Bangalore District Court
M/S. Reddy'S Chits Private vs Mr. Madhu Sudhan .M.J on 4 December, 2021
IN THE COURT OF XXVII ADDL. CHIEF
METROPOLITAN MAGISTRATE, BENGALURU
Present: Sri. T. GOVINDAIAH. B.Com., LLB.,
XXVII A.C.M.M Bengaluru
Dated: This the 4th day of December 2021
C.C. NO.5778/2020
Complainant M/S. REDDY'S CHITS PRIVATE
LIMITED,
Registered office at No.85,
South End Road,
Basavanagudi,
BENGALURU 560004.
Represented by its
Managing Director/Foreman
Sri. Rajeev Reddy. V
Aged about 43 Years
(Rep by Sri. P.P. Jayakumara Adv.)
V/s
Accused MR. MADHU SUDHAN .M.J
S/o. Jayappa
Aged about 28 Years,
No.4064, 3rd Cross,
Vivekananda Nagar,
BENGALURU 563114.
(Rep by Sri. C.S, Adv)
Offence U/s.138 of Negotiable Instruments
Act.
Plea of the Pleaded not guilty
accused
Final Order CONVICTED
Judgment Date 04/12/2021
2 C.C.No.5778/2020
JUDGMENT
The complainant Chit company filed this complaint against the accused for the offence punishable U/s.138 of the Negotiable Instruments Act.
2. Brief facts of the complainant case are as follows:
The complainant company is a reputed Chit Company registered under the companies Act and engaged in the business of promoting and conducting Chits as per the provisions of the Chit Funds Act. The accused subscribed Chit bearing No. 10L4 with Ticket No.05, for Chit value of Rs.10,00,000/- payable at Rs.40,000/- per month for a period of 25 months from the complainant company and the accused became successful bidder in auction held on 15/02/2019 and the accused received a prize money of Rs.6,00,000/- after 3 C.C.No.5778/2020 deducting Bid amount and standard deductions on 20/02/2019. Further, the accused along with his guarantors executed On demand promissory note, Surety Form, Guarantee Bond and other relevant documents infavour of the complainant company for the amount received by him. After receiving prize money, the accused was not regular in payment of Chit installments and he has paid only Rs.3,12,000/- as against Rs.10,00,000/- as per Chit agreement and thereafter he became defaulter. Since, the accused failed to make payment, the complainant was forced to issue legal notice dated:
20/01/2020 to the accused. At that time, the accused personally came to the complainant company and issued cheque bearing No. 002639 dated: 03/01/2020 for Rs.2,50,000/- drawn on ICICI Bank, Bangarapet Branch, Kolar, in favour of the complainant company as a part Chit dues and requested not to file a suit or not to proceed the legal 4 C.C.No.5778/2020 notice dated: 25/11/2019 against the accused. The complainant presented the said cheque for encashment through their banker Punjab and Sind Bank (PSB) Bank, J.C. Road Branch, Bengaluru and the said cheque returned with an endorsement dated: 04/01/2020 for the reason "ACCOUNT CLOSED". The complainant by giving demand notice dated : 20/01/2020 called upon the accused for payment of the cheque amount within 15 days from the date of receipt of notice and the said notice was served on 22/01/2020. But the accused has not paid the cheque amount. Hence this complaint.
3. Sworn Statement of the Authorized Representative of the complainant company recorded as PW1 and got marked 16 documents as per Ex.P.1 to 16 and ordered summons to the accused. The accused appeared through his advocate and he enlarged on bail. Substance of 5 C.C.No.5778/2020 accusation readover to the accused and he pleads the case of the complainant as false. In view of the decision of the Hon'ble Supreme Court of India, reported in (2014) 5 SCC 590 (Indian Bank Association & Ors V/s. Union of India & Ors), sworn statement of the complainant is treated as chief-examination of the complainant. The accused has filed application U/sec. 145(2) of the Negotiable Instruments Act seeking permission for cross- examination of the complainant and allowed the same. The counsel for the accused cross-examined PW1 in fully. Then the case is posted for statement of the accused U/s.313 of Cr.P.C.. Thereafter, the accused regularly remained absent. Since the proceeding U/s.138 of the Negotiable Instruments Act are summary in nature. In view of the decision reported in the Hon'ble Supreme Court of India, in 2014 SCC 599 (Indian Bank Association and 6 C.C.No.5778/2020 Ors Vs. Union of India & Ors.) Statement of the accused U/sec. 313 of Cr.P.C., can be dispensed.
