Karnataka High Court
Venkatesh Prasad vs Subray V Bhat on 21 March, 2014
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 21ST DAY OF MARCH 2014
BEFORE
THE HON'BLE MR.JUSTICE PRADEEP D. WAINGANKAR
CRIMINAL REVISION PETITION NO.452/2010
BETWEEN:
VENKATESH PRASAD
PROPRIETOR OF
SRI. LAKSHMI INDUSTRIES
R/AT NO.99
"SAPTHAGIRI NIVASA"
L.G. RAMANNA EXTENSION
LAGGERE, BANGALORE-67.
...PETITIONER
(BY SRI. A.V. RAMAKRISHNA, ADV.,)
AND:
SUBRAY V. BHAT
S/O V.K. BHAT
AGED ABOUT 47 YEARS
NO.10, 1ST MAIN, S.V. LAYOUT
RMV 2ND STAGE, SANJAYNAGAR
BANGALORE-94.
... RESPONDENT
(BY SRI. RAJKUMAR, ADV.,)
THIS CRIMINAL REVISION PETITION IS FILED
UNDER SECTION 397 AND 401 CR.P.C. PRAYING TO SET
ASIDE THE ORDER OF CONVICTION DATED 21.03.09
PASSED BY THE XVI ADDL. CMM., BANGALORE CITY IN
C.C. NO.7353/08 AND AS CONFIRMED BY THE APPELLATE
COURT ORDER DATED 22.12.09 PASSED BY THE P.O.,
FTC-I, BANGALURU CITY IN CRL. A. NO.332/2009 AND
ACQUIT THE PETR.
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THIS CRL.RP HAVING BEEN HEARD AND RESERVED
FOR PRONOUNCEMENT OF ORDERS, THIS DAY,
PRADEEP D. WAINGANKAR J., PRONOUNCED THE
FOLLOWING:
ORDER
By judgment dated 21.03.2009 in C.C.No.7353/2008 on the file of the XVI Additional Chief Metropolitan Magistrate, Bangalore, the petitioner has been convicted for the offence punishable under Section 138 of N.I. Act and has been sentenced to pay a fine of Rs.37,00,000/-, in default, to undergo Simple Imprisonment for a period of one year and ordered to pay a sum of Rs.36,75,000/- as compensation to the respondent-complainant out of fine amount. The Judgment of conviction and sentence has been confirmed by the Fast Track Court-I, Bangalore City in Criminal Appeal No.332/2009 by judgment dated 22.12.2009. Challenging the judgment passed by both the Courts below and questioning its legality and correctness, this revision petition is preferred by the petitioner under Section 397 r/w Section 401 of Cr.P.C. 3
2. The petitioner was the accused before the Magistrate and the respondent was the complainant. The case of the complainant as made out before the Magistrate is that the complainant and accused are friends since many years. The accused was engaged in real estate business at Peenya area. He induced the complainant to purchase a property bearing No.480/A2, measuring 28,557 Sq.ft. consisting of constructed factory building with A.C. roofing in Sy.No.88 of Nellakaderenahalli Village, 4th Phase, Peenya Industrial Area, Yeshwanthpura Hobli, Bangalore North Taluk for a total consideration of Rs.1,49,00,000/-. The complainant entered into an agreement with the accused on 29.08.2005 and in pursuance of the agreement, he paid Rs.25,00,000/- on 29.08.2005, Rs.12,50,000/- on 17.09.2005, Rs.12,50,000/- on 19.10.2005 totally amounting to Rs.50,00,000/- to the accused. But the Sale Deed could not be executed because of non transferrable title of the accused over the property. Instead of executing the sale deed, the 4 accused went on demanding more amount in view of the considerable increase in the value of the land in Bangalore. As such, they mutually cancelled the agreement in view of the fact that the accused agreed to pay Rs.80,00,000/- to the complainant in four installments. Accordingly, the accused paid a sum of Rs.50,00,000/- and towards the payment of balance amount of Rs.30,00,000/-, the accused issued three cheques drawn on Indian Overseas Bank, Malleswaram Branch, Bangalore dated 15.11.2006, 25.11.2006 and 05.12.2006 for Rs.10,00,000/- each. On presentation of the cheques on 10.12.2006, all the cheques returned with an endorsement "Not Arranged For". So, the complainant got issued a legal notice on 02.01.2007 to the accused through RPAD and by Under Certificate of Posting. Inspite of receipt of the notice, the accused neither replied the notice nor paid the cheque amount. As such, a complaint came to be filed against the accused for the offence punishable under Section 138 of N.I. Act.
