Bangalore District Court
M/S. Footprints Collateral Services vs Sri. Raveendra Reddy K on 25 January, 2023
1 O.S.6311/2019
KABC010268592019
IN THE COURT OF I ADDL. CITY CIVIL &
SESSIONS JUDGE AT BENGALURU (CCH.No.2)
Present: - SRI.SREENIVASA, B.A., LL.B.
I Addl. City Civil & Session Judge,
Bengaluru.
Dated this the 25 th day of January 2023
O.S.No.6311 / 2019
Plaintiff: M/s. Footprints Collateral Services
Pvt. Ltd.,
Having its registered office at No.216/2B,
Plot No.2, Nagawara Palya,
C.V.Raman Nagar, Bengaluru-560 093.
Rep. by its authorized representative
Sri.Purushothama R.
(By Sri.P.Prasanna Kumar, Adv.)
- VS -
Defendants: 1. Sri. Raveendra Reddy K,
S/o. K. Sreenivasulu Reddy,
Aged about 51 years,
R/at No.399, 3rd Floor,
11th Main, Jakkur Layout,
Bengaluru-560 064.
2. Sri. Konda Sreenivasalu Reddy,
S/o. Late Ayyappa Reddy,
Aged about 73 years,
R/o. Utakuru Village Post, Gandhi Bomma
Centre, Vidavallusu Mandalam, Kuvuru
2 O.S.6311/2019
Taluk, Nellur District, Andhra Pradesh.
(Sri.T.L.Lakshmipatel, Adv.)
Date of Institution of the suit 27.08.2019.
Nature of the Suit (suit for pronote, Money suit.
Suit for declaration & possession,
Suit for injunction, etc.):
Date of the commencement of 29.09.2021.
recording of the Evidence:
Date on which the Judgment was 25.01.2023.
pronounced:
Year/s Month/s Day/s
Total duration:
03 04 28
(SREENIVASA)
I Addl. City Civil & Sessions Judge,
Bengaluru.
JUDGMENT
This suit is filed by the plaintiff Company against the defendants for a judgment and decree to direct them to pay Rs.98,05,168/- along with future interest @ 18% from the date of suit till its realisation.
2. The brief facts of the plaintiff's case are that:
a) The plaintiff company is a wholly owned subsidiary of AuthBridge Research Services Pvt. Ltd., and provides services that include Risk Mitigation Services, Employee Screening, Business Due 3 O.S.6311/2019 Diligence, Business Partner Due Diligence and other allied services.
The plaintiff company is a pioneer in the said field and has earned a high reputation even amongst its competitors. The plaintiff company is duly registered under the Company's Act 1956 on 21.11.2006. The plaintiff company has passed a board resolution dated 30.07.2019 to appoint the authorized representative to present the said suit on behalf of the company and to represent the plaintiff company.
2b) It is further submitted that, the defendant No.1 herein was an employee of the plaintiff company. The defendant No.1 herein came to be appointed by the plaintiff company as a Manager of Finance vide letter of appointment dated 22.04.2015. The letter of appointment was annexed to terms and conditions of service which was mandatory for the defendant No.1 to sign for confirmation of the aforesaid job. The defendant No.1 herein has duly signed the said terms and conditions of service and as such is bound by it. Along with letter of appointment, the defendant No.1 was also provided his monthly income break up and non-disclosure certificate, which also has duly signed by the defendant No.1. The defendant No.1 herein was also given an appraisal on 02.05.2016. The defendant No.1 being the Finance Manager was given responsibility with respect to the accounts of the plaintiff company and was also given the responsibility for payments to various vendors in the absence of authorised representative of the plaintiff. As the defendant No.1 was high ranking official of the plaintiff company, he was bestowed with serious responsibilities necessary for the effective functioning of the plaintiff company.
2c) It is further submitted that, in general practice, the authorized representative is the custodian of the cheques in the 4 O.S.6311/2019 name of the plaintiff company, which were to be used for payment of vendors and such other needs of the plaintiff company. However, when the authorized representative is not available then the said cheques would be handed over to the custody of one Mr.Murali M. Reddy for payment to various vendors. The defendant No.1 being well aware of the rules and practices of the plaintiff company took serious advantage and misused his responsibility by embezzling a total of Rs.64,78,000/- from the plaintiff company herein. The defendant No.1 holding a key managerial post was given the custody of the company safe. The said safe was maintained by the plaintiff company in order to keep safe custody and account of unspent monies returned from its employees who were granted certain allowance for a particular purpose by the company. The plaintiff company had granted certain allowance to one of its employee by name Mr.Ajit Rai for an official trip to the Phillippines. The said Mr.Ajit Rai returned the upspent amount to the tune of Rs.2000S to the defendant herein as the defendant was the custodian of the company safe. However, the defendant took undue advantage of the said position and stole 1906S which is roughly equivalent to Rs.1,27,702/- and has not returned the same till date.
