Bangalore District Court
Sri.M.Nagaraj vs Sri.L.Saravan on 17 January, 2023
KABC020229172021
IN THE COURT OF THE JUDGE COURT OF SMALL
CAUSES AND A.C.M.M, AT BENGALURU
DATED THIS THE 17th DAY OF JANUARY-2023
PRESENT:
SRI.SOMASHEKARA.A,B.A.,L, L.L.M.
SMALL CAUSES JUDGE & MACT
CC No.7920/2021
Complainant: Sri.M.Nagaraj,
Aged about 52 years,
S/o. Rama Naidu,
R/a No. 49/1, Flat 102,
1st Floor, Sai Meadows Apartment,
1st Main Road, Cauvery Nagara,
Ramamandira Road,
Kathriguppe B.S.K. 3rd Stage,
Bangalore- 560085.
(By Sri.Chenna Krishna - Adv.)
-Vs-
Accused: Sri.L.Saravan,
Prop Sri. Maruthi Traders,
Aged about 44 years,
S/o K.Lingam,
2 CC. No.7920/2021
Judgment
No.17, " Saravana Bhavan",
Rangappa Road,
Chikka Mavahalli,
BBMP Ward No. 143,
Bangalroe- 560004.
(By Sri. Shankare Gowda H.N.-Adv)
JUDGMENT
This case is instituted by the complainant viz., Sri.M.Nagaraj, Under Section 200 of Cr.P.C. stating that complainant and accused good friends and known to each other. The accused approached the complainant in the second week of June 2010 for hand loan of Rs.25,00,000/- to improve his business. Thereafter, by considering the request of the accused, complainant paid Rs.25,00,000/- to the accused on 25.06.2010 by way of cash. On the receipt of the loan amount, the accused handed over the original sale deed and GPA papers in respect of accused properties and also executed on Judge Sign 3 CC. No.7920/2021 Judgment agreement/On demand promissory note assuring that he will pay the loan amount within three years and agreed to pay the interest at the rate of 24% per year and towards discharge of the same he has issued 3 post dated cheques bearing No.838643 dated 14.12.2020, No. 836845 dated 18.12.2020 and No.836846, dated 27.12.2020 for a sum of Rs.10,00,000/- each drawn on Canara Bank, Visweswarapuram Branch, Bangalore. It is alleged that as per the instructions of the accused, he has presented the said cheques through his bank but, the same were returned dishonoured by the bank for the reasons "Account Closed" vide memo dated 13.01.2021. Thereafter, he got issued a demand notice dated 04.02.2021 through his counsel to the accused calling upon him to pay the cheque amount. The said notice has been duly served on the accused on 07.02.2021. Hence, it is alleged that the accused has Judge Sign 4 CC. No.7920/2021 Judgment committed an offence punishable Under Section 138 of N.I.Act.
2. My Predecessor in Office by taking cognizance for the offence punishable U/Sec.138 of N.I. Act, registered the case as PCR. Sworn statement of complainant was recorded. Thereafter, by perusing the averments of complaint, documents, this court has registered the case as CC in register No.3 and issued summons to accused. In pursuance of summons accused appeared through his Advocate and he is on bail. Plea read over accused pleaded not guilty and claimed to be tried.
3. Thereafter, complainant in order to prove his case, she examined herself as PW1 and got marked documents as per ExP1 to P11. Thereafter, statement of accused u/Sec. 313 of Cr.P.C. was recorded. PW1 was Judge Sign 5 CC. No.7920/2021 Judgment cross-examined by the accused, thereafter he has not turned up and not adduced his defense evidence.
4. Heard the arguments and perused the materials on record.
5. The following points are arise for my consideration:
1. Whether the complainant proves that beyond reasonable doubt the accused availed loan of Rs.25,00,000/- and towards discharge of the same the accused has issued Ex.P1 to 3 Cheques and on its presentation, the same was got bounced for the reasons "Account Closed" and inspite of legal notice the accused did not paid the cheque amount and thereby the accused is guilty for the offence punishable under Section U/Sec. 138 of N.I.Act?
