Bangalore District Court
M/S.Margadarsi Chits vs Sri.Umesha.Y.R on 17 September, 2018
IN THE COURT OF XXVII ADDL. CHIEF
METROPOLITAN MAGISTRATE, BANGALORE.
Present: Sri. N.Muniraja B.A., LL.B.,
XXVII A.C.M.M Bangalore.
Dated: This the 17th day of September 2018.
C.C. NO.4871/2017
Complainant M/s.Margadarsi Chits
(Karnataka) Pvt Ltd.,
No.366, KMP Arcade 2nd Floor,
R.T.Nagar,
Bangalore-560 032
Rep by its
Foreman & Branch Manager,
Sri.Venkat Kondaiah.A
(Rep by Sri.BV, Adv.)
Accused Sri.Umesha.Y.R
S/o.Sri.Rangaswamy
Proprietor,
Sneha Tours and Travels,
No.249, Shop No.11,
YVK Complex,
C.B.Sandra,
yelahanka New Town,
Bangalore-560 064
(Reptd by Sri.MLS.Adv.,)
Offence U/s.138 of Negotiable
Instruments Act.
Plea of the accused Pleaded not guilty
Final Order Convicted
Judgement Date 17.09.2018
*****
2 C.C.No.4871/2017
JUDGEMENT
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 registered under the companies act and is in the business of promoting and conducting chits as per the provisions of the chit funds act. The accused subscribed to chit No.LT 001D RT/10 for chit value of Rs.25,00,000/- payable at Rs.50,000/- per month for a period of 50 months. The accused participated in the chit auction held on 9.11.2013 and bid the chit for an amount of Rs.5,00,000/- and as received prized money of Rs.20,00,000/- from the complainant on 29.1.2014 by executing necessary documents. The accused in the chit agreement has undertaken to pay monthly chit installments regularly and in case of default 3 C.C.No.4871/2017 undertaken to repay the entire outstanding amount of the chit. After receiving the prized money the accused was not regular in repayment of the monthly chit installments and has become defaulter. The complainant issued prized register letter to the accused asking him to pay the due of the chit. But he has not respond to the said letter. The complainant issued gurantors prized register letter to the accused and his sureties. Since the accused did not respond to both the said letters, the complainant issued legal notice to the accused and to his sureties as provided under the Chit funds Act to pay the outstanding amount along with interest and other costs to the complainant failing which they would file money recovery suit against the accused and his sureties. After receipt of the prized register letter to the guarantors prized register letter and legal notice the accused approached the complainant and agreed to pay the dues and issued cheque bg.No.485685 dated 31.10.2016 for Rs.1,45,954/- drawn on Axis Bank 4 C.C.No.4871/2017 Limited, Yeshwanthpura Branch, Bangalore. The complainant presented the said cheque for collection on 15.12.2016 through Kotak Mahindra Bank Limited, R.T.Nagar Branch, Bangalore and the said cheque dishonoured as per bank memo dated 17.12.2016 for the reason funds insufficient.
Thereafter, the complainant issued legal notice dated 05.1.2017 calling upon the accused to pay the dishonoured cheque amount within 15 days from the date of receipt of the said notice. The said notice served to the accused on 7.1.2017 and inspite of service of notice the accused has not paid the cheque amount. Hence, this, complaint.
3. The accused appeared through his advocate and he enlarged on bail. Substance of accusation read over to the accused and he pleads as false.
4. To prove the guilt of the accused, on behalf of the complainant company its Foremen and Branch Manager examined as PW1 and got marked 13 5 C.C.No.4871/2017 documents as per Ex.P.1 to P.13 and closed its side evidence. On closure of the complainant side evidence, statement of the accused recorded as required U/s.313 of Cr.P.C. The accused has denied the incriminating evidence which appears against him in the complainant side evidence. The accused has not led defence evidence. However, in the cross- examination of PW1 got marked Ex.D.1 documents.
5. Heard the learned counsels for the complainant and accused and I perused the records.
6. 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 dishonoured for want of sufficient funds in the account of the accused.?6 C.C.No.4871/2017
(ii) Whether the complainant proves that after dishonour of cheque, issued notice to the accused in compliance of Sec.138(b) of N.I Act?
(iii) What order?
