Bangalore District Court
Sri.K.C.P.Pillai vs Sri.Lokanath B.R on 6 January, 2023
KABC030004032018
IN THE COURT OF XX ADDL.CHIEF METROPOLITAN
MAGISTRATE AT BENGALURU CITY
PRESENT: BHOLA PANDIT,
B.Com.,LL.M.,
XX ADDL. C.M.M.
Bengaluru.
Dated this the 6th day of January 2023
C.C.No.99/2018
Complainant : Sri.K.C.P.Pillai,
S/o KN Chandrashekaran Pillai,
Age 61 years,
R/at.No.12, 5th Main,
Raghavendra Nagar,
Ramamurthy Nagar Extension,
Bengaluru- 560 016.
{ By Sri.Lakshmikanth - Advocate }
Vs.
Accused : Sri.Lokanath B.R.
S/o Late B.M.Ramanna,
Age 59 years,
R/at.No.19, BMR Mansion,
2 C.C.99/2018
2nd Cross, Raja Ram Mohan Extension,
Bengaluru- 560 027.
{ By Sri.K.V.Vinay Shreyas - Advocate }
Offence complained : U/S. 138 of N.I. Act.,
Plea of accused : Pleaded not guilty
Final Order : Accused is Convicted
Date of Order : 06-01-2023
JUDGMENT
The present complaint is filed under section 2(d) read with section 200 of code of criminal procedure against the accused seeking to punish him for the offence punishable under section 138 of the Negotiable Instruments Act ( in short referred as "N.I. Act").
3 C.C.99/2018
02. The factual matrix of the complaint is summarized as under;
It is averred in the complaint that, the accused is the owner of the premises No.19, BMR mansion, 2nd Cross Raja Ram Mohan Roy Extn, Bengaluru. The complainant was in need of rented accommodation for his family and came to know that a portion of accused house was available for letting out and thereby the complainant and his son have approached the accused to let out the said portion of 2 BHK in 2nd floor, two bed rooms, one hall, one kitchen for rent basis. In the first week of October 2016, the accused has agreed to let out the said premises on monthly rent basis and demanded advance amount of Rs.5,00,000/- and further stated that, one tenant is in occupation of the said premises and he vacate the said premises in few days and immediately thereon the said portion will be handed over to the complainant. It is further told to the complainant that, the accused required advance amount payable to the 4 C.C.99/2018 earlier tenant for refund of advance amount, therefore on 13.10.2016, the complainant has paid a sum of Rs.5,00,000/- to the accused by way of RTGS and thereafter an agreement of rent has been entered between them on 17.10.2016. The accused has acknowledged the receipt of said amount of Rs.5,00,000/- under the agreement. Thereafter, the accused again requested the complainant to pay the amount of Rs.1,20,000/- for the repayment of advance amount to the earlier tenant and get the premises vacated and hand over the same to the complainant, on the request of accused, the complainant has paid Rs.1,20,000/- by way of cash on 26.10.2016 and the accused has acknowledged in this regard. Thus, the complainant has paid a sum of Rs.6,20,000/- to the accused who has assured to handed over the premises in rent in a couple of days. It is further alleged that, despite of several request made, the accused has failed to let out the said premises on rent to the complainant. Therefore, the 5 C.C.99/2018 complainant has demanded to the accused for the refund of the payment by the complainant. On the demand of the complainant, the accused has issued a cheque bearing No.729728 dated 04.10.2017 for a sum of Rs.6,20,000/- drawn on Canara Bank, Shanthinagar Branch, Bengaluru in favour of the complainant. The complainant has presented the said cheque for encashment through his banker, but it returned unpaid with banker's endorsement dated 07.10.2017 as "Funds Insufficient". On 03.11.2017, the complainant had issued demand notice to the accused by RPAD, the same has returned with shara "intimation delivered Unclaimed" hence returned to sender. On these grounds, it is sought to convict the accused for the offence punishable under section 138 of NI Act and grant compensation as per section 357 of Code of Criminal Procedure.
6 C.C.99/2018
03. On presentation of complaint, this court has verified the averments of complaint along with records and thereby had taken cognizance for the offence punishable under section 138 of NI Act. Thereby, as per the verdict of the Hon'ble Apex court reported in AIR 2014 SC 2528 in the case of Indian Bank Association and others V/s Union of India and others, the sworn statement of the complainant has been recorded as PW.1 and got exhibited eight documents at Ex.P.01 to 08. Having been made out the prima-facie case, the complaint has been registered in Register No. III and issued process against the accused.
