Bangalore District Court
Sri. C.V.Suresh Babu vs Sri. P. Ganesh on 10 January, 2022
1
C.C.No.26916/2018
COURT OF THE XVI ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE, BENGALURU CITY
Dated: This the 10th day of January 2022
Present: Sri.S.B.HANDRAL, B.Sc., L.L.B(SPL).,
XVI Addl.C.M.M., Bengaluru City.
JUDGMENT U/S 355 OF Cr.P.C.,
Case No. : C.C.No.26916/2018
Complainant : Sri. C.V.Suresh Babu,
S/o. Late Venkatesh,
Aged about 44 years,
R/at No.1126, "Srimath",
9th Cross, Ashok Nagar,
Banashankari 1st stage,
2nd Block,
Bengaluru 560 050.
Rep.by Sri.J.S.Krishna Murthy &
Kiran,. Advs.,)
Vs
Accused : Sri. P. Ganesh,
S/o. Sri.Ramapoojari,
Aged about 36 years,
R/at No.150, 14th Cross,
Ashok Nagar,
Gangamma Layout,
Banashankari 1st Stage,
Bengaluru 560 050.
And also at:
No.27, "Diganth Nilaya",
2nd Floor,
2
C.C.No.26916/2018
Above Cambridge Public School,
1st 'C' Main Road,
Mukambika Nagar,
Hosakerehalli, BSK III Stage,
Bengaluru 560 085.
(Rep. by Sri. Anil Kumar,
D.Kavitha, Adv.,)
Case instituted : 10.9.2018
Offence complained : U/s 138 of N.I Act
of
Plea of Accused : Pleaded not guilty
Final Order : Accused is convicted
Date of order : 10.1.2022
JUDGMENT
The Complainant has filed this complaint against the Accused for the offence punishable u/Sec.138 of the Negotiable Instruments Act.
2. Briefly stated the case of the Complainant is that, the accused is the absolute owner in possession and enjoyment of property bearing site no.17, layout known as "VIJAYA SHREE" SectorI, formed converted property bearing No. 63/1, converted for non-agricultural residential purpose vide conversion order bearing No. ALN.(U). SR.A.A. 3 C.C.No.26916/2018 47/201516, dated: 15.12.2015 issued by the Deputy Commissioner, Bengaluru District situated at Uttari Village, Uttarahalli Hobli, Bengaluru South Taluk, measuring East to West : 20 feet, North to South : 40 feet, totally measuring 800 sq. ft. and the accused has agreed to sell the said property in his favour and entered sale agreement dated: 3.10.2016 and at the time of entering into the said sale agreement and the accused has received an advance sale consideration amount of Rs.5 Lakhs received from him by way of cheque and cash as stated in the said sale agreement, out of total sale consideration amount of Rs.5,50,000/. The complainant has further contends that, as per the terms and conditions of the said sale agreement, he is/was ready and willing to get the registered sale deed but the accused has failed to perform his part of contract and failed to execute the registered absolute sale deed in his favour and left with no other option, he got issued a legal notice to the accused on 9.5.2018 and the same was duly served upon the accused and upon the service of the said legal notice the accused has failed to comply the demand made by him and failed to execute the sale deed in his favour and accused 4 C.C.No.26916/2018 has requested him to cancel the said sale agreement amicably. The complainant further contends that, accordingly for repayment of the aforesaid advance sale consideration amount of Rs.5 Lakhs which was duly received by the accused from him, the accused has issued a cheque bearing No.514988 dated:19.7.2018 for Rs.5 Lakhs drawn on IndusInd Bank, Basavanagudi Branch, Bengaluru in his favour to discharge the legal debt and liability of the accused and he and accused have mutually agreed to revoke/cancel the said sale agreement on 18.7.2018 and the accused assured him to honour the said cheque for encashment and as per the instruction of the accused, when he presented the said cheque for encashment through his banker, the same came to be returned dishonoured as "Insufficient Funds" vide bank endorsement dated: 21.7.2018, immediately after return of the said cheque, he personally approached the accused and demanded him to pay the amount covered under the cheque but with a malafide intention just to cheat him, the accused has not made any efforts to pay the amount covered under the cheque and left with no other alternative he got issued legal notice to the 5 C.C.No.26916/2018 accused on 30.7.2018 through RPAD calling upon him to pay the cheque amount within 15 days from the date of receipt of the said legal notice, the same was duly served on the accused on 18.8.2018 and acknowledgement were returned to sender, inspite of that, the accused has failed to pay the cheque amount to him. Hence the complainant has filed this present complainant against the Accused for the offence punishable U/s.138 of Negotiable Instruments Act.
3. Before issuing process against the accused, the Complainant has filed his affidavitinlieu of his sworn statement, in which, he has reiterated the averments of the complaint. In support of his sworn statement, P.W.1 has relied upon the documentary evidence as per Ex.P.1 to Ex.P.15 i.e, original Cheque dt.19.07.2018 as per Ex.P.1, the signatures on the said cheques identified by P.W.1 is that of the accused as per Ex.P.1(a), the Bank Challan as per Ex.P.2, the Bank Memo as per Ex.P.3, the office copy of the Legal Notice as per Ex.P.4, postal receipts as per Ex.P.5 & P.6, Postal acknowledgements as per Ex.P.7 & P.8, signature of one Mamatha on postal 6 C.C.No.26916/2018 acknowledgment as per Ex.P.7(a), notice dt:
9.5.2018 as per Ex.P.9, postal receipts as per Ex.P.10 and P.11, postal acknowledgement as per Ex.P.12, Agreement dt: 3.10.2016 as per Ex.P.13, signature of the accused as per Ex.P.13(a), signature of the complainant as per Ex.P.13(b), Statement of accounts of Kaveri Gramina Bank for the period from 1.4.2016 to 31.3.2017 as per Ex.P.14, complaint as per Ex.P.15, signature of the complainant as per Ex.P.15(a). The complainant during the trial has produced absolute sale deed dt:
11.08.2016 as per Ex.P.16, signature of the accused on the said sale deed as per Ex.P.16(a) to 16(j).
During the cross examination of accused the complainant has got marked the Plea Form as per Ex.P.17, signature of the accused as per Ex.P.17(a), vakalath of the accused as per Ex.P.18, signature of the accused as per Ex.P.18(a), postal acknowledgement as per Ex.P.19, signature of one Mamatha as per Ex.P.19(a).
4. Primafacie case has been made out against the accused and summons was issued against the accused in turn he has appeared before the court 7 C.C.No.26916/2018 and got enlarged on bail and the substance of the accusation has been read over to him, to which he pleaded not guilty and claims to be tried.
5. In view of the principles of law laid down and as per the directions of the Hon'ble Apex Court in the decision of the Indian Bank Association Vs., Union of India, reported in 2014 (5) SCC 590, after recording the plea of the accused, as he intended to set out his defence, and the case was posted for cross examination of complainant.
6. Thereafter, the statement of the accused as required under Sec.313 of the Cr.P.C. has been recorded. He has denied the incriminating evidence appearing against him and has chosen to lead his rebuttal evidence, subsequently the accused himself examined as DW1 and has got marked relevant portion in Ex.P.13 as per Ex.D.1, relevant portion of last para in Ex.P.13 as per Ex.D.2 during cross examination of complainant and closed his side.
7. Heard the arguments by learned counsel for the complainant and accused and perused the 8 C.C.No.26916/2018 decisions relied upon by the learned counsel for the Accused ie., 1) ILR 2014 KAR 6572 H. Manjunath Vs.A.M.Basavaraju 2) 2010 CRI.L.J. 1061 Venkatesh Bhat A Vs. Rohitdas Shenoy.
8. On the basis of complaint, evidence of complainant and documents and having heard the arguments of both learned counsels for the complainant and the accused, the following points that are arise for consideration are:
1. Whether the complainant proves that the accused has issued cheque bearing No.514988 for Rs.5 Lakhs dated:
19.07.2018 drawn on IndusInd Bank, Basavanagudi branch, Bangalore04 to discharge legally recoverable debt to the complainant and when the complainant has presented the above said cheques for encashment through his banker but the said cheques have been dishonoured for the reasons "Funds Insufficient" on 21.7.2018 and the complainant issued legal notice to the accused on 30.07.2018 and inspite of it the accused has not paid the cheques amount within prescribed period there by the accused has committed an offence U/s.138 of the Negotiable instruments Act?9
C.C.No.26916/2018
2. What Order?
9. The above points are answered as under:
Point No.1: In the Affirmative Point No.2: As per final order for the following:
REASONS
10. Point No.1: Before appreciation of the facts and oral and documentary evidence of the present case, it is relevant to mention that under criminal jurisprudence prosecution is required to establish guilt of the Accused beyond all reasonable doubts however, a proceedings U/s.138 of N.I.Act is quasi criminal in nature. In these proceedings proof beyond all reasonable doubt is subject to presumptions as envisaged U/s.118, 139 and 136 of N.I.Act. An essential ingredient of Sec. 138 of N.I.Act is that, whether a person issues cheque to be encashed and the cheque so issued is towards payment of debt or liability and if it is returned as unpaid for want of funds, then the person issuing such cheque shall be deemed to have been committed an offence. The offence U/s.138 of N.I. Act presupposes three conditions for prosecution of an offence which are as under:
10C.C.No.26916/2018
1. Cheque shall be presented for payment within specified time i.e., from the date of issue or before expiry of its validity.
