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2008 SCC OnLine Bom 593 : (2008) 6 Mah LJ 353 : (2008) 6 Bom
CR 399 : (2009) 73 AIC (Sum 31) 14

In the High Court of Bombay

Panaji-Goa
Negotiable Instruments Act, Sections 138, 142, 118 and 139
(BEFORE N.A. BRITTO, J.)

Chico Ursula D'Souza … Petitioner;

Versus
Goa Plast Pvt. Ltd. … Respondent.
Cri. Rev. Appln. Nos. 4 of 2007, 4/2008, 5/2008, 6/2008, 7/2008,
8/2008 and 9/2008
Decided on June 25, 2008

(a) Negotiable Instruments Act, S. 142(a) — Dishonour of cheque —

Complaint on behalf of the company — Must be filed by a person authorized
by a resolution of the board of directors or by articles of association of the
company.
A Director of the complainant-company, authorised P.W.I to lodge complaint for
prosecution of the Managing Director of the company for dishonour of cheques
issued in favour of the company and to depose on its behalf in the Court of law. A
person who claims to represent another is expected to produce an authority or
power which entitles him to so appear. An incorporated company is a separate
juristic person distinct from its directors or shareholders. It acts through the
resolutions passed by its board of directors. PW 1 could have appeared and
deposed on behalf of the company only in case he was authorised by a resolution
of the board of directors or by articles of association of the company. A Director
alone could not have given a power of attorney to PW 1 to prosecute the accused
or depose on behalf of company unless there was a resolution in his favour passed
by the company at its meeting of the Board of Directors. The complaint which was
entertained, based on a purported power of attorney, given by one of the Directors
could not in law be entertained and the accused convicted. 2006 (2) Bom.C.R. (Cri)
717 and Cri. Revision No. 56 of 2006 [2007 (6) Mh.L.J. 94], Rel.
(Paras 7 and 8)
(b) Negotiable Instruments Act, S. 142(a) — Dishonour of cheque —
Complaint on behalf of registered company — Power of attorney in favour of
PW 1 not given by the complainant company but by one of its Directors —
Complaint was not filed by the company as required under section 142(a) —
On such complaint no process could have been issued and no conviction
could have been imposed.
(Paras 9 to 11)
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(c) Negotiable Instruments Act, S. 138 — Cheque returned by the Bank

with the endorsement “present again” — Complainant need not wait to
present the same again and could proceed with the prosecution of the
accused. (2004) 2 SCC 235, Ref.
(Para 12)
(d) Negotiable Instruments Act, SS. 138, 139 and 118 — Presumptions
available under sections 138, 139 and 118 are all rebuttable.
The presumptions available under sections 138, 139 and 118 of the Negotiable
Instruments Act are all rebuttable presumptions and they can be rebutted by the
accused either with the help of the evidence of the complainant or his own and they
are required to be established by a lower standard of proof i.e. on the balance of
probabilities and not by a higher standard which is always required of the
prosecution being a standard beyond reasonable doubt. The circumstances under
which the cheques came to be issued by letter dated 20-7-1992 have been
explained by the accused in his evidence while no such evidence

Page: 354

has come from the complainant. The accused after having discharged the onus
placed upon him by aforesaid sections of the Act by explaining the circumstance in
which he gave the said letter and the 10 cheques it was necessary for the
complainant to have proved that in fact Rs. 7,17,171/- were missing from the
company and out of that the liability of the accused was Rs. 4 lacs. Considering the
evidence led by the accused, both the Courts below were not justified in coming to
the conclusion that the accused had not discharged the presumption available to
the complainant in terms of sections 138, 139 of the Act. The accused had
discharged his onus and had rebutted the presumptions. The complainant had failed
to prove that there was either any shortage of funds or any shortage was at all
attributable to the accused and more so when the complainant itself had clearly
stated that there were three persons to whom the said shortage could have been
attributed. The revisions are allowed and the judgment of both the Courts below
are set aside and the accused is acquitted under section 138 of the Act in all the
cases.

(Paras 22, 23, 25 and 26)

For Petitioner: A.F. Diniz
For Respondent: Sudesh Usgaonkar

List of cases referred:

1. Goa Plast (P) Ltd. v. Chico Ursula D' Souza, 2004(Paras 2, 4, 5, 12, 18, 24)
(2) Mh.L.J. (S.C.) 348 : (2004) 2 SCC 235
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2. Goa Plast (P) Ltd. v. Chico Ursula D' Souza, (Para 2)

(2003) 3 SCC 232

3. Rajendraprasad Gangabishen Porwal v. (Paras 6, 20)

Santoshkumar Parasmal Saklecha, 2008 (1)
Bom.C.R. (Cri.) 647

4. Krishna Janardhan Bhat v. Dattatraya G. Hegde, (Paras 6, 18, 20, 22)

2008 (2) Mh.L.J. (Cri) (S.C.) 447 : 2008 (4)
Mh.L.J. (S.C.) 354 : 2008 AIR SCW 738

5. Alka Toraskar v. Vaishya Urban Co-op. Credit (Para 7)

Society Ltd., 2006 (2) Bom.C.R. (Cri) 717

6. Shri Ashok Bampto Pagui v. Agencia Real (Para 8)

Canacona, Cri. Rev. Application No. 56/2006
decided on 8-6-2007 [2007 (6) Mh.L.J. 94]

7. MMTC Ltd. v. Medchl. Chemicals and Pharma (P) (Para 8)

Ltd., 2002 ALL MR (Cri) 230 (S.C.)

8. Dale and Carrington Invt. (P) Ltd. v. P.K. (Para 8)

Prathapan, (2005) 1 SCC 212

9. Capt. Harcharanjit Singh Thind v. Deeksha Thind, (Para 9)

Appeal from Order No. 89/2006 decided on 22-2-
2008

10. Bratindranath Banerjee, Director, Standard (Para 10)

Chartered Bank v. Hiten P. Dalai, 1994 (4)
Bom.C.R 237

11. Roy Joseph Creado v. Tamisuddin Nazir Ahmed, (Para 18)

2008 (3) Mh.L.J. 705 : 2008 (2) Mh.L.J. (Cri) 118 :
2008 (1) Bom.C.R. (Cri) 402

12. Hiten P. Dalai v. Bratindranath Banerjee, (2001) 6 (Para 21)

SCC 16
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13. Bharat Barrel and Drum Manufacturing Company (Para 22)

v. Amin Chand Pyarelal, (1999) 3 SCC 35

ORAL JUDGMENT
1. These revisions are filed by the accused who has been convicted
and sentenced under section 138 of the Negotiable Instruments

Page: 355

Act, 1881 (‘Act’ for short) and whose convictions and sentences have
been upheld by the learned Session Judges.

