The Revisional Power Of The Court Under Sections 397 to 401 Cr.P.C Is Not To Be Equated With That Of An Appeal: Kerala High Court

CASE TITLE:-

Prana Educational and Charitable Trust and Anr. Vs. State of Kerala and Ors.

DATE OF ORDER:

18th September, 2023

BENCH:

Hon’ble Mr. Justice A. Badharudeen

PARTIES:-

Plaintiff:-Prana Educational and Charitable Trust Sheeba Kochoth

Respondents:-State of Kerala Lincy
 

IMPORTANT PROVISIONS:-

1. The Negotiable Instrument Act:-

• Section 138:-

Dishonour of cheque for insufficiency, etc., of funds in the account. —Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that 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 that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for ¹⁹ [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless—

(a) the 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;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, ²⁰ [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) 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.

Explanation.— For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.]

• Section 141:-

Offences by companies. —

(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: ²² [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.]

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.— For the purposes of this section,—

(a) “company” means any body corporate and includes a firm or other association of individuals; and

(b) “director”, in relation to a firm, means a partner in the firm.]

• Section 7:-

“Drawer”, “drawee”. —The maker of a bill of exchange or cheque is called the “drawer”; the person thereby directed to pay is called the “drawee”. “drawee in case of need”. —When in the bill or in any indorsement thereon the name of any person is given in addition to the drawee to be resorted to in case of need such person is called a “drawee in case of need”. “acceptor”. —After the drawee of a bill has signed his assent upon the bill, or, if there are more parts thereof than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the “acceptor”. “acceptor for honour”. — [When a bill of exchange has been noted or protested for non-acceptance or for better security], and any person accepts it supra protest for honour of the drawer or of any one of the indorsers, such person is called an “acceptor for honour”. “Payee”. —The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the “payee”.

• Section 26:-

Capacity to make, etc., promissory notes, etc.—Every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, indorsement, delivery and negotiation of a promissory note, bill of exchange or cheque.

• Section 118:-

Until the contrary is proved, the following presumptions shall be made:

1. of consideration; that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
2. as to date; that every negotiable instrument bearing a date was made or drawn on such date;
3. as to time of acceptance; that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
4. as to time of transfer; that every transfer of a negotiable instrument was made before its maturity;
5. as to order of indorsements; that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
6. as to stamp; that a lost promissory note, bill of exchange or cheque was duly stamped;
7. that holder is a holder in due course; that the holder of a negotiable instrument is a holder in due course: Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an SP offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burthen of proving that the holder is a holder in due course lies upon him.

• Section 139:-

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 for the discharge, in whole or in part, of any debt or other liability.
 

• Section 20:-

Inchoate stamped instruments.—Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in 1[India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.

• Section 87:-

Effect of material alteration.—Any material alteration of a negotiable instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties; Alteration by indorsee.—And any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof. The provisions of this section are subject to those of sections 20, 49, 86 and 125.

2. The Code of Criminal Procedure:-

• Section 313(1)(b):-

shall, after the witnesses for the prosecution have been examined and before he is called on for his defence, question him generally on the case: Provided that in a summons- case, where the Court has dispensed with the personal attendance of the accused, it may also dispense with his examination under clause (b).

• Section 255(2):-

Where the Magistrate does not proceed in accordance with the provisions of section 325 or section 360, he shall, if he finds the accused guilty, pass sentence upon him according to law.

• Section 357(1):-

When a Court imposes a sentence of fine or a sentence (including a sentence of death) of which fine forms a part, the Court may, when passing judgment, order the whole or any part of the fine recovered to be applied-

(a) in defraying the expenses properly incurred in the prosecution;

(b) in the payment to any person of compensation for any loss or injury caused by the offence, when compensation is, in the opinion of the Court, recoverable by such person in a Civil Court;

(c) when any person is convicted of any offence for having caused the death of another person or of having abetted the commission of such an offence, in paying compensation to the persons who are, under the Fatal Accidents Act, 1855 (13 of 1855 ), entitled to recover damages from the person sentenced for the loss resulting to them from such death;

(d) when any person is convicted of any offence which includes theft, criminal misappropriation, criminal breach of trust, or cheating, or of having dishonestly received or retained, or of having voluntarily assisted in disposing of, stolen property knowing or having reason to believe the same to be stolen, in compensating any bona fide purchaser of such property for the loss of the same if such property is restored to the possession of the person entitled thereto.