2. The holder shall issue a notice demanding payment in writing to the drawer within one month from the date of receipt of information of the bounced cheque and
3. The drawer inspite of demand notice fails to make payment within 15 days from the date of receipt of such notice.
If the above said three conditions are satisfied by holder in due course gets cause action to launch prosecution against the drawer of the bounced cheque and as per Sec.142(b) of the N.I. Act, the complaint has to be filed within one month from the date on which cause of action arise to file complaint.
11. It is also one of the essential ingredients of Sec. 138 of N.I.Act that, a cheque in question must have been issued towards legally recoverable debt or liability. Sec. 118 and 139 of N.I.Act envisages certain presumptions i.e., U/s.118 a presumption shall be raised regarding 'consideration' 'date' 11 C.C.No.26916/2018 'transfer' 'endorsement' and holder in course of Negotiable Instrument. Even Sec.139 of the Act are rebuttable presumptions shall be raised that, the cheque in question was issued regarding discharge of a legally recoverable or enforceable debt and these presumptions are mandatory presumptions that are required to be raised in cases of negotiable instrument, but the said presumptions are not conclusive and rebuttable one, this proportion of law has been laid down by the Hon'ble Apex Court of India and Hon'ble High Court of Karnataka in catena of decisions.
12. In the present case the complainant got examined as PW.1 by filing his affidavit evidence wherein he has reiterated the entire averments of the complaint and in his evidence testified that, the accused is the absolute owner in possession and enjoyment of property bearing site no.17, layout known as "VIJAYA SHREE" SectorI, formed converted property bearing No. 63/1, converted for non-agricultural residential purpose vide conversion order bearing No. ALN.(U).SR.A.A.47/201516, dated:
15.12.2015 issued by the Deputy Commissioner, 12 C.C.No.26916/2018 Bengaluru District situated at Uttari Village, Uttarahalli Hobli, Bengaluru South Taluk, measuring East to West : 20 feet, North to South : 40 feet, totally measuring 800 sq. ft. and the accused has agreed to sell the said property in his favour and entered sale agreement dated: 3.10.2016 and at the time of entering into the said sale agreement and the accused has received an advance sale consideration amount of Rs.5 Lakhs received from him by way of cheque and cash as stated in the said sale agreement, out of total sale consideration amount of Rs.5,50,000/. The complainant/PW.1 has further testified that, as per the terms and conditions of the said sale agreement, he is/was ready and willing to get the registered sale deed but the accused has failed to perform his part of contract and failed to execute the registered absolute sale deed in his favour and left with no other option, he got issued a legal notice to the accused on 9.5.2018 and the same was duly served upon the accused and upon the service of the said legal notice the accused has failed to comply the demand made by him and failed to execute the sale deed in his favour and accused has requested him to cancel the said sale agreement 13 C.C.No.26916/2018 amicably. The complainant/PW.1 further testified that, accordingly for repayment of the aforesaid advance sale consideration amount of Rs.5 Lakhs which was duly received by the accused from him, the accused has issued a cheque bearing No.514988 dated:19.7.2018 for Rs.5 Lakhs drawn on IndusInd Bank, Basavanagudi Branch, Bengaluru in his favour to discharge the legal debt and liability of the accused and he and accused have mutually agreed to revoke/cancel the said sale agreement on 18.7.2018 and the accused assured him to honour the said cheque for encashment and as per the instruction of the accused, when he presented the said cheque for encashment through his banker, the same came to be returned dishonoured as "Insufficient Funds" vide bank endorsement dated: 21.7.2018, immediately after return of the said cheque, he personally approached the accused and demanded him to pay the amount covered under the cheque but with a malafide intention just to cheat him, the accused has not made any efforts to pay the amount covered under the cheque and left with no other alternative he got issued legal notice to the accused on 30.7.2018 through RPAD calling upon 14 C.C.No.26916/2018 him to pay the cheque amount within 15 days from the date of receipt of the said legal notice, the same was duly served on the accused on 18.8.2018 and acknowledgement were returned to sender, inspite of that, the accused has failed to pay the cheque amount to him.
13. In support of his sworn statement, P.W.1 has relied upon the documentary evidence as per Ex.P.1 to Ex.P.15 i.e, original Cheque 19.07.2018 as per Ex.P.1, the signatures on the said cheques identified by P.W.1 is that of the accused as per Ex.P.1(a), the Bank Challan as per Ex.P.2, the Bank Memo as per Ex.P.3, the office copy of the Legal Notice as per Ex.P.4, postal receipts as per Ex.P.5 & P.6, Postal acknowledgements as per Ex.P.7 & P.8, signature of one Mamatha on postal acknowledgment as per Ex.P.7(a), notice dt:
9.5.2018 as per Ex.P.9, postal receipts as per Ex.P.10 and P.11, postal acknowledgement as per Ex.P.12, Agreement dt: 3.10.2016 as per Ex.P.13, signature of the accused as per Ex.P.13(a), signature of the complainant as per Ex.P.13(b), Statement of accounts of Kaveri Gramina Bank for the period 15 C.C.No.26916/2018 from 1.4.2016 to 31.3.2017 as per Ex.P.14, complaint as per Ex.P.15, signature of the complainant as per Ex.P.15(a)., absolute sale deed dt:
11.08.2016 as per Ex.P.16, signature of the accused on the said sale deed as per Ex.P.16(a to 16(j), Plea Form as per Ex.P.17, signature of the accused as per Ex.P.17(a), vakalath of the accused as per Ex.P.18, signature of the accused as per Ex.P.18(a), postal acknowledgement as per Ex.P.19, signature of one Mamatha as per Ex.P.19(a).
14. In the present case, there is no dispute between the complainant and Accused with regard to their acquaintance. It is also not disputed by the accused that, the cheque in question ie Ex.P.1 belongs to his account and though the accused has denied the signature on the cheque but during the course of his cross examination has admitted that, cheque belongs to him and signature found at Ex.P.1(a) is that of his signature, hence the accused has admitted that, signature found at Ex.P.1(a) is his signature. The accused has also not disputed that, the cheque in question was presented to the encashment within its validity period and the said 16 C.C.No.26916/2018 cheque has been returned as dishonoured for the reason of "Funds Insufficient" as per the returned memo issued by the concerned bank i.e Ex.P.3, hence as a matter on record it is proved by the complainant that, the cheque in question was dishonoured for the reason of Funds Insufficient.
15. In relation to the service of legal notice the accused has denied the service of legal notice upon him. On the other hand the complainant in order to prove the service of notice upon the Accused, has produced the documents i.e copy of the legal notice, postal receipts, postal acknowledgements which are at Ex.P.4 to P.7 respectively. On perusal of the Ex.P.4 to P.7 it appears that, the complainant has issued legal notice within 30 days from the date of receipt of endorsements of the bank and the said notice was sent through RPAD and the said RPAD was duly served on the accused as per Ex.P.7 ie postal acknowledgement which was received by the wife of the accused by name Mamatha.S. and her signature was marked as Ex.P.7(a) at the time of cross examination of the accused. Hence, the documents produced by the complainant makes it 17 C.C.No.26916/2018 clear that, the legal notice issued by the complainant was served on the wife of the accused, as same has been admitted by the accused in his cross examination and the accused has identified the signature of his wife on Ex.P.7 postal acknowledgement which is marked as Ex.P.7(a). In addition to the above, the accused has not disputed his name and address mentioned in the legal notice, postal acknowledgement by the complainant as not of his correct address and has also not disputed that, the legal notice which was sent by the complainant through RPAD as per Ex.P. 5 to P.7 , hence in view of non disputing the name and residential address of the accused which was shown by the complainant in the legal notice on Ex.P.7 and P.8 ie postal acknowledgements, it can be held that, the legal notice caused by the complainant was sent through RPAD to the correct residential address of the accused and same has been served on the wife of the accused ie upon the accused, in such circumstances, it can be held that, the notice sent by the complainant to the correct address of the Accused is presumed to have been served on him U/s. 27 of General Clauses Act. In this regard, it is 18 C.C.No.26916/2018 relevant here to refer the decision of Hon'ble High Court of Karnataka reported in 2011 ACD 1572 (KAR) in the case of Jayamma Vs. Lingamma, wherein the Hon'ble High Court held that, "Notice sent at correct address returned unclaimed - is deemed to be served. It is also relevant here to refer the decision reported in 2008(4) Civil code cases 027 (SC) "M/s. Indo Automobiles Vs., M/s. Jai Durga Enterprises and others." wherein the Hon'ble Apex Court held that, "notice sent by registered post with acknowledgement to a correct addressservice of notice has to be presumed". Therefore in view of the principles of law in the above decisions, it can be safely held that, the service of notice on accused in this case is presumed to have been served on him since in this case also the complainant has issued notice to the accused to his correct address through registered post and the said notice was served on the accused, hence the notice issued by the complainant through registered post is held to be proper. In addition to that, it is relevant here to refer the decision reported in 2007 AIR SCW 3578 in the case of C.C.Alavi 19 C.C.No.26916/2018 Haji Vs. Palapetty Muhammed and another., wherein the Hon'ble Apex court held that " the drawer of the cheque is permitted to deposit the cheque amount within 15 days from the date of his appearance before the court in pursuance of the service of summons on him and in such situation, his defence of non service of the legal notice cannot be available to him'. Hence, in view of the said principles of law, even for sake of discussion, though there is no cogent and reliable documentary proof to substantiate the claim of the complainant with regard to address of the Accused to show there is due service of the legal notice on the Accused, in view of settled position of law by virtue of the above said decision of Hon'ble Apex Court of India, the Accused is not entitled to the technical defence of the alleged non service of the legal notice. Therefore, the argument convassed by the learned counsel for the accused that, the notice issued by the complainant was not served on the accused and the complainant has not complied the mandatory requirements of Sec.138(b) of N.I.Act and complaint is not maintainable cannot be acceptable. Hence, on 20 C.C.No.26916/2018 careful perusal of the oral and docuemtnary evidence produced by the complainant , makes it clear that, complainant has complied all the mandatory requirements as required U/s.138(a) to (c) of N.I.Act and initial presumptions can be drawn in favour of the complainant as requried U/s.118 (a) and 139 of N.I.Act.