2. What order?
6. My findings on the above points are as under:
Point No.1 : In the Negative;
Point No.2 : As per the final order;
for the following:
Judge Sign 6 CC. No.7920/2021 Judgment REASONS
7. Point No.1:- It is the specific case of the complainant is that, on 25.06.2010 the accused had borrowed Rs.25,00,000/- from the complainant for his business and to clear small debts owed by him. On receipt of the said amount the accused had executed on demand promissory note and handed over sale deed and GPA papers to the complainant, at the time of availing the said loan the accused undertaken to repay the same within three years and also agreed to pay interest @ 24% per year and accordingly he had paid interest upto October 2023 and thereafter, he did not paid the loan amount. On demand on 10.06.2019 the accused had issued Ex.P1 to P3 cheques for Rs.10,00,000/- each. On their presentation the same were got bounced for the reason "Account Closed".
Judge Sign 7 CC. No.7920/2021 Judgment
8. To substantiate and establish this fact before the court beyond reasonable doubts as per the verdict of the the Hon'ble Apex Court in the case of Indian Bank Association and others V/s. Union of India and other, the sworn statement of the complainant has been treated as affidavit evidence. In his affidavit evidence PW1 has replicated the averments of complaint. To corroborate the evidence of PW1 he has placed on record in on 11 documents as per Ex.P1 to P11.
9. Ex.P1 to 3 are the cheques in question, as could be seen from the said document, it appears that the complainant has presented the said cheque within the period of limitation from the date of its issuance. Ex.P4 to 6 are the endorsement issued by the bank by intimating that the cheque got dishonoured for the reasons "Account Closed" in the accused account. Ex.P7 Judge Sign 8 CC. No.7920/2021 Judgment is the office copy of the legal notice, issued to the accused in compliance with Section 138 of N.I.Act. Ex.P8 is the postal receipts. Ex.P9 & 10 are postal acknowledgements and Ex.P11 is the copy of the Sale deed.
10. In addition to the oral and documentary evidence the learned counsel for the complainant vehemently argued that the complainant has complied with all the requirements of under Section 138 of N.I.Act and thus he prayed for conviction of the accused.
11. The complainant/PW1 was thoroughly cross examined and tried to elicit that in the year 2010 the complainant was not having financial capacity to lend such huge amount of Rs.25,00,000/-. The PW1 admitted that the accused had paid interest of Rs.50,000/- p.m., for a period of three years. In respect of financial Judge Sign 9 CC. No.7920/2021 Judgment capacity is concerned the complainant/PW1 gave explanation that in the year 2010 he and his family members have sold property for sale consideration of Rs.55,00,000/- out of which an amount of Rs.14,00,000/- had been received by the complainant through cheques from their purchaser. According to the complainant he had paid the said amount to the accused. It is worth to note here that if the complainant was received the said amount through account payee, certainly he would have transferred the said amount to the accused account but no such documents have been placed on record, to show that the complainant neither withdrawn the said amount from his account nor he has paid the same to the accused. Be that as it may, the very advancement of the loan amount was seriously disputed by the accused. In the cross-examination it is elicited that at the time of advancement of the loan amount of Rs.25,00,000/- one Judge Sign 10 CC. No.7920/2021 Judgment Ramachandra and Praveena were present, who are the friends of the complainant. The complainant failed to examine the said persons to prove that they were present at the time of lending the loan amount.
12. The learned counsel for the accused vehemently argued that as per the say of complainant on 25.06.2020 the accused had availed loan of Rs.25,00,000/- from the complainant and executed on demand promissory note and consideration receipt. Admittedly, the complainant has not produced the original document of promissory note. However, copy of the same is placed on record, this Court has taken judicial note of the same. On perusal of the said document, it could be noticed that the accused has availed hand loan of Rs.25,00,000/- from the complainant. The validity of the said document would be for three years. Before Judge Sign 11 CC. No.7920/2021 Judgment expiry of the said promissory note the complainant has not taken any legal action against the accused. Therefore, the claim of the complainant is time barred debt. No doubt, the accused might have been issued Ex.P1 to P3 cheques on 10.06.2019 but as on that day there was no legally recoverable debt from the accused.
13. Article 21 of the Indian Limitation Act, the period of limitation for recovery of loan amount starts from the date on which the amount has been paid. Further, as per Sec.18 of the l Imitation Act, a fresh period of limitation shall be computed if any acknowledgement debt has been executed by the borrower within the period of three years, from the date of borrowal the loan amount. By considering the Sec.18 & 21 of Limitation Act if we peruse the on demand pronote executed by the accused. It makes clear that on Judge Sign 12 CC. No.7920/2021 Judgment 25.06.2010 the accused had availed loan. As per the Sec.21 of the Limitation Act, the period will be three years to recover the loan amount. Admittedly, there was no any acknowledgement endorsed by the accused for revalidation of the period of loan. But no such documents are placed on record to believe that the said loan period was extended from 25.06.2010.
