Bangalore District Court
Sri. Deepak S.Kakkad vs M/S Virtue Import & Export on 29 January, 2016
IN THE COURT OF XVI ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE, BENGALURU CITY
Dated this the 29th day of January 2016
Present: Smt. Saraswathi.K.N, B.A.L.,LL.M.,
XVI Addl. Chief Metropolitan Magistrate,
Bengaluru.
JUDGEMENT U/S 355 OF Cr.P.C.,
Case No. : C.C. No.9897/2011
Complainant : Sri. Deepak S.Kakkad,
Aged about 42 years,
S/o Sri Suresh Chand G.Kakkad,
R/at No. 134 S-2, Rajyog
Apartment,
1st Cross Central Excise Layout
Vijayanagar,
Bengaluru - 560 040.
(Rep. by Dharmapal &
Associates, Advs.,)
- VS -
Accused : 1. M/s Virtue Import & Export
Pvt Ltd.,
No. 902, 3rd Cross, 5th Main,
M.C. Layout Vijayanagar
Bengaluru- 40,
Rept by its Managing Director
Mr. Sridhar.D
2. Mr. Sridhar.D,
S/o Mr.Dorairaj
Aged 39 years,
16th ACMM
C.C.No.9897/2011
2
Managing Director
M/s Virtue Import & Export
Pvt. Ltd.,
No.902, 3rd Cross, 5th Main,
M.C. Layout Vijayanagar,
Bengaluru - 40.
3. Mrs. S. Hemamalini,
W/o Sridhar.D
Aged 39 years
Managing Director
M/s Virtue Import & Export
Pvt. Ltd.,
No.902, 3rd Cross, 5th Main,
M.C. Layout Vijayanagar,
Bengaluru - 40.
(Rep. by MS., Adv.,)
Case instituted : 03/11/2010
Offence complained : U/s 138 of N.I. Act
of
Plea of accused : Pleaded not guilty
Final Order : Accused is convicted
Date of order : 29.01.2016
JUDGMENT
The Complainant has filed this complaint against the accused No.1 to 3 for the offence punishable u/Sec.138 of the Negotiable Instruments Act.
16th ACMM C.C.No.9897/2011 3
2. It is the case of the Complainant that the accused was residing in the same apartment where he was residing and both have become friends. The accused was running a business of supply of food products in the name and style of 'Shasta Food Products", which was under loss and was in a position of closure. At that juncture, the accused started to persuade him to part with his new companies, saying that both will get more profit on the said business. Accordingly, the accused made him to have trust on him. On good faith and belief, the Complainant had agreed to take part with the accused in the business and accordingly both have started 3 companies in the name and style of (a) Virtue Consumer Products Pvt., Ltd., (b) Virtue Import & Export Pvt., Ltd., (c) Virtue Life Science Pvt., Ltd., at Vijayanagar, Bengaluru. Both became the Directors of the said companies and the accused was the Managing Director of the said companies and he was only looking after all the business and transaction. The second accused always used to ask him to arrange huge amount in terms of investment and the loan since he was not in a position to arrange money of his own. The accused had also assured that he will repay the loan amount with reasonable interest. Accordingly, the accused has taken lakhs of rupees in terms of investment and hand loan from him. After some times, he came to know that the accused is not trust worthy and hence he decided to come out from the said 16th ACMM C.C.No.9897/2011 4 companies. Accordingly, the accused had arrived for settlement and agreed to return the money to him. In this regard, the accused executed loan agreement and Memorandum of Understanding in his favour and also issued several cheques in his favour.
3. In pursuance of the memorandum of understanding and the loan agreement executed by the accused on behalf of M/s Virtue Import & Export Pvt., Ltd., for the return of the money of the Complainant, the accused issued in total 9 separate cheques dated 30.05.2010 drawn on the Bank of Baroda in favour of the Complainant for the total amount of Rs.8,52,920/-. Thereafter the Complainant started to demand the said amount from the accused, but the latter avoided to pay the same on one pretext or the other. He had given sufficient time, even after the grace period mentioned in the M.O.U and the loan agreement and finally as per the instructions of the accused, the Complainant presented the following 4 cheques (pertaining to this complaint) for collection on 20.9.2010 through his banker after duly informing the accused:-
Sl. Cheque Name of the Date Amount No No. Bank
1. 514260 State Bank of 30.5.2010 Rs.1,00,000/-
India 16th ACMM C.C.No.9897/2011 5
2. 514261 State Bank of 30.5.2010 Rs.1,20,000/-
India
3. 514262 State Bank of 30.5.2010 Rs.75,000/-
India
4. 514263 State Bank of 30.5.2010 Rs.57,920/-
India For the total amount of Rs.3,52,920/-, but all the said 4 cheques came to be dishonored due to "Insufficiency of funds" as per the Bank endorsements dated 21.09.2010. Thereafter he got issued legal notice to all the 3 accused intimating to them about the bouncing of their cheques and calling upon them to arrange the cheque amount within 15 days of the receipt of the notice. Inspite of service of the notice, the accused have not responded to the same even after lapse of 15 days and thereby committed the offence punishable under Sec.138 of the Negotiable Instruments Act.