16. The accused in his defence has denied the transaction in question and also issuance of the cheque in dispute towards discharge of liability in question. It is the specific claim of the complainant that, the accused is absolute owenr and in possession of property bearing site No.17, Layout known as VijayaShree, Sector I, situated at property bearing No.63/1, at Uttari Village, Uttarahalli Hobli, Bangalore South Taluk, measuring EastWest 20 sq. ft, NorthSouth: 40 sq ft, totally measuring 800 sq.ft and accused agreed to sell the said property in his favour for total sale consideration amount of Rs.5,50,000/ and entered into sale agreement dt:
3.10.2016 and at that time the accused has received an amount of Rs.5 Lakhs as advance sale consideration amount by way of cheque and cash. It 21 C.C.No.26916/2018 is also the claim of the complainant that, as per the terms and conditions of sale agreement he is/was ready and willing to get the registered sale deed but the accused has failed to perform his part of contract for that, he got issued a legal notice on 9.5.2018 and it was duly served on him inspite of it has failed to comply the demand made therein and failed to execute the sale deed in his favour and thereafter the accused has requested him to cancel the sale agreement amicably and for repayment of the advance sale consideration amount of Rs.5 Lakhs which was received by him has issued the cheque in question dt: 19.7.2018 for Rs.5 Lakhs towards discharge of his legal debt and liability and both have agreed to revoke/cancel the sale agreement on 18.7.2018. It is also the claim of the complainant that, he has presented the cheque for encashment on 20.7.2018 but ti was returned dishonoured with shara "Funds Insufficient" on 21.7.2018 and thereafter he got issued legal notice to the accused and inspite of receipt of the said notice the accused did not complied the terms of his notice.
17. In support of claim made by the 22 C.C.No.26916/2018 complainant has produced original cheque issued by the accused is at Ex.P.1 , the original agreement of sale dt: 3.10.2016 is at Ex.P.13, statement of accounts pertains to the complainant is at Ex.P.14, original sale deed dt: 11.10.2016 which is at Ex.P.16, copy of legal notice dt: 9.5.2018 is at Ex.P.9, postal receipt are at Ex.P.10 and P.11, postal acknowledgements are at Ex.P.12 and P.19. On the other hand the accused has denied the execution of Ex.P.13 ie Agreement of sale and also receipt of legal notice dt: 9.5.2018 issued by the complainant and also issuance of the cheque in question ie., Ex.P.1.
18. It is relevant here to mention that, the learned counsel for the accused has cross examined the complainant ie., PW.1 in length but nothing has been elicited to discard or disbelieve the evidence of complainant. It is specifically stated by the complainant in his cross examination that, he has not filed a suit for specific performance against the accused, since the accused has issued the cheque in question towards repayment of the advance sale consideration amount received by him at the time of purchase of site and the said cheque was issued 23 C.C.No.26916/2018 towards cancellation of sale agreement. The complainant has also stated that, he has not filed suit for recovery of money on the basis of Ex.P.13 agreement, since the accused has issued the cheque in question towards cancellation of the agreement. The complainant/PW.1 has also stated that, at the request of the accused he has paid the amount by way of cash, therefore he has not given the said amount either through D.D or cheque. It is also stated by the complainant that, as on the date of execution of the agreement of sale the site was standing in the name of accused. It is true that, the complainant has admitted the contents of para No.11 in Ex.P.13 but he has specifically stated that, as per contents of para No.11 he was ready to get the registration of the site in his name and also issued notice to the accused but the accused approached him for settlement. The complainant has also stated that, he has paid the amount as advance sale consideration amount towards purchase of the site and at that time the accused has agreed to hand over the other original apart from sale deed. The complainant has denied the suggestions made to him that, he was conducting chit business and he had 24 C.C.No.26916/2018 collected blank signed stamp papers and blank signed cheque from the accused towards security of the chit and inspite of amount repaid by the accused he did not return the said documents and by misusing the said documents has filed this false case against him. It is also relevant here to mention that, the accused in his evidence has admitted that, he was successful bidder in respect of chit in the year 2015, at that time the complainant had collected his signed blank cheque and also collected the documents ie original sale deed, Aadhar card towards security of the chit amount and though he has repaid the entire chit amount to the complainant but by misusing the documents and cheque given to the complainant has filed this false case against him.
19. It is relevant here to mention that, the accused during the course of his cross examination has admitted that, the signature found at Ex.P.19(a) is that of the signature of his wife by name Mamatha.S, hence it goes to show that, the legal notice issued by the complainant dt: 9.5.2018 was served on the wife of the accused as per Ex.P.19 as 25 C.C.No.26916/2018 admitted by the accused and same has been deemed to have been served on him and accused is having knowledge about receipt of legal notice by his wife.
20. Hence, on careful considering the oral and documentary evidence produced by the complainant and admissions of the accused makes it clear that, though accused has denied the execution of the agreement of sale ie Ex.P.13 and his signatures but during the course of cross examination of the complainant and in his evidence has alleged that, the complainant had collected his blank signed stamp papers and blank signed cheque towards security of the chit amount alleged to have been conducted by him and though he has repaid the entire chit amount but the complainant did not return his blank signed stamp paper and blank signed cheque and by misusing the same has filed this false complaint against him. But in order to prove the said allegations, the accused has not produced any documentary proof, except the oral suggestion and self serving evidence nothing has been produced before the court to prove that, his blank signed stamp papers and blank signed cheque have been 26 C.C.No.26916/2018 misused by the complainant and filed this false case against him, but the fact that, his signatures found on agreement of sale ie Ex.P.13 and cheque in dispute ie., Ex.P.1 and handing over the said documents to complainant are remained as it is, therefore though the accused has denied the execution of agreement of sale ie., Ex.P.13 and cheque in dispute ie Ex.P.1 but he admitted the handing over of Ex.P.13 stamp papers in favour of complainant and cheque in question and his signatures on Ex.P.13 and P.1 ie., cheque.
21. In addition to the above, it is also relevant here to mention that, if really the complainant got collected blank signed stamp papers and blank signed cheque towards security of the chit amount and even inspite of repayment of the chit amount, the complainant did not return blank signed stamp papers and blank signed cheque of the accused and by misusing the said documents by filing this case against the accused, definitely the accused would have taken or initiated action against the complainant , immediate after receipt of the notice issued by the complainant dt:9.5.2018 ie Ex.P.9 27 C.C.No.26916/2018 which was issued much prior to the filing of this complaint and also issuance of legal notice in this complaint, but despite of receipt of legal notice ie., Ex.P.9, the accused has not choosen to give any reply to the said notice, in such circumstances it can be held that, if really the accused did not executed the agreement of sale as per Ex.P.13 and has not received advance sale consideration amount from the complainant as mentioned in Ex.P.13 and in turn the complainant has misused his blank signed stamp paper as agreement of sale and also blank signed cheque, definitely the accused would have given reply to the legal notice dt:9.5.2018 ie Ex.P.9 issued by the complainant by disclosing the said facts, but no reply has been given or denied the contents of the legal notice ie., Ex.P.9, in such circumstances the conduct of the accused in non replying to the notice issued by the complainant and non taking of action may leads to draw an adverse inference against him that, the accused has not denied or taken any action against the complainant with regard to his alleged misuse of blank signed stamp paper and blank signed cheque, since the accused has executed the agreement of sale as per Ex.P.13 and has agreed to 28 C.C.No.26916/2018 sell his site for sale consideration amount of Rs.5,50,000/ in favour of the complainant and also received an amount of Rs.5 Lakhs as advance sale consideration amount at the time of entering into sale agreement with the complainant but not for any other reason.
