Bangalore District Court
M/S. Reddy'S Chits Private vs Mr. Vinod Vargese on 29 November, 2021
IN THE COURT OF XXVII ADDL. CHIEF METROPOLITAN
MAGISTRATE, BANGALORE.
Present: Sri. T. GOVINDAIAH. B.Com., LLB.,
XXVII A.C.M.M Bengaluru.
Dated: This the 29th day of November 2021.
C.C. NO.5785/2020
Complainant M/S. REDDY'S CHITS PRIVATE
LIMITED,
Registered office at No.85,
South End Road,
Basavanagudi,
BENGALURU 560004.
Represented by its
Managing Director/Foreman
Sri. Rajeev Reddy. V
Aged about 43 Years
(Rep by Sri. P.P. Jayakumara
Adv.)
V/s.
Accused MR. VINOD VARGESE
S/o. Sri. T.K. Vargese
No.32, 5th Cross,
Gurumahal Extension,
Kammagondanahalli,
Jalahalli West,
Bengaluru 560015.
(Reptd by Sri. S.S Adv.,)
U/s.138 of Negotiable
Offence Instruments Act.
Plea of the accused
Pleaded not guilty
2 C.C. No. 5785/2020
Final Order Acquitted
Judgment Date 29/11/2020
****
JUDGMENT
The complainant Chit company filed this complaint against the accused for the offence punishable U/s.138 of the Negotiable Instruments Act.
2. Brief facts of the complainant case are as follows:-
The complainant company is a reputed Chit Company registered under the companies Act and engaged in the business of promoting and conducting Chits as per the provisions of the Chit Funds Act. The accused subscribed Chit bearing No. 25L25M2 with Ticket No.03, Chit bearing No. 25L25M2 Ticket No.22 for a both Chit value of Rs.25,00,000/- payable at Rs.1,00,000/- per month for a period of 25 months from the complainant company and Chit bearing No.10L25M2 with Ticket No.20, for a Chit value of 3 C.C. No. 5785/2020 Rs.10,00,000/- payable at Rs.40,000/- for 25 months from the complainant company and the accused became successful bidder in auction held on 15/06/2018 and the accused received a prize money of Rs.15,00,000/- after deducting Bid amount and standard deductions on 02/07/2018, chit auction held on 15/07/2018, and was declared as the prize bidder in the said auction draw and received the prize money of Rs.15,00,000/- after deducting the bid amount and standard deductions on 31/07/2018, chit auction held on 15/07/2018, and was declared as the prize bidder in the said auction draw and received the prize money of Rs.6,00,000/- after deducting the bid amount and standard deductions on 24/05/2018. Further, the accused along with his guarantors executed On demand promissory note, Surety Form, Guarantee Bond and other relevant documents infavour of the complainant company for the amount received by him. After receiving prize money, the accused was not 4 C.C. No. 5785/2020 regular in payment of Chit installments and he has paid part installments and thereafter he became defaulter. Since the accused failed to make payment, the complainant was forced to issue legal notice dated:
25/11/2019 to the accused. At that time, the accused personally came to the complainant company and issued cheque bearing No. 882940 dated: 03/01/2020 for Rs.12,27,643/- drawn on State Bank of India, Jalahalli Branch, Bengaluru in favour of the complainant company as a part Chit dues and requested not to file a suit or not to proceed the legal notice dated: 25/11/2019 against the accused. The complainant presented the said cheque for encashment through their banker Punjab and Sind Bank (PSB) Bank, J.C. Road Branch, Bengaluru and the said cheque returned with an endorsement dated: 04/01/2020 for the reason "Funds Insufficient". The complainant by giving demand notice dated : 20/01/2020 called upon the accused for payment of 5 C.C. No. 5785/2020 the cheque amount within 15 days from the date of receipt of notice. But the accused has not paid the cheque amount. Hence this complaint.
