The Power of Attorney Holder cannot escape from his penal liability by saying that he signed the cheque only under authority given by the principal and not in his individual capacity.
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  1. 1 Whether the principal who has given an authority to operate the account to the Power of Attorney Holder, can be liable to be proceeded against and punished for the offence punishable under Sec.138 of the N.I. Act, caused by the dishonor of the cheque, for insufficient funds, drawn and issued by the Power of Attorney Holder.
  2. 2 The first point to be considered is who is responsible and liable to be proceeded against for the dishonour of the cheque for the commission of the offence under Sec.138 of the N.I. Act? 
    1. 2.1 According to Sec.138 of the N.I. Act, where a cheque which was drawn and issued for payment of money to another person, for the discharge in whole or in part of any debt or liability is dishonoured and returned for insufficient fund, the person who has drawn and issued cheque is liable for the offence under Sec.138 of the N.I. Act. 
    2. 2.2 The point centers around the question, who has drawn and issued the cheque? What we mean by drawing a cheque? 
      1. 2.2.1 According to the definition clause under Sec.7 of the N.I. Act, the maker of a bill of exchange or cheque is called drawer. Then the question is who is maker of a cheque? 'Maker' is not defined in the Act; but in Black's Law Dictionary 'maker' is defined as 'some one who signs a promissory note'. In Iyer's Judicial Dictionary, 11th Edition 1995, 'maker' means the person who signs promissory note; by making it he engages that he will pay it according to its tenor and is precluded from denying to a holder in due course, the existence of the payee and his then capacity to endorse.
      2. 2.2.2 7. Let us examine the dictionary meaning of 'draw', which does not find a place in the definition clause of Statute. In Black's Law Dictionary, 7th Edition, 1990, to 'draw' means to create and sign (a draft). Draw a cheque to purchase goods. 'Drawer' means someone who directs a person or entity usually a bank to pay a sum of money stated in an instrument. Eg:- A person who writes a cheque: a person who signs or is identified in a draft as person ordering payment.
      3. 2.2.3 8. In view of the above statutory analysis with the aid of dictionary meaning, it can be held that the maker of cheque is a person who orders payment and signs the cheque. It follows that the drawer of a cheque is the person who orders payment and signs it. In this analysis, a cheque is said to have been completed or made as soon as the person orders payment and signs the cheque. This is the process by which the drawer makes the cheque. It is only the 'drawer' of a cheque who can be held liable for an offence under Sec.138 of the N.I. Act. If that be so, the Power of Attorney Holder, who ordered payment and signed the cheque, is primarily held liable to be proceeded against for the commission of the offence under Sec.138 of the N.I. Act,, caused by the drawing and issuing of the cheque, when there is no sufficient fund in the account.
      4. 2.2.4 9. In the instant case, the Power of Attorney Holder had ordered payment, signed and issued the cheques. It is true that the power of attorney holder has signed and issued the cheque under the authority granted by the principal. Then, the court is further required to see, can the principal be held either constructively or vicariously liable for the act done by the Power of Attorney Holder. According to Sec.2(n) of the Cr.P.C., an offence means any act or omission made punishable under any law for the time being in force. It is only the man who commits a crime must be liable for it. At this juncture, it is significant to note that unlike Indian Penal Code, there is no enabling provisions akin to Secs.34 to 38, 107, 149, 120B etc., under the Negotiable Instruments Act so as to rope in the person who caused the commission of the offence by sharing of mind or abetting or conspiring to do an act that constitutes an offence. According to the statutory mandate under Sec.138 of the N.I. Act, a person who has drawn and issued the cheque is liable to be proceeded against for the offence under Sec.138 of the N.I. Act. In the absence of enabling provisions, the person who has caused the offence cannot be held constructively liable for the offence under Sec.138 of the N.I. Act.