22. It is also the specific claim of the complainant that, he got issued legal notice dt:
9.5.2018 as per Ex.P.9 to the accused for calling upon him to execute the registered absolute sale deed in his favour since the accused has failed to perform his part of contract and the said notice was served on the accused and despite of it he did not execute the sale deed in his favour but has requested him to cancel the sale agreement, accordingly has issued the cheque in question towards discharge of liability ie repayment of the advance sale consideration amount received by him and also agreed to cancel or revoke the sale agreement on 18.7.2018. It is also relevant here to mention that, as already held in the above that, the notice dt:
9.5.2018 ie Ex.P.9 was served on the accused but the accused did not chosen to give reply to the said 29 C.C.No.26916/2018 notice or complied the terms of the said notice. It is also relevant here to mention that, the complainant has issued a legal notice dt: 30.7.2018 ie., Ex.P.4 after dishonour of the cheque in question by calling upon him to pay the cheque amount ie Ex.P.1 within 15 days from the date of receipt of the notice. It is also important here to mention that, as already held in the above that, the legal notice ie Ex.P.4 was also received by the wife of the accused as per Ex.P.7(a) and it is held that the notice was served on the accused but inspite of receipt of said notice, the accused has not given any reply to the said notice, therefore if really the accused has not issued the cheque in question towards repayment of the advance sale consideration amount received by him as per Ex.P.13, definitely he would have issued reply to the notice issued by the complainant by denying the alleged fact that, he has not issued the cheque in question towards repayment of the advance sale consideration amount , instead of that, for the first time before the court he has denied the issuance of cheque by contending that, the complainant had obtained his blank signed stamp paper and blank signed cheque towards security of the chit amount 30 C.C.No.26916/2018 and though he has repaid the chit amount , the complainant instead of returning his blank signed stamp paper and blank signed cheque by misusing the same has filed this false complaint, but the accused has not produced any documentary proof or evidence except his oral say to that effect, in such circumstances the conduct of the accused in non giving of reply and without there bing any documentary proof the defence of the accused cannot be acceptable one, on the contrary it may leads to draw an adverse inference against the accused that, the accused has issued the cheque in question toward repayment of the advance sale consideration amount received by him, in favour of the complainant not for any other reason as claimed by the accused in his defence.
23. Therefore from careful perusal of the evidence of the complainant and accused and for the above stated reasons, it can be held that, the accused has executed the sale agreement as per Ex.P.13 and agreed to sell his site property infavour of the complainant for total sale consideration amount of Rs.5,50,000/ and as on the date of sale 31 C.C.No.26916/2018 agreement the accused has received an amount of Rs.5 Lakhs as advance sale consideration amount and thereafter the accused has failed to perform his part of contract ie failed to execute the registered sale deed infavour of the complainant, the complainant got issued legal notice dt: 9.5.2018 by calling upon the accused to execute the sale deed in his favour and the said notice was served on the accused despite of it, the accused has failed to execute the sale deed in favour of the complainant, on the contrary has issued the cheque in question towards repayment of the advance sale consideration amount received by him as claimed by the complainant.
24. It is important to note here that, the accused during the cross examination of complainant has disputed the financial capacity of the complainant by suggesting that, he had no sufficient fund in his bank statement ie., more than Rs.50,000/ , but the perusal of the statement of account pertains to the complainant's bank account ie Ex.P.14 it appears that, the complainant in his account having the sufficient funds ie., more than 32 C.C.No.26916/2018 Rs.50,000/ , therefore the suggestion made by the learned counsel for the accused cannot be acceptable one. The perusal of Ex.P.14 it appears that, complainant was having sufficient in his bank account as on the date of lending of the advance sale consideration amount to the accused. In addition to that, the perusal of entire oral and documentary evidence produced by the complainant i.e Ex.P.1 to P.8 and admitted facts by the Accused, the complainant has proved that the cheque in question belongs to the account of the Accused i.e Ex.P.1 and signature found at Ex.P.1(a) is that of the signature of the Accused and also proved that, the cheque in question was presented within its validity period and it was dishonoured for the reason of "Funds Insufficient" as per Ex.P.3 and thereafter a legal notice was caused by the complainant as per Ex.P.4 through RPAD to the Accused and it was served on the accused as per Ex.P.7 postal acknowledgement, but the Accused has not given any reply to the legal notice, in such circumstances, it can be held that, the complainant has discharged his initial burden by complying the mandatory requirements as required U/s.138 of N.I. Act and initial presumptions are 33 C.C.No.26916/2018 available in favour of the complainant U/s.118(a) and 139 of the N.I. Act. Consequently it is for the Accused to rebut the presumptions available in favour of the complainant to show that, the cheque in question was not issued either to the complainant or towards discharge of any legally recoverable debt by producing cogent and convincible evidence but not mere suggestions or even by plausible explanation. In such circumstances, when the presumptions U/s.118 and 139 of N.I.Act are available to the complainant, even a presumption can be drawn to the extent of existence of legally recoverable debt or liability against the Accused unless and until the said presumptions are rebutted by the Accused, even in the absence of documents produced by the complainant with regard to loan transaction in question and source of income. In this regard, it is relevant here to refer the decisions reported in 2001 AIR Karnataka HCR 2154 between 'M/s.Devi Tyres V/s.Navab Jan' and in 2011 ACD 1521 (KAR) between 'Smt. Usha Suresh V/s. Shashidharn', in 2010 SC 1898 between 'Rangappa Vs. Mohan' and 2011 ACD 1412 (KAR) between 'N.Hasainar Vs. 34 C.C.No.26916/2018 M.Hasainar, S/o. Ibrahim'. The Hon'ble High Court of Karnataka in the above decision i.e., 2001 AIR Karnataka HCR 2154 at para No.6 was pleased to hold that issuance of cheque itself was an adequate proof of existence of debt or liability. In another decision of Hon'ble Apex Court of India i.e. Hon'ble Three Judges Bench Decision reported in (2010) 11 SCC 441 in the case of Rangappa Vs. Sri. Mohan ., wherein the Hon'ble Apex Court held that "
A. Negotiable Instruments 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 - Presumptions
- Generally. Further held that "Signature on the cheque was his, statutory presumption under S.139 comes into play and the same was not rebutted even with regard to the materials submitted by complainant Appellant not able to prove "lost cheque" theory - Apart from not raising a probable defence appellant was also 35 C.C.No.26916/2018 not able to contest the existence of a legally enforceable debt or liability-hence, his conviction by High Court, held, proper. In another decision of Hon'ble Apex Court of India, reported in CRIMINAL APPEAL NO. 508 OF 2018 DT 15032018 between ROHITBHAI JIVANLAL PATEL Vs. STATE OF GUJARAT AND ANR held that "Negotiable Instruments Act facts like source of funds are not relevant if the Accused has not been able to rebut the presumption. It is further held that "
When such a presumption is drawn, the facts relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the Accused has been able to rebut the presumption or not". In another decision of Hon'ble Apex court of India decided in Crl.Appeal No.1545 of 2019 dt.17/10/2019 by the Hon'ble Apex Court of India in the case of Uttam Ram Vs. Devinder Singh Hudan and Anr. Wherein the Hon'ble Apex Court held that, " Dishonor of cheque - Statutory 36 C.C.No.26916/2018 presumption under - burden to prove - the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability - it is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer - even a blank cheque leaf, voluntarily signed and handed over by the accused which is towards some payment, would attract presumption U/s. 139 of NI Act - the accused is held guilty of dishonour of cheque for an offence U/s.138 of NI Act. It is also held that, " the accused has failed to lead any evidence to rebut the statutory presumption, a finding returned by both the Trial Court and High Court. Both courts not only erred in law but also committed perversity when the due amount is said to be disputed only on the account of discrepancy in the cartons, packing materials or the rate to determine the total liability as if the appellant was proving his debt before the civil court. Therefore it is presumed that, the cheque 37 C.C.No.26916/2018 in question were drawn for consideration and the holder of the cheques received the same in existing debt". It is also held that, "the Trial court and the High Court proceeded as if, the appellant is to prove a debt before civil Court wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due. A dishonour of cheque carries statutory presumption of consideration. The holder of cheque in due course is required to prove that, the cheque was issued by the Accused and that when the same presented , it was not honoured Since there is a statutory presumption of consideration, the burden is on the Accused to rebut the presumption that, the cheque was issued not for any debt or other liability". It is also relevant here to refer the decision of Hon'ble High Court of Karnataka reported in ILR 2019 KAR 493 in the case of Sri.Yogesh Poojary Vs. Sri.K.Shankara Bhat, wherein the Hon'ble High Court held that, the presumption mandated by 38 C.C.No.26916/2018 Sec.139 of N.I Act includes the presumption that, there existed a legally enforceable debt or liability, however such presumption is rebuttable in nature". In another decision of Hon'ble High Court of Karnataka in the case of Shri.V.R.Shresti Vs. Shri. Bhaskara.P. in Crl. Appeal No. 2109/2017 dated: 15.10.2019 wherein the Hon'ble High Court of Karnataka held that "the Accused has not given any reply to the notice and also in the crossexamination, he categorically admits that, the cheque has bounced on account of no sufficient fund in the bank account of the Accused. Mere non producing of the document before the court with regard to the source of income to advance a loan is not a ground to dismiss the complaint. The Accused ought to have rebutted the contention of the complainant by producing cogent evidence before the court and mere denial is not enough". In another decision of Hon'ble Apex Court of India reported in ICL 2021(2) SC 529 in the case of M/s. Kalamani Tex Vs. P.Balasubramanian , dt: 10.02.2021 39 C.C.No.26916/2018 wherein the Hon'ble Apex court held that " once the accused had admitted his signatures on the cheque and deed, the trial court ought to have presumed that, the cheque was issued as consideration for legally enforceable debt" . In another decision of Hon'ble Apex Court of Indian in Crl. Appeal No.132/2020 in the case of D. K. Chandel Vs. M/s Wockhardt (L) wherein it is held that, "Production of account books / cash book may be relevant in the civil court, may not be so in the criminal case filed