Bangalore District Court
Vasu .N vs Sachin Khimji Nuvo Investors And ... on 16 May, 2025
KABC010182022022
IN THE COURT OF THE LXVIII ADDITIONAL CITY CIVIL AND
SESSIONS JUDGE, BENGALURU CITY (CCH-69)
Dated this the 16th day of May, 2025
:PRESENT:
Smt. Pallavi.R, B.Sc., LL.B,
LXVIII Addl. City Civil and Sessions Judge,
Bengaluru City.
CRI. A.No.789/2022
APPELLANT : Mr. Vasu.N,
S/o Late K. Narayan,
Aged about 55 years,
R/at No.E22, 3rd A Cross,
Manyata Residency,
Hebbal Ring Road,
Nagawara, Bengaluru - 560 0094.
(By Sri. Ashok B.Patil, Adv.,)
V/s
RESPONDENT : M/s. Sachin Khimji Nuvo Investors &
Realtors Private Ltd.,
A Company registered under the
Companies Act, 1956,
Crl.Apl.789/2022
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Having its registered office at,
Binny Crescent Apartments 15-A,
Block-D, Benson Cross Road,
Bangalore - 560 046.
Represented by it's Directors
Mr. Sachin Khimji.
(By Sri. A.K, Adv.,)
JUDGMENT
The appellant has preferred this appeal under Sec.374(3) of Cr.P.C., challenging the judgment passed by the learned XXIV Addl., Small Causes Judge & MACT & ACMM, Bengaluru, (SCCH-26), in C.C.No.6109/2018 dated 18.04.2022, whereby the appellant has been convicted for the offence punishable under Sec.138 of the Negotiable Instruments Act.
2. The appellant is the accused and respondent is the complainant before the Trial Court. For the purpose of convenience, the parties to this appeal are hereinafter referred to their rank in C.C.No.6109/2018 before the Trial Court in this appeal since the accused in the said case has preferred this appeal.
3. The brief facts of the case is that, the complainant filed a complaint against the accused for the offence punishable U/Sec.138 of the N.I.Act alleging that, the complainant is a private Crl.Apl.789/2022 3 Limited Company located in Bengaluru and is primarily associated in the real estate sector. The accused is the founder/Director of V3 Engineers Private Limited, which is furniture solutions company based in Bengaluru.
The complainant had extended financial assistance to the Company owned by the accused and invested in the Company in convertible preference shares which were subsequently converted into equity shares of the company and complainant is holding 29,32,308/- equity shares of Rs.10/- amounting to 30% of the paid up capital of the Company.
The accused along with other promoter Directors of the Company are holding 70% of the paid up capital of the Company. One of the conditions of the financial assistance extended by the complainant was that the promoter Directors will enable the exit of the complainant from the Company with the agreed return on the investment and therefore, the complainant was desirous of existing by disposing it's entire equity shares in the Company proportionately in favour of the accused and other promoter Directors as agreed by the accused and the other promoter Directors of the company.
The complainant entered into a shareholders agreement dated 23.03.2018 (SHA) along with the accused and other promoter Directors of the Company to dispose off it's shareholding in the company on the agreed terms and conditions as incorporated in the Crl.Apl.789/2022 4 said SHA. The accused along with other promoter Directors of the Company agreed to purchase the entire shareholdings in the Company to provide the agreed exit to the complainant.
As per the SHA, the accused has issued post dated cheques dated 03.04.2018 in favour of the complainant for his share of the total sale consideration to be paid to the complainant and deposited the same with an escrow agent as agreed between the parties.
In terms of the said addendum, the promoter Directors of the company including the accused issued undated cheques in favour of the complainant and deposited the cheques with the escrow agent. The accused issued 5 cheques bearing No.121260 for Rs.20 lakhs, cheque bearing No.121258 for Rs.45 lakhs, cheque bearing No.001450 for Rs.65 lakhs, cheque bearing No.121257 for Rs.75 lakhs and cheque bearing No.121256 for Rs.65 lakhs, all the cheques were drawn on ICICI Bank, Malleshwaram branch. All the cheques were dated 11.10.2018 and accused instructed the complainant to present all the cheques on 29.10.2018.
When the said cheques were presented by the complainant for encashment through his banker, it returned with an endorsement as "Funds insufficient and payment stopped by the drawer".
Afterwards, the complainant got issued legal notice to the accused but accused failed to make payment of the cheques amount Crl.Apl.789/2022 5 to the complainant within 15 days. Hence, the complainant is constrained to file complaint under Section 138 of the N.I.Act.
