Bangalore District Court
M/S. Kotak Mahindra Bank Ltd vs Duragappa D on 15 November, 2024
KABC0B0027832023
IN THE COURT OF THE XVII ADDL. JUDGE, COURT OF
SMALL CAUSES &
ADDL. CHIEF METROPOLITAN MAGISTRATE,
MAYO HALL UNIT, BENGALURU (SCCH-21).
PRESENT: Sri. VIJAYKUMAR S. HIREMATH, LL.B.,
XVII ADDL. JUDGE, Court of Small
Causes & ACJM, Bengaluru.
Dated: This the 15th Day of November-2024
C.C. No.55074/2022
Complainant : M/S. Kotak Mahindra Bank Ltd.,
Having its office at:
No.22, 2nd floor, M G road,
Bangalore 560001.
Represented by its authorized representative
Mr. Lokesh Hedge,
Aged about 30 years.
(By Smt. Poornima. S, Adv.,)
V/s.
Accused : Duragappa. D
Nagalapur, Near Govt. School,
Lingasgur (T), Raichur (D) -584125.
(By Sri. Suresh. M. Charamagol, Adv.,)
Date of institution of the Complaint : 07.07.2022
Nature of the Complaint : U/Sec.138 of N.I. Act
SCCH 21 2 C.C.No.55074/2022
Date of commencement of : 03.10.2023
recording of the evidence
Date on which the Judgment was : 15.11.2024
pronounced
Duration of the Complaint Year/s Month/s Day/s
02 04 08
JUDGMENT
The accused in this case is tried for the offence punishable under Section 138 of Negotiable Instrument Act 1881, on the complaint of the complainant.
2. The brief facts of the complainant's case is that:
The complainant company is a Banking Company incorporated under the Companies Act 1956 and licensed by the Reserve Bank of India under the Banking Regulations Act 1949 and is carrying on the business of Banking and is regulated by the Reserve Bank of India and other relevant acts. It has introduced loans for the benefit of their customers on the application of the respective customers upon executing requisite security documents. Accused have availed the loan from the complainant and entered in to an agreement bearing No.1384155 for an amount of Rs.4,27,466/- towards purchase of MASSEY FERGUSON TRACTORS AND IMPLEMENTS - TAFE 241DIPD, Engine No: S3251D70276, Chasis No.AAAB707748 and was due for Rs.4,20,000/-. Towards the payment of the same accused has issued a cheque for Rs.4,20,000/- bearing No.000002 dated 02-03-2022 drawn on Kotak Mahindra Bank Ltd and assured to maintain sufficient balance in his account.
SCCH 21 3 C.C.No.55074/2022 The complainant presented the said cheque for encashment through its bank, Kotak Mahindra Bank, M G Road branch, Bangalore, but the said cheque came to be dishonoured for the reason "Funds Insufficient'' on 30-04-2022. Thereafter on 24- 05-2022 complainant got issued legal notice to accused through RPAD demanding for repayment of the cheque amount within 15 days from the date of receipt of the notice. The said notice was returned with shara 'Refused' on 01-06-2022. Inspite of service of notice also accused has neither paid the cheque amount nor replied to the notice. Therefore, the complainant has filed this complaint.
3. On filing of the complaint cognizance was taken for the offence punishable under section 138 of N.I. Act and sworn statement was recorded. As there was sufficient ground to proceed further, a criminal case has been registered against the accused and he was summoned. Accused appeared before the court. The substance of accusation is stated to the accused and his plea was recorded. Accused pleaded not guilty and submitted that he has defence to make.
4. In support of the complainant's case, the sworn statement of the complainant filed by its authorized signatory during the pre-summoning stage is considered as evidence of the complainant and Ex.P.1 to Ex.P.6 documents are marked. The statement of the accused is recorded under Section 313 of Cr.P.C and his answers were recorded. On the other hand SCCH 21 4 C.C.No.55074/2022 accused got examined himself as DW.1 and got marked the documents at Ex.D1 to Ex.D16.
