2025 (5) TMI 1618 - HC - Indian Laws

High Court overturns acquittal in Section 138 case, rules companies can substitute authorized representatives with court permission

Shriram Transport Finance Co. Ltd. Versus The State of West Bengal & Anr.

HC set aside trial court's acquittal in dishonour of cheque case under Section 138 N.I. Act. Trial court erred by acquitting accused solely because ... Challenged the acquittal of the accused - Dishonour of the cheque - offence punishable under section 138 of the N.I. Act - post-dated cheque as security - presumption of liability under Section 139 - non examination of the first authorized representative - dejure complainant - failed to prove the charge beyond reasonable doubt - HELD THAT:- In the present case PW-1 Jayanta Halder who is the substituted representative of the complainant company has stated that it is true that Sandip Banerjee, the then branch manager of the company filed the case and he filed affidavit in chief along with original documents. But those documents were not marked exhibit in the case and in the meantime Sandip Chatterjee left the company. Mr. Lahiri on behalf of the appellant also submits that whereabouts of said Sandip Chaterjee is not available with the company. Mr. Lahiri in this context argued that under such circumstances the evidence adduced by the said witness can very well be looked into for determining the merit of the case until and unless the accused is able to canvass the irreparable loss and prejudice. He further submits that entire prosecution case is based on documentary evidence and as such the accused respondents cannot have any cause to prejudice for non production of that initial authorized representative Sandip Chatterjee. Mrs. Jharna Ghosh on behalf of respondent in this context submits that said Jayanta Halder who deposed as PW-1 did not file affidavit in chief and Sandip Chatterjee who filed affidavit in chief did not make himself available for further cross examination and for which the accused did not get the opportunity to cross examine said Sandip Chatterjee and as such the interest of the accused has been seriously prejudiced as also accused did not get any opportunity to rebut his evidence and examination is supposed to be on the basis of affidavit in chief of Sandip Chatterjee. However having considered aforesaid facts and circumstances of the case and having observed that the court below was not justified in acquitting the accused solely on the ground that first authorized representative of the company was not examined and also considering the ground reality that different persons may represent the company and it is open for the dejure complainant/company to substitute the human face representing dejure entity with leave of the court, the judgment impugned which did not address the other issues involved in the case is not sustainable in the eye of law and therefore, liable to be set aside. In such view of the matter the impugned judgment dated 27th August 2021 passed by MM 17th Court Calcutta in complaint case no. C/6947 of 2023 is hereby set aside. The evidence adduced by PW-1 before the court below and the examination of accused under section 313 CrPC are hereby expunged. The court below is directed to conduct denovo trial from the plea taking stage and after giving opportunity to both the parties to adduce documentary and oral evidence and to give the respective other side to cross examine the witness and thereafter following the procedure laid down for trial of summons cases he is directed to conclude the trial at the earliest preferably within a period of six months from the date of communication of the order and thereafter to pronounce judgment afresh without being influenced by any observation made herein. It is also made clear that for the purpose of adducing evidence, the complainant will be at liberty to pray for substitution, if required. CRA (SB) 1 of 2022 thus stands allowed. 1. ISSUES PRESENTED and CONSIDERED- Whether the acquittal of the accused under Section 138 of the Negotiable Instruments Act (N.I. Act) on the ground of non-examination of the first authorized representative of the complainant company is legally sustainable.- Whether the substituted authorized representative's evidence and the documentary evidence filed on behalf of the complainant can be considered despite the initial authorized representative not facing cross-examination.- Whether the trial court erred in dismissing the complaint on a technical ground without considering the substantive merits of the case.- Whether the court below should have exercised its power under Section 311 of the Code of Criminal Procedure (Cr.P.C.) to summon and examine the first authorized representative to ensure a just decision.- Whether the accused suffered any prejudice due to the non-examination of the initial complainant's representative, especially in light of the documentary evidence supporting the prosecution case.- Whether the principles applicable to acquittal in other criminal cases apply identically to proceedings under the N.I. Act, given its quasi-criminal nature.- Whether the substituted authorized representative lacked knowledge of the loan transaction and thus his evidence was inadmissible or insufficient to prove the complainant's case.- Whether the accused's defense that the cheque was issued as a post-dated security cheque and the cheque was materially altered was sufficiently supported and valid to dislodge the presumption under Section 139 of the N.I. Act.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Legality of acquittal based on non-examination of the first authorized representativeThe legal framework mandates that in a complaint under Section 138 of the N.I. Act, the complainant company must be represented by a competent person who files affidavit-in-chief under Section 145 of the Act. The trial court below acquitted the accused solely on the ground that the first authorized representative, Sandip Chatterjee, who filed the affidavit-in-chief, did not appear for cross-examination, and the substituted representative, Jayanta Halder, who appeared later, did not file any such affidavit. The court held that this procedural anomaly was fatal to the prosecution case.The Court referenced precedents establishing that a company, as a legal entity, must be represented by a human face in court, but this representative may change during the course of proceedings by lawful substitution. It is not mandatory that the initial representative who filed the complaint must continue till the end. The Court cited judgments holding that substitution of representatives is permissible and the company can