3. Sworn Statement of the Assistant Legal Manager of the complainant company recorded as PW1 and got marked 37 documents as per Ex.P.1 to 37, 3(a) and 7(a) and ordered summons to the accused. The accused appeared through his advocate and he enlarged on bail. Substance of accusation readover to the accused and he pleads the case of the complainant as false. In view of the decision of the Hon'ble Supreme Court of India, reported in (2014) 5 SCC 590 (Indian Bank Association & Ors V/s. Union of India & Ors), sworn statement of the complainant is treated as chief-examination of the complainant. The accused has filed application U/sec. 145(2) of the Negotiable Instruments Act seeking permission for cross-examination of the complainant and allowed the 6 C.C. No. 5785/2020 same. On behalf of the accused cross-examined the PW1. On closure of the complainant side evidence, Statement of the accused recorded U/sec. 313 of Cr.P.C.,. The accused has denied the incriminating circumstances which appears against him in the complainant side evidence. The accused has led defense evidence as DW1 and two witness namely Vijay Vargees and Saravana have been examined as DW2 & 3 and got marked Ex.D1 to 27 documents.
4. Heard the arguments of learned counsel for the complainant and accused and perused the oral and documentary evidence produced by both the parties.
5. The points that would arise for my consideration are as follows:
(i) Whether the complainant proves that the accused issued Ex.P.3 cheque towards discharge of legally enforceable debt or liability and the said cheque 7 C.C. No. 5785/2020 dishonoured for the reason "Funds Insufficient" ?
(ii) Whether the complainant proves that after dishonour of cheque, served notice to the accused in compliance of Sec.138(b) of N.I Act?
(iii) What order?
6. My answer to the above points are as follows:-
Point No.1 : In the Negative Point No.2 : In the Negative Point No.3 : As per the final order, for the following.
REASONS
7. Point No.1 : It is the case of the complainant company that the complainant company is a reputed Chit Company registered under the companies Act and engaged in the business of promoting and conducting Chits as per the provisions of the Chit Funds Act. The accused subscribed Chit bearing No. 25L25M2 with Ticket No.03, Chit bearing No. 25L25M2 Ticket No.22 for a both Chit value of 8 C.C. No. 5785/2020 Rs.25,00,000/- payable at Rs.1,00,000/- per month for a period of 25 months from the complainant company and Chit bearing No.10L25M2 with Ticket No.20, for a Chit value of Rs.10,00,000/- payable at Rs.40,000/- for 25 months from the complainant company and the accused became successful bidder in auction held on 15/06/2018 and the accused received a prize money of Rs.15,00,000/- after deducting Bid amount and standard deductions on 02/07/2018, chit auction held on 15/07/2018, and was declared as the prize bidder in the said auction draw and received the prize money of Rs.15,00,000/- after deducting the bid amount and standard deductions on 31/07/2018, chit auction held on 15/07/2018, and was declared as the prize bidder in the said auction draw and received the prize money of Rs.6,00,000/- after deducting the bid amount and standard deductions on 24/05/2018.
Further, the accused along with his guarantors executed On demand promissory note, Surety Form, 9 C.C. No. 5785/2020 Guarantee Bond and other relevant documents infavour of the complainant company for the amount received by him. After receiving prize money, the accused was not regular in payment of Chit installments and he has paid part installments and thereafter he became defaulter. Since the accused failed to make payment, the complainant was forced to issue legal notice dated:
25/11/2019 to the accused. At that time, the accused personally came to the complainant company and issued cheque bearing No. 882940 dated: 03/01/2020 for Rs.12,27,643/- drawn on State Bank of India, Jalahalli Branch, Bengaluru in favour of the complainant company as a part Chit dues and requested not to file a suit or not to proceed the legal notice dated: 25/11/2019 against the accused. The complainant presented the said cheque for encashment through their banker Punjab and Sind Bank (PSB) Bank, J.C. Road Branch, Bengaluru and the said cheque returned with an endorsement dated: 10 C.C. No. 5785/2020
04/01/2020 for the reason "Funds Insufficient" and in spite of demand notice by the complainant the accused has not paid the cheque amount. PW1 who is the Managing Director and Authorized Representative of the complainant company in his chief examination has reiterated the contents of the complaint averments.
