Bangalore District Court
Reptd By Its P.A Holder vs Totanahalli on 15 March, 2023
1
KABC0C0001702021
IN THE COURT OF XIV ADDL. CHIEF METROPOLITAN
MAGISTRATE, MAYO HALL, BENGALURU
PRESENT
SRI.OONKAR MURTHY K.M.,
B.Sc., L.L.M.,
XIV Addl. C.M.M., Bengaluru
DATED ON THIS 15 th DAY OF MARCH 2023
CASE NO C.C. NO.50028/2021
Shaan Finance Limited
Registered office at 611,
Barton Centre,
No.84, M.G. Road,
Bengaluru - 560 001.
COMPLAINANT Reptd by its P.A Holder
Mr. Nishanth Babu K.K
S/o. K.H. Kapani Gowda
Aged about 34 years,
Mob. No.98457 67411
Mail ID : [email protected]
(By Sri. Sathish .B - Adv.,)
2
Sri. Akash .N
S/o. Narayanappa
Aged about 23 years,
Billinakote Post,
ACCUSED Totanahalli, Billanakote,
Bengaluru Rural - 562 111
Mob. No.99729 87813
(By Sri.B. Siddeshwara - Adv.,)
OFFENCE U/s.138 of Negotiable Instruments Act
PLEA OF THE
ACCUSED Pleaded not guilty
FINAL ORDER
Accused is convicted
Digitally signed by
ONKARMURTHY
ONKARMURTHY K M
KM
Date: 2023.03.15
17:33:39 +0530
(OONKAR MURTHY K.M)
XIV ADDL. C.M.M.,
BENGALURU
JUDGMENT
This is a private complaint filed by the complainant against the accused under Sec.200 Cr.PC 3 alleging the offense punishable under Section 138 of the Negotiable Instruments Act, 1881.
The brief facts of the complaint are as follows ;
2. The complainant Company is incorporated as per the Companies Act 1956 having it's Registered Office at No.611, Barton Centre, No.84, M.G. Road, Bengaluru
- 560 001 and is represented by Mr.Nishanth Babu the duly constituted attorney holder on behalf of the complainant company. The company is in the business of advancing vehicle loan for three and four wheeler vehicles etc,.
2.1) The accused had availed vehicle loan from the complainant company vide Agreement No.9969 dated 26.04.2019 for purchasing PIAGGIO APE RICKSHAW PASSENGER STR 4 vehicle and he had agreed to repay the loan amount in equated monthly installments. The accused has executed Hypothecation Agreement dtd.26.04.2019 as a borrower. But the accused did not adhere to the terms and conditions of 4 agreement with regard to the repayment of loan and has became defaulter.
2.2) It is further case of the complainant that after several demands made by the complainant, the accused has issued a cheque bearing No.816886 dtd.07.08.2020 for Rs.85,570/- drawn at Kaveri Grameena Bank, Thyamagondlu Branch, Bengaluru Rural District. When the said cheque was presented for encashment through his banker i.e., South Indian Bank, Brigade Road branch, Bengaluru, the said cheque has been returned dishonored vide return memo dated 11.08.2020 for the reason " kindly contact drawer/drawee bank and please present again ". Thereafter the complainant got issued legal notice dtd.25.08.2020 to the accused calling upon the accused to repay the cheque amount. The said notice was duly served on the accused on 8.9.2020. In spite of it, the accused has not paid the cheque amount. Therefore, the accused has committed the offense punishable under Sec.138 of Negotiable Instruments Act, 1881. Hence, the complaint.
53. On filing of the complaint, cognizance has been taken for the offense punishable under Sec.138 of Negotiable Instruments Act, 1881 and a private complaint was initially registered in PCR. No.53997/2020. Sworn statement of the complainant was recorded. On hearing the complainant and considering the documents on record, summons was issued to the accused by registering the criminal case in C.C. No.50028/2021. Later in response to the summons issued, the accused has appeared before the court through his counsel. The accused has been enlarged on bail. Plea of the accused has been recorded. The accused has pleaded not guilty and claims to be tried for which the matter was posted for trial.