04. In response to the summons, the accused put his appearance before the court through his counsel and filed bail application under section 436 of Code of Criminal Procedure, the accused has been enlarged on bail. The substance of accusation has been recorded and read over to the accused, he pleaded not guilty. On filing application 7 C.C.99/2018 by the complainant under section 145(1) of NI Act, sworn statement of the complainant has been treated as examination in chief. Similarly, on filing application under section 145(2) of NI Act, the accused has been permitted to cross examine PW.1. On completion of the trial of the complainant's side, the statement of accused under section 313 of Code of Criminal Procedure has been recorded and read over to the accused, the incriminating material found in the trial of the case of the complainant. The accused has denied the same in toto and the accused also wants to lead his defense evidence, but the accused neither has entered in the witness box nor has produced any documentary evidence.
05. Heard the oral argument of Learned counsels for both the parties. Perused the materials available on record.
In support of his arguments, the Learned counsel for the complainant has relied the following verdicts; 8 C.C.99/2018
1. 2010(11) SCC 441
2. (2001)6 SCC 16
3. Criminal Appeal Nos.1233-35/2022 Order dated 12.08.2022
4. Criminal Appeal Nos.1497/2022 Order dated 11.10.2022 In support of his oral argument, the Learned counsel for the accused relied the following verdict;
1. 2001 CRI.L.J.4457 GUJARAT HIGH COURT I have carefully and meticulously gone through the above relied judgment.
06. The following points that arise for my consideration are as under;
POINTS
1. Does the complainant proves beyond reasonable doubts that, the accused has issued a cheque bearing No.729728 dated 04.10.2017 for a sum of 9 C.C.99/2018 Rs.6,20,000/- towards the discharge of his lawful liability of the complainant and when the said cheque was presented for encashment, it was returned unpaid due to "Funds Insufficient" in the account of the drawer as per banker's memo and inspite of issuance of demand notice , the accused has failed to pay the cheque amount, thereby has committed the offence punishable under section 138 of NI Act?
2. What Order or sentence ?
07. My findings to the above points is as follows;
1. Point No.1: In the affirmative
2. Point No.2: As per final order for the following;
REASONS
08. POINT No.1: It is the specific case of the complainant that, towards the discharge of his liability, the accused has issued the disputed cheque and when the said cheque was presented for encashment, it returned unpaid due to "Funds Insufficient" in the account of the drawer and 10 C.C.99/2018 inspite of receipt of demand notice, the accused has failed to make the payment of the cheque amount.
09. To substantiate and establish this fact before the court beyond reasonable doubts as per the verdict of the Hon'ble Apex court in the case of Indian Bank Association and others V/s Union of India and others , the sworn statement of the complainant has been treated as affidavit evidence. In his affidavit evidence, PW.1 has replicated the averments of the complainant. To corroborate the evidence of PW.1, the complainant has placed on record in all eight documents as per Ex.P.01 to 08. Ex.P.1 is the rent agreement, Ex.P.2 is the cash receipt, Ex.P.3 is the disputed cheque dated 04.10.2017, Ex.P.3 (a) is the signature of accused, Ex.P.4 is the banker's memo dated 07.10.2017, which shows the reasons for the return of the cheque at Ex.P.3 for unpaid is as "Funds Insufficient" , Ex.P.5 is the legal notice dated 03.11.2017 demanding for payment of 11 C.C.99/2018 cheque amount by replicating the averments of complaint which was returned with postal shara " intimation delieved Unclaimed, hence returned to sender". Ex.P.6 is the the postal receipt about sending legal notice at Ex.P.5, Ex.P.7 is the postal acknowledgement about receipt of the demand notice and Ex.P.8 is the postal cover. PW.1 has been substantially cross examined by the counsel of accused.
10. To disprove the case of the complainant and also to rebut the mandatory presumptions which could be drawn in favour of the complainant, the accused did not enter into the witness box and submitted that, there is no oral evidence on behalf of the accused. As per the aforesaid relied judgments of the Hon'ble Apex Court, now it is well settled law that, in order to rebut the statutory presumption under section 118(a) & 139 of NI Act, the accused need not steps in to the witness box and adduce his oral evidence. Instead, the accused can very well make 12 C.C.99/2018 use of the evidence culled out during the cross examination of PW.1. The Learned Defense Counsel has cross examined substantially to PW.1.
11. In the case on hand, the Learned Prosecuting Counsel argued that, the accused has admitted the cheque at Ex.P.1 and also his signature thereon, therefore the legal presumption under sections 118(a) & 139 of NI Act shall go in favour of the complainant. It is further argued that, the accused did not steps into the witness box to rebut the statutory presumption under section 118(a) & 139 of NI Act, so also no such material evidence has been elicited during the cross examination PW.1 to rebut the statutory presumption under section 118(a) & 139 of NI Act. Accordingly, it is sought to convict the accused and award the compensation.