4. The Trial Court took cognizance of the offence after recording the sworn statement of the complainant. Thereafter, the present case C.C.No.6109/2018 has been registered and summons has been issued to accused for the offence punishable under Sec.138 of the Negotiable Instruments Act. On receipt of summons, the accused appeared before the Trial Court through his counsel and was enlarged on bail.
5. Thereafter, the Trial Court has recorded the plea of accused, however, the accused pleaded not guilty and claimed to be tried. Hence, the complainant in order to prove it's case, the Director of the complainant company himself examined as PW.1 and got marked 18 documents as Ex.P.1 to P.18. Thereafter, statement of the accused under Sec.313 of Cr.P.C., is recorded and the accused got examined himself as DW.1 and got marked Ex.D.1 to D.29.
6. The Trial Court on appreciation of the evidence on record, has convicted the accused for the offence punishable under Sec.138 of the Negotiable Instruments Act and sentenced him to pay fine of Rs.3,25,00,000/- (Rupees Three Crores Twenty Five Lakhs Crl.Apl.789/2022 6 Only) in default he shall undergo S.I for a period of 6 months and it is ordered that Rs.3,24,90,000/- shall be paid to the complainant as compensation and remaining amount of Rs.10,000/- is defrayed to the State.
7. The accused being aggrieved by the judgment of conviction and sentence has come up with this appeal on the following grounds :
1) The judgment passed by the learned Magistrate is contrary to law, facts and evidence on record.
2) The evidence on record discloses that, there was a Share Purchase Agreement dated 23.03.2018 between the accused and the complainant.
3) The Trial Court has failed to appreciate that, under the Addendum to the Share Purchase Agreement dated 27.06.2018, 5 cheques issued by the accused were not dated. It is an admitted fact that, the undated cheques and the share certificates held by the complainant were deposited with Mrs. Jayashreee Murali, Advocate, who is none other than the Advocate of the complainant.
4) The Trial Court has failed to appreciate that, the complainant and it's Advocate have received the legal notice on Crl.Apl.789/2022 7 25.10.2018 and on 24.10.2018 respectively, much before the date of presentation of the cheques on 29.10.2018.
5) The Trial Court failed to appreciate that the accused and another Director, Mr.S.Sampath Raghavan joined together and filed Arbitration application No.370/2018 under Sec.9 of the Arbitration and Conciliation Act, seeking restraint order against the complainant company.
The complainant company was served with notice in A.A.No.370/2018 before 29.10.2018. The complainant did not appeared. The learned Judge did not pass orders on the application for Interim Injunction though heard on 29.10.2018. The case was transferred to Commercial Court and ultimately as the application became infructuous, it was withdrawn on 21.06.2019.
6) The Trial Court failed to appreciate that, the complainant Company acknowledged the fact that, there was a dispute and the same had to be resolved through arbitration. As such, in the reply noticed dated 25.10.2018, the complainant identified Mr.M.R.C. Ravi, Advocate as the Arbitration.
7) The Trial Court failed to appreciate that, under the letter dated 09.11.2018, the name of Mr.Vishwanath V. Angadi, Retired District Judge was suggested as the Sole Arbitrator by the accused to which the complainant sent a letter dated 20.11.2018, asserting it's right to name the Arbitrator.
Crl.Apl.789/2022 8
8) The Trial Court has committed grave error in it's observation applying the principle of presumption U/Sec.139 of the N.I.Act, in para 11 of the impugned judgment, having noticed the fact of the circumstances under which Ex.P.14 and P.15 came to be executed and notice was sent to the complainant seeking Arbitration, in para 10 of the judgment.
9) The Trial Court has failed to appreciate that, by issuing the notice dated 23.10.2018, the accused had initiated Arbitration for determining the validity of Ex.P.14 and P.15, to which the complainant has replied on 25.10.2018 suggesting the name of the Arbitrator. Thus, presenting the cheques in question on 29.10.2018 by the complainant was totally uncalled for.
10) The Trial Court has failed to appreciate the fact of betrayal of the Escrow Agent, Mrs.Jayashree Murali, who parted with the cheques after receiving the legal notice dated 23.10.2018. Thus, the unholy collusion between the Escrow Agent and the complainant is explicit which dis-entitle the complainant to file the complaint.
11) The Trial Court failed to appreciate that, in the complaint filed on 04.12.2018, the complainant has suppressed all the above exchange of notices and has fraudulently contended in para 9 of the complaint that, after discussing with the accused, all the cheques were dated 11.10.2018 and accused instructed the complainant to present all the cheques on 29.10.2018.