7. My answer to the above points are as follows:-
Point No.1 : In the Affirmative Point No.2: In the Affirmative Point No.3: As per final order, for the following.
REASONS
8. Point No.1 : It is the case of the complainant that, the accused subscribed chit No.LT001DRT/10 for chit value of Rs.25,00,000/- payable at Rs.50,000/- per month for the period of 50 months and the accused auctioned the said chit on 9.11.2013 for bid amount of Rs.5,00,000/- and has received the prized money of Rs.20,00,000/- on 29.1.2011 and after receiving prized money the accused became defaulter in paying the installments and towards payment of the outstandingdues the 7 C.C.No.4871/2017 accused issued Ex.P.3 cheque and the said cheque dishonoured for want of sufficient funds in the account of the accused.
9. PW1 who is the foremen and Branch Manager of the complainant company in his chief examination affidavit has reiterated the contents of the complaint averments. It is here itself mentioned that on behalf of the complainant produced Ex.P.1 authorisation letter and Ex.P.2 Board Resolution to show the authorisation given to PW1 to represent the complainant company. As could be seen from Ex P.2 that, the complainant chit company by Resolution dated 6.2.2006 authorised to the Director Smt.C.H.Shylaja to represent the complainant company before the court of law and also authorised her to delegate the powers to any other employee of the complainant company. It is seen from Ex.P.1 that, the said C.H.Shylaja Director of the complainant company an authorisation letter 8 C.C.No.4871/2017 authorised to PW1 to represent the complainant company. In the course of cross-examination of PW1 on behalf of the accused not disputes the said Ex.P.1 & 2 documents and authority of PW1 to represent the complainant company. Therefore, there is no dispute with regard to the authority of PW1 to represent the complainant company and give evidence in this case.
10. As borne out from the cross-examination of PW1 that on behalf of the accused not disputes the fact that the accused subscribed chit No.LT001DRT/10 chit value of Rs.25,00,000/- from the complainant company, auction of the said chit on 9.11.2013 and receipt of prized amount. But the defence of the accused is that, the complainant not conducted the chit as per law and the complainant not paid prized amount of Rs.20,00,000/- to the accused and paid Rs.19,04,059/- and charging of interest at the rate of 24% is illegal and the accused 9 C.C.No.4871/2017 is not liable to pay any amount to the complainant and cheque issued by the accused for security mis used by the complainant.
11. On behalf of the accused not disputes that, Ex.P.3 cheque drawn from the account of the accused and his signature thereon. Further, there is no much dispute about the issuance of cheque to the complainant. Since the accused not denied his signature on Ex.P.3 cheque and issuance of the same to the complainant, presumption U/s.139 of the N.I Act raises infavour of the complainant that the accused issued the said cheque to the complainant towards discharge of any debt or liability and burden shifts on the accused to rebut the said presumption. With this background let me appreciate the evidence on record whether the accused is able to rebut the presumption U/s.139 of the N.I Act.
12. As noticed above, the accused not denied the subscription of chit No.LT 001DRT/10 for chit value 10 C.C.No.4871/2017 of Rs.25,00,000/- pay able at Rs.50,000/- per month for the period of 50 months from the complainant company. But the contention of the accused is that, the complainant has not conducted the chit as per law. During the course of cross-examination of PW1 on behalf of the accused questioned about non production of permission obtained to conduct chit business and chit agreement.
13. Though the complainant at the first instance not produced the permissions obtained for conducting of chit business and chit agreement entered between the complainant company and the accused but subsequently produced Ex.P.10 chit prior sanctioned order Ex.P.11 chit commencement certificate and Ex.P.12 chit agreement executed by the accused. The said documents goes to show that the complainant company obtained necessary permissions to conduct the chit business. Further it is seen from Ex.P.12 chit agreement that the accused 11 C.C.No.4871/2017 is the subscriber of the chit conducted by the complainant. Moreover, as noticed above, the accused not disputes the fact that he is the subscriber of the chit conducted by the complainant company. It is also seen from Ex.P.9 that the complainant maintained the ledger pertaining to the chit transaction of the accused. The said documents goes to show that the complainant by obtaining necessary permission conducted chit business.