5. Heard the arguments on both sides.
6. The points that arise for my consideration are:
1.Whether the complainant proves that accused has committed an offence punishable under Section 138 of N.I. Act 1881?
3. What order?
7. My answer to the above points is as follows:
Point No.1 : In the Affirmative,
Point No.2 : As per final order,
for the following:
REASONS
8. POINT No.1: S. 139 of Negotiable Instrument Act
clearly lays down presumption in favour of the complainant with regard to the issuance of the cheque by the accused towards the discharge of his liability in favour of the complainant.
9. Under the scheme of the act, the onus is upon the accused to rebut the presumptions, which are in favour of the complainant by raising a probable defence.
10. It is also a well settled position of law that once the cheque is proved relating to the account of the accused and if SCCH 21 5 C.C.No.55074/2022 he /she accepts and admits the signature of the said cheque then the initial presumption as contemplated under section 139 of the N.I.Act has to be raised by the court in favour of the complainant.
11. The presumption referred to in section 139 of N.I.Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption. What is required to be establish by the accused in order to rebut the presumption is different from each case under given circumstances. However, the fact remains that a mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. The defence raised by the accused by way of rebuttal evidence, must be probable and capable of being accepted by the court.
12. No doubt the initial mandatory statutory presumption as provided under sections 118 and 139 of N.I.Act are in favour of the complainant. However, they are rebuttable presumptions and the accused is expected to rebut the presumption by raising a probable defence.
13. Such being the legal position, it would be pertinent to refer the defence raised by the accused in order to rebut the presumptions in favour of the complainant. On perusal of the examination-in-chief of the accused, he has raised the following grounds as defence;
SCCH 21 6 C.C.No.55074/2022
(i) debt is time barred.
(ii) Accused has paid entire loan amount, only he has to pay Rs.20,000/- to the complainant bank.
(iii) PW.2 has no authority to depose evidence on behalf of the complainant bank.
(iv) Accused has given disputed cheque to the complainant for security purpose.
14. In the present case, the complainant has examined himself as PW.1 by filing his affidavit evidence in lieu of oral evidence, wherein, he has reiterated the entire averments made in the complaint. In support of his oral evidence, PW.1 has produced the cheque as per Ex.P.1, the bank endorsement as per Ex.P.2, office copy of the Legal notice as per Ex.P.3, Postal receipt as per Ex.P.4, Postal Cover as per Ex.P.5, the authorization letter as per Ex.P.6. On perusal of Ex.P.1 to Ex.P.6, it appears that, the complainant has complied with the mandatory requirements of section 138 of Negotiable Instruments Act. Therefore, the presumptions can be drawn in his favour as contemplated U/s 118 and 138 of the Negotiable Instruments Act.
15. Having gone through the defence raised by the accused, he is not disputing that cheque in question and signature thereon are not belongs to him. It is well settled that, when once the issuance of the cheque and signature is admitted, the presumption as contemplated U/s 139 of N.I.Act has to be raised in favour of the complainant. The course open to SCCH 21 7 C.C.No.55074/2022 the accused is to rebut the said presumption by raising a probable defence. In this context of matter, it is useful to refer the decision of the Hon'ble Apex Court in APS FOREX SERVICES PRIVATE LTD., V/S SHAKTHI INTERNATIONAL FASHION LINKERS AND OTHERS reported in AIR 2020 Supreme Court 945, wherein, it has been observed and held that once the issuance and the signature of the cheque/s is admitted, there is always presumption in favour of complainant that there exists legally enforceable debt or liability.
16. It is also profitable to refer another decision of the Hon'ble Apex Court in P.RASIYA V/S ABDUL NAZEER AND ANOTHER reported in 2022 SCC Online Supreme Court 1131, wherein, it has been observed and held that once the initial burden is discharged by the complainant, that the cheque was issued by the accused and signature of the accused on the cheque is not disputed, then in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for discharge or any debt or other liability.
