Bangalore District Court
M/S Kodachadri Chits Private vs Mr. Girish Kumar A.T on 9 March, 2023
IN THE COURT OF THE XX ADDITIONAL SMALL
CAUSES JUDGE AND ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE AND M.A.C.T.,
BENGALURU (SCCH-22)
PRESENT : Smt. Savitha.P.R.,
B.A.[L]., LL.B.,
XX Addl. Small Causes Judge
and A.C.M.M., Bengaluru.
DATED : This the 9th Day of March 2023.
C.C. NO.11547/2022
Complainant - M/s Kodachadri Chits Private
Limited.,
No.158, 1st Floor, 1st Main Road,
1st N Block, Rajajinagar,
Bengaluru-560010,
Represented by its POA holder,
Sri. Nagaraj.B, Director,
S/o. Byrappa,
Aged about 58 years.
(Rept: By Sri. H.A.Prabhakara, Advocate)
- Versus -
Accused - Mr. Girish Kumar A.T,
S/o. Sri. Thimmaiah,
R/at No.26/27, Doddabidarakallu,
Nagasandra, Bengaluru.
(Rept: By Sri. Narendra Kumar.P, Advocate)
Dated of Institution : 30.08.2021
The offences complied : Under Sec.138 of the
off or proved Negotiable Instrument Act
SCCH-22 2 CC No.11547/2022
Plea of the accused : Pleaded not guilty
Date of commencement : 12.09.2022
of recording evidence.
Final Order : Accused is Convicted
Date of such order : 09.03.2023
(Savitha.P.R.)
XX ADDL.S.C.J. & A.C.M.M.,
BENGALURU.
:: JUDGMENT ::
The Complainant filed this complaint under Section 200 of Cr.PC against the accused for the offence punishable under Section 138 of Negotiable Instrument Act.
2. The case of the complainant is as follows; One Nithyananda Kumar.N.G was the subscriber of the chit bearing No. N40C54081019 ticket No.24 in his name with complainant and became successful bidder of the said chit and received the prize amount from the complainant company. The accused stood as a guarantor SCCH-22 3 CC No.11547/2022 to the said Nithyananda Kumar.N.G. Later the said Nithyananda Kumar.N.G paid 20 installments and became defaulter to pay the monthly chit installments to the complainant company.
3. After repeated request and reminder the accused as guarantor came forward to pay the due amount by the Nithyananda Kumar.N.G and issued a cheque bearing No.025128 dated:13.07.2022 for a sum of Rs.2,76,974/- drawn on Syndicate Bank, Peenya Indl Estate Branch, in favour of complainant chit fund company towards discharge of the payment of outstanding arrears of chit amount.
4. The said cheque was presented for encashment, through its banker Axis Bank Ltd, Yeshwanthapura Branch, Bengaluru. But the said cheque returned unpaid for the reason 'Chi Reject-Do not Present'. Thereafter it got issued notice dated 28-07-2022 calling upon the accused to pay the above amount. SCCH-22 4 CC No.11547/2022 The accused neither complied the notice nor replied. Hence this complaint.
5. After service of the summons, the accused appeared through his counsel and released on bail. Copy of the complaint furnished to the accused. Plea read over to the accused. He denied the accusations.
6. In support of the complainant case GPA holder by name Nagaraj.B examined as PW1 and got marked 9 documents at Ex.P1 to Ex.P9. The statement under Section 313 Cr.P.C was recorded. Accused denied the version of the complainant evidence and submitted that there is defence evidence.
7. Heard and perused the record.
8. Now the points that arise for my consideration are as follows:
1) Whether the complainant proves that the accused issued a cheque Ex.P2 towards discharge of legally enforceable debt?
2). Whether the complainant proves the guilt of the accused punishable under Section 138 of NI.Act?SCCH-22 5 CC No.11547/2022
3). What Order?
9. My answer to the above points are under :
Point No.1- In the Affirmative
Point No.2- In the Affirmative
Point No.3- As per final order for the
following
:: REASONS ::
POINT No.1 & 2:- These points are taken up together for common discussion to avoid repetition of facts.
