TaxTMI 
TaxTMI 
2014 (9) TMI 1236
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....ddl. Chief Metropolitan Magistrate, Bangalore in C.C. No. 4116 of 2004. 3. The Appellant is the original complainant. The Respondents are original accused 1 and 2 respectively. Respondent 1 is a private limited company and Respondent 2 is its Managing Director who looks after the day-to-day affairs of Respondent 1 company. The Respondents are financial consultants and sub-brokers who are engaged in the business of trading inter alia on the National Stock Exchange, the Bombay Stock Exchange and the Bangalore Stock Exchange. 4. The Appellant filed a complaint for the offence punishable Under Section 138 of the Negotiable Instruments Act, 1881 ('the NI Act') against the Respondents. Gist of the complaint needs to be shortly stated. The Appellant and her husband had discussions with Respondent 2 regarding trading in 10000 shares of Hindustan Lever Limited belonging to the Appellant. The Respondents advised the Appellant to entrust the said 10000 shares to them and it was represented that those shares would not be sold outright; that the Respondents would utilize their expertise and knowledge of the markets to sell and buy back the shares regularly and they would thereby earn....
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..... To secure the interest of the Appellant, the Respondents offered to replace the previous cheques dated 30/09/2002 with fresh cheques securing the value of 7500 shares and the money due to the Appellant. The Appellant acceded to this request in the hope of recovering her shares. The Respondents addressed two letters dated 22/02/2003 reiterating their commitment to return the shares as well as amounts due to the Appellant and recording the deposit of two cheques totalling Rs. 18,22,500/- towards the value of shares as well as a separate cheque for Rs. 1,79,500/- towards dividends and profits due from the transactions in the said shares. As the extension of time was expiring, the Respondents again sought further extension of time till 31/12/2003 vide letter dated 30/6/2003 and for replacement of earlier cheques, enclosed two cheques; being cheque No. 392942 dated 01/08/2003 for a sum of Rs. 8,50,000/- and cheque No. 392943 dated 01/08/2003 for a sum of Rs. 9,72,000/- both drawn on Corporation Bank, M.G. Road Branch, Bangalore, towards the value of 7500 shares in Hindustan Lever Limited. The Respondents addressed another letter dated 30/6/2003 enclosing another cheque bearing No. 39....
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...., he was not examined by the complainant and since sworn statement of the complainant was not recorded complaint was not maintainable. 8. On 09/11/2006 the trial court convicted the Respondents of the offence punishable Under Section 138 of the NI Act. The Respondents were sentenced to pay a fine of Rs. 30,12,000/- out of which a sum of Rs. 30,02,000/- was directed to be paid to the Appellant as compensation and balance of Rs. 10,000/- was directed to be paid to the State. Respondent 2 was sentenced to six months' simple imprisonment in the event of failure to pay the fine amount. 9. The Respondents filed an appeal in the Court of Principal City and Sessions Judge, Bangalore being Criminal Appeal No. 1897 of 2006. On 17/09/2009 the said appeal was rejected by the Fast Track Court-V, Bangalore. 10. Aggrieved by the order of Fast Track Court-V, Bangalore, the Respondents preferred a criminal revision petition in the Karnataka High Court. By the impugned orders, the Karnataka High Court overturned the concurrent judgments of the courts below and acquitted the Respondents only on the ground that the complaint had been presented by the Appellant's husband as her power of atto....
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....missed on that ground. Counsel further submitted that the cheques were not issued in discharge of legally recoverable debt. Letters dated 1/10/2002 and 22/2/2003, exchanged between the Appellant and the Respondents mention that the cheques have been issued as security. This is reflected in the complaint and cross-examination of the complainant. In support of this submission, the counsel relied on M.S. Narayana Menon v. State of Kerala (2006) 6 SCC 39, Sudhir Kumar Bhalla v. Jagdish Chand (2008) 7 SCC 137 and Kamala S. v. Vidhyadharan (2007) 5 SCC 264. 13. We shall first deal with the submission that copy of power of attorney was not produced by the Appellant. We have carefully perused the written submissions filed by the Respondents in the trial court. This submission was not raised and consequently not considered by the trial court. In fact, since this submission pertains to documents produced in the trial court, it ought to have been raised there. It could have been more appropriately dealt with by the trial court. But it was not raised. The Respondents filed appeal in the Sessions Court. In the appeal memo, no contention was raised that copy of power of attorney was not produce....
