Bangalore District Court
M/S. Smart Assets Services India ... vs Trishul Developers on 15 April, 2023
KABC030081332016
IN THE COURT OF THE XXV ADDL. CHIEF
METROPOLITAN MAGISTRATE, AT BANGALORE
Dated this the 15th day of April 2023
Present:
SMT SUJATA SIDAGOUDA PATIL,
B.SC.,LL.B.
XXV Addl. Chief Metropolitan Magistrate,
Bangalore.
CC NO.3207/2016
Complainant : M/s. Smart Assets Services India Pvt.Ltd
Company Incorporated under the
Companies Act, 1956
Having its registered office at No.151, 9th
Main,6th Sector, HSR Layout,
Bangalore 560 102.
And previously at NO.367
14th Cross, Sadashivanagar
Bangalore 560 080
(By VRN Advocate )
V/s
Accused : 1. Trishul Developers
A Partnership Firm
Having its office at Mittal Towers
No.109, B Wing First Floor
No.6, M.G.Road, Bangalore 560 001.
Rep by its Managing Partner
Mr.Niraj Mittal.
2
CC NO.3207/2016
2. Mr.Niraj Mittal
Managing partner
Trishul Developers, Mittal Towers
No.109, B Wing First Floor
No.6, M.G.Road, Bangalore 560 001.
Also R/at.94/D, 9th C Main
RMV Extension, Bangalore 560 080.
3. Mr.O.P.Mittal
Trishul Developers , Mittal Towers
No.109, B Wing First Floor
No.6, M.G.Road, Bangalore 560 001.
Also R/at.94/D, 9th C Main
RMV Extension, Bangalore 560 080.
4. Mrs.Uma Mittal
Trishul Developers, Mittal Towers
No.109, B Wing First Floor
No.6, M.G.Road, Bangalore 560 001.
Also R/at.94/D, 9th C Main
RMV Extension, Bangalore 560 080.
5. Mrs.Jyothi Mittal
Trishul Developers, Mittal Towers
No.109, B Wing First Floor
No.6, M.G.Road, Bangalore 560 001.
Also R/at.94/D, 9th C Main
RMV Extension, Bangalore 560 080.
(Accused No.3 to 5 have been deleted as
per the order passed by Honble High
Court of Karnataka in
Crl.P.No.1621/2017 dt.05.01.2023).
(By DJ Advocate)
1. Date of 08.09.2015
Commencement of
offence
3
CC NO.3207/2016
2. Date of report of 03.05.2016
offence
3. Name of the M/s.Smart Asset Services India
Complainant Pvt.Ltd,
4. Date of recording of 13.09.2017
evidence
5. Date of closing of 13.11.2019
evidence
6. Offence Complained of 138 N.I.Act.
7. Opinion of the Judge Accused are acquitted
8. Complainant By VRN
Represented by
9. Accused defence by By DJ
JUDGMENT
The complainant filed the complaint under Sec.200 Cr.P.C. against the accused for the offence punishable under Sec.138 Negotiable Instruments Act (For short N.I.Act).
2. The brief facts of the complainant case is as under:
That the complainant is a well known company engaged in the business of providing real estate and allied services and has over a period of time acquired reputation in the market.4
CC NO.3207/2016 First accused is a Partnership Firm represented by the 2nd accused Mr.Niraj Mittal , the Managing Partner. The 3 rd and 4th accused are the parents of 2nd accused and the 5th accused is the wife of 2nd accused. Accused No.3 to 5 are the partners of the partnership firm.
The 2nd accused acting on behalf of 1st accused represented that they are reputed builders and are constructing and developing a project known as "MITTAL PALMS" in Sy.NO.32/3, 32/4, 32/5 and 33/4 of Shivanahalli Village, Yelahanka Hobli, Bangalore North Taluk, Bangalore.
The 2nd accused on behalf of the 1st accused entered into a transaction with the complainant wherein it was agreed that the "Core and Shell" of various apartments to be constructed in the project would be sold to the complainant. The 2nd accused also agreed to resell the apartments within a fixed time period at prevailing market price, not less than the minimum sale price. Pursuant to said transactions, there was various agreements entered into between the complainant and the 1st accused. The entire transaction was 5 CC NO.3207/2016 to cnclude with 18 months failing which the legal consequences as mentioned in those documents would ensue.
The complainant and the 1st accused entered into an agreement dt.01.02.2013 wherein it was agreed that the shell and the core of the building would be completed within a period of 18 months from 01.02.2013 along with procuring access to the project by way of public road as demarcated by the authorities.