• Section 401:-

High Court' s Powers of revisions.

(1) In the case of any proceeding the record of which has been called for by itself or Which otherwise comes to its knowledge, the High Court may, in its discretion, exercise any of the powers conferred on a Court of Appeal by sections 386, 389, 390 and 391 or on a Court of Session by section 307 and, when the Judges composing the Court of revision are equally divided in opinion, the case shall be disposed of in the manner provided by section 392.

(2) No order under this section shall be made to the prejudice of the accused or other person unless he has had an opportunity of being heard either personally or by pleader in his own defence.

(3) Nothing in this section shall be deemed to authorise a High Court to convert a finding of acquittal into one of conviction.

(4) Where under this Code an appeal lies and no appeal is brought, no proceeding by way of revision shall be entertained at the instance of the party who could have appealed.

(5) Where under this Code tan appeal lies but an application for revision has been made to the High Court by any person and the High Court Is satisfied that such application was made under the erroneous belief that no appeal lies thereto and that it is necessary in the interests of justice so to do, the High Court may treat the application for revision as a petition of appeal and deal with the same accordingly.

• Section 397:-

Calling for records to exercise powers of revision.

(1) The High Court or any Sessions Judge may call for and examine the record of any proceeding before any inferior Criminal Court situate within its or his local jurisdiction for the purpose of satisfying itself or himself as to the correctness, legality or propriety of any finding, sentence or order,- recorded or passed, and as to the regularity of any proceedings of such inferior Court, and may, when calling for such record, direct that the execution of any sentence or order be suspended, and if the accused is in confinement, that he be released on bail or on his own bond pending the examination of the record. Explanation.- All Magistrates whether Executive or Judicial, and whether exercising original or appellate jurisdiction, shall be deemed to be inferior to the Sessions Judge for the purposes of this sub- section and of section 398.

(2) The powers of revision conferred by sub- section (1) shall not be exercised in relation to any interlocutory order passed in any appeal, inquiry, trial or other proceeding.

(3) If an application under this section has been made by any person either to the High Court or to the Sessions Judge, no further application by the same person shall be entertained by the other of them.

• Section 313(5):-

The Court may take help of Prosecutor and Defence Counsel in preparing relevant questions which are to be put to the accused and the Court may permit filing of written statement by the accused as sufficient compliance of this section.

3. The General Clauses Act:-

• Section 3(42):-

"person" shall include any company or association or body of individuals, whether incorporated or not;

4. Indian Penal Code:-

• Section 11:-

“Person”.—The word “person” includes any Company or Associa­tion or body of persons, whether incorporated or not.

SUBJECT:-

This revision petition has been filed under Sections 397 and 401 of Code of Criminal Procedure (hereinafter referred as Cr.P.C. for convenience). The revision petitioners are the accused in S.T. No.2278/2016 on the files of the Court of Special Judicial First Class Magistrate (N.I.Act Cases), Kozhikode and the appellants in Crl.A. No.176/2019 on the files of the Sessions Court, Kozhikode Division. The respondents herein are the original complainant as well as the State of Kerala.

The main question before this court was whether the court has jurisdiction to interfere with the orders of the trial court and sessions judge in a revision petition?  Here, in this case, the High Court of Kerala at Ernakulam (hereinafter referred to as the court) after referring to various cases decided not to interfere with such orders and thus directed the trust to pay compensation to the respondents as per the decision of the trial court.

OVERVIEW:-

The case put up by the complainant before the trial court was that in order to discharge liability to the complainant and her husband to the tune of Rs.9,50,000/-, the 2nd accused issued cheque for Rs.9,50,000/- dated 03.04.2013 drawn on the account maintained by the 1st

accused (Prana Educational and Charitable Trust) and the said cheque was dishonored for the reason “funds insufficient”.

Accordingly, the complainant launched prosecution against the accused alleging commission of offence punishable under Section 138 of the Negotiable Instruments Act (hereinafter referred as N.I.Act for convenience), since the accused failed to make the payment of the cheque amount on demand, within the statutory period. Initially, the complaint was filed before the Judicial First Class Magistrate Court No.III, Kozhikode and the learned Magistrate took cognizance of the offence and numbered the case as C.C. No.499/2014.