      5. 2.2.5 10. Coming to vicarious liability, in criminal law unlike in the law of torts, a master is not held liable for the act of his servant or agent on the principle of respondent superior. But the Indian Penal Code makes a departure from general rule under a few provisions like Sec.154 to 156. The doctrine of vicarious liability is more frequently invoked under the special enactment. Under such special enactments, a master can be held criminally liable for the violation of the provisions contained in that Acts provided that his agent or servant, during the course of employment or engagement, committed such act, and the statute imposes such vicarious liability.
      6. 2.2.6 11. Let us examine the N.I. Act which is also a special enactment contemplating the law relating to promissory note, bills of exchange and cheque. Significantly, Sec.141 which deals with the offence committed by the company is the only provision which fastens the liability over the persons other than the person who has drawn and signed the cheque for the commission of the offence under Sec.138 of the N.I. Act. There, the person responsible to the company for the conduct of the business of the company and the officers and other functionaries of the company as well as the company shall also be liable to be proceeded against; but such a proposition cannot be imported to the commission of the offence by the Power of Attorney Holder while acting under the power of attorney granted by the principal, in the absence of statutory provision, enabling to fasten the liability on the principal also.
      7. 2.2.7 12. To sum up, the principles of vicarious criminal liability cannot be attributive upon the principal who has granted power of attorney in favour of the Power of Attorney Holder for the commission of the offence under Sec.138 of the N.I. Act, caused by the dishonour of the cheque for want of sufficient fund, drawn and issued by the Power of Attorney Holder. The Power of Attorney Holder cannot escape from his penal liability by saying that he signed the cheque only under authority given by the principal and not in his individual capacity.
    3. 2.3 Mohammed Samdani Basha v. Syed Issac Basha [2006 KHC 1383] 
    4. 2.4 Sova Mukherjee v. Rajiv Mehra [1997 (1) CCR (313)(Cal)]
      1. 2.4.1 held that a principal, who has a general power of attorney is always bound by the act of Attorney including penal liability when the power is general. So the principal is liable to be proceeded against for the penal liability also. For the reasons analysed above, in view of the statutory mandate under Sec.138 of the N.I. Act, and absence of enabling provisions, I am unable to accept the above view of the Calcutta High Court, which is having a persuasive value only. I am of the considered opinion that the penal liability for the act done by the Power of Attorney Holder cannot be imported to the principle, unless the act specifically provides so, in view of the liability imposed on the drawer of the cheque only under Sec.138 of the N.I. Act.
      2. 2.4.2 16. In the above view of the matter, coming to the instant case, it could be seen that the 2nd accused has issued power of attorney in favour of the 3rd accused to operate the account of 1st accused, a proprietary concern of the 2nd accused. The cheques which were drawn and issued by the 3rd accused had been dishonoured for want of sufficient funds and culminated in criminal prosecution against all the accused in the above cases. Though the cheques had been drawn and issued by the 3rd accused, the trial court went wrong and found that the 2nd accused, who has granted the power of attorney to operate the account, is liable for the commission of the offence under Sec.138 of the N.I. Act. The appellate court also set its seal on the erroneous findings without appreciating the law in its correct perspective. In my view, the concurrent findings of the conviction entered and the sentence imposed on the revision petitioner, the 2nd accused, is opposed to the statutory mandate envisaged under Sec.138 of the N.I. Act.
      3. 2.4.3 17. Consequently, the conviction and the sentence imposed on the revision petitioner which is under challenge in the above revisions will stand set aside and the revision petitioner is acquitted of the offence. 
      4. 2.4.4 The revision petitions are allowed to the above extent. 