4. After recording the sworn statement of the Complainant, the same was registered as criminal case, summons was issued to the accused persons, who appeared through their counsels and got enlarged on bail. The substance of the accusation was read over to them, they pleaded not guilty and claimed to be tried.
16th ACMM C.C.No.9897/2011 6
5. In order to prove his case, the Complainant has examined himself as PW-1 by relying upon the documentary evidence at Ex.P1 to P15.
6. Thereafter, the incriminating evidence found in the evidence of the Complainant has been explained to the accused persons by recording their statements as required under Section 313 of Cr.P.C. They have denied the incriminating evidence and the accused No.2 has examined himself as DW-1 by relying upon the documentary evidence at Ex.D1 to D3, while accused No.3 has examined herself as DW-2.
7. Heard the arguments of both the sides and perused the materials on record.
8. The counsels for the accused and also the Complainant have filed their written arguments.
9. The following points arise for my consideration:-
1. Whether the Complainant has proved beyond reasonable doubt that the accused is guilty of the offence punishable under Sec.138 of the Negotiable Instruments Act?
2. If so, what Order or Sentence?
10. My findings to the above points are as under:-
16th ACMM C.C.No.9897/2011 7 Point No.1 : In the Affirmative, Point No.2 : As per the final order for the following:-
REASONS
11. POINT No.1:- It is not in dispute between the parties that both of them started 3 companies in the name and style of (a) Virtue Consumer Products Pvt Ltd. (b) Virtue Import & Export Pvt Ltd., (c) Virtue life Science Pvt Ltd., at Vijayanagar, Bengaluru and it is also not in dispute that both of them became the Directors of the said companies and the accused No.2 was the Managing Director of the said companies and he was only looking after all the business transaction.
12. According to the Complainant, the second accused always used to ask him to arrange huge amount in terms of investment and loans since he was not in position of arrange money of his own and he had also assured that he will be paid reasonable interest for his loan amount. Accordingly, he has taken several lakhs of rupees in terms of investment and hand loan from the Complainant, but after sometime, he came to know that the accused is not trustworthy. Hence, he decided to come out from the said companies. Accordingly, the accused had arrived for settlement and agreed to return 16th ACMM C.C.No.9897/2011 8 the money to him. In this regard, the accused have also executed loan agreements and Memorandum of Understanding in his favour and also issued several cheques in his favour. In pursuance of Memorandum of Understanding and loan agreement executed by the accused on behalf of the M/s Virtue Import and Export Pvt. Ltd., for the return of his money, the accused issued in total 9 separate cheques dated 30.5.2010 drawn on the Bank of Baroda in his favour for a total of amount of Rs.8,52,920/- and after the cheques dates, the Complainant started to demand the said amount from the accused. Even after the grace period mentioned in the M.O.U., and loan agreement, he gave sufficient time to the accused and finally as per the instruction of the accused, he presented the following cheques (pertaining to this complaint) for collection on 20.09.2010 through his banker after duly informing the accused.
Sl. Cheque Name of the
Date Amount
No No. Bank
1. 514260 State Bank of 30.5.2010 Rs.1,00,000/-
India
2. 514261 State Bank of 30.5.2010 Rs.1,20,000/-
India
3. 514262 State Bank of 30.5.2010 Rs.75,000/-
India
4. 514263 State Bank of 30.5.2010 Rs.57,920/-
India
16th ACMM
C.C.No.9897/2011
9
13. The total amount involved the 4 cheques of the present case amounts to Rs.3,52,920/-. However, all the above said 4 cheques came to be dishonored due to the reason of "insufficient funds". Thereafter, even after the legal notice issued by him to the accused No.1 to 3 came to be duly served upon them, they have not responded to the same.
