Karnataka High Court
The Kittur Rani Chennamma Urban Co-Op ... vs Mallikarjun Gangadhar Pasalkar, Age ... on 1 March, 2018
Author: John Michael Cunha
Bench: John Michael Cunha
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IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 1ST DAY OF MARCH, 2018
BEFORE
THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA
CRL.R.P.NO.2321/2010
BETWEEN:
THE KITTUR RANI CHENNAMMA URBAN CO-OP
CREDIT SOCIETY LTD.,
REP. BY ITS 1ST DIVISIONAL CLERK,
RAJESH BABURAO CHADICHAL,
AGE: 37 YEARS, OCC: SERVICE,
R/O BAILHONGAL, TQ.BAILHONGAL,
DIST: BELGAUM.
...PETITIONER
(BY SRI.N.P.VIVEKMEHTA & SRI.P.B.CHIKKANARAGUND, ADVS.)
AND:
SHRI.MALLIKARJUN GANGADHAR PASALKAR,
AGE: MAJOR, OCC: ADVOCATE,
R/O GUNDLUR CHAWL, BAILHONGAL,
TQ.BAILHONGAL, DIST: BELGAUM.
...RESPONDENT
(BY SRI.MURUGHENDRA S.WANTMURI, ADV.)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 R/W 401 OF CR.P.C. SEEKING TO SET ASIDE THE
ORDER DATED 02.02.2010 IN CRL.R.P.NO.535/2009 PASSED BY
THE PRINCIPAL SESSIONS JUDGE, BELGAUM, AND RESTORE
THE ORDER DATED 10.08.2009 IN P.C.NO.157/2007 PASSED
BY THE ADDITIONAL CIVIL JUDGE (JR.DN.) AND JMFC,
BAILHONGAL AND RESTORE THE COMPLAINT FILED BY THE
PETITIONER.
THIS CRIMINAL REVISION PETITION COMING ON FOR
DICTATING ORDERS THIS DAY, THE COURT MADE THE
FOLLOWING:
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ORDER
This revision petition is directed against the order passed by the Principal Sessions Judge, Belgaum in Crl.R.P.No.535/2009 dated 02.02.2010 whereby the criminal revision petition filed by the respondent herein was allowed with costs of Rs.10,000/- and the order passed by the Additional Civil Judge (Jr.Dn.) and JMFC, Bailhongal in P.C.No.157/2007 dated 10.08.2009 came to be set aside. Further, the learned Sessions Judge has held that the complaint filed by the respondent under Section 138 of Negotiable Instruments Act (herein after referred to as 'the N.I.Act') is not maintainable.
2. The facts leading to the instant petition are as follows:
The petitioner Kittur Rani Chennamma Urban Co- Op. Credit Society filed a private complaint before the JMFC, Bailhongal under Section 200 of Cr.P.C. r/w Sections 138 and 142 of N.I.Act. In the complaint, it was averred that the respondent herein (hereinafter :3: referred to as 'the accused') approached the complainant-society in March 2002 for availing loan for the joint family. Accordingly, complainant-society sanctioned a loan of Rs.20,000/- in the name of the father of the accused Sri.Gangadhar and a loan of Rs.20,000/- in the name of his brother Dattatreya on 30.03.2002. Further, the accused approached the bank seeking financial assistance to his other brothers and accordingly, the society sanctioned a loan of Rs.20,000/- in the name of Shridhar Venkatesh Pasalkar and another loan of Rs.28,000/- was granted to another brother Pradeep Gangadhar Pasalkar on 10.03.2004. It is alleged in the complaint that borrowers having failed to pay the amount, the accused issued a cheque in the name of Gangadhar M.Pasalkar on 30.09.2007 for Rs.2,17,000/- drawn on Malaprabha Grameena Bank, Bailhongal Branch, bearing No.449621 dated 30.09.2007. The said cheque when presented for encashment came to be dishonoured for the reason of insufficient funds. The complainant :4: caused a notice to the accused. The said notice was served on the accused on 10.11.2007. The accused having failed to comply with the demand, the complainant sought action under Section 138 of the N.I.Act. The learned Magistrate recorded the sworn statement of one of the officials of the complainant-
society took cognizance of the offence and ordered summons to the accused.