14. It is the case of the complainant that the accused participated in the chit auction held on 9112013 and bid the chit for Rs.5,00,000/- and received prized money of Rs.20,00,000/- from complainant on 1912014. The complainant produced Ex.P.13 payment voucher to show the payment of prized money to the accused. The contention of the accused is that, the complainant paid prized money of Rs.19,04,059/- not Rs.19,04,059/-. PW1 in the course of cross- 12 C.C.No.4871/2017 examination admits Ex.D.1 pass book of the accused. The learned counsel for the accused referring to the entry dated 322014 in Ex.D.1 pass book has argued that, the complainant paid Rs.19,00,875/- towards the prized money not Rs.20,00,000/-. It is seen from Ex.P.9 legder account extract produced by the complainant inrespect of the chit transaction of the accused that as per the entry dated 30.1.2014 the complainant paid prized money of Rs.19,00,875/- to the accused vide cheque No.6729371 to the accused. No doubt it is true that as per Ex.P.9 statement of account and Ex.D.1 bank pass book an amount of Rs.19,00,875/- paid to the accused towards prized money. The learned counsel for the complainant has argued that the complainant is entitle for commission and also the accused is also liable to pay tax on the prized money and after deduction of commission and tax payable by the accused an amount of Rs.19,00,875/- paid to the accused out of Rs.20,00,000/-. There is some force 13 C.C.No.4871/2017 in the arguments of the learned counsel for the complainant because the complainant chit company is entitle for commission and the accused is liable to pay tax on the prized money. Therefore, after deducting the commission as well as tax the complainant paid an amount of Rs.19,00,875/- to the accused towards the prized money.
15. The learned counsel for the accused has argued that the complainant chit company charged interest at the rate of 24% p.a which is against to the public policy and therefore, charging of exorbitant rate of interest cannot be considered as legally enforceable debt and in support of the said arguments has cited the Judgment dated 6.7.2018 passed in Cr.P.No.1387/2011 by the Hon'ble High Court of Karnataka. Per contra, the learned counsel for the complainant has argued that the complainant chit company charged interest on the delayed payments as per the terms of Ex.P.12 chit agreement as per the 14 C.C.No.4871/2017 terms of the chit agreement the complainant chit company is entitle to charge interest at the rate of 24% p.a and he further argued that as per Sec.33(2) of the chit funds act, the complainant chit company is entitle to charge interest as per the terms of the chit agreement and therefore, the complainant has not charged exorbitant interest as contended by the accused.
16. As per the judgement cited above by the accused, charging of exorbitant rate of interest is opposed to public policy. Here is a case the complainant chit company charged interest at the rate of 24% p.a on due amount. In the course of cross-examination of PW1 on behalf of the accused by way of suggestion admits that in the chit agreement mentioned about the rate of interest. As per Ex.P.12 chit agreement default subscriber is liable to pay interest at the rate of 24% p.a. As noticed above, the accused by way of suggestion 15 C.C.No.4871/2017 admits about the mentioning of the rate of interest in the chit agreement. Here is a case, the said facts and circumstances of the said judgement are footing different to the case on hand. Because here is a case in Ex.P.9 chit agreement stipulated the rate of interest on the due amount payable by the subscriber of the chit. As per Sec.33(2) of the chit Funds Act, the subscriber of the chit is liable to pay interest as per terms of the chit agreement. Here is a case as noticed above, the accused himself by way of suggestions admits about the stipulation of rate of interest in the chit agreement. As per the terms of Ex.P.12 chit agreement the complainant is entitled to charge interest at the rate of 24% p.a on the due amount. In have gone through the judgement relied upon by the learned counsel for the accused. The accused had taken 10 Lakhs from the complainant to provide job to the son of the complainant. But the accused could not get the job to the son of the complainant and for return of the money paid by the 16 C.C.No.4871/2017 complainant, the accused had issued the cheque and the said cheque dishonoured for want of sufficient funds in the account of the accused and therefore a complaint was filed for the offence punishable U/s.138 of the N.I Act. The fact and circumstances of the cited case are footing different to the case on hand. Therefore, the arguments of the learned counsel for the accused and judgement relied upon by the complainant will not come to the aid of the complainant. Moreover in view of Sec.33(2) of the chit funds Act the complainant chit company is entitle for interest at the rate of Rs.24% pa from the accused as per the terms of Ex.P.12 chit agreement.