14. In order to fortify these contentions, the Complainant by examining himself as PW-1 as filed his affidavit, in which he has reiterated the entire complaint averments. In support of his oral evidence, he has relied upon the following documentary evidence:-
Ex.P1 to P4 are the disputed cheques, in which PW-1 has identified the signatures of accused No.2 and 3 as per Ex.P1(a) to P4(a) respectively, the Bank endorsements as per Ex.P5 to P9, the office copy of the legal notice as per Ex.P10, reply notice as per Ex.P11, the original MOU as per Ex.P12, the certified copy of the Judgment in O.S. No.8179/1- as per Ex.P13 and the certified copy of the Decree as per Ex.P14, original complaint as per Ex.P15.
15. By relying upon this documentary evidence, the Complainant claims that the Accused No.2, being the Managing Director of the accused No.1 company and accused 16th ACMM C.C.No.9897/2011 10 No.3, being one of Directors of the companies have issued the disputed cheques, which came to be bounced due to "Insufficiency of funds" and as such both of them are guilty of the offence punishable under Sec.138 of the Negotiable Instruments Act.
16. In this regard, PW-1 has been cross-examined by the learned defence counsel and during his cross-examination, it is suggested to him that, till date, he is the Director in all the documents of the 3 companies, to which, he has answered that, he was a Non-Executive Director for one particular date and he does not know, as to, if there is any resolution to show that he was a Non-Executive Director only for a particular date. According to PW-1, there was a resolution for the purpose of investment of Rs.50,000/- by him and Rs.50,000/- by the accused No.2 and accused No.2 had undertaken to invest first in the company after its establishment, but thereafter, the accused asked PW-1 to invest in the company and according to him, the said investment is towards capital investment and loan and he has invested when he was the Director, but he has denied the suggestion that the amount covered under the disputed cheques in the present case has been invested by him for the purpose of taking return of the capital investment and loan advanced by him in the company. According to him, the 16th ACMM C.C.No.9897/2011 11 disputed cheques are pertaining to his investments towards the capital investment and loan to the company, but he has not maintained any accounts pertaining to the investments made by him to the company and the reasons assigned by PW-1 for not maintaining the accounts is that it was the second accused who was looking after the administration of the company as well as its accounts. According to him, except the investments made by him, there were no other investments in the company and that the amount invested by him was used for the payments pertaining to the purchase order made in the name of the company. According to PW-1, initially the company was being run successfully, but thereafter the company started incurring loss at which point of time he stated raising objections. According to him, he does not know what is the investment made by accused No.2 in the company and that himself and the second accused entered into an agreement for the purpose of PW-1 going out from the company, but he has denied the suggestion that, except the investment of Rs.1 lakh made by him to the 3 companies he has not invested any other amount to the company. PW-1 has further deposed that, there was an agreement that in the event of his going out from the Directorship of the 3 companies, he would be paid amount and in this regard, there was an agreement as well as a Memorandum of Understanding. It is suggested to PW-1 that the accused 16th ACMM C.C.No.9897/2011 12 would pay him the money for his going out from the Directorship of the company, to which, he has answered that the accused are liable to repay to him the investment amount and the loan amount given by him to the company. He has further denied the suggestion that except the capital investment made by him in the 3 companies, there is no other transactions between himself and the company. The defence of the accused, which is evident from the cross-examination of PW-1 is as follows:-
" £À£Àß ºÉ¸ÀgÀ£Àß qÉÊgÀPÀÖgï²¥ï¤AzÀ ROC EAzÀ ©qÀÄUÀqÉ ªÀiÁqÀĪÀ §UÉÎ ¨ÀszÀævÉUÉƸÀÌgÀ ZÉPïUÀ¼À£ÀÄß PÉÆqÀ¯Á¬ÄvÀÄ. DgÉÆævÀgÀÄ M¦àPÉÆAqÀ £ÀAvÀgÀ CªÀjUÉ ZÉPïUÀ¼À£ÀÄß PÉÆqÀ¯Á¬ÄvÀÄ."
" £À£Àß ºÉ¸ÀgÀ£Àß qÉÊgÀPÀÖgï²¥ï¤AzÀ ROC EAzÀ vÉUÉAiÀÄzÉ EgÀĪÀ PÁgÀt £Á£ÀÄ DgÉÆævÀgÀ «gÀÄzÀÝ ZÉPïUÀ¼À ¸ÀA§AzÀs F PÉøÀ£ÀÄß ºÁPÀ®Ä §gÀĪÀÅ¢®è CAzÀgÉ ¸ÀjAiÀÄ®è, E°èAiÀÄ vÀ£ÀPÀ £À£Àß ºÉ¸ÀgÀÄ AiÀÄ°è qÉÊgÀPÀÖgï JAzÀÄ EgÀĪÀÅzÀjAzÀ DgÉÆævÀgÀÄ £À£ÀUÉ AiÀiÁªÀÅzÉà ºÀt PÉÆqÀ¨ÉÃPÁV®è JAzÀgÉ ¸ÀjAiÀÄ®è".