2d) It is further submitted that, the defendant No.1 herein using his position in the plaintiff company influenced one Murali M Reddy to handover the cheques of the plaintiff company. The defendant No.1 then presented four cheques as 'self' to the bank and withdrew the said money from the bank and it is pertinent to mention that the defendant No.1 has mentioned his own name as a payee of the said cheque. The said cheque came to be cleared by HSBC Bank and the amount was credited into the bank account of the defendant herein maintained at Axis Bank, M.G.Road Branch from 5 O.S.6311/2019 which the defendant subsequently withdrew. By doing so, the defendant has unlawfully withdrawn Rs.63,05,000/- from the bank account of the plaintiff company. Out of the said unlawful withdrawn amount of Rs.63,05,000/-, the defendant No.1 herein deposited an amount of Rs.1,25,000/- in the Bank account of his father, the defendant No.2 herein. The amount of Rs.1,25,000/- was utilized by the defendant No.2 herein.
2e) It is pertinent to mention that, the defendant No.1 herein took an advance of his salary to the tune of Rs.40,000/- on 30.05.2016 and the defendant has still not returned the same to the plaintiff company. When the authorized representative of the plaintiff attempted to approach the defendant regarding his financial decisions, much to a shock and belief the defendant No.1 had gone absconding. The plaintiff company made hectic efforts to track down the defendant No.1 as the defendant No.1 had caused a loss of Rs.64,72,702/- to the plaintiff company. The defendant No.2 being the father of the defendant No.1 received the entire embezzled amount from the defendant No.1 with complete knowledge that the said amount was unlawfully gained by the defendant No.1 by defrauding the plaintiff company. In pursuance of the same, the authorized representative of the plaintiff company visited the residential address of the defendant No.1 as provided in his application details to the said company. Upon visiting the said residential address, it came to the notice of the plaintiff company that, the defendant No.1 herein had not returned to his residential house for quite some time and the plaintiff was further informed that, the defendant No.1 is in the habit of not returned to his residential house regularly. Unable to reach the defendant No.1, hence, the plaintiff company approached the jurisdictional police and registered a written 6 O.S.6311/2019 complaint bringing to the notice of the jurisdictional Police about the illegal actions of the defendant company.
2f) Upon receipt of the said complaint, Byappanahalli Police registered an FIR in Crime No.243/2016 dated 27.08.2016 as against the defendant herein for offenses punishable under Sections 420 and 406 of IPC and took up investigation. During the course of investigation, the plaintiff company has duly participated in the same and assisted the jurisdictional police by producing relevant documents at appropriate stage. After completion of the said investigation, Byappanahalli Police filed a charge sheet as against the defendants for the aforesaid offences. The defendant No.1 herein has unlawfully embezzled Rs.64,72,702/- from the plaintiff company and has not repaid the same. A portion of the embezzeled amount has been utilized by the defendant No.2. The plaintiff has given numerous opportunities to the defendant to return the said amount. However, the same has been in vain. Having left with no other alternative, the plaintiff has approached this Court for recovery of Rs.64,72,702/- along with interest at the rate of 18% amounting to Rs.33,32,466/-, totaling to an amount of Rs.98,05,168/-.
3. a) After receipt of suit summons, the defendant No.1 has appeared through his counsel and filed written statement. In the written statement, the defendant No.1 has disputed the entire case pleaded by the plaintiff company. Further, the defendant No.1 has contended that, he is a law abiding citizen and he has joined with the company with a good hope to discharge his duties and the defendant No.1 has maintained the accounts very sincerely and the defendant No.1 has got appreciation letter from the company also. The plaintiff company has lodged police complaint by making false 7 O.S.6311/2019 allegation regarding the misappropriation of the fund against the defendant No.1. The defendant No.1 has done transactions as per the guidelines of the plaintiff company. Due to making a false allegation by the plaintiff company, the defendant No.1 is mentally shocked and he has lost his reputation in the society and is very difficult to lead normal life, to take care of his old parents, wife and 2 children. Due to false suit filed by the plaintiff, the plaintiff is liable to pay damages to the defendant No.1 a sum of Rs.1,00,00,000/-. The defendant No.1 is entitled to the aforesaid amount from the plaintiff company and the plaintiff is liable to pay the same forthwith to the defendant No.1. The defendant No.1 has further submitted that, he will take appropriate steps against the plaintiff company. The plaintiff company have done fraudulent Act by playing a fraud against this defendant No.1. There is no piece of paper to establish that this defendant has embezzled the money of the plaintiff company. Hence, the suit of the plaintiff is liable to be dismissed.
