Bangalore District Court
Sri. Waheed Khan M.A vs Sri. P.Venkatesh Babu on 14 February, 2023
KABC0C0005222019
IN THE COURT OF XXXIII ADDL. CHIEF
METROPOLITAN MAGISTRATE, MAYO HALL UNIT,
BENGALURU
: PRESENT :
M.Vijay, BAL, LLB.
XXXIII ADDL.CHIEF METROPOLITAN MAGISTRATE,
BENGALURU.
DATED THIS THE 14TH DAY OF FEBRUARY, 2023.
C.C.NO.50162/2019
COMPLAINANT : Sri. Waheed Khan M.A.
S/o M.A. Ayub Khan,
R/a Balaji Talkies road,
Near Jamia Maszid, Babu rao street,
Malaur Taluk, Kolara
District563130.
Vs.
ACCUSED : Sri. P.Venkatesh Babu
S/o Papaiah
Aged about 41 years,
R/a 1st floor, 4th main, Priyadarshini
Layout, Palanajogihalli, Malathalli
post, Kasaba hobli,
Doddaballapura taluk,
Bangalore rural District561203
JUDGMENT
The complainant has filed this private complaint U/s.200 of Cr.P.C., against the accused for the offence punishable U/s 138 of Negotiable Instrument Act.
2C.C.No.50162/2019
2. The factual matrix of the case are as follows: The Complainant and his friend by name Sudhakar were jointly running a business under partnership firm in the name and style of M/s Royal Enterprises i.e., supply of Steel and Cement till january 2018, during course of business, the accused approached him for supply of 400 bags of cement and 6492 kg of Steel on 10.09.2017, accordingly, on 18.09.2017 he claims to have supplied steel worth of Rs.2,72,715/ on 21.09.2017 cement for worth of Rs.1,35,997/, in all the firm has supplied goods for worth of Rs.4,08,712/, however, subsequently, in the month of january, the partners of the firm decided to close the firm, and mutually came to an understanding that, the dues from it's customers may be collected personally, accordingly, on persistent demand the accused in the month of june 2018 has issued 3 cheques in his favour bearing No.270018 dated 06.07.2018, 270019 dated 10.09.2018 for sum of Rs.50,000/ each, and cheque bearing No.270020 dated 10.10.2018 for sum of Rs.3,08,000/ in totally for sum of Rs.4,08,000/ towards supply of materials with an assurance that cheques would be honored.
3C.C.No.50162/2019
3. As per the assurance and instruction of the accused the complainant claims to have presented first 2 cheques on 03.10.2018, but, both the cheques came to be returned unpaid, i.e., cheque bearing No.270018 returned with the remark of "payment stopped by the drawer" another cheque bearing No.270019 returned for "Insufficient Funds" vide memos dated 03.10.2018 and third cheque was presented on 10.10.2018, but, it was also came to be returned unpaid for "Insufficient Funds", immediately, he tried to contact the accused, but, the accused did not respond to his call, accordingly, he was constrained to issue demand notice on 02.11.2018, calling upon the accused to pay the cheques amount, but, the notice was unserved with the shara "absent" on 09.11.2018, however, it is deemed to have been served, despite of service, the accused neither paid the cheque amount nor replied to his notice, accordingly, pray to convict the accused for an o/p/u/s 138 of N.I Act.
4. Based on the complaint, the sworn statement affidavit, the documents etc., the court took cognizance of an offense punishable under Sec.138 of N.I. Act by following the guidelines of Apex Court issued in Indian Bank 4 C.C.No.50162/2019 Association case and ordered to be registered a criminal case against the accused for the o/p/u/s. 138 of N.I. Act.
5. In pursuance of summons, the accused appeared through his counsel, he was enlarged on court bail, further, substance of plea was recorded, the accused pleaded not guilty and he claimed to be tried, the complainant in order to prove his case got examined himself as P.W.1 and placed reliance on Ex.P1 to P24. Upon closure of complainant side evidence, the court examined the accused U/s 313 of Cr.P.C, the accused denied the incriminating materials on record and also examined himself as DW1 and placed reliance on Ex.D1 to D7.
