Bangalore District Court
Ramalinga Sastry vs K. Nagaraj Patel on 20 February, 2025
1 CC.No.23563/2022
KABC030596012022
IN THE COURT OF XII ADDL. CHIEF JUDICIAL MAGISTRATE,
BENGALURU.
Dated this the 20th day of February, 2025.
:Present:
Smt. PREETH. J., B.A.(L)., LLB.,
XII Addl. Chief Judicial Magistrate,
Bangalore.
CC.No.23563/2022
1. Name of the : Mr. Ramalinga Sastry,
Complainant S/o. P.Seetharamaiah,
Aged about 52 years,
R/at: No.22, 4th Cross,
Papanna Layout,
Maruthinagar,
Yelahanka, Bengaluru-560064.
(By Sri.R.C., Advocate)
2. Name of the Accused Mr.K.Nagaraj Patel.,
S/o. Late.K.Sailoo Patel,
Aged about 37 years,
R/at: Flat No.202, D.J.Apts,
Gayathri Nagar, Suchitra,
Quthbullapur Mandal,
Medchal-Malkajgiri District,
Telangana-500055.
(By Sri.P.M.N.,Advocate)
3. The date of commission of : 28.01.2022
the offence
4. The offence complained of : Under Section 138 of the
2 CC.No.23563/2022
or proves Negotiable Instrument
Act.
5. Plea of the accused and his : Pleaded not guilty.
examination
6. Final Order : Accused is Acquitted
7. Date of such order for the : 20.02.2025
following
JUDGMENT
01. The Complainant has filed the present complaint against the Accused alleging commission of the offence punishable under section 138 of the Negotiable Instrument Act, (Herein, after referred as 'N.I. Act').
02. In brief case of the complainant is as follows:-
The Complainant and one G. Srinivas S/O G. Ramanandha Babu are the family friends and also business partners/investors since several years. The Accused and G. Srinivas are known to each other for several decades and accordingly the Accused approached G. Srinivas seeking hand loan of Rs.20,00,000/- in the month of November 2016 for the purpose of development of his business. Being good friends and well wishers of the accused G. Srinivas paid the said amount in the month of December 2016 and while paying the same G. Srinivas and thew accused entered into an MOU at Hyderabad vide document no. C 347885. As per the said MOU the accused agreed to repay the said amount within 18 months from the 3 CC.No.23563/2022 date of receipt of the same along with interest of 3% per month. But as the accused did not keep up his promise the G. Srinivas approached the accused the demanded for repayment of the above hand loan but the accused intimated G. Srinivas that his business is running under loss and he requires some more money for investment for the betterment and welfare of hos business. But G. Srinivas refused to make the said payment to the accused. The Accused along with wife Aruna again approached G. Srinivas in the month fo December 2020 for further loan of Rs.20,00,000/- and they have assured that they will repay the entire loan amount within one year with interest to G. Srinivas. The wife of the accused Smt. Aruna also assured they if the accused fails got repay she will dispose of the properties standing in her name and repay the loan amount. Accordingly G. Srinivas with a fond hope of repayment by the accused gave additional hand loan of Rs.10,00,000/- by way of cash. While paying the said amount the accused and his wife executed another MOU on 04-02-2021 as per document no.AE446428 at Hyderabad and assured that they will repay the entire loan amount of Rs.30,00,000/- with interest within one year. The accused also issued postdated Cheques to G. Srinivas and assured that the same will be honoured on its presentation. As per the instructions and assurance of the 4 CC.No.23563/2022 accused said G. Srinivas handed over the 1st installment cheque bearing no.000032 dated 28.01.2022 for Rs.10,00,000/- drawn on draw on Bank of Baroda, Quthbullapur Branch(03584), Hydereabad, to the Complainant as there was a mutual commitment between the complainant and G. Srinivas . On his assurance the complainant presented the said cheque for encashment, but the same got dishonoured, as per endorsement dated 02.02.2022 stating "Funds Insufficient". when the same was intimated to the said fact to the accused by approaching him along with G. Srinivas. The accused sought for some time to make necessary arrangement in his account. Taking into considerations his request the complainant once again presented the cheque for encashment on 08.02.2022, but to his surprise the cheque got dihonoured once again with an endorsement dated 09.02.2022 stating "Funds Insufficient". As such, the complainant got issued a Demand Notice to the accused on 02.03.2022. inspite of service of the said notice the accused has neither paid the amount covered under the cheque nor has cause any reply. Hence, the cause of action arose to file the present complaint.
3. On filing of the complaint, cognizance of the offence is taken and recorded the sworn statement of the complainant and marked 09 documents as per Ex.P.1 to Ex.P.09. The 5 CC.No.23563/2022 complainant has complied all the statutory requirements under Sec.138 of N.I.Act. Thereafter, the case is registered against the accused and summons issued.
