Bangalore District Court
Sri. A.M. Mahadevaiah vs S. Balachandra Naidu on 20 July, 2017
IN THE COURT OF THE XXII ADDL.CHIEF METROPOLITON
MAGISTRATE, BENGALURU CITY
Dated this the 20th day of July, 2017
Present: Sri. V. NAGARAJA, B.A., LL.B.,
XXII Addl. Chief Metropolitan Magistrate,
Bengaluru.
C.C.No.28782/2016
JUDGMENT
Complainant : SRI. A.M. MAHADEVAIAH,
S/o Late Mari Ankegowda,
Aged about 38 years,
PVC Door Carpenter/Business,
R/at. No.2, 9th C Main Road,
Byraveshwaranagar,
Nagarabhavi Main Road,
Bengaluru - 560 072.
(Rep. by Sri. Vinay. S, Advocate)
V/s.
Accused : S. BALACHANDRA NAIDU,
S/o Late B.S. Naidu,
Aged about 31 years,
Business/Real Estate Broker,
R/at. No.2/3, 1st D Main,
B.S. Naidu Main Road,
7th Cross, 5th Block,
Banashankari III Stage,
Bengaluru - 560 085.
Phone No.9916848914/9742976568
(Rep. by Sri. T.V. Harinarayana, Advocate) 2 CC.No.28782/2016 JUDGMENT Complainant has filed this complaint u/S.200 of Cr.P.C., r/w Section 138 of N.I. Act, seeking for penalizing the accused for the offence punishable under Section 138 of N.I. Act and also sought for awarding compensation to him.
2. Case of the complainant in a nutshell is that:
He and accused are good friends from past several years.
Whereas, he (complainant) has been working as carpenter and also doing business of PVC doors selling. Whereas, accused has been doing chit business in the locality. Hence, complainant being his friend, he became one of the member to said chit which was started in the year 2014 i.e., from 15.09.2014, for chit amount of Rs.1,00,000/- (One Lakh). He further submitted that he has paid regular monthly chit amount at Rs.5,000/- per month.
So, after completion of chit i.e., 15.02.2016, the accused was supposed to pay entire chit amount of Rs.1,00,000/- to him, but accused did not pay and he went on postponing the payment.
So, complainant had waited for another 8 months, but accused did not pay. However on his repeated demands for said payment, the accused in the last week of October 2016 he 3 CC.No.28782/2016 issued post dated cheque bearing No.057225 dated 05.11.2016 in his name for Rs.1,00,000/- (One Lakh) drawn on Allahabad Bank, Banashankari Branch, 100 Ft. Road, 3rd Stage, Bengaluru.
So, he presented the said cheque on 05.11.2016 through his banker, but the said cheque was dishonoured for the reason that "Insufficient Funds" in the account of accused. So bank authorities issued endorsement on 07.11.2016. Hence, complainant got issued legal notice dated 16.11.2016 to accused, whereas said notice has been duly served to accused on 31.11.2016. But, accused has not paid cheque amount within stipulated period. Hence, he is constrained to file this complaint seeking for penalizing the accused for the offence punishable u/S.138 of N.I. Act and also seeking for awarding compensation to him.
3. In pursuance of summons issued by this court, accused made appearance through his counsel and obtained bail and now he is on bail.
4. As these proceedings are summary in nature, substance of accusation read over and explained to accused in 4 CC.No.28782/2016 language known to him whereas, he pleaded not guilty and claimed for trial.
5. In order to prove the case of the complainant, he has been examined as PW1 and got documents marked Ex.P1 to Ex.P8. After completion of evidence of the complainant, statement of accused as specified u/S.313 of Cr.P.C., has been recorded. On the other hand, the accused in order to substantiate his defence, he himself has been examined as DW1.
6. I have heard arguments of both learned counsels. They also filed their written arguments. Whereas, learned counsel for accused filed memo of citations reported in (1) 2016(1) Bankers Journal 540 (MP High Court) (2) 2015(5) Karnataka Law Journal 472 (3) 2015(2) Karnataka Law Journal 559 (4) ILR 2007 Karnataka 2709 (5) ILR 2008 Karnataka 3635 (6) 2009(1) DCR 583
7. After perusal of records, the points arise for my consideration are:-
1) Whether complainant proves beyond all reasonable doubt that accused was due of 5 CC.No.28782/2016 chit amount of Rs.1,00,000/- to him. So in order to discharge said chit amount liability, he issued cheque bearing No.057225 dated 05.11.2016 for Rs.1,,00,000/- drawn on Allahabad Bank, Banashankari Branch, Bengaluru, in favour of complainant?