17. In order to rebut the presumption available to the complainant accused himself stepped into the witness box and examined as DW.1 and got marked 16 documents as Ex.D.1 to Ex.D.16. During examination in chief accused deposed that, he has taken loan of Rs.4,25,000/- from the complainant bank and complainant bank has taken 04 cheques from him for the purpose of security. Thereafter bank officials has taken my tractor. Thereafter panchayath taken place between SCCH 21 8 C.C.No.55074/2022 complainant and accused, accordingly complainant bank sold his tractor as such, he has repaid all the amount to the bank and infact bank officials themselves assured him to return Rs.60,000/- extra amount, but till today they have not repaid and he is only liable to pay Rs.20,000/-.
18. During his cross-examination accused admitted about his signature on cheque, but denied the version of the complainant that, due of Rs.4,20,000/-. Further he also admits that, he ought to have pay Rs.81,220/- to the complainant on each installment dates and also admits that, he has to pay said amount upto 08 installments. Further he also admits that, he has not paid Rs.81,220/- in each installments at a time but he depose that he has paid installment amount bit by bit. In addition to above cross-examination on perusal of documents produced by accused himself shows that, specially Ex.D.14 itself shows that as on 12.10.2015 accused still has to pay Rs.68,338/- and as on 30.09.2017 he has to pay Rs.2,99,719/-. The above documents as well as deposition of accused itself shows that, accused is under liability to pay debt to the complainant. Further accused has not produced any documentary evidence to show that bank officials have sold his tractor and assured him to pay the remaining amount. As such, the contention taken by the accused to that effect is amounts mere assertion without any support.
19. Now the accused raised defence that, the debt is time barred. Learned Counsel for accused argued that, accused has SCCH 21 9 C.C.No.55074/2022 taken loan on 23.02.2012 and last repayment is on 15.02.2016. So, complainant ought to have file this case on or before 14.02.2019. But complainant filed this case on 07.07.2022. So, on this count learned advocate for accused argued that, the complainant has filed the present case after lapse of limitation period. As such, the debt is time-barred. On referring the said defence, the accused is not disputing that it is a debt. But in this case accused has not replied to the notice, even there is a valid service of notice i.e., as per Ex.P.5 accused refused to take the notice. It was the accused who would have raised the defence of time barred debt by replying to the notice.
20. The law relating to a time-barred debt and the revival by virtue of furnishing a cheque by the drawer, is well settled. This is based upon the concept that a promise to pay wholly or in part a debt which cannot be enforced by the creditor being barred by the law of limitation, is a valid agreement, if it is made in writing and signed by the person. This is encapsulated in Section 25(3) of the Indian Contract Act, 1872 ('the ICA') which when read along with Illustration (e), crystallizes the concept clearly. The said provisions are extracted as under:
"25. Agreement without consideration void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law. -- An agreement made without consideration is void, unless--
...
SCCH 21 10 C.C.No.55074/2022 (3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.
...
(e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract."
21. So, the furnishing of a cheque of a time-barred debt effectively resurrects the debt itself by a fresh agreement through the deeming provision under section 25(3) of ICA. The original debt therefore, through section 25(3) of the ICA, becomes legally enforceable to the extent of the amount the cheque has been given. This resonates also with practical considerations. Persons who have chosen to escape liability, can draw a cheque, in order to clear an earlier debt upon persuasion by the creditor. By the act of drawing a cheque, the promisor i.e. the drawer, is effectively stating that he has a liability to pay the drawee. Drawing of the cheque in itself, is acknowledgment of a debt or liability. It is the resurrection or the revival of the prior debt which would trigger the provisions under section 138 of NI Act.