3b) It is further submitted that, the suit is liable to be dismissed on the following grounds:
1. There is no cause of action.
2. Barred by law of limitation, the suit is filed beyond period of 3 years for recovery of amount.
3. Non-joinder of necessary party. The defendant No.2 is unnecessary party to the suit.
4. No documents / materials to show that the defendant No.1 misused the company amount.
5. No proper pleadings and the plaintiff is representative have no right to sue against this defendants.
6. No jurisdiction to entertain the suit.8 O.S.6311/2019
7. The plaintiff company have misrepresented and played a fraud against the defendant.
8. The plaintiff have not approached this Court with clean hands and suppressed the material facts.
9. The defendant has not misused the amount of the plaintiff company.
10.The plaintiff company sold to AUTHIBRIDGE.
On the above grounds, the defendant No.1 prays to dismiss the suit.
4. Based on the pleadings, my learned predecessor-in- office framed the following issues are as under :-
ISSUES
1. Whether plaintiff proves that one of its employee by name Mr.Ajith Rai granted 2000S for an official trip to the Philippines and the said money unused which was returned to its finance manager / defendant No.1, who stolen 1906S 9Rs.1,27,702/-) out of said amount of the firm as alleged ?
2. Whether plaintiff further proves that the defendant No.1 was being its finance manager unlawfully withdrew totally Rs.63,05,000/- from its bank account during the period from 03.08.2016 to 22.08.2016 and credited the same to his personal account to misuse and out of which Rs.1,25,000/- was transferred to the bank account of his father / defendant No.2, who utilize the same as alleged in the plaint ?
3. Whether the plaintiff further proves that the defendant No.1 took advance salary of Rs.40,000/- on 30.05.2016, without returned the same absconded as alleged ?
4. Whether the defendant No.1 proves that the suit of the plaintiff is bad for non-joinder of necessary party as contended in his written statement ?9 O.S.6311/2019
5. Does the suit of the plaintiff is time barred ?
6. Whether the plaintiff proves that the defendant No.1 unlawfully embezzled totally Rs.64,72,702/- belonging to it and liable to return the same with interest at the rate of 18% per annum amounting to Rs.33,32,466/- as sought for ?
7. Whether the plaintiff is entitled for future interest as sought for ?
8. What Order or decree ?
5. In order to prove the case of the plaintiff, the authorised representative of the plaintiff examined himself as PW.1 and got marked the documents at Ex.P.1 to Ex.P.11. Inspite of sufficient opportunities, the defendants have not adduced their oral and documentary evidence.
6. Heard the arguments on behalf of the plaintiff. Inspite of opportunities, the defendant has not addressed his arguments. Hence, giving liberty to the defendants to file written arguments within 24.01.2023, posted the matter for judgment. But the defendants have not filed their written arguments. Perused the entire materials on records.
7. My findings on the above issues are as under :-
Issue No.1 to 3 :- In the affirmative, Issue No.4 :- In the negative, Issue No.5 :- In the negative, Issue No.6 & 7 :- In the affirmative, 10 O.S.6311/2019 Issue No.5 :- As per final order;
for the following :-
REASONS
8. ISSUE Nos.1 to 7: All these issues are interconnected with each other, hence they are taken together for discussion in order to avoid repetition of facts.