3. The accused challenged the order of cognizance and issuance of process, before the Principal District and Sessions Judge, Belgaum and by the impugned order dated 02.02.2010 in Crl.R.P.No.535/2009, the learned Sessions Judge allowed the revision petition and consequently, set aside the order of cognizance and the summons ordered by the trial Court. Further, the learned Sessions Judge imposed cost of Rs.10,000/- on the respondent/complainant. Feeling aggrieved by the impugned judgment, the complainant has preferred this revision petition under Section 397 of Cr.P.C. :5:
4. Regarding maintainability of the petition, the learned counsel submits that by virtue of Section 397(3) of Cr.P.C., the revision petition is maintainable before this Court, since the earlier revision before the Sessions Judge was preferred by the accused and the same has been allowed dismissing the complaint which amounts to the acquittal of the accused.
5. Sri.N.P.Vivekmehta, learned counsel appearing for the petitioner/complainant submits that the learned Sessions Judge has erred in holding that the complainant is not a 'holder in due course', The tenor of the instrument as well as circumstances in which the said cheque was handed over to the complainant by the father of the accused in settlement of the total outstanding due by the joint family of the accused amounting to Rs.2,17,000/-, which tallies with the exact loan amount due by all the borrowers belonging to the same family would go to show that the said cheque was issued towards repayment of the said outstanding. The complainant therefore becomes an 'holder in due :6: course'. In view of the language of Section 138 of N.I.Act, a complaint is maintainable by the "payee" or 'holder in due course' as the case may be. In the instant case, the demand was made by the complainant based on the dishonoured cheque. The requisite notice was also issued to the accused and all the requirements of Section 138 of N.I.Act were complied and the petition was presented within the period prescribed under Section 138 of N.I.Act. Therefore, the impugned order being contrary to the provisions of the N.I.Act is liable to be set aside by this Court.
6. Sri. Murughendra S.Wantmuri, learned counsel appearing for the respondent however disputes the submission of the learned counsel for the petitioner and submits that the cheque in question was drawn in the name of Gangadhar M.Pasalkar, the father of the accused. It was a crossed cheque. It was not a bearer cheque. It could not have been negotiated by delivery or by indorsement. The cheque does not bear any indorsement in favour of either the complainant or any :7: other person. The complainant has not produced any covering letter or any authorization given by the accused to show that the said cheque was intended to be given to the complainant-society in discharge of the loan. The instrument does not answer the definition of 'holder in due course' as defined under Section 9 of the N.I.Act. On the other hand, Section 35 of the N.I.Act, prescribes that, "In the absence of a contract to the contrary, whoever indorses and delivers a negotiable instrument before maturity, without, in such indorsement, expressly excluding or making conditional his own liability, is bound thereby to every subsequent holder, in case of dishonour by the drawee, acceptor or maker, to compensate such holder for any loss or damage caused to him by such dishonour, provided due notice of dishonour has been given to, or received by, such indorser as hereinafter provided."
7. The learned counsel submits that payee has not joined the lis and the complainant has sought to proceed only against the accused person, which is not permissible. Section 138 of N.I.Act is penal in nature, it should be strictly construed. The complainant having :8: prima facie not established that he is 'holder in due course' and is entitled to present the said cheque for encashment, the learned Sessions Judge was justified in setting aside the cognizance taken by the learned Magistrate.
8. In support of his argument, the learned counsel has placed reliance on the decision of the Hon'ble Supreme Court in the case of National Small Industries Corporation Ltd. Vs. State (NCT of Delhi) and Others reported in AIR 2009 SC 1284 and with reference to paragraph 14 submitted that, the term 'complainant' is not defined under the Code. Section 142 of N.I.Act requires a complaint under Section 138 of that Act, to be made by the payee (or by the holder in due course). It is thus evident that in a complaint relating to dishonour of a cheque (which has not been endorsed by the payee in favour of anyone), it is the payee alone who can be the complainant.
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9. I have bestowed my careful thought to the submissions made by the learned counsel appearing for the parties and perused the complaint as well as reasoning assigned by the learned Sessions Judge.
