Bangalore District Court
Yelahanka Merchants Finance Company vs K Munianjanappa on 6 January, 2025
KABC020032612020
IN THE COURT OF THE XVI ADDL. JUDGE AND ADDL
CHIEF JUDICIAL MAGISTRATE, BENGALURU CITY.
SCCH-14
Dated this the 06th day of January, 2025
Present : SRI. D.RAMESH,
B.A.L., LL.B.,
MEMBER, MACT,
XVI ADDL. JUDGE,
COURT OF SMALL CAUSES & ACJM
BENGALURU.
C.C.No.802/2020
Complainant Yelahanka Merchants,
Finance Company,
Premakumar Nagar,
By pass, B.B.Road,
Yelahanka,
Bangalore-560 064.
Rep. By its Manager and
G.P.A. Holder Smt. Anitha,
W/o. Sri. Narendra Kumar.
(By Sri.M.Subramani, Adv.)
-Vs-
Accused K. Munianjanappa,
S/o. Anjinappa,
Aged about 42 years,
Residing at:-
SCCH-14 2 CC.No.802/2020
Rakesh Provision Stores,
Surabhi Layout, Jakkur Main
Road, Yelahanaka,
Bangalore-560 064.
(By Sri.K.Raghavendra, Adv.)
1. The offence Under Sec.138 of N.I. Act.
complained of
2. Plea of accused Pleaded not guilty
3. Final order Convicted
4. Date of such 06-01-2025
order
******
JUDGMENT
Complainant preferred this private complaint under Section 200 of Cr.P.C. alleging that the accused committed an offence punishable under Sec.138 of the Negotiable Instruments Act.
2. Complainant's case in brief is as under:
That, the Complainant is a Registered Partnership Firm and it carries on financial business with all necessary licenses.
The accused is the member of the complainant firm. He borrowed loan various occasions from the complainant Firm SCCH-14 3 CC.No.802/2020 and repaid the same. Now he obtained loan of Rs.32,00,000/-
on 19.05.2017 by executing the written acknowledgment for the receipt of the said amount and agreed to repay the same along with interest within short period and also agreed to pay penal interest, recovery expenditure and to the incidental charges in case of his default to make repayment. Further, accused had unconditionally assured and agreed to make repayment of such amount due towards complainant. But inspite of repeated demands from complainant, accused has deliberately failed and neglected to discharge the liability towards the Company. Thereafter, on 02.05.2019 complainant sent a final notice to accused through registered postal acknowledgment, but he did not repay the loan. Again on 04.09.2019 complainant approached the accused and demanded the repayment of the outstanding loan due amount, thereafter accused issued a cheque bearing No.000263 dated 16.09.2019 drawn on HDFC Bank, MVM Complex, Santhe Circle, Yelahanaka, Bangalore-64 for a sum of Rs.24,03,549/-
in favour of the Complainant. As per the instructions of the SCCH-14 4 CC.No.802/2020 accused, the Complainant presented the said cheque to its banker Corporation Bank, Yelahanaka for its encashment. The same returned without crediting to the account with an endorsement "Funds Insufficient" dated 18.09.2019. Thereafter, the Complainant got issued notice dated 16.10.2019 to the accused, thereby calling upon them to discharge their liability. The said notice to the accused has been served on 17.10.2019. The accused inspite of receipt of notice neither replied, nor paid the cheque amount. Hence, the Complainant preferred this complaint alleging that the accused has committed an offence punishable under Sec.138 of the Negotiable Instruments Act.
3. Upon taking cognizance, after considering the sworn statement and other materials made available on the record in support of the Complainant's case, process was issued to the accused. Upon receipt of the same accused made appearance through his counsel and secured bail.
SCCH-14 5 CC.No.802/2020
4. Substance of accusation was recorded. Same was read over and explained to the accused in the language known to him. He denied the same and claimed to be tried.
5. The Power of attorney holder of the Complainant firm Smt. Anitha got examined herself as PW.1 and got marked Ex.P.1 to P.31 and she was cross examined.
