Bangalore District Court
Mysore Mercantile Company Limited vs Varuna Exports on 25 April, 2024
C.C.NO.27321/2018
0
KABC030740282018
Presented on : 06-10-2018
Registered on : 06-10-2018
Decided on : 25-04-2024
Duration : 5 years, 6 months, 19 days
IN THE COURT OF THE XXVIII ADDL. CHIEF
METROPOLITAN MAGISTRATE NRUPATHUNGA ROAD,
BENGALURU CITY
Present:
Soubhagya.B.Bhusher,
BA.,LL.B.,LL.M
XXVIII A.C.M.M, Bengaluru City.
DATED; THIS THE 25 th DAY OF APRIL-2024
C.C.NO.27321/2018
Complainant: Mysore Mercantile Company Limited,
A company incorporated under the
provisions of the companies Act
and having its registered O/at No.201
and 202, 2nd Floor, "Shresta Bhoomi"
No.87, K.R.Road, Bangalore-560004.
R/by its Director - Admin
Mr.Rakesh Shetty.
(By Sri.H.Mujtaba.,Adv & MRP Legalis.,)
V/S
Accused: 1. Varuna Exports,
A Partnership firm, having its
Principal place of business at
No.161, Old No.80, Room No.C2,
III Floor, Al Amin Arcade, Thambu
Chetty Street, Chennai-600001.
R/by its Partners, Mr.Ilaya Perumal &
Mr.K.Anandan.
C.C.NO.27321/2018
1
2. Mr.Ilaya Perumal, Partner,
Varuna Exports, No.161, Old No.80,
Room No.C2, III Floor, Al Amin Arcade,
Thambu Chetty Street, Chennai-600001.
3. Mr.K.Anandan, Partner,
Varuna Exports, No.161, Old No.80,
Room No.C2, III Floor, Al Amin Arcade,
Thambu Chetty Street, Chennai-600001.
(By Smt.Manjula & Sri.T.Murugesh.,Advs.,)
: JUDGMENT:
This case arises out of the private complaint filed by the complainant against the accused under section 200 of Cr.P.C., for an offence punishable under section 138 of Negotiable Instruments Act.
2. The case of the complainant's in brief is as under:
It is the case of the complainant is that the complainant is a company incorporated under the provisions of the companies act and registered with the Registrar of Companies, Bangalore. The complainant company is engaged in the business of importing and exporting of all kinds of commodities including liquid edible oils, agricultural products, packed food items, soft drinks, tinned foods etc., to manufacture and deal in all kinds of eatables, to carry on the business of production, generation, distribution, sales, development and maintenance of Renewable energy and Renewable energy products etc. The accused No.1 is a partnership firm. The accused No.2 and 3 are partners C.C.NO.27321/2018 2 of accused No.1. The accused No.2 and 3 being the partners of the accused No.1 are at all time responsible to the day today affairs, administration and business of the accused No.1. Hence, the accused No.2 and 3 are vicariously liable for the acts of the accused No.1. Further stated that during the course of business, the accused had procured and delivered chilly and onion worth of Rs.27,52,72,398.25 on account of the complainant. The complainant shipped chilly and onion so procured by the accused and have found that the quality of the chilly and onion are poor and no upto export standard and some of the shipment buyers found shortage in quantity and also as a result of which the buyers of the complainant deducted from the invoice raised by the complainant total amount to Rs.2,56,82,000/-. When these facts were confronted to the accused, the accused agreed the above aspects and further agreed to compensate the complainant. Accordingly the complainant issued a debit note dated:
31.03.2017 for a sum of Rs.2,56,82,000/- and after adjusting the pending purchase payment due to the accused, the accused is still due and liable to pay a total sum of Rs.1,55,00,000/- to the complainants and agreed to pay the same in monthly installments commencing from February 2018. Accordingly an indenture in the name and style settlement agreement dated 25th September 2017 was executed by and between the accused and the complainant. As per the C.C.NO.27321/2018 3 said agreement, the accused have agreed and undertaken to pay the said sum to the complainant as stipulated therein in eight monthly installments.
Accordingly the accused issued cheque bearing No.565312 dated: 10.03.2018 for a sum of Rs.20,00,000/- and other seven cheques drawn on Indian Overseas Bank, Muthialpet branch, Chennai in favour of the complainant towards the due discharge of the debt payable to the complainant.
3. It is further stated that as per the instructions of the accused the complainant presented the said cheque for encashment through its banker Axis Bank, Chamarajpet Branch, Bangalore, but the said cheque was dishonored with an endorsement dated 08.05.2018 as "Exceeds Arrangement" in the account of the accused. Thereafter on 29.05.2018 the complainant got issued a legal notice to the accused through its counsel by RPAD calling upon them to pay the said cheque amount within fifteen days from the date of receipt of the legal notice. The said notices were duly served to the accused No.1 to 3 on 31.05.2018. After service of the notices, the accused neither reply to the notice nor paid the cheque amount. As such, the accused have committed an offence punishable under section 138 of N.I.Act. Hence, the present complaint came to be filed before this court on 10.07.2018.
4. After the complaint was filed, the cognizance of C.C.NO.27321/2018 4 the offence cited therein was taken and it was registered as P.C.R.No.9604/2018. Sworn statement of the complainant was recorded. Since there were sufficient materials to proceed against the accused, an order was passed on 05.09.2018 to register the case in Register No.III.
5. Thereafter, summonses were issued to the accused and they have appeared before the court through their counsel and secured bail. They were furnished its necessary papers as complied under section 208 of Cr.P.C,. Thereafter, the plea of the accused was recorded by the court. They have pleaded not guilty and claimed to be tried.
6. The complainant in support of its case, have examined its Director as PW.1 and got marked 10 documents at Ex.P.1 to 10 and closed its side.
7. After closer of the evidence of the complainant, the statement of the accused under section 313 of Cr.P.C, was recorded. They have denied the incriminating evidence appeared against them. In their defence, the accused No.3 examined himself as DW.1 and got marked 65 documents at Ex.D.1 to 65.
8. I have heard the arguments on both the sides and perused the documents placed on record.
9. Upon hearing the arguments and on perusal of the material placed on record, the following points arise for my consideration:
C.C.NO.27321/2018 5
1.Whether the complainant proves the existence of legally enforceable debt/liability.?
2. Whether the complainant further proves that the accused had issued the cheque-Ex.P.4, towards the discharge of the legally enforceable debt/liability.?
3.Whether the complainant further proves that the cheques-Ex.P.4 was dishonored for the reasons "Exceeds Arrangement" in the account of the accused No.1 and thereafter the accused had failed to repay the same within the statutory period, inspite of receipt of legal notice.?