4. On service of summons, the accused appeared through his counsel and he was enlarged on bail. The substance of accusation was read over and explained to the accused in the language known to him. The accused has pleaded not guilty and claimed to be tried. As per the directions of Hon'ble Supreme Court of India in "Indian Bank Association V/s Union of India & Others reported in (2014) 5 SCC 590 , this court has treated the sworn statement of the complainant as his evidence and in compliance with the direction of Hon'ble Apex Court in the aforementioned ruling, statement of the accused was also recorded under section 313 of Cr.P.C. On application filed by the counsel for the accused under section 145 of NI Act, permission was accorded to cross examine PW1. PW1 is cross examined fully by the counsel for the accused. The Accused examined himself as DW1 and marked 06 documents as Ex.D1 to D6.
05. Heard both the counsels. Both Counsels filed memo along with citation.
06. The counsel for the accused has relied upon the following decisions:-
6 CC.No.23563/2022
1. Milind Shripad Chandurkar V. Khalim Khan and others(2011) 4 Supreme Court Cases275.
2. A.C.Narayanan V. State of Maharastra and another (2014) 11 Supreme Court Cases 790.
3. Rangappa V. Sri.Mohan (2010) 6 SCR 507.
4. Sri.Jeevan Prakash M V. Smt. Lakshmamma, Criminal Revision Petition No.688/2019.
5. Basalingappa V. Mudibasappa (2019) 6 S.C.R.555
6. Sri Dattaraya V. Sharanappa, (2024) 8 S.C.R.121.
07. The following points arise for my consideration:
Point No.1: Whether the Complainant proves that he is the Holder in Due course of the Cheque and Accused has committed the offence punishable under section 138 of N.I Act?
Point No.2: What Order or Sentence?
08. 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:
REASONS
09. POINTS No.1 : It is the definite case of the complainant that the accused availed loan of Rs.30,00,000/- in total from one 7 CC.No.23563/2022 G. Srinivas in the month of December 2016 and on 04-02-2021 respectively. It is the definite case of the complainant that for the repayment of the 1st installment of the said loan the accused issued Ex.P1 cheque to G. Srinivas . It is the definite case of the complainant that as per the instruction of the accused G. Srinivas handed over the said cheque to the complainant as there was a mutual commitment between the Complainant and G. Srinivas. The complainant has examined himself as PW1. The cheque is marked as Ex.P1, Endorsements are marked as Ex.P2 & P3, Demand Notice is marked as Ex.P4, Postal Receipt is marked as Ex.P5, Postal acknowledgment is marked as Ex.P6, Complaint is marked as Ex.P7, MOU are marked as Ex.P8 & P9.
10. PW1 is thoroughly cross examined by the counsel for the accused and the accused has also examined himself as DW1. Through himself Sale deeds is marked as Ex.D1 & D2, Photographs & Fingerprints as per Sec.32 A of Registration Act is marked as Ex.D3, MOU is marked as Ex.D4, Demand Promissory Note is marked as Ex.D5, Account Statement is marked as Ex.D6. In the chief examination of the accused he has deposed that he had issued cheque bearing no.000032 drawn on Bank of Baroda to one Srinivas. He has deposed that he came to know Srinivas through his friends Ramachandra and Bhadri. He has further deposed that he had also appeared 8 CC.No.23563/2022 before the sub-Regsitrar and got the sale deed executed on behalf of Srinivas as he was unable to appear before the Sub-
Registrar at Narsapur, Medak District, as he was working at Pune. He has further deposed that Srinivas approached him for exchange of old currency notes after demonetization in the last week of November 2016 and he agreed to get Rs.10,00,000/- exchanged into new currency notes and also asked him to bear the expenses for the same and also to provide adequate time for returning the said amount. Accordingly, Srinivas handed over Rs.10,00,000/- old currency notes.
11. He has further deposed that in the meantime in the second week of December 2016 Srinivas came to know that there was some legal issues in the joint venture started by D. Satya Sarvan and Srinivas started blaming him as he had shown the said plots to Srinivas. As such Srinivas called him and Ramachandra on 20-12-2016 and in the meeting, Srinivas threatened him either to pay him the money that he has invested in the plots or to get the legal issues resolved. During the said meeting Srinivas also asked him about the currency notes that were give to for exchange. But by then only Rs.6,00,000/- was deposited to the bank but was not able to despot the remaining sum of Rs.4,00,000/-. As such Rs.4,00,000/- old currency notes were returned to Srinivas, 9 CC.No.23563/2022 which he handed over to Ramachandra as hand loan only for the purpose exchange of the said notes and Srinivas also insisted him to enter into an MOU with Ramachandra as if he is the lender, as Srinivas had entered into many agreements with many people in exchange of his old currency notes. As such, a MOU was entered into between them both and Srinivas signed the said document as a witness.