17. This suggestion put to PW-1 by the learned counsel for the accused clearly goes to show that, the chief defence of the accused is that the disputed cheques have been given by them to PW-1 only towards security for PW-1 getting his name removed from the Directorship in the Registrar of Companies and by virtue of security only for the said period and as such, the complaint is not maintainable, since there is no legally recoverable debt from the accused. However, this 16th ACMM C.C.No.9897/2011 13 defence version suggested to PW-1has been categorically denied by him.
18. In this regard, it is also pertinent to note that, Accused No.2 has examined himself as DW-1 who in his evidence has deposed that, the Complainant is also a Director of the Accused No.1's company and he is also a shareholder and he has made investment into the first account of the first accused company and therefore he cannot file complaint against the first accused company. It is further deposed by DW-1 that, the Complainant who intended to separate from the first accused company entered into an arrangements with Accused No.3 and himself for coming out from the first Accused company and in any event there is no payment made to accused No.3 or himself in their individual capacity and there is no liability either on himself or on accused No.3 to the Complainant and the loan agreement is also entered into by PW-1 with the first accused company and not in the personal capacity of himself and accused No.3. It is further deposed by DW-1 that, himself, accused No.3 along with PW- 1 are the Directors of the first accused company, even now and therefore, until and unless PW-1, works out his remedy with the first accused company, only thereafter the corporate veil can be lifted against the accused No.3 and himself and even otherwise, the Complainant continuous to be a Director 16th ACMM C.C.No.9897/2011 14 of the first accused company and he is also liable to pay the first accused company and neither himself nor accused No.3 have not personally undertaken to pay any amount to PW-1 and therefore, there is no legally recoverable debt between accused No.3, himself and PW-1 and even if the Complainant has no claim, then he has to exhaust his remedy against the first accused company, which may include filing petition for liquidation. Therefore, it is further deposed by DW-1 that, the Complainant had no objection, when the cheques were used for business and it is purely a case of civil dispute, wherein funds paid to the business in the form of capital is sought to be refunded from the first accused company, in which, the Complainant is even now a Director.
19. In support of his oral evidence, DW-1 has relied upon the certified copy of the deposition of PW-1 in O.S.No.8177/10 as per Ex.D1, the certified copy of the deposition of PW-1 in O.S.No.8178/10 as per Ex.D2 and the certified copy of the deposition of PW-1 in O.S.No.8179/10 as per Ex.D3.
20. During his cross-examination, DW-1 has deposed that both himself and PW-1 had the authority to sign the cheques and he has made the payment to PW-1 by way of cheque duly signed by himself and PW-1 and when he has 16th ACMM C.C.No.9897/2011 15 been questioned as to if he has produced any documents with regard to the same, he has answered that he needs to verify the documents. However, he has deposed that he cannot say, through which bank, the cheque has been issued to PW-1 and according to him, PW-1 had stated that he would submit his resignation to the company and in respect of the same there was a settlement and that the Complainant had to be paid the amount towards settlement, for the security of which, the disputed cheques have been given by him, but the Complainant did not resign the company and therefore the said settlement agreement has not come into force between PW-1 and himself. He has further denied the suggestion that PW-1 has resigned to the company and the same has been accepted by the company. However, it is admitted by DW-1 that, thereafter, his wife i.e., Accused No.3 and his brother have been included as the Directors in the company. However, he has further admitted that when the resignation submitted by the Complainant to the post of Joint Manager has been accepted. But, he has denied that PW-1 has tendered resignation to the posts of both Joint Managing Director and the Director and according to him, both himself and Pw-1 are bound by the conditions stated in the M.O.U., but according to DW-1, the conditions stated in the M.O.U are applicable only if the Complainant tenders his resignation. DW-1 has further deposed that all the cheques 16th ACMM C.C.No.9897/2011 16 issued by him to PW-1 are related to the M.O.U and the loan agreement and it is denied by him that he is liable to pay the cheque amount to PW-1 since the cheques have been issued relating to the M.O.U., and the loan agreement. It is further deposed by DW-1 that, the suits filed by the Complainant for the recovery of the money covered under the cheques have been decreed, but he has not paid the decreetal amount to PW-1. Further, DW-1 has deposed that they have not issued any notice to PW-1 seeking his resignation to the post of the Director of the companies.