6. Heard both the sides, perused the materials on record, the following points arise for my determination.
1. Whether the complaint proves beyond all reasonable doubt that, accused has committed an o/p/u/s 138 of Negotiable Instruments Act?"
2. What Order?
5C.C.No.50162/2019
7. My findings to the above points are follows;
Point No1: In the Affirmative.
Point No.2: As per final order for forgoing;
REASONS
8. POINT No:1: The accused denied the supply of materials i.e., Cement for worth of Rs.1,35,997/ and Steel for worth of Rs.2,72,715/ to him by the complainant as well as denied the claimed liability of Rs.4,08,712/ and the service of demand notice, so, the burden is on the complainant to prove the existence of liability as well as issuance of cheques bearing No.270018, 270019, 270020 for total Rs.4,08,712/ in his favour by the accused, and the compliance of Sec.138(a) to (c) of N.I Act.
9. The complainant has reiterated the complainant averments in his examination chief affidavit that, he and one Sudhakar were jointly carrying business at Malur in the name and style of M/s Royal Enterprises under a partnership, during that time, he claims to have supplied steel and cement bags to the accused for worth of 6 C.C.No.50162/2019 Rs.4,08,712/, however, subsequently, in the month of january, the partnership firm was closed on mutual understanding between both the partners that, all the dues of the customers may be recovered individually, accordingly, on his demand the accused issued Ex.P1 to 3 cheques towards clearance of Ex.P15 and 16 tax invoices raised against the accused towards supply of steel for worth of Rs.2,70,715/ on 18.09.2017 and cement bags on 21.09.2017 for tune of Rs.1,35,997/, but, on presentation of all the cheques came to be dishonored with the remark "Insufficient Funds" and "payment stopped by the drawer" , despite service of demand notice the accused failed to pay the cheque amount, accordingly, this complaint.
10. Inter alia, the accused subjected the PW1 for cross examination, wherein, the accused firstly denied the service of demand notice, then, questioned the locus standi of the complainant to file the complaint, and also denied the delivery of materials by contending that, he issued cheques Ex.P1 to 3 for supply of materials as a security, but, the complainant does not supplied the materials, accordingly, he issued stop payment instruction 7 C.C.No.50162/2019 to the banker, so, the accused denied the claimed liability, however, firstly, so far as, demand notice is concern, the accused denied the service of demand notice, solely on the ground that, he was residing in his village during the time of notice sent to his official address, therefore, demand notice not been served upon him, but, the complainant relied upon Ex.P7 copy of legal notice, postal returned cover Ex.P8 as well as confronted Ex.P22, the accused though denied the service of demand notice, but, in his cross examination admitted that;
"It is true to suggest that, the address shown in cause title as well as in GST certificate are one and the same, the witness volunteers that, during the time of supply of materials I was residing at my village but not residing in the address shown in Ex.P22", So, on this admission it is crystal clear that, the address shown in Ex.P22, Ex.P6 legal notice, Ex.P9 Postal cover and cause title is correct and proper address of the accused, however, he claims that, during the time of supply of materials, he was residing at his village i.e., Durgenahlli Doddaballapur taluk, accordingly, the Ex.P9 8 C.C.No.50162/2019 postal shara returned unserved with the shara "absent"
but, not either incorrect or improper address of the accused, so, it is crystal clear that, the complainant sent Ex.P7 to the correct and proper address of the accused as shown in his GST certificate, therefore, the demand notice correctly sent to the last known address of the accused, though it was returned unserved with the shara "absent", in view of the admission of the accused that, the complainant has sent legal notice to his correct address then, service of demand notice shall be presumed, unless until contrary is proved, since, it was dispatched to the correct last known address of the accused, as per Sec.27 of general clauses Act, in contrary to it, the accused produced Ex.D1 to D7 to prove his residence of Durgenahalli, but, as held supra, the accused admitted the address given in cause title is the correct and proper place of business of the accused as mentioned in his own GST certificate Ex.P22, as such, even though it is returned unserved with the remark "absent", the service of demand notice shall be presumed, in contrary, though the accused produced Ex.D1 to D7, in contrary to the claim of complaint, but, admitted Ex.P22 is GST certificate, wherein he was given his permanent address, as principal 9 C.C.No.50162/2019 place of business as shown in cause title and demand notice, therefore, service of demand notice cannot be doubted.