2. Since the facts involved are almost common, by consent of

Counsel they are being disposed of by this common judgment. The
cases from which these revisions arise, pertain to the cheques of
different dates given by the accused, with letter dated 20-7-1992. The
accused was the Managing Director of the complainant which is a
registered company. The details of the said cheques are as follows:
Cheque Date Amount Criminal Case No.
No. Revision No. before JMFC
0160171 10-1-1993 40,000/- Decided by 149/2003
S.C. 2004 (2)
Mh. L.J. (S.C.)
348 : 2004
(2) SCC 235
0160172 10-4-1993 40,000/- Crir No. 150/1993
9/2008
0160173 10-8-1993 40,000/- Crir No. 372/1993
7/2008
0160174 10-12-1993 40,000/- Crir No. 10/1994
8/2008
0160175 10-4-1994 40,000/- Crir No. 37/1994
5/2008
0160176 10-8-1994 40,000/- Crir No. 5/1995
4/2008
0160177 10-12-1994 40,000/- Crir No. 66/1995
4/2007
0160178 10-4-1995 40,000/- Crir No. 66/1995
4/2007
0160179 10-8-1995 40,000/- Crir No. 32/1996
6/2008
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0160180 10-12-1994 40,000/- Crir No. 32/1996

6/2008
3. The case regarding the first cheque No. 0160171 dated 10-1-
1993 finally ended in conviction against the accused by the judgment
of the Hon'ble Supreme Court dated 20-11-2003 reported in 2004 (2)
Mh. L.J. (S.C.) 348 : 2004 (2) SCC 235. These cases had also landed
before the Hon'ble Supreme Court at one stage and the Hon'ble
Supreme Court was pleased to remand the cases by another judgment
dated 7-3-2003 reported in 2003 (3) SCC 232.
4. The case of the complainant which is a registered company and
whose factory apparently came to be closed down, is that the said
cheques were issued because the accused owed the complainant a
certain amount and in order to pay the said amount, the accused had
drawn the said post dated cheques. The cheques were presented for
payment into the account of the complainant, and as far as Criminal
Revision No. 4/2007 is concerned, the said cheque was returned on 12-
5-1997 with remark ‘present again’. The complainant thereafter sent
the notice to the accused demanding the payment. However, the
accused did not reply to the notice. Thereafter, the complaints came to
be filed on different dates and in support of the case of the
complainant, one I.B. Mulchandi came to be examined pursuant to a
power of attorney purportedly given by Mr. Audhut Timblo, the Director
of the complainant. The case of the accused, when examined under
section 313 of the Code of Criminal Procedure, 1973, was that he had
issued the cheques under a mistaken belief that the amount was due.
It was further his case that on finding a note (letter from Mr. Timblo)
he had realised that he had not owed any money to the complainant
and therefore he informed Mr. Audhut Timblo in writing that there was
no liability due. The accused examined himself in support of his
defence.

Page: 356

5. The learned trial Court in convicting the accused also referred to

the first case 2004 (2) Mh. L.J. (S.C.) 348 : 2004 (2) SCC 235 and
guided by it, proceeded to convict and sentence the accused. The
learned first appellate Court noted, and, in my view rightly, that under
Criminal law each case has to be decided on its own merits, but did not
accept the contention on behalf of the accused that the trial Court had
convicted the accused based on the said first judgment of the Hon'ble
Supreme Court and that the learned Magistrate had only noted certain
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observations made by the Hon'ble Supreme Court in the said earlier

case.
6. At the hearing of these revisions, Counsel appearing on behalf of
both parties have also referred to the said judgment, in the first case in
2004 (2) Mh. L.J. (S.C.) 348 : 2004 (2) SCC 235.
7. To challenge the convictions, three points have been raised by
Shri Diniz, the learned Counsel on behalf of the accused. The first is
that the complaint was filed by a person who was not authorized by the
company and that too in favour of a stranger who had no connections
with the said company and without any resolution in his favour. The
second is that the Bank's endorsement ‘present again’ would not satisfy
the ingredients of the offence for the purpose of launching a
prosecution under section 138 of the Act. Thirdly, learned Counsel has
submitted that both the Courts below had misdirected themselves in
interpreting the provisions of section 139 of the Act and has farther
submitted that there is no presumption in law that debt exists and in
support of this submission learned Counsel has placed reliance on the
cases of Rajendraprasad Gangabishen Porwal v. Santoshkumar
Parasmal Saklecha, 2008 (1) Bom. C.R. (Cri.) 647 and Krishna
Janardhan Bhat v. Dattatraya G. Hegde, 2008 (2) Mh. L.J. (Cri) (S.C.)
447 : 2008 (4) Mh. L.J. (S.C.) 354 : 2008 AIR SCW 738.
8. As regards the first objection, there is no dispute that the
complainant in this case is a company registered under the Companies
Act, 1956. On behalf of the complainant, the power of attorney
purported to have been executed by Shri Audhut Timblo, the Director of
the company was produced. The authority of Mulchandi/PW 1 was
questioned before the trial Court and the learned trial Court did not
entertain any objection observing that the accused at no point of time
had raised any grievance about the authority of Shri Mulchandi to file a
complaint or depose on behalf of the complainant and said power of
attorney clearly brought out that he was authorized by Shri Audhut
Timblo, the Director of the company, pursuant to a resolution of the
Board of Directors dated 30-6-1995. The first appellate Court also dealt
with the said objection and the learned first appellate Court observed
that Mr. Mulchandi/PW 1 had not filed the complaint in his personal
capacity and that the said power of attorney disclosed that Mr.
Mulchandi/PW 1 had been authorized by Mr. Audhut Timblo to make,
sign, execute and affirm, present and file any application, written
statement, plaint, reply complaints, affidavits, representations,
declarations, cross objection, memos of appeal, revision, etc. and to
make any statements, defences and to verify the same and further to
give statements on oath or to depose on behalf of the said Company in
any court of law and/or before the public authorities or authority. The
learned first appellate Court also observed that since the said power of
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attorney was produced by Mr. Mulchandi/PW 1 which authorized him to