under Sec.138 of N.I. Act while restoring the trial court judgments, the High Court observed that "the reason given by the lower Appellate Court that, he did not bring the cash book or order book etc., could well be understood, if civil suit is tried." But may not be so in the criminal case filed under Sec.138 of N.I. Act. This is because of presumption raised in favour of holder of cheque. Therefore on careful reading of the principles of law laid down by the Hon'ble Apex Court of India and High Court of Karnataka in the above referred decisions makes it 40 C.C.No.26916/2018 very clear that, once the holder in due course i.e. the complainant proved that, the cheque in question belongs to the drawer and signature appearing on the cheque is that of the drawer i.e., Accused and complied the mandatory requirements as required U/s.138 of N.I.Act, presumptions U/s.118(a) and 139 of N.I.Act indeed does extend to the existence of legally recoverable debt and when such presumption is drawn, the facts relating to the want of documentary evidence in the form of receipts or accounts or want of evidence regarding source of funds were not of relevant unless the Accused rebutted the presumption available to the complainant as held by the Hon'ble Apex Court and High Court of Karnataka in the above decisions. In the present case also the complainant has complied the mandatory requirements and has proved that, the Accused has issued the cheque in question in his favour and the Accused has admitted the cheque belongs to his account and his signature on the cheque and complainant has proved that the legal notice issued by him was served on the Accused but accused has not given any reply to the said notice, in such circumstances, presumptions have to be 41 C.C.No.26916/2018 drawn even to the extent of existence of legally enforceable debt as per Sec.118a and 139 of N.I.Act. Therefore, for the above said reasons the defence taken by the Accused that, the complainant has not produced the documents to show that, he has paid Rs.5 Lakhs to the accused and in turn the accused has issued the cheque in question towards discharge of the liability in question cannot be acceptable one. The defence taken by the Accused appears that, the complainant has to prove his claim by producing his evidence as if it is required for proving his debt before the Civil Court, but same cannot be permissible in proceeding initiated U/s.138 of N.I. Act, as held by the Hon'ble Apex court of India in the above referred decisions, therefore in view of the principles of law laid down in the above referred decisions. It is presumed that, cheque in question was drawn for consideration as the Accused has admitted the cheque in question belongs to his account and the signature found on the cheque in question is that of his signature, therefore for the above said reasons the defence taken by the accused cannot be acceptable one, as the accused has miserably failed to rebut the presumptions available to the 42 C.C.No.26916/2018 complainant. Therefore in view of the above said reasons the arguments canvased by the learned counsel for the accused can not be acceptable one and with due respect to the principles of law laid down in the decisions relied upon by the counsel for the accused ie., the Hon'ble High Court of Karnataka are not applicable to the defence of the accused in this case, as the accused has admitted the cheque belongs to his account and his signature on the cheque and also inspite of service of the notice accused has not chosen to give reply to the said notice , but for the first time before the court has come up with the story that, he had not issued the cheque in question to the complainant and the facts and circumstances of this case and facts and circumstances of the decided cases are not one and the same and accused has not produced any evidence or elicited anything from the complainant to rebut the presumption available to the complainant as held by the Hon'ble Apex Court of India and High Court of Karnataka in the decisions relied upon by the learned counsel for the accused.
25. It is also relevant here to mention that, it is 43 C.C.No.26916/2018 true that, the complainant/PW.1 in his cross examination has admitted that, he has not declared the amount of Rs.5 Lakhs paid to the accused as shown in Ex.P.13 in his income tax returns. Even for sake of discussion if it is assumed that, the complainant has not declared the amount paid to the accused in question in his I.T. returns , in such circumstances whether only on the ground of non declaration of the payment of amount in question to the accused that itself invalidates the transaction in question or not is to be taken into consideration. In this regard, it is necessary here to refer the decision of our Hon'ble High court of Karnataka reported in 2019(1) Kar. L.R.185 in the case of Sri.Yogesh Poojary Vs. Sri.K.Shankara Bhat in the said case the Hon'ble High Court of Karnataka held that " Negotiable Instruments Act, 1881 - Sections 138 and 139 Endorsement 'payment stopped by drawer' - The trial court in the instant case, merely considered a suggestion made from the Accused side in the cross examination of PW1 that the complainant was an income tax assessee and that he has not 44 C.C.No.26916/2018 declared the alleged loan transaction in his returns and disbelieved the case of the complainant that too, ignoring that legal presumption under section 139 of the N.I. Act, was operating in favour of the complainant For these reasons, it has to be held that the complainant has beyond reasonable doubt proved the guilt of the Accused punishable under Section 138 of the N.I. Act. As such, the impugned judgment of acquittal passed by the trial court deserves to be set aside and respondent/ Accused is liable to be convicted for the offence punishable under Section 138 of the N.I. Act. Hence in view of the principles of law laid down by the Hon'ble High court of Karnataka in the above referred decision, in the present case also the complainant has not not declared in his I.T. Returns about payment of advance sale consideration amount to the accused, but as it is already held that, the complainant has discharged his primary burden by complying the mandatory provisions of Sec.138 of N.I. Act, therefore it is for the accused to rebut the presumption existing infavour of the complainant 45 C.C.No.26916/2018 U/s.139 of Negotiable Instruments Act. Apart from that, the admissions of the complainant with regard to non declaration in I.T. Returns could not by itself draw an adverse inference and to hold that, there was no existence of legally enforceable debt or the presumption as envisaged U/s.139 of N.I.Act is successfully rebutted by the accused. In another decision of Hon'ble Madhya Pradesh High Court decided in C.R.R No.5263/2018 dated: 7.3.2019 in the case of Smt. Ragini Gupta Vs. Piyush Dutt Sharma Gwalior., wherein the Hon'ble High Court held that, mere non filing of income tax return would not automatically dislodge the source of income of the complainant and non payment of income tax is a matter between the revenue and assessee and if the assessee has not disclosed his income in the income tax return, then the income tax department is well within its right to reopen the assessment of income of the assessee and to take action as per provisions of Income Tax Act, however non filing of income tax return by itself would not mean that, the complainant had no source of income and thus no adverse inference can be drawn in this regard only because of absence of income tax return. Hence in 46 C.C.No.26916/2018 view of the principles of law laid down by Hon'ble High Court of Madya Pradesh in the above said decision in the present case also even though if the complainant has admitted that, he has not declared in his I.T. Returns about payment of advance sale considertaion amount to the accused that itself would not automatically dislodge the source of income of the complainant. Therefore the admissions of the complainant which are elicited in his cross examination are not helpful for the accused to prove his defence that, in view of non declaration of loan transaction in his I.T. Returns that itself sufficient to hold that, the complainant has no source of income cannot be acceptable one.
26. It is also relevant here to mention that, the complainant has ignored the suggestion made to him in his crossexamination that, as per the law if any transaction is made involving the amount more than Rs.20,000/ has to be paid by way of cheque only. The learned counsel for the accused during his argument vehemently addressed that, in the present case an amount of Rs.4 Lakhs was alleged to be paid by way of cash out of alleged advance sale 47 C.C.No.26916/2018 consideration amount of Rs.5 Lakhs, therefore the alleged amount involved is more than Rs.20,000/ and as per the law it has to be paid only by way of cheque on this count the transaction involved in this case itself is invalidate. But the law does not mandates to pay the loan amount to the accused only through cheque even if the loan amount paid is more than Rs.20,000/ in cash in such circumstances also the transactions are not invalid. In this regard it is relevant here to refer the decision of Hon'ble High Court of Karnataka reported in 2008 (5) KCCR 3371 in a case of Kempanarasimhaiah Vs. P. Rangaraju and others., wherein it is held that, "on careful reading of the above observations and also all other observations in the said juddment I could not find the Hon'ble Supreme Court having laid down that, the transactions in contravention of the said provision of Income Tax Act could be termed as the transactions opposed to the public policy so as to bring within the ambit of nonenforceable transactions. The Hon'ble Supreme Court has not laid down in the said 48 C.C.No.26916/2018 decision that, the transactions of this nature could be termed as opposed to pubic policy and as such the same would be became legally not enforceable." Hence in the light of principal of law laid down by the Hon'ble High Court of Karnataka in the above said decision it is for the income tax authority to take the action against the person who had transacted in contravention to Sec.269 SS of Income Tax Act, but the transaction cannot be termed as opposed to public policy and legally not enforceable. In another decision of Hon'ble Bomby High Court in Crl. Appeal No.322 of 2017 decided on 25.11.2020 in a case of Pushpa Sanchala Kothari Vs. Aarti Uttam Chavan wherein it is held that, Negotiable Instrument Act 1881, Sec.138 - Income Tax Act 1961, Sec.269 SS - Criminal Procedure Code 1973, Sec.378 (4) - Cheque dishonored - Appeal against acquittal - the complainant has not shown the transaction in her income tax returns - no provision in Income Tax Act which makes an amount not shown in the Income Tax Returns unrecovarable 49 C.C.No.26916/2018
- Sec.269 SS of Act 1961, does not declare all transactions of loan, by cash in excess of Rs.20,000/ as invalid, illegal or null and void - the accused cannot take benefit of such infraction by complainant to show the transaction in income tax returns - The judgment of acquittal rendered by the learned Trial Court is perverse - The impugned judgment needs to set aside - Appeal deserves to be allowed." Hence in the light of principal of law laid down by the Hon'ble High Court of Bomby, the defence of the accused in the present case cannot be acceptable one as under Sec.269 SS of the Income Tax Act does not declare all the transactions of the loan by cash in excess of Rs.20,000/ as invalid, illegal or null and void and the accused cannot take benefit of the same to escape from the liability in question. Therefore for the above said reasons though the complainant has pleaded his ignorance about the law that itself cannot be termed as the transaction in question is not enforceable.