21. Further to corroborate the evidence of DW-1, accused No.3, who is the wife of accused No.2 has also examined herself as DW-2 and her evidence is in consonance with the evidence of DW-1 and therefore, the same is not discussed in detail again.
22. Now by going through the evidence of the Complainant as well as the accused, it is clear that the total amount admittedly paid by the Complainant to the accused is Rs.12,23,486/-, towards which, the accused have issued totally 13 cheques dated 30.5.2010 and all the 13 cheques were presented for collection on 20.9.2010. Among the 13 cheques, 7 cheques came to be bounced for " Insufficiency of funds " in the account of the accused, while 6 cheques 16th ACMM C.C.No.9897/2011 17 came to be bounced for the reason of " Payment stopped by the Drawer". Admittedly, the loan agreement is dated 5.12.2009, under which, as per clause (4), these cheques were given as security for the repayment of the principal loan amount of Rs.6,38,000/- and as per the said loan agreement, the accused undertook to repay the principal loan amount on or before 30.5.2010. Further as per cause (7) of the loan agreement, it was agreed that the Complainant should not attempt to encash any cheques issued for security for the repayment of the unsecured loan amount till 31.7.2010 and that the cheques were agreed to be returned after the loan was cleared by the accused. However, the disputed cheques have been presented for collection only on 20.09.2010. i.e., after the period agreed in the loan amount. The M.O.U is dated 2.12.2009, by virtue of which, Rs.5 lakhs was said to have been lent towards loan by way of cheques by the Complainant to the accused and towards the repayment of the said loan amount of Rs.5 lakhs, the accused issued 5 cheques bearing Nos. 24541 to 24545, dated 20.5.2010 and even these cheques were presented for collection on 20.9.2010. However, all the cheques issued by the accused came to be bounced and accordingly along with present complaint, the Complainant has also filed suit for recovery of money of Rs.22,00,560/- against the accused in O.S.No.8178/2010, which came to be decreed. In the said 16th ACMM C.C.No.9897/2011 18 Judgment at Para No.11 it has been clearly observed that, the present accused No.2 and 3 did not deny their execution of M.O.U and loan agreement specifically and in Para No.12 of the Judgment, it is observed that, the accused No.2 admits the settlement between him and PW-1 when accused No.2 represented the accused No.1 company at that point of time and it is also observed that, the accused No.2 and 3 have admitted their signatures on the M.O.U and the loan agreement and they have also admitted the issuance of the disputed cheques.
23. Further, in page No.17 of the Judgment, it is observed that DW-1 in the present case i.e., accused No.2 has admitted that, he, being the authorized signatory of the accused No.1's company has determined the amount payable to the Complainant at Rs.20,38,000/- and he had agreed to repay the same subject to certain terms and conditions. Further in Para 12 of the Judgment, it is observed that, the present DW-1 admits in his cross-examination in the said suit that there was a settlement between Defendant No.1/accused No.1 and the Complainant at the time of resignation of the Complainant and the accused No.2 represented the accused No.1 company at that time and it is further observed that one of the terms and conditions i.e., condition No.3 of the M.O.U., is that the Complainant should 16th ACMM C.C.No.9897/2011 19 extend his co-operation in the matter of carrying on the day to day affairs of the company and as per clause (4) of the M.O.U., the Plaintiff/Complainant should continue as a non- whole time Director of the company up to 31.5.2010 and as per clause (6) of the M.O.U., the accused No.2 shall make full and final settlement of the investment and loans of the Complainant on or before 31.5.2010.
24. Further it could be seen that, the defence of the accused as is evident from the oral evidence of both the accused No.2 and 3 is that, the amount was agreed to be paid by the accused No.1 company, as the loan agreement and also the M.O.U., is entered into between the Complainant and the accused No.1 company and as such they are not personally liable to pay the amount. In this regard, it is necessary to place reliance upon the observation made in page No.13 of the Judgement in O.S. No. 8178/2010, wherein, it has been clearly described with regard to the liability of the accused No.1 company in favour of the Complainant by referring to the argument canvassed by the counsel for the Complainant/Plaintiff and the counsel for the accused/Defendant before the said Hon'ble Court. However, on Page No.20 at para No.14 of the Judgment, it has been clearly held that, the amount of Rs.9 lakhs which is mentioned in Ex.P1 on para-2 i.e., the initial subscription 16th ACMM C.C.No.9897/2011 20 amount of Rs.9 lakhs to the M.O.U is to be termed as a debt as provided under Sec.36(2) of the Companies Act and therefore, it is observed that the Defendants therein/accused No.1 to 3 cannot contend that the said amount is not recoverable by the Complainant /Plaintiff in the said suit.