6. Statement of accused under Sec.313 of Cr.P.C. was recorded. The incriminating evidence that appeared against the accused in Complainant's case were read over and explained to him in the language known to him. Accused denied the same and submitted that he has defence evidence.
7. Accused deposed orally as DW.1 and got marked docu- ments at Ex.D.1 to 17 and he was cross examined.
8. Heard arguments both the side.
9. After perusal of the entire material and evidence on record, the following points arises for determination is :-
1. Whether the complainant proves that the accused has issued a cheque No.000263, dated:SCCH-14 6 CC.No.802/2020
16.09.2019 for an amount of Rs.24,03,549/-
drawn on HDFC Bank, MVM Complex, Santhe Circle, Yelahanka, Bangalore towards the legal recoverable debt and committed an offence punishable U/s 138 of N.I. Act?
2. To what order?
10. My findings on the above points are as under:
POINT NO.1 : In the Affirmative POINT NO.2 : As per final order, for the following;
REASONS
11. POINT NO.1: The gist of the complaint is that the Complainant is a Finance Company. The accused had obtained loan from the complainant company at various occasions and repaid the same. Now he obtained loan of Rs.32,00,000/- on 19.05.2017 and agrees to repay the same with interest within short period. Despite repeated request, the accused has failed to make payments. The accused issued the subject matter cheque for repayment of balance loan amount with assurance to Complainant company. The complainant company presented the said cheque to its banker. But, the said cheque returned SCCH-14 7 CC.No.802/2020 without crediting to his account with an endorsement "Funds Insufficient". Therefore, the Complainant company has issued notice to accused. Inspite of service of notice the accused neither replied nor paid the cheque amount.
12. In order to prove the case of the Complainant, the power of attorney holder of Complainant company examined, by way of affidavit and reiterated the averments of the complaint and got marked Ex.P.1 to 31. On the other hand, the accused is examined as DW.1 and admitted that he had borrowed loan from the Complainant company and he has repaid the entire loan amount. But the complainant company has misused the cheque which was given by him while availing the loan in the year 2016. He further deposed that he has paid Rs.10,00000/- through his wife's cheque and remaining amount by way of cash. He further deposed that Rs.4,50,000/- belongs to him and Rs.20,000/- pigmi amount belongs to his wife was with the complainant company and there were 5 cheques belongs to his wife which were given for security and document pertaining to SCCH-14 8 CC.No.802/2020 his house were also with the complainant company. When he requests the complainant company for clear the above said amount and return the said cheques and documents, the complainant company has filed this false complainant.
13. The signature of the accused on Ex.P.1 is not in dispute. Even issuance of cheque by the accused in favour of complainant company is also not in dispute. Even the transaction between the complainant and accused i.e., availment of loan by the accused from the complainant company is also not in dispute. The specific contention of the accused is that he has repaid the entire loan amount, but, the complainant has misused the subject matter cheque which was given by the accused for security at the time of granting loan by the complainant and filed false case. It is the burden on the accused to rebut the presumption, if accused succeeds in rebutting the presumption he is entitled for acquittal, at the same time, if the accused failed to rebut the presumption then the benefit of presumption lies in favour of the Complainant SCCH-14 9 CC.No.802/2020 and accused is liable for conviction.
14. On careful examination of all the documents of the Complainant, it is very clear that Complaint is filed well within time. The Complainant has followed all the requirements of the NI Act. The presumption under Section 139 of the Act is Presumption of law, is not a presumption of fact. The presumption has to be drawn by the Court in all the cases once the fact of dishonour is established. The onus of proof to rebut this presumption lies on the accused. The standard of such rebuttal evidence depends on the facts and circumstances of each case. Such evidence must be sufficient to prove the case. Therefore, mere contention is not sufficient to rebut this presumption of law. There must be a rebuttal evidence.
15. As per NI Act, presumption is in favour of the holder of cheque. Herein, the holder of cheque is Complainant and presumption is in favour of Complaint. The burden on the accused to rebut the said presumption. Therefore, it is to be appreciated whether the accused has rebutted the evidence or SCCH-14 10 CC.No.802/2020 not.