Crl.Apl.789/2022 9
12) The Trial Court failed to appreciate that, PW.1 has admitted the legal notice dated 23.10.2018 and 3 postal acknowledgments in his cross-examination.
13) The Trial Court has wrongly applied the principles of statutory presumptions U/Sec.118 and 139 of the N.I.Act.
14) The Trial Court has failed to appreciate that in the Addendum to the Share Purchase Agreement dated 27.06.2018, no date is stipulated for completion of the transaction, which is noticed in the impugned judgment.
Hence, on these and among other grounds, the judgment of conviction and sentence passed by the court below is liable to be set-aside in the interest of justice and equity.
8. This appeal was presented before the Honb'le Prl. City Civil & Sessions Judge, Bengaluru, it was registered as Criminal Appeal No.789/2022 and made over to this Court for disposal according to law. After receipt of the records this court has issued notice to the respondent. The respondent appeared before this Court through his counsel. Thereafter, received the TCR.
9. Heard the arguments of both sides. Perused the materials placed before me.
Crl.Apl.789/2022 10
10. The points that arise for my consideration are as under:
1. Whether the appellant has made out a sufficient ground to condone the delay ?
2. Whether the Trial Court has committed any error in not appreciating the oral and documentary evidence lead by the parties ?
3. Whether the interference of this court is necessary in the impugned judgment of the trial court ?
4. What Order ?
11. My findings to the aforesaid said points are as follows:
Point No.1 : In the Affirmative Point No.2 : In the Negative Point No.3 : In the Negative Point No.4 : As per final order for the following ;
REASONS
12. POINT NO.1 : The accused has filed this appeal as against the judgment of conviction along with an application U/Sec.5 of the Limitation Act to condone the delay of 1 day in preferring the appeal.
As per the affidavit annexed to the interim application it is stated that, the judgment was passed on 18.04.2022. Counsel for the Crl.Apl.789/2022 11 accused applied for certified copy of the judgment on 21.04.2022 and the certified copy of the judgment was delivered on 06.06.2022. Thereafter, the present appeal was filed on 04.07.2022. Due to inadvertent error committed by his counsel in calculating the period of 30 days of limitation, delay of 1 day was crept in filing the present appeal. Accordingly, prayed to allow the I.A by condoning delay of 1 day.
The respondent has filed objection to the application filed U/Sec.5 of the Limitation Act contending that, the application filed by the accused U/Sec.5 of the Limitation Act is not maintainable either in law or on facts. The judgment was passed on 19.04.2022 and appeal ought to have preferred before 18.05.2022. However, this appeal is filed on 04.07.2022 and there is a delay of 46 days.
13. On going through the materials placed before me, it is obvious that, the impugned judgment was passed on 18.04.2022 and this appeal is preferred on 04.07.2022. As per the contents of his affidavit, he could not secure the certified copy of the judgment in time, however, copy of the judgment must have been furnished to the accused at the time of passing the judgment. As such, there is a delay of 46 days and the reasons assigned in the affidavit seems to be bonafide. Hence, I answer this point in the Affirmative.
Crl.Apl.789/2022 12
14. POINT NOS.2 & 3 : Both these points for consideration are taken together for discussion in order to avoid repetition of law and facts.
On going through the memorandum of appeal it is apparent that the accused has filed this appeal on the ground that dates are not mentioned on the cheques, cheques in question and share certificates were handed over to the Advocate of the complainant and the accused has initiated Arbitration proceedings and even suggested the name of Arbitrator and the complainant has also consented for appointment of Arbitrator. It is also contended that, the complainant has no authority to initiate proceedings U/Sec.138 of the N.I.Act.
15. On going through the cross examination of PW.1 he has clearly deposed that, complainant Company has invested in the company of accused to purchase shares and his company has purchased 30% of the share of V3 Engineers Company. He admitted that he has handed over share certificates to Escrow Smt.Jayashree Murali and agreed to the suggestion that even today also 30% of the shares was standing in the name of complainant company. As per PW.1, he does not remember whether V3 Engineers Company has paid Rs.5,90,00,000/- and dividend amount of Rs.1,63,77,374/- on Crl.Apl.789/2022 13 various dates but those documents are not produced by the accused.
16. Former Director of accused company came to be examined as DW.1 and he stated that, the complainant company was the share holder of their company and shares are not yet transferred.
