Bangalore District Court
M/S Emerald Entrprises vs M/S Zoom Exports Limited on 2 January, 2021
IN THE COURT OF THE LVIII ADDL.CITY CIVIL AND
SESSIONS JUDGE (CCH-59), BENGALURU CITY.
Dated this the 2nd day of January 2021
PRESENT
Sri.G.L.Lakshminarayana, B.Com.,LL.B.,
LVIII Addl. City Civil & Sessions Judge (CCH-59),
Bengaluru.
: CRIMINAL APPEAL NO.133/2018 :
APPELLANT : M/s Emerald Entrprises,
Dasanapura Village,
Dorapalli Post,
Hosur-635 109
Represented by its Proprietor
C. Venu Madhav
(By Sri.Dwarakanath B.R., Adv.,)
V/S
RESPONDENT: M/s Zoom Exports Limited
No.98, Hard Soft Towers,
21st Main, BSK 2nd Stage,
Bengaluru-560 070.
Represented by its proprietor
Mr. Satish Bhaskar
(By Sri.R.G.K., Advocate,)
: JUDGMENT :
The appellant/accused has preferred an appeal under section 374(3) of Cr.P.C., to set aside the judgment of 2 Crl.Apl.133/2018 conviction and order of sentence passed in C.C.No.1561/2016 dated 02.01.2018 on the file of learned XLII Additional Chief Metropolitan Magistrate, Bangalore by allowing the appeal and to acquit the appellant/accused.
2. The parties to the appeal are hereinafter referred to their ranks assigned to them before the Trial Court for the sake of convenience.
3. The facts scenario of the case as per complainant is as under:
The complainant has filed a private complaint under section 200 of Cr.P.C., against the accused for the offence punishable under section 138 of N.I.Act in PCR No.12963/2015. The case of the complainant is that the complainant is running export business and accused is known to him since many years. The accused had approached the complainant during the year 2014 seeking loan of Rs.19,00,000/- to improve and develop his business. Accordingly, complainant has given an amount of Rs.17,00,000/- by way of six cheques through his account 3 Crl.Apl.133/2018 No.04251010001414 during 2014. In addition to that complainant has also paid a sum of Rs.2,00,000-/- to the accused through NEFT to M/s ABI Industries on the instruction of the accused. The accused had promised to repay the said loan amount of Rs.19,00,000/- along with interest within six months. After six months the complainant requested the accused for repayment of loan amount along with interest. For which the accused has given a cheque bearing No.204984 dated 31.07.2015 for a sum of Rs.19,00,000/- drawn on Union Bank, Richmond Town, Bengaluru. Thereafter the complainant presented the cheque for encashment on 16.09.2015 through his banker. But the cheque came to be dishonoured with a reason of "Account Closed" as per the bank memo dated18.09.2015. Thereafter, the complainant issued legal notice to the accused on 23.09.2015 by RPAD to the office and residential address of the accused calling upon him to make the payment of the dishonored cheque. But the notice served to the residential address was returned with the share "Left without intimation"
on 26.09.2015. However it was duly served upon the accused
4 Crl.Apl.133/2018 on another address and the accused got issued vague reply. On 09.10.2015 complainant got issued rejoinder to reply given by the accused. In spite of receipt of legal notice, the accused has not paid the cheque amount. Hence, the complaint.
4. The trial court took cognizance of the offence sworn statement of the complainant was recorded and registered a case.
5. In order to prove the case of the complainant, the proprietor of complainant firm examined as PW-1 and got marked Ex.P.1 to Ex.P.7 documents in evidence and closed his side. After closing the evidence of the complainant, the statement of accused under section 313 of Cr.P.C. was recorded and the proprietor of accused company has taken a defence as total denial and he was examined himself as D.W.1 and got marked Ex.D.1 to Ex.D.9., and closed his side.
6. After hearing the arguments of both sides and appreciating the oral and documentary evidence, the learned 5 Crl.Apl.133/2018 XLII Additional Chief Metropolitan Magistrate, Bengaluru City, by impugned judgment and order of sentence dated.02.01.2018, convicted the accused for the offence punishable under section 138 of Negotiable Instruments Act and sentenced him to pay fine of Rs.21,50,000/- in default of payment of fine amount, he shall undergo simple imprisonment for Five Months and out of the fine amount a sum of Rs.21,45,000/- is ordered to be paid as compensation to the complainant as provided under section 357 of Cr.P.C. and the balance amount of Rs.5,000/- shall be remitted as fine to the State.