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3. In response to the notice, the accused appeared before the Magistrate and denied the charge levelled against him. The complainant in order to establish the charge examined himself as PW-1 and marked Exs.P1 to P10. The accused, on the other hand, has not led defence evidence except marking Ex.D-1 in the cross-examination of PW-1. Learned Magistrate upon hearing both the learned counsel appearing for the parties and upon consideration of the entire material placed on record held that the accused committed an offence punishable under Section 138 of N.I. Act, which resulted in his conviction and sentence by the Magistrate by judgment dated 21.03.2009. The Criminal Appeal filed by him against his conviction and sentence came to be dismissed on merits by the learned Sessions Judge by judgment dated 22.12.2009. Aggrieved by the judgment passed by both the Courts below, the revision petitioner is before this Court. 6
4. I have heard the learned counsel for the revision petitioner and the respondent. Perused the records secured from the Courts below.
5. The learned counsel for the petitioner would submit that three cheques in question were given to the complainant towards security while they were dealing in their business and that the complainant instead of returning those cheques misused and filed this case. The learned counsel further submitted that there is no evidence as to the existence of liability to pay Rs.30,00,000/- to the complainant over and above Rs.50,00,000/-. Further, he submitted that in the sale agreement marked as Ex.D1, there is no whisper about the three cheques being issued. Learned counsel placed reliance on the decisions of the Supreme Court reported in (2008) 4 SCC 54 (Krishna Janardhan Bhat v. Dattatraya G. Hegde) and (2009) 14 Supreme Court Cases 398 (M.D. Thomas vs. P.S. Jaleel and another) and sought to allow the revision petition and to set aside the judgment of conviction and sentence. 7
6. Learned counsel for the respondent-
complainant, on the other hand, submitted that whenever a cheque is issued, a presumption has to be drawn under Section 139 of the N.I. Act that the cheque has been issued towards the discharge of debt or liability and the presumption also includes the existence of legally enforceable debt or liability. He placed reliance on the decision reported in 2013 (4) Crimes 393 (SC) (C. Keshavamurthy vs. H.K. Abdul Zabbar) in support of his arguments. Further, he submitted that the agreement speaks about the payment of liquidated damages. In the event of failure to follow the terms and conditions of the agreement and in view of the cancellation of the agreement, the accused issued those cheques towards the liquidated damages which came to be dishonoured on presentation and hence, the accused committed an offence punishable under Section 138 of N.I. Act. There is no merit in the revision petition. Hence, he sought for dismissal of the revision petition.
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7. In view of the rival submission made by the learned counsels, let me examine the evidence on record. The petitioner who has been examined as PW-1 reiterated the case made out by him in the complaint in his evidence. The fact that the accused and the complainant entered into an agreement to purchase the properties belonging to the accused for a total consideration of Rs.1,49,00,000/- is not in dispute. It is also borne out from Ex.D1 the original sale agreement dated 29.08.2005. It is also not in dispute that the complainant paid a sum of Rs.50,00,000/- to the accused in pursuance of the terms of the agreement. Further, it is also not in dispute that because of the non transferrable title of the accused, the sale deed could not be executed. It is the case of the complainant that the accused instead of executing a sale deed went on demanding higher rate and thereby finally the agreement entered between the complainant and the accused came to be mutually cancelled. The case of the complainant is that the accused at the time of 9 cancellation of the agreement agreed to pay a sum of Rs.80,00,000/- as against Rs.50,00,000/- received from the complainant and in pursuance of the same the accused repaid a sum of Rs.50,00,000/-. The receipt of Rs.50,00,000/- from the accused by the complainant is an admitted fact. Further, case of the complainant is that the accused paid Rs.50,00,000/- out of Rs.80,00,000/- and towards the balance amount of Rs.30,00,000/-, the accused issued three cheques marked as Exs.P2 to P4 for Rs.10,00,000/- each. The defence of the accused is that those cheques were issued by him to the complainant as security towards the earlier transactions entered into between the complainant and the accused and at the time of cancellation of the agreement Ex.D-1, the complainant instead of returning those cheques has misused the same and filed the present case. The accused has produced the sale agreement dated 29.08.2005 entered into between the accused and the complainant marked as Ex.D1. The execution of this agreement is not in 10 dispute. That is in respect of transaction entered into between the accused and the complainant whereunder the complainant had agreed to purchase the property belonging to accused for a total consideration of Rs.1,49,00,000/-. In page No.6 of the agreement the complainant-Subray V. Bhat has made an endorsement for having received Rs.6,30,000/- on 18.08.2006 and Rs.43,70,000/- on 09.09.2006. Thus, the complainant has acknowledged for having received Rs.50,00,000/- from the accused as refund of the advance amount paid by the complainant to the accused under the sale agreement dated 29.08.2005.