16. In the cross examination of PW.1, nothing worth elicited to prove the alleged contention of the accused.
17. In the cross examination of DW.1, he categorically admits that he has not taken legal action stating that Ex.P.1 was misused by the complainant company. But admittedly no legal action is taken against the complainant in this regard. Further he categorically admits that he has document to show that Ex.P.1 cheque is given for surety. But, for the reasons best known to him no such document is produced before the court to prove that the subject matter cheque was given for surety.
18. He further clearly admits that he has signed the Ex.P.12 after understanding its contents. The Ex.P.12 is the letter dated 04.09.2019, which clearly shows that the accused has given a letter to the complainant company stating that he was issuing the subject matter cheque for an amount of Rs.24,03,549/- to repay the loan dated 19.05.2017. Taken into consideration of this admission of the DW.1 and contents of SCCH-14 11 CC.No.802/2020 the Ex.P.12, it is clear that the accused has issued the Ex.P.1 cheque to the complainant company for an amount of Rs.24,03,549/- to clear the debt. Therefore, the complainant has established the existence of legally recoverable debt and issuance of cheque by the accused to clear the debt.
19. In the cross examination of Dw.1, he further admits that the 18th loan took from the complainant company is Rs.32,00,000/-. Further he admits that there is no mention of Rs.32,00,000/- in Ex.D.4 to 8 Pigmy slips belongs to him. Therefore, it is clear that the Ex.D.4 to 8 do not proves the alleged repayment by the accused. Further he admits that the Ex.D.10 to 14 Pigmy slips related to his wife and not connected to this case. The Ex.D.2 and 3 Bank statement of the accused do not proves that he has repaid entire loan amount. Therefore, there is no evidence to prove that he has repaid the entire loan amount.
20. As per the accused, the cheque which he had given to the complainant company at the time of availing the loan has SCCH-14 12 CC.No.802/2020 been misused by the complainant and filed this complaint. In this regard also he has no evidence. If at all he has issued cheque to the complainant at the time of availing the loan and he has repaid entire loan amount what prevented him to take steps to get back the cheque after the alleged payment. Hence, his contention in this regard is not at all believable at any stretch.
21. Another aspect is, if the defence of the accused is true, why he did not reply the legal notice and why those aspects was not stated in his statement under section 313 of Cr.P.C. Therefore, his contention is only after thought, which does not have any water.
22. The learned counsel for the accused vehemently argued that the legal notice which issued by the complainant has not been served upon the accused. He further contended that the accused is not residing in the address mentioned in the Ex.P.3 Legal notice. But in the cross examination of DW.1, he categorically admits that the address found in Ex.D.2 and D.3 SCCH-14 13 CC.No.802/2020 Bank statements and address mentioned in the cause title of the complaint are one and the same. Further more, the loan application given by the accused marked at Ex.P.7 also clearly shows that the address mentioned in Ex.P.3 Legal notice belongs to accused. Therefore, it could be presume that the notice issued to the admitted address is proper one.
23. It is worth here to mention judgment reported in 2010(11) SCC 441 between Rangappa Vs. Mohan;
"B) N.I. Act Section 138 existence of legal recoverable debt or liability - is matter of presumption U/S. 139 "The presumption mandates by Section139 of the act does indeed include the existence of legally enforceable debt or liability. This is of course in nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of 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 example of reverse onus, class that has SCCH-14 14 CC.No.802/2020 been included in furtherance of legislative objections of him credibility of the Negotiable Instrument. While Section 139 of the Act specifies the strong criminal remedy dishonor of cheques, the rebuttal presumption U/S. 139 is devise to prevent undue delay in the course of litigation.
However, it must to be remembered that the offence made punishable by Sec. 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in nature of civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario the test of proportionately should guide the construction and interpretation of reverse onus clauses and the accused/defendant can not be accepted to discharge a unduly high standard of 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 be rebut the presumption U/S. 139, the standard proof for doing so is that of 'preponderance probabilities'. Therefore, if the accused is able to raise probable defence, which SCCH-14 15 CC.No.802/2020 creates doubts about the existence of alleged debt or liability. The prosecution can fail. The accused can rely on the material submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduced evidence of his/her own."
