Bangalore District Court
Chikkamudavadi Village vs That The Accused Would Always Keep ... on 3 April, 2021
IN THE COURT OF THE XXI ADDL. CHIEF METROPOLITAN
MAGISTRATE, BENGALURU CITY.
DATED THIS THE 3RD DAY OF APRIL 2021
Present: Miss.B.T.ANNAPOORNESHWARI
B.A., L.L.B., L.L.M.
XXIII ASCJ & XXI ACMM.
JUDGMENT
1. Sl. No. of the Case : C.C.No.21503/2013
2. The date of : 14.11.2013
commission of offence
3. Name of the : M/s SVS Granites,
Complainant Chikkamudavadi Village,
Kanakapura Taluk,
Ramanagara district,
Rep: by its Proprietor
Sri.L.Mahadevaiah,
Aged about 58 years.
(By Sri.Shivashankaraiah,
Advocate.)
4. Name of the Accused : Sri. K.S.Palaniswamy
Aged about 62 years,
Proprietor,
Sri.Balaji Agencies,
No.1500, Kuchappa Pete,
Doddaballapura Taluk,
Bangalore Rural Dist.
(By Ravikumar M.C.,
Advocate.)
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5. The offence : u/Sec.138 of Negotiable
complained of or Instruments Act
alleged
6. Plea of the Accused : Pleaded not guilty
7. Final order : Accused is acquitted.
8. Date of such order : 03.04.2021
JUDGMENT
This complaint is filed by the Complainant against the Accused for the offense punishable under section 138 of N.I. Act.
2. The case of the Complainant in brief is that the accused obtained a quarry of ornamental stone, situated Yelkarahalli Village, Gudibande Taluk, Kolar Dist. (Now Chikkaballapur Dist.), on lease from the Department of Mines and Geology, vide QL No.644. In order to obtain the said lease as well as to carry on the quarry business as the accused did not have sufficient financial capacity approached him and sought for financial help for which he agreed and he invested money and also provided working capital to develop and to run the above said quarry business. As a consequence, there was an agreement between them on 19.04.2005 and in addition to it one more continued agreement entered on 17.02.2008.
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3. It is further case of the Complainant that, under the above said agreement, the accused agreed to cede out (partition) 50% of the leased out area i.e., 5 Acres out of 10 Acres of total grant vide quarry lease NO.644 and it was mutually agreed that if he was not ready to take 50% of the leased area then the accused would carry on the quarry business even in respect of his share i.e., 50% of area. In such an event it was agreed by the accused to furnish the annual accounts of the extracted ornamental stones and to pay the due generated amount to the share of the complainant. In order to comply the due payment to the complainant, it was agreed by the accused that the accused would always keep signed cheques/other securities at the disposal of the complainant so as to compensate his claim.
4. It is further case of the complainant that, the accused has made payment of Rs.47,00,000/. However, the said payment has been made by the accused without disclosing the accounts of how much ornamental stone was extracted and sold. The complainant insisted the accused to disclose the accounts for which the accused refused to show the account on the ground that the account has 4 CC No.21503/2013 SCC.H-25 not yet been audited. However, the accused issued three signed cheques, which were blanks and undated. After issuing the said cheques, the accused wanted some time for settling the accounts but the accused failed to settle the accounts. Since the accused did not settle the accounts, the complainant approached the accused and requested to make the payment towards his 50% share towards which the accused asked him to fill a sum of Rs.60,50,000/ to the cheque bearing NO.509925 dated 07.11.2013; to fill a sum of Rs.2,00,00,000/ to the cheque bearing No.509926 dated 21.11.2013; and to fill a sum of Rs.2,00,00,000/ to the cheque bearing NO.509947 dated 21.11.2013, all the cheques were drawn on Karnataka Bank Ltd., Kasturba Road, Bangalore.
5. It is further case of the complainant that, the accused had issued the above said cheques in terms of clause 18 of the agreement dated 19.04.2005 by signing the same and asked to mention the date as stated above and present the cheques at any time after 07.11.2013, as there would be sufficient fund in the account of accused for payment of the cheque amount. The Complainant as per directions of the accused filled up the date and amount and presented the first cheque dated 7.11.2013 bearing 5 CC No.21503/2013 SCC.H-25 No.509925 for a sum of Rs.60,50,000/ (Sixty Lakhs and Fifty Thousand only) on 14.11.2013 in the Karnataka Bank Ltd., Kasturba Road, Bangalore, as the complainant is also holding the account in the same bank. The Bank of the accused has issued an endorsement on the same day i.e., 14.11.2013 to the effect that there is "Insufficient of funds".
6. It is further case of the complainant that, the accused had issued the above said cheques towards the legally recoverable debt to the complainant. The complainant submits that the accused had issued the cheques knowingly that there was no sufficient fund for payment of the amount under the cheques. By issuing the above said cheques the Accused has committed an offense punishable under Section 138 of the Negotiable Instruments Act.