12. He has further deposed that in the month of December 2016 Srinivas insisted him to give security for his investment in the plots and to secure the same Srinivas forced him to sign a MOU stating that he has availed hand loan of Rs.20,00,000/- and also forced him to hand over five cheque leaves. He has deposed that when Srinivas started forcing him to return the exchanged old currency notes, he gave him back Rs.5,00,000/- after deducting the expenses through bank transfer on 20-01- 2018. he has deposed that later the joint venture with D. Satya Sravan got canceled as the legal issues could not be resolved. As such Srinivas started threatening him and his wife to get back his land or money and forced him and his wife to sign one more MOU on 04-02-2021 during corona period and also forced him to given three cheque leaves and also took two cheque leaves of his wife's account also. Accordingly, he issued cheque bearing no.000032, 000033 and 000034 for Rs.10,00,000/- each and 10 CC.No.23563/2022 also two cheque leaves bearing no.000011 and 000012 pertaining to his wife for Rs.15,00,000/- each drawn on Kotak Mahindra Bank.
13. The disputed cheque in the case on hand is bearing no.000032 which is shown at Sl. No. a) of the MOU. He has deposed that he has not taken any hand loan from Srinivas as alleged by the complainant and he also do not owe any money to Srinivas. Finally he has deposed that in order to harass him, Srinivas has given one of his cheque leaves to this complainant and he came to know about the same only after receiving a notice from an Advocate at Bengaluru.
14. Now from the oral evidence of PW1 and DW1 it is crystal clear that the Complainant did not have any transaction with the accused directly or indirectly. Srinivas is the person who had transaction with the Accused. According to the complainant, the accused availed hand loan from Srinivas to the tune of Rs.30,00,000/- and towards the repayment of the first installment amount the accused has issued the disputed cheque to Srinivas and the said cheque is issued to the complainant by Srinivas, as he had some mutual commitment with Srinivas. Except pleading and deposing that he had some mutual commitment with Srinivas, the complainant has not giving any better particulars about his alleged transaction with Srinivas. 11 CC.No.23563/2022 There is nothing on record to show as to what is the transaction better him and Srinivas.
15. There is no document to show as to how Srinivas is owning him Rs.10,00,000/- . Except the oral testimony of PW1, there is nothing on record to either show the transaction of the complainant with Srinivas, nor any evidence to show that the Accused had availed hand loan from Srinivas to the tune of Rs.30,00,000/- as contended by the complainant. No doubt the complainant has produced Ex.P8 and P9 which are the MOUs dated 20.12.2016 and 04.02.2021. Though the accused has admitted to have signed both the MOUs, the contents of the same are denied. In the cross examination of DW1, admittedly he has admitted the suggestion that he has read the contents of MOUs and signed the same, but he has also deposed that he was forced to sign the MOU marked at Ex.P9. DW1 has admitted that he has not lodged any complaint against Srinivas. But only on that ground this court cannot come to the conclusion that the Accused has issued the Cheques under MOUs for the alleged liability mentioned therein. This court has to look into all the attending facts and circumstances of the case coupled with the oral and documentary evidence placed before this court by both the parties.
12 CC.No.23563/2022
16. The complainant is before this court not as Holder of the cheque, but as Holder in due course. Now for the Complainant to become the Holder in Due course, he must first prove his alleged transaction with G. Srivivas. As discussed supra except pleading and deposed in his chief examination affidavit, that the cheque is given to him by Srinivas as he had some mutual commitment with Srinivas, there is nothing on record to show as to what is the said mutual commitment. To become a "holder in due course," one must acquire a negotiable instrument "for value," "in good faith," and "without notice" that it is overdue, dishonored, or subject to any claims or defenses; essentially meaning, they must take the instrument completely unaware of any potential problems with it, while giving something of value in exchange for it. A holder in due course of a cheque must prove that he acquired the cheque in good faith, for consideration, and before it became payable. He must also prove that they didn't know of any defects in the cheque.
17. To prove "holder in due course" status of a cheque, one must demonstrate that he acquired the cheque for valuable consideration, before it became due, and without any knowledge of defects in the title of the previous holder, essentially proving he acted in good faith and had no reason to suspect any issues with the cheque's origin; this is usually done by presenting 13 CC.No.23563/2022 evidence like the date of acquisition, the consideration given, and any documentation related to the transaction. But in the case on hand not even a scrap of paper is before this court to show that, he received Ex.P1 from Srinivas for valuable consideration. Such being the case, if really he had any mutual committment with Srinivas, then Srinivas could have issued the cheque pertaining to his account itself instead of the cheque belonging to the accused.