4. Whether the accused have thus committed an offence punishable under section 138 of N.I.Act.?
5. What order?
10. My answers to the above points are as under:
Point No.1: In the Affirmative Point No.2: In the Affirmative Point No.3: In the Affirmative Point No.4: In the Affirmative Point No.5: As per final order, for the following;
:REASONS:
11. POINT NO.1 AND 2: These two points are inter-related to each other and finding given on any one point will bearing on the another. Hence, in order to avoid repetition of facts, I have taken these two points together for common discussion. The case of the complainant is that he was acquainted with the accused. Further the accused No.2 and 3 are the partners of accused No.1 and they are responsible to C.C.NO.27321/2018 6 the day today affairs, administration and business of the accused No.1. Hence, the accused No.2 and 3 are vicariously liable for the acts of the accused No.1. During the course of business, the accused had procured and delivered chilly and onion worth of Rs.27,52,72,398.25 on the account of the complainant. The complainant shipped the chilly and onion and have found that quality of chilly and onion of poor and not upto export standard and some of the shipment buyers found shortage in quantity also and as a result of which buyers of the complainant deducted from the invoice raised by the complainant total amount of Rs.2,56,82,000/-. When these facts were confronted to the accused, they are agreed and further agreed to compensate the complainant. Accordingly the complainant issued debit note and after adjusting pending purchase payment the accused due sum of Rs.1,55,00,000/- to the complainant and the accused agreed to pay the same in monthly installment commencing from February 2018. Accordingly an indenture in the name and style settlement agreement was executed by the accused and complainant.
12. Further as per the said agreement the accused have agreed and undertaken to pay the said amount to the complainant as stipulated period in 8 months installment. Accordingly the accused have issued cheque in question along with other seven cheques in favour of the complainant. As per the C.C.NO.27321/2018 7 instructions of the accused, the complainant have presented the cheque in question through their banker for encashment. But the said cheque was dishonor as Exceeds Arrangement. Thereafter, the complainant got issued a legal notice to the accused pay the said cheque amount within a period of 15 days from the date of receipt of the legal notice. The said legal notices were duly served to the accused. After service of the legal notice the accused neither reply to the notice nor paid the cheque amount. As such, the accused have committed an offence punishable under section 138 of N.I.Act. Hence, the present complaint came to be filed before this court against the accused.
13. At this juncture, it is necessary to go through the provisions of N.I.Act before proceeding further. The provisions under Section 118(a) and 139 of the Act., 1881 are extracted and they reads thus;
"118. Presumptions as to negotiable instruments:- Until the contrary is proved, the following presumptions shall be made:-
(a) of consideration-that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
(b) as to date:- that every Negotiable C.C.NO.27321/2018 8 Instrument bearing date was made or drawn on such date;
"139.Presumption in favour of holder:-
It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
14. On plain perusal of the provisions under Section 118(a) and 139 of the N.I.Act., as extracted hereinabove, it can be seen that initially the presumptions constituted under these two provisions favour the complainant. However, it is open to an accused to raise a defence to rebut the statutory presumptions. An accused can raise a defence, wherein the existence of legally enforceable debt or liability can be contested.
15. It is also well established that an accused for discharging the burden of proof placed upon them under a statute need not examine themselves. They may discharge their burden on the basis of the materials already brought on record. An accused have constitutional rights to maintain silence. Standard of proof on part of the accused and that of the prosecution in a Criminal case is different. The prosecution must prove the guilt of an accused beyond all reasonable C.C.NO.27321/2018 9 doubts, the standard of proof so as to prove a defence on the part of an accused is "Preponderance of probabilities".
16. Under the light of above extracted provisions of the Act, I have perused the oral and documentary evidence on record. In support of the case, the complainant have examined its Director as P.W.1 and 10 documents were marked at Ex.P.1 to 10. In the chief examination P.W.1 has repeated the contents taken by the complainant in the complaint. Ex.P.1 is the certified copy of the Board resolution. Ex.P.2 is the Settlement agreement dated: 25.09.2017 executed by and between the complainant and the accused persons. Ex.P.3 is the certified copy of the debit note dated 31.03.2017 issued by the complainant. Ex.P.4 is the cheque issued by the accused in favour of the complainant company dated: 10.03.2018 for a sum of Rs.20,00,000/-. Ex.P.4(a) and (b) are the signatures of the accused No.2 and 3. Ex.P.5 is the bank memo dated: 08.05.2018 for informing the dishonor of the cheque as "Exceeds Arrangement" in the account of the accused No.1. Ex.P.6 is the office copy of the legal notice dated: 29.05.2018. Ex.P.6(a) to 6(c) are the postal receipts. Ex.P.7 to 9 are the postal acknowledgments. Ex.P.10 is the complaint.
17. I have perused the exhibits on which the complainant have placed their reliance. On perusal of the exhibits, it is clear that cheque in question was C.C.NO.27321/2018 10 presented for encashment within its validity. The Bank endorsement with a shara "Exceeds Arrangement". The complainant issued the legal notice within one month from the date of receipt of memo. The notices were served on the accused. The complaint was filed on 10.07.2018, which is within limitation. The transaction with the complainant is admitted. The issuance of the cheque and the signatures on the cheque at Ex.P.4 is admitted. Therefore, the documents on record clearly show that the complainant have complied the ingredients of Section 138(a) to (c) of the N.I.Act. Therefore the presumptions under section 118 and 139 of the N.I.Act arise in favour of the complainant. The presumptions are rebuttable and the burden is on the accused to rebut the presumptions. The presumption is that the cheque was issued for legally enforceable debt/liability. However actual existence debt/liability can be contested. The accused can rebut the presumptions by raising probable defences and proving it relying on the evidence of the complainant or by leading their direct evidence.
18. The case was seriously contested by the accused and the service of notice was disputed. The notice was not served on the accused. It was returned with shara 'duly served' as per Ex.P.7 to 9. The accused also denied the service of notice. The counsel for the accused cross-examined PW-1 in respect of non service of notice. But PW.1 denied the same.
C.C.NO.27321/2018 11 Further contended that the notice sent to the accused not served'; that the accused have no knowledge of the notice as it was not served on them; that the accused did not give reply notice as the notice was not served on them; that they did not produce any documents to show that the accused was doing business at the said address and that the accused did not issue reply notice as they were not doing business at the said address. The counsel for the accused argued that no legal presumption can be raised as the notice was sent to the wrong address and the accused was not doing business at the said address. On the other hand, the counsel for the complainant cross examined DW.1 in length in respect of address of the accused, service of notice. He admitted that the address. He admitted that the notice was received by them and not given the reply notice. When the notice at Ex.P.6, wherein the names of accused are appearing together, was confronted.