24. As per the said authority it is crystal clear that when the accused admits issuance of cheque he has to rebut the presumption under Section 139 of NI Act. In the instant case as already discussed above that the accused failed to prove that the complainant has misused the cheque issued by him at the time of availing loan. Hence, he has not rebutted the presumption.
25. Under such circumstances, it is crystal clear that accused has failed to rebut the presumption under Section 139 of NI Act. Hence, the presumption can be drawn in favour of the complainant. Thus, I hold that the evidence on hand by the Complainant crystalise that the accused has borrowed the loan from the Complainant and issued cheque-Ex.P.1 for a sum of SCCH-14 16 CC.No.802/2020 Rs.24,03,549/- to discharge legal recoverable debt. Accordingly, I answer point No.1 in the Affirmative.
26. Learned Counsel for accused relied upon the Judgment of Hon'ble High Court of Andra Pradesh reported in 1988 Crl. LJ 419 in between M/S. Satish and company Vs. M/S. S.R. Traders and Others. Wherein Hon'ble High Court held are as follows:
5. Having regard to this kind of controversy, the short point that arises for my consideration is whether the complaint filed by and on behalf of the company under the name and style M/S. Satish and company was competent as on the date of filing of the same i.e., as on 20.07.1993 and what is the effect of the alleged authorised letter in Ex.P.1 in favor of PW.1 filed after one year.
6. In order to appreciate the rival contentions, I have to note a few admitted facts. It is an admitted fact that the complaint in question was filed by M/S Satish and Company represented by its Manager, Mr. N.K. Gupta. It is also an admitted facts that along with complaint no letter or any resolution of the SCCH-14 17 CC.No.802/2020 company was filed to show that the Manager was authorized to filed the complaint. It is also not in dispute that the letter said to have been dated 17.06.1993 is filed in the case vide Ex.P.1 after one year of filing of the complaint. Now, the short question, therefore would be whether the complaint was competent as on the date of filing of complaint, i.e., as on 20.07.1993, and whether Ex.P.1 can be taken as the ratification on behalf of the company for the action taken by the Manager PW.1 in filing the complaint and even if it is so, would be the valid ratification.
25. ........................ In this context, I further make it clear that in terms of sec. 142 of the Negotiable Instrument Act, another duly authorized complaint could be filed in time i.e., within one month from the date of cause of action. In this view of the matter, Ex.P.1, a letter of authorization filed after one year cannot be taken as a proper ratification of the action initiated by PW.1. Because if it is taken that on the date of Ex.P.1, letter (filed after one year), a duly constituted complaint is filed, it would be barred by limitation of one month prescribed by Sec. 142 of the Negotiable Instrument Act. Moreover, nothing SCCH-14 18 CC.No.802/2020 prevented the complainant to withdraw the complaint himself voluntarily and filed another complaint with proper authorization within the time permitted by Sec. 142 of NI Act."
Learned counsel for the accused relied the another Judgment of Hon'ble High Court of Karnataka, Dharwad Bench in Crl. Appeal No.2653/2008 decided on 27.09.2013 in between M/S. Canara Workshop Ltd., Vs. Sri Mahanthesh. Wherein the Hon'ble Court held as follows:
"7. Applying the above, in the present case on hand, it is found as a fact by the trial court that a general power of attorney Exhibit P.14 by one Premanath Guruva, the executive Director of the complainant, executed in favor of PW.1 was sought to be produced as a proof of authorization. The trial court has observed that the said power of attorney was in respect of civil litigation and there was no specific authority to file a complaint under Sec. 138 of NI Act and that there was no proof of the fact that the said Premanath Guruva was the executive Director of the company and that he himself had any authority to file a complaint or execute a power of SCCH-14 19 CC.No.802/2020 attorney in terms of Exhibit P.14 in favor of PW.1 and hence held that the complaint filed through the medium of PW.1 and sought to be prosecuted through the said Guruva, was not maintainable."
