Bangalore District Court
M/S Kotak Mahindra Bank vs Mr.Svs Sudheer Babu on 31 May, 2022
1 CC 7929 /2016
IN THE COURT OF THE XXVI ADDL.CHIEF
METROPOLITON MAGISTRATE,
BANGALORE CITY
Dated this the 31st day of May 2022
: PRESENT :
Sri.C.S. SHIVANAGOUDRA, B.COM., LLM
XXVI Addl. Chief Metropolitan Magistrate,
Bengaluru.
Case No. : C.C No. 7929 /2016
Complainant : M/s Kotak Mahindra Bank
Limited,
No.60, Gandhi Bazar
Main Road,
Basavangudi,
Bangalore 560 004
represented by its
Authorized Signatory
Mr. Mohammed Shabber
Pasha,
Deputy Manager,
(By Sri.Anees Ahmed Adv.)
2 CC 7929 /2016
Vs.
Accused : Mr.SVS Sudheer Babu,
Aged about 40 years,
S/o. of Mr.Lakshmi Narayana
Solliety,
R /at No.130, 7th Block,
Jayanagar 4th Block,
Bangalore 560 011
(By Sri.M.Devaraja Adv.)
Offence complained of : U/s 138 of N.I.Act.
Plea of the accused : Pleaded not guilty.
Date of Order : 31.05.2022
*********
Here in this case earlier, my Predecessor passed
a judgment on 13.02.2019 and convicted the accused
aggrieved by the said judgment the accused has
prepared an appeal before the Hon'ble LIX Addl.
3 CC 7929 /2016
City Civil and Session Judge, Bengaluru, the said
appeal was allowed and sentence awarded by this
court was set aside and directed this court to decide
the case afresh after giving an opportunity to the
accused to cross examine PW1, and After closure of
complainant side evidence this court is further
directed to examine the accused u/s 313 of Cr.P.C.
and also give an opportunity to the accused to lead
defense evidence. Accordingly this court has also
given sufficient opportunity to the accused to put
forth their grievance in spite of that, accused and
his counsel remained absent before the court and
finally passed the following judgment........
4 CC 7929 /2016
JUDGMENT
This complaint is filed by the Complainant bank against the Accused for the offense punishable u/s 25 of Payment and Settlement System Act of 2007.
2. The brief facts of complainant case is that, the accused had approached the Complainant bank seeking for financial assistance for a sum of Rs. 80 lakhs which was granted to the accused under sanction letter, in pursuant of the said sanction letter the accused had entered into a loan agreement vide No.0423TL0100000067 with the Complainant bank and agreed to abide by the terms and conditions of the agreement, wherein the accused were required to pay the installment without any default. It is further contended that the Complainant bank acting upon the documentary proof and representations made by the accused extended the financial facilities to the accused and 5 CC 7929 /2016 in pursuant of the above loan agreement the accused has initiated electronic fund transfer from the over draft account No.1811580019, Kotak Mahindra Bank, Basavanagudi Branch, Bangalore in the name of the Complainant bank for a sum of Rs.1,62,074/ towards installment of the said loan and agreeing to honour the standing instructions of the Complainant bank as and when the loan installment fell due.
3. It is further contended that as per the due date of installment the Complainant bank gave the standing instructions on 25.01.2016 for a sum of Rs.1,62,074/ in the accused bank for encashment, to the shock and surprise of the Complainant bank, the said initiation of electronic fund transfer could not be executed on the ground of insufficient balance maintained by the accused and to that effect the accused bank has issued an endorsement dated 04.02.2016 6 CC 7929 /2016 insufficient balance. Thereafter the Complainant bank has issued legal notice on 06.02.2016 through RPAD the said notice issued to accused to the address has been served on 09.02.2016 and the same is received on 11.02.2016. Despite, the accused failed to repay the said instalment amount. Hence, the complaint.