The 2nd accused acting on behalf of the 1 st accused had agreed that if the Shell and Core of the apartments are not completed within 18 months and / or in the event of any title issues to the land or building in the project, and / or int the event of 1st accused being unable to procure road access to the project, the total consideration paid would be returned to the complainant with 25% interest compounded annually.
That an amount of Rs.9,09,13,508/ was paid by the complainant pursuant to the agreement dt.01.02.2013. In return to the total consideration paid along with the interest payable in case of default or breach by accused, there were 24 post dated cheques issued to the complainant. 6
CC NO.3207/2016 Pursuant to issuance of post dated cheques, second accused acting on behalf of the 1st accused categorically agreed and confirmed that in the event of failure of payment of amount within 2 days , the complainant may without any notice to the accused present the cheques for payments. Pursuant to agreement dt.01.2.2013, an exclusive marketing rights agreement was also entered into on 01.02.2013 wherein the 2nd accused on behalf of 1st accused had undertaken to market each apartment for a period of 18 months. It is further submitted that there was minimum price fixed as sale price and no sale was to be made below that price. .
That similar agreements were entered into between the complainant and the first accused on 24.05.2013 regarding 4 more apartments and that the terms and conditions of the agreement were similar to that of the agreements dt.01.02.2013. Pursuant to agreement dt.24.05.2013, the complainant paid Rs.77,87,501/ and Rs.67,86,252/ on various dates in favour of accused No.1. In order to guarantee return of total consideration in the 7 CC NO.3207/2016 eventuality of termination of agreement, 2 nd accused acting on behalf of the 1st accused issued 24 post dated cheques in favour of the complainant as described under the complaint.
That pursuant to issuance of above post dated cheques, 2nd accused made all representations that were made as regard the cheques made in agreement dt.01.02.2013. That there were various agreements to sell and construction agreements executed by the 1 st accused. Despite the representation made, the accused failed to comply with the terms and conditions of the agreement dt.01.02.2013, exclusive marketing right agreement dt.01.02.2013, supplemental agreement dt.24.05.2013 and exclusive marketing rights agreement dt.24.05.2013 referred to as definitive agreements.
According to the time period stipulated under the Definitive Agreements, 1st accused was required to market the entire set of apartments, however, 1st accused managed to sell only 4 out of 30 apartments. When the time frame for completion of the transaction under the Definitive Agreements was coming to a close, 2nd accused acting on 8 CC NO.3207/2016 behalf of the 1st accused requested the complainant for extension of time , assuring that the remaining apartments would be sold within a period of 12 months and thus there was an addendum entered into between the complainant and the 1st accused on 08.09.2014.It was further represented that if the 1st accused represented by 2nd accused is unable to resell the apartment within 12 months, they would make payment of Rs.3,924/per square foot to the complainant. Pursuant to the addendum , there was a fresh trigger price fixed, based on which a fresh marketing agreement was simultaneously entered into on 08.09.2014.
That the cheques issued pertaining to the Definitive agreements required to be renewed, the 2 nd accused acting on behalf of 1st accused issued fresh post dated cheques in favour of the complainant drawn on ING Vysya Bank, Mittal Towers, MG Road branch, for the 26 apartments.
That despite waiting for over 12 months, 1 st accused could only effect two sales made between 20.08.2014 to 20.08.2015 . The complainant on several occasions discussed with the 2nd accused as regard the transaction requesting the 9 CC NO.3207/2016 2nd accused to complete the transaction within the stipulated time. After the discussion and requests which did not yield any result and after seeing that the 1st accused being represented by the 2nd accused are incapable of completing the transaction which was admitted by the 2 nd accused on behalf of 1st accused , vide e mails exchanged between the complainant and the 2nd accused, the complainant invoked Clause 3 of the addendum dt.08.09.2014 and presented above mentioned cheques with its banker ie Yes Bank, Kasturba Road Branch, Bangalore. On presentation of the said cheques, the same returned dishonored for the reason "Insufficient Funds"
That on the cheque being returned dishonored , the complainant issued a legal notice dt.17.12.2015 to the 1st accused calling upon the accused to make good the payment within 15 days of receipt of said notice. The legal notice addressed by the complainant was received by the 1 st to 5th accused . That the complainant received a reply to the above mentioned legal notice dt.17.12.2015 from the 3rd, 4th and 5th accused on 29.12.2015 .10
CC NO.3207/2016 That the complainant issued a rejoined dt.13.01.2016 to the said reply notice dt.29.12.2015. The complainant categorically stated that the 1st accused is a family run partnership firm which is admitted by them as such being the case, they are in charge of managing the affairs of the 1 st accused.