SCCH 21 11 C.C.No.55074/2022
22. In this case, learned counsel for accused relied upon the Judgment of Hon'ble Apex court between K. Hymavathi Vs. The State of Andra Pradesh and Another ( 2023 INSC811) and argued that, the said citation is squarely applicable to the present case. However, in the said decision itself at para No.12 Hon'ble Apex court opine that, 'the claim which was made in the complainant before the trial court based on the cheque which was dishonored cannot be construed as time barred debt and as such it cannot be classified as a debt which was not legally recoverable. Further, Hon'ble Apex court in the case of Yogesh Jain Vs. Somesh Chadha 2022 Livelaw (SC) 879 was on the view that, issuance of cheque itself was the acknowledgment of time barred debt. Further, in another case reported in (2022) 9 SCC 364 held at para No.33 that, Sec.25(3) of the Contract Act is only attracted when there is an express promise to pay a debt i.e., time barred or any part thereof. Therefore, the amount mentioned in the cheque is a legally enforceable debt, which is evident on the face of it, the complaint was also filed within time. Further, in recent Judgment of Hon'ble High court of Karnataka between Sudhakar Reddy vs. Pushpa, in Crl.R.P. No. 256/2022 (DD 12.10.2023) held that, issuance of cheque towards time barred debt creates legally enforceable debt as per Sec. 25(3) of Indian Contract Act. Therefore, the said defence i.e., the debt is time barred debt and the complaint is not maintainable holds no water.
SCCH 21 12 C.C.No.55074/2022
23. In this case accused issued the cheque at Ex.P.1 on 02.03.2022 and admittedly accused failed to prove that he has issued the cheque at the time of availing the loan. It is a common plea in most dishonour cases that the cheque in question was issued as security cheque. In the case of I.C.D.S limited Vs. Beena Shabid and another reported in AIR 2002 SC 3014, the Hon'ble Supreme Court has observed that, even if the dishonored cheque in question was issued as security cheque, it will still come under the ambit of sec. 138 of N. I. Act. The only condition is that, the cheque must be backed by some form of legally enforceable debt or liability towards the holder. Admittedly, in this case accused not denied the loan taken from the complainant bank and also in his chief examination itself he deposed that he is still under obligation to pay Rs.20,000/- to the complainant. In addition to that accused has failed to show before this court that he has paid entire due to the complainant. Hence, accused failed to prove that, amount mentioned in the cheque is not legally recoverable debt as well as complainant has taken the said cheque for security purpose.
24. In this case, learned counsel for accused submitted that PW.2 has no authority to adduce evidence before this court. In support of his argument he relied upon the Ex.P.6. As per Ex.P.6 PW.2 is permitted to adduce evidence upto March 31 st 2024. But in this case PW.2 adduced evidence before this court on 05.04.2024. As such, it goes to show that as on the date of evidence PW.2 has not produced any document to show that he was authorized to depose on behalf of the complainant. Further SCCH 21 13 C.C.No.55074/2022 on perusal of another document i.e., Authorization letter, which was produced before this court at the time of taking cognizance and issuance of process, as per said document one Mr. Naveen B. K, who is authorized to file the complaint. Admittedly, this complaint is also filed by the said Naveen B. K, as such by going through the above document as well as complaint, it clearly shows that, as on the date of filing of the complaint i.e., 07.07.2022 authorized person on behalf of the complainant bank has filed the present complaint. As stated above, learned counsel for complainant raised objection stating that, as on the date of evidence PW.2 is not authorized to depose before this court on behalf of the complainant. Further, in the cross- examination of PW.2 it is elicited that, the witness has no Power of Attorney or written authorization to give evidence in the court. In my opinion this argument has no merit, because anybody can come and given evidence in court provided that he is acquainted with the facts of the case, no Power of attorney or authorization if necessary for any witness to give evidence in the court, but it may be for filing the complaint or signing the complaint, the authority may be necessary, but to give evidence on oath anybody who is acquainted with the facts of the case can give evidence. In this case PW.2 in his chief examination deposed that, he is convergent with the facts of the case and also during the cross-examination he has deposed about the question raised by the accused. Hence, the argument placed by the learned counsel for accused has no merits.
