Bangalore District Court
Tata Motors Finance Ltd vs Muttappa Mudanur on 1 April, 2019
IN THE COURT OF THE XVII ADDL. JUDGE, COURT OF
SMALL CAUSES &
ADDL. CHIEF METROPOLITAN MAGISTRATE,
MAYO HALL UNIT, BENGALURU (SCCH-21).
Dated: This the 1st Day of April 2019
PRESENT: Smt.VANI A. SHETTY, BA.Law, LL.B,
XVII ADDL. JUDGE, Court of Small
Causes & ACMM, Bengaluru.
C.C. No.50845/2018
Complainant/s : TATA Motors Finance Ltd.,
No.45, Prestige Libra, 3rd floor,
Lalbagh Road, Bengaluru-560027
Landmark: Above Regional Passport office
Rept: By its State Collection Manager
Mr. Raghavendra M.C.,
Mob No.9036002574
(By S.A. Associates)
V/s.
Accused/s : Muttappa Mudanur,
Father's name not known,
Age major,
Menasagi Tq. RON, Dist. Gadag,
Near Anjaneya Temple,
Menasagi, Gadag,
KA-582 201.
((By Sri/Smt. S.A., Advocate)
JUDGEMENT
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.
SCCH-21 2 C.C. No.: 50845/182. The summary of the complainant's case is that:
The accused took vehicle loan from the complainant and towards discharge of sum of Rs.6,05,809/-, issued a cheque in favour of the complainant bearing No.507757 dated 14.07.2017 for Rs.6,05,809/- drawn on ICICI Bank Ltd., Guledgudd branch, Badami, assuring that the cheque would be honoured if presented for payment. The complainant presented the said cheque for encashment through its banker HDFC bank, Richmond Road branch, Bengaluru, on 24.07.2017. But the said cheque came to be dishonoured on the ground of 'Funds Insufficient' on 25.07.2017. Thereafter, on 31.07.2017 complainant got issued legal notice through RPAD demanding for repayment of the cheque amount within 15 days from the date of receipt of the notice. The notice sent through RPAD was returned back on 17.08.2017. The accused has not paid the amount and therefore, this complaint filed on 11.09.2017.
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. The substance of accusation is orally 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, GPA holder of the complainant got examined himself as P.W1 and got marked 8 documents as Ex.P1 to Ex.P8. The statement of the accused is recorded under Section 313 of Cr.P.C and his SCCH-21 3 C.C. No.: 50845/18 answers were recorded. The accused got examined himself as DW.1.
5. Heard the arguments.
6. The points that arise for my consideration are:
1. Whether the complainant proved that accused has committed an offence punishable under Section 138 of N.I. Act 1881?
2. 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: In order to constitute an offence
under Section 138 of N.I. Act, the cheque shall be presented to the bank within a period of 3 months from its date. On its dishonor, the drawer or holder of the cheque as the case may be shall cause demand notice within 30 days from the date of dishonor, demanding to repay within 15 days from the date of service of the notice. If the drawer of the cheque fails to repay the amount mentioned in the cheque within 15 days from the date of service of notice, cause of action arises for filing complaint.
9. The GPA holder of the complainant filed affidavit in lieu of his oral chief examination. In the affidavit, the he has testified regarding lending of vehicle loan, issuance of SCCH-21 4 C.C. No.: 50845/18 cheque, issuance of demand notice and also failure of the accused to pay the cheque amount. The complainant has produced cheque bearing No.507757 dated 14.07.2017 for Rs.6,05,809/- drawn on ICICI Bank Ltd., Guledgudd branch, Badami, alleged to be issued by the accused. Ex.P1 stands in the name of complainant for Rs.6,05,809/-. Ex.P2 is the endorsement issued by the bank stating dishonor of Ex.P1 cheque. Ex.P2 shows that Ex.P1 was dishonoured for 'Funds Insufficient'. Ex.P3 is the office copy of legal notice dated 31.07.2017. Ex.P4 is the postal receipt for having sent legal notice to the accused and Ex.P5 is the returned postal cover.
10. In the present case, cheque is dated 14.07.2017. Ex.P2 shows that the cheque was presented on 24.07.2017 i.e., within three months from the date of cheque. Ex.P2 further shows that cheque in question was dishonoured on 25.07.2017. The notice was issued within the statutory period of time. The notice sent was returned back on 17.08.2017 as per Ex.P5 postal cover. The accused has denied the receipt of legal notice sent by the complainant. But, in the cross examination made to the accused by the complainant, the accused has admitted that the address mentioned in the notice is his address. Therefore, it is clear that notice was sent to the correct address of the accused. When a notice is sent to the correct address of the accused duly stamped, there is a presumption under section 27 of General Clauses Act that notice has deemed to be effected to the addressee unless and until the contrary is proved. In view of above, the service of demand notice deemed to have effected to the accused. Therefore, the contention of the SCCH-21 5 C.C. No.: 50845/18 accused in this regard cannot be accepted. The cause of action for filing the complaint arose on 02.09.2017. The complainant has filed this complaint on 11.09.2017 i.e. within 30 days from the date of arisal of cause of action. In this way the complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act.