7. It is further case of the complainant that, on receipt information of dishonor of the above said cheques, dated 7.11.2013 got issued a legal notice dated 26.11.2013 to the accused and called upon him to pay the amount due under the cheque dated 7.11.2013 within 15 days from the date of receipt of the said legal notice. The said notice has been acknowledged by the accused on 6 CC No.21503/2013 SCC.H-25 29.11.2013. However, the accused got issued an untenable reply by the reply notice dated 06.12.2013. The accused has admitted issuance of cheques but denied the liability with a view to defraud him. Therefore, the accused has committed an offence punishable under section 138 of N.I. Act.
8. In response to summons issued by this court, the accused being the Proprietor of Sri. Balaji Agencies appeared through his advocate and obtained bail. The copies of prosecution/complaint papers were supplied to the accused as required u/s 207 of the Cr.P.C. The substance of accusation for the alleged offence punishable under section 138 of N.I. Act., is read over and explained to the accused in the language known to him to which he pleaded not guilty and claimed to be tried and submitted that he has got defense.
9. The complainant in order to bring home the guilt of the accused, has examined its Proprietor Mr.L.Mahadevaiah as PW.1 and got marked 15 documents as per Exs.P.1 to P.14 and P.17. He has also examined two more witnesses by name Mr.C.P.Ashoka and MR.Ravishankar as PWs.2 and 3 and not produced any documents 7 CC No.21503/2013 SCC.H-25 on their behalf. Further got examined Bank Managers as PWs.4 to 6 and got marked two documents at Exs.P.15 and P.16.
10. The statement of the accused under section 313 of the Cr.P.C was recorded by explaining incriminatory circumstances appearing against him. The accused has denied the entire evidence of the prosecution/Complainant. The accused - K.S.Palaniswamy (Proprietor of Balaji Agencies) got examined himself as DW.1 and produced 6 documents as per Exs.D.3 to D.8 and got marked Exs.D.1, D.2 and D.9 in the crossexamination of PW.1.
11. Heard arguments of both sides on the merits of the case.
12. Now the points that arise for consideration of this court are:
1. Whether the Complainant proved that, the accused issued cheque bearing No.509925 dated 7.11.2013 for a sum of Rs.60,50,000/drawn on Karnataka Bank Ltd., Kasturaba Road, Bangalore, to discharge the legally recoverable debt or liability?
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2. Whether Complainant proved that, he has complied the mandatory requirements of section 138 of NI Act and therefore the accused has committed the offence punishable under section 138 of N.I Act?
3. What order?
13. On hearing the arguments of both counsel and perusal of oral and documentary evidence on record, this court answers the above points as under;
1) In the negative,
2) In the negative,
3) As per final order, for the following reasons.
REASONS
14. Point Nos.1 and 2: These points are taken up together as they are connected with each other for the sake of convenience and to avoid repetition of facts and circumstances of the case.
15. It is the specific case of the Complainant that, in order to obtain a quarry of ornamental stone on lease as well as to carry on the quarry business the accused took financial help from him and accordingly he invested money by entering into two agreements 9 CC No.21503/2013 SCC.H-25 on 19.4.2005 and 17.2.2008 and thereafter accused only made payment of Rs.47,00,000/ without any accounts and on insistence the accused as per clause 18 of first agreement issued cheques in his favour and the three cheques were issued signed by the accused and asked him to present them and accordingly he presented the cheque in question which got dishonoured and he issued legal notice for which the accused gave evasive reply and the said cheque was issued for legally recoverable debt.
16. The Complainant, in order to prove that the accused has issued the cheque in question for discharge of legally recoverable debt or other liability, has examined the Proprietor as PW.1 and marked 15 documents.
17. In the crossexamination of PW.1 it is brought out that, he did not sign on any documents for obtaining lease, license holder cannot tender, sell, mortgage, create a charge over the land bearing Sy.No:78 of Yerakarahalli village. He admitted that as per the request of accused in the month of April 2005 he had paid 10 lakhs to accused in a staggered separate dates, the accused given three blank cheques, he did not perform the conditions as per agreement 10 CC No.21503/2013 SCC.H-25 dated 19.4.2005, he did not kept any books of accounts for having given daily wages to coolies and it was not mentioned in audit, he sold the stones and rocks excavated from said land from 2005 to 2007, he did not pay royalty as per agreement, in the said agreement there is no mention about payment of money either by himself or accused. The PW.1 admitted that there is no mention of 2005 agreement in the agreement of 2008, in 2008 agreement there is only mention about payment of loan of Rs.10 lakhs and also not mentioned as to how much money the accused has to pay to him, in Ex.P.3 notice he mentioned that he has to get amount in respect of 5 acres, the cheques in question in this case are the blank cheques which were given by accused by signing for the balance amount due for November 2013, the accused filed original suit against him for Rs.70 lakhs, he filed Writ petition in 2005 before Hon'ble High Court for cancellation of renewed license of accused and orders passed as per Ex.D.1, he preferred appeal before Secretary of Geology, prior he gave money as hand loan and later as on 17.2.2008 he was to get Rs.9,70,000/ as profit as per agreement, he gave more than Rs.30 lakhs to accused, on 9.2.2009 he got Rs.1,47,000/ from the account of accused and gave receipt for said amount as per Ex.D.2, similarly he got amount of 11 CC No.21503/2013 SCC.H-25 Rs.3,30,000/ Rs.2,93,000/ Rs.2,00,000/ on 27.6.2008 26.8.2008 1.12.2008 respectively and gave receipts and it is mentioned Ex.D.2 which totally comes to Rs.9,70,000/, he received caveat copy from Gudibande court and to that time on 14.11.2013 differences of opinion arose between himself and accused, remaining two signs appearing in Ex.D.2 are belonged to him, the Exs.P.15 and P.16 are the bank account copies of accused and he does not know why amount was deposited and withdrawn by the accused, except these Exs.P.15 and P.16 he has no other documents to show that said amount paid to him is the profit of business.
