Bangalore District Court
Mr.Lazar.M vs Sri.K.S.Raghurama Reddy on 28 February, 2023
1
C.C.No.19651/2019
KABC030619872019
IN THE COURT OF THE XIX ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE AT BENGALURU CITY.
Dated this the 28th day of February 2023.
PRESENT:SRI.FAROOQ ZARE
B.A.(Law)LL.B.L.L.M.
XIX ADDL.C.M.M., BENGALURU.
Case No. :- C.C.No.19651 of 2019
Complainant Mr.Lazar.M
S/o Mr.Michael,
Aged about 52 years,
R/at No.1401, "Shaloam Nilaya"
Near Govt.High School,
Begur, Begur Hobli,
Bengaluru-560068.
(By Sri.T.M.P. Advocate.)
-V/s-
2
C.C.No.19651/2019
Accused :- Sri.K.S.Raghurama Reddy
S/o Late. Shamanna Reddy
Aged about 62 years,
R/at No.684, 10th Main ,
4th 'C' Block, Koramangala,
Bengaluru-560034.
(By Sri.A.N. Advocate.)
Offence complained of :- Under Section 138 of N.I.Act.
Plea of accused :- Pleaded not guilty.
Opinion of the Judge :- Accused found not guilty.
Date of order :- 28th February, 2023.
J UD GME N T
The complainant has filed this complaint under
Section 200 of Cr.P.C against the accused for the offence
punishable under Section 138 of N.I.Act.
2. The brief facts of the complaint are that;
The complainant as well as accused are friends and
known to each other for the past several years. The
3
C.C.No.19651/2019
accused approached the complainant seeking hand loan
of Rs.25,00,000/- to meet his urgent business domestic
and other legal necessities agreeing to repay as and when
demanded by the complainant. The complainant has
advanced a sum of Rs.25,00,000/- as hand loan by way of
cheque bearing No.000000488766 dated 20.07.2016
drawn on Canara Bank, Bommanahalli Branch,
Bengaluru to the accused. After lapse of one year, the
complainant insisted the accused to repay the hand loan.
The accused on 05.05.2019 issued a cheque bearing
No.803187 dated 14.05.2019 for Rs.25,00,000/- drawn
on Corporation Bank, Koramangala Branch, Bengaluru,
in favour of the complainant.
3. When the complainant presented the cheque for
encashment on 15.05.2019 through his banker Canara
Bank, Bommanahalli Branch, Bengaluru, which was
returned unpaid with an endorsement "Funds
4
C.C.No.19651/2019
Insufficient" on 16.05.2019. Thereafter, the complainant
got issued demand notice on 07.06.2018 to the accused
through RPAD calling upon him to repay the cheque
amount. The accused received the demand notice on
08.06.2019. However, he has neither paid the cheque
amount nor replied.
4. On presentation of the complaint, the cognizance
was taken of the offence punishable under Section 138 of
N.I.Act and registered it as P.C.R.No.8360 of 2019. The
sworn statement of the complainant was recorded. Since
there were sufficient materials to proceed against the
accused, it was registered as Criminal case in register
No.III and the process was issued to the accused.
5. On receipt of the summons, the accused
appeared before the court through his counsel and
secured bail. He was furnished with the prosecution
5
C.C.No.19651/2019
papers. The substance of the accusation was read over
and explained to him. He pleaded not guilty and claimed
to be tried.
6. The complainant has himself got examined as
PW1 and got marked documents at Exs.P1 to Ex.P7 and
he got marked Ex.P8 during the course of cross
examination of DW1 on confrontation as DW1 admitted it.
7. The statement of the accused under Section 313
of Cr.P.C was recorded. He denied the incriminating
evidence appearing against him. In his defence evidence,
he himself has got examined as DW1 and got marked
documents at Ex.D1 and Ex.D2.
8. Heard the arguments of both the sides. The
learned counsel for the complainant has relied upon the
following decision;
6
C.C.No.19651/2019
1.2022(3) AKR 381 M.S.Sathya Narayana vs Lingaraje Urs. The learned counsel for the accused has relied upon following decisions;
1. Criminal Appeal No.1497 of 2022 Dasharathbhai Trikambhai Patel vs Hitesh Mahendrabhai Patel & Anr.
2. 2022 (3) KCCR 2029 M/s Paxal Surgicals, Bengaluru vs Ashok Kumar.