4. After filing this complaint, this court took cognizance of the offense and registered the criminal case against the accused and summons was issued to him. In response to summons, he appeared before the court through their counsel and he was enlarged on bail. Thereafter plea was recorded and accused pleaded not guilty and claims to be tried.
5. The Complainant bank represented by its Deputy Manager by name Mohammed Shabeer Pasha has been examined as PW1 and he has produced 7 documents as per 7 CC 7929 /2016 ExP1 to 7. On the other hand in spite of given sufficient opportunities to the accused but he has not adduced his defence evidence.
6. On perusal of entire case file and evidence available on record the following points would arise for my consideration are:
1) Whether the Complainant bank proves that, the accused to discharge of legally recoverable debt or other liability initiated Electronic Fund Transfer from the over draft a/c No. 1811580019 for a sum of Rs.1,62,074/ of Kotak Mahindra Bank, Basavanagudi Branch, Bangalore?
8 CC 7929 /2016
2) Whether the Complainant proves that, the said initiation of Electronic Fund Transfer was not executed on the ground of insufficient funds maintained by the accused and despite of giving legal notice, they failed to pay the cheque amount, thereby he has committed an offense punishable under section 25 of payment and settlement act of 2007 ?
3) What order?
7. Heard on both sides and perused the material available on record.
8. My findings on the above points are as under: 9 CC 7929 /2016
Point No.1 : In the Affirmative, Point No.2 : In the Affirmative, Point No.3 : As per the final order for the following:
REASONS POINTS NO.1 and 2 :
Both points 1 and 2 are taken up together for common discussion to avoid repetition.
9. Admittedly the present complaint filed by the complainant bank u/s 25 of Payment and Settlement Systems Act 2007. The crux of Section 25 of the Payment and Settlement Act 2007 is that when an electronic transfer of funds cannot be executed due to insufficient funds or if the amount to be executed exceeds the credit limit of the payer, then the payer is liable to be either imprisoned for 2 years or fined 10 CC 7929 /2016 an amount which is twice the amount of the electronic funds' transfer or both. The Section provides that an act of dishonouring an electronic transfer of funds is an offence. The Section also provides for acts that are considered an offence:
A) Initiating an electronic fund transfer to pay any amount of money to discharge another person of any debt or liability by paying wholly or in part;
B) Initiating an electronic funds transfer not in accordance with relevant procedural guidelines from the system provider;
C) When a demand is made by the beneficiary for the payment by issuing a notice in writing to the person initiating the electronic funds' transfer within 30 days of the receipt of information by them from the bank concerned regarding the dishonour of the electronic funds' transfer;
and further, when the beneficiary does not receive the payment by the person 11 CC 7929 /2016 initiating the payment within 15 days of the receipt of the said notice.
Subject to complying with the procedures stipulated under the Payment and Settlement Act 2007, a defaulter can be criminally prosecuted in such cases. This Section was introduced to circumvent the dishonour of electronic payment instructions.
10. It is pertinent to note that Section 25(5) attracts the applicability of Chapter XVII of the Negotiable Instruments Act, 1881 to the dishonouring of an electronic funds transfer. Section 138 of the NI Act expressively gives provisions concerning the penalisation of dishonoured cheques. Both these sections make the dishonouring of electronic funds and cheques an offence punishable 12 CC 7929 /2016 with imprisonment, a fine or both. The prime difference between the two is that in the case of the former, the dishonour, which is the subject matter of the offence, is of electronic funds transfer rather than of a cheque.
11. In this regard I would like to relied upon a judgment of Hon'ble Delhi High Court In the case of Ritu Jain v. The State Through Standing Counsel, the court (through standing counsel) stated that by virtue of Section 25(5) of the Payments and Settlement Act, the provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of an electronic funds transfer to the extent the circumstances admit. Therefore, when Section 25 of the Payment and 13 CC 7929 /2016 Settlement Act is invoked, Section 138 of the NI Act is also applicable as the case may be.