18. The complainant got examined one witness namely Sri.C.P.Ashoka as PW.2. He has deposed in his chief examination supporting to the version of the PW.1 and with regard to two agreements. In the crossexamination it is elicited that he has no knowledge about the details of transaction of the accused.
19. The complainant got examined one more witness namely Ravishanker as PW.3, who has also supported the version of the PW.1 with regard to due of amount in respect of share of 12 CC No.21503/2013 SCC.H-25 complainant. In the crossexamination it is elicited that he does not know whether the accounts of complainant is audited or not and as per the say of complainant he knows about the due. The complainant got examined PWs.4 to 6 who are the Bank Managers and their evidence is only with regard to furnishing statement as per Ex.P.15 and P.16 and nonexistence of Bank account of accused in SBI, Sadhashiva Branch, Bengaluru.
20. The accused in support of his defence got examined himself as DW.1 and deposed that he had made an application for grant of quarry license at the allotted place by the Mines and Geology Department and I was granted an area of 10 acres of land in his individual name quarry license deed dated 8.4.2004. As per Rules, he had no right to part with any of the land to any third party and he started his business in the year 200405. In the year 2005 he was in need of money to tide over minor difficulties of payment and since he knew the complainant, he had requested him to lend a loan of Rs.10,00,000/. Though he assured but paid only Rs.9,70,000/ at his convenience in installments. In the year 2008, he insisted that he should provide security for the said loan what he had paid to him and thus obtained the signature on the blank 13 CC No.21503/2013 SCC.H-25 stamp paper at 09 places. By that time he had a current account No:13119 in Karnataka Bank and as per the insistence of the complainant he gave three blank cheques in the year 2008 duly signed having not filled either the date, name or amount. The complainant insisted him to give three blank cheques from the middle of the cheque books notwithstanding the fact that he cleared a substantial amount leaving balance of Rs.3,47,000/ as on the date of giving three cheques, even after request for return of said cheque on 1.1.2019 for having cleared the loan but he misused the said blank cheques. When his business was doing well, the complainant borrowed money which he had paid him as loan amount, the loan which he had taken by cheques is more than Rs.82,21,519/ and also repaid his loan amount of Rs.9,70,000/. When he insisted to repay the amount taken by him, he evaded in the process and manipulated documents on the signed blank stamp papers to suit his convenience and as such, the contents of the said agreement made in the year 2008 are absolutely false and concocted. The original of said document is with the complainant and he deliberately withheld from producing before this court. The complainant in collusion with others have fabricated yet another document as if made during the year 2005 by forging his 14 CC No.21503/2013 SCC.H-25 signature/Ex.P.5. In order to make unlawful gain the complainant filled cheques and filed this case. He has issued reply during the year 2008 an agreement was signed by him but in face there was a typographical error wherein the actual fact is that the signature in the said stamp paper is mine and the said agreement was manipulated and fabricated, hence he does not accept the said contents. Since the complainant has indulged in fabricating false evidence, he has initiated recovery proceedings in O.S.2907/2015 and also filed private complaint in PCR 11771/2014 against the complainant. The complainant has put spokes to restrain the Mines and Geology Department for renewal of his license and in this regard, there has been several proceedings wherein the Hon'ble High Court held that the complainant has no locus standi and as such, he has to legally take the issues as civil proceedings but the complainant has not initiated any proceedings till today as the dispute is civil in nature.
21. In the crossexamination of accused it is elicited that the complaint filed by him came to be dismissed, he did not give any notice and police complaint against complainant prior to September 2013, he filed complaint and civil suit after filing these complaints, 15 CC No.21503/2013 SCC.H-25 himself and complainant are known to each other from 15 years, he admits his 9 signatures on agreement copy dated 17.2.2008, after 1.1.2009 he gave cheques in question to the complainant, he was having business with M/s Lakshmi Stones, he is doing business with complainant SVS Granites and said Lakshmi Stones since 2008, he admits signatures on Ex.P.17, he lodged complaint against complainant in the year 2013 itself for having forged the cheques but not produced any documents in that regard, he paid Rs.47 lakhs to the complainant after 2008 as the complainant helped him and hence paid Rs.82 lakhs to the complainant.