Page: 357

file the complaint and to depose on behalf of the complainant and as no

challenge was made to the said power of attorney, it should be
presumed to be admitted and therefore as proved. Counsel on behalf of
the complainant has submitted that the Director of the company is also
entitled to file the complaint. Since the complaint was filed by the
company, it was necessary for the said Mr. Mulchandi/PW 1 to prove
before the Court that he had authority to appear on behalf of the
company. Shri Diniz, the learned Counsel on behalf the accused has
placed reliance on two decisions of this Court. The first is in the case of
Alka Toraskar v. Vaishya Urban Co-op. Credit Society Ltd., 2006 (2)
Bom. C.R. (Cri) 717. That was a case where the complaint was filed by
registered co-operative credit society registered under the Maharashtra
Societies Co-operative Act, 1960 as applicable to the State of Goa. A
resolution of the said Society was produced. When the said resolution
was brought to the notice of the witness, who was examined on behalf
of the complainant, the said witness had stated that the resolution
authorized him to attend Court cases and not to depose on oath. This
Court observed that the said resolution did not authorize Shri Gaurish
P. Shirodkar, the recovery officer of the complainant-Co-operative
Society either to file complaint on behalf of the complainant which is a
separate legal entity or to depose in support of the complainant. This
Court further observed that the complaint under section 142 of the Act
can be filed either by the payee or the holder in due course. The
complainant/Co-operative Society was the payee in that case and the
complaint was filed in its name. The authority produced did not
sufficiently authorize Shri Gaurish P. Shirodkar either to file the
complaint or to depose in support thereof. The complainant was not
sufficiently represented before the Court, therefore, it could not be said
that the complaint filed or the evidence given in support thereof was in
accordance with section 142 of the Act, which required that the
Complaint has to be made by the payee or the case may be, by the
holder in due course, of the cheque. In the absence of any power of
attorney or the valid authority by the complainant in favour of the said
recovery officer, the complaint itself could not have been entertained
and conviction based on such a complaint was liable to be set aside.

9. The other is the case of Shri Ashok Bampto Pagui v. Agenda Real
Canacona (unreported judgment dated 8-6-2007 in Criminal Revision
Application No. 56/2006) (since reported in 2007 (6) Mh. L.J. 94). That
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was a case also filed by a private limited company. This Court after
considering various authorities on the subject including the case of
MMTC Ltd. v. MedchL Chemicals and Pharma (P) Ltd., 2002 ALL MR (Cri)
230 (S.C.) on which reliance has been placed by the learned first
appellate Court, and, after referring to Dale and Carrington Invt. (P)
Ltd. v. P.K. Prathapan, 2005 (1) SCC 212 held that:
“A Director, as an individual Director, has no power to act on behalf
of a company. He is only one of a body of Directors called the Board
of Directors and alone he has no power except such as may be
delegated to him by the Board of Directors or given to him by the
articles of association of a company. In the case at hand, the
complaint was filed by one of the Directors and as already stated by
a Director who had initially complained to the Police that the subject
cheque was forged by the

Page: 358

accused, and, without any resolution of the company or any

authorization from the Board of Directors. The view held by me is
consistent with the views expressed in decisions referred to herein
above, namely, those of the Madras High Court in Ruby Leather Exports
v. K. Venu (1995 Vol. 82 Company Cases 776), Andhra Pradesh High
Court and Delhi High Court which is now confirmed by the view held by
the Apex Court in Dale and Carrington Invt. (P) Ltd. v. P.K. Prathapan
(supra) and therefore I hold that the complaint in this case was not
filed by the company as required under clause (a) of section 142 of the
Act and on such a complaint no process could have been issued much
less a conviction imposed.”

10. This decision is squarely applicable to the facts of the case at

hand. It is quite interesting to know that in this case a Director has
purported to prosecute a Managing Director! An incorporated company
is a separate juristic person distinct from its Directors or Shareholders.
It acts through the resolutions passed by its Board of Directors. Mr.
Mulchandi/PW 1 could have deposed on behalf of the complainant only
in case there was a resolution of the Board of Directors or in case he
was otherwise authorized by the articles of association of the company.
A person who claims to represent another is expected to produce an
authority or power which entitles him to so appear. Mulchandi/PW 1
could have appeared and deposed on behalf of the company only in
case he was authorized by a resolution of the Board of Directors or as
already stated, by articles of the association of company. He had
produced no such resolution and therefore the complaint filed on behalf
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of the company could not have been entertained and much less a
conviction imposed. A Director alone could not have given a power of
attorney to Mulchandi/PW 1 to prosecute the accused or depose on
behalf of company unless there was a resolution in his favour passed by
the company at its meeting of the Board of Directors. The complaint
which was entertained, based on a purported power of attorney, given
by one of the Directors could not in law be entertained and the accused
convicted.
11. There is another aspect which needs to be looked into. Shri
Diniz, learned Counsel on behalf of the accused has contended that the
said power of attorney in favour of Mulchandi/PW 1 does not authorize
him to file a complaint. Learned Counsel particularly refers to clause 3
of the said power of attorney which authorizes “to make, sign, execute
and affirm, present and file any application, written statement, plaint,
reply complaints, affidavits, representations, declarations, cross
objection, memos of appeal, revision, etc. and to make any statements,
defences and to verify the same and further to give statements on oath
or to depose on behalf of the said company in any Court of law and/or
before the public authorities or authority”. Shri Usgaonkar on the other
hand submits that the plaint referred to in the said clause could be
understood only as a plaint as defined under the Code of Civil Procedure
and the complaint referred to therein could be understood with
reference to the Code of Criminal Procedure, 1973 and therefore the
expression “reply complaints” could be understood only as a complaint
as contemplated under the Code of Criminal Procedure, 1973. A bare
reading of the said clause 3 shows that it refers to “reply complaints”
and not to any complaints. One does not know what the principal

Page: 359

exactly meant by the said expression. Nevertheless, in Capt.