8. The dispute is regarding the amount of Rs.30,00,000/-, which according to the complainant, the accused had promised to pay to the complainant at the time of the cancellation of the agreement Ex.D1 and in furtherance of the same, these cheques were issued by the accused in favour of the complainant for Rs.30,00,000/-. The accused, on the other hand, has denied for having promised to pay the additional sum of 11 Rs.30,00,000/-. According to him, these three cheques for Rs.30,00,000/- were issued by him to the complainant towards the security for the earlier transaction. But the facts remains that these three cheques bear different dates. What made the accused to issue these three cheques by putting different dates as 15.11.2006, 25.11.2006 and 05.12.2006 is not explained by the accused. Unless, there is some purpose behind it, the question of putting three different dates on three different cheques does not arise. Therefore, it is to be seen whether the cheques were issued by the accused to the complainant as security or towards the discharge of the liability of Rs.30,00,000/- which the accused had promised to pay to the complainant at the time of cancellation of the agreement as alleged. Admittedly, there is no whisper or an endorsement in the agreement-Ex.D1 regarding the payment of the additional sum of Rs.30,00,000/- by the accused to the complainant. When the accused refunded an amount of Rs.50,00,000/- to the 12 complainant in two installments for Rs.6,30,000/- and Rs.43,70,000/-, an endorsement has been made in page No.6 of the agreement in that regard. In that case, nothing prevented the complainant from endorsing the same in the agreement Ex.D1. When everything has been incorporated in Ex.D1 in writing regarding the refund of Rs.50,00,000/- to the complainant, the agreement is totally silent regarding the payment of Rs.30,00,000/- over and above Rs.50,00,000/-. But at the same time, it is pertinent to note that Clause 13 of the sale agreement Ex.D1 reads as under:
"13. The Vendor covenants with the Purchaser herein that he will perform his part as enshrined in this indenture and despite the readiness of the Purchaser if he fails to execute the sale deed in favour of the Purchaser herein within the stipulated time he will refund the entire advance amount herein received from the Purchaser and along with the liquidated damages. In case the Purchaser fails to register the sale deed with respect to the schedule property within the stipulated time the Vendor shall have the right to forfeit half of the advance amount paid to him."
9. In view of the aforesaid Clause in the agreement regarding payment of liquidated damages the possibility of accused having issued those three cheques 13 towards the payment of liquidated damages of Rs.30,00,000/- cannot be ruled out as alleged by the complainant. At the time of cancellation of the agreement mutually, it appears that the accused was not in position to pay the amount and at that time he issued three post dated cheques by putting different dates. At this stage, it has to be stated that whenever cheques are issued a presumption has to be drawn under Section 139 of N.I. Act that cheque has been issued towards discharge of his liability and the said presumption also includes the presumption of existence of legally enforceable debt or liability as held by the Supreme Court in 2013 (4) Crimes 393 (SC) (C. Keshavamurthy vs. H.K. Abdul Zabbar) which reads as under:
"Negotiable instruments Act, 1881- Sections 138 and 139 - Offence of dishonour of cheque - Presumption under Section 139 of the Act includes the presumption of existence of a legally enforceable debt or liability - High Court set aside the conviction in revisional jurisdiction accepting plea of respondent 14 accused that he had issued notice to complainant to not to present the cheque - Admittedly cheques subject matter of the case were the issued by accused subsequent to issuance of his notice and that notice referred to some earlier cheques - Burden was on accused to disprove the allegations once a prima facie case was made out by complainant - Conviction recorded by Sessions Court was liable to be restored."