8. As borne out from the cross-examination of PW1 and defense evidence, the contention of the accused is that he paid entire chit amount to the complainant company. After payment of all the installments the complainant himself returned the surety documents to the accused. Further, the accused contended that, the complainant has not returned one cheque, stating that the same was misplaced and he will returned the same after tracing the same. In that regard, the complainant also gave a letter by mentioning the number of missed cheque.
Accordingly, the complainant has not returned one 11 C.C. No. 5785/2020 cheque and the complainant returned all the documents which are furnished to the complainant by accused.
9. The accused further contended that, Vijay Vargees and Saravana are the sureties to his chit. The complainant also returned all the surety documents to Vijay Vargees and Saravana. Accordingly, the complainant themselves have returned the documents to the accused and also sureties. Therefore, there is no any dues to the complainant company from the accused. Therefore, the accused has paid entire installment amount to the complainant. But the complainant by misusing the one document he filed the present case against the accused only with an intention to harass the accused.
10. Further, two witness namely Vijay Vargees and Saravana have been examined as DW2 & DW3. 12 C.C. No. 5785/2020 In the evidence of DW2 & DW3 they also states that, the accused has paid entire installments amount to the complainant. Thereafter, the complainant company themselves have returned the documents in favour of accused and surety. Therefore, there is no any dues by the accused.
11. In support of say of the DW1 to 3 they have produced the Chit Agreement, Blank cheques issued by the accused, blank cheque issued by sureties as Ex.D1 to 27.
12. Here in this case, the complainant contended that, the accused fails to pay the installments of Chits. After issuance of demand notice, accused paid Ex.P3 Cheque. The same was presented for encashment, but Ex.P3 cheque dishonoured with a shara "Funds are Insufficient" in the account of the accused. In that regard, bank issued endorsement as per Ex.P4. 13 C.C. No. 5785/2020 Thereafter, the complainant issued legal notice dated:
20/01/2020 for demanding the cheque amount.
13. On the other hand, the accused contended that, he paid all the installments to the complainant. After closure of the all the installments the complainant themselves have returned Ex.D1 to 27, in favour of accused and sureties. At the time of subscribing to the Chit, the complainant has received Blank cheques from the accused and surety persons. After clearance of all the installments the complainant himself returned all the surety documents infavour of the accused and sureties. He further contended that, the complainant intentionally not issued one cheque saying that the same was misplaced and it was returned after tracing the same. In that regard the complainant himself gave endorsement by putting his signature. Now, after closure of all the installments the complainant has filed 14 C.C. No. 5785/2020 this case, only with an intention to gain wrongful profit and to cause loss to the accused.
14. It is important to note that, here in this case, it is admitted fact that complainant is running a Chit business, it is also an admitted fact that, the accused is the subscriber of the Chits, it is also an admitted fact that DW2 & 3 are the sureties to the accused. Further, here in this case, it is an admitted fact that, accused bid the Chits by putting his signatures to all the documents in favour of the complainant. Further, it is also an admitted fact that, the complainant have received documents from DW2 & 3 for surety purpose. Now the complainant contended that the accused fails to pay the installments amount. After demanding the same, the accused issued Ex.P3 Cheque. The same was dishonored with an endorsement that "Funds Insufficient" . Thereafter he issued notice to the accused on 20/01/2020. But now the accused himself 15 C.C. No. 5785/2020 examined as DW1, the sureties namely Vijay Vargees and Saravana themselves as examined as DW2 & 3. In the evidence of DW1 to 3 they have denied the all the contents of complaint and they have took separate defense stating that, the accused paid all the installment in respect of Chit business. After closure of the all the installments the complainant himself returned Ex.D1 to 27 infavour of accused and sureties.
15. It is important to note that, there is no doubt on perusal of the evidence of PW1 and Ex.P1 to 37, it is clear that, accused is one of the subscriber of the Chit fund. The evidence of PW1 and Ex.P1 to 37 would clearly establishes the transactions between accused and complainant. In order to rebut the evidence of PW1 and Ex.P1 to 37, accused and two sureties have examined as DW1 to 3 and produced 27 documents at Ex.D1 to 27.