That the complainant received a delayed reply to the legal notice dt.17.12.2015 from the 1st and 2nd accused on 14.01.2016 which is after expiry of 15 days. In the said reply notice, the 1st and the 2nd accused also issued a false counter claim of Rs.5,00,00,000/ as a counter blast to the claim made by the complainant.
That the complainant also received a notice dt.14.01.2016 from the 1st and the 2nd accused . The 1st and the 2nd accused have misinterpreted the terms of various agreements entered into between the complainant and the accused and as such the said notice and the claim made there is baseless. That the accused deny the receipt of money but admit issuance of cheques. The averments made by 11 CC NO.3207/2016 the 1st and 2nd accused vide notices dt.14.01.2016 are an after thought and are totally misconceived and vexatious.
That the complainant received a Sur rejoinder dt.20.01.2016 to the rejoinder dt.13.01.2016 issued by the 3rd to 5th accused and denied all the allegations made against them in a malafide manner. That the 1st to 5th accused knowing fully well that after time specified under the addendum dt.08.09.2014 said cheques would be presented, failed to maintain and willfully abstained from depositing the required sum. That the 1st accused being the Partnership Firm, 2nd accused being the Managing Partner of the firm and 3rd to 5th accused being the partners of the firm are in charge of and responsible for conduct of the business and are necessary parties to the proceedings . That the said offence of dishonor has been committed by the 1st accused with the consent and connivance of the 2nd to 5th accused and as such are liable under Chapter XVII of the N.I.Act, Therefore, the complainant was constrained to file the complaint against the accused. Hence, this complaint. 12
CC NO.3207/2016
3. After filing of the complaint recorded the sworn statement of the complainant. The complainant has complied all the statutory requirements under Sec.138 of N.I.Act. Thereafter, the case is registered against the accused persons by taking cognizance for the offence punishable under Sec.138 of N.I.Act and summons issued. The accused persons appeared with their Advocate and released on bail. Copy of the complaint furnished to the accused. Plea recorded and read out to the accused persons . The accused persons pleaded not guilty and claimed to be tried. 4. After recording the plea accused No.3 to 5 approached the Honble High Court of Karnataka through Crl.P.No.1621/2017 seeking quashing of the order for issuance of summons against accused Nos.3 to 5 as they have no material role played while issuing the cheques in this case. Accordingly, The Hon'ble High court of Karnataka has allowed the petition by instructing the trial court to proceed with the case only against accused No.1 and 2.
5.. In support of the complainant's case, the Director of the complainant company got examined as PW1 got marked 13 CC NO.3207/2016 Ex.P.1 to Ex.P.84. After closure of the evidence of the complainant, 313 Cr.P.C statement of the accused has been recorded. The accused denied the incriminating evidence placed by the complainant. The accused No.2 is examined as DW 1 and got marked Ex.D1 to Ex.D.3.
Heard arguments and perused the material on record.
6. On the basis of the contents of the complaint the following points arise for my consideration. :
1. Whether the complainant proves beyond reasonable doubt that the accused issued cheques in dispute as per Ex.P.8 to Ex.P.31 in favour of the complainant towards discharge of legal liability ?
2. Whether the complainant proves beyond reasonable doubt that the accused has committed the offence punishable under Sec.138 of N.I.Act?
3. What order ?
7. My findings to the above points are as follows:
Point No.1&2 : In the Negative .
Point.No.3 : As per final order
for the following:
REASONS
8.Point Nos.1 & 2: Both these points are interconnected with each other. In order to avoid repetition 14 CC NO.3207/2016 of facts, both the points have been taken up together for consideration.
9. The case of the complainant is that :
That the complainant is a well known company engaged in the business of providing real estate and allied services and has over a period of time acquired reputation in the market.
First accused is a Partnership Firm represented by the 2nd accused Mr.Niraj Mittal , the Managing Partner. The 3 rd and 4th accused are the parents of 2nd accused and the 5th accused is the wife of 2nd accused. Accused No.3 to 5 are the partners of the partnership firm.