4. The sworn statement of the GPA holder of complainant which has been recorded as CW.1 is treated as his examination-in-chief in view of the decision of the Hon'ble Apex Court reported in (2014) 5 SCC 590 - Indian Bank Association and others Vs Union of India and others-[W.P. (civil) No.18/2013]. To prove the guilt against the accused, the complainant has relied on the 6 documents marked at Ex.P1 to Ex.P7. The incriminating circumstances in the evidence of the complainant have been brought to the notice of the accused and his statement under Sec.313 of Cr.PC was recorded. The accused has denied the incriminating circumstances. The accused has not led any defense evidence nor has produced any of the documents on his behalf.
5. The counsel for the complainant has filed his written arguments. The counsel for the accused has not addressed his arguments.
6. Perused the materials on record. The points that arise for my consideration are:-
1) Whether the complainant proves that the accused has issued a cheque bearing No.816886 dtd.07.08.2020 for Rs.85,570/-
drawn at Kaveri Grameena Bank, Thyamagondlu Branch, Bengaluru Rural District for discharge of legally recoverable debt and the said cheque was dishonored for the reason " kindly contact drawer/drawee bank and please present again " . In spite of issuance of legal notice dated 25.08.2020, accused has failed to repay the loan amount and thereby the 7 accused has committed the offense punishable under Sec.138 of N.I. Act, 1881?
2) What Order?
7. My findings on the above points are as under;
Point No.1 : In Affirmative,
Point No.2 : As per final order,
for the following.,
REASONS
8. Point No.1: To prove its case, the Representative
of the complainant company Mr.Nishanth Babu K.K has examined himself as CW.1. In his chief-examination, he has reiterated the entire averments of the complaint. Further, CW.1 has produced the original cheque bearing No.816886 dtd.07.08.2020 for Rs.85,570/- drawn at Kaveri Grameena Bank, Thyamagondlu Branch, Bengaluru Rural District at Ex.P1. Ex.P2 is the Bank endorsement dtd.11.08.2020 wherein the said cheque is shown to have been dishonoured for the reason " kindly contact drawer/drawee bank and please present again ". Ex.P3 is the Legal notice dtd.25.08.2020 8 issued by the complainant to the accused demanding payment of the cheque amount. Ex.P4 is the postal receipt showing dispatch of the said notice on 25.08.2020. Ex.P5 is the track consignment report taken out from the postal web site wherein it is shown that the notice has been returned unserved with an endorsement dtd.29.08.2020 as "insufficient address". Ex.P6 is the notarized copy of General Power of Attorney dtd.22.02.2016 showing authority of CW.1 to prosecute this matter. Ex.P7 is the Hypothecation Agreement dtd.26.04.2019 entered into between the complainant and the accused wherein the document discloses that an amount of Rs.1,80,000/- has been lent to the accused. After adding the financial charges and insurance premium, the total agreed value of repayment of loan is shown as Rs.2,80,400/- to be payable in 36 monthly installments. Payment schedule of Rs.7,800/- per month for 35 months and an amount of Rs.7,400/- for 36 th month payable from 20.05.2019 to 20.04.2022 is also mentioned.
99. In the cross-examination, the suggestion that the cheque issued as a security during borrowing of the loan has been misused by the complainant company is denied by CW.1. Also CW.1 has denied the suggestion that the company executives have cheated the company without depositing the loan repayment amount collected from the accused and to recover the said money, this false case has been filed. CW.1 has admitted the suggestion that the signature on the cheque and other contents of the cheque are written in different ink. Even though CW.1 admits that the avements in respect of his personal knowledge has not been written in the complaint and his power of attorney at Ex.P6, he has reiterated that he has personal knowledge of the transaction. When it was suggested the talks in respect of loan transaction had happened between his higher authorities and the accused, CW.1 denies it by stating that they have transacted with the accused.
1010. In spite of opportunities provided to the accused, he has not lead his defense evidence nor has relied on any documents on his behalf.