16 C.C. No. 5785/2020
16. It is important to note that, in the cross- examination of PW1, he denied about returns of Ex.D1 to 27 infavour of accused and sureties. But in the cross-examination of PW1, he clearly admits that accused is the subscriber of Chit and DW2 and DW3 are the sureties to the accused. On perusal of Ex.D1 to 27, it is clear that, Ex.D1 & 2 are the Chit agreement executed by accused in favour of the complainant. Now, DW1 produced the same, stating that the complainant returned to his custody after closure of Chit installments. Further, Ex.D3 to 7 are the Blank cheques issued by the accused infavour of complainant towards Chit transactions. Now DW1 has produced the Ex.D3 to 7 stating that the complainant himself returned to the custody of accused after closure of Chit transactions. In the same manner, Ex.D8 to 27 are the cheques issued by the sureties infavour of complainant and now the defense witness i.e., DW2 & DW3 have produced the said cheques stating that the 17 C.C. No. 5785/2020 complainant himself returned the said cheque to their custody after closure of the Chit transactions. Therefore, Ex.D1 to 27 would go to show that the same are returned by the complainant to the custody of accused and sureties.
16. It is important to note that, as per the contention of PW1, accused was in due of Rs.12,27,643/-. In the evidence of PW1 he states that, accused issued Ex.P3 Cheque to discharge of installment of the Chit amount. He further contenteded that Ex.P3 Cheque was presented for encashment and same was dishonoured with an endorsement "Funds Insufficient". Thereafter he gave legal notice to the accused on 20/01/2020. The said notice are returned unserved. On the other hand, the accused contended that he paid entire installment amount to the complainant. After completion of the installment the accused themselves returned the surety 18 C.C. No. 5785/2020 bond and blank cheques for the custody of the accused and sureties. The accused further contended that, the complainant intentionally not returned one cheque and the complainant agreed to returned the said cheque after tracing the same. The same was misplaced. Now, the complainant filed present case by misusing the returned cheque. It is important to note that, the accused produced the letter issued by complainant by putting his signature on 06/09/2019. In the said letter the complainant has clearly mentioned that "cheque bearing No.093705 and cheque bearing No.882940 these two cheques bearing above numbers we don't have with us. You can give stop payments". These facts clearly go to show that the complainant himself gave endorsement to the accused by putting his signature. Further, the document produced by the accused i.e., Ex.D1 to 27 are go to show that these documents are produced by the accused while they entering into Chit transactions. After closure of the 19 C.C. No. 5785/2020 installments the complainant themselves have returned the said documents to the accused. Further, in the evidence of PW1 or in the complaint the complainant has not gave any explanation about Ex.D1 to 27. Further, the counsel for the complainant also not disputed the Ex.D1 to 27. Under these circumstances, Ex.D1 to 27 are remained unchallenged. Here in this case, on careful perusal of Ex.D1 to 27 it is clear that these documents are given to the custody of the complainant. After completion of Chit transactions the complainant himself returned the same to the custody of accused. Further, the entire case of the complainant is rebutted by the accused by producing consist and cogent material evidence. Therefore, the evidence of DW1 to 3 and Ex.D1 to 27 itself rebut the presumption U/sec. 139 of the Negotiable Instruments Act.
20 C.C. No. 5785/2020
18. As per the Ex.P4 i.e., Bank endorsement the cheque in question i.e., Ex.P3 was dishonored for the reason "Funds Insufficient" also attracts Sec.138 of the Negotiable Instruments Act. But as discussed above, the complainant himself returned Ex.D1 to 27 to the custody of the accused. These facts clearly go to show that after closure of the Chit transactions the complainant himself handed over the above said documents to the custody of the accused. Therefore, on perusal of the entire evidence placed before the court, the complainant fails to establish the liability of the accused for the cheque amount of Rs.12,27,643/-. Therefore, the above aspects itself rebuts the presumption U/sec. 139 of the Negotiable Instruments Act. In view of my above discussion, this court answer Point No.1 in the Negative.