10. The burden of proving the ingredients of Section 138 of N.I.Act is heavily on the complainant.
11. In order to constitute an offence under Section 138 of N.I.Act, the complainant has to fulfill the following requirements which are as follows.
I) Cheque should have been issued for the discharge in whole or part of any debt or other liability.
ii) Cheque should have been presented before the bank within a period of six months or within a period of its validity whichever is earlier. SCCH-22 6 CC No.11547/2022 Iii) The payee should have issued a legal notice in writing to the drawer of the cheque within 30 days from the date of information by the bank.
iv) After the receipt of the notice, the drawer should have failed to pay the cheque amount within 15 days from the date of the receipt of the said notice.
v) On non payment of the amount due, on the dishonored cheque within 15 days from the date of the receipt of the notice by the drawer, the complaint should have been filed by the complainant within one month from the date of expiry of the grace time of 15 days before Metropolitan Magistrate or not below the rank of JMFC.
12. For that purpose, I have gone through the documentary evidence placed by the complainant. In this case, the disputed cheque which is Ex.P.2 dated 13.07.2022 which was issued by the accused in the name of the complainant for an amount of Rs.2,76,974/- drawn on Syndicate Bank, Peenya Indl Branch, Bengaluru. Ex.P.3 is an endorsement given by the banker, stating that "Chi Reject-Do not present". Ex.P.4 is the legal notices issued to the accused by the complainant. Ex.P5 is the postal receipt, Ex.P.6 is the postal cover, Ex.P6a is the copy of notice.
SCCH-22 7 CC No.11547/2022
13. Now, let us see whether the ingredients of Sec. 138 of N.I.Act is complied with. On careful scrutiny of the said provisions of law, it is clear that within 6 months from the date of issuance of cheque which is at Ex.P.2 was presented for an encashment through, Axis Bank, Yashwanthapura branch, Bangalore, but the same was dishonored as per Ex.P.3 dated 13.07.2022. The legal notice was issued as per Ex.P.4 dated 28.07.2022. The complaint is filed on 30.08.2022, which is within time as per the provisions of 138 of N.I.Act. Hence, the ingredients of Sec.138 of N.I.Act is complied by the complainant.
14. At this juncture it is also necessary to discuss the about provision of law enshrined under the Negotiable Instrument Act which says about the presumption of law regarding Negotiable Instruments.
15. Section 139 of NI Act says about the presumption available to the holder of cheque. Under the said provision of law it is presumed that the holder of the SCCH-22 8 CC No.11547/2022 cheque received the same in discharge of any debt or liability in whole or in part. Therefore prima face reading of the provision will reveal that a presumption in favour of the complainant in law.
16. Even under Section 118(a) of NI Act. There is presumption that every Negotiable Instrument made shall be presumed to be drawn for consideration.
17. However the presumption drawn under both the provision are rebuttable in nature. It is the right of the accused to rebut the presumption on a defence of preponderance of probability.
18. So in order to decide whether accused has sufficiently rebutted the presumption available under Section 139 and 118(a) or not can only be decided by going in to the factual matrix of this case and the materials brought on record and having regard to the legal principles governing the same.
19. In order to substantiate the case of the complainant it got examined the authorized person of the SCCH-22 9 CC No.11547/2022 complainant company as PW.1 and got marked Ex.P1 to Ex.P9. It is the contention of the complainant that one Nithyananda Kumar N G was a subscriber of a chit. Since he became a defaulter, on behalf of his debt, the accused as a guarantor issued a cheque to pay the balance subscription amount. But the same was dishonoured as per the endorsement in Ex.P3. So the complainant issued a legal notice as per Ex.P4. These documents all together shows that the accused failed to make the payment of the cheque amount which is due to the complainant.
20. Now, onus shifts on the accused to rebut the case of the complainant by placing rebuttal evidence. But the accused neither cross-examined the complainant nor led any defence evidence. Such being the case without any hesitation the court can draw presumption in favour of the complainant under Section 139 and 118(a) of the NI Act.