The 2nd accused acting on behalf of 1st accused represented that they are reputed builders and are constructing and developing a project known as "MITTAL PALMS" in Sy.NO.32/3, 32/4, 32/5 and 33/4 of Shivanahalli Village, Yelahanka Hobli, Bangalore North Taluk, Bangalore.
The 2nd accused on behalf of the 1st accused entered into a transaction with the complainant wherein it was 15 CC NO.3207/2016 agreed that the "Core and Shell" of various apartments to be constructed in the project would be sold to the complainant. The 2nd accused also agreed to resell the apartments within a fixed time period at prevailing market price, not less than the minimum sale price. Pursuant to said transactions, there was various agreements entered into between the complainant and the 1st accused. The entire transaction was to conclude with 18 months failing which the legal consequences as mentioned in those documents would ensue.
The complainant and the 1st accused entered into an agreement dt.01.02.2013 wherein it was agreed that the shell and the core of the building would be completed within a period of 18 months from 01.02.2013 along with procuring access to the project by way of public road as demarcated by the authorities.
The 2nd accused acting on behalf of the 1 st accused had agreed that if the Shell and Core of the apartments are not completed within 18 months and / or in the event of any title issues to the land or building in the project, and / or int the event of 1st accused being unable to procure road access to 16 CC NO.3207/2016 the project, the total consideration paid would be returned to the complainant with 25% interest compounded annually.
That an amount of Rs.9,09,13,508/ was paid by the complainant pursuant to the agreement dt.01.02.2013. In return to the total consideration paid along with the interest payable in case of default or breach by accused, there were 26 post dated cheques issued to the complainant.
Pursuant to issuance of post dated cheques, second accused acting on behalf of the 1st accused categorically agreed and confirmed that in the event of failure of payment of amount within 2 days , the complainant may without any notice to the accused present the cheques for payments. Pursuant to agreement dt.01.2.2013, an exclusive marketing rights agreement was also entered into on 01.02.2013 wherein the 2nd accused on behalf of 1st accused had undertaken to market each apartment for a period of 18 months. It is further submitted that there was minimum price fixed as sale price and no sale was to be made below that price. .
17
CC NO.3207/2016 That similar agreements were entered into between the complainant and the first accused on 24.05.2013 regarding 4 more apartments and that the terms and conditions of the agreement were similar to that of the agreements dt.01.02.2013. Pursuant to agreement dt.24.05.2013, the complainant paid Rs.77,87,501/ and Rs.67,86,252/ on various dates in favour of accused No.1. In order to guarantee return of total consideration in the eventuality of termination of agreement, 2 nd accused acting on behalf of the 1st accused issued 26 post dated cheques in favour of the complainant as described under the complaint.
That pursuant to issuance of above post dated cheques, 2nd accused made all representations that were made as regard the cheques made in agreement dt.01.02.2013. That there were various agreements to sell and construction agreements executed by the 1 st accused. Despite the representation made, the accused failed to comply with the terms and conditions of the agreement dt.01.02.2013, exclusive marketing right agreement dt.01.02.2013, supplemental agreement dt.24.05.2013 and 18 CC NO.3207/2016 exclusive marketing rights agreement dt.24.05.2013 referred to as definitive agreements.
According to the time period stipulated under the Definitive Agreements, 1st accused was required to market the entire set of apartments, however, 1st accused managed to sell only 4 out of 30 apartments. When the time frame for completion of the transaction under the Definitive Agreements was coming to a close, 2nd accused acting on behalf of the 1st accused requested the complainant for extension of time , assuring that the remaining apartments would be sold within a period of 12 months and thus there was an addendum entered into between the complainant and the 1st accused on 08.09.2014.It was further represented that if the 1st accused represented by 2nd accused is unable to resell the apartment within 12 months, they would make payment of Rs.3,924/per square foot to the complainant. Pursuant to the addendum , there was a fresh trigger price fixed, based on which a fresh marketing agreement was simultaneously entered into on 08.09.2014. 19
CC NO.3207/2016 That the cheques issued pertaining to the Definitive agreements required to be renewed, the 2 nd accused acting on behalf of 1st accused issued fresh post dated cheques in favour of the complainant drawn on ING Vysya Bank, Mittal Towers, MG Road branch, for the 26 apartments.