14. Apart from this, it is worth to note that on 10.06.2019 the accused was issued Ex.P1 to P3 cheques, as on the date the accused was not liable to pay any amount as the promissory note executed by the accused was expired on or before 25.06.2013. Therefore, the present claim of the complainant is time barred debt. At this juncture, I would like to rely upon the decision reported in ILR 2007 Karnataka 1708 between Vishnudas V/s Vijaya Mahantesh:
Judge Sign 13 CC. No.7920/2021 Judgment " NI Act 1881 Section U/Sec. 138 of N.I.Act - offence under - Acquittal - Appealed against the issue of cheque without mentioning the date - Admission of PW1 in the cross-examination that there was no debt as on the date of issue of cheque. On facts, held that on the date of handing over the cheque, there was no debt due to be paid by the respondent and wherefore the cheque was not issued towards discharge of any debt. The facts elicited in the cross-examination of PW1 that the cheque was undated on the date of its issue and the same was presented for payment after 6 months from the date of issue The order of acquittal is justified". The ratio laid down in the above said decision is applicable to the facts and circumstances of the case on hand.
Judge Sign 14 CC. No.7920/2021 Judgment
15. Apart from this, in the cross examination of PW1, it is elicited that within three years from the date of execution of promissory note, the complainant has not issued notice calling upon the accused to pay the loan amount.
16. Even, if we consider the date of loan is as 25.06.2010, but the date of the issuance cheques are on 10.06.2019. Admittedly, from 25.06.2010 on wards the payment was not made within three years and as such the debt is clearly time barred by law of limitation and time barred debt cannot be termed as legally enforceable debt. Apart from this, the transaction is of the year 2010 and the notice came to be issued on 04.02.2021 i.e., after 11 years, such long period no steps were taken the recovery of loan amount. It is worth to note the cheques were dated 14.12.2020, 18.12.2020 Judge Sign 15 CC. No.7920/2021 Judgment and 27.12.2020 and on demand promissory dated 25.06.2010 and thus it is clear the cheque in question are not the subject matter of the loan transaction of the year 2010.
17. It appears that Ex.P1 to 3 cheques were taken by the complainant on 25.06.2010, as the said cheques were Non CTS cheques. If the cheques were pertaining to the year 2019 or 2020 certainly it would be CTS cheques. Admittedly, Ex.P1 to 3 are the old cheques. If at all the accused was due to pay any amount, under such of the circumstance the complainant might have been presented the cheques and recovery the loan amount, but he has not done so for the reason best known to him. When the complainant is relying on on demand promissory note then the date of the said document will be taken into consideration from that Judge Sign 16 CC. No.7920/2021 Judgment date the transaction is barred by limitation. The legally enforceable debt doesnot include barred debt and hence to prosecution U/Sec. 138 of N.I.Act is not sustainable in this regard. When it is time barred debt then it cannot be presumed that Ex.P1 to 3 cheques were issued towards discharge of legally enforceable debt.
18. At this juncture, I would like to rely upon the decision rendered by the Hon'ble High Court in the case of The Bidar Urban Co-operative Bank Ltd., V/s. Girish in Crl. Appeal No. 200057/2016, the relevant portion of preposition of law laid is extracted herein below:
" 39. In view of the principles stated in the above referred decision and discussion it is evident that the penal provision of Section 138 of the N.I.Act is applicable only to the cheques which are issued for the discharge in whole or in part, of any debt or other liability, Judge Sign 17 CC. No.7920/2021 Judgment which according to Explanation must be a legally enforceable debt or other liability. A cheque given in discharge of a time barred debt will not constitute an unconditional undertaking or promise in writing either expressly or impliedly so as to attract the criminal offence under section 138 of N.I Act. This was elaborated in SASSERIYIL JOSESPH's case (supra) which is affirmed by the Hon'ble Supreme Court as stated above. A cheque given in discharge of a time barred debt will not constitute a promise in writing not even an implied promise so as to attract a criminal liability under Section 138 of N.I Act. "
19. No doubt, the accused for discharging the burden of proof placed upon him under a statute need not examined himself. He may discharge his burden on the basis of the materials on record. Accused has a Judge Sign 18 CC. No.7920/2021 Judgment constitutional right to maintain silence. Standards of proof on the part of an accused and that of prosecution in a criminal case is different. A statutory presumption has an evidentiary value. The question as to whether the presumption stood rebutted or not, must, therefore, be determined keeping in view the other evidences on record. For the said purpose, stepping in to the witness box by the accused is not imperative.