While so, in view of the decision of the Apex Court reported in [2014 (3) KLT 605] Dasharath Roopsingh Rathod v. State of Maharashtra and another, the complaint was represented before the Judicial First Class Magistrate Court-II, Mananthavadi and numbered as S.T. No.2205/2014. Then the case was returned to be presented before the Judicial First Class Magistrate Court-V, Kozhikode as per order dated 31.07.2015 on the ground of change of territorial jurisdiction in view of the amendment to Section 142 of Negotiable Instruments Act.

Thereafter, the Judicial First Class Magistrate Court-V, Kozhikode returned the case records to Judicial First Class Magistrate Court-II, Mananthavadi and the case got renumbered as S.T. No.731/2016. Learned Judicial First Class Magistrate Court-II, Mananthavadi secured the presence of accused for trial and finally tried the matter. During trial, PWs 1 and 2 were examined and Exts.P1 to P13 were marked on the side of the complainant.

After questioning the accused under Section 313(1)(b) of the Cr.P.C., when opportunity was given, no witness examined on the side of the accused, but Ext.D1 marked on the side of the accused. On appreciation of evidence, the trial court convicted and sentenced the accused.

Although, the accused challenged the conviction and sentence imposed by the trial court, before the Sessions Court, Kozhikode, the learned Sessions Judge also confirmed the conviction and sentence imposed by the trial court, as per judgment in Crl.A. No.176/2019 dated 16.09.2019.

Challenging the concurrent verdicts of conviction and sentence imposed by the trial court as well as the Appellate Court, this revision petition has been filed.

ISSUES RAISED:-

1. Can a Trust (an Artificial Person) be prosecuted alleging commission of offence punishable under section 138 of the NI Act?

2. Whether private or public charitable Trust to be recognised as a juristic person for the purpose of the NI Act?

3. Whether Trust, either private or public, is a company in terms of section 141 of the NI Act?

CONTENTIONS RAISED BY PETITIONER:-

1. The learned counsel of the petitioner contended that, “the 1^st accused in the case is a charitable trust and the 2^nd accused is the managing trustee and signatory of the cheque, prosecution against the trust and the managing trustee is not legally sustainable, since trust is not a juristic person as defined under section 141 of the NI Act.”

2. In support of the above contention, the learned counsel referred the decision of this court in the case of KP Shibu and others vs. State of Kerala and another [2019 (3) KHC 1] argued that, “no prosecution against trust alleging commission of offence punishable under section 138 of the NI Act is maintainable. Since, trust is not a body corporate or an association of individuals as provided in the explanation to section 141 of the NI Act”.

3. He further asserted that, “the complainant failed to prove the execution and issuance of Ext. P1 cheque by the accused and also the pleadings in the complainant and testimony of PWs 1 and 2 are contradictory in nature”.

CONTENTIONS RAISED BY RESPONDENTS:-

1. Referring to a judgment of the Madras High Court in Crl. OP Nos. 12630 and 12661 of 2012 and MP Nos. 1, 2, and 2 of 2012, the learned counsel of the respondent no. 2 contended that, “a trust (an artificial person) can be prosecuted, though there is compulsory sentence of imprisonment prescribed under section 138 of the NI Act, a trust can be imposed only with fine or compensation”.

2. Secondly, he argued that, “the drawer of a cheque is the one who makes a cheque and under section 138 of the NI Act, if a drawer fails to pay the cheque amount as demanded under a notice, is liable for punishment. Therefore, it is undoubtedly clear that a public charitable trust, being a drawer is liable for punishment under the NI Act”.

3. He further stated that, “even though the judgment of the Madras High Court rendered above was challenged before the Apex Court by filing SLP, the same also was dismissed, though he did not place the said order of dismissal”.

4. Referring to the decision of the Bombay High Court in The Dadasaheb Rawal Co-op, Bank of Dondaicha Ltd. vs. Ramesh and Others, the learned counsel for respondent no 2 further contended that, “a plain reading of the expression ‘company’ as used in sub-clause (a) of the explanation is that it is inclusive of any body corporate or ‘other association of individuals’. The term ‘association of individuals’ include club, trust, HUF business, etc. It shall have to be construed ejusdem generis alongwith other expressions ‘company’ or ‘firm’.

JUDGMENT ANALYSIS:-

In this matter, the specific case of the complainant before the trial court was that on receipt of money as loan from the complainant for and on behalf of the Trust, a cheque of the 1^st accused (Trust) was signed and issued by the 2nd accused to discharge the liability of the Trust and accordingly on dishonor of the cheque prosecution was launched.