3. 2020 (4) KCCR 2540 K.S.Nagarajappa vs Dibbada Kotresh.
4. 2020(3) KCCR 2373 Vishal vs Prakash Kadappa Hegannawar.
5. 2021(4) KCCR 2988 Mr.Krishna Gopal Khetan vs M/s Pearl Valley Silks Ltd., Bangalore and Others.
6. 2007 AIR SCW 6736 Jon K.John vs Tom Varghese and Anr.
7. AIR 2011 SC 1588 Milind Shripad Chandurkar vs Kalim M. Khan and Anr.
7
C.C.No.19651/2019
8. ILR 2021 KAR 1184 M/s National Agricultural Co-op. Marketing Federation of Indian Ltd.(NAFED),rep., by its Bengaluru Branch Manager vs M/s Disha Impex (Pvt.) Ltd., New Delhi and Another.
9. 2016 (4) KCCR 2891 Prabhakar Murthy vs S.G.Shankariah.
10. ILR 2021 KAR 2437 The Bidar Urban Co-operative, Bank Ltd., Bidar vs Mr. Girish.
11. AIR 2019 SC 1983 Baslingappa vs Mudibasappa.
9. The points that arise for my consideration are as under;
1. Whether the complainant proves that the accused has issued the cheque at Ex.P1 for Rs.25,00,000/- in his favour towards discharge of legally enforceable debt.?
2. Whether the complainant further proves that the said cheque was dishonoured as "Funds Insufficient"
when it was presented for
encashment.?
8
C.C.No.19651/2019
3. Whether the complainant further
proves that he has complied with the
mandatory provisions of Section 138 of N.I.Act.?
4. What order ?
10. My findings to the above points for consideration are as under:
Point No.1 :- In the Negative.
Point No.2 :- In the Affirmative. Point No.3 :- In the Negative.
Point No.4 :- As per final Order for the following;
::: REASONS :::
11. Point No.1:- As regards legally enforceable debt or liability the Hon'ble Supreme Court in the case of Rangapa v/s Sri. Mohan reported in (2010) 11 SCC 441 has held that "The presumption mandated by Section 139 of the Act includes a presumption that there exists a legally enforceable debt or liability. This is of course in the 9 C.C.No.19651/2019 nature of a rebuttable presumption and its 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 complainant. When an accused has to rebut the presumption under Section 139, the standard of proofs for doing so is that of preponderance probabilities. Therefore, when the accused is able to raise a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the presumption can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own".
12. If the facts and circumstances of the case are considered in the light of above said principle of law it is 10 C.C.No.19651/2019 clear that the accused has not disputed during the trial that the cheque in question is drawn on his bank account and it bears his signature. Therefore, the statutory presumptions arise under Sections 118(a) and 139 of N.I. Act in favour of the complainant that the cheque in question is issued for consideration in discharge of debt or liability. The burden of rebutting the said presumptions by probable defence is on the accused.
13. PW1 in his examination chief has reiterated the averments of the complaint and has relied upon documents at Ex.P1 to Ex.P8.
14. The accused has entered the witness box as DW1 and has contended that the complainant has agreed to purchase site No.5, 6 and 7 in the layout formed by him and paid an amount of Rs.25,00,000/- by way of cheque as part payment. It is also contended that he has 11 C.C.No.19651/2019 formed the layout for residential purpose. Though complainant initially has agreed to purchase three sites for residential use but subsequently he has intended to construct a church in the layout and as such the oral understanding/agreement was canceled. Thereafter the accused had paid a sum of Rs.5,00,000/- by way of RTGS to the complainant on 28.02.2019 and had also agreed to repay the remaining amount. He has also contended that the demand notice was not served upon him. It is contended that there is no legally enforceable debt payable by him to the complainant and he has never taken hand loan of Rs.25,00,000/- from the complainant.