Per contra, the Learned Defense Counsel by referring to section 231 of Indian Contract Act, vehemently argued 13 C.C.99/2018 that, since it is a contract of privity between the accused and son of complainant as per rental agreement, the complainant do not gets any right to file the present complaint. The Learned Defense Counsel further argued that, as per rental agreement at Ex.P.1, the cheque at Ex.P.3 do not attract the penal offence under section 138 of NI Act. Hence, it is sought to acquit the accused.
12. Before to appreciate the oral and documentary evidences produced by the respective parties and also the contentions raised in the arguments, it is necessary to find out whether the present complaint has been filed in consonance with the provisions of section 138 of NI Act or not?. On perusal of the cheque at Ex.P.3, banker's memo at Ex.P.4 the provisions of section 138(a) & (b) have been complied and on perusal of demand notice at Ex.P.5 and postal records at Ex.P.6 to 8, it appears that, the present complaint has been filed within 30 days after accrual of 14 C.C.99/2018 cause of action. However, at the time of argument and also during cross examination of PW.1, the service of notice has been denied, but on perusal of postal cover at Ex.P.8 on which, the postal authorities have written shara stating that, " intimation delieved Unclaimed, hence returned to sender". This shara made by the postal authority has a presumptive value. Further, the address of the accused on Ex.P.8 is neither denied nor disputed during cross examination of PW.1. That apart, the address written on Ex.P.8 and the address shown in the rental agreement at Ex.P.1 pertaining to accused are one and the same, therefore I am of the considered opinion that, as per section 27 of General Clauses Act, when the demand notice has been sent to proper and correct address of the accused, it is held to be deemed service of notice. Hence, the contention of defense side is unacceptable. Therefore, I am of the considered opinion that, only after compliance of 15 C.C.99/2018 requirements of section 138 of NI Act, the present complaint came to be filed.
13. As per sections 118(a) & 139 of NI Act are two important provisions and they provides for raising mandatory presumptions in favour of the complainant until the contrary is proved by the accused. Even in the catena of decisions i.e., in the case of Rangappa Vs. Mohan reported in 2010(11) SCC 441, in the case of Bir Singh Vs. Mukesh Kumar reported in 2019(4) SCC 197, in the case of APS Forex Services (P) Ltd., Vs.Shakthi International Fashion Linkers reported in 2020(12) SCC 724, in the case of Rajeshbai Muljibhai Patel Vs. State of Gujarat, reported in 2020(3) SCC 794, in the case of Triyambak S. Hegde Vs. Sripad reported in Live Law 2021 SC 492 and it is laid down that, " Once the issuance of cheque and the signature thereon is admitted by the accused, the court is required to raise presumption in favour of the complainant 16 C.C.99/2018 stating that, the accused has issued the cheque for some consideration towards discharge of his legal debt or liability of the complainant and that the complainant is the due holder of the said cheque. The burden shifts on the accused to rebut the statutory presumptions under sections 118(a) & 139 of NI Act." Now, it is well established law that, the presumption mandated by section 139 of NI Act, thus indeed includes the existence of legally enforceable debt or liability and it is open for the accused to raise a probable defense wherein the existence of legally enforceable debt or liability can be contested and he shall prove before the court on preponderance of probabilities, only thereupon a statutory presumption raised in favour of the complainant stands rebutted.
14. In the well known judgment of the Hon'ble Apex Court reported in AIR 2019 SC 1983 , in the case of 17 C.C.99/2018 Basalingappa Vs. Mudibasappa in para No.19, the top court of the country held that;
"Applying the rule of the word 'proved' under section 3 of Evidence Act, it became evident that in a trial under section 138, a prosecution will have to be made out every negotiable instrument was made or drawn for consideration and that it was extended for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges burden to prove that instrument was executed by the accused, the rules of presumptions under section 118 & 139 help him to shift the burden on the accused.
The presumptions will live, exists & survive & shall and only when the contrary is proved by the accused, that is the cheque was not issued for consideration and in discharge of any debt or liability. A presumption itself is not evidence, but only makes a prima-facie case for a party to whose benefits it exists.
The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insists in every case the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative 18 C.C.99/2018 evidence is neither possible nor contemplated, but bare denial of the passing of consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is possible has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration & debt did not exists or their non- existence was so probable, that a prudent man would under the circumstances of the case act upon the plea that they did not exists."