27. It is relevant here to mention that, the 50 C.C.No.26916/2018 Accused in order to rebut the presumption available to the complainant U/s.118 and 139 of N.I. Act himself examined as DW.1, in his evidence has stated that, he is running a bakery since 10 years during that period he came to know about the complainant through his brother by name Umesh and complainant was lending money on interest basis business and also doing chit business, during the year 2014 he was also became a member to the chit and during the year 2015 he took one of the chit and at the time receiving chit amount, the complainant had collected his blank signed cheque and some other documents ie., original sale deed, Aadhar card as security to the said chit amount and thereafter he has repaid the entire chit amount to the complainant and requested him to return his disputed cheque and also other documents but the complainant did not return the same to him and misused the said documents by filing this false complaint against him.
28. On careful considering the defence of the accused it appears that, according to him the complainant was doing chit business and money 51 C.C.No.26916/2018 lending business and he has subscribed for chit and during the year 2015 he had obtained chit and at the time of receiving the chit amount the complainant got collected his blank signed cheque and other documents towards security of the chit amount and inspite of repayment of the chit amount made by him the complainant misused his blank signed cheque and other documents and filed this complaint, but the Accused in order to substantiate his defence has not produced any documents, except the oral evidence nothing has been produced before the court even has not examined any of the members of the alleged chit transaction , therefore only on the basis of self serving statement of the accused, it cannot be held that, the complainant was running chit business and accused was also subscriber of the said chit and at the time of receiving the chit amount the complainant had collected blank singed cheque and other documents as security to the said chit amount. The accused has also not produced any documents to show that, he has repaid the chit amount and the complainant has misused his blank signed cheque and other documents by filing this complaint, therefore the oral evidence of the accused 52 C.C.No.26916/2018 itself is not sufficient to prove his defence and to rebut the presumptions available to the complainant. In this regard, it is relevant here to refer the decision of Hon'ble Madras High Court reported in AIR 2009 (NOC) 726 MAD in the case of P. Armugam Vs. P. Veluswamy, wherein the Hon'ble High Court held that "Negotiable Instruments Act (26 of 1881) S.138 - Dishonour of cheque - Accused admits to have signed cheque and handed it over to complainant - Defence raised by accused that said cheque was issued as a blank cheque intended to be a collateral security for an unregistered chit conducted by complainant - However, no evidence has been adduced by Accused to prove that complainant was running an unregistered chit in which Accused joined as a subscribing member - there is no evidence to prove amount of chit or that Accused was a priced subscriber and the blank cheque had been issued to ensure proper payment of future subscriptions - can be held that, cheque was issued for payment of loan obtained by accused 53 C.C.No.26916/2018 from complainant - Accused guilty of offence. In another decision of Hon'ble High Court of Karnataka reported in 2012 (4) KCCR 2634 in the case of Sri. Prakash @ Jnana Prakash Vs. Ms. T.S. Susheela wherein the Hon'ble High Court held that "NEGOTIABLE INSTRUMENTS ACT, 1881 - Section 138 - Complaint under - Cheque dishonoured for "insufficient funds" - Plea of accused as to non -receipt of demand notice, absence of legal liability, misuse of documents given as security in an independent chit transaction - Convicted by Trial Court Confirmed by Appellate Court - Revision against The plea as to misuse of documents would not be believed due to in action of the accused. Hence in view of the principles of law laid down by the Hon'ble High Courts in the above decisions, in the present case also the Accused has not proved that, the cheque in question was given at the time of receipt of chit amount. In another decision of Hon'ble High Court of Karnataka reported in 2015 (1) KCCR 235 in the case of Lale Patel Vs. Sharanabasappa., wherein the Hon'ble High Court 54 C.C.No.26916/2018 held that : NEGOTIABLE INSTRUMENTS ACT, 1881 section 138 - Dishonour of cheque for insufficiency of funds Plea of accused that he had given a blank cheque signed as security for a transaction and complainant filled up the contents and denied existence of any debt or loan - Conviction by Trial court Affirmed by Appellate Court - Revision against. Hence the Hon'ble High Court of Karnataka in the above decision clearly held that, if the Accused has taken defence that, the a blank signed cheque has been issued as a security for transaction and the complainant filled up the contents and the accused denied the existence of debt or loan in such circumstances it is for the accused to prove his defence by producing cogent and convincible evidence, if the Accused has not proved the same in such circumstances, it cannot be held that, the cheques in question were issued for the purpose of repayment of the subscription amount of the chit transaction. In the present case also the Accused has failed to establish his defence to show that, the cheque in question and other documents were 55 C.C.No.26916/2018 collected by the complainant toward security of the chit amount, under such circumstances the cheque so issued cannot be considered as the one issued as a security and the defence taken by the Accused is untenable one. In another decision reported in 2015 (4) KCCR 2881 (SC) in the case of T. Vasanthakumar Vs. Vijayakumari wherein the Hon'ble Apex court held that " NEGOTIABLE INSTRUMENTS ACT, 1881 Section 138 and 139 - acquittal - If justified Accused not disputing issuance of cheque and his signature on it Plea that it was issued long back as security and that loan amount was repaid Not supported by any evidence - Fact that date was printed, would not lend any evidence to case of accused Acquittal not proper. Hence in the present case also it is the main defence of the Accused that the cheque in dispute and other documents were alleged to have been collected by the complainant as security towards chit amount and even after repayment of the entire chit amount, the complainant by misusing the said cheque and other documents has filed this complaint but the Accused has admitted the 56 C.C.No.26916/2018 issuance of cheque and his signature on the said cheque but no documents or proof produced by the Accused to prove his defence in such circumstances by applying the principles of law laid down in the above decision the defence of the Accused cannot be acceptable one.
29. It is relevant here to mention that, according to the defence of the Accused that, the complainant was running chit business and he was also subscriber to the said chit and during the 2015 he bidded the chit amount at the time of receiving the chit amount the complainant got collected his blank signed cheque and other documents as security to the chit amount and thereafter he had repaid entire chit amount but the complainant instead of returning his blank signed cheque and other documents has misused the said documents by filing this false complaint against him. If really the complainant has collected his blank signed cheque and other documents towards payment of chit amount as security and misused the said cheque and other documents by filing this false complaint against him, in such circumstances, the accused would have 57 C.C.No.26916/2018 made an efforts to get return of his blank signed cheque and other documents from the complainant by filing complaint against the accused or by issuing reply to the notice issued by the complainant or by issuing stop payment instructions to his bank but no such efforts have been made by the accused, in such circumstance the conduct of the accused in not making efforts to get return of his blank signed cheque and other documents may leads to draw an adverse inference against the accused that, he has not made any efforts since the cheque in question was issued by the accused towards discharge of liability in question not for other reasons as stated by the accused in his defence. In this regard, it is relevant here to refer the decision of Hon'ble Apex Court of India reported in AIR 2018 SC 3601 in a case of T.P.Murugan(dead) Thr. Lrs.V. Bhojan Vs. Posa Nandi, rep. Thr. Lrs. PA holder, T.P. Murugan V. Bhojan, wherein the Hon'ble apex Court held that "Negotiable Instruments Act (26 of 1881) Ss.118, 138, 139 - Dishonour of cheque - Presumption as to enforceable debt cheques allegedly issued by accused towards repayment 58 C.C.No.26916/2018 of debt Defence of accused that 10 cheques issued towards repayment of loan back in 1995 - behavior of accused in allegedly issuing 10 blank cheques back in 1995 and never asking their return for 7 years, unnatural - Accused admitting his signature on cheques and pronote, presumption under S.139 would operate against him - Complainant proving existence of legally enforceable debt and issuance of cheques towards discharge of such debt Conviction, Proper." Hence by applying the above principles of law to the present facts of the case in the present case the Accused has not produced any document to prove his defence, under such circumstances, it can be held that, the accused has not made any efforts to get return of the cheque in question and other documents alleged to have been given to the complainant at the time of receipt of chit amount, in such circumstances, the said unnatural conduct of the accused in non taking of action, an adverse inference can be drawn against the accused that, the cheque in question issued by the accused towards discharge of the liability and presumption U/s.139 59 C.C.No.26916/2018 of N.I. Act would operate against him, as he has admitted the signature and cheque in questions are belongs to him.