11. On considering the suggestions made in the cross-examination of CW.1 and the answer given by the accused while recording his statement U/s.313 of Cr.PC, the defense of the accused can be deduced as follows;
i) Entire loan amount is cleared. There is no existence of legally recoverable debt.
ii) Signature on the cheque and other contents of the cheque are written in different ink. Blank cheque issued as a security during borrowing of the loan has been misused.
iii) Notice has not been served on the accused.
iv) CW.1 has no personal knowledge of the transaction.
Principles:
12. In respect of the proof of the fact that the cheque has been issued for discharge of legally 11 enforceable debt, there is a presumption of law under Sec.139 of Negotiable Instruments Act, 1881 in favour of the holder of the cheque which reads as follows:
Sec.139 - Presumption in favour of holder: it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.
The presumption under Sec.139 of Negotiable Instruments Act is a presumption of law and not the presumption of fact. The presumption has to be raised in all the cases once the factum of issuance of cheque and its dishonour is established. U/s.118(a) of Negotiable Instruments Act, there is a presumption in respect of passing of consideration in favour of the complainant. The onus of proof to rebut the presumption lies on the accused. The accused need not rebut the presumption beyond all reasonable doubt. But the accused has to place sufficient materials to convince the court that his case is more probable when it is compared with the case of the complainant. Accused may adduce direct evidence to prove that the 12 note in question was not supported by consideration or that he had not incurred any debt or liability. He may also rely upon the averments in the complaint, statutory notice and the circumstantial evidence adduced by the complainant during the trial. Accused need not enter into the witness box to rebut the presumption.
13. In the case on hand the complainant has established the factum of issuance of cheque and its dishonour. Therefore, this court shall raise a presumption that the accused has issued cheque towards discharging the legally enforceable debt. After raising initial presumption it is for this court to consider whether the presumption has been rebutted by bringing in cogent materials on record with reference to the defense raised by the accused.
Defense - Existence of legally recoverable debt:
14. While recording statement U/s.313 of Cr.PC., accused has stated the entire loan has been cleared.
13But in the cross-examination, counsel for the accused has suggested that the accused has paid eight EMIs and due to covid-19 lock down, further EMIs has not been paid. For a suggestion that loan of Rs.1,50,000/- has been granted to the accused, CW.1 states that Rs.1,80,000/- has been lent to the accused. Ex.P7 which is the Hypothecation Agreement dtd.26.04.2019 disclose that an amount of Rs.1,80,000/- has been lent. Total agreed value of repayment of loan amount payable in 36 monthly installments along with financial charges and insurance premium is shown to be Rs.2,80,400/-. Repayment schedule of 36 months is also mentioned in schedule-2 of the Hypothecation Agreement. The repayment schedule is shown to be of Rs.7,800/- per month for 35 months and Rs.7,400/- for 36 th month, in all amounting to Rs.2,80,400/-. The suggestion that the accused has paid eight monthly installments in the cross-examination of CW.1 clearly show that the accused is due for repayment of the loan borrowed. Eight EMIs @ Rs.7,800/- will amounts to Rs.62,400/-. The total agreed value of repayment of 14 loan is Rs.2,80,400/- as per Ex.P6. After deducting the repaid eight installments, the balance will be more than the amount claimed in the cheque. Moreovoer, there is nothing on record to show that the entire loan has been cleared. Therefore, the accused has failed to prove that the entire loan has been cleared. Under the circumstances, the complainant has clearly made out the existence of legally recoverable debt. Accordingly, the contention of the accused that there is no legally recoverable debt holds no water.
Defense - Cheque issued as security during borrowing of the loan:
15. The accused in the cross-examination of CW.1 has suggested that the alleged cheque was issued as security while borrowing of the loan and the same has been misused by the complainant by filling up the contents of the cheque. Also contends that signature on the cheque is made in different ink and other contents of the cheque are filled up in different ink.15
16. To adjudicate the issue, I would like to rely upon the decision of the Hon'ble Supreme Court in the case of Oriental Bank of Commerce Vs Prabodh Kumar Tewari - [(2022) OnLine SC 1089] at para 14 and 18 has held as follows;
Para 14. In Bir Singh v. Mukesh Kumar,after discussing the settled line of precedent of this Court on this issue, a two-Judge Bench held:
33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.