21. In the decision, Rangappa - Vs - Mohan (AIR 2010 SC 1898), Hon'ble Supreme Court has SCCH-22 10 CC No.11547/2022 reconsidered this issue and clarified that, existence of legally recoverable debt or liability is a matter of presumption under section 139 of N.I.Act. In para 14 of the Judgment the Hon'ble Supreme Court observed as here below:
''In light of these extracts, we are in agreement with the respondent-
claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, 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, there can be no doubt that there is an initial presumption, which favours the complainant. Section 139 of the Act 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 138 of the Act, specifies a strong criminal remedy in relation 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 SCCH-22 11 CC No.11547/2022 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 accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probabile defence, which creates doubts about the existence of a legally enforceable debt or liability, the presumption can fail. As clarified in the citations, 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 on his/her own."
22. In view of the above decision, now it is clear that the presumption mandated by section 139 of N.I.Act does indeed include the existence of legally enforceable debt or liability. It is a rebuttable presumption. It is open to the accused to raise the defence wherein the existence of SCCH-22 12 CC No.11547/2022 legally enforceable debt or liability can be contested. For rebutting the presumption, the accused need not adduce evidence with unduly high standard of proof but, the standard of proof for doing so with that of preponderance of probabilities. If the accused is able to raise a probable defence, which creates doubt about the existence of legally enforceable debt or liability, the onus shifts back to the complainant. It is also clear that for rebutting the presumption, accused can rely on the materials submitted by the complainant or his cross examination and he need not necessarily adduce his evidence.
23. At this juncture it is also relevant to quote the another decision in the case of K.N.Beena Vs Muniyappan reported in (2001) 8 SCC 458, it is observed and held as here under;
"under Section 118 of the NI Act, unless the contrary is proved, it is to be presumed that the negotiable instruments (including a cheque) had been made or drawn for consideration. Under Section 139, the court has to presume, unless the contrary is proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. In SCCH-22 13 CC No.11547/2022 complaints under Section 138, the court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that the cheque has not been issued for a debt or liability is on the accused.
24. So as per the ratio laid down in the above said two decision the accused ought to have placed rebuttal evidence in order to rebutt the presumption available under law in favour of the complainant. But he failed to do so. Therefore court has to come to the conclusion that the accused issued a cheque to the complainant to discharge the legally enforceable debt.
25. Therefore I am of the opinion that accused is guilty of the offence punishable under Section 138 of the N.I Act. Therefore I answer point No.1 and 2 in the affirmative.
26. POINT No.3: In view of the above discussion, I proceed to pass the following:
:: ORDER ::
The accused is found guilty of the offence punishable U/s 138 of N.I.Act.SCCH-22 14 CC No.11547/2022
In exercise of powers conferred U/s 255(2) of Cr.P.C., the accused is hereby convicted for the offence punishable U/s 138 of N.I. Act.
The accused is liable to pay Rs.2,86,974/- in favour of the complainant. In default he shall undergo S.I for a period of one year.
Further, it is also ordered that out of the amount deposited by the accused, the accused shall liable to pay compensation amount of Rs.2,76,974/- to the complainant U/s 357 of Cr.P.C and remaining amount of Rs.10,000/- shall be confiscated to the state towards the state expenses.
Bail bond of the accused and his surety shall stands cancelled.
Furnish free copy of this Judgment to the accused forthwith.
(Dictated to the stenographer directly on the computer, typed by her, corrected by me and then pronounced in the open court on this the 09rd day of March 2023.) (Savitha.P.R) XX A.S.C.J. & A.C.M.M., Bengaluru.
SCCH-22 15 CC No.11547/2022:: ANNEXURE ::
List of witnesses examined on behalf of the complainant:
P.W.1 - Sri. Nagaraj.B List of witnesses examined on behalf of the accused:
- Nil -
List of documents marked on behalf of the complainant:
Ex.P.1 - Certified copy of the GPA
Ex.P.2 - Cheque
Ex.P.2a - Signature of accused
Ex.P.3 - Bank Endorsement
Ex.P.4 - Legal Notice
Ex.P.5 - Postal receipt
Ex.P.6 - Postal cover
Ex.P.6a - Legal notice sent to accused
through Ex.P6
Ex.P.7 - Chit agreement
Ex.P.8 - Payment voucher
Ex.P.9 - Surety Proposal form
List of documents marked on behalf of the accused:
- Nil -
(SAVITHA.P.R) XX A.S.C.J. & A.C.M.M., BENGALURU.