rectify any initial defects at a later stage.The Court further observed that the trial court's refusal to consider the evidence of the substituted representative and the documentary evidence on the sole ground of non-examination of the initial representative was an erroneous application of law and amounted to acquittal on technical grounds, which runs contrary to the legislative intent of the N.I. Act.Issue 2: Consideration of evidence of substituted representative and documentary evidenceThe complainant's entire prosecution case was documentary in nature, relying on the loan agreement, the cheque, the cheque return memo, and the demand notice. The substituted representative, Jayanta Halder, appeared and was cross-examined, but did not file an affidavit-in-chief. The Court noted that while the initial affidavit-in-chief was filed by Sandip Chatterjee, his absence for cross-examination did not automatically vitiate the prosecution case, especially since his whereabouts were unknown and the substituted representative was available to face cross-examination.The Court emphasized that the trial court should have exercised its discretion to summon the initial representative under Section 311 Cr.P.C. to ensure justice rather than acquitting on a procedural technicality. The Court held that the evidence adduced by the substituted representative and the documentary evidence should be considered for determining the merits of the case.Issue 3: Application of Section 311 Cr.P.C. and judicial discretionThe appellant contended that the trial court failed to invoke its powers under Section 311 Cr.P.C. to summon and examine the initial authorized representative, which would have allowed the trial to proceed on merits. The Court agreed that the power under Section 311 is 'exclusive and unfettered' and should be exercised to reach a just decision. The Court found the trial court's failure to do so and instead acquitting on technical grounds as improper and illegal.Issue 4: Prejudice to the accused due to non-examination of initial representativeThe accused argued that non-examination of Sandip Chatterjee caused prejudice because the accused did not get an opportunity to rebut his evidence, which was foundational to the prosecution case. The Court observed that unless the accused demonstrated irreparable loss or prejudice due to non-production of the witness, the prosecution's documentary evidence and the substituted representative's testimony could be relied upon. The Court found no evidence of such prejudice demonstrated by the accused.Issue 5: Burden of proof and presumption under Section 139 of the N.I. ActThe Court reiterated the settled principle that once the complainant proves issuance of the cheque and its dishonour, the burden shifts to the accused to rebut the presumption of liability under Section 139. The accused's defense that the cheque was a post-dated security cheque was found to be an afterthought, uncorroborated and inconsistent with documentary evidence. The Court noted that mere possession of a signed blank cheque does not automatically discharge the complainant's burden, but in this case, the accused failed to rebut the presumption effectively.Issue 6: Applicability of principles of acquittal in N.I. Act casesThe appellant emphasized that the quasi-criminal nature of proceedings under the N.I. Act requires a different approach than ordinary criminal cases, and acquittals should not be granted on technical grounds but on merits. The Court agreed, noting that the legislative object of the N.I. Act is to ensure speedy and effective remedy for cheque dishonour cases and that procedural technicalities should not defeat substantive justice.Issue 7: Knowledge and admissibility of evidence of substituted representativeThe accused contended that Jayanta Halder, the substituted representative, lacked knowledge of the loan transaction and thus his evidence was inadmissible. The Court noted that although Jayanta Halder stated he did not file affidavit-in-chief and had limited knowledge of the transaction, this alone does not justify acquittal. The Court directed a fresh trial to allow both parties to adduce evidence and cross-examine witnesses properly, including the substituted representative.Issue 8: Material alteration and validity of chequeThe accused alleged material alteration of the cheque and challenged its validity. The Court found that the accused failed to substantiate this claim with credible evidence. The complainant's documentary evidence and the presumption under Section 139 remained intact, and the defense was considered a belated and uncorroborated attempt to dislodge liability.3. SIGNIFICANT HOLDINGS'The order of acquittal has been recorded by the court below on technical score which runs contrary to the legislative object and purpose for which chapter XVIII of the N.I. Act was introduced.''Even if it was in the mind of the court that earlier authorized representative of the complainant who filed the complaint is a vital witness for reaching to a just decision of the case, what prevented learned Magistrate to invoke his power under 311 of the Code of Criminal Procedure to summon the said person and to compel his attendance before the court to do complete justice.''No magistrate shall insist that the particular persons, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceeding because there may be occasion when different person can represent the company and it is open to the dejure complainant to seek permission of the court for sending any other person to represent company in court.''The evidence adduced by the said witness can very well be looked into for determining the merit of the case until and unless the accused is able to canvass the irreparable loss and prejudice.''The judgment impugned which did not address the other issues involved in the case is not sustainable in the eye of law and therefore, liable to be set aside.'Final determinations:- The acquittal solely on the ground of non-examination of the initial authorized representative is unsustainable.- The substituted authorized representative's evidence and the documentary evidence must be considered for deciding the merits.- The trial court should have exercised its power under Section 311 Cr.P.C. to summon the initial representative rather than acquitting on technical grounds.- The accused failed to prove prejudice or successfully rebut the presumption of liability under Section 139 of the N.I. Act.- The matter is remanded for a de novo trial with directions to allow both parties to adduce evidence and cross-examine witnesses, and the complainant may seek substitution of representatives if necessary.