That despite waiting for over 12 months, 1 st accused could only effect two sales made between 20.08.2014 to 20.08.2015 . The complainant on several occasions discussed with the 2nd accused as regard the transaction requesting the 2nd accused to complete the transaction within the stipulated time. After the discussion and requests which did not yield any result and after seeing that the 1st accused being represented by the 2nd accused are incapable of completing the transaction which was admitted by the 2 nd accused on behalf of 1st accused , vide e mails exchanged between the complainant and the 2nd accused, the complainant invoked Clause 3 of the addendum dt.08.09.2014 and presented above mentioned cheques with its banker ie Yes Bank, Kasturba Road Branch, Bangalore. On presentation of the 20 CC NO.3207/2016 said cheques, the same returned dishonored for the reason "Insufficient Funds"
That on the cheque being returned dishonored , the complainant issued a legal notice dt.17.12.2015 to the 1st accused calling upon the accused to make good the payment within 15 days of receipt of said notice. The legal notice addressed by the complainant was received by the 1 st to 5th accused . That the complainant received a reply to the above mentioned legal notice dt.17.12.2015 from the 3rd, 4th and 5th accused on 29.12.2015 .
That the complainant issued a rejoinder dt.13.01.2016 to the said reply notice dt.29.12.2015. The complainant categorically stated that the 1st accused is a family run partnership firm which is admitted by them as such being the case, they are in charge of managing the affairs of the 1 st accused.
That the complainant received a delayed reply to the legal notice dt.17.12.2015 from the 1st and 2nd accused on 14.01.2016 which is after expiry of 15 days. In the said reply notice, the 1st and the 2nd accused also issued a false counter 21 CC NO.3207/2016 claim of Rs.5,00,00,000/ as a counter blast to the claim made by the complainant.
That the complainant also received a notice dt.14.01.2016 from the 1st and the 2nd accused . The 1st and the 2nd accused have misinterpreted the terms of various agreements entered into between the complainant and the accused and as such the said notice and the claim made there is baseless. That the accused do not deny the receipt of money and issuance of cheques. The averments made by the 1st and 2nd accused vide notices dt.14.01.2016 are an after thought and are totally misconceived and vexatious.
That the complainant received a Sur rejoinder dt.20.01.2016 to the rejoinder dt.13.01.2016 issued by the 3rd to 5th accused and denied all the allegations made against them in a malafide manner. That the 1st to 5th accused knowing fully well that after time specified under the addendum dt.08.09.2014 said cheques would be presented, failed to maintain and willfully abstained from depositing the required sum. That the 1st accused being the Partnership Firm, 2nd accused being the Managing Partner of the firm 22 CC NO.3207/2016 and 3rd to 5th accused being the partners of the firm are in charge of and responsible for conduct of the business and are necessary parties to the proceedings . That the said offence of dishonor has been committed by the 1st accused with the consent and connivance of the 2nd to 5th accused and as such are liable under Chapter XVII of the N.I.Act, Therefore, the complainant was constrained to file the complaint against the accused .
10. In order to create the legal presumption as per Sec.139 of N.I.Act, the authorized representative of the complainant company got examined as PW1 and narrated entire complaint averments and got marked the documents as Ex.P.1 to Ex.P.84.
11. Ex.P.1 is the Supplemental Agreement. Ex.P.2 is the Marketing Rights Agreement. Ex.P.3 is the Supplemental Agreement. Ex.P.4 is the Marketing Rights Agreement. Ex.P.5 is the Addendum to the Supplemental Agreements. Ex.P.6 is the Marketing Rights Agreement. Ex.P.7 is the Email. Ex.P.8 to P.31 are the cheques. Ex.P.32 to P.55 are the Bank Endorsements. Ex.P.56 and P.57 are 23 CC NO.3207/2016 the Notice copies. Ex.P.58 to P.66 are the RPAD Receipts. Ex.P.67 to P.75 are the Courier Receipts. Ex.P.76 toP.79 are the Postal acknowledgements. Ex.P.80 to P.82 are the Reply Notice. Ex.P.83 is the Notice. Ex.P.84 is the Minutes of the Meeting. With respect to web copies produced by PW 1 he has duly complied with Sec.65 of the Evidence Act by submitting his certificate.