(2015) 393 KLW 871

IN THE HIGH COURT OF KERALA AT ERNAKULAM 

PRESENT: THE HONOURABLE MR.JUSTICE K.HARILAL 

WEDNESDAY, THE 3RD DAY OF DECEMBER 2014/12TH AGRAHAYANA, 1936 

Crl.R.P. Nos.898 of & 899 of 2010

AGAINST THE JUDGMENT IN CRL.A.NO. 817/2008 of ADDITIONAL SESSIONS COURT (ADHOC-I), ERNAKULAM DATED 17-12-2009. AGAINST THE JUDGMENT IN CC NO.2451/2004 of J.M.F.C.-I, ERNAKULAM DATED 19-09-2008. 

REVISION PETITIONER(S)/(APPELLANT/ACCUSED)

MRS.JAYAPRABHA HARIKUMARAN THAMPI

BY ADV. SRI.T.M.ABDUL LATIFF 

RESPONDENT(S)/(RESPONDENTS/COMPLAINANT)

1. SRI.DON BOSCO

2. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. 

R1 BY ADV. SRI.P.GOPAKUMARAN NAIR BY ADV. SRI.C.S.DIAS BY ADV. SRI.N.K.SUBRAMANIAN R2 BY PUBLIC PROSECUTOR SRI. ABHIJETT LESSLI. 

ORDER 

The common question that emerges for consideration in these revision petitions is, 

Whether the principal who has given an authority to operate the account to the Power of Attorney Holder, can be liable to be proceeded against and punished for the offence punishable under Sec.138 of the N.I. Act, caused by the dishonor of the cheque, for insufficient funds, drawn and issued by the Power of Attorney Holder.

2. The revision petitioner is the second accused and the 1st accused proprietary concern, having the business of cine film distribution belongs to her. The 3rd accused is her husband as well as the Power of Attorney Holder, to whom the first accused has given power of attorney to operate the bank account of the 1st accused independently. In the exercise of that power, the third accused has drawn and issued a cheque for an amount of Rs.50,000/- dated 2/9/2004 and another cheque for an amount of Rs.55,000/- in discharge of the debt due to the respondent/complainant. On presentation, both the cheques were dishonoured and returned for want of sufficient funds. Though the complainant caused to issue a lawyer's notice, the accused neither pay the cheques amount nor did they send a reply denying the liability under the said cheques. Thus, the accused have committed the offence punishable under Sec.138 of the N.I. Act which culminated in prosecution in C.C.No.2450 and 2451/2004 respectively.

3. After trial, in both cases, the learned Magistrate found that the revision petitioner, being the principal, who has given Power-of-Attorney to operate the account, is guilty of the offence punishable under Sec.138 of the N.I. Act and convicted thereunder. Aggrieved by the conviction entered and the sentence imposed on her, though she had preferred a Crl. Appeal Nos.817 and 818 of 2008 respectively, after re- appreciating the evidence on record, the learned Sessions Judge also concurred with the findings of the trial court and upheld the conviction sentence, as such, without any interference. The legality, propriety and correctness of the concurrent findings of the conviction and sentence are under challenge in these revision petitions.

4. Sri. T.M. Abdul Latiff, the learned counsel for the petitioner, advanced arguments mainly pointing out the illegality in conviction entered against the revision petitioner. According to him, the courts below went wrong in finding that the revision petitioner is guilty of the offence under Sec.138 of the N.I. Act. It is contended that though the revision petitioner is the account holder, who had executed the power of attorney in favour of the 3rd accused to operate the account, he is not the person who had drawn and issued the cheque to the complainant when there was no sufficient fund. The learned counsel drew my attention to Sec.7 of the N.I. Act which defines 'drawer' and contended that though the revision petitioner has given power of attorney to operate the account, he cannot be held liable to be proceeded against for the penal consequences caused by the power of attorney holder by drawing and issuing the cheque when there was no fund in the account. In short, where the principal is not the drawer of the cheque, she shall not be liable to be proceeded against for the drawal and issuance of the cheque done by the power of attorney holder.

5. Per contra, Sri. C.S. Dias, the learned counsel for the respondent advanced arguments resisting the contention that the revision petitioner is not the drawer of the cheque. According to him, the 3rd accused has drawn the cheque for and on behalf of the 1st accused, the proprietary concern of the 2nd accused under the authority granted by the 2nd accused, the revision petitioner. Therefore, the revision petitioner is the real drawer of the cheque and thereby she is liable to be proceeded against for the penal consequences caused by the power of attorney holder. To sum up, the power of attorney holder is not liable for the penal consequences caused by the dishonour of the cheque for want of sufficient funds, drawn and issued under the authority granted by the principal.