19. On perusal of Ex.P.6, it is clear that the name of accused are appearing in the notice. The same notice was sent to the accused. The accused not given reply. There is no evidence on record to show that the accused was doing business at some other address other than the address mentioned in the notice at Ex.P.6. On the other hand, it is clear from the cross- examination of DW-1 that the accused were doing business at the said address during the year 2018. The C.C.NO.27321/2018 12 above discussion clearly shows that the address mentioned in the notice is the correct address of the accused. As the notice was jointly given to accused and the same notice was sent to all of them through separate RPAD, the inference can be drawn that the notice was also served on the accused. Further the address mentioned in the notice being the correct address of the accused as admitted by him in the cross-examination, the presumption as per Section 27 of General Clauses Act can be drawn. It states that the notice sent through post shall be deemed to be served, if it is properly addressed to a person to whom it is sent. Even otherwise as per the Judgment of the Hon'ble Supreme Court of India in Crl.Appeal No.767 of 2007 (Arising out of SLP (Crl) No.3910 of 2006 between CC Alavi Haji Vs.Palapetty Muhammed and another decided on 18.5.2007, wherein it has been held by the Hon'ble Supreme Court of India para No.17 as under;
17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint U/s.138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within C.C.NO.27321/2018 13 15 days of receipt of the summons from the Court along with the copy of the complaint u/s.138 of the Act, cannot obviously contend that there was no proper service of notice as required u/s.138, by ignoring statutory presumption to the contrary u/s.27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran's case (supra), if the 'giving of notice' in the context of Clause (b) of the proviso was the same as the 'receipt of notice' a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act.
20. In a nutshell it can be said that the statutory notice is an opportunity given to the accused to make payment and avoid the consequences of 138 of N.I.Act. In the case on hand, the summons was duly served on accused and they appeared through their counsel. The accused also admitted the service of warrants in their defence evidence. They appeared before the Court and contested the case by taking all probable defences. Therefore they cannot take the shelter of statutory requirement of service of notice to avoid the consequences of Section 138 of N.I.Act. The complaint was filed on 10.07.2018, which is within limitation. The accused admitted the issuance of cheque in favour of the complainant and signatures in the cheque. It is their defence that the cheques were issued to the complainant for the purpose of security of business. Therefore, the documents on record clearly show that the complainant have complied the ingredients of C.C.NO.27321/2018 14 Section 138(a) to (c) of the N.I.Act. Therefore the presumptions under 118 and 139 of the N.I.Act arise in favour of the complainant. The presumptions are rebuttable and the burden is on the accused to rebut the presumptions. Once the issuance of cheque and signature are proved, the presumption arises in respect of the fact that the cheque was issued for legally enforceable debt/liability. The accused can rebut the presumption by raising probable defence and proving it relying on the evidence of the complainant or by leading their direct evidence.
21. In order to prove their defence, the accused No.3 is examined himself as DW.1 by way of affidavit and 65 documents were marked at Ex.D.1 to 65. In his chief examination affidavit D.W.1 has repeated the defence taken by them. Ex.D.1 is the certified copy of the demand letter. Ex.D.2 is the certified copy of the demand notice given by the Sales Tax Department. Ex.D.3 is the certified copy of Sales Tax Department has given the final notice dated: 06.03.2023. Ex.D.4 is the certified copies of 13 acknowledgments issued by the complainant company. Ex.D.5 to 56 are the certified copies of the 52 purchase orders. Ex.D.57 are the certified copies of the 180 invoices. Ex.D.58 are the certified copies the computerized statement of total sales Invoice for the year 2016-17. Ex.D.59 is the certified copy of the ledger account. Ex.D.60 to 65 are the 6 H-Forms.
C.C.NO.27321/2018 15
22. The accused have taken up the defence that at the time of business with the complainant, the complainant was demanded 8 signed blank cheques and also blank signed stamp paper with additional sheets for security for future business transactions purpose. As per the demand made by the complainant the accused had issued 8 signed blank cheques and signed blank stamp paper without filing the amount date and other particulars for the purpose of security. After receipt of the cheques and signed blank stamp paper and additional sheets, the complainant assured the accused that the balance sale invoices amount will be transferred shortly and also assured hand over the H-form to their authority. The complainant also assured to issue the purchase order to the accused for continuing the business immediately after commencement of new financial year 2018-19. The accused had not issued the said cheque to the complainant for repayment of the outstanding due. The complainant company have misused the security cheque and blank stamp paper issued by the accused and filed a false case. The accused in their defence have not disputed the cheque-Ex.P.4 has been issued by them in favour of the complainant company. They also does not dispute their signatures appearing on the said cheque. But they have taken up the contention that the accused have issued signed cheques in favour of the complainant for the purpose of security, when the C.C.NO.27321/2018 16 said cheques were given to the complainant its were blank. Further contended that they have never admitted regarding payment of the said due amount as contended by the complainant and there is no due from the accused. The accused have specifically denied having agree to pay the due amount to the complainant as per the contention of the complainant. Further the complainant instead of returning the cheques to the accused, they misused the same and filed false case against the accused just to harass them and to make a wrongful gains.
23. In order to attract the offence punishable under section 138 of N.I.Act, the complainant is firstly required to prove the existence of legally enforceable debt/liability, for which the cheque came to be issued by the accused. The learned counsel for the complainant has argued that from the evidence placed on record, the accused No.2 and 3 are the partners of the accused No.1. They being the partners of the accused No.1 are at all time responsible to the day today affairs of the accused No.1, they are vicariously liable for the acts of the accused No.1. Further argued that during the course of business the accused had procured and delivered chilly and onion worth of Rs.27,52,72,398.25 on the account of the complainant. The complainant shipped the chilly and onion and have found that the quality of the chilly and onion are poor and not upto export standard and some of the shipment C.C.NO.27321/2018 17 buyers found shortage in quantity also and as a result of which the buyers of the complainant deducted from the invoice raised by the complainant of Rs.2,56,82,000/-. It is further argued that when these facts were intimated to the accused, the accused agreed that aspect and further agreed to the complainant to compensate the same. Accordingly, the complainant issued a debit note of the same and after adjusting pending purchase payment to the accused, the accused is still due and liable to pay a sum of Rs.1,55,00,000/- to the complainant and the accused agreed to pay the same in monthly installments commencing from February 2018.
24. It is further argued that as per the assurance of the accused an indenture in the name and style settlement agreement dated: 25.09.2017 was executed by and between the accused and the complainant. As per the said agreement the accused have agreed and undertaken to pay the said amount to the complainant as stipulated in 8 monthly installments and accordingly the accused became liable to pay the said amount. In the said agreement the accused agreed to pay the said amount and they had issued the cheque in question along with other seven cheques towards the discharge of the debt payable to the complainant. As per the instructions of the accused the complainant presented the said cheque to the bank. But the said cheque was dishonored for the reasons Exceeds Arrangement.