12. During cross examination the defence counsel suggested that accused NO.3 to 5 were never involved during the relevant time of issuance of the cheques in favour of the complainant. But suggestion is denied by the witness by stating that they were involved in the business transaction of the accused company and played material role while entering into agreement as well as while issuing the cheques in question. During cross examination the defence counsel filed application u/s.91 Cr.P.C. requesting to instruct the complainant to produce the entire agreements. Accordingly court has passed order by instructing the complainant to produce the agreement copies. Accordingly, only six agreements have been produced and marked 24 CC NO.3207/2016 accordingly. During further cross examination PW 1 explained that the transaction was between the parties in respect of purchase of apartment constructed by accused No1 company and for marketing of the said constructed apartments. Further it is suggested that no payment has been made in favour of the accused as mentioned under the complaint and there is no material documents to show alleged payment. Further it is observed that through evidence of PW 1 it has been reflected that with respect to sale and marketing of apartments to be constructed by accused No.1 company there were 26 written agreements executed on 1.2.2013 and 24.5.2013 through which there was specifically execution of sale agreement, construction agreement and marketing agreements. But out of these 26 agreement, the complainant company has produced only six agreements and produced 24 cheques. Further it is admitted that minimum marketing valuation as shown under Ex.P.5 is for Rs.3,924/per sq. ft. but this price has been concluded by adding agreed interest. Further it is observed that PW 1 has duly admitted that the addition of above said interest at 25 CC NO.3207/2016 the rate of 25% is not at all mentioned under Ex.P.5 agreement. Despite it, in order to claim the interest over the alleged paid amount, they have enhanced the rate which was fixed for minimum rate with respect to per sq. ft area.
13. It is specifically suggested that as per contents of all 26 agreements, the complainant company has not at all performed its part performance. Therefore the company is not entitled for cheque amount as no such payment is made by the complainant company. Hence it is not entitled for alleged paid principal amount as well as the interest on it.
14. In order to rebut the legal presumption existing as per Sec.139 of NI Act, the accused No.2 himself got examined as Dw 1 and narrated entire reasons which caused hurdle for performance of the agreements. As per defence after execution of the agreements, the accused No.1 firm represented by accused No.2 have made huge investment and started construction of apartments. Meanwhile, BDA authority has denotified the lands adjacent to the project. dt.10.05.2013 and created 18 mts length of 26 CC NO.3207/2016 public road. Due to formation of this road, the original land owner had blocked the access road which was left by him connecting the project . The accused No.1 challenged said denotification before Honble High Court of Karnataka through W.P. No.18300304/2014 in which the Honble High Court of Karantaka issued interim stay order. Meanwhile, without issuance of prior notice, the BDA authority has canceled the sanctioned plan issued in favour of accused No.1 dt..28.8.2014. The very order has been challenged by accused no.1 before the Honble High court of Karnataka vide W.P. No.5380913/2015. Since 28.08.2014, there was no sanctioned plan existing in favour of accused No.1 to proceed with the construction work. Therefore due to this legal hurdle accused No.1 failed to perform its part performance.
15. During his cross examination the suggestion of execution of all 26 agreements involving the business of building and construction of apartments has been duly admitted and as per the agreement it is the duty of accused No.1 firm to complete the construction work of the apartment within stipulated period of 18 months. But DW 1 27 CC NO.3207/2016 has denied receipt of alleged sum of Rs.9,09,13,508/ at the time of execution of supplementary agreement along with agreed interest at the rate of 25%. Further he agreed that on default on his part towards performance of the agreement, the complainant was at liberty to present the cheques in dispute for encashment as he has agreed to complete the construction work of the apartments and he has to market the apartments within the stipulated period. Accordingly, during his cross examination he has admitted entire terms and condition of all the agreements except the receipt of alleged cheque amount. Further it is observed that he denied the email message alleged to be sent by him by admitting his liability by saying that the cheques in dispute are not issued for discharge of liability. Further he denied rest of the suggestions put by the complainant counsel .
16. On careful scrutiny of entire oral and documentary evidence placed by both the parties, it is evident that there is no material proof placed by the complainant company regarding payment of amount mentioned under those 28 CC NO.3207/2016 cheques to the extent of Rs.9,09,13,508/. There is no dispute regarding execution of all the agreement. But regarding alleged payment accused has denied and not accepted the version of the complainant. In order to prove the alleged payment, there is no pleading specifically as on exact date the said amount has been duly transferred to the account of the accused. Therefore in absence of any such relevant material like the Income Tax returns and other relevant account statements, the alleged payment cannot be taken into consideration.