22. Keeping in mind the evidence on record, the ingredients of Section 138 of the Negotiable Instruments Act is to be looked into. Sec.138 of the N.I. Act reads thus;
"Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement 16 CC No.21503/2013 SCC.H-25 made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for [ a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both."
23. Section 139 of the Negotiable Instruments Act which is presumption needs to be drawn in favour of the complainant when he satisfies the ingredients of Section 138 of N.I. Act. Section 139 of N.I. Act reads thus;
"139. Presumption in favour of holder It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."
Therefore, the debt or other liability narrated in the above Sections has to be construed as existence of legally recoverable debt or liability so far as the accused is concerned.
24. As per settled principles of law laid down by the Hon'ble Apex court in Rangappa vs. Sri Mohan and many other cases once the accused admitted issuance of cheque by signing itself is 17 CC No.21503/2013 SCC.H-25 sufficient to draw presumption in favour of the complainant and presumption u/Sec.139 includes there is legally recoverable debt or liability unless it is rebutted as it is rebuttal presumption. In this case the accused admitted issuance of cheque by signing then the presumption is in favour of the complainant as rightly argued by the counsel for the complainant. Whether the said presumption is rebutted by the accused as required under law is to be looked into as it is rebuttable presumption and if the presumption is rebutted by preponderance of probabilities by leading separate evidence or with the materials placed by the complainant itself then the presumption raised in favour of the complainant stands rebutted and the burden of onus shifts again on the complainant as rightly pointed out by the counsel for the accused.
25. Now keeping in view the above principles of law the same needs to be applied to the facts and circumstances of this case and as there is already a presumption in favour of complainant it is to be seen whether the accused is successfully rebutted the said presumption or not. In the present case the entire case of the complainant about issuance of cheques in question revolves around two agreements i.e. Exs.P.5 and P.17 and hence firstly said 18 CC No.21503/2013 SCC.H-25 agreements needs to be appreciated in order to come to the cheques in question which are based on agreements, as there is no dispute with regard to issuance of cheques by singing by the accused. The accused denied the said documents at Exs.P.5 and P.7 and contended that in the year 2005 as he was in need of money he asked loan from complainant and at that time he provided security as per demand of complainant by putting signatures at 9 places on stamp paper and gave three blank cheques duly signed, the contents of agreement at Ex.P.17 is false and concocted, Ex.P.5 is created by forging his signatures. But contrary to this the accused admitted the Ex.P.17 agreement in his reply notice at Ex.P.6 which was the very first document came into effect as defence of the accused, no doubt the accused in his evidence tried to over come the said admission by stating that by mistake he stated like that but only he admits signatures found on Ex.P.17 but not the contents. The said contention of the accused cannot be considered as the Ex.P.6 is the very first document as reply after receipt of notice of complainant as per Ex.P.3 when the differences arose between the parties. Further the accused took defence that as per rules, he had no right to part with any of the land to any third party. As per the Ex.P.6 the accused himself admitted Ex.P.17 document. The accused in his 19 CC No.21503/2013 SCC.H-25 evidence denied the Ex.P.5 agreement. Then how the Ex.P.5 agreement was executed or whether it is a created document needs to be appreciated first.
26. The present cheques in question are mainly based on two agreements Exs.P.5 and P.17, which agreements are denied by the accused. Therefore, at first the said two agreements needs to be appreciated by assessing their evidentiary value and evaluated and if the said documents are proved by the complainant that were legally enforceable agreements, then the cheques in question can be said to have been issued for legally recoverable debt or liability and then the presumptions as required under law will be in favour of complainant.
