shortcomings in the trial Court judgment and
therefore, re-trial is of the paramount importance. Actually, the original complaint is not maintainable since it had been levelled against the third
parties at the time of transaction. The auditor is the core witness to reveal the entire facts of the case, especially, legally enforceable debt for which,
there is entry in the account book which had been maintained by the accused company. Hence, the learned counsel entreats the Court to dismiss
the revision.
On considering the facts and circumstances of the case and arguments advanced by the learned counsels on either side and on perusing the first
appellate Court judgments, this Court is of the view that the learned trial Court judge had framed necessary issues, viz., issuance of chqeues,
dishonour of Cheque, legal notice and limitation period as per Section 138 of Negotiable Instruments Act. If the complainant had initiated money
recovery proceedings before the trial Court, then the auditor''s report discussion is necessary. But in the instant case, as the complainant had
sought relief for dishonour of Cheque u/s 138 of Negotiable Instruments Act and based on the above mentioned issues, the trial Court had found
the accused guilty of offence u/s 138 of Negotiable Instruments Act and imposed punishment, which is appropriate. The trial Court had imposed
compensation of a sum of Rs. 25,000/- on each of the four accused which is appropriate. However, the period of one year simple imprisonment
which had been imposed on the accused 2, 3 and 4 are on the higher side and therefore, this Court reduces the sentence from one year simple
imprisonment to two months simple imprisonment. Now, the accused 2 to 4 have to either pay the said compensation as per trial Court order or
undergo two months simple imprisonment, as per this Court''s modified order. The cause of action arose in the year 2001 and therefore, this Court
directs the learned Judicial Magistrate-VI, Coimbatore to issue bailable warrant at once and secure the accused 2, 3 and 4 in order to undergo
two months simple imprisonment. If all the accused deposit the compensation amount as per trial Court order before being remanded into judicial
custody, then the accused would be set at liberty. If the accused deposit the said compensation amount, then the complainant is at liberty to
withdraw the said compensation from the trial Court, after filing a Memo, along with a copy of this order. This order has been passed by this Court
after invoking the discretionary power vested with it. In the result, the above revision is partly allowed with the above observations. Consequently,
the order passed in C.A. No. 228 of 2004, on the file of Principal District and Sessions Judge, Coimbatore, dated 30.08.2005, setting aside the
conviction and sentence passed in C.C. No. 351 of 2001, on the file of Judicial Magistrate-VI, Coimbatore, dated 20.04.2004 is modified.