11. So far as, liability is concern, the complainant has placed reliance on Ex.P1 to 3 cheques, tax invoices for having been purchased the steel and cement bags from the KCP Ltd., as well as the tax invoices raised against the supply of materials i.e., steel and cement bags Ex.P15 and 16, and stated that, on 18.09.2017 supplied steel for tune of Rs.2,72,715/, cement bags supplied on 21.09.2017 for worth of Rs.1,35,999/ towards discharge of the same, the accused allegedly issued Ex.P1 to 3 cheques, but, it got bounced and accused has failed to pay the cheques amount, despite of service of demand notice, inter alia, the accused denied very delivery of materials, however, he contended that, he issued Ex.P1 to 3 cheques for security to supply the materials well in advance, but, the complainant failed to supply the materials, accordingly, he claims to have issued stop payment instruction to his banker, further, he contended that, Ex.P15 and 16 tax invoices are not genuine bills as they are created, accordingly, he is not liable to pay the cheques amount, 10 C.C.No.50162/2019 however, the accused admitted the GST number mentioned in both the tax invoices i.e., Ex.P15 and 16 is pertaining to his business entity and he claims that, cheques were issued for supply of materials well in advance, but, the complainant does not have supplied the materials ordered by him, accordingly, he issued stop payment instruction in his banker, but, the accused failed to produced a copy of stop payment instruction given to his banker to prove that, for what reason, he requested his banker to stop the payments issued to the complainant, further, out of 3 cheques as per Ex.P4 and 5, 2 cheques were dishonored for "funds insufficient" and only one cheque dishonored for "payment stopped by the drawer".
12. That apart, it is significant to note that, out of 3 cheques only one cheque for sum of Rs.50,000/ came to be dishonored "payment stopped by the drawer" and remaining 2 cheques were came to be dishonored for "funds insufficient", more significantly all the cheques Ex.P1 to 3 pertaining to same account, so, to believe the defence, the accused must prove sufficient balance in his account as on the date of the cheques, in other words the 11 C.C.No.50162/2019 accused must prove the cheques were dishonored not because of "paucity of funds" in his account, but, despite of taking specific contention that, because of not supplying of materials as per his order, he issued stop payment instruction, neither he produced statement of account, nor the copy of the stop payment instruction by citing the reason of non supplying of materials, as the accused does not disputed the issuance of Ex.P1 to 3 cheques infavour of the complainant with signature, therefore, in absence of that, and admission of the accused, even though, the accused denied the liability for tune of Rs.4,08,712/, but, it is to be presumed, unless and until contrary is proved that, accused has drawn Ex.P1 to 3 for lawful consideration or the complainant has received Ex.P1 to 3 cheques towards discharge of the liability claimed herein, as it is mandatory presumption shall be drawn U/S139 r/w 118(a) of N.I Act, infavour of the holder of the cheque, once, the accused admits the cheques in question and signature found thereon belongs to him, at this stage, it is worth to note decision of Hon'ble Apex Court reported in between M/s Kalmani Tex and another Vs. P. Balasubramanyam, wherein, the lordship held that, 12 C.C.No.50162/2019 "The statute mandates that, once the signature of an accused on the cheque and cheque are established then the statutory presumption U/S 118(a) r/w 139 of N.I Act must be drawn infavour of the complainant".
13. Accordingly, initial presumption has been drawn infavour of the complainant that, Ex.P1 to 3 cheques drawn by the accused, towards discharge of legally enforceable liability i.e., against tax invoices raised against the accused for supply of materials for tune of Rs.4,08,712/, however, it is rebuttble presumption, therefore, the onus is on the accused to disprove the claimed supply of materials and cheques were issued much prior to supply of alleged materials.