In the case on hand, the complaint is filed by Manager of the complainant company was duly authorized as on the date of presentation of complaint. Ex.P.10 GPA dated 30.11.2017 clearly shows that Smt. Anitha was authorized to represent the complainant firm before any court, Tribunal or authority for issuance of notice, filing of any complaint, suit, petition against any defaulter or such other person in court of law. The copy of the said GPA was filed along with complaint. Even the list of documents at Sl.No.16 mentioned in the page 7 of complaint clearly discloses that copy of Power of Attorney was filed along with the complaint. Therefore, the present complaint was filed by the competent authorized person. Further Ex.P.31 Board of Resolution dated 25.11.2017 discloses that the board of director of the complainant company has continued its authorization given earlier to the Smt. Anitha to represent the SCCH-14 20 CC.No.802/2020 complainant company.
Counsel for accused relied upon the another Judgment reported in ILR 2008 Kar 4629 between Shivamurthy Vs. Amruthraj. Wherein it is held as follows:
"31. In the light of discussion made above, I hold that complainant has utterly failed to prove the existence of legally enforceable debt against the accused. Therefore, the question of drawing presumption Under Sec. 138 of NI Act does not arise. ....................................."
In the case on hand, as discussed above, the complainant has proved the existence of legally enforceable debt against the accused. Hence, the presumption under Sec. 139 of NI Act would available to the complainant.
Learned counsel for the accused also relied upon the another Judgment reported in (2014) 2 SCC 236 in between John K. Abraham Vs.Simon C. Abraham and another. Wherein Hon'ble apex court held as follows:
"Debt, Financial and Monetary Laws-Negotiable SCCH-14 21 CC.No.802/2020 Instruments Act, 1881- Ss. 118, 139 and 138- Dishonour of cheque-Drawing presumption under SE.118 r/w S.139- Prerequisites for, when cheque is for repayment of a loan/advanced money-Proof required on the part of complainant- Held, in order to draw presumption under S.118 r/w S.139, burden lied on complainant to show:(i) that he had the requisite funds for advancing the sum of money/loan in question to accused, (ii) that the issuance of cheque by accused in support of repayment of money advanced was true, and (iii) that the accused was bound to make payment as had been agreed while issuing cheque in favour of complainant- IN present case, complainant not aware of the date when substantial amount of Rs.1,50,000/- was advanced by him to appellant-accused-Respondent complainant failed to produce relevant documents in support of the alleged source for advancing money to accused- Complainant also not aware as to when and where the transaction took place for which the cheque in question was issued to him by accused-Complainant also not sure as to who wrote the cheque and making contradictory statements in this regard-In view of said serious defects/lacunae in evidence of complainant, judgment of High Court reversing acquittal of accused SCCH-14 22 CC.No.802/2020 by trial court, held, was perverse and could not be sustained-Acquittal restored."
In the case on hand, first and foremost the complainant company is a finance company it has requisite funds to lend the loan to a needy person. Secondly, the Ex.P.7 loan application, Ex.P.9 Account statement and Ex.P.11 Receipt, which are relevant documents in support of the source for advancing money to accused. Moreover, as discussed above, the accused himself admitted that he availed loan from the complainant company. Hence, question of considering that whether complainant had requisite funds for advancing the loan to the accused does not arise at all.
27. Point No.2:- The point No.1 is already answered in the affirmative. Therefore, the accused is found guilty of offence punishable under section 138 of NI Act and hence, liable to be convicted. As the offence is related to financial transaction, which can not be subjected to supervision of probationary officer, the Probation of Offender Act is not applicable. It is also settled principle of law that, awarding imprisonment is not SCCH-14 23 CC.No.802/2020 necessary under Section 138 of N.I Act of conviction. Further I am of the opinion that, awarding of double the cheque amount is not warranted under the circumstances of the case. If cheque amount plus some compensation is imposed, that would meet the ends of justice. With these observations, I proceed to pass the following:
ORDER By exercising the powers conferred U/Sec. 255(2) of Cr.P.C., the accused is hereby convicted for the offence punishable U/Sec. 138 of the Negotiable Instruments Act.