7. Being aggrieved by the impugned order of the trial court, the appellant/accused has preferred an appeal on the following grounds:
The learned Magistrate has committed grave error in law in convicting the accused for the offence punishable under Sec.138 of N.I.Act. The PCR was filed without the board resolution and the person on the day of filing the PCR had no authority to file the PCR. The learned Magistrate has not considered the fact that, the complainant company has not 6 Crl.Apl.133/2018 produced or marked any document such as articles of association, memorandum of association, company registration certificate etc. to proposed new business. The accused believed his prospective business partner issued the cheque. The belief of the accused was that when a cheque is issued against a legally enforceable liability only then it amounts to a criminal offence and in this particular case when there was no legally enforceable liability issue of a cheque does not amount to an offence. The transaction between the Complainant Company and accused firm is purely a transaction to do the business together. The learned Magistrate has erred in not appreciating the facts that the complainant witness. PW1 in his cross examination has categorically admitted that there was no loan transaction between the complainant and accused. The learned Magistrate has erred in not appreciating the fact that the complainant has not produced any document to show that accused instructed the complainant to transfer Rs.2,00,000/-
to ABI industries. The learned Magistrate erred in not appreciating the fact that complainant has misused the 7 Crl.Apl.133/2018 undated cheque given to him in good faith. No documents were produced by the complainant to substantiate their claim of loan. The learned Magistrate has committed miscarriage of justice in discarding the case laws referred by the accused. Amongst other grounds, the appellant has prayed to set aside the impugned order by allowing this appeal.
8. After filing of the appeal, notice was issued to the respondent/Complainant. In response to court notice, the respondent/Complainant appeared before the court and he was represented by his counsel. Respondent has resisted the appeal.
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9. Trial Court records are received.
10. Heard the arguments of learned counsel for the appellant and the learned counsel for the respondent. Perused the trial court records.
11. The following points arise for my consideration:-
1. Whether the trial Court has committed error in convicting the accused for the offence punishable under Section 138 of 8 Crl.Apl.133/2018 Negotiable Instruments Act and it requires interference by this court.
2. What order?
12. My findings on the above points are as follows:-
POINT NO.1 - Negative;
POINT NO.2 - As per final order for the following:-
: R E A S O N S:
13. POINT NO.1: The complainant contention is that the complainant company is running export business and accused is known to him. The accused has approached the complainant during the year 2014 seeking loan of Rs.19,00,000/- in order to improve and develop the accused business. Accordingly, complainant has given an amount of Rs.17,00,000/- by way of six cheques through his account No.04251010001414 during 2014. The accused encashed those cheques. In addition to that complainant has also paid a sum of Rs.2,00,000-/- to the accused through NEFT to M/s ABI Industries on the instruction of the accused. The accused had promised to repay the said loan amount of 9 Crl.Apl.133/2018 Rs.19,00,000/- along with interest within six months. The complainant had approached the accused and requested repayment of loan amount along with interest for which the accused has issued a cheque dated 31.07.2015 for a sum of Rs.19,00,000/- drawn on Union Bank, Richmond Town, Bengaluru. The complainant presented the cheque for encashment through his banker. But the banker has given endorsement as "Account Closed". Thereafter, the complainant got issued legal notice to the accused on 23.09.2015 by RPAD to the office and residential address of the accused. The legal notice to the residential address was returned with the share "Left without intimation". However it was duly served upon the accused on another address and the accused got issued vague reply. The complainant got issued rejoinder to reply given by the accused.
14. On the other hand, the accused contended that during the last week of June 2014 Mr. Satish Bhaskar expressed his desire to enter into granite export business with him and after through discussions both agrees to establish private limited company to do granite export business. In that 10 Crl.Apl.133/2018 connection M/s Zoom export limited, on various dates transferred money to the account of M/s Emerald Enterprises. Mr. Satish Bhaskar himself approached the Registrar of companies, Ministry of Corporate affairs, Government of India for availability of the name "Naturstein Emerald Private Limited" and "Opal Naturstein Emerald private Limited" but both the applications were rejected. In the course of taking the business forward of an amount of Rs.2,00,000/-was transferred M/s Zoom Exports Limited to M/s ABI industries as advance for the consideration of the said proposed granite Factory. In the last week of November 2014 Mr. Satish Bhaskar requested him to give undated cheque for Rs.19,00,000/- as security and he blindly believing the words of said Satish Bhaskar gave undated cheque for Rs.19,00,000/-only as security. Either Mr. Satish Bhaskar and M/s Zoom Exports limited., has not given any loan to him.