2) Whether complainant further proves that he has complied with mandatory requirements as specified under Section 138 of N.I. Act?
3) What Order?
8. My findings on the above points are:
Point No.1 : In affirmative
Point No.2 : In affirmative
Point No.3 : As per final order, for the following:
REASONS
9. Point No.1:- As I have already stated, in order to prove the case of the complainant, he has been examined as PW1 and filed his examination-in-chief by way of affidavit by reiterating entire complaint averments as stated above. In support of his oral testimony he relied upon Ex.P1 to ExP8.
10. On the other hand, in order to substantiate the defence taken by the accused, he has been examined as DW1.
11. Before appreciation of evidence of the parties regarding their respective contentions, I am of the opinion, it is 6 CC.No.28782/2016 worth to note presumptions envisaged in N.I. Act as well as ratio laid down by the Hon'ble Apex Court in the Judgment reported in (2009) 2 Supreme Court Cases 513 (Kumar Exports V/s Sharma Carpets) wherein it is held "B. Negotiable Instruments Act, 1881-S.118- Presumptions under - Purpose of, held, is to facilitate negotiability of an instrument - It is for this purpose S.118 has departed from general law of contract wherein existence of consideration has to be proved in the first instance - The Act also creates special rules of evidence for negotiable instruments - Contract Act, 1872 - Ss.10 and 25 - Evidence Act, 1872, S.4 Further held:
In a suit to enforce a simple contract, the plaintiff has to aver in his pleadings that it was made for good consideration and must substantiate it by evidence. But to this rule, the negotiable instruments are 'an exception'.
In a significant 'departure from the general rule' applicable to contracts, Section 118 of the Act provides certain presumptions to be raised. This section also lays down some special rules of evidence relating to presumptions. The reason for these presumptions is that, a negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain presumptions are made. The presumption, therefore, is a matter of principle to facilitate negotiability as well as trade."
Applying the definition of the word "proved" in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident 7 CC.No.28782/2016 that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharge the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists."
It is also worth to note Judgment of Hon'ble Three - Judges Bench of Hon'ble Supreme Court, reported in (2010) 11 SCC 441 (Rangappa V/s. Sri Mohan) wherein it is held "The presumption mandated by Section 139 includes a presumption that there exists a legally enforceable debt or liability. This is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, herein, there can be no doubt that there is an initial presumption which favours the respondent /complainant."
Section 139 is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section for the offence punishable under Section 138 of N.I. Act of the Act specifies a strong criminal remedy in relation 8 CC.No.28782/2016 to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof.
It is further held:
Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the court in favour of the complainant. The presumption referred to Section 139 of the NI Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption.
What is required to be established by the accused in order to rebut the presumption is different from each case under the given circumstances. But the fact remains that a mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words, the defence raised by way of rebuttal evidence must be probable and capable of being accepted by the court."9 CC.No.28782/2016
In the recent judgment of Hon'ble Apex Court reported in (2015) 8 SCC 378 (T. Vasanthakumar V/s Vijayakumari) wherein it is held "Therefore, in the present case since the cheque as well as the signature has been accepted by the accused-respondent, the presumption under Section 139 would operate.
Thus, the burden was on the accused to disprove the cheque or the existence of any legally recoverable debt or liability.
12. So in the light of above presumptions and ratio laid down by Hon'ble Apex Court, if the present facts and situations are analyzed, it is obvious that according to complainant, accused has issued Ex.P1, cheque for discharging his chit fund amount liability. On the other hand, on considering the defence taken by the accused in his defence evidence as well as his stand taken in the cross-examination of PW1 and also his answers given in his statement recorded u/S.313 of Cr.P.C. It is obvious that though he dispute the chit transaction between him and complainant and chit amount of Rs.1,00,000/-,payable to complainant, but he is not disputing his cheque Ex.P1 and his signature thereon (as clearly admitted in his cross- examination at page No.5) but he took up a plea by contending 10 CC.No.28782/2016 that he and complainant were members in a chit run by one Muralidar, who is also friend of the complainant whereas he(accused) had already bid the chit amount of Rs.1,00,000/- and received Rs.85,000/- after deducting the commission amount of Rs.15,000/- from above said Muralidar, at that time the said Muralidar, insisted and obtained his (accused) signed blank cheque as a security. Now, both complainant and said Muralidar colluded together and misused the said signed cheque. Hence, there is no chit transaction between him and complainant and he has not issued cheque to him. Hence, he is not liable.