34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.
[...] 16
36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.
Para 18. For such a determination, the fact that the details in the cheque have been filled up not by the drawer, but by some other person would be immaterial. The presumption which arises on the signing of the cheque cannot be rebutted merely by the report of a hand-writing expert. Even if the details in the cheque have not been filled up by drawer but by another person, this is not relevant to the defense whether cheque was issued towards payment of a debt or in discharge of a liability.
(emphasis supplied) In view of the above ratio laid down by the Hon'ble Supreme Court, it is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. Under the circumstances, the contention that the contents of the cheque other than the signatures has been filled up by the complainant with different ink and has been misused finds no substantiation.
1717. Even though it is contended that the alleged cheque was issued as a security while borrowing of the loan, there is nothing on record to substantiate the same except oral assertions. Hon'ble Supreme Court in the case of Sripati Sing Vs. State of Jharkhand and another, at para 17 and 18 has held as follows;
Para 17. "A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified time frame and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow".
Para 18. "When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security' cannot be presented prior to the loan or the instalment maturing for repayment towards 18 which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an 'on demand promissory note' and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation".
(Emphasis supplied) In the above precedent, it is clearly held that if a loan is advanced and the borrower agree to repay the amount in a specified time frame and issues a cheque 19 as security to secure such repayment, if the loan amount is not repaid, the cheque which is issued as a security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of Negotiable Instruments Act would flow. In the case on hand, the accused has clearly admitted the borrowing of loan from the complainant. But has failed to show repayment of the entire loan. The complainant has clearly shown the existence of legally recoverable debt more than the amount covered under the cheque. Under the circumstances, by relying upon the above precedent, even though the cheque issued is to be considered as a security, the same would mature for presentation. When the said cheque have been dishonored, the contention that the cheque issued for security do not attract the provision of Sec.138 of N.I. Act holds no water.
20Defense - Notice is not served on the accused:
18. It is contended that notice has not been served on the accused. The complainant has produced track consignment report taken out from the postal website at Ex.P5 wherein it is shown that the notice sent to the accused has been returned with shara "insufficient address". The address mentioned in the legal notice at Ex.P3 is same as that of address mentioned in the Hypothecation Agreement at Ex.P6. Further there is nothing on record to show that the said address is not the correct address of the accused.
19. Further to adjudicate the said fact, I would also like to rely upon the decision in the case of T.Kumar Vs K.Chennakeshavulu - (2021 (2) AKR 219) at para 16 our Hon'ble High Court has held as follows;
Para 16. When the matter was referred to the Larger Bench of the Hon'ble Supreme Court in C.C.Alavi Haji V. Palapetty Muhammed and Anr. (2007) Cri LJ 3214 answering the reference in para 17 of the judgment it was held as follows:
"17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice 21 before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran's case (supra), if the 'giving of notice' in the context of Clause (b) of the proviso was the same as the 'receipt of notice' a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."
(Emphasis supplied by me) In the case on hand the accused has not repaid the cheque amount within 15 days of his appearing before the court. Under the circumstances, by relying upon the above precedent, the contention of the accused that he has not been served with legal notice and therefore no offense is made out against him holds no water.
22Defense - No personal knowledge of the transaction:
20. It is contended by the accused that there are no averments in respect of personal knowledge of CW.1 in respect of the alleged transaction in the complaint or in the power of attorney and therefore the evidence of CW.1 is of no value. The fact of personal knowledge is to be ascertain by considering over all materials available on record. The suggestion that the transaction had happened between higher authorities and the accused is denied by CW.1. Further CW.1 states that they have handled the loan transaction with the accused. Also reiterates that he has got personal knowledge of the transaction. There is nothing on record to show that CW.1 is devoid of due knowledge of the transaction. Moreover, when the facts have been brought on record with documentary evidence, personal knowledge gains less importance. Under the circumstances, the contention of the accused that CW.1 do not have personal knowledge of the transaction holds no water.