C.C.NO.27321/2018 18 Further argued that after the repeated request made by the complainant, the accused have not paid any amount to the complainant. He further argued that the accused have not denied Ex.P.4 being their cheque drawn on the account of the accused No.1. When the signatures of the accused is not disputed, the presumption under section 139 N.I.Act is to be drawn in favour of the complainant. The accused have failed to elicit anything in the cross examination of P.W.1 to disbelieve the said evidence. The defence have failed to rebut the presumption under section 139 N.I.Act. The learned counsel for the complainant further argued that the accused have failed to produce any believable evidence that they had issued 8 blank signed cheques and blank stamp paper in favour of the complainant for the purpose of security and also why they have not returned back the same is not clear. He further argued that under section 139 of N.I.Act, there is a presumption that the cheques have been issued for discharge of legally enforceable debt/liability. In the present case, the accused have not disputed Ex.P.4 being their cheque drawn on the account of the accused No.1. The said presumption is available to the complainant.
25. The learned counsel for the complainant further argued that the accused have failed to prove the very fact that blank cheques and blank stamp paper were given to the complainant for the purpose security C.C.NO.27321/2018 19 and its were blank when its were given to the complainant. Moreover, under section 118 of N.I.Act, there is a presumption that the Negotiable Instruments is drawn on the date, for the amount and in favour of the person as shown in it. It is for the accused to rebut the said presumption. But, in the case on hand no such evidence forthcoming. It was also argued by him that as per the defence by the accused that they had given 8 blank signed cheques and stamp paper to the complainant for the purpose of security. As such, the very defence of the accused is not believable. He further argued that the complainant had presented the cheque issued by the accused for encashment as per the instructions of the accused, but same was dishonored for the reasons Exceeds arrangement in the account of the accused No.1, thereafter the complainant issued a legal notice to the accused, which is marked as Ex.P.6. Further argued that after sending a legal notice the accused neither reply the notice nor paid the cheque amount, the complainant having no alternative have filed a complaint before this court. The defence of the accused is that they had issued 8 blank signed cheques and stamp paper to the complainant for the purpose of security and further they have taken up the defence that the complainant company misused the said security cheque and blank stamp paper to harass the accused and to make a wrongful gain filed this false case. The accused have not produced any C.C.NO.27321/2018 20 materials to take such defence, but in the cross examination of DW.1 he clearly and categorically admitted that he was not taken any action against the complainant for misusing of the cheque and stamp paper. Further argued that in support of the said presumption the accused have not produced any documents to take such defence to rebut the said presumption under section 138 of N.I.Act. Therefore, the accused have committed an offence. Further argued that even though the issue of cheque for security/guaranty, the offence under section 138 of N.I.Act is attracted. He has further argued that the documents produced by the accused is not concerned to the case on hand. The accused to escape from their lawful liability from the complainant they have created and forged the said documents and same has been produced before this court. Hence, the complainant have proved their case beyond reasonable doubt. Hence, he prays to convict the accused and imposed maximum sentence.
26. The learned counsel for the accused has argued that there was no legally enforceable debt/liability to the complainant from the accused for which the cheque-Ex.P.4 was issued. Further argued that the accused had issued 8 blank cheques and stamp paper to the complainant for the purpose of future business security. Further argued that the accused No.1 has been running a business of C.C.NO.27321/2018 21 purchasing the commodities through out the country on request and order received from the intending buyers who are having export license to deal with the overseas customers in particular commodities as per guideline issued by the Government of India from time to time. It is further argued the tax components are applicable against all the sales invoices issued in favour of the purchaser/intending export company and the same is entirely borne by the said export company till submitting H-form issued by sales tax department, jurisdictional purchase's circle to the sale tax department. As per overseas export policy of the Government of India, the export company will not be liable to pay the sale taxes of particular commodities after shipment to the overseas customer on the said sales invoice by submitting H-form to the jurisdictional sales tax department.
27. The learned counsel for the accused further argued that the said business terms are within the knowledge of the complainant and they have been doing export business for several years. The complainant have approached the accused for request assisting them to purchase export quality of Red chilly and onion from available market yard and deliver the same to near by shipyard which they have identified. In this regard both the directors have been issued separate purchase order in favour of the accused from 17.08.2016 to 19.12.2016 on behalf of the complainant C.C.NO.27321/2018 22 company. As per the purchase orders placed by the complainant, the accused had purchased and delivered the required commodities under 180 sale invoices worth about Rs.26,52,25,410/- in 180 consignments by on road to Chennai shipyard. The complainant's appointed surveyor's checked and verified each consignments of commodities like numbers of bag, its package, weight of each consignments at the goddown in destination shipyard. Further argued that they sent the samples for quality check ups to the spices board at Chennai. After compliance of all requirements prescribed in the purchase order, commodities were sent by the complainant to their overseas customers. Further argued that the accused firm is nowhere concerned about the sale price between the complainant and their overseas customers, payment terms between them and shipment risk. As per the accused firms statement of account in respect of the complainant sale invoice total value of 180 sales invoices from 18.08.2016 to 09.01.2017 of Rs.26,52,25,410/- and the complainant transferred an amount of Rs.25,46,45,776/- to the accused No.1 bank account. The balance amount of Rs.1,05,79,634/- is due from the complainant.
28. The learned counsel for the accused further argued that after pongal festival on 16.01.2018 the accused met Sri.H.S.Shetty for immediate release of balance sale invoices amount and explained their C.C.NO.27321/2018 23 financial commitment and requested to issued H-forms from each sale invoice. But the complainant not given any purchase order to the accused from 2017 till January 2018 and other hand they have doing regular business with other export company and also issued H- forms to them periodically. Further argued that when the accused requested to give further business from the complainant, the complainant demanded to give 8 blank signed cheques also signed blank stamp paper with additional sheets for security for future business transaction purposes. The accused being eager to do business with the complainant also get back the balance sale invoices amount and H-form from the complainant, since sale tax office at Guntur had repeatedly issuing notice and demanded to furnish H- form or pay the taxes. In view of the said circumstance the accused had given 8 blank signed cheques in favour of the complainant and also given singed blank stamp paper and additional sheets as a security for future business transaction. After receipt of the cheques and stamp papers, the complainant assured the accused that the balance sale invoices amount will be transferred shortly to the bank account and also assured handed over the H-form to their authorized agent. Further the complainant also assured to issue the purchase order to the accused for continuing business immediately for commencement of new financial year.
C.C.NO.27321/2018 24
29. He has further argued that all of a sudden Chennai Police got call to the accused for issuance of warrant. After the accused appeared before this court and enlarged on bail. Then the accused came to know the entire facts of the case. Further argued that as per the purchase order the accused firm maintain the quality and quantity of chilly and onion and procure the same within the agreed price and delivered at identified shipment area. The complainant has sent the respective consignment to their overseas customers by ship after satisfying the quantity, package of commodities and quality of each consignment. After the dispatch each assignment to overseas, the only obligation left over between the accused and the complainant is that he should clear entire sale invoice amount to the accused and also give H-forms for the said dispatch consignment. Further argued that the accused never executed the alleged settlement agreement in favour of the complainant and the accused never agreed for repayment of the shortage of quantity amount to the complainant. Further the accused never agreed to repayment of the alleged remaining balance amount of Rs.1,55,00,000/- to the complainant. Further argued that the accused not agreed and liable to pay any amount as claimed by the complainant and the alleged settlement agreement and 8 cheques were not issued towards alleged loss of business claimed by the complainant. Further argued C.C.NO.27321/2018 25 that the accused have not received any legal notice issued by the complainant for the alleged dishonor of the cheque.