4. Heard the learned counsel for the complainant and perused the evidence and documents produced by complainant.
5. The points that would arise for my consideration are as follows:
(i) Whether the complainant proves that the accused issued Ex.P.3 cheque towards discharge of any debt or liability and the said cheque dishonoured as "Account Closed" in the account of the accused.?
(ii) Whether the complainant proves that after dishonour of cheque, served notice to the accused in compliance of Sec.138(b) of N.I Act?
(iii) What order?
6. My answer to the above points are as follows:-
Point No.1 : In the Affirmative Point No.2: In the Affirmative 7 C.C.No.5778/2020 Point No.3: As per the final order, for the following.
REASONS
7. Point No.1: It is the case of the complainant that, the complainant company is a reputed Chit Company registered under the companies Act and engaged in the business of promoting and conducting Chits as per the provisions of the Chit Funds Act. The accused subscribed Chit bearing No. 10L4 with Ticket No.05, for Chit value of Rs.10,00,000/- payable at Rs.40,000/- per month for a period of 25 months from the complainant company and the accused became successful bidder in auction held on 15/02/2019 and the accused received a prize money of Rs.6,00,000/- after deducting Bid amount and standard deductions on 20/02/2019. Further, 8 C.C.No.5778/2020 the accused along with his guarantors executed On demand promissory note, Surety Form, Guarantee Bond and other relevant documents infavour of the complainant company for the amount received by him. After receiving prize money, the accused was not regular in payment of Chit installments and he has paid only Rs.3,12,000/- as against Rs.10,00,000/- as per Chit agreement and thereafter he became defaulter. Since the accused failed to make payment, the complainant was forced to issue legal notice dated: 25/11/2019 to the accused. At that time, the accused personally came to the complainant company and issued cheque bearing No. 002639 dated: 03/01/2020 for Rs.2,50,000/- drawn on ICICI Bank, Bangarapet Branch, Kolar, in favour of the complainant company as a part Chit dues and requested not to file a suit or not to proceed the legal notice dated:
25/11/2019 against the accused. The complainant 9 C.C.No.5778/2020 presented the said cheque for encashment through their banker Punjab and Sind Bank (PSB) Bank, J.C. Road Branch, Bengaluru and the said cheque returned with an endorsement dated: 04/01/2020 for the reason "ACCOUNT CLOSED".
8. PW1 who is the Authorized representative and Manager of the complainant company in his chief examination affidavit has reiterated the contents of the complaint averments. On behalf of the complainant produced Authorization Letter, Minutes of Meeting of the Board of Directors of the complainant company held on 15/05/2017, Cheque, Bank endorsement dated: 04/01/2020, Office copy of legal notice dated: 20/01/2020 postal receipt, postal acknowledgement, Promissory note, Copy of Account Extract, Chit Agreement, Suety form, Payment voucher, Chit commencement 10 C.C.No.5778/2020 certificate and copy of notice dated: 25/11/2019 as per Ex.P1 to 16.
9. It is pertinent to note that, the accused in the present case has failed to discharge the onus of rebutting the presumption available in favour of the complainant. Because, though the counsel for the accused cross-examined PW1, the accused has not led his defense evidence. Hence, the oral and documentary evidence of the complainant remained as unchallenged. Then the case was posted for recording the accused statement U/sec. 313 of Cr.P.C.,. But, the accused remained absent . When the accused regularly remained absent and this court assumed that there is no chance to secure the accused in this case. Lastly accused statement U/sec. 313 of Cr.P.C., is dispensed.