Consequently, the accused is sentenced to pay fine amount of Rs.24,15,000/-.
Further by exercising powers conferred under Section 357 of Cr.P.C., it is ordered that, out of fine of Rs.24,15,000/-, Rs.24,10,000/- shall be payable to the complainant and remaining Rs.5,000/- shall be remitted to the state. The accused is directed to pay the fine amount. In default of payment of fine, accused shall under go simple SCCH-14 24 CC.No.802/2020 imprisonment up to six months.
The bail bonds executed by the accused stands canceled.
Issue free copy of judgment to the
accused.
(Dictated to the Stenographer, and transcription of the same was corrected by me and pronounced in the open court, on this the 06th day of January, 2025) (D.RAMESH) XVI Addl.SCJ & ACJM, BENGALURU.
ANNEXURE List of witnesses examined for complainant:
P.W.1 : Smt. Anitha List of documents marked for complainant:
Ex.P.1 : Cheque
Ex.P.1(a) : Signature of accused
Ex.P.2 : Bank memo
Ex.P.3 : Office copy of legal notice
Ex.P.4 : Postal receipts (2 in no's)
Ex.P.5 : Postal track consignment (2 in no's)
Ex.P.6 : Bank Challan
Ex.P.7 : Application for Membership
Ex.P.8 & 9 : Ledger extract
Ex.P.10 : Certified copy of General Power of
SCCH-14 25 CC.No.802/2020
Attorney
Ex.P.11 : Cash paid receipt
Ex.P.12 : Letter for issuance of post dated
cheque
Ex.P.13 : Certified copy of Money lending
license
Ex.P.14 : Certified copy of Form D
Ex.P.15 : Notarized copy of Death Certificate
Ex.P.16 : Certified copy of Reconstitution of
partnership Deed
Ex.P.17 : Cash received receipt
Ex.P.18 : Final Notice
Ex.P.19 : Postal receipt
Ex.P.20 : Postal Acknowledgment
Ex.P.21 : Computerised Ledger extract (4 in
no's)
Ex.P.22 : Manual Ledger extract 9 6 in no's)
Ex.P.23 : Office copy of legal notice (41 in no's)
Ex.P.24 : Copy of permission letter
Ex.P.25 : Tax paid returns
Ex.P.26 & : Profit and Loss Account in the year 27 2018.
Ex.P.28 : 2018 Balance sheet
Ex.P.29 : Income Tax assessment
Ex.P.30 : Certified copy of Board Resolution
dated 23.11.2017
Ex.P.31 : Certified copy of Board Resolution
dated 25.11.2017
List of Witnesses examined for accused:
DW.1 : Bhaskar.P
List of documents marked for accused :
Ex.D.1 : Notarized copy of Aadhar card of
accused
SCCH-14 26 CC.No.802/2020
Ex.D.2 : Bank Statement of accusd for the
period 01.03.2016 to 01.03.2018.
Ex.D.3 : Bank statement of accused for the
period 01.01.2019 to 31.12.2021.
Ex.D.4 : Pigmi slip bearing No.50013
Ex.D.5 : Pigmi slip bearing No.47314
Ex.D.6 : Pigmi slip bearing No.1465
Ex.D.7 : Pigmi slip bearing No.91084
Ex.D.8 : Pigmi slip bearing No.1638
Ex.D.9 : Electricity bill for the month of
05.10.2019
Ex.D.10 : Pigmi slip bearing Name
Shashikala .B for Rs.1,400/-.
Ex.D.11 : Pigmi slip bearing No.1466
Ex.D.12 : Pigmi slip bearing No.50013
Ex.D.13 : Pigmi slip bearing No.50013
Ex.D.14 : Pigmi slip bearing No.50013
Ex.D.15 & : Counter file of cheque book (2 in Ex.D.16 no's) Ex.D.17 : Bank statement (D.RAMESH) XVI Addl.SCJ & ACJM, BENGALURU.