11. Section 118 of N.I. Act lays down that, until the contrary is proved, it shall be presumed that every Negotiable Instrument was made or drawn for consideration. Section 139 of N.I. Act, contemplates that unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole of any debt or liability. In the decision reported in 2001 Crl.L.J. page 4647 (SC) (Hiten P.Dalal -Vs- Bratindranath Banerjee) and in various other decisions of Hon'ble Supreme Court and our Hon'ble High Court, repeatedly observed that in the proceeding under Section 138 of N.I. Act the complainant is not required to establish either the legality or the enforceability of the debt or liability since he can avail the benefit of presumption under Section 118 and 139 of N.I. Act in his favour. It is also observed that, by virtue of these presumptions, accused has to establish that, the cheque in question was not issued towards any legally enforceable debt or liability. Later in the year 2006, the Hon'ble Supreme Court in the decision M.S. Narayan Menon @ Mani
-vs- State of Kerala and another (2006 SAR Crl. 616) has held that, the presumption available under Section 118 and 139 of N.I. Act can be rebutted by raising a probable defence and the onus cast upon the accused is not as heavy as that SCCH-21 6 C.C. No.: 50845/18 of the prosecution. It was compared with that of a defendant in civil proceedings. Subsequently, in the year 2008, in Krishna Janardhana Bhat -Vs- Dattatreya G. Hegde (2008 Vo.II SCC Crl.166) Hon'ble Supreme Court has held that, existence of legally recoverable debt is not a presumption under Section 138 of N.I. Act and the accused has a constitutional right to maintain silence and therefore, the doctrine reverse burden introduced by Section 139 of N.I. Act should be delicately balanced.
12. In the decision, Rangappa - Vs - Mohan (AIR 2010 SC 1898) Hon'ble Supreme has considered this issue and clarified that, existence of legally recoverable debt or liability is a matter of presumption under section 139 of N.I. Act. In para 14 of the judgment the Hon'ble Supreme Court observed as here below:
"In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a SCCH-21 7 C.C. No.: 50845/18 strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. "
13. In view of the above decision, now it is clear that the presumption mandated by Section 139 of N.I. Act does indeed include the existence of legally enforceable debt or liability. It is a rebuttable presumption. It is open to the accused to raise the defence wherein the existence of legally enforceable debt or liability can be contested. For rebutting presumption, the accused do not adduce evidence with unduly high standard of proof but, the standard of proof for doing so with that of preponderance of probabilities. If the SCCH-21 8 C.C. No.: 50845/18 accused is able to raise a probable defence, which creates doubt about the existence of legally enforceable debt or liability, the onus shifts back to the complainant. It is also clear for rebutting the presumption accused can rely on the materials submitted by the complainant or his cross- examination and he need not necessarily adduce his evidence in all the cases.
14. In the present case, complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act by producing the documents and evidence. The accused has admitted the borrowing of loan of Rs.4,20,000/- from the complainant. Though the accused has contended that he has repaid the loan amount, he has not produced even a single receipt. Accused has also contended that the complainant has not given the receipt. According to the accused, he paid the monthly installment in cash on every month. In the normal course, few payment receipts will be misplaced. But, it is highly difficult to believe that the complainant has not issued receipt for all the months of his payments. The complainant has admitted the payment of Rs.1,02,767/- from the accused. If the accused had really paid any other additional sum, certainly he would have secured the receipts for it. If the complainant did not give the receipt, accused would not have paid the amount at least during subsequent month. Therefore, this contention of the accused cannot be believed.
15. The accused had admitted the issuance of Ex.P1 cheque. But, he has contended that he had issued Ex.P1 cheque as security without signing it. It is needless to SCCH-21 9 C.C. No.: 50845/18 mention that no person would receive unsigned cheque as security for payment. Therefore, the issuance of unsigned cheque and its receipt by the complainant is totally improbable and it will not happen in the normal course of business. Hence, considering the circumstances of the case, I am constrained to hold that the accused issued Ex.P1 cheque for the discharge of legally enforceable debt.
16. Learned counsel appearing for the accused placed reliance on the decision rendered in the case of Smt. Threja vs. Smt. Jayalaxmi (2016(5) KCCR 1341). It is a case wherein the complainant is lady and she has admitted that she had no personal income and except the amount sent by her son who is staying in Germany, she had no other source of income. On that backdrop, the Hon'ble High Court observed that complainant failed to prove the source of income for lending the amount to the accused and acquitted the accused. But in the present case, the complainant is a finance company. Hence, the said decision relied by the accused is of no assistance to the present case.