SCCH 21 14 C.C.No.55074/2022
25. On over all perusal of the materials on record, the accused has not disputed the relationship and also the transaction. The accused has failed to raise his defence by replying to the notice. The accused has also failed to prove that the debt was time barred debt. The accused has not disputed with regard to the issuance of cheque and signature thereon. On perusal of the materials on record, the accused has failed to show that he has rebutted the presumption by raising probable defence. In the absence of the sufficient evidence on record by the accused, the benefit of presumption as contemplated U/s 118 and 139 of N.I.Act has to be drawn in favour of the complainant. Accordingly, I answer point No.1 in the "Affirmative".
26. POINT No.2: Section 138 of N.I. Act empowers the Court to sentence the accused upto two years and also to impose fine which may extend to twice the amount of cheque or with both. This cheque in question was issued on 02.03.2022 for Rs.4,20,000/- (Rupees four lakh twenty thousand Only). The complainant was deprived of money that was rightfully due to it for a period of 02 years 04 months. Hence, if the interest is calculated at 7% p.a. on the cheque amount for the above period certainly the complainant is entitled for suitable compensation to the cheque amount as per Sec.80 of N.I. Act. Hence, in this case Rs.4,20,000/- is the cheque amount and interest at 7% for 28 months if calculated will amounts to Rs.68,600/- as the case is pending clearly about 2 years 04 months and as such the total amount including interest will be of Rs.4,88,600/-.
SCCH 21 15 C.C.No.55074/2022
27. However, having regard to the facts of the case and the amount involved, there are no warranting circumstances to award the sentence of imprisonment as substantive sentence. Directing the accused to pay fine and also awarding compensation to the complainant would meet the ends of justice. But adequate default sentence shall have to be imposed to ensure the recovery of fine imposed to the accused. Therefore, the complainant is required to be suitably compensated as per Section 80 and 117 of the Negotiable Instrument Act and also appropriate in default sentence. Accordingly, I pass the following:
ORDER Acting U/Sec.255(1) of Cr.P.C. the accused is found guilty for the offence punishable under Sec.138 of N.I. Act and he is sentenced to pay a fine of Rs.4,88,600/- (Rupees four lakh eighty eight thousand six hundred Only).
In default to pay fine, the accused shall undergo simple imprisonment for a period of six months.
Further, acting U/Sec.357(1)(b) of Cr.P.C., on recovery of entire fine amount, a sum of Rs.4,88,600/- shall be paid as compensation to the complainant.
SCCH 21 16 C.C.No.55074/2022 The office is directed to supply a free copy of judgment to the accused.
(Dictated to the Stenographer directly on computer, same is corrected, signed and then pronounced by me in the open court on this the 15th day of November, 2024) (VIJAYKUMAR S. HIREMATH) XVII ADDL. JUDGE, Court of Small Causes & A.C.M.M, Mayo Hall Unit, Bengaluru.
ANNEXURE List of witnesses examined on behalf of the complainant:
P.W.1 : Sri. Naveen B. K P.W.2 : Sri. Lokesh Hegde
List of documents exhibited on behalf of the complainant:
Ex.P.1 : Cheque Ex.P.2 : Bank Endorsement Ex.P.3 : Office copy of legal notice Ex.P.4 : Postal Receipt Ex.P.5 : Unserved Postal cover Ex.P.6 : Authorization letter
List of witnesses examined on behalf of the defence:
DW.1 : Durgappa List of documents exhibited on behalf of the defence:
Ex.D.1 : Loan Account Form
Ex.D.2 : Loan summary
Ex.D.3 to 13 : Loan receipts
Ex.D.14 : Bank Statement of accused
SCCH 21 17 C.C.No.55074/2022
Ex.D.15 & 16 : Copy of accounts
(VIJAYKUMAR S. HIREMATH)
XVII ADDL. JUDGE,
Court of Small Causes &
A.C.M.M, Mayo Hall Unit, Bengaluru.