15. As already stated above, the accused has raised defences to rebut the statutory presumptions operating in favour of the complainant under Sections 118(a) and 139 of N.I.Act. According to the complainant, he has lent hand 12 C.C.No.19651/2019 loan of Rs.25,00,000/- to the accused by way of cheque. In support of his case the complainant has relied upon Ex.P6 the statement of account evidencing that on 20.07.2016 a sum of Rs.25,00,000/- was paid to the accused by way of cheque bearing No.488766. However, it is the contention of the accused that the complainant has agreed to purchase site Nos.5, 6 and 7 in the layout formed by him for residential purpose and paid a sum of Rs.25,00,000/- as part payment. It must be noted here that so for as receipt of Rs.25,00,000/- is concerned, the accused has not raised any voice. The only dispute between the parties is the purpose of which it was advanced. In the cross examination of PW1 he has admitted that he has booked sites in the layout formed by the accused. He has also clearly admitted that the said layout was formed for residential purpose only. These admission give by PW1 substantiate the contention of the 13 C.C.No.19651/2019 accused that, the complainant has agreed to purchase sites in his layout.
16. It is the contention of the accused that the oral agreement was canceled as the complainant intended to form the church in the layout. However, in the cross examination PW1 has denied it. However, in the cross examination of DW1 the complainant has denied that there is no transaction between him as well as accused regarding purchase of sites.
17. It is also suggested in the cross examination of DW1 that the transaction in respect of site was ended prior to issuance of cheque in question for that DW1 states that there was no transaction between him and the complainant. It is to be noted here that in the notice of demand, complaint and in his evidence affidavit the complainant ha not at all stated about the site transaction 14 C.C.No.19651/2019 between him and accused. He only during the course of cross examination of DW1 has whispered about the site transaction. It is clear from above evidence that, the site transaction was taken place between the complainant as well as accused as contended by the accused. PW1 in the cross examination has stated that he purchased sites from the accused for Rs.30,00,000/-. The defence of the accused is that the transaction was taken place between complainant as well as accused in respect of sites but not in respect hand loan transaction as stated by the complainant. The complainant during the trial has admitted that the transaction in respect of purchase of sites was taken place between him as well as accused. It probabalises the contention of the accused that transaction was taken place between him as well as accused in respect of sites.
15
C.C.No.19651/2019
18. According to the complainant he has advanced a sum of Rs.25,00,000/- by way cheque to the accused on 20.07.2016. However, during the course of cross examination of DW1 the complainant has introduced a new version suggesting that a transaction was taken place between him as well as accused for Rs.30,00,000/- which has been denied by DW1. The above said suggestion of the complainant is quite contrary to his case set up in the complaint. It is also relevant to note here that in the cross examination PW1 has stated that he has paid a sum of Rs.25,00,000/- by way of cheque and after one year he paid another sum of Rs.5,00,000/- by way of cash to the accused. It must be noted here that if really he has also advanced a sum of Rs.5,00,000/- by way of cash apart from Rs.25,00,000/- by way of cheque, he could have stated in the notice of demand, complaint as well as in his evidence affidavit regarding advancement of Rs.5,00,000/- 16
C.C.No.19651/2019 by way of cash. Therefore, the version of the complainant in his cross examination that he has advanced a sum of Rs.5,00,000/- by way of cash is unbelievable. No doubt it is suggested to PW1 in the cross examination by the defence side that he paid Rs.5,00,000/- by way of cash when the demonetization policy was imposed. In the cross examination of PW1 it is also suggested by defence side that he has never advanced a sum of Rs.5,00,000/- by way of cash. It is true that in our country The Government of India had imposed demonetization policy in November 2016. However, PW1 has stated in his cross examination that he paid a sum of Rs.5,00,000/- after one year from payment of Rs.25,00,000/- on 20.07.2016. Therefore, it is unbelievable that he paid a sum of Rs.5,00,000/- by way of cash when the demonetization policy was imposed.
17
C.C.No.19651/2019
19. It is contended by the accused that he had issued a postdated cheque in January 2019 towards payment of remaining amount. However, it is asserted by the complainant that the accused has issued the cheque in question for Rs.25,00,000/- on 05.05.2019. In the cross examination PW1 has clearly admitted that the accused has issued cheque in question to him in January 2019. Therefore, this clear admission given by PW1 falsifies his statement that on 05.05.2019 the accused issued cheque in question.