In his cross examination by the learned counsel for the complainant, DW.1 has deposed that since their company was under
loss they decided to sell the assets and hence he was in need of funds from all the share holders.
17. To prove the transaction, the complainant has relied upon the 5 cheques as per Ex.P.1 to P.5, bank endorsements as per Ex.P.6 to P.10, notice as per Ex.P.11, postal acknowledgment as per Ex.P.12 along with share purchase agreement, addendum to share purchase agreement.
As per the endorsement, one cheque returned as "Funds insufficient" and other 4 cheques returned as "payment stopped by the drawer." The accused even gave reply notice to the complainant and it is not disputed that complainant was the share holder of Rs.30,00,000/- for share of Rs.10/-.
Crl.Apl.789/2022 14
18. As per the materials on record, Advocate Sri.Sachin Khimji has prepared Share Purchase Agreement and collected the cheques.
Finally the directors of V3 Engineers company decided to identify buyers to sell at higher value. At this movement, the bank officials forced to sell properties like land and machineries of V3 Engineers company.
Left with no option, V3 Engineer Company has singed Ex.P.14. All the documents are executed in presence of Smt.Jayashree Murali, Advocate and escrow agent. Even Ex.P.14 and P.15 along with signed cheques were kept in custody of Smt.Jayashree Murali and shares are not yet transferred till date.
It is also stated that, in the month of October 2018, they sent a letter to Sachin Khimji not to present cheques and filed Arbitration application disputing Ex.P.14 and P.15. Despite of that, Sachin Khimji presented the cheques for collection, cheques not honoured and hence the present case is filed.
19. The accused has relied upon Ex.D.1 to D.29 i.e., the documents pertaining to Arbitration, exchange of notices, bank transaction letters, documents relating to Board resolution and of the Company.
Crl.Apl.789/2022 15
20. In a decision reported in Bir Singh V/s Mukesh Kumar, (2019)4 SCC 197, it is observed that, "even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
21. In the decision reported in 2006 Crl.L.J. 3760 in case of Smt. Umaswamy V/s K.N.Ramaiah, wherein the Hon'ble High Court of Karnataka has observed at para 4 of its judgment that :
"The cheque, whether issued for payment of debt or as security does makes no distinction in law. The cheque is a negotiable instrument, it may be that sometimes the cheque is issued with a request on the part of the drawer to defer the presentation of the cheque for some time to enable the drawer to make payment by cash and take back the cheque or allow time to arrange funds for encashment of cheque. When the amount is not paid as per oral understanding the payee is well justified to present the cheque for encashment. The cheque even if it is issued as a security for payment, it is negotiable instrument and encashable security at the hands of payee. Therefore, merely because the drawer contends that it is issued as security is not a ground to exonerate the penal liability U/Sec.138 of the N.I.Act."
Crl.Apl.789/2022 16
22. As observed in the above citation, it has to be presumed that the cheques in question were issued by the accused to discharge the legally recoverable debt or liability. The accused can place rebuttal evidence, so as to show that the cheques were not issued for consideration.
23. It is not disputed by the accused that, V3 Engineers Company has suffered financial loss and was under pressure from financial institutions and therefore, they decided to dispose of the company's assets. The Directors of V3 Engineers did not purchase the shares from Sachin Khimji and company was having loan of Rs.11,50,00,000/- (Rupees Eleven Crores Fifty Lakhs Only) in SBI and Rs.3 Crores in Exim Bank. At the time of investment, the complainant company has entered into an agreement with V3 Engineers Company and it is apparent that V3 Engineers Company have suffered loss in the year 2017-18. Ex.D.26 to D.29 are no way concerned with the present case and accused has clearly admitted his signature on the disputed cheques.
24. Regarding capacity of the complainant to proceed with the case, on going through Board Resolution dated 24.05.2019 it is clearly mentioned that, Sachin Khimji was the Director of the company and he was authorized to institute, prosecute or defend or Crl.Apl.789/2022 17 appoint any Advocate or counsels and to incur all other necessary expenses. As such, it is clear that the said document clearly authorizes the Board of Directors i.e., PW.1 to prosecute the case.
25. The cheques in question handed over by the escrow agent to the Director of the Company and again as per Ex.P.15 fresh signed cheques of all the Directors of V3 Engineers Company were handed over to escrow agent.
26. As per Ex.P.14 accused issued post dated cheques to the escrow agent but he could not arrange money. Thereafter, both the complainant and the accused entered into agreement i.e., Ex.P.15. The escrow agent of the complainant company returned the earlier signed blank cheques to the accused and other Directors of V3 Engineers and in turn they have issued fresh signed cheques. As per terms and conditions of Ex.P.14 and P.15, the complainant has got ever right to present the cheques for collection.