25. With regard to the amount of Rs.6,38,000/-, it is observed in Page No.15 of the Judgment that the Defendant No.2/accused No.2 has entered into loan agreement produced at Ex.P2 in the said suit and the present accused No.2 has clearly admitted the execution of the loan agreement and M.O.U in his cross-examination and the Complainant/PW-1 has produced the 13 cheques with regard to the loan amount and also the Memos issued by the Bank for having presented the cheques and the Memos issued by the Bank for having dishonored the cheques and by referring to the said cheques and the Bank Memos which were produced in the said suit as the documentary evidence, it is clearly held that, the Defendants No.1 and 2/accused No.2 and 3 have agreed to pay the amount of Rs.20,38,000/- under the M.O.U. and they have also agreed to pay the investment amount of Rs.9 lakhs and the loan amount of Rs.11,38,000/-, apart from interest amount and the cheques were issued for payment of interest amount.
16th ACMM C.C.No.9897/2011 21
26. In the present case, it is clear that the amount covered under the cheques form part of the cheques, among the 13 cheques issued by the accused No.2 and 3 to the Complainant and consequently, the said cheques have been bounced. Further, in the said Judgment, it is observed that the M.O.U clearly reveals that the Complainant resigned from the post of Joint Managing Director and he should continue as a non-whole time Director and he should co-operate to induct the other Directors. After entering into the M.O.U., the accused No.2 has inducted his wife i.e., the accused No.3 and his brother as Directors. Therefore, it is clearly held that the Defendants No.1 to 3/accused No.1 to 3 are jointly and severally liable to pay the decreetal amount to the Complainant/Plaintiff.
27. Thus the defence of the accused that, it is the accused No.1 company against whom the Complainant should proceed and only after the corporate veil is lifted, the liability of accused No.3 and himself could be considered holds no water, since the same has already been adjudicated in the civil suit. Moreover, DW-1 in his cross-examination, at Para No.2 has admitted that he has induced his wife i.e., accused No.3/DW-2 and his brother as Directors and he has also admitted that, till date he has not paid the decreetal amount to the Complainant. Further, the defence of the 16th ACMM C.C.No.9897/2011 22 accused that the complaint is not maintainable, since the name of PW-1 is not yet taken out from the Directorship by the Registrar of Companies till date is also not tenable, since no such condition is forthcoming in the M.O.U. and the loan agreement and the M.O.U which are the admitted documents, except the clause for non-presentation of the cheques till the repayment of the unsecured loan amount i.e, till 31.7.2010, there is no other condition with regard to the non- availability of the remedy to the Complainant, in the event of the non- payment of the unsecured loan amount by the accused. Therefore, the defences which have been taken by the accused No.2 to 3 in the present case have already been answered by way of holding that the amounts covered under the cheques are legally recoverable debts. Therefore, it could be concluded that inspite of the defence taken by the accused, they have not been able to rebut the presumption available under Sec.139 of the Negotiable Instruments Act. On the other hand, the Complainant is entitled to avail the benefit of the presumption.
28. During the course of arguments, the counsel for the accused has submitted his written arguments in which, he has stated that in view of the refusal of the relief of attachment and sale of the property in O.S. No.8178/2010, it is clear that there is no legally recoverable debt to attract Sec.
16th ACMM C.C.No.9897/2011 23 138 of the Negotiable Instruments Act and the agreement between the parties describes the nature of transaction as only a security and the cheques cannot be construed as issued towards the discharge of legally recoverable debt and that the Complainant, also being a Director, the cheques were issued as a security to him for coming out of the company by selling his shares and tendering his resignation and it is argued that the transfer of shares are made through admitted documents, the Complainant continues to be a shareholder till the transfer certificates are signed and it is further argued that there is already a decree in favour of the Complainant against the accused and now the Complainant intends to seek remedy under Sec.138 of the Negotiable Instruments Act with respect to cheques, which are admittedly issued by him as security securing the payment in lieu of the smooth transfer of the shares. It is also argued that the cheques were not issued towards the discharge of any debt or pre-existing liabilities and it is also argued that the complaint is not maintainable, since the complainant has not made specific allegations as to who is responsible for the affairs of the company at the relevant point of time.
29. In support of his arguments, the counsel for the accused has also produced the photocopy of the Judgment passed by the Hon'ble 22nd ACMM, Bengaluru in CC No. 16th ACMM C.C.No.9897/2011 24 28511/14 and by relying upon the same, he has argued that, in a similar case, the present accused No.2 and 3 have been acquitted by the said court.