27. Legally recoverable debt under the said two agreements to be looked into. The first agreement marked at Ex.P.5. I have perused the said agreement it is dated 19..4.2005. At clause 4 of the Ex.P.5 it is mentioned that the complainant handed over fund of Rs.2,00,000/ on 1.6.1994 and initiated a quarry lease application in the name of accused, but to prove the same no documents are produced by the complainant. Further at clause No.5 50% of the 20 CC No.21503/2013 SCC.H-25 applied area of 12 acres I.e. first party's future quarry which will going to be granted by Department of Mines and Geology at Sy.No:78 of Yalakarahalli village, is mentioned. From this it clearly shows that it falls under contingent agreement. It is also mentioned that complainant continued to invest and the accused approximately received a sum of Rs.12,00,000/ at different dates from the complainant for meeting the day today expenses incurred towards proceeding of the quarry lease application and towards other expenses like obtaining no objection certification inspection etc., and also to pay half of the advance royalties, stamp duty and registration of quarry lease. To prove that complainant invested a sum of Rs.12,00,000/ till the accused getting completion of quarry lease process, no document is produced to prove that he invested such huge amount. In the crossexamination the PW.1 clearly admitted that he did not act according to Ex.P.5 agreement. No documents are produced by the complainant to show that he did quarry work in his half portion i.e. 5 acres out of 10 acres as mentioned in Ex.P.5 or whether he paid dead rent of his share to Government. Contents of clause 18 of Ex.P.5 mentioned about sublease and payment of royalty to the complainant. The complainant has not produced the annual books of accounts of said quarry work in order to ascertain 21 CC No.21503/2013 SCC.H-25 how much income the accused got and how much is the share of the complainant. Ex.P.5 is not registered document and also not notarized, even there is no mention as to who drafted the said document and it is not between the accused and company or firm but it is between two business persons clearly violating the provisions of KMMCR Rules. As per the admission of complainant he did not act according to Ex.P.5 agreement. Further no documents are produced to prove the execution of said Ex.P.5 agreement and also to prove the quarry income. From this it is clear that the Ex.P.5 was not at all acted upon by either parties. Further, as already discussed above the accused did admit the Ex.P.17 alongwith its signatures and it is considered that there was an agreement to that effect between the parties therein. What Ex.P.17 agreement contents are to be looked into. Ex.P.17 is dated 17.2.2008 executed between the accused and M/s Lakshmi Stones and complainant. There is no mention about 2005 agreement in the Ex.P.17, all the covenants of said agreements majorly covers first part and second part i.e. the accused and M/s. Lakshmi Stones, wherein it is clearly mentioned that the accused is the quarrying licensee and 10 acres was possessed by the accused and ever since the grant the accused has been in continuous quarrying of the 22 CC No.21503/2013 SCC.H-25 leased property by paying royalty. From this agreement to which the complainant is also a signatory it is clear that the Ex.P.5 agreement was not at all acted upon and hence the Ex.P.5 remained only paper agreement. As per Ex.P.17 the accused and said M/s Lakshmi Stones entered into agreement that M/s Lakshmi Stones to work on B property and excavate the Granite deposit on Royalty Basis for 5 years and at clause 22 of said agreement a due of sum of Rs.9,70,000/ mentioned payable by the accused to the complainant and there is no any kind of agreement between accused and complainant in Ex.P.17. The Ex.D.2 receipt for having paid the said amount of Rs.9,70,000/ is produced by the accused which is dated 17.6.2008 which document is admitted by the complainant and from this it is clear that said due amount shown in Ex.P.17 was repaid by the accused. The Ex.D.3 and D.4 quarrying lease Form E and sketch with leased area alongwith Part II and III liberties and conditions for quarrying license and on their perusal there is only mention of name of accused and nowhere the name of the complainant is mentioned. The complainant did not produce any documents to prove that he assisted the accused in getting completion of quarrying license is not proved. 23 CC No.21503/2013
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28. The very important thing to be noted here is the Ex.D.9/proceedings passed by the Director of Mines and Geology Department, wherein it is clearly mentioned that the accused herein appeared in the said case and submitted that as the complainant therein (i.e. present complainant) obstructed for quarry works and hence he entered into agreement with complainant only with regard to quarry activities but as he came to know that the complainant by misusing his consent obtained signatures at that moment itself he relieved the complainant and he is only carrying and continued the quarry work in the leased out area. From this it is clear that the accused after knowing the Ex.P.5 agreement contents not acted upon the said document. Further in the said proceedings/Ex.D.9 the Director observed that the said agreements were not acted upon as no documents are produced to that effect and further on perusal of documents like Form AP application it is clear that all the applications were filed by the accused herein only while obtaining quarry license. The complainant herein himself sought for taking action against accused in view of two agreements i.e. Exs.P.5 and P.17 as they are violating Section 19(A) of KMMCR 1994 Rules, which application came be dismissed holding that there was no any violation of Section 19(A) of KMMCR 1994 Rules as there was no 24 CC No.21503/2013 SCC.H-25 action on both the above agreements by the parties. If at all there was performance of said agreements then the why the complainant being a party to Ex.P.5 challenged the same under Ex.D.9, which affirms that there was no any execution of said agreement. The complainant himself indirectly admitted that there was violation of Section 19(A) of KMMCR 1994 Rules in view of the Exs.P.5 and P.17 agreements even though he is one of the party to said agreement but the complainant himself seeking relief on the basis of those two agreements before this court stating that the cheques were issued for legally recoverable debt or liability. The complainant has challenged the said order at Ex.D.9 before the Hon'ble High Court of Karnataka in W.P.No:21480/2015 (GMMMS) wherein the Hon'ble High Court dismissed the said petition observing that the petitioner (present complainant) is a party to the alleged illegal contract, he wants the authorities to take action against the respondent No.3, which seems there is a private dispute between the petitioner (present complainant) and respondent No.3 (accused) which may have to be resolved before a Civil Court. But the complainant has not filed any suit before the Civil Court till today. 25 CC No.21503/2013
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29. What Section 19A speaks about needs to be looked into; 19A. (1) Prohibition of Transfer of leases; The lessee shall not,
(a) Assign, sublet, mortgage or in any other manner transfer the quarrying lease or any right, title or interest therein, or
(b) Enter into any agreement, arrangement or understanding with any person whereby lessee is directly or indirectly financed to a substantial extent by such person and quarrying operation and other activities connected therewith are substantially controlled by such person;
Provided that nothing in this rule shall apply to mortgage made by a lessee in favour of the institutions specified in Schedule VI"(I) (a)" or to transfer of lease held by the lessee to the company or firm in which he is one of the Directors or partners, as the case may be."