30. It is suggested by the accused during the course of cross examination of the complainant that, he had collected blank signed cheque and blank stamp papers of the accused at the time of payment of chit amount and even inspite of the repayment of the chit amount the complainant did not return his blank signed cheque and stamp papers to him but by misusing the said documents has filed this complaint against him but the said suggestions were denied by the complainant, hence the suggestions made by the accused goes to show that, he has admitted his signatures on the cheque in dispute and also stamp papers ie Ex.P.1 and P.13 respectively but he denies the contents of the cheque as are not written by him and the contents of Ex.P.13, in such circumstances it cannot be held that, the cheque in question and agreement of sale ie., Ex.P.1 and P.13 have been forged by the complainant but on the contrary it can be held that, once signature on the negotiable instrument act is admitted, in that circumstances 60 C.C.No.26916/2018 sec. 20 of N.I. Act comes into play i.e. as per Sec. 20 of N.I.Act if the blank or incomplete Negotiable Instrument is given to the holder in due course, it is to be presumed that, he had given authority to the holder in due course to fill up the remaining portion. In this regard, it is relevant here to refer the decision of Hon'ble High Court of Karnataka reported in ILR 2006 KAR 2054 in the case of H.S.Srinivasa Vs. Girijamma and another wherein the Hon'ble High Court held that " a reading of sec.20 of the act which is extracted above reveals that, the words used are ' either wholly blank or having written therein an incomplete negotiable instrument' . The instrument may be wholly blank or incomplete in a particular in either case, the holder has authority to make or complete the instrument as a negotiable one. The authority implied by a signature to a blank instrument is so vide that, the party so signing is bound to be a holder in due course. Promissory notes are often executed in the name of the payer and left unfilled to be afterwards filled by the actual 61 C.C.No.26916/2018 holder, the object being to enable the owner to pass it off to another without incurring the responsibility as an endorser. Thus, it is seen that, person in possession of an incomplete instrument in maternal particulars has the authority prima facie to fill it and thus the executants becomes liable to pay the amount due'. In another decision of Hon'ble High Court of Madras reported in 2005 (1) DCR 85 in the case of P.A.Thamatharan Vs. Dalmia cements (B) Ltd., wherein it is held that " Negotiable Instrument Act 1991 - Sec. 138 - dishonour of cheque - plea
-body of cheque was not written by Accused - held it is not mandatory and no law prescribes that, the body of cheque should also be written by the signatory to the cheque, a cheque could be filled up anybody and if it is signed by the account holder of the cheque'. In another decision reported in 1996 Cri. L.J.3099( Guj) :
1997 II Crimes : 1997 (I) CCR 603 wherein the Hon'ble High Court held that "no law provides that, in any case of any negotiable instrument entire 62 C.C.No.26916/2018 body has to be written by maker or drawer only". It is further held that, " when a cheque is admittedly issued blank are incomplete and there is no dispute regarding the signature, it can be presumed that, there is an implied consent for filling up the cheque as when required by holder and get it encashed. Complaint of dishonour of such cheque cannot be held to be beyond the scope of penal provisions of Sec.138". In another decision of Hon'ble Apex court to India reported in (2002) 7 SCC in the case of P.K. Manmadhan Karthra Vs.Sanjeeva Raj., wherein it is held that " As long as signature on the cheque is admitted, whether the ink with which the other particulars are filled up is different or that the hand writing is not that of drawer does not matter. Until rebutted, the presumption that, cheque was issued for consideration exists". In another decision of Hon'ble High Court of Karnataka at Bengaluru in a case of Crl. Appeal No. 1664/2003 C/w. Crl.Appeal No.1663/2003 dated: 18.6.2008 63 C.C.No.26916/2018 in the case of R.Mallikarjuna Vs. H.R.Sadashivaiah wherein the Hon'ble High Court at para No.19 held that " But, the question is, whether that renders instrument unenforceable. In this regard, it must be observed that, this court similar circumstances in the case of S.R. Muralidar Vs. Ashok G.Y. reported in 3001 (4) KAR. LJ K. 122 referring to the provisions of Sections 20, 138, 139, and 140 of the Act and after interpreting alteration and filling up of the cheque observed thus " The trial court has made much about the difference in ink. Admittedly, Accused cheque is issued bearing signature of the Accused. It is the contention of the defence that, blank cheques issued for the business transactions have been illegally converted as a subject matter to this case fastening false liability........ 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 64 C.C.No.26916/2018 payee to fill up the 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 begins the maker of the negotiable instrument to the extent it purports to declare........ The 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 in admissible nor it amounts to tampering with the material particulars...... In the present case there is no categorical defence version, it is only by conjunctures and surmises, a case is made out from the difference in ink between the signature of the cheque and the other handwritten contents. Therefore in view of the principles of law of Hon'ble Apex court of India and 65 C.C.No.26916/2018 also Hon'ble High Court of Karnataka and Madras referred above, In the present case the Accused has admitted the signature on Negotiable Instrument i.e. cheque and he also admitted issuance of the cheque, it is primafacie proof of authorizing the holder in due course i.e. the complainant to fill up the remaining contents of the Negotiable Instrument, therefore it cannot lie in the mouth of the Accused that, the complainant had misused or fabricated the cheque in question given by him and the defence of the Accused cannot be acceptable one as the instrument i.e., cheque in question cannot be rendered unenforceable merely because the contents have been filled by different ink, as it would not render such instrument illegal or inadmissible, the complainant certainly can base action on it. Therefore the defence of the accused that, the signature on the subject cheque is not of his signature and has not filled up the contents of the cheque in question cannot be acceptable one. It is also relevant here to refer another decision of Hon'ble Apex Court of India reported in AIR 2019 SC 2446 in the case of Birsingh Vs. Mukesh Kumar., wherein the Hon'ble apex Court held that, "presumption U/s.139 is 66 C.C.No.26916/2018 presumption of law, distinguished from presumption of facts and also held that, presumptions are rules of evidence and do not conflict with presumption of innocence which requires prosecution to prove case against the Accused and also held that obligation on the prosecution may discharged with the help of presumptions of law and presumption of fact unless the accused adduces evidence showing reasonable plausibility of non existence of presumed fact." In the present case though the Accused has denied the contents of the cheque in question but he did not proved his defence or produced any documents or satisfactory evidence to rebut the presumptions as available U/s.139 of the N.I.Act, under such circumstances in view of the above principles of law, it can be presumed even on fact also that the complainant has proved his case by discharging his burden and complying the mandatory provisions. In the said decision the Hon'ble Apex court has also held that, "presumption as to legally enforceable debt is rebuttable, the signed blank cheque if voluntarily presented to payee 67 C.C.No.26916/2018 towards payment payee may fill up amount and other particulars and it in itself would not invalidate cheque and onus would still be on the accused to prove that, cheque was not issued or discharge of debt or liability by adducing evidence." In another decision of Hon'ble Apex court of India decided in Crl.Appeal No.1545 of 2019 dt.17/10/2019 by the Hon'ble Apex Court of India in the case of Uttam Ram Vs. Devinder Singh Hudan and Anr. Wherein the Hon'ble Apex Court held that, "Dishonor of cheque - Statutory presumption under - burden to prove - the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability - it is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer - even a blank cheque leaf, voluntarily signed and handed over by the accused which is towards some payment, would attract presumption U/s. 139 of NI Act - the accused is held guilty of dishonour of cheque for 68 C.C.No.26916/2018 an offence U/s.s.138 of NI Act. In such circumstances even if it is assumed that, the complainant admitted that, there is difference in the ink as well as in the handwriting between the signature and the other contents of the Ex. P.1, in such circumstances also in view of the principles of law laid down in the above decision that itself would not invalidates the cheque in question and it can be presumed that, the said cheque has been issued towards discharge of legally recoverable debt.
31. It is also important to note here that, the Accused has not denied or disputed that the cheque in question as well as the signature therein do belong to him and he has failed to explain as to how his cheque has came to the possession of the Complainant, this would also give rise to an adverse inference against him. This preposition of law finds support from the decisions of Hon'ble High Court of Karnataka reported in 2010(1) KCCR 176 in the case of "Siddappa Vs. Manjappa". In another decision of Hon'ble Apex court of India decided in Crl.A.No.664 of 2012 dated: 19.9.2019 in the case of "M.Abbas Haji Vs. T.M.Chennakeshava"
69C.C.No.26916/2018 held that, " the Accused has to explain how the cheque entered into the hands of complainant".
Hence in the present case also the Accused has failed to explain and prove that, how the cheque in question was entered into the hands of complainant. Therefore for the above said reasons the defense taken by the accused cannot be acceptable one and accused has miserably failed to rebut the presumption available in favour of the complainant by adducing cogent and convincible evidence.
32. The learned counsel for the accused has also argued that, the complaint filed by the complainant is not maintainable against the accused and there is no liability existing as on the date of presentation of the cheque and no presumption could be drawn U/s.139 of N.I.Act as admittedly the dispute involved in the complaint is of in civil nature and as per Ex.P.9 the complainant ought to have file suit for specific performance of the contract since according to him, the accused has failed to perform his part of contract to execute the registered sale deed, in such circumstances as per the terms and conditions involved in agreement of sale ie., Ex.P.13 70 C.C.No.26916/2018 the complainant has to file a suit against the accused but not the present complaint filed by him against the accused. It is also argued that, as per clauses No.10 and 11 of the Ex.P.13 agreement of sale the complaint itself is not maintainable as the dispute involved is in the form of civil nature and as per Ex.D.1 and D.2 the complainant ought to have file a civil suit against the accused,thus the remedy is available to the complainant before the civil court but not before this court by filing the complaint U/s.138 of N.I.Act. It is also argued that, according to the complainant cheque in question was issued by the accused to him under an agreement between him and the accused , if there was any violation of terms of agreement by the accused, remedy open to the complainant to take appropriate steps before the civil court and not before the criminal court, hence prayed for acquittal of the accused. In support of his argument relied upon the decision reported in 2010 Cri.L.J No.1061 in the case of Venkatesh Bhat V/s. Rohidas Shenoy in Crl.Appeal No.1166/2008 decided on 3.8.2009.