In the instant case on hand, the sworn statement of complainant has been treated as affidavit evidence as per the provisions of section 145(1) of NI Act and in this affidavit evidence, the complainant has replicated the averments of complaint. During the cross examination of PW.1, the issuance of cheque at Ex.P.3 from the account of accused and also the signature of at Ex.P.3(a) is neither disputed nor has been denied. Therefore, I am of the considered opinion that, the legal presumption under 19 C.C.99/2018 sections 118(a) & 139 of NI Act requires to be raised in favour of the complainant that the accused has issued the cheque at Ex.P.3 from his account for some consideration towards the discharge of his legally enforceable debt or liability, that the complainant is the payee of the said cheque and due holder of the same. Now, the burden shifts on the accused to rebut the said statutory presumption.
15. As per the aforesaid relied judgments of the Hon'ble Apex Court, now it is well settled law that, in order to rebut the statutory presumption under section 118(a) & 139 of NI Act, the accused shall raise probable defense and to prove the same. But, the standard of proof the defense shall be only to the extent of preponderance of probabilities. But, whereas the complainant requires to prove his case beyond all reasonable doubts. Admittedly, the accused did not give reply to the demand notice and thereafter he has failed to raise his defense in the beginning itself. The accused has 20 C.C.99/2018 raised only his technical defense during the cross examination of PW.1. It is suggested to PW.1 during his cross examination that, his son stayed in the house of accused for 11 months and not paid rent of Rs.10,000/- for each month. It is further suggested to PW.1 that, the accused has paid Rs.3,00,000/- to his son and the son of PW.1 has failed to pay rent amount. These suggestions have been clearly denied by PW.1. On page No.6 it is suggested that, the complainant and accused have no relationship and the cheque at Ex.P. 3 has given to his son as a security and has mis-used, that suggestion is also denied. However, during further cross examination on page No.7 it is clearly admitted that, the complainant has remitted Rs.5,00,000/- to the accused by RTGS on behalf of his son. For the sake of discussion, the relevant portion of the cross examination of the PW.1, is reproduced as under;
" ನನನ ಆರರರಪ ಇವರಗ RTGS ಮರಲಕ ರರ. 5 ಲಕ
ಹಣವನನ
ನ ನನನ ಮಗನ ಪರವಗ ನರಡದನ ಎಎದರ ಸರ."
21 C.C.99/2018
By this suggestion to PW.1, the accused has clearly
admitted that, he has received advance amount of
Rs.5,00,000/- through RTGS from the account of
complainant. Further, suggested to PW.1 that, in order to file the present complaint, he has not obtained any authorization from his son, this suggestion is untenable and cannot be accepted, as such PW.1 further stated that, himself, his son and wife have been residing under the same roof as one family and he has paid a advance amount under Ex.P.1 on behalf of his son only. It is further suggested that, whatever the amount was payable to his son from the accused side has been already paid and without returning the security cheque, his son vacated the flat over night without paying rent, the said suggestion is also denied. PW.1 further admitted that, he is not party to the rental against at Ex.P.1. Further, made suggestion about making alteration in the year and date on the cheque at Ex.P.3, that has been denied by PW.1. In support of this 22 C.C.99/2018 cross examination and also oral argument, the Learned Defense Counsel has relied the judgment of Hon'ble High Court of Gujarat in the case of Cri.Revn.Appln.No.517 of 2020 between Bhikhabhai Ranchhodbhai Makwana Vs. State of Gujarat and another. With due respect to the ratio laid down in the relied judgment, I have carefully gone through this judgment, wherein the facts of the case was in respect of sale of property between two persons vide registered agreement of sale at Ex.P.15 and in respect of the said document, the Hon'ble High Court of Gujarat pleased to held that, in the case of privity of contract only parties to the agreement, they have right to claim with each other and the 3rd parties do not gets any right to sue in respect of the said agreement. In the present case on hand, there is a specific evidence by PW.1 and also there is pleadings in the complaint that, he and his family were in need of rented accommodation and they have contacted the accused and the rental agreement at Ex.P.1 has been entered between 23 C.C.99/2018 accused and the son of the complainant. This evidence of PW.1 is neither denied nor disputed during his cross examination. Apart from that, there is no oath against oath in respect of this evidence. Further, the defense side itself suggested to PW.1 that, he had paid amount of Rs.5,00,000/- to the account of accused on behalf of the his son through RTGS. Which means, all though the rental agreement at Ex.P.1 has been entered between accused and the son of complainant. but the advance amount of rental agreement has been paid only by PW.1 and not by the son of PW.1. The doctrine of privity of a contract is a common law principle which implies that, only parties to a contract which alleged to sue each other to enforce their rights and no stranger is allowed to enforce the contract and who is not party to contract. By the development of contract law, from time to time, had has some exceptions they are;