12. In the present case the Complainant bank has stated that, the accused has borrowed a sum of Rs.80 lakhs from the Complainant bank, after obtaining the loan amount became defaulter in paying loan installment amount. The Complainant requested the accused to pay the said amount. On repeated request made by the Complainant bank the accused initiated electronic fund transfer from the overdraft account i.e. Ex.P2. The Complainant Deputy Manager by name Mohammed Sahbeer Pasha has been examined as PW1 by way of affidavit which is replica of complaint averments. PW1 has produced the alleged ExP2 ECS Mandate, which was issued by the accused towards loan instalment due amount of Rs1,62,074/. On presentation of the said ECS 14 CC 7929 /2016 mandate it was returned as "Insufficient Funds" as per ExP3 banker memo dated 04.02.2016. Thereafter the Complainant issued legal notice on 06.02.2016 through RPAD, the notice sent through RPAD has been served, it can be seen from ExP4 to 6 notice, postal receipt and postal acknowledgement.
13. On going through the materials available on record, it is the specific case of the Complainant is that, the accused has borrowed financial assistance of Rs.80 lakhs, but after availing the above said loan the accused has utterly failed and neglected to regularize the loan account and failed to remit the loan installments and interest to the Complainant bank. Thereafter on repeated request made by the Complainant, the accused has got issued Ex.P2 ECS , but when the Complainant has presented the above 15 CC 7929 /2016 said ECS, but it was returned with dishonored as "Insufficient Funds".
14. It is true that, once the accused admitted he has issued ECS Mandate, it relates to the accused is proved an initial presumption as contemplated u/s. 139 of Negotiable Instruments Act has to be raised by the court in favor of the Complainant. Sec. 139 of the Negotiable Instrument Act contemplates that it shall be presumed unless contrary is proved that the holder of the ECS received the nature referred to in the Sec.138 of NI act and sec 25 of payment and settlement act for the discharge of the whole or in part any debt or liability. The presumption referred to u/s 138 of Negotiable Instruments Act is mandatory presumption and in general presumption.
15. In a proceeding under section 138 of NI Act,and sec 25 of payment and settlement act, the first and 16 CC 7929 /2016 foremost ingredient is that the alleged ECS must be drawn on account maintained by the accused . Admittedly the alleged ECS belongs to accused. The accused has not at all disputed about initiated Electronic Fund Transfer. Thus, it is clear that the Complainant has complied all the essential ingredients of Section 138 of NI Act to punish the accused for the alleged offense. Since the accused has not disputed the ECS and the signature, the presumption u/s 139 of NI Act has to be drawn as held by the Hon'ble Supreme Court in Rangappa vs. Mohan reported in AIR 2010(11) SCC
441. But the presumption available under the section is rebuttal in nature but the accused failed to rebut the evidence of PW1. Even in spite of given sufficient opportunities to the accused but accused did not make an effort to cross examine the PW1 . Even the accused has not come forward to lead his defence evidence. 17 CC 7929 /2016
16. Herein this case, earlier my predecessor has passed a judgment and convicted the accused for the offence punishable under section 138 of Negotiable Instruments Act and sentenced to pay fine of Rs.1,72,,000/, aggrieved by the said judgment the accused has prepared an appeal before the Hon'ble appellate court, the Hon'ble appellate court has allowed the appeal and set aside the judgment passed by this court and directed this court to decide the case afresh after giving an opportunity to the accused to crossexamine PW1, after closure of Complainant side evidence this court is directed to examine the accused u/s 313 of Cr.P.C. and also given an opportunity to the accused to lead defence evidence if any. The Hon'ble appellate court also 18 CC 7929 /2016 directed to both the parties to appear before this court without expecting the summons or notice from this court, on 06.05.2021.