27. As appreciated supra, accused has failed to put acceptable and satisfactory evidence to probabilise the defence. Therefore, there is no question of saying that the cheques were not issued for liability or security.
Crl.Apl.789/2022 18
28. The decision reported in 2004(3) KCCR 1816 (L.Mohan V/s V.Mohan Naidu), wherein it is held that, "When once the issue of cheques and the signature of its is admitted, Court has to presume that the cheques have been issued for discharging the debt or liability."
29. Be that as it may, legal notice was issued within 30 days from the date of return memo as per Ex.P.6 to P.10 and accused failed to repay the loan amount within 15 days from the date of receipt of notice.
30. The Hon'ble Supreme Court of India the case of Rangappa Vs. Sri. Mohan reported in (2010) 11 SCC 441, has made it clear that, "the presumption mandated by Sec.139 of the Act does indeed include the existence of a legally enforceable debt or liability". Thus, it is clear that the presumption under Sec.139 of the Act covers a legally enforceable debt or liability, so as on today the law is that, "once the issuance of the cheque is admitted or proved, the trial court is duty bound to raise the presumption that the dishonoured cheque placed before it was indeed issued in discharge of a legally enforceable debt or liability of the amount mentioned therein.
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31. The object of amendment to N.I.Act is to regulate the growing of business, trade, commerce and industrial activities along with to promote greater vigilance in financial matter and to safeguard the faith of creditors.
32. On going through the entire judgment of the Trial Court, it is clear that, the Trial Court has discussed each and every contention taken by the accused in detail and came to the right conclusion. Once the accused has issued cheques to the complainant, it is the duty of the accused to rebut the presumption available under the Act. Thereby, the burden lies on the accused to show that he is not due to pay any amount to the complainant. I am of the opinion that no materials are made out to interfere with the judgment of the trial court. The accused failed to make out grounds to allow this appeal.
33. To conclude, in the case on hand, the complainant has made out the existence of legally enforceable debt and also that accused failed to repay the amount within 15 days after service of notice. Nowhere, the accused has disputed his signature on the cheques i.e., Ex.P.1 to P.5 and complainant has made out a case by complying requirements under Sec.138 of N.I.Act. Legal presumptions envisaged under Sec.118 and 139 of N.I.Act also Crl.Apl.789/2022 20 stands unrebutted. It is apparent that the complainant has proved that the accused has intentionally issued the cheques knowing fully well that, he could not discharge his liability by issuing the said cheques though he has got the knowledge that sufficient funds are not available in his account. Thereby accused has violated Sec.138 of N.I.Act and accused failed to make out any grounds to interfere with the impugned judgment. Hence, I answer point No.2 and 3 in the Negative.
34. POINT NO.4: For the aforesaid reasons, I pass the following:
ORDER The Criminal Appeal filed by the appellant under Sec.374(3) of Cr.P.C. is hereby dismissed.
The judgment of conviction and sentence passed by the learned XXIV Addl., Small Causes Judge & MACT & ACMM, Bengaluru, (SCCH-26), in C.C.No.6109/2018 dated 18.04.2022, is hereby confirmed.
Crl.Apl.789/2022 21 Office to return the TCR along with the copy of this judgment forthwith.
(Dictated to the Stenographer, transcribed by her, corrected, signed and then pronounced by me in the open court on this the 16th day of May, 2025) (PALLAVI.R) LXVIII Addl. City Civil and Sessions Judge, Bengaluru City.
Digitally signed by R PALLAVI R Date:
PALLAVI 2025.06.18
16:32:46
+0530
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JUDGMENT PRONOUNCED IN THE OPEN
COURT, VIDE SEPARATE ORDER
The Criminal Appeal filed by the
appellant under Sec.374(3) of Cr.P.C. is
hereby dismissed.
The judgment of conviction and
sentence passed by the learned XXIV
Addl., Small Causes Judge & MACT &
ACMM, Bengaluru, (SCCH-26), in
C.C.No.6109/2018 dated 18.04.2022, is
hereby confirmed.
Office to return the TCR along with
the copy of this judgment forthwith.
LXVIII A.C.C & S.J,
Bengaluru City.
Crl.Apl.789/2022
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For clarification.
Call on 21.02.2025
LXVIII A.C.C & S.J,
Bengaluru City.
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