13. As I have already stated in view of ratio laid down by Hon'ble Apex court in the Judgments stated supra, that as soon as accused admits his signature on cheque, the mandatory presumption u/S 139 of N.I. Act comes to the aid of complainant and he can rest upon said presumption, whereas the burden of proof shifts on accused to rebut the said presumption.
14. Here in this case, I have already stated, accused has clearly admitted in his cross-examination that Ex.P1 is his cheque and signature thereon belonged to him. Moreover, he is not disputing financial capacity of the complainant. So under 11 CC.No.28782/2016 these circumstances, I am of the opinion that complainant has discharged initial burden placed upon him. Hence, mandatory presumption u/S 139 of N.I. Act can be raised in favour of complainant and he can rest there upon.
15. Whereas, learned counsel for defence argued that in order to raise presumption u/S.138 of N.I. Act, the condition precedent is that complainant must prove the existence of legal recoverable debt or liability, if he is able to prove the same, then only presumption can be raised otherwise not.
16. Having regard to the arguments of learned counsel for accused, it is important to note as I have already pointed out Hon'ble Three-Judges Bench Judgment of Hon'ble Supreme Court in Rangappa's case stated supra, it is clearly held "The presumption mandated by Section 139 includes a presumption that there exists a legally enforceable debt or liability.
So when above ratio clearly states that presumption includes existence of legally enforceable debt or liability then further proof of that fact is not required. Moreover, it is well settled law that the prime object of presumptions are to minimize 12 CC.No.28782/2016 or to avoid the leading of unnecessary evidence. It is further significant to note that in "Kumar Exports" case stated supra Hon'ble Apex Court clearly held that in Section 118 and 139 of N.I. Act special rules of evidence are prescribed and they are departed from general rule of contract and they are also exception to general rule of evidence, by observing so, the Hon'ble Apex court also gave illustration that "In a suit to enforce a simple contract, the plaintiff has to aver in his pleadings that it was made for good consideration and must substantiate it by evidence. But to this rule, the negotiable instruments are 'an exception'.
17. So I am of the opinion that as soon as complainant is able to discharge initial burden placed upon him that the cheque in question is belonged to accused and it bears his signature and he has proved that he has transferred amount to accused's account as reflected in Ex.P8 which is statement of account of complainant, then the initial presumption has to be drawn in his favour that there exist legally recoverable debt or liability and said cheque has been issued for legally recoverable debt or liability and said mandatory presumptions will live, exist and 13 CC.No.28782/2016 survive and shall end only when the contrary is proved by the accused, that is to say the cheque was not issued for consideration and in discharge of any debt or liability, in other words, reverse onus shifts on the accused to rebut the said initial presumption raised in favour of complainant.
18. In another judgment of Hon'ble Apex Court reported in (2008) 7 SCC 655 (Mallavarapu Kasivisweswara Rao V/s. Thadikonda Ramulu Firm and Others), wherein it is held "Negotiable Instruments Act, 1881, - S.118(a) - Presumption of consideration - Held, initial burden is on defence to show that existence of consideration was improbable or doubtful or illegal - If this burden fails to discharged, onus shifts on plaintiff - If, however, defence fails to discharge initial burden, the plaintiff is invariably entitled to benefit of the presumption - Mere denial of consideration is not sufficient to discharge the initial burden - Something probable has to be brought on record to prove non-existence of consideration"
Now the crucial question arises as to whether accused is able to rebut the said presumption or not?
19. As I have already stated, accused has taken a plea by contending that he and complainant were members in a chit run by one Muralidar, who is also friend of the complainant. 14 CC.No.28782/2016 Whereas, he (accused) had already bid the chit amount of Rs.1,00,000/- and received Rs.85,000/- after deducting the commission amount of Rs.15,000/- from above said Muralidar, at that time the said Muralidar, insisted and obtained his (accused) signed blank cheque as a security. Now, both complainant and said Muralidar colluded together and misused the said signed cheque. Hence, there is no chit transaction between him and complainant and he has not issued cheque to him. Hence, he is not liable.
20. It is important to note though accused contends so, but he has not chosen to examine said Muralidar to prove his contention.
21. Whereas learned counsel for accused in his written arguments, he argued by picking out a part of sentence in the cross-examination of PW1 that "£Á£ÀÄ aÃn ªÀåªÀºÁgÀªÀ£ÀÄß ¸ÀzÀj ªÀÄÄgÀ½ÃzÀsgï eÉÆvÉ £ÀqɸÀÄwÛzÉÝ," so by relying upon said statement, he contended that complainant has admitted the fact that he was having chit transaction with Muralidar, so admitted fact need not to be proved by examining the Muralidar.