23Conclusion:
21. Under all the circumstances, the complainant has clearly proved that the cheque has been issued by the accused towards discharge of legally recoverable debt and the same has been presented within its life time for encashment and the same has been dishonoured under the bank endorsement dtd.11.08.2020 for the reason " kindly contact drawer/drawee bank and please present again ". The complainant has issued legal notice on 25.08.2020, which has been returned unserved with postal shara "insufficient address" on 29.08.2020. The complaint is filed on 30.09.2020 within the period of limitation. Therefore, the complainant has proved all the ingredients of Sec.138 of N.I. Act. On the contrary, the accused has miserably failed to rebut the statutory presumption available U/s.139 of N.I. Act in favour of the complainant. Therefore, the accused is found guilty for the offense punishable U/s.138 of N.I. Act. Accordingly, I hold Point No.1 in Affirmative.
2422. Point No.2: The punishment prescribed for the offense U/s.138 of Negotiable Instruments Act is imprisonment for a period which may extend to two years or with fine. Considering the facts and circumstances of this case, nature, year of the transaction, nature of the instrument involved, cost of litigation and the rate of interest proposed by Hon'ble Supreme Court in 2012 (1) SCC 260 (R.Vijayan Vs Baby), this court is of the considered view that it is just and desirable to impose fine of Rs.1,30,000/- and out of the said amount, it seems to be proper to award a sum of Rs.1,25,000/- as compensation to the complainant as provided U/s.357(1) (b) of Cr.PC and the remaining sum of Rs.5,000/- shall go to the State. In view of the discussions made while answering Point No.1, I proceed to pass the following.., ORDER In exercise of power vested under section 255(2) of Cr.P.C., I hereby convict the accused for the offense punishable 25 under Sec.138 of Negotiable Instruments Act, 1881.
The accused is sentenced to pay fine of Rs.1,30,000/- (One Lakh Thirty Thousand only) for the offense punishable U/s.138 of Negotiable Instruments Act, 1881. In default of payment of fine, the accused shall under go simple imprisonment for a period of two months.
In exercise of powers vested under section 357(1)(b) of Cr.P.C., out of fine amount a sum of Rs.1,25,000/- (One Lakh Twenty Five Thousand only) is ordered to be paid to the complainant as compensation and the remaining Rs.5,000/-
(Five Thousand only) shall go to the State.
The bail bond of the accused stands canceled. The cash security deposited by the accused is ordered to be continued till expiry of the appeal period.
26Free copy of the judgment shall be supplied to the accused forthwith.
(Dictated to the stenographer, transcripted thereof, computerized and print out taken by him is verified, corrected and then pronounced by me in open court on this the 15th day of March, 2023) Digitally signed by ONKARMURTHY ONKARMURTHY KM KM Date: 2023.03.15 17:34:01 +0530 (OONKAR MURTHY K.M) XIV ADDL. C.M.M., BENGALURU 27 ANNEXURE List of witnesses examined by complainant:
CW.1 : Sri. Nishanth Babu K.K List of Documents marked by complainant:
Ex.P1 : Cheque
Ex.P1(a) : Signature of the accused
Ex.P2 : Bank endorsement
Ex.P3 : Legal Notice
Ex.P4 : Postal receipt
Ex.P5 : Track Consignment report
Ex.P6 : Notarized copy of General Power
of Attorney dtd.18.02.2016
Ex.P7 : Hypothecation Agreement dtd.26.04.2019
List of Witnesses examined by defence:
NIL List of Documents marked by defence:Digitally signed
NIL by
ONKARMURTHY ONKARMURTHY
KM KM
Date: 2023.03.15
17:33:50 +0530
(OONKAR MURTHY K.M)
XIV ADDL. C.M.M.,
BENGALURU