6. In view of the rival submissions at the Bar, let us examine the common question raised above. 

The first point to be considered is who is responsible and liable to be proceeded against for the dishonour of the cheque for the commission of the offence under Sec.138 of the N.I. Act? 

According to Sec.138 of the N.I. Act, where a cheque which was drawn and issued for payment of money to another person, for the discharge in whole or in part of any debt or liability is dishonoured and returned for insufficient fund, the person who has drawn and issued cheque is liable for the offence under Sec.138 of the N.I. Act. 

The point centers around the question, who has drawn and issued the cheque? What we mean by drawing a cheque? 

According to the definition clause under Sec.7 of the N.I. Act, the maker of a bill of exchange or cheque is called drawer. Then the question is who is maker of a cheque? 'Maker' is not defined in the Act; but in Black's Law Dictionary 'maker' is defined as 'some one who signs a promissory note'. In Iyer's Judicial Dictionary, 11th Edition 1995, 'maker' means the person who signs promissory note; by making it he engages that he will pay it according to its tenor and is precluded from denying to a holder in due course, the existence of the payee and his then capacity to endorse.

7. Let us examine the dictionary meaning of 'draw', which does not find a place in the definition clause of Statute. In Black's Law Dictionary, 7th Edition, 1990, to 'draw' means to create and sign (a draft). Draw a cheque to purchase goods. 'Drawer' means someone who directs a person or entity usually a bank to pay a sum of money stated in an instrument. Eg:- A person who writes a cheque: a person who signs or is identified in a draft as person ordering payment.

8. In view of the above statutory analysis with the aid of dictionary meaning, it can be held that the maker of cheque is a person who orders payment and signs the cheque. It follows that the drawer of a cheque is the person who orders payment and signs it. In this analysis, a cheque is said to have been completed or made as soon as the person orders payment and signs the cheque. This is the process by which the drawer makes the cheque. It is only the 'drawer' of a cheque who can be held liable for an offence under Sec.138 of the N.I. Act. If that be so, the Power of Attorney Holder, who ordered payment and signed the cheque, is primarily held liable to be proceeded against for the commission of the offence under Sec.138 of the N.I. Act,, caused by the drawing and issuing of the cheque, when there is no sufficient fund in the account.

9. In the instant case, the Power of Attorney Holder had ordered payment, signed and issued the cheques. It is true that the power of attorney holder has signed and issued the cheque under the authority granted by the principal. Then, the court is further required to see, can the principal be held either constructively or vicariously liable for the act done by the Power of Attorney Holder. According to Sec.2(n) of the Cr.P.C., an offence means any act or omission made punishable under any law for the time being in force. It is only the man who commits a crime must be liable for it. At this juncture, it is significant to note that unlike Indian Penal Code, there is no enabling provisions akin to Secs.34 to 38, 107, 149, 120B etc., under the Negotiable Instruments Act so as to rope in the person who caused the commission of the offence by sharing of mind or abetting or conspiring to do an act that constitutes an offence. According to the statutory mandate under Sec.138 of the N.I. Act, a person who has drawn and issued the cheque is liable to be proceeded against for the offence under Sec.138 of the N.I. Act. In the absence of enabling provisions, the person who has caused the offence cannot be held constructively liable for the offence under Sec.138 of the N.I. Act.

10. Coming to vicarious liability, in criminal law unlike in the law of torts, a master is not held liable for the act of his servant or agent on the principle of respondent superior. But the Indian Penal Code makes a departure from general rule under a few provisions like Sec.154 to 156. The doctrine of vicarious liability is more frequently invoked under the special enactment. Under such special enactments, a master can be held criminally liable for the violation of the provisions contained in that Acts provided that his agent or servant, during the course of employment or engagement, committed such act, and the statute imposes such vicarious liability.