30. He has further argued that the complainant is with holding huge investment amount of Rs.1,05,79,634/- of the accused company without any valid reasons and also intentionally with holding the H- form received by the complainant from the sales tax department. In intention of the complainant the jurisdictional sale tax office Andhra Pradesh issued demand notice to the accused company for sum of Rs.6,26,48,502/- or to submit the H-form immediately before the concerned authority. The accused have made many request and demands since from 2017 by way of sending email and over phone to the complainant to clear the outstanding balance amount and also H-form, but the complainant have not responded the request in any manner and neglected. Therefore, the accused have send a demand letter dated: 29.10.2021 by register post to the complainant that to pay the balance amount and also handed over H-form and same has been served by the complainant, but they have not complied or reply to said notice. The complainant has not ready and willing to pay the balance amount to the accused and handed over H- form for closing the sales tax proceedings before the Guntur. In view of the said illegal attitude of the complainant, the accused company is defaulted in C.C.NO.27321/2018 26 payment of the loan amount to their lending banks, thus the said bank has initiated recovery proceedings against the accused. The amount mentioned in the cheque is not a legally recoverable debt from the accused and the complainant is not entitled any amount as mentioned in the settlement agreement. The alleged settlement agreement is created one and no legal sanctity attached there on, since the complainant has intention to defraud the accused company legitimate amount which he owes and due to the accused company a sum of Rs.1,05,79,634/- being the balance amount out of total worth of 86 sales invoices and also the complainant is liable to pay the sales tax on 86 sales invoices for a sum of Rs.6,26,48,502/- along with penalty to Andhra Pradesh Government. In order to attract the offence punishable under section 138 of N.I.Act, the complainant is firstly required to proves the existence of a legally enforceable debt/liability, for which the cheque came to be issued. The complainant created all the documents and make a unlawful gain against the accused have filed this false case. The complainant have not produced any believable documents before this court. Therefore, from the evidence placed on record, the loan amount from the accused is not clearly made out whereas the accused is succeeded in rebutting the presumption available under section 139 of N.I.Act regarding existence of legally enforceable debt. The complainant C.C.NO.27321/2018 27 have filed this false case against the accused by filling the contents of the cheque and have misused the said cheque.
31. Further argued that the complainant have not approached the accused at any point in time and informed the accused about the alleged dishonor of cheque. The complainant filed this false complaint. Further argued that the offence punishable under section 138 of N.I.Act is not attracted. The ingredients are not made out. Further argued that there is no existing legally enforceable debt/liability on the date of presentation of alleged cheque. The learned counsel for the accused has further argued that the accused have given the subject cheque to the complainant as security measure and the complainant have misused the same and presented the subject cheque to the bank. The complainant have deliberately with held the cheque issued by the accused, even after the complainant not handed over the H-form and not paid the remaining balance amount to the accused, the complainant instead of returning the cheque to the accused, whereas the subject cheque by filing up the date in order to make wrongful gain by adopting arm twisting tactics. The accused have successfully rebutted the presumption under Section 139 of the Act by leading defence evidence to show that there is no legally enforceable debt/liability between the complainant and the accused. The complainant have C.C.NO.27321/2018 28 failed to prove its case on any grounds. In fact there is no cause of action to file the complaint against the present accused. Further argued that the complainant have not produced any documents before this court to prove their case. Viewed from any angle, the complaint is misconceived not maintainable either in law or on facts and the same is liable to be dismissed with the costs. Hence, he prays to dismiss the complaint and acquit the accused.
32. In the case on hand the complainant and the accused having some transaction has not been seriously disputed by the accused. Further the accused have not seriously disputed they had issued the cheque-Ex.P.4 in favour of the complainant. Further it is not disputed that the cheque in question issued by the accused in the account of the accused No.1 in favour of the complainant. It is not disputed that the complainant is a limited company and the accused No.1 is a partnership firm and the accused No.2 and 3 are the partners of the accused No.1. The accused in order to repayment of said amount had issued the cheque in favour of the complainant. Whereas, the accused have contended that they had given 8 signed chaques and blank stamp paper with additional sheets to the complainant for the purpose of security. When they had given cheques which were blank. The accused have specifically denied having debt/liability had issued the cheque-Ex.P.4 on 10.03.2018. They contends that the C.C.NO.27321/2018 29 blank cheques given by the accused to the complainant as was misused by the complainant and false complaint was filed against the accused.
33. In order to attract the offence punishable under section 138 of N.I.Act, the main ingredients of the existence of the legally enforceable debt/liability, for which the cheque drawn on the account of the accused and was given for discharge of the same, are to be proved. The complainant in order to prove its case, have examined its Director as PW.1 and 10 documents were marked at Ex.P.1 to 10. In chief examination, he has repeated the averments made by the complainant in the complaint. In the present case, the accused have not disputed Ex.P.4 being their cheque drawn on the account of the accused No.1. The said presumption is available to the complainant. In the complaint it is stated that the accused in order to clearing the outstanding due had issued the cheque in favour of the complainant. This fact is also stated in the notice as well as in the evidence. This fact is not disputed by the accused.
34. Under section 139 of N.I.Act, there is a presumption regarding the existence of legally enforceable debt/liability. Such presumption is rebuttable presumption and it is opinion to the accused to raise defence discharging the existence of a legally enforcible debt/liability. In the case on hand also the accused have disputed the existence of legally C.C.NO.27321/2018 30 enforceable debt/liability, for which the cheque in question was issued. PW.1 during his cross- examination has specifically denied the suggestions made to him that the cheques and blank stamp paper with additional sheet were issued to the complainant for the purpose of security and same were blank at the time of issuing the same. Further PW.1 denied all the suggestions made in respect of the defence of the accused.