Analyzing the decision rendered by the Madras High Court, it could be gathered that after elaborately considering the relevant statutory provisions, the learned Single Judge held as above. The High Courts of Bombay and Gujarat interpreted the explanation appended to Section 141 of the N.I. Act with reference to “inclusive of any body corporate” or “other association of individuals” and construed the above terms by applying the principle of ejusdem generis and held that the term “association of individuals” will include club, trust, Hindu Undivided Family Business.

Coming to K.P. Shibu and Others's case, it is discernible that the said decision is not so elaborative and the interpretation of the term “association of individuals” not done by applying the ratio of ejusdem generis. The principle of ejusdem generis intented for the construction of constitutional and statutory provisions means “of the same kind” and this doctrine provides that the general words which follow the specified words will be restricts to the same class of the specified words.

While applying this principle,

(1) the general words must follow the specific words and the specific words must necessarily constitute, a genus/class

(2) the legislative intention of the statute to be born in mind for restricting the general word to the genus/class of the specified words if follows and

(3) this principle has to be used by the Courts properly and apply where it is necessary and not use this principle where it is not necessary so as to defeat the purpose of the statute and to cause miscarriage of justice are the conditions to be satisfied.

Thus, it appears that the High Courts of Madras, Bombay and Gujarat correctly interpreted the various Provisions and the law emerges from the said judgments are as under:-

(i) The expression “company” used in sub-clause (a) of explanation appended to Section 141 of the N.I. Act includes any body corporate or other “association of individuals” and the term

“association of individuals” to be interpreted by applying the principle of ejusdem generis. To be construed so, the term “association of individuals” will include club, trust and Hindu undivided family business along with the expression “company” or “firm”.

(ii) A Trust, either private or public/charitable or otherwise, is a juristic person who is liable for punishment for the offence punishable under Section 138 of the Negotiable Instruments Act.

(iii) A Trust, either private or public/charitable or otherwise, having either a single trustee or two or more trustees, is a company in terms of Section 141 of the Negotiable Instruments Act.

(iv) For the offence under Section 138 of The Negotiable Instruments Act, committed by the

Trust, every trustee, who was in-charge of the day to- day affairs of the Trust shall also be liable for punishment besides the Trust.

Therefore, following the legal principles set forth above, it has to be held that the challenge raised by the accused on the ground that no prosecution under Section 138 read with Section 141 of the N.I. Act against the Trust would lie, cannot be sustained and the same stands repelled.

In another decision reported in [(2015) 3 SCC 123: (2015) 2 SCC (Cri) 19], Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao Phalke, the Apex Court held that the High Court in exercise of revisional jurisdiction shall not interfere with the order of the Magistrate unless it is perverse or wholly unreasonable or there is non-consideration of any relevant material, the order cannot be set aside merely on the ground that another view is possible. The said ratio has been followed in a latest decision of the Supreme Court reported in [(2018) 8 SCC 165], Kishan Rao v. Shankargouda.

Thus the law is clear on the point that the whole purpose of the revisional jurisdiction is to preserve power in the court to do justice in accordance with the principles of criminal jurisprudence and, therefore, it would not be appropriate for the High Court to re-appreciate the evidence and come to its own conclusion on the same when the evidence had already been appreciated by the Magistrate as well as the Sessions Judge in appeal, unless any glaring feature is brought to the notice of the court which would otherwise tantamount to gross miscarriage of justice.

To put it otherwise, if there is non-consideration of any relevant materials, which would go to the root of the matter or any fundamental violation of the principle of law, then only the power of revision would be made available.

CONCLUSION:-

Apart from the above contentions, nothing substantiated by the learned counsel for the accused/revision petitioners to revisit the concurrent verdicts of conviction and sentence. Therefore, the conviction imposed by the trial court and confirmed by the Appellate Court does not require any interference.

Coming to the sentence, the same also is very reasonable and the same also does not require any interference. In the result, this revision petition fails and is accordingly dismissed. Therefore, the revision petitioners/accused are directed to pay the fine/compensation imposed by the trial court within a period of two weeks from today.

If the revision petitioners/accused fail to pay the fine/compensation, as directed, the trial court shall execute the sentence as per law without fail