20. It is the contention of the accused that after cancellation of oral agreement, towards repayment of amount, he paid a sum of Rs.5,00,000/- on 28.02.2019 to the complainant by way of RTGS. In support of this contention the accused has relied upon statement of account at Ex.D1 which depicts that a sum of 18 C.C.No.19651/2019 Rs.5,00,000/- was transferred to complainant by way of RTGS on 28.02.2019. It is to be noted here that in the cross examination of DW1 it is suggested that the dispute arose in respect of sites and later it was compromised and as per compromise, the accused paid a sum of Rs.5,00,000/- but not in respect of cheque in question. This suggestion has been denied by DW1. Having suggested so, complainant has not produced any document evidencing the said compromise.
21. It is elicited in the cross examination of PW1 that he has not shown in his income tax returns about advancement of Rs.25,00,000/- by way of cheque and Rs.5,00,000/- by way of cash. It is also elicited that he has not declared in his income tax returns that a sum of Rs.25,00,000/- is payable by accused to him. In this regard the learned counsel for the complainant has relied 19 C.C.No.19651/2019 upon a decision reported in 2022 (3) AKR 381 in the case of M.S.Sathya Narayana vs Lingaraje Urs. therein the Hon'ble High Court of Karnataka in para No.15 of the judgment has observed thus;
No doubt, in the income tax declaration, PW1 has not declared for having paid the money. But in the cross examination, PW1 admits that he has not produced any documents to show that is paying income tax . But he admits that he is an income tax assessee. But non filing of the document for having paid income tax, will not take away the case of the complainant and petitioner has to explain how the subject matter of cheque had gone to the hands of the said Devaraje Urs and what made him to give the said cheque.
22. The above said decision is of no help to the complainant. Because in that case the complainant has not declared the alleged money advanced to the accused 20 C.C.No.19651/2019 and has not produced document evidencing that he is paying income tax returns. However, in the case on hand the complainant has set up a case that a sum of Rs.25,00,000/- by way of cheque was lent to the accused. But during the trial he has stated that he advanced a sum of Rs.25,00,000/- by way of cheque and Rs.5,00,000/- by way of cash.
23. It is the defence of the accused that on 28.02.2019 he made payment of Rs.5,00,000/- by way of RTGS to the complainant. PW1 in his cross examination though has denied that on 28.02.2019 a sum of Rs.5,00,000/- was transferred by way of RTGS but he has admitted that a sum of Rs.5,00,000/- was credited to his account from the bank account of the accused. It is relevant to note here that it is suggested to DW1 that he is liable to pay a sum of Rs.20,00,000/- to the complainant 21 C.C.No.19651/2019 and said suggestion has been admitted by DW1 as true. The accused in his examination-in-chief and during the course of cross examination of PW1 has not denied his liability to pay a sum of Rs.20,00,000/- to the complainant. The above made suggestion by the complainant and his admission in the cross examination that a sum of Rs.5,00,000/- was transferred to his account from the bank account of the accused coupled with entry dated 28.02.2019 in Ex.D1 probabalises the defence of the accused that he paid Rs.5,00,000/- by way of RTGS to the complainant. As suggested above by the complainant himself that there is a liability on the part of the accused to pay a sum of Rs.20,00,000/-. But the complainant has claimed that the accused is liable to pay Rs.25,00,000/- the amount covered under the disputed cheque at Ex.P1. It must be noted here that the cheque in question for Rs.25,00,000/- was presented for 22 C.C.No.19651/2019 encashment and returned on 06.05.2019 as "Funds Insufficient". It is evident from the entry in Ex.D1 that on 28.02.2019 a sum of Rs.5,00,000/- was transferred to the bank account of the complainant. It means before presentation of cheque for encashment, a part payment of Rs.5,00,000/- was made by the accused. In this regard the learned counsel for the accused has relied upon recent decision of Hon'ble Supreme Court in the case of Dasharathbhai Trikambhai Patel vs Hitesh Mahendrabhai Patel & Anr. It is useful to refer to a relevant paragraph No.29 of the judgment and same is extracted herein below;
"Under Section 56 read with Section 14 of the Act, an endorsement may be made by recording the part-payment of the debt in the cheque or in a note appended to the cheues. When such an endorsement is made, the instrument could still be used to negotiate the balance amount. If the endorsed cheque when presented for 23 C.C.No.19651/2019 encashment of the balance amount is dishonoured, then the drawee can take recourse to the provisions of Section 138. Thus, when a part-payment of the debt is made after the cheque was drawn but before the cheque is encashed, such payment must be endorsed on the cheque under Section 56 of the Act. The cheque cannot be presented for encashment without recording the part of payment. If the unendorsed chequue is dishonoured on presentation, the offfence under Section 138 would not be attracted since the cheque does not represent a legally enforceable debt at the time of encashment".