10. It is not in dispute that the cheque in question was drawn in the name of the father of the accused. It is a crossed cheque. By virtue of Section 138(b), the payee or the 'holder in due course' of the cheque is entitled to present the cheque and to make a demand for the payment of the amount shown in the cheque. In the instant case, indisputably, the complainant is not the payee. Though the learned counsel for the petitioner would contend that the complainant answers the description of 'holder in due course', but having regard to the tenor of the document and the facts and circumstances alleged in the complaint, in my view, the complainant does not answer the description of 'holder in due course'. Section 9 of the N.I.Act defines the term 'Holder in due course' as under:
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"Holder in due course' means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if [payable to order], before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title."
11. From the above provision, it is clear that for a person to be a 'holder in due course' he must get possession of the instrument, if payable to a bearer or he must be 'payee' or 'indorsee' if payable to or to the order of the payee. In the latter case also the delivery of the instrument to the payee or to the indorsee is necessary. In the instant case, the complainant has neither averred in the complaint nor has he produced any material to show that the cheque in question was delivered to him by the drawer or that it was indorsed to him. On the other hand, the instrument namely, the cheque in question on the face of it reveals that it was drawn in the name of his father and it was a crossed cheque. The crossing made in the cheque undoubtedly mandates the bank to make the payment directly to the : 11 : account of the payee and not to others. By crossing the said cheque negotiation of the instrument is restricted. It was not a bearer cheque. There is no averment whatsoever in the complaint that the cheque in question was either handed over to the complainant or received by the complainant in consideration of the amount due or payable by the father and brothers of the accused. Therefore, in my considered opinion, none of the ingredients of Section 9 of the N.I.Act are attracted to the facts of the present case. Complainant is neither a payee nor 'holder in due course'. The learned Sessions Judge therefore, was justified in holding that the complainant not being either a payee or 'holder in due course' is not entitled to proceed against the accused under Section 138 of the N.I.Act.
12. Indisputably, the cheque was drawn in the name of Gangadhar M.Pasalkar. He is not a party to the proceedings. Whether the said cheque was issued by him in consideration of the amount due and payable by the payee is also not specifically pleaded. In the absence : 12 : of Gangadhar M.Pasalkar as party to the proceedings, the Court could not have recorded a finding that the said cheque was issued in discharge of the loan due to the bank as contended by the complainant contrary to the tenor of the instrument.
13. Another patent defect which stares on the face of the record is that the complaint was presented on 28.12.2007. As per the averment in the complaint, the cheque in question is dated 30.09.2007 and it was presented for encashment on 09.10.2007. On the same day, the endorsement of dishonour was issued by the bank. The notice as required under Section 138(b) of N.I.Act was issued on 06.11.2007. It is specifically stated in the complaint that the said notice was served on the accused on 10.11.2007. By virtue of proviso(c), the accused was required to make the payment within 15 days from the receipt of the said notice. Section 142(b) mandates that, complaint shall be made within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138 of : 13 : the N.I.Act. The cause of action as provided under clause (c) of the proviso to Section 138 arose 15 days after the date of service, i.e., on 25.11.2007. If so, the complainant ought to have been presented within 30 days from the said date as mandated in the said proviso. Indisputably, the complaint was presented only on 28.12.2007, three days after the expiry of the prescribed period. Therefore, even on this score, the learned Magistrate could not have taken cognizance. Hence, on both these grounds, the learned Sessions Judge was justified in passing the impugned judgment. I do not find any error or infirmity in the reasoning assigned by the learned Sessions Judge.
14. However, coming to the cost imposed by the Sessions Judge, I find that, having regard to the circumstances of the case, the learned Sessions Judge was not justified in imposing cost. Having regard to the contentions raised by the parties, it cannot be said that the complaint was either false or frivolous. The contentions urged by the petitioner were legally tenable. : 14 : The society appears to have been more concerned with the recovery of loan than in the observance of legal formalities. Therefore, having regard to the above circumstances, in my view, the imposition of cost cannot be sustained. Hence. I proceed to pass the following:
ORDER
i) The criminal revision petition is dismissed.
ii) The impugned order is confirmed. However, the cost of Rs.10,000/- imposed by the learned Sessions Judge is set aside.
Sd/-
JUDGE MBS/-