17. Further it is observed that due to legal hurdle, cancellation of approved plan by the concerned authority and creation of public road adjoining to the construction land, the accused company was unable to perform its part performance. Knowing well above said legal hurdles, the complainant company presented the cheques without due intimation to the accused company after lapse of extended period. But, it is observed that immediately after cancellation of the approval plan and creation of public road the accused company kept on resisting those activities by 29 CC NO.3207/2016 filing the writ petitions before the Honble High Court of Karnataka and succeeded in getting stay order. Later on as per the judgment passed by the Honble High Court of Karnataka in W.P.Nos.18300304/2014 dt 4.9.2018 the accused company along with its partners entered into settlement process with the BDA , BBMP and others who being the purchasers of the constructed apartments and settled the matter through which it has been settled that the objection raised by BDA Authority along with concerned authorities agreed to withdraw their objections raised by resisting the construction work of the accused company. Further it is observed that BBMP also agreed to extend its approval plan in favour of the accused company. Therefore, through the disposal of above said writ petitions, the accused company has obtained settled remedy towards continuation of the construction work. Now, after going through the entire defence evidence, it reveals that the accused company has restarted its construction work. Therefore, due to above said legal hurdles, the accused company has been deprived from performing the agreements within the given time . 30
CC NO.3207/2016 Hence as per Sec.56 of the Indian Contract Act, if an agreement to do an act become impossible, then the said agreement is nothing but void agreement. Therefore, the compensation for loss through the non performance of void agreement is unlawful. Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promiser must make compensation to such promisee for any loss which such promisee sustains through the non performance of the promise.
18. Section 56 of the Indian Contract Act has three ingredients:
1. It declares an agreement to do an act impossible in itself is void,
2. It makes the contract to do an act void on account of the following events:
. When the act becomes impossible to do after the contract is made,or . The act becomes unlawful by reason of some events which the promisor could not prevent.
3. Paragraph 3 of this section postulates that where a person has promised to do something, which
a) He knew, or 31 CC NO.3207/2016
b) He, with reasonable diligence might have known to be impossible or unlawful, and Which promisee did not know to be impossible or unlawful, such promisor will be held liable to make compensation to the other party for any loss sustained through non performance of the promise. (Alluri Narayana Raju v.
Dist. Collector, Visakhapatnam Dist., A.I.R 2008 A.P. 264 at p.267) (Para 23)
19. To attract and apply Section 56, the following conditions must be filled:
a. There should be a valid and subsisting contract between the parties, b. There must be some part of the contract yet to be performed, c. The contract after it is entered becomes impossible to be performed, d. The impossibility is by reason of some events which the promisor could not prevent, and e. The impossibility is not induced by the promisor or due to his negligence.
The term frustration of contract clearly, is not found in the Contract Act. The Doctrine of Frustration has been envisaged/introduced under Section 56 of the Contract Act. If a contract becomes void because of the reasons stipulated in section 56 of the contract Act, in normal parlance it is called as the frustration of the contract. The term frustration has been defined in the Black's Law Dictionary (9th Edition) as, The prevention of the attainment of a goal such as contractual performance. In relation to 'contracts' the term has been described as the doctrine that if a party's main purpose is substantially 32 CC NO.3207/2016 frustrated by unpredictable/unforeseen change in circumstances, that party's duties are discharged and the contract is considered terminated.
Section 56; comprehensively deal with the doctrine of frustration. The principle underlying the section is that performance of a contract can be avoided if, on account of happening of an event, which is not the result of the action of either of the parties, the performance of the contract becomes impossible.
20. As per Sec.56 of the Indian Contract Acts, the agreements executed between the complainant company and the accused No.1 company are void agreements and due to above said legal hurdles Accused No.1 company failed to perform its performance. Now, by getting finding in its favour through the judgment passed in W.P.No.18300304/ 2014, the accused No.1 company has restituted its previous position. Therefore, the complainant company has to bear with the planned construction work. Apart it, the complainant company is not entitled for payment of the cheque amount as claimed under the complaint as it is not legally recoverable debt. Further it is observed that after getting of disposal of the W.P.No.18300304/2014 as per Sec.62 of Indian Contract Act, the agreement between the 33 CC NO.3207/2016 parties can be altered and both the parties are at liberty to perform their performance.