11. Let us examine the N.I. Act which is also a special enactment contemplating the law relating to promissory note, bills of exchange and cheque. Significantly, Sec.141 which deals with the offence committed by the company is the only provision which fastens the liability over the persons other than the person who has drawn and signed the cheque for the commission of the offence under Sec.138 of the N.I. Act. There, the person responsible to the company for the conduct of the business of the company and the officers and other functionaries of the company as well as the company shall also be liable to be proceeded against; but such a proposition cannot be imported to the commission of the offence by the Power of Attorney Holder while acting under the power of attorney granted by the principal, in the absence of statutory provision, enabling to fasten the liability on the principal also.

12. To sum up, the principles of vicarious criminal liability cannot be attributive upon the principal who has granted power of attorney in favour of the Power of Attorney Holder for the commission of the offence under Sec.138 of the N.I. Act, caused by the dishonour of the cheque for want of sufficient fund, drawn and issued by the Power of Attorney Holder. The Power of Attorney Holder cannot escape from his penal liability by saying that he signed the cheque only under authority given by the principal and not in his individual capacity.

13. This finding is supported by Sec.26 of the N.I. Act that reads as follows: 

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

14. The above view is further supported by a logical analysis also. The power of attorney has been granted to operate the account only. That means, the attorney has power to draw and issue the cheque wherever it is necessary, in accordance with law. The drawal and issuance of the cheque does not constitute the offence under Sec.138 of the N.I. Act, unless the cheque has been dishonoured for want of sufficient fund and thereafter the drawer does not pay the cheque amount, in spite of the statutory notice demanding cheque amount. Therefore, the drawer of a cheque is not expected to draw and issue a cheque, unless it is made sure that there is sufficient fund in the account to honour the cheque. It follows that the authority granted to the Power-of-Attorney Holder can never be presumed to be a power or authority to issue a cheque when there is no fund in the account. In short, the authority granted by the principal can never be extended to the extent of drawing and issuing the cheque when there is no sufficient fund in the account. Therefore, in my view, the legal analysis held above is also supported by a logical conclusion, in the absence of specific provisions imposing strict liability, on the principal also, in the Act.

15. The learned counsel for the 1st respondent cited the decision in 

Mohammed Samdani Basha v. Syed Issac Basha [2006 KHC 1383] 

and strenuously contended that the principal is always liable for the act done by the Attorney and he is responsible for the penal liability also. Going by the above decision, it is seen that the learned Judge relying on another decision of the Calcutta High Court in 

Sova Mukherjee v. Rajiv Mehra [1997 (1) CCR (313)(Cal)]

held that a principal, who has a general power of attorney is always bound by the act of Attorney including penal liability when the power is general. So the principal is liable to be proceeded against for the penal liability also. For the reasons analysed above, in view of the statutory mandate under Sec.138 of the N.I. Act, and absence of enabling provisions, I am unable to accept the above view of the Calcutta High Court, which is having a persuasive value only. I am of the considered opinion that the penal liability for the act done by the Power of Attorney Holder cannot be imported to the principle, unless the act specifically provides so, in view of the liability imposed on the drawer of the cheque only under Sec.138 of the N.I. Act.

16. In the above view of the matter, coming to the instant case, it could be seen that the 2nd accused has issued power of attorney in favour of the 3rd accused to operate the account of 1st accused, a proprietary concern of the 2nd accused. The cheques which were drawn and issued by the 3rd accused had been dishonoured for want of sufficient funds and culminated in criminal prosecution against all the accused in the above cases. Though the cheques had been drawn and issued by the 3rd accused, the trial court went wrong and found that the 2nd accused, who has granted the power of attorney to operate the account, is liable for the commission of the offence under Sec.138 of the N.I. Act. The appellate court also set its seal on the erroneous findings without appreciating the law in its correct perspective. In my view, the concurrent findings of the conviction entered and the sentence imposed on the revision petitioner, the 2nd accused, is opposed to the statutory mandate envisaged under Sec.138 of the N.I. Act.

17. Consequently, the conviction and the sentence imposed on the revision petitioner which is under challenge in the above revisions will stand set aside and the revision petitioner is acquitted of the offence. 

The revision petitions are allowed to the above extent.