Provided further that such transfer of lease shall not be made without a written consent of the competent Authority and such consent shall not be given unless: (i)......."
30. From bare perusal of Section 19(A) extracted above alongwith the Exs.P.5 and P.17, it is crystal clear that the Exs.P.5 and P.17 are not lawful but in violation of said provisions of law which are void under Indian Contract also from the inception and become unenforceable and the any amount stating to be due on the 26 CC No.21503/2013 SCC.H-25 said void agreements under cheques in question will not fulfil the ingredients of Section 138 of Negotiable Instruments Act and presumption cannot lies in favour of the complainant as it is rebutted by the accused from the documents that the said agreements are void contracts.
31. Further, the Exs.P.7 to P.9 are the documents of certificate of registration, certificate, certificate of importerexporter code, VAT certificate pertaining to the complainant Granite business and they are not much helpful to the present case of the complaint much less to prove that the complainant is doing Granite business. Ex.P.10 to P.12 are the RTA information sought by the complainant by application dated 25.10.2013 about the quarry transporting limit and royalty per month with regard to quarry lease obtained by the accused and accordingly information from December 2007 to April 2014 is furnished and these documents also not much helpful to the present case of the complainant. Ex.P.13 is the statement of account pertaining to the Bank account of complainant, which shows transaction between the accused and complainant and Exs.P.15, P.16 are the statement of account pertaining to the Bank account of accused which shows transaction between the accused and M/s 27 CC No.21503/2013 SCC.H-25 Lakshmi Stones. From these Exs.P.13, P.15 and P.16 is can be said that there was money transaction between the accused, complainant and the M/s Lakshmi stones whether it was on the basis of Exs.P.5 and P.17 if considered also, they are not helpful to the complainant as discussed above the Exs.P.5 and P.17 are the void agreements and hence there was no any legally recoverable debt or liability under said agreements which caused to issue of cheques in question. Ex.P.14 is the balance written in white sheets sealed and signed by complainant but they are any ledger extracts or books of accounts having maintained during the regular course of business transaction but on the face of said document it clearly appears that it is self sworn balance table produced by the complainant which has no evidentiary value under eye of law. The accused is able to prove that the said agreements are opposed to law as hit under Section 23 of Indian Contract Act and opposed to KMMCR Rules. On considering the transactions as shown in statement of Bank accounts and the indirect admission of accused about Ex.P.17 and also findings given by the Director in Ex.D.9 proceedings about Ex.P.5, it is clear that the conduct of the parties and materials on record manifests that the entire transaction was designed. The accused has produced Exs.D.5 to D.8 which are the certified copies of ordersheet with complaint in 28 CC No.21503/2013 SCC.H-25 PCR No.11771/14 and plaint, written statement in O.S.No:29078/15 but as per the admitted facts they are filed after lodging this complaint and there is no evidence placed by the accused why they are filed after filing of this complaint and what prevented him to file them prior to this complaint when the alleged differences arose between himself and complainant in the year 2013 itself, itself shows that they are only filed as shield to this present complaint but no any strong defence can be considered on the said documents because they are filed after this complaint. The complainant also did not seek any counter claim in the said case and not asserted any reasons for it therein. Therefore, perusal of the evidence and facts and circumstances of the case it is clear that the none of parties is a victim of exploitation. The parties voluntarily and willingly joined hands to flout the law. The maxim in parti delicto portior est conditio possidentis is a settled principle of law. It lays down that the courts will refuse to enforce an illegal agreement at the instance of a person who is himself a party to an illegality or fraud, no court can come to the aid of the party in an illegal transaction. In such cases the loss must be allowed to lie where it falls. The principle of part delicto applies with full force in the instant case. Thereby there did not exist any legally enforceable debt or liability for the discharge of which it 29 CC No.21503/2013 SCC.H-25 could be said that the cheque in question was issued. The explanation to Section 138 of the Act clearly provides that a debt or other liability referred to in section means a legally enforceable debt or other liability. Consequently, Section 138 of the said Act would not be attracted.
32. The Section 23 of the Indian Contract Act which reads as under;
"23. What consideration and objects are lawful and what no The consideration or object of any agreement is lawful, unless it is forbidden bylaw; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regard it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void."