Harcharanjit Singh Thind v. Deeksha Thind (unreported judgment of
this Court dated 22-2-2008 in Appeal from Order No. 89/2006) this
Court had referred to Halsbury's Laws of England wherein it was stated
that:

“An instrument conferring authority by deed is termed a power of

attorney. The person conferring the authority is termed the donor of
the power, and the recipient of the authority, the donee. A power of
attorney is construed strictly by the Courts, according to well-
recognised rules, regard first being had to any recitals which,
showing the general object, control the general terms in the
operative part of the deed.”
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12. That the power of attorney must be strictly construed to confer

an authority given expressly or by necessary implications is a view
which can also be found at page 75 of Bowstead on Agency and at page
2118 of Pullock and Mulla. Viewed in that light, since the power of
attorney confers power both of filing the plaint and written statement,
as well as the complaint and reply, it could be understood that it does
by necessary implication authorized the said Mulchandi to file a
complaint as well. Nevertheless the matter cannot be allowed to end
there.
13. Mulchandi/PW 1 stated in his evidence that he had the power of
attorney of the complainant and produced the same and which was
marked as Exhibit I.A. already stated the complainant is a registered
company and the said power is purported to have been given by the
said Mr. Audhut Timblo. Mulchandi/PW 1 however, did not even identify
the signature of the said Mr. Audhut Timblo on the said power of
attorney to show that it was issued by the said Mr. Audhut Timblo. It
was the duty of Mulchandi/PW 1 to have prima facie proved that he had
entered the witness box pursuant to the power given by the said Mr.
Audhut Timblo. In the circumstances, it must be stated that the said
power of attorney was not at all proved and much less the endorsement
made thereon that it was issued pursuant to the resolution of the Board
of Directors dated 30-6-1995 regarding which Mulchandi/PW 1 also
remained silent. It was for Mulchandi/PW 1 to have, prima facie, proved
that he was authorized to depose on behalf of the complainant, or on
behalf of the Director to whom he purported to represent. There was no
resolution from the Board of Directors authorizing Mulchandi/PW 1 to
depose on behalf of the company. Likewise, the power of attorney
produced by him was not proved by him as having been executed by
the said Audhut Timblo. The question of further cross-examination by
the accused could have been insisted only in case Mulchandi/PW 1,
had, prima facie proved either that he had authority from the Company
or from the said Mr. Audhut Timblo. Counsel on behalf of the
complainant has placed reliance on a decision of this Court in
Bratindranath Banerjee, Director, Standard Chartered Bank v. Hiten P.
Dalal, 1994 (4) Bom. C.R. 237 wherein this Court observed as follows:
I am unable to accept these submissions. The said Bank
undoubtedly is a legal entity. But it can only act through its officers.
Mr. Bratindranath Baneriee is admittedly a Director of the said Bank
and an officer of that Bank. On a plain reading of the complaint, it is
clear that it has been filed by Mr. Bratindranath Banerjee as a
Director of the said Bank and not as an individual. In fact the
accused himself understood that this is a

Page: 360
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complaint by the said Bank. This is clear from Application No. 15 of

1992 which has been filed by the accused. In this application, in para 1
the accused himself states that he has received a copy of the complaint
filed on behalf of the said Bank. Also there is no challenge to the
statement of Mr. Baneijee was that he was authorized to file this
complaint. There is also no challenge to the deposition of Mr. Banerjee
that the complaint was filed on behalf of the said Bank. The contents
and substance of the complaint also make it clear that it is by the said
Bank. Accordingly I hold that the complaint is maintainable and is not
barred under section 142(a) of the Negotiable Instruments Act.

14. In my view, the said observations would be inapplicable to the

facts of this case and disclosed hereinabove. The complaint was filed by
registered company and firstly it was necessary for a company by
resolution to have authorized Mulchandi/PW 1 to file a complaint
against the accused and depose in support of it. No such authority was
produced by Mulchandi/PW 1. Secondly, Mulchandi/PW 1 did not even
prima facie prove that the said power of attorney was given by the said
Audhut Timblo by identifying his signature. He stated that it was given
by the complainant when in fact it was not. What follows from the
aforesaid discussion is that the company itself did not authorize
Mulchandi/PW 1 to file a complaint and depose in support thereof.
Secondly, Audhut Timblo being only a Director could not have
authorized Mulchandi/PW 1 to depose on behalf of the company.
Thirdly, the power of attorney produced by Mulchandi/PW 1 was not
prima facie proved as having been given by Mr. Timblo. In such a
situation, and, as observed by this Court in Ashok G. Bagi (supra),
since the complaint was not filed by the company as required under
clause (a) of section 142 of the Act, on such a complaint no process
could have been issued and no conviction could have been imposed. In
the absence of prima facie proving that Mulchandi/PW 1 had an
authority to depose on behalf of the company, the accused had the
right to maintain profound silence. The question to cross-examine
would have come only in case the authority produced was prima facie
proved.
15. As regards the second objection, what follows from the evidence
of Ulhas Narkar/PW 2 is that on 15-3-1993 the accused had issued stop
orders for the payment of 10 cheques. The accused at the time of
issuing the said stop order did not have sufficient funds into his
account. Although the cheques ought to have been returned with the
endorsement that the accused had stopped payment, one fails to
understand as to why the cheques were returned with endorsement
“present again”. Ulhas Narkar/PW 2 has stated that generally they give
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that reason when they expect the funds to be deposited by the

customer into the account. Learned Counsel on behalf of both the
parties have not been able to throw any light as to why in spite of the
stop instructions from the accused, the Bank returned the cheque with
the said endorsement “present again”, inasmuch as, the said Ulhas
Narkar himself has not been able to give any explanation. Since the
cheques were returned unpaid because of the said stop instructions
from the accused, nevertheless it cannot be said that no offence was
committed by the accused on that count. This matter has already been
dealt by the Apex

Page: 361

Court in the said case of Goa Plast (P) Ltd. v. Chico Ursula D'Souza,
2004 (2) Mh. L.J. (S.C.) 348 : (2004 (2) SCC 235) by stating that:

“Once the cheque is issued by the drawer a presumption under

section 139 of the Act must follow and merely because the drawer
issues a notice to the drawee or to the bank for stoppage of the
payment, it will not preclude an action under section 138 of the Act
by the drawee or the holder of a cheque in due course.”
16. Even if it was a case of ‘present again’ the complainant was not
bound to wait to present the same again and since the complainant had
issued the notice and called upon the accused to make the payment of
the dishonoured cheque, the complainant was certainly entitled to
proceed with the prosecution of the accused. The second objection
therefore needs to be rejected.
17. As regards the merits of the case, at the very outset it must be
stated that the handing over the letter dated 20-7-1992 along with the
10 cheques is a transaction which took place between the accused on
one hand, as the Managing Director of the Company, and the said Mr.
Audhut Timblo who was one of the Directors of the said company. The
said Director Mr. Audhut Timblo has not stepped in the witness box.
Who was purportedly authorized was Mulchandi/PW 1, who could not
even claim to be associated with the said company either as an
employee or otherwise. He does not appear to have had any knowledge
about the said transaction inasmuch as he could not have deposed
beyond the documents he produced.
18. Referring to the said documents, it can be seen that by the said
letter dated 20-7-1992 addressed to the complainant/company, the
accused handed over the said 10 cheques stating that he was refunding
the amount due and payable to Goa Plast Pvt. Ltd. The said letter is as
short as that. Thereafter, the accused wrote to the said Director by his
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letter dated 12-2-1993 recalling the issue of the cheques for Rs. 4 lacs
at his request. In the said letter, the accused stated that the Director
had told him that the accounts had showed an unexplained expenditure
of that amount and it was his duty as a Managing Director to see that
the accounts were in order and it was for him to have checked the
assets and liabilities position every month. The accused also
categorically stated that the said letter dated 20-7-1992 was drafted by
Mr. Rajan Kinnerkar at his instance and handed over to him and he was
asked to give his letter exactly in line to the said draft, which he did in
the said letter. In the said letter, the accused stated that he had told
him that he was not good at accounts and that he had required an
accountant to whom the above task could have been entrusted and he
had entrusted the work to Mr. Rajan Kinnerkar and he had told the
accused that he had no knowledge of such an arrangement and had
asked him to prove the same or pay the said difference of Rs. 4 lacs.
The accused also stated that after about 6 months he had managed to
search and find out the said paper in his handwriting and sent the
same along with the said letter. The accused farther stated that he
would recall with the said note that he was not liable to make good the
said amount of Rs. 4 lacs. The said letter of the accused, was replied to,
on behalf of the company, by advocate's letter dated 31-5-1993 and in
this letter it was stated on behalf of the company, that Mr. Timblo had
never denied that Mr. Rajan Kinnerkar was appointed in his professional
capacity of chartered accountant to

Page: 362

review the accounts and monthly assets and liabilities position. It was
accepted that the accounts were reviewed and monthly assets and
liabilities statements were prepared by him but what was stated was
that the accused had not disagreed with the said statements. In the
said letter dated 31-5-1993 it was also mentioned that the accused had
given an excuse as an afterthought and the allegation of the accused
that the letter dated 20-7-1992 was drafted by Mr. Rajan Kinnerkar at
the instance of Mr. Audhut Timblo was totally false. In this letter, it was
also stated that Mr. Audhut Timblo had consented for the appointment
of Mr. Rajan Kinnerkar at the instance of the accused in the capacity of
the Managing Director and on that occasion it is the accused who had
specified what would be the various duties of Mr. Rajan Kinnerkar which
Mr. Audhut Timblo had noted for his records. It was also stated that Mr.
Audhut Timblo was surprised that the accused would have the said
noting in original-in his possession. It was reiterated that the innocence
of the accused along with that of Mr. Rajan Kinnerkar and Mr. Afonso
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had remained in serious doubt. In other words, this letter dated 31-5-
1993 was a clear indication that the Director Mr. Timblo had pointed out
the needle of suspicion against three persons including the accused for
the shortage of money of the company after its factory had to be closed
down on 6-7-1992.

19. The accused again wrote a letter dated 22-7-1973 denying the
contents of letter dated 31-5-1993. In this letter, addressed to the
advocate of the company, the accused stated that as regards his
innocence being in serious doubt he had already written to Mr. Audhut
Timblo. In his letter dated 22-7-1993, the accused wrote to Mr. Audhut
Timblo and told him that in case he had not asked the accused to stop
going to Goa Plast then he should be informed as to when he should
resume his duties and in case he did not wish the accused should
resume his duties, he should inform whether he would like him to
resign from the company. The last letter written by the said Audhut
Timblo to the accused and produced on behalf of the complainant is the
letter dated 1-9-1993. In this letter the said Shri Audhut Timblo
informed the accused that he would spare some time to meet him, but
before that he would like to have a written statement regarding the
subject on which the meeting was to be held. Shri Timblo also
reminded the accused that he had promised a frank letter of facts and
‘in case he wished to redeem himself and seek clemency that was
necessary. This letter sent by Shri Audhut Timblo, on behalf of the
company, shows that he was not ready to have any explanation on the
part of the accused as regards the shortage of funds regarding which
the accused had already given letter dated 22-7-1992 unless the
accused had admitted his liability and sought his clemency.
20. Be that as it may, Mulchandi/PW 1 stated that the accused was
the Managing Director of the Company and had withdrawn totally Rs.
7,17,171/- when he was the Managing Director during the financial
year 1991-1992 and the said cash was not there. Certainly this was not
the case of the complainant in letter dated 31-5-1993. Mulchandi/PW 1
produced two pages of the ledger book for the year 1991-1992 which
were taken on record and marked as Exhibit PW 1/A stating that the
said amount of Rs. 7,17,171/- was shown on the said ledger. He also
produced the auditor's report. Director's report and the balance sheet
which were taken on record collectively and marked Exhibit PW 1/B.
Thereafter, he produced the correspondence referred to hereinabove,
and he stated that the