24. It is clear from the above referred to decision of Hon'ble Supreme Court that, Section 138 of N.I.Act cannot be made applicable to the case where without endorsing as to part payment of the debt in the cheque or in a note in terms of Section 56 read with 14 of N.I.Act the cheque was presented for encashment and the amount 24 C.C.No.19651/2019 covered under the cheque cannot be termed as a legally enforceable debt. In the case on hand also the cheque in question at Ex.P1 was presented for encashment on 15.05.2019. But prior to this, the accused made payment of Rs.5,00,000/- to the complainant on 28.02.2019 by way of RTGS. However, the complainant without endorsing as to part payment of Rs.5,00,000/- in disputed cheque has presented it for encashment of Rs.25,00,000/-. Therefore, a sum of Rs.25,00,000/- covered under the disputed cheque cannot be legally enforceable debt so as to attract section 138 of N.I.Act in the light of ratio laid down in the above referred decision of Hon'ble Supreme Court.
25. The learned counsel for the accused has relied upon a decision of Hon'ble High Court of Karnataka reported in ILR 2021 KAR 2437 in the case of The Bidar 25 C.C.No.19651/2019 Urban Co-operative Bank Ltd., Bidar vs Mr.Girish to contend that the debt in question is a time bared debt and as such Section 138 of N.I.Act does not attract to the case. It is laid down in the above referred to decision by Hon'ble High Court of Karnataka in para No.39 that a cheque given in discharge of a time bared debt will not constitute an unconditional undertaking or promise in writing either expressly or implied so as to attract the criminal offence under Section 138 of N.I.Act. However, in the case on hand, the alleged amount of Rs.25,00,000/- is said to have been lent on 20.07.2016. The complainant has to initiate action against the accused within three years from 20.07.2016 as the complaint came to be filed on 03.07.2019 within three years which is evident from the records, the debt in question is not time barred debt and as such the above referred to decision relied upon by the learned counsel for the accused does not apply to the 26 C.C.No.19651/2019 case on hand. The rest of the decisions relied upon by the learned counsel for the complainant cannot be made applicable to the case on hand as the facts of those cases are together different from the facts of the case on hand. The complainant has produced the certified copy of Sale deed dated 27.06.2016 in terms of Ex.P7 showing that he has purchased the property detailed therein for a sum of Rs.2,70,00,000/-. It must be noted here that the lending capacity of the complainant has not been disputed by the accused. In the cross examination of DW1 the complainant got marked the layout Registration Slip at Ex.P8 on confrontation pertaining to the accused. However, DW1 has denied that he requested that he would return the amount after sale of sites in the layout. Ex.P8 is not helpful to the complainant, as he has stated different version during the trial as to advancement of amount to the accused. Because during the trial he 27 C.C.No.19651/2019 claims to have advanced Rs.13,00,000/- to the accused. From the above discussion this court opines that the accused has rebutted the statutory presumptions operating in favour of the complainant under Sections 118(a) and 139 of N.I.Act. On the other hand the complainant has failed in establishing that the accused in discharge of legally enforceable debt of Rs.25,00,000/- has issued cheque in question in his favour. Accordingly point No.1 is answered in the Negative.