9. To prove the facts in issue, the authorised representative of the plaintiff company examined himself as PW1. He has reiterated the plaint averments in his examination-in-chief. He has stated that, the plaintiff company had appointed Mr.Purushotham R vide a board resolution dated 30.07.2019 to authorize him to present the suit on behalf of the plaintiff company. The defendant No.1 herein was an employee of the company as Manager of Finance vide letter of appointment dated 22.04.2015. The letter of appointment was annexed to terms and conditions of service, which was mandatory for the defendant No.1 to sign for confirmation of the aforesaid job. The defendant No.1 herein has duly signed the said terms and conditions of service, as such, he is bound Rs.63,05,000/- from the bank account of the company. Out of the said unlawful withdrawn amount of Rs.63,05,000/-, the defendant No.1 herein deposited an amount of Rs.1,25,000/- in the bank account of his father i.e., defendant No.2 herein. The amount of Rs.1,25,000/- was utilised by the defendant No.2 herein. He further stated that, the defendant No.1 herein took an advance on his salary to the tune of Rs.40,000/- on 30.05.2016 and the defendant has still not returned the same to the company. The plaintiff company has approached the defendant regarding his financial decisions, much to 11 O.S.6311/2019 a shock and belief the defendant No.1 had gone absconding. The company made hectic efforts to track down the defendant No.1 as the defendant No.1 had caused a loss of Rs.64,72,702/- to the company. He further stated that, the defendant No.2 being the father of the defendant No.1 received the entire embezzled amount from the defendant No.1 with complete knowledge that the said amount was unlawfully gained by the defendant No.1 by defrauding the company. In pursuance of the same, the representative of the plaintiff company visited the residential address of the defendant No.1 as provided in his application details to the said company. Upon visiting the said residential address, it came to the notice that, the defendant No.1 herein had not returned to his residential house for quite some time and it was also further informed that the defendant No.1 is in the habit of not returning to his residential house regularly. Unable to reach the defendant No.1, the company approached the jurisdictional police and registered complaint bringing to the notice of jurisdictional police about the illegal actions of the defendant company. Upon receipt of the said complaint, Byappanhalli Police have registered a criminal case against the defendant in Crime No.243/2016 for the offences punishable under Secs.420 and 406 of IPC and took up the investigation and after investigation, the Police have filed the charge sheet against the defendants. The defendant No.1 herein has unlawfully embezzled Rs.64,72,702/- from the said company and has not repaid the same. A portion of the embezzled amount has been utilized by the defendant No.2. The company has given numerous opportunities to the defendant to return the said amount. However, the same has been went in vain.
12 O.S.6311/201910. Apart from oral evidence, PW.1 has produced documents at Ex.P.1 to Ex.P.11. Ex.P.1 is the certified copy of the certificate of incorporation. As per this document, the company passed the resolution authorising Mr.Purushothama R Asst. Manager Finance to file the case. Ex.P.2 is the resolution passed by the plaintiff company authorizing PW.1 Mr.Shasikant S, Asst. Manager Finance to appear and give evidence in this suit. Ex.P.3 is the letter of appointment of the defendant No.1 Raveendra Reddy K dated 22.04.2015, wherein, the defendant No.1 had appointed the defendant No.1 as a Manager Finance of the plaintiff company. This document is not disputed by the defendants. Ex.P.4 is the monthly CTC break up statement. Ex.P.5 is the non- disclosure certificate dated 22.04.2015. As per this document, the defendant No.1 shall not disclose any information pertianing to the plaintiff company. Ex.P.6 is the commendation for good performance issued by the plaintiff company to the defendant No.1 dated 02.05.2016, wherein the plaintiff company recognised the performance of the defendant No.1 and appraised and enhanced monthly CTC at Rs.68,841/- w.e.f. 01.04.2016. Ex.P.7 is the salary break up. Ex.P.8 is the details of embezzlement of money by the defendant No.1 through withdrawl from the plaintiff's bank HSBC account No.071-512073-001 during the period from 03.08.2016 to 22.08.2016 and the defendant No.1 transferred and withdrawn the amounts mentioned in Ex.P.8 statement amounting to Rs.63,05,000/-. Ex.P.9 is the complaint dated 29.08.2016 to the Officer in charge, Bypanahalli Police Station about missing of defendant No.1 after stealing large amount of money from the company and its director. Ex.P.10 is the FIR. Ex.P.11 is the 13 O.S.6311/2019 charge sheet submitted against the defendant No.1. All these documents disclose that, the defendant No.1 was the Manager (Finance) in the plaintiff's company. During the tenure of his working in the plaintiff's company, he had misappropriated the company amount and withdrawn / transferred the same. In that regard, the company lodged the complaint. The concerned IO investigated the matter and submitted the charge sheet.
11. To disbelieve the evidence of PW.1, the defendants have not cross-examined PW.1. The defendant No.1 in his written statement has taken the contention that, there is no cause of action. To accept the case of the defendant No.1, he has not cross-examined the witness and not elicited anything from the mouth of PW.1.
12. Further, the defendant No.1 has taken contention that, the suit of the plaintiff is barred by law of limitation. Ex.P.8 discloses that, in the year 2016, the defendant No.1 misappropriated the amount and the plaintiff filed this suit on 27.08.2019. The learned counsel for the plaintiff company has argued that, the cause of action arose when the neglect or misconduct become known to the plaintiff. As per the case of the plaintiff, Ex.P.8 discloses that, the auditor submitted the report on 20.10.2016. The said date is the knowledge to the plaintiff. If that date is taken into consideration, then the suit of the plaintiff is within the time. To substantiate his argument, the learned counsel for the plaintiff has relied upon the ruling reported in 2022 SCC online Del 292 in the case of K.N.Rao and another Vs 14 O.S.6311/2019 Composite Securities Ltd., and others. I have gone through the ruling. As observed in this ruling, the limitation will start from the date of misconduct known to the plaintiff. As per the document at Ex.P.8, the date of knowledge i.e., when the auditor has given report on 20.10.2016 is taken into consideration, the suit is perfectly within the time.