10. In the course of cross-examination of PW1 on behalf of the accused not denied the 11 C.C.No.5778/2020 issuance of Ex.P3 cheque in favour of the complainant and his signature thereon. Since the accused not disputes his signature on Ex.P3 cheque and issuance of the cheque in favour of the complainant, presumption U/sec. 139 of the Negotiable Instruments Act raises in favour of the complainant that the accused issued the cheque to the complainant towards discharge of debt or liability. The burden shifts on the accused to rebut the said presumption. With this back ground let me appreciate the evidence on record whether the accused is able to rebut the presumption U/sec. 139 of the Negotiable Instruments Act available in favour of the complainant.
11. On behalf of the complainant, in the evidence of PW1, he produced Ex.P1 & 2 Meeting of the Board of Directors of the complainant company held on 15/05/2017 and authorization letter, it is 12 C.C.No.5778/2020 seen from Ex.P1 & 2 documents that in the Board Meeting of the complainant company held on 01/01/2017 resolved to Authorize Mr. Rajeev Reddy, Managing Director to represent the complainant company before the Court of law and he authorized to delegate his powers to other employees of the company. In the course cross-
examination of PW1 on behalf of the accused not disputes the said Ex.P1 and P2 documents and Authority and competency of PW1 to represent the complainant company.
12. It is important to note that, in the evidence of PW1, he reiterated all the averments of complaint. In support of say of PW1, he produced the Certified copies of Board Resolutions which shows that complainant company have authorized the PW1 to adduce evidence in their favour, he produced the cheque as per Ex.P3 the same is 13 C.C.No.5778/2020 belongs to the Bank account of the accused and accused also admits his signature on Ex.P3. Further, the complainant produced the Ex.P3 cheque for encashment, but bank authorities have dishonored the same. In the bank endorsement it is clearly mentioned that "Account Closed" in the Bank account of the accused. Though the accused is well aware that he has know that his bank account is closed, he issued Ex.P3 Cheque in favour of the complainant, only with an intention to cheat the complainant. Therefore, the evidence of PW1 and Ex.P1 to 16 would clearly establish the case of complainant. Therefore, when the accused admits his cheque and his signature thereon, presumption U/sec. 139 of the Negotiable Instruments Act raises infavour of the complainant that, the accused has issued Ex.P3 cheque infavour of the complainant to discharge of the debts. The said presumption is rebuttable in the nature and onus shifts on the 14 C.C.No.5778/2020 accused to rebut the said presumption. On the other hand, the evidence of PW1 and Ex.P1 to 16 are clearly corroborated with each other and clearly establish the case of the complainant. Therefore, the complainant proved his case by producing material evidence.
13. As per Ex.P4 Bank Endorsement the cheque in question dishonoured for the reason "Account closed". It is not the defense of the accused that at the time of presentation of Ex.P3 cheque for realization there were sufficient funds in his account to meet Ex.P3 cheque amount and his bank account is inexistance. More over U/sec. 146 of the Negotiable Instruments Act there is a presumption with regard to the bank endorsement. The complainant by adducing oral coupled with documentary evidence established that the accused subscribed chit from the complainant company and 15 C.C.No.5778/2020 he auctioned the chit and received the prize money and he has issued the cheque in question to the complainant towards discharge of the outstanding Chit amount and the said cheque dishonoured for the reason "Account Closed". The accused has failed to rebut the presumption U/sec. 139 of the Negotiable Instruments Act by raising probable defense. In view of my above discussion, this court answer Point No.1 in the Affirmative.
14. Point No.2 :- It is the case of the complainant that after dishonour of the cheque, issued notice to the accused on 20/01/2020 through RPAD demanding to pay the cheque amount and the said notice served on the accused. The complainant to prove the factum of issuance of notice to the accused through RPAD after dishonor of the cheque produced office copy of notice dated:
20/01/2020 and Ex.P6 Postal receipt. As could be 16 C.C.No.5778/2020 seen from Ex.P7 postal acknowledgement that the postman delivered the intimation to the accused about the notice. Therefore, the notice issued by the complainant after dishonour of the cheque and same was served on accused. Thereby the complainant has complied the mandatory requirement of Sec. 138(b) of the Negotiable Instruments Act. In view of my above discussion, this court answer Point No.2 in the Affirmative.