17. Learned counsel appearing for the accused also placed reliance on the decision rendered in the case of John K. Abraham vs. Simon C. Abraham and another (2014 AIR SCW 2158). In the said case the Hon'ble Supreme Court acquitted the accused on the ground that there was serious lacuna and inconsistency in the evidence of complainant. But, in the present case, the evidence on record show that there is no lacuna and inconsistency in the evidence of the complainant. Hence, the said decision relied by the accused SCCH-21 10 C.C. No.: 50845/18 is also of no assistance to his case. In this regard, I also rely upon the recent decision of Hon'ble Supreme Court rendered in the case of Rohitbhai Jivanlal Patel vs. State of Gujarat and another(Criminal Appeal No. 508 OF 2019 (Arising out of Special Leave Petition (Crl.) 1883 of 2018) dated 15.03.2019, wherein the Hon'ble Supreme Court observed as hereunder:
19. Hereinabove, we have examined in detail the findings of the Trial Court and those of the High Court and have no hesitation in concluding that the present one was clearly a case where the decision of the Trial Court suffered from perversity and fundamental error of approach; and the High Court was justified in reversing the judgment of the Trial Court. The observations of the Trial Court that there was no documentary evidence to show the source of funds with the respondent to advance the loan, or that the respondent did not record the transaction in the form of receipt of even kachcha notes, or that there were inconsistencies in the statement of the complainant and his witness, or that the witness of the complaint was more in know of facts etc. would have been relevant if the matter was to be examined with reference to the onus on the complaint to prove his case beyond reasonable doubt. These considerations and observations do not stand in conformity with the presumption existing in favour of the complainant by virtue of Sections 118 and 139 of the NI Act. Needless to reiterate that the result of such presumption is that existence of a legally enforceable debt is to be presumed in favour of the complainant.
When such a presumption is drawn, the factors relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the accused has been able to rebut the presumption or not. The other observations as regards any variance in the statement of complainant and witness; or want of knowledge SCCH-21 11 C.C. No.: 50845/18 about dates and other particulars of the cheques; or washing away of the earlier cheques in the rains though the office of the complainant being on the 8th floor had also been of irrelevant factors for consideration of a probable defence of the appellant.
18. The learned counsel appearing for the accused also placed reliance on the decision rendered by the Hon'ble Delhi High Court in the case of Devendra Kumar vs. Khem Chand (2016(1) DCR 147) and contended that, the complainant has not shown the alleged loan in the income tax return and therefore, adverse inference could be drawn against the complainant. But, in the recent decision of our Hon'ble High Court reported in 2019(1) KCCR 750 (Yogesh Poojary vs. K.Shankara Bhat), it is held that, merely making a suggestion that alleged debt or liability, has not been reflected in the income tax returns would not by itself suffice to draw an adverse inference and to hold that there was no legally enforceable debt or the presumption standing in favour of the complainant has successfully rebutted by the accused. Hence, as already observed above, the cheque issued by the accused for discharge of legally enforceable debt. The mere suggestion to the complainant that the alleged loan has not been reflected in the income tax return, it cannot be said that the presumption has rebutted by the accused. Therefore, the said decision relied by the accused is also no assistance to the present case. In view of the above decision and discussion, the complainant has proved the guilt of the accused for the offence punishable under Section 138 of N.I. Act. Accordingly, I answer Point No.1 in the AFFIRMATIVE.
SCCH-21 12 C.C. No.: 50845/1819. 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 14.07.2017 for Rs.6,05,809/-(Rupees six lakhs five thousand eight hundred and nine only). The complainant was deprived of money that was rightfully due to it for a period of more than one and half year. It is admitted by the complainant that accused has repaid the loan amount of Rs.1,03,000/- to it. 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. Having regard to all these fact, I pass the following:
ORDER Acting under Sec.265 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.7,00,000/- (Rupees seven lakhs only). In default to pay fine, the accused shall undergo simple imprisonment for a period of one year.SCCH-21 13 C.C. No.: 50845/18
Further, acting under Section 357(1)(b) of Cr.P.C., out of the fine amount, a sum of Rs.6,95,000/-(Rupees six lakhs ninety five thousand only) on recovery shall be paid as compensation to the complainant.
The office is directed to supply a free copy of judgment to the accused.
(Dictated to the Stenographer, transcribed and typed by her, same is corrected, signed and then pronounced by me in the open court on this the 1st day of April 2019) (VANI A. SHETTY) XVII ADDL. JUDGE, Court of Small Causes & Addl. CMM, Mayo Hall Unit, Bengaluru.
ANNEXURE List of witnesses examined on behalf of the complainant:
P.W 1: A. Panduranga Kini List of documents exhibited on behalf of the complainant:
Ex.P.1 : Cheque
Ex.P.2 : Bank endorsement
Ex.P.3 : Copy of Demand notice
Ex.P.4 : Postal receipt
Ex.P.5 : Postal cover
Ex.P.6 & 7 : Notarised copy of GPA
Ex.P.8 : Statement of accounts
SCCH-21 14 C.C. No.: 50845/18
List of witnesses examined on behalf of the accused:
D.W 1: Muttappa List of documents exhibited on behalf of the accused:-Nil-
(VANI A. SHETTY) XVII ADDL. JUDGE, Court of Small Causes & Addl. CMM, Mayo Hall Unit, Bengaluru.
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