1. Beneficiary under contract 24 C.C.99/2018
2. Contact, acknowledgement or admission
3. Trust
4. Assignment of contract.
In the case of exception relating to a beneficiary under a contract, if a contract has been entered into between two parties for a benefit of the 3rd person without being not a party, then in the event of failure by any party to perform his part, the third party can enforce his rights against the others. In the instant case on hand, though the rental against at Ex.P.1 has been entered between accused and the son of complainant, but since PW.1 has paid advance amount of Rs.5,00,000/- on behalf of his son under Ex.P.1 for getting rented agreements for the whole family, under such circumstances it can be held that, under Ex.P.1, in the rental agreement, the complainant being Kartha of his family is one of the beneficing of the said contract under Ex.P.1, therefore the complaint filed by the complainant against accused under section 138 of NI Act, is 25 C.C.99/2018 maintainable and it do not hit the provisions of privity of contract. Further, in respect of receipt of additional amount of Rs.1,20,000/- from the complainant it has been admitted during cross examination of PW.1 and in respect of this fact, the complainant has produced cash receipt marked at Ex.P.2 and the signature of accused on Ex.P.2 is not at all denied by the accused and the contents of this Ex.P.2 clearly reveals about receiving Rs.1,20,000/- from the complainant as a personal loan agreeing to repay the same within one month. On the other hand, during the cross examination of PW.1 it is suggested that, the accused has repaid an amount of Rs.3,00,000/- advance to the son of complainant, who has vacated his premises by over night without paying rent, but to prove this suggestion made to PW.1, neither the accused did not enter into the witness box nor produced any documentary evidences such as bank account statement before the court to say about repayment of Rs.3,00,000/- to the son of complainant. 26 C.C.99/2018 Thus, during cross examination of PW.1 it appears that, no such material evidence has been culled out from the mouth of PW.1 to prove before the court, the accused has raised probable defense and has to prove the same on preponderance of probabilities.
16. Further, the judgment relied by the defense counsel, is not applicable to the case on hand. On the other hand, the Learned Prosecuting Counsel also relied the judgments listed above. I have carefully read the ratio of the said judgments and as per those judgments it is elicited that, once the issuance of cheque and signature is admitted, the legal presumption under sections 118(a) & 139 of NI Act requires to be raised in favour of the complainant and the burden shifts on the accused to prove the contrary. The ratio of relied judgments of the complainant can be applicable to the case on hand. Hence, the question of 27 C.C.99/2018 shifting onus on the complainant does not arise at all. Hence, I answered point No.1 in the affirmative.
17. POINT NO.2: In view of the reasons stated and discussed above, the complainant has proved the guilt of the accused punishable under section 138 of N.I. Act It is worth to note that, the offence is of the nature of civil wrong. Hence, it is proper to award sentence of fine, instead of awarding sentence of imprisonment. Accordingly, this court proceed to pass the following;
ORDER
Acting under section 255 (2) of
Criminal Procedure Code, accused is
hereby convicted for the offence
punishable under section 138 of
Negotiable Instrument Act and
sentenced to pay fine of Rs.8,30,000/-
(Rupees Eight Lakhs Thirty
28 C.C.99/2018
Thousand only). In default, he shall
undergo simple imprisonment for 6
(Six) months.
Acting under section 357(1) of
code of criminal procedure, it is ordered that an amount of Rs.8.20,000/-
(Rupees Eight Lakhs Twenty
Thousand only), there from shall be
paid to the complainant as a
compensation, remaining fine amount
of Rs.10,000/- (Rupees Ten
Thousand only) is defrayed to the
state for the expenses incurred in the
prosecution.
The bail bond of accused stands
canceled subject to appeal period.
29 C.C.99/2018
Supply free copy of judgment to the
accused.
{Dictated to the stenographer, transcribed and computerized by her, revised corrected and then pronounced in the open court on this 6th day of January 2023}.
(BHOLA PANDIT) XX ACMM, Bengaluru.
ANNEXURE List of witnesses examined on behalf of complainant:
P.W.1 K.C.P Pillai List of documents produced on behalf of complainant:
Ex.P.1 Rental agreement
Ex.P.2 Cash receipt
Ex.P. 3 Cheque
Ex.P. 3(a) Signature of accused
30 C.C.99/2018
Ex.P. 4 Bank endorsement
Ex.P. 5 Office copy of the legal notice
Ex.P. 6 Postal receipt
Ex.P.7 Postal acknowledgement
Ex.P.8 Postal cover
List of witnesses examined on behalf of accused:
-Nil-
List of documents produced on behalf of accused:
-Nil-
XX A.C.M.M., Bengaluru.