17. The accused in the course of cross-examination of PW1 contended that, the cheque issued for security purpose mis used by the complainant and there is no liability of payment on the part of the accused. Ofcourse, PW1 has specifically denied the suggestions made to that effect. It is pertinent to note 17 C.C.No.4871/2017 that the accused in the cross-examination of PW1 except formal suggestion to the effect that the cheque obtained for security purpose misused, there is no explanation when and under what circumstances the accused issued the cheque for alleged security. In the cross-examination of PW1 on behalf of the accused not whispered when cheque obtained from the accused for security purpose. Absolutely, there is no specific defence in this regard. It is pertinent to note that though in the cross-examination of PW1 made suggestion to the effect that there is no liability on the part of the accused but in the cross-examination of PW1 there is no specific defence to the effect that the accused has paid the entire chit amount. The complainant produced Ex.P.9 ledger account extract pertaining to the chit transaction of the accused. The said documents goes to show that the accused is not prompt in payment of the chit installments. Further on behalf of the accused in the course of cross- examination not disputes the genuineness of Ex.P.9 18 C.C.No.4871/2017 ledger account extract. In the entire cross- examination of PW1 on behalf of the accused not denied the service of notice issued by the complainant after dishonour of the cheque in question. If the complainant obtained the cheque in question for security purpose and there is no liability on the part of the accused, the accused could have issued reply notice to the notice issued by the complainant after dishonour of the cheque narrating the said defence. There was no impediment for the accused to issue reply notice. Further, if the accused issued the cheque in question to the complainant for security and he is not due any amount to the complainant, the accused could have issued stop payment instructions to the bank. But the accused has not issued any stop payment instructions to the bank. Non issuance of stop payment instructions and reply notice by the accused leads to draw an adverse inference against him. Ex.P.9 ledger account extract reveal that, he has paid the subscription 19 C.C.No.4871/2017 amount of Rs.19,91,285/- and the accused is entitled for dividend of Rs.3,79,428/-. The total value of chit is of Rs.25,00,00/-. The accused has paid subscription of chit installments of Rs.19,91,285/- and he is entitled for dividend of Rs.3,79,428/-. So it is clear that the accused has not paid the entire chit amount of Rs.25,00,000/-. As discussed above, as per the terms of Ex.P.12 chit agreement, the accused is also liable for interest at the rate of 24% p.a on the due amount. As noticed above, it is not at all the specific defence of the accused that, he has paid the entire cheque amount. Since the accused has not disputes the signature on Ex.P.3 cheque and issuance of the same to the complainant as per the decision of Hon'b'le Supreme Court of India, reported in AIR 2010 SCC 1898 Rangappa Vs. Mohan, existence of legally enforceable debt or liability is also a matter of presumption U/s.139 of the N.I Act. The burden is on the accused to rebut the said presumption. The accused in the cross-examination 20 C.C.No.4871/2017 not specifically set out the defence that the accused has paid the entire chit amount and nothing worth is elicited from the cross-examination of PW1 and accused has not led defence evidence to rebut the presumption U/s.139 of the N.I Act.
18. As per Ex.P.4 bank endorsement, the cheque in question dishonoured due to insufficiency of funds in the account of the accused. It is not at all the defence of the accused that, at the time of presentation of Ex.P.3 cheque there were sufficient funds in the account of the accused to meet out the amount mentioned therein. No such defence is forth coming from the accused side. Moreover, as per Sec.146 of the N.I Act there is a presumption regarding the bank endorsement. The complainant by adducing oral as well as documentary evidence proved that the accused issued Ex.P.3 cheque towards discharge of liability and the said cheque dishonoured for the reason funds insufficient in the account of the 21 C.C.No.4871/2017 accused. In view of my above discussion I answer Point No.1 in the Affirmative.