26. Point No.2:- According to the complainant the cheque in question at Ex.P1 was returned unpaid with an endorsement as "Funds Insufficient". The bank memo produced by the complainant at Ex.P3 reveals that cheque was returned unpaid for the reasons "Funds Insufficient". The bank memo at Ex.P3 proves dishonour of cheque for the reasons "Funds Insufficient" by virtue 28 C.C.No.19651/2019 of presumption raised under Section 146 of N.I. Act and during the trial Ex.P3 went uncontroverted. Hence, I answer point No.2 in the Affirmative.
27. Point No.3:- The cheque in question at Ex.P1 was returned unpaid with bank endorsement on 16.05.2019 as per bank memo at Ex.P2. It is clear from Ex.P3 the office copy of legal notice that, the complainant caused demand notice on 07.06.2019 informing the accused about dishonour of the cheque and making demand for repayment of amount covered under the cheque in question. On perusal of Ex.P1 to Ex.P3 it is evident that the complainant has presented the cheque within its validity and it was returned unpaid on 16.05.2019 as well as he caused demand notice within one month from the date of intimation of dishonour of the cheque.
29
C.C.No.19651/2019
28. The accused has contended that the notice of demand was not served upon him. PW1 in his cross examination has admitted that he has stated in para No.6 of the complaint that notice was caused on 07.06.2018. It is also suggested to him that even in his evidence affidavit he has mentioned the date 07.06.2018. However, PW1 has answered that there might be mistake in mentioning the date of demand notice. Ex.P3 the office copy of demand notice depicts that it was issued on 07.06.2019. It is contended in the cross examination of PW1 that Ex.P5 the track consignment has been created. It is well settled law that the notice of demand sent by RPAD is deemed to have been served if notice is sent to correct address of the addressee in view of Section 27 of General Clauses Act. It is not the contention of the accused that the notice of demand was sent to the wrong address or he was not residing in the given address when notice was 30 C.C.No.19651/2019 sent. However, he has himself admitted in the cross examination he has been residing in the address shown in the cause title of the complaint and said address is the correct address. Therefore, it is clear that as the notice of demand was sent by RPAD to the correct address of the accused it is deemed to have been served. The accused has produced delivery Manifest at Ex.D2. According to complainant the notice of demand served upon by the accused on 08.06.2019 as per track consignment at Ex.P5. Besides, Ex.D2 also indicates that notice was served on 08.06.2019. The records disclose that after causing demand notice, the accused has not repaid amount covered under cheque at Ex.P1 after expiry of fifteen days statutory period from the date of deemed service of demand notice, the complaint is filed well within the period of limitation. Since the complainant has failed to prove the basic ingredient of section 138 of N.I.Act that 31 C.C.No.19651/2019 the cheque in question was issued towards discharge of legally enforceable debt, point No.3 is answered in the Negative.
29. Point No.4:- In view of my findings on the above points, I proceed to pass the following;
O RDE R
Accused is acquitted under Section
255(1) of Cr.P.C of the offence
punishable under Section 138 of N.I.Act.
The bail bond of the accused and surety bond stands canceled.
(Directly dictated to the Stenographer on computer, typed by him, corrected by me and then pronounced in the Open Court on 28th February, 2023.) (FAROOQ ZARE) XIX ADDL.C.M.M., Bengaluru.
32
C.C.No.19651/2019 :: ANNEXURE ::
Witnesses examined on behalf of the Complainant:
PW1 :- Lazar.M Documents marked on behalf of the Complainant:
Ex.P1 :- Cheque.
Ex.P1(a) :- Signature of the accused.
Ex.P2 :- Bank Endorsement. Ex.P3 :- Office copy of the legal notice. Ex.P4 :- Postal receipt. Ex.P5 :- Track Consignment. Ex.P6 :- Statement of Account. Ex.P7 :- Certified copy of Sale Deed. Ex.P8 :- Registration Slip.
Witnesses examined on behalf of the Accused:- PW1 :- K.S.Raghurama Reddy. Documents marked on behalf of the Accused:-
Ex.D1 :- Bank Statement.
Ex.D2 :- Delivery Manifest issued by Post Office.
(FAROOQ ZARE)
XIX ADDL.C.M.M., Bengaluru.