35. Since, the presumption under section 139 of N.I.Act is a rebuttable presumption the accused is firstly required to produce some probable evidence to rebut the same. Though in the criminal cases, the standard of the proof required for the accused is not so strict as required for the complainant to prove the case, further the accused have to produce some probable evidence, which creates doubt about the existence of legally enforceable debt/liability. In the present case, as per the defence taken by the accused that they had given 8 blank signed cheques and blank stamp paper with additional sheets to the complainant company for the purpose of security. Further they have already paid entire amount to the complainant and the complainant is due to the accused. Except, the said defence, they have not produced any materials to prove such defence. If the accused had given 8 blank signed cheques and blank stamp paper to the complainant company for the purpose of security, what prevented C.C.NO.27321/2018 31 the accused to file the complaint immediately after the alleged illegal act made by the complainant. Further what prevented the accused to file the complaint against the complainant for misusing of the said cheque and stamp paper. On which date the accused came to knew about the alleged illegal act of the complainant, they did not whisper about on what date they came to know the alleged cheque illegally misused by the complainant. Admittedly the accused are the Businessmen and having knowledge of the financial transaction, why they had given 8 blank signed cheques and blank stamp paper to the complainant without anticipating the consequence is not explained by them. So also, they have not stated anything as to what steps they took to receive back the blank signed cheques and stamp paper. Moreover, immediately after the alleged cheque-Ex.P.4 and stamp paper misused by the complainant they have not lodge any complaint before concerned police station. No steps have been taken to receive back the blank signed cheques and stamp paper, after they came to know about the same.
36. Once issuance of the cheque and signature are admitted, the statutory presumptions would arise under sections 118 and 139 of the N.I.Act that cheque was issued by the drawer for legally payable debt/liability and for valid consideration. The Hon'ble Supreme Court has held in Rangappa V/s Mohan, reported in 2010 AIR SCW 296, the presumption that C.C.NO.27321/2018 32 the cheque was drawn in discharge of legally recoverable debt is a presumption of law that ought to be raised in every case, though, it is a rebuttable presumption. Of course, the presumption under section 139 and 118 of the N.I.Act are rebuttal presumption. Further it is also held that mere plausible explanation by the drawer is not sufficient and proof of that explanation is necessary. The principle of law laid-down in the above decision is applicable to the facts of this case. In the instant case, since the complainant is in possession of the cheque-Ex.P.4 the court has to draw the initial presumption that he is the payee of that cheque. Once the initial burden is discharged by the complainant, the onus shifts on the accused to rebut the complainant case.
37. Further in considering the scope of the presumption to be raised under section 139 of the Act and nature of evidence to be adduced by the accused to rebut the presumption, in Kumar Exports V/s Sharma Carpets, reported in (2009) 2 SCC 513 held as under;
"14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Evidence Act all presumptions must come under one or the other class of the three classes mention in the Act, namely, (1) "may presume" (rebuttable), (2) C.C.NO.27321/2018 33 "shall presume" (rebuttable), and (3) "conclusive presumptions" (irrebuttable). The terms "presumption" is used to designate an inference, affirmative or dis-affirmative of the existence of a fact, conveniently called the "presumed fact"
drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means 'taking as true without examination or proof.'
18. Applying the definition of the word "proved" in section 3 of the Evidence Act to the provisions of section 118 and 139 of the Act, it becomes evident that in a trial under section 138 of the act a presumption will have to be made that every Negotiable Instruments was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of Negotiable Instruments is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumption under sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end 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 is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
19.The use of the phrase "until the contrary is proved" in section 118 of the Act and use of the words "unless the contrary is proved" in section 139 of the act read with definitions of "May presume" and "Shall presume" as give in section 4 of the Evidence Act, makes it at once clear that presumption to be raised under both the provisions are rebuttable. When a presumptions is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that C.C.NO.27321/2018 34 party has produced evidence fairly and reasonably tending to show that the real fact is not presumed, the purpose of the presumption is over.
20. The accused in a trial under section 138 of the act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non- existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. 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 insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumption, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstance of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstance so relied upon are compelling the burden may likewise shift again on to the complainant. The accused may also rely upon presumption of fact, for instance, C.C.NO.27321/2018 35 those mentioned in section 114 of the evidence act to rebut the presumptions arising under section 118 and 139 of the Act".
38. In the present case of the complainant, due to commercial arrangement between the parties were fructified, and as such the accused had supplied the materials to the complainant. The documents shows for acceptance of materials, the accused had issued the cheque in question. However, it has been contended by the accused in their defence that the cheques were issued for the purpose of security and not for payments. The oral and documentary evidence adduced by the complainant are sufficient to prove that the cheque was issued for legally enforceable debt. An evidence adduced by the complainant there would be presumption under section 139 of N.I.Act. Further the accused did not adduced any cogent and reliable evidence, it is not sufficient to rebut the presumption raised under section 139 of the N.I.Act. It is quite unbelievable that in a business/mercantile transaction the accused even after making payment/completion of business did not insist for the return of the cheques. It is quite improbable that the accused did not take any steps to get back those cheques.
39. Further the complaint filed within statutory period. That consequent to the non-payment of the cheque amount so demanded by the complainant within the statutory period, the complainant have filed C.C.NO.27321/2018 36 the present complaint, which is well within limitation. Hence, contention of the accused cannot be considered that the cheque in question was issued for the purpose of security. It is clear that there is no prohibition either in insolvency act or Negotiable Instruments Act for the complainant to approach the criminal court. The bar is extended to only civil detention and civil arrest, it would not cover under section 138 of the Negotiable Instruments Act.
40. Further the learned counsel for the accused has argued that the cheque was given to the complainant for the purpose of security. Further the accused have no due to the complainant. Hence, offence punishable under section 138 of N.I.Act is not attracted. In this regard once issuance of the cheque and signature are admitted, the statutory presumptions would arise under sections 138 of N.I.Act that cheque was issued by the drawer for legally payable debt/liability and for valid consideration. In the case of Sripati Singh (Since deceased) through his son Gaurav Singh V/s State of Jarkhand and another, reported in 2021 SCC Online SC 1002, the Hon'ble Supreme court categorically held that, once the cheque is issued as security for the loan and if the loan is not paid back then if the cheque is dishonored which attract 138 of N.I.Act. The principle of law laid-down in the above decision is applicable to the facts of this case. Therefore, the contention of the accused cannot be C.C.NO.27321/2018 37 acceptable that the cheque was given only for security purpose, but without producing any documents, then the accused have to pay the cheque amount when it is presented for encashment which is legally recoverable debt/liability.
41. In the case of K.S.Ranganatha V/s Vittal Shetty, reported in 2021 SCC Online SC 1191, the Hon'ble Supreme Court held that once the cheque is admitted to be that of the accused, the presumption envisaged in section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability. It is further held that the position of law makes it crystal clear that when a cheque is drawn out and is relied upon by drawee, it will raise a presumption that it is drawn towards a consideration which is a legally recoverable amount; such presumption of course, is rebuttable by proving to the contrary. The onus is on the accused to raise a probable defence and the standard of proof for rebutting the presumption is on preponderance of probabilities.
42. In the case of Kalamani Tex and another V/s P.Balasubramanian, reported in (2021) 5 SCC 283, the Hon'ble Supreme Court has observed that even a blank cheque leaf, voluntarily signed and handed over by the C.C.NO.27321/2018 38 accused, which is towards some payment, would attract presumption under section 139 of the Negotiable instruments Act, in the absence of any cogent evidence to show that the cheques were not issued in discharge of a debt.