19.Point No.2. It is the case of the complainant that, the accused have issued Ex.P3 cheque towards 21 C.C. No. 5785/2020 installments of Chit fund. As discussed above, in the evidence of DW1 to 3 they have clearly and unequivocally states that the complainant himself returned the Ex.D1 to 27 to the custody of accused and sureties. The accused had paid entire installments to the complainant. After closure of the entire installment the complainant handed over the Ex.D1 to 27 to the custody of accused and sureties. But the complainant contended that after dishonour of Ex.P3 he issued notice to the accused as per Ex.P5. Ex.P6 is the postal receipt, Ex.P7 is the returned postal cover. Further, there is no dispute regarding the issuance of notice. Therefore, the material placed on record by the complainant clearly go to show that he sent notice to the accused and the complainant has complied mandatory requirement U/sec. 138(b) of the Negotiable Instruments Act. But, as discussed above, the evidence of DW1 to 3 and Ex.D1 to 27 would rebut the entire case of the complainant. Under such 22 C.C. No. 5785/2020 circumstances, though the complainant sent the notice to the accused the same is not sufficient to prove his case. Accordingly this court answer Point No. 2 in the Negative.
20. Point No.3 :- In view of my findings on Point No.1 & 2 though the complainant is able to establish that he has complied mandatory requirement of Sec.138(b) of the Negotiable Instruments Act by issuing demand notice to the accused after dishonor of the cheque, but the complainant fails to establish that the complaint averments by producing materials evidence. The evidence of DW1 to 3 and Ex.D1 to 27 are clearly support the case of accused. Therefore the accused is not liable for punishment for the offence punishable U/sec. 138 of the Negotiable Instruments Act. In the result, this court proceed to pass the following:-
23 C.C. No. 5785/2020
ORDER The complaint filed by the complainant against the accused is dismissed.
Consequently, acting U/s.255(1) of Cr.PC, the accused is acquitted for the offence punishable U/s.138 of the N.I. Act and his bail bond and surety bond are cancelled and he set at liberty.
(Dictated to the stenographer, transcribed by her, corrected and then pronounced in open court by me on this the 29 th day of November, 2021) (T. Govindaiah) XXVII A.C.M.M., Bengaluru.
ANNEXURE Witnesses examined on behalf of the complainant:
PW1 : SRI. RAJEEV REDDY Documents marked on behalf of the complainant Ex.P1 : Extract of minutes of Meeting of the Board of Directors of the complainant company held on 15/05/2017 Ex.P2 : Authorization letter Ex.P3 : Cheque Ex.P3(a) : Signature of the accused Ex.P4 : Bank Endorsement 24 C.C. No. 5785/2020 Ex.P5 : Office copy of Legal notice dt:20/01/2020 Ex.P6 : Postal receipt Ex.P7 : Returned Postal Cover Ex.P.7(a) : Copy of notice contained in Ex.P7 Postal Cover Ex.P8 to 11 : Promissory Notes Ex.P12 to 15 : Chit Agreements Ex.P16 to 19 : Agreements of Guarantors Ex.P20 to 23 : Surety proposal forms Ex.P24 to 27 : Cash Vouchers Ex.P28 to 31 : Chit Ledger extracts Ex.P32 & 33 : Chit commencement certificates Ex.P34 to 37 : Legal notices dt:25/11/2019 Witnesses examined on behalf of the accused:
DW1 : VINOD VARGEES DW2 : VIJAY VARGEES DW3 : SARAVANA
Documents marked on behalf of the accused:
Ex.D1 & 2 : Chit Agreements
Ex.D3 to 27 : Blank Cheques
XXVII A.C.M.M
Bengaluru.
25 C.C. No. 5785/2020
29/11/2021
Comp: Sri. PP Adv.,
Accd: Sri. SS Adv.,
For Judgment.
(Order typed vide separate sheet)
ORDER
The complaint filed by the complainant against the accused is dismissed. Consequently, acting U/s.255(1) of Cr.PC, the accused is acquitted for the offence punishable U/s.138 of the N.I. Act and his bail bond and surety bond are cancelled and he set at liberty.
XXVII A.C.M.M., Bengaluru.