10. Thus, the very fact that the cheques were issued by the accused to the complainant itself speaks that they were issued towards the discharge of existing or liability. Of course, it is rebuttable presumption and it is for the accused to rebut the presumption either by placing on record cogent evidence or based on the evidence placed on record by the prosecution. But the burden to be discharged by the accused is not like prosecution to prove the case beyond reasonable doubt. The burden to be discharged by an accused person is that of a plaintiff or defendant in a civil suit i.e., the preponderance of probability as held by the Supreme 15 Court in (2008) 4 SCC 54 (Krishna Janardhan Bhat v. Dattatraya G. Hegde) in para 31 of the judgment which reads as under:
"The Courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct."
11. Thus, from reading the aforesaid observation made by the Supreme Court, it is obvious that the accused need not step into the witness box. He can establish his defence on the evidence brought on record by the prosecution. Therefore, it is to be seen whether the accused has been able to rebut the presumption under Section 139 of the N.I. Act from the evidence brought on record by the complainant. Admittedly, the accused has not stepped into the witness box nor he examined any witness on his behalf. The agreement Ex.D-1 provides for liquidated damages in the event of 16 breach of the agreement. The agreement came to be cancelled since the accused could not perform his part of the contract and execute the sale deed because he had no transferable title. As such, the issuance of three cheques by the accused towards payment of liquidated damages as mutually agreed by them cannot be ruled out. Having regard to the presumption of law in favour of the complainant and that the cheques in question bear different dates and in view of the Clause in the agreement regarding payment of liquidated damages, it is impossible to accept the defence putforth by the accused that the cheques in question were issued by him to the complainant towards security and not towards discharge of liability. It is suffice to say that the accused failed to rebut the presumption available in favour of the complainant under Section 139 of N.I. Act.
12. The other submission made by the learned counsel for the accused is that there was no cause of action for the complainant to file a complaint. His submission is that the legal notice said to have been 17 issued to the accused was not at all served upon the accused and it was served upon one Srinivas-the brother of the accused. It is true that the legal notice sent to the accused by RPAD was served upon Srinivas as evident from Ex.P10 Registered acknowledgement due signed by Srinivas. Learned counsel for the accused placing reliance on the decision of the Supreme Court in (2009) 14 Supreme Court Cases 398 (M.D. Thomas v. P.S.Jaleel and another) submitted that the service of notice to Srinivas the brother of the accused is not proper service. The ratio reads as under:
"Negotiable Instruments Act, 1881- S.138(b)-Service of notice-Proper mode of- Notice received by family member, whether deemed to be served-Notice served on wife- Held, notice to drawer is sine quo non in terms of cl. (b) of proviso to S.138 of the Act- Conviction of the appellant therefore set aside."
13. From the reading of the aforesaid decision, it is seen that the notice addressed to the accused was served upon his wife. It is, in that context, the Supreme 18 Court held that it is not a proper service of notice in terms of Clause (b) of proviso to Section 138 of N.I. Act and thereby the conviction came to be set aside. Since the notice sent to the accused by RPAD in this case was served upon his brother Srinivas, it is needless to say that it is not a proper service. But the notice in this case was also issued to the accused by Under Certificate of Posting as could be seen from Ex.P9 Postal Acknowledgement for having sent the notice to the accused by Under Certificate of Posting. The accused has not disputed his address shown therein. The notice to the accused sent by Under Certificate of Posting is on his correct address and therefore a presumption has to be drawn under Section 27 of the General Clauses Act 1827 that the notice is deemed to have been served. As such, there is no substance in the contention taken by the accused that he was not served with the notice and therefore there was no cause of action to file a complaint. Thus, the complainant has been able to establish the due service of notice to the accused and 19 that the accused failed to pay the cheque amount even after service of notice and thereby he committed an offence for which he has been rightly convicted by both the courts below. I do not find any illegalities or irregularities committed by the Courts below. Revision petition is bereft of merits. Hence, I pass the following order.
Criminal Revision Petition is dismissed.
Sd/-
JUDGE PMR