43. Applying the above said principles to the present case and before considering the point whether the accused succeeded to rebut the presumptions and to establish their defence to the extent of probabilities, it is just and necessary to accumulate undisputed facts in this case.
44. It is not in dispute that bounced cheque belongs to the bank account of the accused No.1. It is also not in dispute that signatures appearing on the bounced cheque is the signatures of the accused No.2 and 3. It is also not in dispute that the cheque presented by the complainant came to be dishonored by the banker of the accused for the reasons stated in the dishonor memo. To consider whether the accused succeeded to rebut the presumption and established the defence to the extent of probabilities, the accused have not produced any documents in this regard. It was also contended by the accused that they had given 8 blank signed cheques and stamp paper with additional sheet to the complainant for the purpose of security. The said blank cheque was misused by the complainant. In order to prove their defence have failed to produce any believable evidence before this court.
C.C.NO.27321/2018 39
45. In the defence there is no ill-will between the complainant and the accused. Hence, misuse of cheque and filing false case is not possible. The accused admittedly having knowledge of business. It is implies, they are conversant with financial transaction. If the complainant misused the said cheque and stamp paper and had not return the same, inspite of collecting cheques leaves from the accused, as a prudent man, the accused should have inquired with the complainant and demanded to return those cheques. No ordinary prudent man would keep quite in such circumstances, without taking any steps. The conduct of the accused is very unusual, because they did not take any legal action against the complainant, even after filing of the complaint based on Ex.P.4-cheque. Further they could have issued notice to their banker to stop payment or legal notice to the complainant or they could have given complaint to the police station immediately. No such steps were taken by the accused. They simply makes a bald allegation of misuse of blank signed cheque and blank stamp paper against the complainant. It appears, just to escape from their legal liability, they have taken such contentions without any valid basis.
46. Moreover, the complainant have got issued a legal notice to the accused by registered through its counsel calling upon them to make repayment to the complainant. Before a person is held to be guilty of an offence punishable under section 138 of N.I.Act, the C.C.NO.27321/2018 40 complainant have to prove the compliance of the requirement under section 138 of N.I.Act. It is not in dispute that Ex.P.4 is the cheque drawn on account of the accused No.1. In view of the above discussions, it is also held to be proved that it was drawn for discharge of legally enforceable debt/liability. From the evidence of P.W.1 and also cheque return memo- Ex.P.5 it is established that the cheque was dishonored for the reasons "Exceeds Arrangement'' in the account of the accused No.1. A legal notice being issued as per Ex.P.6 within one month from the date of dishonor of the cheque is also not in dispute. In the case on hand the accused have disputed regarding notice sent by the complainant on their address. But the notice issued by the complainant to the accused duly served. But the accused have not given reply to the said notice. Thereby, they could have asserted their defence at an earliest available opportunity. In the case on hand the notice is sent to the accused at their address. When the accused have not seriously disputed the address, the notice sent to the correct address is sufficient compliance under section 138 of N.I.Act. Therefore, there is sufficient proof of due service of the legal notice.
47. It is not the contention of the accused that thereafter they have repaid the cheque amount within stipulated time of 15 days on receiving the notice. Therefore, in the case on hand on perusal of the C.C.NO.27321/2018 41 evidence placed on record, all the essential ingredients under section 138 N.I.Act, have been complied with. As the accused have not paid the cheque amount within stipulated period and failed to give reply to the notice, as such the accused have committed an offence punishable under section 138 of Negotiable Instruments Act. The present complaint is filed within the period of one month after the accused failed to repay the cheque amount. Even the accused did not whisper anything about the defence while their plea was recorded under section 251 of Cr.P.C. In view of judgment of the Hon'ble Supreme Court in Indian Bank Association V/s Union of India and others, (2010(5) SCC 590), it is clear that while recording the plea under section 251 of Cr.P.C., it becomes the duty of the accused to state whether they have any defence to make or they pleads guilty. Thus, unlike under section 240 of Cr.P.C., the accused have no option under section 251 of Cr.P.C., just to deny the allegations made against them. If they are not willing to plead guilty, they must explain what are the defences they want to take. As such, it has to be considered, whatever defence raised by the accused during the trial are all after thought, just to get ride of statutory burden cast on them.
48. In addition to this in the case of T.P.Murugan (Dead) through legal representatives V/s Bojan, reported in 2018(8) SCC 469, the Hon'ble Apex Court C.C.NO.27321/2018 42 held that once the cheque has been signed and issued in favour of the holder of the cheque, there is statutory presumption that the cheque is issued in respect of legally enforceable debt or liability: rebuttal of such presumption must be by adducing credible evidence. Mere raising a doubt without cogent evidence with respect to the circumstances, presumption under section 139 of N.I.Act cannot be discharged. The principle of law laid-down in the above decisions are applicable to the facts of this case. Except some bald contentions, the accused have not been able to make out a probable case on their behalf.
49. The accused have contended that except signatures other writings on cheque-Ex.P.4 is not in their hand writings, which were filled up by the complainant and it amounts to material alterations. As narrated above. When the accused admits their signatures, they cannot take up a defence that other contents of cheque were filled up by the complainant and it amounts to material alteration. In this respect, ruling reported in 2019 SCC On-line (SC) 138), between Bir Singh V/s Mukesh Kumar, the Hon'ble Apex Court held as under:
"37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the C.C.NO.27321/2018 43 cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer, if cheque is otherwise valid, the penal provision of Section 138 would be attracted.
38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still the on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.
40. Even a blank cheque leaf, voluntarily signed and handed over by the accused which is towards some payment. Would attract presumption Under section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
50. The principles emerging from the above referred decision make it clear that, it is not mandatory and no law prescribes that the contents of cheque should be written by the signatory to the cheque. A cheque can be written by anybody and if the account holder of the cheque signs it, the presumption under section 139 of N.I.Act arises. The principle of law laiddown in above decisions is aptly applicable to the facts of this case. In view of section 20 of N.I.Act, cheque being an inchoate instrument, if the drawer signs and delivers to the drawee, thereby he gives C.C.NO.27321/2018 44 authority to the drawee thereof to make or complete the instrument.
51. As per the version of the accused is that the accused have nowhere denied transaction. The accused themselves have admitted that the accused No.1 is the holder of alleged cheque. It is sufficient hold that the accused have issued the cheque-Ex.P.4 and even after the accused have not paid the cheque amount the getting of receipt of notice. However, in any manner as the complainant have complied all the terms of ingredients of the provisions of 138 of N.I.Act. In case of dishonor of cheque, once the execution of cheque is admitted by the accused, then it for them to first rebut presumption arising out of section 139 of N.I.Act. The accused are liable for dishonor of the cheque. Accordingly, PW.1 has established the case of the complainant, the accused have issued the cheque- Ex.P.4 in favour of the complainant in order to repay the legally recoverable amount. Therefore, the accused have failed to probables the defence taken by them that 8 blank cheques and blank signed stamp paper given to the complainant for the purpose of security and there is no due amount to the complainant. Therefore, the accused have failed to rebut the presumption under section 139 of N.I.Act. In the said circumstances, the complainant is not at all required to produce any material as to the financial transaction between the complainant and the accused, since the initial C.C.NO.27321/2018 45 presumption is still available, when there is no rebuttal evidence.