33. Therefore, the Exs.P.5 and P.17 cannot be considered as enforceable as they are void and hit by Section 23 of Indian Contract Act. It is clear that in order to attract Section 138 of the NI Act, the ingredients of Section 138 have to be established by the complainant 30 CC No.21503/2013 SCC.H-25 by pleading in the complaint and leading evidence with regard to the existence of any legally recoverable debt or liability on the part of the accused. If a single doubt raised with regard to the nonexistence of legally recoverable debt upon reading of complaint and appreciation of evidence the complaint does not stand. At present case the complaint and evidence lead by the complainant clearly shows that he based his claim of debt under Ex.P.1/cheque on the Exs.P.5 and P.17 which are unlawful and void agreements as they are opposed to Section 19(A) of KCMMR Rules as discussed above. The case of the complaint is that towards payment of dues as per Ex.P.5 agreement the cheques in question are issued which on presentation dishonured for "funds insufficient" and complaint is lodged. There is no any clear averments in complaint that the accused took the loan and in turn issued the cheques in question. Therefore, it is clear that the complainant himself has entered into a void agreement with the accused and now basing on said agreements filed this complaint for recovery of cheque amount. As per Section 23 of the Indian Contract Act the said agreements are void as they are opposed to provisions of law of Section 19(A) of KMMCR Rules 1994, claiming due on the said agreement also become unlawful and cannot be called as legally recoverable debt or liability.
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34. The counsel for the complainant has relied upon the following rulings reported in; (1) Cr.A.No:123/2021 in the case of "M/s. Kalamani Tex & Anr. Vs. P.Balasumbramanian", (2010) 11 S.C.C. 441 Rangappa Vs. Sri.Mohan, (3) AIR 2020 S.C. 945 APS Forex Services Pvt. Ltd. V. Shakti International Fashion Linkers and Ors." (4) 2020(2) AKR 424 Saptagiri Traders, Bangalore V. D.Venkatesh, (5) 2020(1) KCCR 606 Revanappa Vs. Narasingha Naik, (6) AIR 1986 S.C. 1194 in the case of Nanakram V. Kundalrai, M/s. Kakubhai and Co V. Nathmal. The aforesaid five decisions relied upon for drawing presumption in favour of complainant and presumption in favour of complainant that there exist legally enforceable debt or liability. These decisions are applicable in favour of the complainant if the accused did not lead any evidence of rebuttal or failed to rebut the presumption. With due respect to the said decisions the facts and circumstances are different in the present case. The present case is based on agreements entered contrary to Sec.19 of KMMCR rules, as discussed above the agreements are unenforceable and void and hence there is no legally recoverable debt or liability. With due respect to the ruling relied upon at serial number 6, I am of the view that the facts and 32 CC No.21503/2013 SCC.H-25 circumstances of the said case and present case are different and hence it is also not helpful to the case of the complainant.
35. The counsel for the accused relied upon the following rulings in support of his arguments, they are; (1) Crl.P.No:1387/2011 in the case of "R.Parimala Bai Vs. Bhaskar Narasimhaiah", which is aptly applicable to the present case as the agreements based on which cheques alleged to have been issued are not comes within the purview of legally recoverable debt or liability as they are hit by SEction 23 of Contract Act. (2) AIR 2019 S.C. 1983 Basalingappa V. Mudibasappa, wherein Hon'ble Supreme Court thrown light upon how the probable defence can be raised, what is standard of proof, discharge of burden of proof, that the presumption mandated by Section 139 of the Act is an example of a reverse onus clause ...., which is also aptly applicable to the present case as the complaint fails in absence of legally recoverable debt or liability and presumption is very well rebutted by the accused. (3) 2007 Crl.L.J. 2262 Virender Singh V. Laxmi Narain and another" is also aptly applicable, as in the present case also agreements relied upon by the complainant are void as enumerated in Section 23 of Contract Act. (4) (2006) 5 SCC 39 M.S.Narayana Menon @ Mani Vs. State of Kerala 33 CC No.21503/2013 SCC.H-25 and Another, (5) AIR 2018 S.C. 536`1 Reena Hazarika Vs. State of Assam", (6) (2002) 2 SCC 642 A.V. Murthy Vs. B.S.Nagabasavanna, (7) AIR 1974 SC 1892 Kuju Collieries Ltd Vs. Jharkhand Mines Ltd. And Others", (8) (1999) 3 SCC 35 Bharat Barrel & Drum Manufacturing Company Vs. Amin Chand Payrelal", (9) AIR 1971 S.C. 1865 Sait Tarajee Khimchand and Others V. Yelamarti Satyam and Others.". These citations are applicable to the present case on hand. The counsel for the accused has also relied upon the other decisions; (10) AIR 1986 S.C. 1099 M/s. Sodhi Transport Co. And another, etc. Vs. State of U.P. and another etc.", (11) AIR 2000 S.C. 1203 Subhra Mukherjee and Anr. Vs. Bharat Coking Coal Ltd. And Others", with due respect to these two decisions I am of the view that the facts and circumstances of the said cases and this case are different. The accused has rebutted the presumptions available to the complainant by proving that the agreements on which the complainant based his claim on cheques in question are unlawful and opposed to law and hence there exists no legally recoverable debt or liability.