30. With due respect to the decision rendered by the Hon'ble 22nd ACMM, it is observed here that the said decision is not a precedent, since it is a Judgment rendered by the court of the same rank and as such this court cannot place reliance upon the said judgment.
31. On the contrary, during the course of arguments, the counsel for the Complainant has placed reliance upon the following decisions:-
1. In D.Purushotama Reddy and another Vs., K.Sateesh, reported in 2008 (8) SCC 505;
2. In Sri Krishna Agencies Vs., State of Andhra Pradesh and another, reported in (2009) 1 SCC 69;
3. In D.Purushotama Reddy and another Vs., K.Sateesh, reported in AIR 2008 SCC 302;
4. In Ramasubbu Vs., R. Muthulakshmi Ammal, reported in 2015 ACD 675 (MAD)
5. In 2004 (8) Kar L.J.273
6. In State of Rajasthan Vs., Kalyansundaram Cement, reported in 1996 SCC (Cri) 466.
16th ACMM C.C.No.9897/2011 25 By placing reliance upon these decisions it is argued by the counsel for the Complainant that, the pendency of the criminal proceedings relating to the same matter is not barred for filing a civil suit in the same subject matter, if the same is no doubt, based upon a different cause of action.
32. I have gone through all these decisions relied upon by the learned counsel for the Complainant and in the present case, it is an admitted fact that, the suit for recovery of money filed by the Complainant against the accused in O.S. No.8178/2010 is already decreed and in this regard, though it is suggested to DW-1 that, already the said suit is decreed and that till he has not paid the decreetal amount to the Complainant, he has admitted the same.
33. The counsel for the Complainant has also relied upon the decision in Suresh Chandra Goyal Vs. Amit Singhal reported in 2015 ACD 755 (Delhi), wherein, under similar set of fact situation it was held that:-
"the defence that the cheques were issued as security for return of the amount invested by the Complainant in his absence could not be accepted on the ground that the MOU does not expressly or even impliedly stated that the security cheques are not to be used for recovering the installments even in case of failure to pay the respondent/debtor".
16th ACMM C.C.No.9897/2011 26 The facts and circumstances involved in the said case are aptly applicable to the case on hand, except for the difference that the MOU was entered into the said case between the Complainant and the accused with regard to a firm and in the present case, it is entered into with regard to a Company. However, the principle of law laid down therein is aptly applicable to the case on hand.
34. The learned counsel for the accused No.2 and 3 has submitted his reply written arguments in respect of the citations relied upon by the counsel for the Complainant by contending that the citations relied upon by the counsel for the Complainant about the maintainability of the complaint is not applicable, since, the maintainability of the complaint was never questioned and the accused have gone through the entire trial and also argued that the accused have never resisted the complaint.
35.With regard to the facts situation of the decisions in the case of Suresh Chandra Goyal Vs., Amit Singhal cited supra, the counsel for the accused has submitted his written argument by contending that, the Complainant in the said case held 6 cheques of Rs.50,000/- given by the accused and it was admitted that a sum of Rs.1.50 lakhs was paid and 3 16th ACMM C.C.No.9897/2011 27 cheques were returned to the accused and it is claimed that in order to return the remaining amount of Rs.1.50 lakhs, the accused issued three cheques of Rs.50,000/-, which came to be dishonored and in that circumstances, the Hon'ble High Court of Delhi has not accepted the defence that the cheque issued only as security and accordingly rejected the defence.
36. However, it is pertinent to note that, even in the present case, the amount covered under the 13 disputed cheques, of which, 4 cheques relate to the present case have been held to be issued for the repayment of the unsecured loan amount by the accused No.2 and 3 to the Complainant in the Judgment rendered by the Hon'ble Sessions Court in O.S. No.8178/2010 and accordingly it has been held that the same is a legally recoverable debt and as such the decision relied upon by the learned counsel for the Complainant is applicable to the facts of the present case.
37. Further, the counsel for the accused has also relied upon the following decision:
In Sudhir Kumar Bhalla Vs., Jagadish Chand and others, reported in (2008) 7 SCC 137.
38. By relying upon the said decision, it is the argument of the counsel for the accused that, until and 16th ACMM C.C.No.9897/2011 28 unless the Complainant transfers all the shares by executing Transfer deeds and retires by getting his name removed from the Registrar of Companies with respect to the first accused company, the cheques act as security and there does not exist any legally enforceable debt till the Complainant executes transfer deed and retirement procedures.