52. PW.1 in his evidence has specifically deposed that the accused in order to repayment of the due amount to the complainant, they had issued the subjected cheque in favour of the complainant. So also it is not in disputed that the complainant and the accused are known to each other, some point of period, the accused have issued the cheque in question in favour of the complainant for the purpose of payment of due. When the cheque was presented to the bank same was returned for the reasons Exceeds arrangement, this is not seriously disputed by the accused. The accused have failed to rebut the presumption under section 139 of N.I.Act, non furnishing of details of financial transaction no consequences to disbelieve the case of the complainant. The accused have failed to probables their defence. With these reasons, I answer point No.1 and 2 in the Affirmative.
53.POINT NO.3 AND 4: These two points are inter-related to each other and finding given on any one point will bearing on the another. Hence, in order to avoid repetition of facts, I have taken these two points together for common discussion. Before a person is held to have committed an offence punishable under section 138 of N.I.Act, the complainant have to prove all the requirements of section 138 of N.I.Act. Ex.P.4 C.C.NO.27321/2018 46 being their cheque drawn on the account of the accused No.1 is not in dispute. The said cheque having been dishonored, when it was presented by the complainant before the bank for encashment is also not seriously disputed by the accused. The accused have not taken up any contention that thereafter they had paid the cheque amount within stipulated time of 15 days, after given of the notice. As such, in the present case from perusal of documents, the essential requirements of section 138 of N.I.Act, have been complied with. In this case, if the accused had issued the blank cheques and stamp paper with additional sheets in favour of the complainant for the purpose of security and why they have not produced any documents. After service of notice the accused neither reply the notice nor paid the cheque amount to the complainant. Hence, the present complaint came to be filed before the court on 10.07.2018 within the period of one month from the date of cause of action.
54. While discussing the point No.1 and 2, this court has already observed that the complainant have proved that the cheque was issued for discharge of legally enforceable liability/debt and in view of the mandatory requirements under section 138 of N.I.Act, being complied with. The accused is found to have committed an offence punishable under section 138 of N.I.Act. With these reasons, I answer point No.3 and 4 in the Affirmative.
C.C.NO.27321/2018 47
55.POINT NO.5: The accused is held to have committed an offence punishable under section 138 of N.I.Act. The complainant have proved its case. The accused have failed to prove their rebuttal for the reasons mentioned above and in view of the mandatory requirements of section 138 of N.I.Act, being complied with. The accused is found to have committed an offence punishable under section 138 of N.I.Act. Since, the said offence is an economic crime, the accused is not entitled for the beneficial provisions of probation of offenders Act. In view of the above discussions and the findings on point No.1 to 4, I proceed to pass the following;
:ORDER:
Acting under section 255(2) of Cr.P.C., the accused are convicted for the offence punishable under section 138 of N.I.Act.
The bail bonds of the accused is hereby stands canceled.
The accused are sentence to pay fine of Rs.21,00,000/- (Rupees twenty one lakhs only) to the complainant.
It is further ordered that out of the said fine amount an amount of Rs.20,80,000/- (Rupees twenty lakhs eighty thousand only) shall be paid to the complainant as compensation as per Section 357(1)(b) of Cr.P.C., and remaining amount of C.C.NO.27321/2018 48 Rs.20,000/- (Rupees twenty thousand only) shall be remitted to the State.
In default of the payment of fine amount, the accused shall undergo simple imprisonment of six months each.
(Dictated to the stenographer directly on computer typed by her, corrected by me and then judgment pronounced in the open court on 25 th day of April 2024) Digitally signed by SOUBHAGYA SOUBHAGYA B BHUSHER B BHUSHER Date:
2024.04.30 12:24:14 +0530 (Soubhagya.B.Bhusher) XXVIII Addl. Chief Metropolitan Magistrate, Bengaluru.
ANNEXURE List of witness examined on behalf of the complainant:
PW.1 : Mr.Rakesh Shetty.
List of documents marked on behalf of the complainant:
Ex.P.1 : Certified copy of the Board Resolution. Ex.P.2 : Settlement agreement dated: 25.09.2017. Ex.P.3 : Certified copy of the debit note.
Ex.P.4 : Cheque.
Ex.P.4(a) & 4(b) : Signatures of the accused.
Ex.P.5 : Bank memo. Ex.P.6 : Office copy of the legal notice. Ex.P.6(a) to 6(c) : Postal Receipts. Ex.P.7 to 9 : Postal acknowledgments. Ex.P.10 : Complaint.
List of witnesses examined on behalf of the accused:
DW.1 : Mr.K.Anandan
C.C.NO.27321/2018
49
List of documents marked on behalf of the accused: Ex.D.1 : Certified copy of the Demand letter. Ex.D.2 : Certified copy of the demand notice given by the Sales Tax Department.
Ex.D.3 : Certified copy final notice. Ex.D.4 : Certified copies of 13 acknowledgments issued by the complainant company.
Ex.D.5 to 56 : Certified copies of the 52 purchase orders. Ex.D.57 : Certified copies of the 180 invoices. Ex.D.58 : Certified copies of the computerized statement. Ex.D.59 : Certified copy of the ledger account. Ex.D.60 to 65 : H-Forms.
Digitally signed by SOUBHAGYA SOUBHAGYA B BHUSHER B BHUSHER Date:
2024.04.30 12:24:21 +0530 XXVIII Addl. Chief Metropolitan Magistrate, Bengaluru.
C.C.NO.27321/2018 50 25.04.2023 (Judgment pronounced in the Open Court Vide Separate Sheet) :ORDER:
Acting under section 255(2) of Cr.P.C., the accused are convicted for the offence punishable under section 138 of N.I.Act.
The bail bonds of the accused is hereby stands canceled.
The accused are sentence to pay fine of Rs.21,00,000/- (Rupees twenty one lakhs only) to the complainant.
It is further ordered that out of the said fine amount an amount of Rs.20,80,000/- (Rupees twenty lakhs eighty thousand only) shall be paid to the complainant as compensation as per Section 357(1)(b) of Cr.P.C., and remaining amount of Rs.20,000/- (Rupees twenty thousand only) shall be remitted to the State.
In default of the payment of fine amount, the accused shall undergo simple imprisonment of six months each.
XXVIII Addl. Chief Metropolitan Magistrate, Bengaluru.