21. The accused has successfully rebutted the presumption available under Sec.139 of N.I.Act . Therefore, it is to be decided whether the complainant had succeeded in establishing the case against the accused. As it is already held in the above that, the complainant has to prove the allegations made against the accused beyond all reasonable doubt, to prove the said allegations there must be a clinching and clear evidence against the accused to establish all the ingredients constituting the offence U/s.138 N.I.Act. The complainant has failed to prove the initial burden that lies on it. It is observed that after verifying the entire agreements, there is absence of recital of making payment of cheque amount of Rs.9,09,13,508/ in favour of the accused . Apart it there is no relevant document to show the transfer of above said amount. Hence, as per Sec.25 of the Indian Contract Act, without passing of consideration amount, the alleged contract is not said to be a valid one. 34
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22. Mere production of the cheques is not sufficient to prove the ingredients of Sec.138 of N.I.Act. There must be a existing legally recoverable debt on the part of the accused . The complainant has not discharged the initial burden which lies on him. The accused has successfully rebutted the presumption available under Sec.139 of N.I.Act. Therefore complainant has to establish its case beyond reasonable doubt. Hence failure of the complainant to prove due of the cheque amount on the part of the accused may itself probabalize the accused version and lead to conclusion that debt mentioned under the cheques is not legally recoverable. Hence it is clear that the accused has performed part performance. Hence, under these circumstances offence under Sec.138 of NI Act is not attracted. Therefore, accused has rebutted legal presumption existing u/s.139 of N.I. Act .
23. In this regard, it is necessary to refer the following decisions :
1. (2020) 15 SCC 348 ANSS Rajashekar V/s.Augustus Jeba Ananth Debt - Financial and Monetary Laws N.I.Act ,1881, S138, 118, Presumption under Sec.139 - Rebuttable nature of presumption - 35
CC NO.3207/2016 Standard of proof to rebut said presumption is preponderance of probabilities Principles summarised Held on a probable defence which creates doubt about existence of a legally enforceable debt or liability., prosecution can fail In determining whether the presumption has been rebutted , the test of proportionality must guide the determination.
2. (2010) 11 SCC 441 Rangappa V/s Sri.Mohan 'N.I.Act, 1881 S.139 Presumption under Scope of - Held, presumption mandated by S.139 includes a presumption that there exists a legally enforceable debt or liability However, such presumption is rebuttable in nature - Criminal Trial - Proof Presumption -
Generally'.
The principles of the above cases are amply applicable to the case on hand. In view of the principles laid down in the above cases and materials on record, the court comes to the conclusion that the complainant has utterly failed to prove the case beyond all reasonable doubt and has not placed sufficient oral and documentary evidence for convincing the court in order to convict the accused for the offences punishable under Sec.138 of N.I.Act. Hence, Point Nos.1 and 2 are answered in the Negative.
36
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24.Point No.3 :In the light of the above findings on point Nos.1 & 2, I proceed to pass the following :
ORDER Exercising the powers conferred upon this court u/s.255(1) Cr.P.C., the accused No.1 and 2 are hereby Acquitted for the offence punishable under Sec.138 Negotiable Instrument Act.
The bail bond of the accused and that of the surety if any stand cancelled.
(Dictated to the Stenographer online, transcribed and typed by her, corrected and signed and then pronounced by me in the open court on this the 15th day of April , 2023 ) (SUJATA SIDAGOUDA PATIL) XXV A.C.M.M., BANGALORE.
[ ANNEXURE
1) LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
P.W.1 : Meenu Agarwal
2) LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P1 : Supplemental Agreement
Ex.P2 : Marketing Rights Agreement
Ex.P3 : Supplemental Agreement
Ex.P4 : Marketing Rights Agreement
Ex.P5 : Addendum to the Supplemental
Agreements
Ex.P6 : Marketing Rights Agreement
Ex.P7 : Email
Ex.P8 :
to 31 : Cheques
37
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Ex.P32
to 55 : Bank Endorsements
Ex.P56 :
& 57 : Notice copies
Ex.P58
to 66 : RPAD receipts
Ex.P67
to 75 : Courier receipts
Ex.P76
to 79 : Postal acknowledgements
Ex.P80
to82 : Reply Notices
Ex.P83 : Notice
Ex.P84 : Minutes of the Meeting.
3) LIST OF WITNESSES EXAMINED FOR THE ACCUSED: DW.1 : Niraj Mittal.
4) LIST OF DOCUMENTS MARKED FOR THE ACCUSED: [ Ex.D1 : C.C.of the W.P.Nos.18300304/ 2014 Ex.D2 : C.C. of the W.P.Nos.53809813 / 2015 Ex.D3 : C.C. of the W.P.Nos.18300304 / 2014 (LABDA) Digitally signed by SUJATA SUJATA SIDAGOUDA SIDAGOUDA PATIL PATIL Date:
2023.04.19 17:05:36 +0530 (SUJATA SIDAGOUDA PATIL) XXV A.C.M.M., BANGALORE.