Page: 363
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accused had admitted the liability and had issued the said 10 cheques
in the sum of Rs. 40,000/- each. When he was questioned as to why
cheques of Rs. 4 lacs were received when the liability was about 7 lacs,
Mulchandi/PW 1 stated that the accused had accepted his liability for
Rs. 4 lacs. He confirmed that the said forwarding letter and the cheques
were received by Mr. Audhut Timblo on behalf of the company.
Certainly, it was not his case that the said letter and the said cheques
were received by Shri Timblo in his presence. When he was asked
whether he attributed the liability to the accused only because he was
the Managing Director and the sole trustee of the Company, Mulchandi
answered stating that the accused was the Managing Director and had
withdrawn the amount. When he was asked further whether he had
personally withdrawn the said amount, he stated categorically in the
affirmative. When he was further asked whether he had any documents
to show whether the accused had personally withdrawn the said
amount, he stated that the accused was authorized signatory of the
Company. He further stated that he was aware that Mr. Cordeiro had
made a statement in the first case that the accused was not responsible
for the entire sum of Rs. 7,17,171/-. Next, he stated that the cash of
Rs. 7,17,171/- was kept in the petty cash box and when he was asked
whether he had checked the said petty cash box he stated that he had
not personally checked the same, but that is what was stated by the
auditors. Further he stated that the cheques were issued by the
Managing Director and the amount was withdrawn by the accountant.
As already stated, it can be seen that Mulchandi/PW 1 did not have any
first time knowledge of the transaction or the circumstances in which
the subject cheques came to be issued along with the said letter dated
20-7-1992 to Mr. Audhut Timblo, the Director of the complainant.

21. On the other hand, the accused stated in his evidence that he
was appointed by Mr. Audhut Timblo, as the Managing Director of the
Company and he was incharge of marketing, sales and general
administration, but accounts were looked after by Mr. Rajan Kinnerkar.
He stated that he was operating their office at the Keith building while
the head office of the Company was at Velho building, both at Panaji.
He stated that he was looking after marketing, sales and general
administration. He also stated that accounts of the company were
handled at the head office. He stated that he had told Mr. Audhut
Timblo that he would not handle the accounts to which he had agreed
and he had given him a note in his own handwriting from which it was
clear that Mr. Rajan Kinnerkar would look after the accounts directly
under Mr. Audhut Timblo and he would keep him aware of the day to
day information of the financial matters and present to him the monthly
assets and liabilities position of the company. He referred to the
correspondence exchanged between him and Mr. Audhut Timblo. As
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regards the letter dated 20-7-1992, the accused stated that Mr. Timblo
called him and informed him that there was a shortfall of Rs. 4 lacs in
the company as was revealed in the books of accounts and though he
informed Mr. Audhut Timblo that he was not responsible for the
accounts from the beginning, Mr. Audhut Timblo threatened to dismiss
him and file Criminal Proceedings unless he gave 10 post dated
cheques of Rs. 40,000/- each, which he did as he did not want to loose
the job. The accused stated that at that point of time he had not found
the noting in the hand writing of Mr. Timblo and though he knew that
he was not

Page: 364

liable, to protect his job he had issued the said cheques and when he
found the noting, he sent the same to Mr. Audhut Timblo and asked
him not to deposit the cheques and he also wrote to the Bank to stop
the payment. He produced the letter to the Bank dated 15-2-1993. He
stated that he did not owe any money to the company but had issued
the said cheques and after giving the said cheques Mr. Auduth Timblo
had asked him not to come to work unless he was called. In cross-
examination, the accused admitted that in the letter dated 12-2-1993
he had admitted that there was some fund of the company which was
missing and that was on the basis of what Mr. Audhut Timblo had told
him that the accounts showed unexplained expenditure. He admitted
that he had not denied the said letter at any time stating that there
was no liability. In further cross-examination he admitted that in the
absence of Mr. Rajan Kinnerkar he was placing orders for the raw
materials but the payments were made by Mr. Rajan Kinnerkar. He also
admitted that he used to be one of the signatories on the cheques
issued to the suppliers along with Mr. Timblo, Mr. Afonso, Mr.
Kinnerkar. He further stated that procuring of material comes under the
accounts section and it is not part of the administration. He denied the
suggestion that he was placing orders sometimes and was also involved
in the accounts. He further stated that normally Mr. Rajan Kinnerkar
was making the payments, but in case he had placed the orders, Rajan
Kinnerkar only was making the payments. A letter dated 7-9-1990 was
brought to his notice and then he admitted that he had sent the
payments for some materials but explained that it was just the
covering letter with the cheque that was sent. In further cross-
examination he stated that whenever he was going on official tours, he
was receiving the money in advance from the said accountant (Mr.
Rajan Kinnerkar) and he used to sign the vouchers. He admitted that
he had signed letter dated 24-9-1991 as Managing Director of the
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Company and that by that letter he had made a payment by Demand

Draft. In further cross-examination he admitted that he was involved in
receiving money for goods supplied by them. He admitted that he had
not written any letter to the company that he was threatened of
dismissal and criminal proceedings unless he gave the said 10 cheques.

22. Shri Diniz, the learned counsel on behalf of the accused has
submitted that the complainant had failed to prove that a sum of Rs.
7,17,171/- was missing and that the accused was responsible for the
same. Learned Counsel further submits that it was necessary for the
complainant to have proved the debt and in this context learned
Counsel had placed reliance on a decision of the Apex Court reported in
the case of Krishna Janardhan Bhat v. Dattatraya G. Hegde, 2008 (2)
Mh. L.J. (Cri) (S.C.) 447 : 2008 (4) Mh. L.J. (S.C.) 354 : 2008 AIR SCW
738. Learned Counsel further submits that the company blamed the
accused, the said accountant and one Mr. Afonso and one fails to
understand as to on what basis the liability that the accused owed the
company of Rs. 4 lacs was established. Learned Counsel further
submits that the first case reported in 2004 (2) Mh. L.J. (S.C.) 348 :
2004 (2) SCC 235 has stood on its own facts and in that case the
accused was not examined but who was examined was one of the
employees who was conversant with the facts of the case and therefore
the conviction of the accused in the said case cannot come in the way
of the acquittal of the accused in this case. Learned Counsel has also
placed reliance on a

Page: 365

decision of this Court in the case of Roy Joseph Creado v. Tamisuddin

Nazir Ahmed, 2008 (3) Mh. L.J. 705 : 2008 (2) Mh. L.J. (Cri) 118 :
(2008 (1) Bom. C.R. (Cri) 402). Learned Counsel has also submitted
that this is a fit case to draw adverse inference against the complainant
for non-examination of said Mr. Audhut Timblo. It is also the contention
of the learned Counsel that none of the reports or ledger books have
been proved by the complainant. Learned counsel further submits that
both the Courts below have misdirected themselves on the legal
implications of section 139 of the Act.