18. The presumptions available under section 139 and 118 of the NI Act will come to the rescue of the complainant only if he establishes that he is the holder is due course of the cheque in question. Here in the case on hand the complainant cannot be said that he is the Holder in Due course of Ex.P1 cheque, because he has not established that he has received the said cheque for value and in good faith. On the other hand the complainant knew about the dispute between the accused and Srinivas and also with regard to the transaction between the accused and said G.Srinivas. From the oral evidence placed before this court it also goes to show that Ex.P 1 is not received by the complainant in good faith as contemplated under section 9 of the N I Act, which describes "Holder in Due course".
19. As the complainant has failed to establish the primary element i.e., the transaction between him and G. Srinivas, to 14 CC.No.23563/2022 receive the cheque belonging to the accused from G. Srinivas, the other oral evidence of PW1 and DW1 is not discussed in detail, as the same would render futile exercise.
20. The complainant has also failed to prove the alleged transaction between the Accused and G. Srinivas i.e., with regard to availing a sum of Rs.20,00,000/- and again a sum of Rs.10,00,000/- respectively. The complainant has produced the copy of the MOUs which are marked as Ex.P8 and 9. The First MOU is Ex.P8 in which it is narrated that the accused had availed loan of Rs.20,00,000/- from G. Srinivas and towards the repayment of the said amount the accused has issued 5 cheques as shown in the said document. Further the complainant has produced Ex.P9 which is another MOU is dated 04-02-2021. As per the case of the complainant the accused has borrowed further sum of Rs.10,00,000/- from G. Srinivas and in total for repayment of the Rs.30,00,000/- the accused has issued Ex.P1 cheque and other two cheque leaves which is described in Ex.P9 and the first installment cheque is given to the complainant by G.Srinivas as they both had mutual commitments with each other.
21. Now on perusal of Ex.P9 nowhere it is mentioned that the accused has further availed loan of Rs.10,00,000/- from G. Srinivas. On the other hand in the said document it is 15 CC.No.23563/2022 mentioned that the accused has availed loan of Rs.20,00,000/- and agreed to repay a sum of Rs.30,00,000/- in return. As such the theory of availing further Rs.10,00,000/- by the accused from G.Srinivas is not proved. If really the accused has taken the loan as alleged by the complainant then definitely the said would find place in Ex.P9. No doubt the accused has admitted that he has read the document and signed the same. But it has to be borne in mind that the accused in the cross examination has also deposed that he was forced to sign the said document. Now when the complainant has failed to prove Ex.P8 and 9 before this court and when the complainant has not even taken any pains to examine G. Srinivas or any other witness to prove the said document, it can be safely said that the very transnation pleaded by the complainant is not proved by placing cogent and sufficient evidence.
22. From the over all oral and documentary evidence placed before this court, it can be safely concluded that the complainant has failed to prove the case pleaded by him and the defence of the accused appears to be more probable. As such without any further discussion it can be safely said that the Accused is not guilty of the alleged offence under section 138 of N.I Act. Therefore, Point No.1 is answered in the NEGATIVE. 16 CC.No.23563/2022
23. POINT No.2 :- In the light of the reasons on the point No.1, I proceed to pass the following;
ORDER Acting under Sec. 255 (1) of Cr.PC, the accused is acquitted of the offence punishable under Section 138 and Section 142 of NI Act.
The bail bond of the accused shall stand cancelled.
(Dictated to the stenographer directly on computer, corrected and then pronounced by me in open court, on this the 20th day of February, 2025.) (Smt.Preeth. J) XII Addl. CJM, Bengaluru.
ANNEXURES Witnesses examined for the Complainant:
P.W.1 : Ramalinga Sastry Documents exhibited for the Complainant:
Ex.P.01 : Cheque,
Ex.P.02& 3 : Memos of the Banker
Ex.P.04 : O/Copy of Legal Notice,
Ex.P.05 : Postal Receipt
Ex.P.06 : Acknowledgment,
Ex.P.07 : Complaint
Ex.P.08 & 9 : MOU (Confronted)
17 CC.No.23563/2022
Witnesses examined for the defence Accused:
D.W.1 : K.Nagaraj Patel Documents exhibited for the defence Accused:-
Ex.D.01 & 2 : Sale Deed Ex.D.03 : Photo & fingerprint U/s. 32A Registration Act Ex.D.04 : MOU Ex.D.05 : Demand Promissory Note Ex.D.06 : Statement of Account Digitally signed PREETH by PREETH J Date: J 2025.03.03 16:35:57 +0530 (Smt.Preeth. J) XII Addl. CJM, Bengaluru [