17. Thereafter the entire case file was received by my predecessor from the Hon'ble Appellate court on 16.04.2021 then issued court notice to both the parties but the the said notice was not served on accused but Complainant regularly present before the court and this court has repeatedly issued court notices inspite of that, the accused remained absent before the court, even till today accused or his counsel are remained absent before the court and proceed with the case. Therefore it is an oldest case in the year 2016 inspite of making all efforts but accused not traced out, finally this court has no 19 CC 7929 /2016 option to proceed with the case, then the case was posted for again arguments, heard the arguments on Complainant side then case was posted for arguments by accused side even after, the accused and his counsel remained absent before the court finally this case was posted for judgment. Therefore though the accused was directed by the Hon'ble appellate court to appear before this court and proceed with the case but unfortunately the accused and his counsel are not present before this court and proceed the case. Therefore that itself shows that accused is not interested to proceed with the case.
18. On going through the materials relied by the Complainant, the Complainant bank has produced Ex.P1 Resolution passed by the complainant bank and 20 CC 7929 /2016 authorized the complainant to file the present complaint and depose before the court on behalf of complainant. Ex.P2 ECS mandate that itself indicates that, the accused has initiated Electronic Fund Transfer from the over draft account No.1811580019 Kotak Mahindra Bank, Basavanagudi Branch, Bangalore, even the accused has not denied the Ex.P2 ECS mandate issued in favour of the complainant bank, even the accused did not come forward to denied the signature appeared on Ex.P2. On going through the Ex.P3 Bank memo that itself shows that, the Ex.P2 could not be executed on the ground of insufficient balance in the account of the accused. Even the complainant bank has also produced loan account extract of accused and got marked as Ex.P7 wherein the accused is due, the amount mentioned in the Ex.P3, on going through these all documents are itself clearly established that, the 21 CC 7929 /2016 accused availed a loan amount of Rs.80 lakhs from the complainant bank, thereafter the Complainant bank has sanctioned the above said loan amount of Rs.80,00,000/ to the accused but the accused has defaulter in payment of the said loan installment amount. In order to disprove the above said documents no materials on accused side, therefore I am of the considerable opinion that, the amount mentioned in the Ex.P3 is legally recoverable debt. Therefore the presumption has to be raised in favour of the complainant as contemplated under section 139 of N.I. Act.
19. On the other hand, though the accused appeared through his counsel, but in spite of given sufficient opportunities to the accused but he has not made cross examination of PW1 and he has not come forward to lead his defence evidence. On going through the entire case file, after completion of chief examination of PW1 the case was 22 CC 7929 /2016 posted for crossexamination, thereafter accused was remained absent before the court. Therefore this court ordered that cross of PW1 taken as nil and statement of the accused under section 313 of Cr.P.C. was dispensed. Even the Hon'ble Appellate Court in Crl Appeal No.782 / 2019 directed the accused to appear before this court without expecting the summons or notice from this court, despite this court has issued court notices but accused was not traced out and accused and his counsel are not appeared before this court hence the accused has failed to avail opportunity given to him for giving his explanation to the incriminating circumstances appearing against him, in the evidence of Complainant. Hence in view of principles of law laid down by Hon'ble Apex Court of India in Indian Bankers Association vs. Union of India reported in 2014 (5) SCC 490 and in a judgment passed by the Hon'ble 23 CC 7929 /2016 High Court of Karnataka in Crl.R.P. No.437/2010 dated 28.06.2012 in the matter of R.V.Kulkarni vs. Dakshina Murthy the recording of accused statement u/s 313 of Cr.P.C. was dispensed with.