39. However this argument canvassed by the counsel for the accused is not tenable, since, there is already a judicial finding given with regard to the nature of the debt involved in respect of the 13 disputed cheques, which include the disputed cheques of the present case. Hence, the accused cannot be permitted to take up the defence that there is exists no legally recoverable debt by them in favour of the Complainant.
40. In view of the overall discussions and reasons, this court has no hesitation to conclude the Complainant has successfully proved before this court that the disputed cheques have been given towards the legally recoverable debt and as such, the accused No.2 and 3 are liable to pay the same. Hence, this Point deserves to be answered in the Affirmative.
16th ACMM C.C.No.9897/2011 29
41.POINT No.2:- In view of the above reasons and discussions, I proceed to pass the following: -
ORDER By exercising the power conferred u/s 265 of Cr.P.C., the accused No.2 and 3 are hereby convicted for the offence punishable u/s 138 of Negotiable Instruments Act.
They are sentenced to pay a fine of Rs.3,62,920/- (Rupees three lakhs sixty two thousand nine hundred and twenty only) collectively within 30 days from today and in default of payment of fine, they shall undergo simple imprisonment for 6 (three) months.
Out of the fine amount so collected Rs.3,57,920/- (Rupees three lakhs fifty seven thousand nine hundred and twenty only) is ordered to be paid to the Complainant and the balance of Rs.5,000/- (Rupees fivehousand only) is ordered to be adjusted towards cost to the State exchequer..
The bail bond and surety bond of the accused stands cancelled.
Issue free copy of Judgment to the accused forthwith.
(Dictated to the stenographer, transcript thereof is computerized and printout taken by him, and then verified, and then pronounced by me in open Court on this the 29th day of January 2016).
(SARASWATHI.K.N), XVI Addl.,Chief Metropolitan Magistrate, Bengaluru City.
16th ACMM C.C.No.9897/2011 30 ANNEXURE List of witnesses examined on behalf of the Complainant:
PW.1 : Deepak.S. Kakkad List of documents exhibited on behalf of the Complainant: Ex.P-1 to P-4 : Original Cheques; Ex.P-1(a)to : Signatures of the accused; P4(a) Ex.P-5 to P-9 : Bank Memos; Ex.P-10 : Copy of the Legal Notice; Ex.P-11 : Reply notice; Ex.P-12 : Original MOU; Ex.P-13 : C/C of the Order sheet in OS No.8179/10; Ex.P-14 : Copy of Decree; Ex.P-15 : Original Complaint. Ex.P-16 : Postal acknowledgement Ex.P-17 : Resignation letter; Ex.P-18 : C/C of Resolution; Ex.P-19 : Extract of Resolution Ex.P-20 : Form No.32
List of witnesses examined on behalf of the accused:
DW-1 : Sri. Sridhar.D; DW-2 : Smt.Hemamalini.
List of documents exhibited on behalf of the accused:
Ex.D-1 : C/C of the cross examination and affidavit of PW-1 in O.S.No.8177/10 Ex.D-2 : C/C of the affidavit evidence and cross examination of PW-1 in O.S.No.8178/10 Ex.D-3 : C/C of the affidavit evidence and cross 16th ACMM C.C.No.9897/2011 31 examination of PW-1 in O.S.No.8179/10 (SARASWATHI.K.N), Date: 29.01.2016 XVI ACMM, Bengaluru City.
16th ACMM C.C.No.9897/2011 32 29.01.2016 Judgment pronounced in the open court vide separate Judgment:-
ORDER By exercising the power conferred u/s 265 of Cr.P.C., the accused No.2 and 3 are hereby convicted for the offence punishable u/s 138 of Negotiable Instruments Act.
They are sentenced to pay a fine of Rs.3,62,920/- (Rupees three lakhs sixty two thousand nine hundred and twenty only) collectively within 30 days from today and in default of payment of fine, they shall undergo simple imprisonment for 6 (three) months.
Out of the fine amount so collected Rs.3,57,920/- (Rupees three lakhs fifty seven thousand nine hundred and twenty only) is ordered to be paid to the Complainant and the balance of Rs.5,000/- (Rupees fivehousand only) is ordered to be adjusted towards cost to the State exchequer..
The bail bond and surety bond of the accused stands cancelled.
Issue free copy of Judgment to the accused forthwith.
(SARASWATHI.K.N), XVI Addl.,Chief Metropolitan Magistrate, Bengaluru City.
16th ACMM C.C.No.9897/2011 33