15 CC.No.28782/2016
22. It is important to note as I have already pointed out, the learned counsel for accused picked out a part of sentence, in out of context and argued for his convenience. In fact, he himself has suggested to PW1 that "£Á£ÀÄ aÃn ªÀåªÀºÁgÀªÀ£ÀÄß ¸ÀzÀj ªÀÄÄgÀ½ÃzÀsgï eÉÆvÉ £ÀqɸÀÄwÛzÉÝ, CzÀgÀ°è DgÉÆæAiÀÄÄ ¸ÀºÀ ¸ÀzÀ¸ÀågÀÄ EzÀÝgÀÄ JAzÀgÉ ¸ÀļÀÄî". So on reading entire sentence with comma placed in the middle of the sentence, it clearly gives real meaning that PW1 has clearly denied the suggestion that he and accused had chit transaction with said Muralidar. So under such circumstance, the question of admission by PW1 as argued by learned counsel for defence does not arise. Hence, I do not find any force in the arguments of learned counsel for accused.
23. Coming to another contention of the accused that complainant and said Muralidar colluded together and misused his signed cheque. It is significant to note though he contended so, but he is completely silent as to whether he has lodged any police complaint regarding misuse of his signed cheque or as to whether he has taken any legal action. It is further significant to note though the notice was duly served on him, he has not given any reply. So under such circumstance, if at all his version was 16 CC.No.28782/2016 true, he could have narrated the same facts in his reply, but he did not do so, so it indicates that it is only after thought.
24. The learned counsel for accused further argued that complainant has admitted in his cross-examination that he himself has written the contents of the cheque, so it shows that accused had given signed blank cheque, whereas complainant subsequently filled up for his unlawful gain. Hence, liability cannot be fastened upon accused.
25. Having regard to the arguments of learned counsel for accused, at this juncture, it is worth to note principles laid down in the judgments of Hon'ble High Court of Karnataka reported in:
ILR 2001 Karnataka 4127 (S.R. Muralidar V/s. Ashok G.Y), wherein it is held:
"No law provides that in case of any negotiable instrument entire body has to be written by maker or drawer only. What is material is signature of drawer or maker and not the body writing hence question of body writing has no significance."
7. It is not objectionable or illegal in law to receive a inchoate negotiable instrument duly signed by the maker despite the material particulars are kept blank if done with an understanding and giving full authority to the payee to fill up the 17 CC.No.28782/2016 material contents as agreed upon. Such a course of action in law cannot vitiate the transaction nor can invalidate the negotiable instrument issued and such transaction fully binds the maker of the Negotiable Instruments Act to the extent it purports to declare. This is explicit from the provisions of Section 20 of the Negotiable Instruments Act, which reads thus:
"Inchoate stamped instruments:- Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima-facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; Provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder."
8. By the very fact that a document executed is inchoate with regard to some of the material particulars would not render such contract invalid nor make the instrument illegal or inadmissible. Voluntarily, if a person were to deliver an inchoate instrument authorizing the receiver to fill up the material contents as agreed upon, the cheque does not get tainted as inadmissible nor it amounts to tampering with the material particulars.
26. So in the light of above ratio if the present facts and situations are analyzed, as I have already stated that accused 18 CC.No.28782/2016 has clearly admitted that Ex.P1, cheque relates to his account and it bears his signature. So when he clearly admits his signature on Ex.P1 cheque, then it is immaterial as to whether drawer has written the body of the cheque or drawee has written, even if it is written by the complainant, it does not invalidate the cheque and its transactions, when complainant has been able to prove existence of the legally recoverable debt and cheque has been issued for discharging of said liability. Hence, I do not find any force in the arguments of learned counsel for accused.
27. Whereas, principles laid down in the judgments of Hon'ble Courts relied by learned defence counsel i.e., (1) 2015 AIR (SCW) 541 (Ramdas V/s. Krishnananda) (2) 2009(2) ALT (Cri) 199 (K.Narayananayak V/s. M. Shivaramashetty (3) ILR 1996 KAR 1219 (Sri Sathyanarayanagowda V/s. B. Rangappa) (4) 2012(4) RLW (Raj) 3047 (Rameshchandra Baregama V/s. Rameshchandra Joshi), will not helpful to the contention of defence in view of binding precedent of Hon'ble Three Judges 19 CC.No.28782/2016 Bench judgments of Hon'ble Apex Court stated supra. Hence, I am of the clear opinion that accused has utterly failed to rebut the mandatory presumption raised in favour of complainant. Hence, I hold point No.1 in affirmative.