20. No doubt as per Section 118(a) of the Act, there is a rebuttable presumption and when such instrument is accepted, it shall be presumed that it was accepted for consideration. According to clause (b) of Sec.118, there is a presumption that every negotiable instrument bearing a date was made or drawn on such date.
Judge Sign 19 CC. No.7920/2021 Judgment
21. Reading of both clauses (a) & (b) of Section 118 together makes it clear that as per the presumption under these clauses, the consideration is supposed to have been received on the date of the cheque. If in a given case from the apparent averment or from the evidence of the drawee of the cheque it can be gathered that on the apparent date of the cheque no consideration was paid or in other words if according to the specific case of the drawee or holder in due course of a cheque, loan was taken on a particular day and for the discharge of the same, on a later date the loanee issued the cheque, the presumption U/sec.118(a) stand rebutted. In that event, the drawee of the cheque has to prove as a matter of fact the existence of legally enforceable debt or liability before involving the presumption U/sec. 139 of Act, as, the presumption U/sec. 139 do not extend as to the existence of debt or Judge Sign 20 CC. No.7920/2021 Judgment legally enforceable liability as held by the Hon'ble Supreme Court in Krishna Janardhan Bhat's case referred to supra. In this reported decision, the Hon'ble Supreme Court has held in para - 32 that;
" An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
In para-31, their lordships have observed that;
"The Courts below in our opinion, committed a serious error in proceeding on the basis that for proving the defense the accused is required to step into the witness box and unless he does so, he would not be discharging his burden. Such an approach on the part of the Courts, we feel, is not correct."
22. In the light of the above, if from the very averments made in the complaint or from the specific Judge Sign 21 CC. No.7920/2021 Judgment case of the drawee of the cheque, or from other materials on record, it is clear that no consideration was paid on the purported date of the cheque, it would be proper on the part of the Court to hold that the presumption U/sec.118(a) of the Act has stood rebutted even if the accused has not entered the witness box.
23. In support of his arguments that the existence of legally enforceable debt is not a matter of presumption U/sec.138 of Negotiable Instrument Act. The accused counsel has relayed reported in ILR 2008 KAR 4629 (Shivamurty Vs. Amrutraj) in which it is held that it is only after satisfying that complainant has proved the existence of legally recoverable debt or liability, the court could proceed to draw presumption U/sec. 139 of Negotiable Instrument Act.
Judge Sign 22 CC. No.7920/2021 Judgment
24. The documents produced by the Complainant do not disclose the existence of legally recoverable debt, which is prerequisite condition for prosecuting the case U/Sec.138 of Negotiable Instrument Act. Presumption U/Sec.139 and 118(a) of Negotiable Instrument Act cannot be extended to presume that there exist legally enforceable liability. More so presumptions they themselves are not Evidence. Hence, viewing from any angle the Complainant has filed to establish that he is entitled for interest. It is also trite that mere issuance of cheque without corresponding legally recoverable liability is not an offence. Under these circumstances the imperative conclusion that the accused is not committed an offence as alleged by the Complainant. This will entitles in acquittal of the accused. Therefore, I answer Point No.1 in the Negative.
Judge Sign 23 CC. No.7920/2021 Judgment
25. POINT No.2:- In the result of my findings on point No.1 , I proceed to pass the following:
ORDER The accused is acquitted U/s.255(1) of Cr.P.C for the offence punishable U/s.138 of Negotiable Instrument Act. His bail bond and surety bond shall stand cancelled.
(Dictated to the stenographer on computer, corrected and then pronounced by me in the open court on this the 17th day of January, 2023.) (Somashekara A.) Judge & ACMM, Court of Small Causes, Bengaluru.
ANNEXURE List of Witnesses examined on behalf of complainant:
PW1 Sri.M. Nagaraj
Judge Sign
24 CC. No.7920/2021
Judgment
List of Documents marked on behalf of complainant:
Ex.P1 to 3 Cheques Ex.P1(a) to 3(a) Signature of accused Ex.P4 to 6 Bank endorsement Ex.P7 Notice Ex.P8 2 Postal receipt Ex.P9 & 10 2 Postal acknowledgements Ex.P11 Sale deed List of Witnesses examined on behalf of accused:
NIL List of documents marked on behalf of accused:
NIL Judge & ACMM, Court of Small Causes, Bengaluru.
Judge Sign