23. On the other hand, Shri Usgaonkar, the learned Counsel on

behalf of the complainant, submits that both the Courts below have
rightly considered the evidence produced and convicted the accused
and therefore the scope in revisional jurisdiction is very limited against
concurrent findings of facts. Learned Counsel further submits that
interference by this Court would be called only in case the concurrent
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findings of both the Courts below can be shown to be perverse. Learned

Counsel also submits that the version given by the accused is
inconsistent with the correspondence exchanged by him earlier with the
company and therefore the accused does not deserve to be believed.
Learned Counsel also submits that the note sent by the accused is no
evidence to prove that the financial matters were allotted to the said
Mr. Rajan Kinnerkar and that allotting financial duties to the said Mr.
Rajan Kinnerkar had nothing to do with the subject cheques issued by
the accused. Learned Counsel further submits that the said letter dated
20-7-1992 contains an admission of liability that the accused owed to
the company the said amount of Rs. 4 lacs and since the said letter was
accompanied by the said cheques, the company was entitled to draw a
presumption that the said cheques were issued in discharge of a debt
or a liability. Learned Counsel further submits that the cross-
examination of the accused brings out to light that the accused was
handling the money of the company and that the accused in fact has
not stated that there was no shortage. Learned Counsel also submits
that the explanation for the said letter dated 20-7-1992 given by the
accused is no explanation at all and therefore it cannot be accepted.
24. The Apex Court in Krishna Janardhan Bhat v. Dattatraya G.
Hegde (supra) observed that section 139 of the Act merely raises a
presumption in regard to the second aspect of the matter. Existence of
a legally recoverable debt is not a matter of presumption under section
139 of the Act. It merely raises a presumption in favour of holder of
cheque that same has been issued for discharge of any debt or other
liability. The Court also noted that the Courts below had proceeded on
the basis that section 139 raised a presumption in regard to existence
of debt also and in that the Courts committed a serious error in
proceeding on the basis that for proving the defence the accused is
required to step into the witness box and unless he does so he would
not be discharging his burden. Such an approach on the part of the
Court was not correct. The Court also noted that an accused was
discharging the burden on the basis of material already brought on
record. An accused has a constitutional right to maintain silence.
Standard of proof on the part of an accused and that of the prosecution
in a criminal case is different. In Rajendraprasad Gangabishen Porwal v.

Page: 366

Santoshkamar Parasmal Saklecha, 2008 (1) Bom. C.R. (Cri) 647 this
Court observed that

“Once it is found that the revision applicant was not required to

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examine himself or to adduce separate evidence in rebuttal, it is

essential to see whether the material brought on record is sufficient
to demolish the fact which can be presumed under section 139 of
the Negotiable Instruments Act.”
25. The aforesaid observations of the Apex Court [referring to
Krishna Janardhan Bhat v. Dattatraya G. Hegde (supra)] would make it
manifest that existence of a legally recoverable debt is not a matter of
presumption under section 139 of the Negotiable Instruments Act. The
trial Court as well as the first appellate Court erroneously proceeded on
the footing that pre-existence of legally recoverable debt has to be
presumed under section 139 of the Negotiable Instruments Act because
the cheque (Exhibit 21) admittedly, bears signature of the petitioner-
Rajendraprasad. This is the error which altered the entire course of the
trial and the decision making process of both the Courts.
26. The Apex Court in Hiten P. Dalai v. Bratindranath Banerjee, 2001
(6) SCC 16 speaking through three learned Judges has made the
position of law very clear particularly in relation to the presumptions
which are available to a holder of a cheque under sections 138, 139 and
118 of the Act. The Apex Court has stated that:
section 138 as well as section 139 require that the Court “shall
presume” the liability of the drawer of the cheques for the amounts
for which the cheques are drawn as noted in State of Madras v. A.
Vaidyanatha Iyer (AIR 1958 SC 61).
It is obligatory on the Court to raise this presumption in every case
where the factual basis for the raising of the presumption had been
established. The Court noted that it entrusts an exception to the rule
as to the burden of proving in Criminal cases and shifts the onus on
the accused. Such a presumption is a presumption of law, as
distinguished from a presumption of fact which describes provisions
by which the Court “may presume” a certain state of affairs.
Presumptions are rules of evidence and do not conflict with the
presumption of innocence, because by the latter, all that is meant is
that the prosecution is obliged to prove the case against the accused
beyond reasonable doubt. The obligation on the prosecution may be
discharged with the help of presumptions of law or fact unless the
accused adduces evidence showing the reasonable possibility of the
non-existence of the presumed fact.
27. The Apex Court further stated that:
In other words, provided the facts required to form the basis of a
presumption of law exist, no discretion is left with the Court but to
draw the statutory conclusion, but this does not preclude the person
against whom the presumption is drawn from rebutting it and
proving the contrary. A fact is said to be proved when, “after
considering the matters before it, the Court either believes it to
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exist, or considers its existence so probable that a prudent man

ought, under the circumstances of the particular case, to act upon
the supposition that it exists.” Therefore, the

Page: 367

rebuttal does not have to be conclusively established but such evidence

must be adduced before the Court in support of the defence that the
Court must either believe the defence to exist or consider its existence
to be reasonably probable, the standard of reasonability being that of
the “prudent man”.