28. Point No.2:- As I have already discussed in point No.1 that accused has issued Ex.P1, cheque for discharging his legally recoverable debt or liability. Whereas, on perusal of Ex.P3 endorsement given by bank authority clearly reveal that the complainant had presented the said cheque within validity period, but the said cheque was dishonoured due to Insufficient Funds in the account of accused. On perusal of the Ex.P4 which is legal notice issued to the accused clearly reveal that he has issued said demand notice to accused within specified time of 30 days from the date of receiving endorsement from bank. On perusal of Ex.P7 which is postal acknowledgement clearly reveal that the said notice has been duly served on accused. So on considering oral coupled with documentary evidence of complainant, they clearly prove that he has complied with mandatory requirements as specified u/S.138 (a) and (b) of N.I.Act. Whereas, accused has not paid the cheque amount 20 CC.No.28782/2016 within specified time, inspite of service of demand notice. Hence, accused has committed offence punishable u/S.138 of N.I. Act. Hence, I hold point No.2 in the affirmative.
29. Point No.3:- For the foregoing reasons discussed on points No.1 and 2, I proceed to pass the following:-
ORDER Acting under Section 255(2) of Cr.P.C. the accused is hereby convicted for the offence punishable u/S.138 of Negotiable Instruments Act.
(V. NAGARAJA) XXII Addl. Chief Metropolitan Magistrate, Bengaluru.21 CC.No.28782/2016
Heard regarding sentence.
Whereas, learned counsel for complainant prayed for imposing maximum sentence to the accused and also sought for awarding maximum compensation to the complainant.
Whereas, learned counsel for accused prayed for taking lenient view and prayed for imposing minimum sentence.
So, on considering the facts and circumstances of the case, accused is hereby sentenced to pay fine of Rs.1,05,000/- (One Lakh Five Thousand) in default he shall undergo simple imprisonment for a period of 3 (three) months.
In view of Section 357 of Cr.P.C., complainant is entitled for compensation of Rs.1,00,000/- (One Lakh) out of above said fine amount.
Hence, after collecting the above fine amount, office is directed to pay Rs.1,00,000/- (One Lakh) to complainant as compensation and defray remaining fine amount of Rs.5,000/- (Five Thousand) to state, after appeal period is over. The bail bond of the accused and surety bonds stands cancelled.
However, accused shall execute personal bond for Rs.10,000/- in view of Sec.437(A) of Cr.P.C.
22 CC.No.28782/2016
The office is hereby directed to supply the copy of this Judgment to the accused on free of cost.
(Dictated to Stenographer, transcribed and computerized by her, corrected and then pronounced by me in the open court on this the 20th day of July, 2017) (V. NAGARAJA) XXII Addl. Chief Metropolitan Magistrate, Bengaluru.
ANNEXURE List of witnesses examined on behalf of complainant:-
PW.1 : A.M. Mahadevaiah List of exhibits marked on behalf of complainant:
Ex.P1 : Original Cheque
Ex.P2 : Bank Challan dated 05.11.2016 for
Rs.1,00,000/-
Ex.P3 : Bank endorsement
Ex.P4 : Copy of legal notice
Ex.P5 & 6 : Two postal receipts
Ex.P7 : Postal acknowledgement card
Ex.P8 : Bank statement
23 CC.No.28782/2016
List of witnesses examined on behalf of the defence:
DW.1 : S. Balachandra Naidu List of exhibits marked on behalf of defence:
Nil XXII Addl. Chief Metropolitan Magistrate, Bengaluru.24 CC.No.28782/2016
Learned counsel for accused filed application u/S.389(3) of Cr.P.C. seeking suspension of sentence passed by this court till appeal period is over, as accused intends to prefer appeal against judgment and sentenced passed by this court.
Heard. Perused the records. On perusal it appears that this court has passed sentence which is not exceeding three years. Moreover, the offence for which accused has convicted is bailable. Moreover, accused has been on bail till conclusion of trial. Hence, I proceed to pass following:
ORDER Application filed by accused u/S.389(3) of Cr.P.C. is hereby allowed.
Consequently, sentence passed by this court is hereby suspended till appeal period is over subject to following conditions:
1) Accused shall execute personal bond of Rs.1,05,000/-.
XXII A.C.M.M., Bengaluru.
Learned counsel for accused filed undertaking affidavit of accused as specified u/S.437(A) of Cr.P.C., by undertaking that accused is undertaking to appear before appellate court whenever the said court directs him to appear the court to said higher court.
In view of Section 437(A) of Cr.P.C. accused shall execute personal bond for sum of Rs.10,000/-.
Office is directed to obtain bail bonds of the accused both for Rs.1,05,000/- as well as Rs.10,000/-.
XXII A.C.M.M., Bengaluru.