13. Further, in the written statement, the defendant No.1 has taken contention that, the suit of the plaintiff suffers from non- joinder of necessary parties. But he has not explained who is necessary and proper party. Further, he has taken contention that, the defendant No.2 is not a necessary party. As per the case of the plaintiff, the defendant No.1 transferred an amount of Rs.1,25,000/- to the account of the defendant No.2. Under the said circumstances, he is a necessary party in this suit.
14. Further, the defendant No.1 has contended that, no documents are produced to show that, the defendant No.1 had misused the company amount, but the documents show that, the defendant No.1 withdrawn the amount. But to substantiate the contention of the defendant No.1, he has not stepped into the witness box. Further contended that, the PW.1 is not a proper person to institute the suit. The said contention cannot be accepted since as per the resolutions at Ex.P.1 and Ex.P.2, Mr.Purushotham R instituted the suit and PW.1 has given the evidence.
15 O.S.6311/201915. Further, the defendant No.1 has taken the contention that, the plaintiff company sold AuthBridge Research Services Pvt. Ltd. Further, to prove the facts, the defendant No.1 has not placed any oral and documentary evidence and not stepped into the witness box. Now, I would like to refer the citation reported in AIR 1999 SC page 1441 in the case of Vidhyadhar Vs Mankikrao and another, wherein, it is held that: (A) Evidence Act (1 of 1872), S.114 - Adverse inference - Party to suit - Not entering the witness box - Give rise to inference adverse against him. Where a party to the suit does not appear into the witness box and states his own case on oath and odes not offer himself to be cross examined by the other side, a presumption would arise that the case set up by him is not correct." Thus, The facts and circumstances discussed in the above respected judgment and the facts and circumstances of the present case are one and the same. Therefore, the principles laid down in the above respected judgment is aptly applicable to the case on hand. Since in the instant case, the defendant No.1 has filed the written statement and not stepped into the witness box. Hence, the Court can draw adverse inference against the defendants and the contents written in the written statement are false since the defendant No.1 has not offered himself for cross-examination. Hence, I am of the opinion that, the plaintiff has satisfactorily proved that, the defendant No.1 had misused the amount of the plaintiff company as a Manager for the period from 03.08.2016 to 22.08.2016 and credited the same to his personal account and also to the account of the defendant No.2. On the other hand, the defendant No.1 failed to prove that, 16 O.S.6311/2019 the suit of the plaintiff is bad for non-joinder of necessary parties and also failed to prove that, the suit is time barred. Under the said circumstances, the plaintiff is entitled for the relief as prayed for in the suit. In view of the above discussion, I answer issue Nos.1, 2, 3, 6 and 7 are in the affirmative and issue No.4 & 5 are in the negative.
16. ISSUE NO.8: In view of my aforesaid discussions, I proceed to pass the following: -
ORDER The suit of the plaintiff Company is hereby decreed with cost.
The defendants are liable to pay an amount of Rs.98,05,168/- to the plaintiff Company with interest @ 18% per annum from the date of suit till its realisation within three months from the date of this order.
Draw the decree accordingly.
(Dictated to the Stenographer, transcription computerised by her, corrected and then pronounced by me in the open court on this the 25 th day of January 2023.) (SREENIVASA) I Addl. City Civil & Sessions Judge, Bengaluru.17 O.S.6311/2019
ANNEXURE WITNESSES EXAMINED ON BEHALF OF PLAINTIFFS:
PW.1 : Sri. Shasikanth S.
DOCUMENTS MARKED ON BEHALF OF PLAINTIFFS:
Ex.P.1 & 2 : Resolutions.
Ex.P.3 : Letter of appointment of the defendant No.1
Raveendra Reddy K dated 22.04.2015
Ex.P.4 : CTC break up statement.
Ex.P.5 : Non discloser certificate.
Ex.P.6 : Commandation for good performance.
Ex.P.7 : Salary break up.
Ex.P.8 : Certified copy of the bank statement.
Ex.P.9 : Certified copy of the complaint.
Ex.P.10 : Certified copy of the FIR.
Ex.P.11 : Certified copy of the charge sheet.
WITNESSES EXAMINED AND DOCUMENTS EXHIBITED
ON BEHALF OF DEFENDANTS: NIL
(SREENIVASA)
I Addl. City Civil & Sessions Judge,
Bengaluru.