33. On careful perusal of the arguments 71 C.C.No.26916/2018 canvassed by the learned counsel for the accused are not acceptable one for the simple reason that, as it is already held at the time of discussion of the oral and documentary evidence and admitted facts by the accused in the above and come to the conclusion that, the accused has cheque in question towards repayment of the advance sale consideration amount of Rs.5 Lakhs which was received by him from the complainant and the said cheque was issued towards discharge of legally recoverable debt as the complainant and accused have mutually agreed to cancel the sale agreement dt: 3.10.2016 ie Ex.P.13 since the accused has failed to execute registered sale deed infavour of the complainant inspite of issuance of legal notice by the complainant and at the request of the accused the cheque in question was issued towards repayment of the advance sale consideration amount received by him. In this regard, it is relevant here to refer the decision fo Hon'ble High Court of Karnataka in Cri.Rev. Petition 452/2010 decided on 21.3.2014 in the case of Venkatesh Prasad V/s. Subraya V. Bhat wherein the Hon'ble High Court held that "In view of the aforesaid clause in the agreement regarding 72 C.C.No.26916/2018 payment of liquidated damages the possibility of accused having issued those three cheques towards payment of liquidated damages of Rs.30 Lakhs cannot be ruled out as alleged by the complainant. At the time of cancellation of agreement mutually it appears that, accused was not in a position to pay the amount and at that time he issued three post dated cheques by putting different dates. At this stage, it has to be stated that, when ever cheques are issued a presumption has to be drawn U/s.139 of N.I.Act that cheque has been issued towards discharge of his liability and the said presumption also imposed the presumption of existence of legally enforceable debt or liability". In another decision reported in (2019) 4 SCC 767 in case of Ripudaman singh V/s. Balakrishna (Crl.Appeal No.483/2019 arising out of SLP (Crl) No.4608/2016) wherein the Hon'ble Apex Court held that " Admittedly, the cheques were issued under and in pursuance of the agreement itself, though it is well settled that, an agreement to 73 C.C.No.26916/2018 sell does not create any interest in immovable property, it nonetheless constitute a legally enforceable contract between the parties to it. A payment which is made in pursuance of such an agreement is hence a payment made in pursuance of a duly enforceable debt or liability for the purpose of Sec.138". Hence, in view of the principles of law laid down by the Hon'ble Apex court of India and High Court of Karnataka if a cheque is issued in pursuance of the agreement to sell or a payment which is made in pursuance of the agreement of sale is duly enforceable debt or liability for the purpose of Sec.138 of N.I.Act, in such circumstances the present complaint filed by the complainant U/s.138 of N.I.Act against the accused is maintainable. It is also seen from the oral and documentary evidence produced by the complainant and admitted facts by the accused it appears that, in view of the accused fails to execute the registered sale deed in favour of the complainant inspite of service of legal notice upon the accused, due to non transferable title which is marked as per Ex.D.2 ie., due to katha problem in respect of the site in 74 C.C.No.26916/2018 question, there are every possibilities of accused having issued the cheque in question towards the payment of advance sale consideration amount of Rs.5 Lakhs which was received from the complainant cannot be ruled out as claimed by the complainant in this complaint. Therefore for the above said reasons the arguments canvassed by the learned counsel for the accused are not sustainable in law and with due respect to the principles of law laid down by the Hon'ble High Court of Karnataka in the decision relied upon by the learned counsel of the accused are not applicable to the defence of the accused in this case, since the facts and circumstances of this case and facts ad circumstances of the said case are not one and the same.
34. Therefore considering all these aspects of the case and totality of the circumstances and on careful and meticulous appreciation of evidence adduced on behalf of the complainant and accused the complainant has successfully established beyond all reasonable doubt that, as per the agreement of sale ie Ex.P.13 dt: 3.10.2016, the accused has agreed to sell his site property to the complainant for 75 C.C.No.26916/2018 total sale consideration amount of Rs.5,50,000/ and out of said sale consideration amount an amount of Rs.5 Lakhs received by the accused as advance sale consideration amount from the complainant at the time of entering into sale agreement and thereafter the accused has failed to perform his part of contract by executing registered sale deed in favour of the complainant despite of service of legal notice issued by the complainant and thereafter the accused has settled amicably with the complainant for cancellation of the sale agreement mutually and has issued the cheque in question towards repayment of advance sale consideration amount of Rs.5 Lakhs which was received by him from the complainant and thereafter the complainant has presented the said cheque through his banker and same was returned dishonoured with an endorsement of "Funds Insufficient" and thereafter complainant got issued legal notice to the accused and inspite of service of the said notice, the Accused did not paid cheque amount, hence the complainant filed the present complaint against the accused. On the other hand, the accused has failed to rebut the presumption available infavour of the complainant with regard to 76 C.C.No.26916/2018 the existence of legally recoverable debt under Ex.P.1 Cheque. Therefore accused has committed an offence punishable U/s.138 of N.I. Act, accordingly for the above said reasons this point is answered in the Affirmative.
35. Point No.2: Negotiable Instrument Act was enacted to bring credibility to the cheque and the very purpose of enactment is to promote the use of negotiable instrument, while to discourage the issuance of cheque without having sufficient funds in their accounts. Such being the case the intention of the legislature is that, complainant be suitable compensated while accused be punished for his act. Hence while awarding the compensation the said fact is to be kept in mind and suitable compensation is awarded to the complainant certainly it will not cause injustice to the accused, accordingly the complainant is entitled for the compensation as ordered by the court and for the said reasons, it is just and proper to pass the following : 77 C.C.No.26916/2018 ORDER Acting U/sec.255(2) of Cr.P.C. the accused is convicted for the offence punishable U/sec.138 of N.I.Act.
The accused is sentenced to pay a fine of Rs.5,15,000/= (Rupees Five Lakhs and Fifteen Thousand only) in default he shall under go simple imprisonment for a period of (3) three months for the offence punishable U/sec.138 of N.I.Act.
Further acting U/sec.357(1) of Cr.P.C. out of the fine amount on recovery, a sum of Rs.5,10,000/= (Rupees Five Lakhs and Ten Thousand only) shall be paid as compensation to the complainant.
Further acting U/sec.357(1)(a) of Cr.P.C. out of fine amount on recovery a sum of Rs.5,000/= (Rupees Five Thousand only) shall be defrayed as prosecution expenses to the state.
The Bail bond of the Accused stands cancelled after appeal period is over.
Office is directed to furnish free certified copy of this judgment to the 78 C.C.No.26916/2018 Accused incompliance of Sec.363(1) of Cr.P.C.
(Directly dictated to the stenographer online, printout taken by her, verified, corrected and then pronounced by me in the open Court on this the 10th day of January 2022).
(SRI.S.B. HANDRAL), XVI ACMM, Bengaluru City.
ANNEXURE
1. List of witness/s examined on behalf of the Complainant: P.W.1 : Sri.C.V.Suresh Babu;
2. List of documents exhibited on behalf of the Complainant: Ex.P.1 : Original Cheque;
Ex.P.1(a) : Signature of the Accused;
Ex.P.2 : Bank challan ;
Ex.P.3 : Bank memo;
Ex.P.4 : Office copy of the Legal Notice;
Ex.P.5 & P.6 : Postal Receipts;
Ex.P.7 & P.8 : Postal Acknowledgements;
Ex.P.7(a) : Signature of wife of accused
Ex.P.9 : notice dt: 9.5.2018 ;
Ex.P.10 & : Postal Receipts;
P.11
Ex.P.12 : Postal acknowledgement
Ex.P.13 : Agreement dt: 3.10.2016
Ex.P.13(a) : signature of the accused
Ex.P.13 (b) : signature of the complainant
79
C.C.No.26916/2018
Ex.P.14 : Statement of accounts of Kaveri Gramina
Bank for the period from 1.4.2016 to
31.3.2017
Ex.P.15 : Complaint
Ex.P.15(a) : signature of the complainant
Ex.P.16 : absolute sale deed dt: 11.08.2016
Ex.P.16(a) to : signature of the accused on the said sale
(j) deed Ex.p.17 : Plea Form Ex.P.17(a) : signature of the accused Ex.P.18 : vakalath of the accused Ex.P.18(a) : signature of the accused Ex.P.19 : postal acknowledgement Ex.P.19(a) : signature of one Mamatha
3. List of witness/s examined on behalf of the Accused: DW.1 : Sri. P.Ganesh
4. List of documents exhibited on behalf of the Accused: Ex.D.1 : Relevant portion in Ex.P.13 Ex.D.2 : Relevant portion of last para in Ex.P.13.
(SRI.S.B.HANDRAL), XVI ACMM, Bengaluru City.
80 C.C.No.26916/2018