19. Point No.2:- It is the case of the complainant that, after dishonour of the cheque, issued legal notice on 05.01.2017 calling upon the accused to pay the dishonoured cheque amount within 15 days from the date of service of notice and the said notice served to the accused on 7.1.2017 and inspite of service of notice the accused has not paid the cheque amount. The complainant to prove the factum of issuance of notice to the accused through Registered post, after dishonour of the cheque and service of the same to the accused produced Ex.P.5 office copy of notice dated 5.1.2017, Ex.P.6 postal receipt, Ex.P.7 postal acknowledgement. In the course of cross- examination of PW1 on behalf of the accused not denied the issuance of notice and also service of notice to the accused issued by the complainant after dishonour of the cheque. Absolutely, there is no 22 C.C.No.4871/2017 cross-examination of PW1 about the service of Ex.P.5 notice. The materials placed on records by the complainant clearly goes to show that after dishonour of the cheque, the complainant issued notice to the accused through registered post and the said ntoice served to the accused. Therefore, the complainant complied the mandatory requirement of Sec.138(b) the N.I Act. In view of my above discussion, I answer Point No2. in the Affirmative.
20. Point No.3 :- In view of my findings on Points No.1 & 2 the complainant proved that the accused issued Ex.P.3 cheque towards discharge of liability and the said cheque dishonoured for want of sufficient funds in the account of the accused and the complainant complied the mandatory requirement of Sec.138(b) of the N.I Act by issuing demand notice to the accused. Therefore, the accused is liable for punishment for the offence punishable U/s.138 of the N.I Act. In cheque bounce 23 C.C.No.4871/2017 cases apart from punishment to the accused compensation can also be awarded to the complainant with respect to the dishonoured cheque. Here is a case, the accused issued Ex.P.3 cheque towards discharge of the chit balance amount. Ex.P.3 cheque is dated 31.10.2016 and amount covered thereunder is of Rs.1,45,954/-. Ex.P.9 ledger account extract goes to show that even the cheuqes issued by the accused towards the earlier payments were also dishonoured. It show the conduct of the accused. The act of the accused dragged the complainant to the court and the complainant spent nearly two years for redressal. It is under these circumstances, the complainant has to be suitably compensated in the matter. In the result, I proceed to pass the following.....
24 C.C.No.4871/2017
ORDER
The complaint filed by the
complainant company against the Accused is allowed.
Consequently, acting U/s.255(2) of Cr.P.C, the accused is convicted for the offence punishable U/s.138 of the N.I. Act and sentenced him to pay fine of Rs.2,00,000/-. In default of payment of said fine amount, the accused shall undergo simple imprisonment for a period of Four months.
Out of the said fine amount order to pay Rs.1,95,000/- to the complainant as compensation and the remaining amount of Rs.5,000/- shall go to the state.
(Dictated to the stenographer, transcribed by him, corrected and then pronounced in open court by me on this the 17th day of September, 2018) (N.Muniraja) XXVII A.C.M.M., Bangalore.
ANNEXURE Witnesses examined on behalf of the complainant:
PW1 : Venkat Kondaiah Documents marked on behalf of the complainant:
Ex.P.1 : Authorisation letter
Ex.P.2 : Board Resolution
Ex.P.3 : Cheque
Ex.P.3(a) : Signature of the accused
25 C.C.No.4871/2017
Ex.P.4 : Bank endorsement
Ex.P.5 : Office copy of Legal Notice
Ex.P.6 : Postal Receipt
Ex.P.7 : Postal acknowledgement
Ex.P.8 : On demand pronote
Ex.P.8(a) : Signature of the accused
Ex.P.9 : Statement of accounts
Ex.P.10 : Chit prior sanction order
Ex.P.11 : Chit commencement certificate
Ex.P.12 : Chit agreement executed by the
accused
Ex.P.13 : Payment voucher
Witnesses examined on behalf of the accused:
Nil Documents marked on behalf of the accused:
Nil XXVII A.C.M.M Bangalore.26 C.C.No.4871/2017
Dt:17.09.2018 Complnt:Sri.BV Adv., Accused: NM Adv., For Judgement.
(Order typed vide separate sheet)
ORDER
The complaint filed by the
complainant company against the Accused is allowed.
Consequently, acting U/s.255(2) of Cr.P.C, the accused is convicted for the offence punishable U/s.138 of the N.I. Act and sentenced him to pay fine of Rs.2,00,000/-. In default of payment of said fine amount, the accused shall undergo simple imprisonment for a period of Four months.
Out of the said fine amount order to pay Rs.1,95,000/- to the complainant as compensation and the remaining amount of Rs.5,000/- shall go to the state.
(N.Muniraja) XXVII A.C.M.M., Bangalore 27 C.C.No.4871/2017