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....s under: 1. To represent me before the said Court to all intents and purposes in connection with the said criminal case to be filed, prosecuted before the Criminal Court Under Section 138 of the Negotiable Instruments Act. 2. And to appear for and prosecute and defend all actions and proceedings, to sign and verify all plaints, written statements and other pleadings, applications, petitions or documents to the court, to deposit, withdraw and receive documents and any money or moneys from the court or from the opposite party, either in execution of the decree or otherwise and, on receipt of payment thereof, to sign and deliver proper receipts and discharge the same for and on my behalf 3. To engage and appoint any solicitor, advocate or advocates or counsel to act and plead and otherwise conduct the said case whenever my said attorney thinks proper to do so. 16. Having perused the copy of the power of attorney, we are satisfied about its authenticity. We view this power of attorney in light of the statement made by the Appellant in the complaint that because she was not keeping good health and was unable to come to the court and because the whole transaction was within the knowl....
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....wledge? (v) Whether the proceedings contemplated Under Section 200 of the Code can be dispensed with in the light of Section 145 of the N.I. Act which was introduced by an amendment in the year 2002? 18. After considering the relevant provisions of the NI Act and the relevant judgments on the point, this Court clarified the legal position and answered the questions in the following manner. (i) Filing of complaint petition Under Section 138 of NI Act through power of attorney is perfectly legal and competent. (ii) The Power of Attorney holder can depose and verify on oath before the Court in order to prove the contents of the complaint. However, the power of attorney holder must have witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions. (iii) It is required by the complainant to make specific assertion as to the knowledge of the power of attorney holder in the said transaction explicitly in the complaint and the power of attorney holder who has no knowledge regarding the transactions cannot be examined as a witness in the case. (iv) In the light of Section 145 of NI Act, it is open to the Magistrate to....
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....000 shares. Her evidence substantiates her case that her husband had knowledge about the entire transaction. Hence, the submission that the complaint could not have been filed through power of attorney holder must fail. 21. It is then submitted that the pre-summoning evidence of power of attorney holder should have been filed. We have no hesitation in rejecting this submission. We have already reproduced the relevant paragraph of the Appellant's evidence where she has stated that due to her ill-health, she was unable to come to the court, hence, the complaint was being filed by her power of attorney holder who had knowledge of the transactions. The power of attorney holder's sworn statement was recorded and summons was issued. This exercise cannot be faulted and is in complete accord with Section 200 of the Code. At that stage, the power of attorney holder had stepped in the shoes of the Appellant. Otherwise, there was no point in the Appellant giving power of attorney to her husband. A.C. Narayanan nowhere states that if the complaint is filed by the complainant through power of attorney holder, the complainant must file affidavit in support of the complaint prior to issu....
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....n consider granting me time till 31st December 2003 to return the 7500 shares to you. I would in the meantime ensure that smaller lots are credited to your account. I am replacing the cheques issued to you earlier by the following instruments: (a) Cheque No. 392942 dt. 1.8.2003 Rs. 850,000.00 (b) Cheque No. 392943 dt. 1.8.2003 Rs. 972,000.00 If I fail to return the shares by 31st December, 2003, I agree to your depositing the cheques to recover your dues. In the case of any eventualities to you, I agree to return these shares to your husband Mr. Sudhir Gulvady or your children Ms. Aparna Gulvady and/or Mr. Gautam Gulvady. I request you to kindly return the cheques issued to you earlier. 24. On the basis of the averments made in the complaint and on the basis of the above letter, it is contended by learned Counsel for the Respondents that the above cheques were issued as a security; that there was no crystallized liability or outstanding dues and that there was no legally recoverable debt and, therefore, the complaint was not tenable. On the other hand, it is strenuously contended by the counsel for the Appellant that it is abundantly clear from the above letter that the chequ....