36. The counsel for the accused vehemently argued that the complainant has created the Exs.P.5 and P.17 false agreements by 34 CC No.21503/2013 SCC.H-25 forging them and the complainant committed offence against public justice by producing the said documents in evidence and prayed to take action. As discussed above the accused has not completed disproved the said agreements to be false and forged as the accused himself admitted Ex.P.17 in his reply notice at Ex.P.6 and the Ex.D.9 proceedings also show that the accused had knowledge about Ex.P.5 document which was against his consent and hence not continued with the said document. Therefore, there are no sufficient materials placed by the accused to prove that the said Exs.P.5 and P.17 falls under Section 195 and 340 Cr.P.C. in order to attract action against the complainant and hence said prayer of the accused is not considered. Therefore, the complainant has failed to prove that the cheque in question marked at Ex.P.1 was issued towards discharge of legally debt or liability and hence there is no compliance of provision u/Sec.138 and accordingly, these points are answered in the negative.
37. Point No.3: For the reasons and discussions made above and findings given to above point Nos.1 to 2, this court is of the opinion that the 35 CC No.21503/2013 SCC.H-25 Accused is to be acquitted for the offence punishable under section 138 of NI Act. Accordingly I proceed to pass the following:
ORDER By exercising the powers conferred u/Sec.
255(1) of Cr.P.C the accused is hereby acquitted of the offence punishable under section 138 of Negotiable Instruments Act.
The bail bonds of the accused and surety shall be in force till the appeal period is over.
(Typed by me directly on the laptop, computerized by the Stenographer, then corrected, signed and then pronounced in open court on this the 3rd day of April 2021) (Miss. B.T.ANNAPOORNESHWARI) XXI Addl.C.M.M & XXIII ASCJ, Bangalore.
ANNEXURE Witnesses examined on behalf of the Complainant:
PW.1 : Mr.L.Mahadevaiah
PW.2 : Mr.C.P.Ashoka
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PW.3 : Mr.Ravishankar
PW.4 : Sri.Jayram
PW.5 : Sri.Subramanya Bhat
PW.6 : Smt.Sandhya
Witnesses examined on behalf of the Accused:
DW.1 : Mr.K.S.Palaniswamy Documents marked on behalf of the Complainant:
Ex.P.1 : Cheque
Ex.P.1(a) : Signature
Ex.P.2 : Endorsement dated 21.11.2013
Ex.P.3 : Legal notice dated 26.11.2013
Ex.P.4 : Acknowledgement
Ex.P.5 : Copy of agreement dated 19.04.2005
Ex.P.6 : Copy of reply notice dated 06.12.2013
Ex.P.7 : Copy of Certificate of Registration
Ex.P.8 : Copy of the Certificate
Ex.P.9 : Copy of Value added Tax Registration
Ex.P.10 : Letter dated 21.11.2013 with royalty
payment details
Ex.P.11 : Letter dated 22.11.2013 with royalty
payment details
Ex.P.12 : Letter dated 12.02.2014 with royalty
payment details
Ex.P.13 : Bank A/c statement of Complainant
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SCC.H-25
Ex.P.14 : Amount balance table as per agreement
Exs.P.15
& P.16 : Bank statements of Karnataka Bank and State
Bank of India
Ex.P.17 : Certified copy of Agreement dated 17.02.2008
Documents marked on behalf of the Accused:
Ex.D.1 : Certified copy of order in W.P.No.21480/2013
Ex.D.2 : Receipt dated 27.06.2008
Exs.D.2(A)
to(C) : Signatures
Ex.D.3 : 1 Quarry lease/licence
Ex.D.4 : Licence sketch and related conditions
Ex.D.5 : Certified copy of ordersheet in PCR
No.11771/2014
Ex.D.6 : C.C. of Complaint under section 200 of Cr.P.C
Ex.D.7 : C.C. of plaint in OS No.2907/2015
Ex.D.8 : C.C. of Written statement in OS No.2907/2015
Ex.D.9 : Proceedings before Director of Mines and Geology
(Miss. B.T.ANNAPOORNESHWARI)
XXI Addl.C.M.M & XXIII
ASCJ, Bangalore.
38 CC No.21503/2013
SCC.H-25
03.04.2021
JUDGMENT PRONOUNCED IN OPEN COURT VIDE SEPARATE ORDER ORDER By exercising the powers conferred u/Sec.
255(1) of Cr.P.C the accused is hereby acquitted of the offence punishable under section 138 of Negotiable Instruments Act.
The bail bonds of the accused and surety shall be in force till the appeal period is over.
XXI A.C.M.M. & XXIII ASCJ Bangalore