15. Point No.3 :- In view of my findings on Point No.1 & 2 the complainant proved that the accused issued cheque towards discharge of liability and the said cheque dishonoured for the reason "Account Closed" by the accused and the complainant by issuing demand notice after dishonour of the cheque has complied the mandatory requirement of Sec.138(b) of N.I Act. Therefore, the accused is liable for punishment for 17 C.C.No.5778/2020 the offence punishable U/s.138 of the N.I Act. In cheque bounce cases apart from punishment to the accused, compensation can also be awarded to the complainant with respect to dishonoured cheque. Here is a case, Ex.P3 cheque is dated: 03/07/2020 and the amount covered there under is Rs.2,50,000/-. If the cheque honoured when it was presented for encashment the complainant would have utilized the said amount for its business purpose and would have got substantial profit. But the act of the accused caused loss to the complainant and dragged the complainant to the court and the complainant spent more than one year for redressal. It is under these circumstances, the complainant has to be suitably compensated in the matter. In the result, this court proceed to pass the following:-
18 C.C.No.5778/2020
ORDER The complaint filed by the complainant Chit company against the accused is allowed.
Acting U/s.255(2) of Cr.PC, the accused is convicted for the offence punishable U/s.138 of N.I. Act and sentenced him to pay fine of Rs.2,65,000/-. In default of payment of said fine amount, the accused shall undergo simple imprisonment for a period of Six months.
Out of the said fine amount ordered to pay Rs.2,60,000/- to the complainant as compensation and the remaining amount of Rs.5,000/- shall go to the state. (Dictated to the stenographer on computer and then pronounced in open court by me on this the 4th day of December, 2021) (T. Govindaiah) XXVII A.C.M.M., Bengaluru.
ANNEXURE Witnesses examined on behalf of the complainant:
PW1 : RAJEEV REDDY Documents marked on behalf of the complainant:
Ex.P.1 : Extract of Minutes of Meeting of the Board of Directors of the complainant company held on 15/05/2017 19 C.C.No.5778/2020 Ex.P.2 : Authorization Letter Ex.P.3 : Cheque Ex.P.3(a) : Signature of the accused Ex.P.4 : Bank endorsement Ex.P.5 : Copy of Legal Notice dt:20/01/2020 Ex.P.6 : Postal Receipt Ex.P.7 : Postal Acknowledgment Ex.P.8 : Promissory Note Ex.P.9 : Chit Agreement Ex.P.10 : Agreement of guarantors Ex.P.12 : Cash Voucher Ex.P.13 : Chit Ledger extract Ex.P.14 : Chit commence certificate Ex.P.15 : Chit prior sanction order Ex.P.16 : Copy of notice dt: 25/11/2019 Witnesses examined on behalf of the accused:
-Nil-
Documents marked on behalf of the accused: Nil XXVII A.C.M.M Bengaluru.20 C.C.No.5778/2020
04/12/2021 Comp: Sri. P.P.J Adv., Accd: Sri. C.S Adv., For Judgment.
(Order pronounced in the open court vide separate order) ORDER The complaint filed by the complainant Chit company against the accused is allowed.
Acting U/s.255(2) of Cr.PC, the accused is convicted for the offence punishable U/s.138 of N.I. Act and sentenced him to pay fine of Rs.2,65,000/-. In default of payment of said fine amount, the accused shall undergo simple imprisonment for a period of Six months.
Out of the said fine amount ordered to pay Rs.2,60,000/- to the complainant as compensation and the remaining amount of Rs.5,000/- shall go to the state.
(T.Govindaiah) XXVII A.C.M.M Bengaluru.