15. P.W.1 in his chief examination reiterated the facts as alleged in the complaint. In his cross examination deposed that he has not received any documents from the accused at 11 Crl.Apl.133/2018 the time of giving loan to the accused and he has paid a loan amount through cheque to the accused. On which date he has paid loan to the accused was mentioned in the Ex.P.3. Further P.W. 1 in his cross examination deposed that on 26.08.2015 he has issued legal notice to the accused through E-mail. In the said notice he has mentioned that accused due an amount of Rs.19,00,000/-. That on 31.07.2015 disputed cheque was given by the accused in his favour. Legal notice has not been issued in the name of complainant company. As an Administrative Director, he has issued legal notice to the accused. The learned counsel for the accused in his cross examination put the suggestion that complainant misused the cheque and filed a false case against the accused, this suggestion is denied by P.W.1. and further P.W.1 denied the suggestion that he has created the Ex.P.7.
16. Ex.P.1 it reveals that accused has issued cheque dated 31.07.2015 in the name of complainant's company for a sum of Rs.19,00,000/-. The said cheque was presented by the complainant through his banker. The banker has given an endorsement as "Account Closed" as per Ex.P.2. Thereafter 12 Crl.Apl.133/2018 complainant issued legal notice to the accused as per Ex.P.3. Ex.P.3(a) and (b) postal receipts it reveals that complainant has issued legal notice to the accused. Ex.P.3(c) it reveals that legal notice duly served upon the accused. Ex.P.3(d) it reveals that legal notice issued by the complainant to the accused is returned as left without in residential address. Ex.P.3(dd) it reveals that reply notice issued by the complainant is unserved. Ex.P.4 it reveals that reply notice issued by the accused. In the reply notice accused contended that cheque has given in favour of complainant as a security purpose. Further stated that complainant misused the cheque and forcibly taken an undated cheque for Rs.19,00,000/-. Ex.P.5 it reveals that rejoinder to the notice. Ex.p.6 is complaint. Ex.P.7 is board of resolution.
17. DW-1 in his chief examination deposed that he knows the complainant. During the last week of June 2014 Mr. Satish Bhaskar expressed his desire to enter into granite export business with him and after discussions both agrees to establish private limited company to do granite business. In that connection M/s Zoom Exports Limited on various dates 13 Crl.Apl.133/2018 transferred money to the account of M/s Emerald enterprises. Mr. Satish Bhaskar himself approached Registrar of companies, Ministry of Corporate affairs, Government of India for availability of the name "Naturstein Emrald Private Limited" and "Opal Naturstein Emerald private Limited" but both the applications were rejected. In the course of taking the business forward of an amount of Rs.2,00,000/-was transferred M/s Zoom Exports Limited to M/s ABI industries as advance for the consideration of the said proposed granite Factory. In the last week of November 2014 Mr. Satish Bhaskar requested him to give undated cheque for Rs.19,00,000/- as security and he blindly believing the words of said Satish Bhaskar gave undated cheque for Rs.19,00,000/-only as security. Either Mr. Satish Bhaskar and M/s Zoom Exports limited., has not given any loan to him. In his cross examination he stated that except date all writing of disputed cheque is in his hand writing, no company was formed by complainant and accused. Further PW1 in his cross examination deposed that PW1 is a administrative director of the complainant company. Further admitted that 14 Crl.Apl.133/2018 at the time of issuing the cheque in favour of complainantRs.19,00,000/- was not in his account.
18. Ex.D.1 is receipt. Ex.D.2 is acknowledgment. Ex.D.3 annual returns for the year 2014-15. Ex.D.4 is annual returns for the year 2015-16. Ex.D.5 is affidavit of DW1. Ex.D.6 is E-mail copy. Ex.D.7 is certificate under Section.65(B) of evidence Act. Ex.D.9 is a board resolution. Ex.D.9 is Form No.MGT-14.
19. The specific case of the complainant is that accused borrowed the loan from complainant and he has paid the said loan accused has issued disputed cheque. On the other hand the accused contended that he has not issued disputed cheque for discharge of liability. However, it was given to the complainant towards the security and by misusing the same, the complainant has filed false case. D.W.1 in his cross examination admitted about the received an amount of Rs.17,00,000/- from the complainant. The case of the complainant is that on the instruction given by the accused, complainant had paid Rs.2,00,000/- to M/s ABI Industries.
15 Crl.Apl.133/2018 PW1 in his chief examination reiterated the said fact. Even though PW1 was subjected to cross examination of the accused and his denied the said fact. Therefore, the evidence on record discloses that complainant has proved the allegation made in the complaint about the issue of Rs.19,00,000/- from the accused. Further DW1 in his cross examination admitted that at the time of closing his account disputed cheque amount of Rs.19,00,000/- was not in his account. Further stated that complete transaction was made by him with PW1 and he knows that P.W. 1 is a administrative director of complainant company. This portion of the cross examination it reveals that transaction alleged in the complaint took place between the P.W.1. DW1 is aware that P.W. 1 is a Managing Director of the complainant company.