28. The presumptions available under sections 138, 139 and 118 of
the Act are all rebuttable presumptions and they can be rebutted by
the accused either with the help of the evidence of the complainant or
his own and they are required to be established by a lower standard of
proof i.e. on the balance of probabilities and not by a higher standard
which is always required of the prosecution being a standard beyond
reasonable doubt. A more clearer statement of the law on this subject
can be found from the case of Krishna Janardhan Bhat v. Dattatraya G.
Hegde (supra) wherein the Apex Court referred to its earlier decision in
the case of Bharat Barrel and Drum Manufacturing Company v. Amin
Chand Pyarelal, 1999 (3) SCC 35 which was rendered with reference to
section 118(a) of the Act. The Court opined that:
“Upon consideration of various judgments as noted hereinabove, the
position of law which emerges is that once execution of the
promissory note is admitted, the presumption under section 118(a)
would arise that it is supported by a consideration. Such a
presumption is rebuttable. The defendant can prove the non-
existence of a consideration by raising a probable defence. If the
defendant is proved to have discharged the initial onus of proof
showing that the existence of consideration was improbable or
doubtful or the same was illegal, the onus would shift to the plaintiff
who would be obliged to prove it as a matter of fact and upon its
failure to prove would disentitle him to the grant of relief on the
basis of negotiable instrument. The burden upon the defendant of
proving the non-existence of the consideration can be either direct or
by bringing on record the preponderance of probabilities by reference
to the circumstances upon which he relies. In such an event, the
plaintiff is entitled under law to rely upon all the evidence led in the
case including that of the plaintiff as well. In case, where the
defendant fails to discharge the initial onus of proof by showing the
non-existence of the consideration, the plaintiff would invariably be
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held entitled to the benefit of presumption arising under section 118

(a) in his favour. The Court may not insist upon the defendant to
disprove the existence of consideration by leading direct evidence as
the existence of negative evidence is neither possible nor
contemplated and even if led, is to be seen with a doubt…
29. At the cost of repetition it may be stated that the transaction in
which the subject cheques came to be issued to the said Audhut Timblo
by the accused was within the knowledge of the said Mr. Audhut Timblo
and the accused alone, since otherwise it was not the case of the
complainant or the accused that the said transaction took place in the
presence of any other witness. The circumstances under which the said
cheques came to be issued by letter dated 20-7-1992 have been
explained by the accused in his evidence while no such evidence has
come from the complainant. There is no doubt that the said letter did
contain an

Page: 368

admission as contended on behalf of the complainant. But nevertheless

the accused had stepped in the witness box and has explained under
what circumstances the said letter with cheques came to be issued and
that is when said Mr. Audhut Timblo brought to the notice of the
accused that there was shortage of fund of about Rs. 7,17,171/- of the
company. In the absence of any evidence from the said Mr. Timblo, the
explanation given by him, that he gave the said letter out of fear of
being dismissed or prosecuted appears to be far more probable. The
letter dated 31-5-1993, the note sent by the accused coupled with the
evidence of the accused, shows that the finanacial aspects of the
complainant were being looked after by the said Mr. Rajan Kinnerkar
and the accused was being blamed only because, as a Manging
Director, he had not disagreed with the account statements prepared
by the said Mr. Rajan Kinnerkar. The said explanation does not appear
to be improbable also considering that what was found missing was the
total sum of Rs. 7,17,171/- and the sum which was attributed to the
accused was much lesser i.e. Rs. 4 lacs. It was the case of the company
itself that the shortfall was attributable to three persons including the
said accountant Shri Kinnerkar, one Mr. Afonso and the accused. The
accused might have been the Managing Director or one of the
signatories to the cheques issued on behalf of the company. As per
Mulchandi/PW 1 the petty cash box from which some money
disappeared was in the custody of one Uday Naik and one does not
know why the needle of suspicion was not pointed towards him. The
explanation of the accused given on oath in the absence of any
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evidence to the contrary, as regards the circumstances in which the

letter dated 20-7-1992 came to be issued by him appears to be
probable and that being so the accused had sufficiently rebutted the
presumptions which the said cheques carried in favour of the
complainant i.e. they were issued without consideration but out of fear
of dismissal from service and prosecution. Having rebutted the said
presumptions it was absolutely necessary for the complainant to
succeed in the cases to have proved firstly that there was shortage of
Rs. 7,17,171/- and secondly that Rs. 4 lacs were misappropriated by
the accused. As already stated Mulchandi/PW 1 had no knowledge
about the transaction nor as regards any facts of the case except
documents which he produced. Counsel on behalf of the complainant,
has submitted that the complainant had produced the documents
which are required to be filed under the Companies' laws, and proved
the amount of short fall. This submission is neither here nor there. In
case the auditor had prepared a report then it was necessary for the
complainant to have examined the author of the same. The same is the
case with the Director's report or the ledgers. Persons who prepared the
said reports were not examined on behalf of the complainant and
therefore the entire case of the complainant that even Rs. 7,17,171/-
were found short is not free from doubt. The accused after having
discharged the onus placed upon him by aforesaid sections of the Act
by explaining the circumstance in which he gave the said letter and the
10 cheques it was necessary for the complainant to have proved that in
fact Rs. 7,17,171/- were missing from the company and out of that the
liability of the accused was Rs. 4 lacs.

30. In my view, the findings of the Courts as regards the first case
which ended before the Hon'ble Supreme Court and reported in 2004
(2) Mh. L.J. (S.C.) 348 : 2004 2 SCC 235 cannot apply to this case.
That case was decided merely

Page: 369

on the basis of the presumptions available to the complainant

particularly in the absence of any evidence having been led on behalf of
the accused. Today the position appears to have been changed. There is
evidence led on behalf of the accused and there is none on behalf of the
complainant except unreliable evidence of Mulchandi/PW 1 and the said
presumptions in the complainant's favour, which the accused has
rebutted by his own evidence by explaining the circumstances under
which he was compelled to give the said letter along with the said
cheques. In case the Hon'ble Supreme Court observed in para 15 that
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the courts below had ignored the admission of the liability by the
accused, that admission had now been explained by the accused by his
own evidence as against none forthcoming on behalf of the
complainant. It may also be noted that the Apex Court in the said case
had observed that the letter dated 12-2-1993 was not proved. It is
proved in this case. It also may be stated that in that case a general
Manager who might have been conversant with the facts of the case
was examined but there is none here.

31. Considering the evidence led by the accused, in my view, both

the courts below were not justified in coming to the conclusion that the
accused had not discharged the presumption available to the
complainant in terms of sections 138, 139 of the Act. The accused had
discharged his onus and had rebutted the presumptions. The
complainant had failed to prove that there was either any shortage of
funds or any shortage was at all attributable to the accused and more
so when the complainant itself had clearly stated that there were three
persons to whom the said shortage could have been attributed.
32. Considering the above, these revisions are bound to succeed.
The judgments of both the Courts below are hereby set aside and the
accused acquitted under section 138 of the Act in all the cases. The
amount, if any, deposited by the accused shall be refunded to him after
a period of six weeks. Bail bonds of the accused to be cancelled.
Revisions allowed.
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