20. Thus, it is clear that, the Complainant has complied all the essential ingredients of Section 138 of NI Act to punish the accused for the alleged offense. Since the accused has not disputed the ECS and the signature, the presumption has to be drawn as held by the Hon'ble Supreme Court in the case reported in AIR 2020 Supreme Court 945 in the matter of APS Forex Services Pvt. Ltd. vs. Shakti International Fashion Linkers and others wherein their lordships held that, Negotiable Instruments Act (26 of 1881), S.138, S139 Dishonour of cheque - Legally enforceable debt 24 CC 7929 /2016 or liability - Presumption as to -
Accused admitting issuance of cheque, his signature on cheque and that cheque in question was issued for second time after the earlier cheques were dishonoured
- Once the issuance and signature on cheque is admitted, there is always a presumption in favour of complaint that there exist legally enforceable debt or liability No evidence led by accused to rebut the presumption -
Plea by accused that cheque was given by way of security and same has been misused by complainant, not tenable - Accused liable to be convicted. .
21. So on going through the above judgment of our Hon'ble Supreme Court, when the accused admitted 25 CC 7929 /2016 issuance of ECS mandate and his signature on it, there is always a presumption in favor of Complainant that their exist legally enforceable debt or liability when no evidence lead by accused to rebut the presumption. Even also cleared from the above ratio that, once there is no rebuttal evidence, accept oral defence, presumption cannot be held to be rebutted. In the case on hand, in spite of given sufficient opportunities to the accused but the accused has not adduced either his oral or documentary evidence to rebut case of the Complainant.
22. Therefore the materials placed by the Complainant bank corroborates with each other with respect to the involvement of legally recoverable debt under Ex.P3. So in the absence of disproof of Complainant case, I have no hesitation to believe the case of the Complainant i.e. it has proved their case as per the standard of proof by 26 CC 7929 /2016 producing relevant and cogent evidence. Even the entire materials indicates to the court that, Complainant bank has filed the Complaint in a proper manner i.e. within the stipulated time and further there is no endeavors on behalf of the accused to disprove the case of the Complainant by producing relevant and cogent evidence. Accordingly I am of the considered opinion that the accused is liable to be convicted for the offence punishable under section 25 of payment and settlement systems act 2007 and I answered these points No.1 and 2 in the affirmative. POINT No.3
23. In view of the findings on points No. 1 and 2 to compensate the holder in due course the accused who has issued ECS without having sufficient funds in his account has to be punished suitably. Therefore considering the facts and circumstances, the accused is liable to pay the loan 27 CC 7929 /2016 amount with a reasonable interest thereon as compensation and expenses to Complainant bank. Hence, I proceed to pass the following:
ORDER Acting u/s 255(2) of Cr.P.C., the accused is convicted for the offense punishable u/s 25 of payment and settlement systems act 2007 and sentenced to pay a fine of Rs.2,49,000 / (Rupees Two Lakhs Forty Nine Thousand only).
In default of payment of fine amount he shall under go simple imprisonment for 3 (three ) months.
Further acting u/s 357(1) of Cr.P.C. a sum of Rs.2,44,000 /( Rupees Two Lakhs Forty four Thousand only) is order to be 28 CC 7929 /2016 paid to Complainant as compensation and remaining amount of Rs.5,000/(Rupees Five Thousand only) shall go to the state.
It is made it clear that in view of section 421 of Cr.P.C. the liability of accused to pay the compensation will not be absolved even if he under go default sentence.
The bail bond executed by the accused and surety stand canceled.
Supply free copy of judgment to the accused.
(Typed directly on computer to my dictation by the stenographer in the chamber, corrected and then pronounced by me in the open court on this the 31st day of May 2022) (C.S.Shivanagoudra) XXVIth ACMM, Bangalore.
29 CC 7929 /2016ANNEXURE Witnesses examined for the Complainant:
PW.1 : Mohammed Shabeer Pasha Witness examined for the accused: NIL
List of Documents marked for the Complainant:
Ex. P1 Authorization letter. Ex. P2 Standing Instruction Form. Ex. P3 Bank Endorsement. Ex. P4 Legal Notice. Ex. P5 Postal Receipt. Ex. P6 Postal Acknowledgment. Ex. P7 Loan Account Statement.
List of Documents marked for the accused:
NIL XXVIth ACMM, Bangalore.