20. DW 1 in his cross examination stated that he has received the work order from the Bleth Exim India company on 30.05.2014, 11.08.2014, 09.04.2014 and 19.02.2014. In that regard there was a financial transaction and work orders have been sent to the complainant company, himself and 16 Crl.Apl.133/2018 complainant have not jointly formed the company. Further DW 1 has received work order from the Bleth Exim India Company limited on different dates and in connection with that he was in needy of money, he sent all work orders to the complainant and he has not formed any company with the complainant and ABI industries and used to supply the goods on credit basis to him. It could be seen that accused has not disputed Ex.P.1 cheque pertains to the account of emerald enterprises and his signature on it.
21. The learned counsel for the accused contended that the complainant has no proper authorization and board of resolution passed by the complainant company as required under law. Ex.P.7 produced by the complainant it reveals that complainant company has issued authorization and board of resolution passed by the complainant company in favour of P.W.1. therefore contents of the Ex.P.7 it shows that complainant company has issued authorization to the P.W. 1 and the said contention taken by the accused cannot be accepted. Further the learned counsel for the accused claims and after dishonor of cheque the legal notice was issued by 17 Crl.Apl.133/2018 Mr. Satish Baskar and not by the M/s Zoom Export Limited. In this regard the Apex court of India passed the order in Central Bank of India and another V/s Saxons forms and others. As per this decision there is no requirement that the payee must be identified the particular manner, while issuance of notice as per clause (B) of Section.138 of N.I.Act. According to accused legal notice was issued by one Satish Basker and not by M/s Zoom Exports Private Limited. Ex.P.3 notice dated 23.09.2015 and posted on 24.09.2015. The same has been served upon the accused on 26.09.2015. In this regard produced theEx.P.3(c), there is no dispute about the service of legal notice. Accused has got issued Ex.P.4 reply, in the reply notice accused has not disputed the said fact.
22. Perused the oral and documentary evidence placed by the both the parties it reveals that the accused has approached the complainant in the year 2014 and sought for loan of Rs.19,00,000/- in order to improve and develop the accused business concern. The complainant has given an amount of Rs.17,00,000/- by way of six cheques through his account. The accused encashed those cheques. In additional 18 Crl.Apl.133/2018 to the complainant has also given Rs.2,00,000/- through NEFT to M/s ABI Industries on the instruction of the accused. The accused has promised to pay said loan amount of Rs.19,00,000/- along with interest within six months. The complainant approached the accused and requested to repay the loan amount. Accused has issued cheque dated 31.07.2015 for a sum of Rs.19,00,000/-. The said cheque was presented by the complainant for encashment, but the banker has given endorsement as account closed. Thereafter complainant got issued legal notice as per Ex.p.3. The said notice duly served upon the accused as per Ex.p.3(c). After service of legal notice accused got issued vague reply. But he did not repay the loan amount to the complainant. Therefore accused is liable to pay the amount of Rs.19,00,000/- in favour of complainant. And the complainant has proved the ingredients as contemplated under Section.138 of N.I.Act. Therefore the trial court rightly convicted the accused for the offence punishable under Section.138 of N.I. Act. I do not find any valid reasons to interfere into the judgment of the trial court. Hence, I answer point No.1 in the negative.
19 Crl.Apl.133/2018
23. POINT NO.2: In view of my finding on point No.1, I proceed to pass the following:
: ORDER :
The appeal filed by the appellant under section 374(3) of Cr.P.C., is hereby dismissed.
The judgment of conviction and order of sentence passed by the learned XLII Additional Chief Metropolitan Magistrate, Bangalore, in C.C.No.1561/2016 dated 02.01.2018 is hereby confirmed.
Send TCR to the concerned court along with copy of the judgment.
(Dictated to the Stenographer directly on computer, then corrected and pronounced by me in the open court on this the 2nd day of January 2021) (G.L.LAKSHMINARAYANA) LVIII ADDL.CITY CIVIL AND SESSIONS JUDGE (CCH-59), BENGALURU CITY.
20 Crl.Apl.133/2018 Judgment pronounced in the open Court (vide separate order) ORDER The appeal filed by the appellant under section 374(3) of Cr.P.C., is hereby dismissed.
The judgment of conviction and order of sentence passed by the learned XIX Additional Chief Metropolitan Magistrate, Bangalore, in CC.No.28996/2017 dated 12.09.2018 is hereby confirmed.
Send TCR to the concerned court along with copy of the judgment.
(G.L.LAKSHMINARAYANA) LVIII ADDL.CITY CIVIL AND SESSIONS JUDGE (CCH-59), BENGALURU CITY.