14. The accused in order to disprove the case of the complainant got examined himself as PW1 and stated on oath that, he is in construction filed, agreed to purchase cement and steel from the complainant on credit basis, accordingly, for supply of cement and steel, he claims to have issued 3 cheques, but, even after receipt of cheques, the complainant failed to supply the materials, 13 C.C.No.50162/2019 accordingly, he issued stop payment instruction, therefore, he is not liable, however, in the cross examination the accused admitted that, he issued Ex.P1 to 3 cheques with request to the complainant to present cheques for encashment, however, only after supply of materials, but, there is no written agreement or document to that effect, further, the accused admittedly does not have business dealings with the complainant, much earlier to the present transaction to prove that, there was business practice that, only after supply of materials, cheques would be presented for encashment.
15. That apart, as held supra, the accused claims to have issued stop payment instruction to his banker, because of not supplying the steel and cement bags, as per his placement of order, but, significantly out of 3 cheques, 2 cheques came to be dishonored for "funds insufficient"
and one for "payment stopped by the drawer", but, not produced the copy of instruction given to his bank for the accused issued stop payment instruction, nothing has produced i.e., the copy of instruction given to his banker to believe his line of defence, since, whenever, the accused raised the defence that, he issued the stop 14 C.C.No.50162/2019 payment instruction, the accused must have prove the sufficient fund in his account, but, to substantiate the same neither he produced statement of account, nor he produced document to show that he had sufficient balance to honour the cheques, at this stage, it is worth to note the decision of Hon'ble Apex Court between M/s MMTC Ltd., and another V/S Medchil Chemicals and Pharma Pvt. Ltd., held that, "even though the cheque dishonored by reason of stop payment instruction an offence under section 138 could still be made out. It is held that, the presumption U/S 139 is attracted in such a case also the authority shows that, even in the cheque is dishonored by reason of stop payment instruction by virtue Sec.139 the court as to presume that, the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Offcourse this is a rebuttable presumption. The accused can thus show that the stop payment instruction were not issued because of insufficiency or paucity of funds if the accused shows that in his account there was sufficient funds to clear the amount of cheque at the time of presentation the cheque for encashment at the drawer bank and that stop payment notice had been issued because of other valid causes including that there was no existing that or liability 15 C.C.No.50162/2019 had been issued because of other valid causs including that there was no existing debt or liability at the time of presentation of cheque for encashment, then an o/p/u/s 138 would not be made out".
So, the defence of the accused that, because of non supply of materials he issued stop payment instruction can not be acceptable, in absence of proof about sufficient balance in his account to honor the cheques, since, all the 3 cheques pertaining same account of the accused and there can not be different reasons for dishonor of the cheques araised out of same transaction and account.
16. Further, the complainant in order to strengthen his claim produced Ex.P15 and 16 tax invoices raised against the supply of materials on 18.09.2017 and 21.09.2017 respectively, the accused challenged these 2 documents and contended that, both the documents are created for the purpose of this claim, however, he admits during course of his cross examination, the GST number mentioned on both the bills pertaining to his business entity, though, in the bills does not found the person who received the goods with an acknowledgment, but, no 16 C.C.No.50162/2019 prudent man would issue 3 cheques for supply of materials before supplying the materials, as such, the Ex.P15 and 16 further strengthen the supply of materials to the accused for a tune of Rs.4,08,712/.
17. Further the accused contended that, as per rule 138 of Karnataka GST Rules, the supplier must obtain eway bill against supply of any materials more than Rs.50,000/, but, the complainant partnership firm, neither registered nor obtained eway bill for transportation of steel and cement bags for tune of Rs.4,08,712/, therefore, in absence of that, the defence of the accused strengthen that, the complainant does not have supplied the materials as per Ex.P15 and 16, however, to over come the defence the complainant has produced Ex.P12 to 14, which clearly show that, the complainant under his partnership firm has purchased steel and cement bags on 06.09.2017 and 13.09.2017, which includes both CGST and SGST, therefore, in absence of eway bill the delivery of goods to the accused by the complainant can not be doubted, as in Ex.P12 esugam number have been mentioned for transportation of goods.
17C.C.No.50162/2019
18. That apart, the accused questioned the locus standi of the complainant for the claim, on the ground that, the firm claimed by the complainant i.e., M/s Royal Enterprises is not a registered firm, nor for its existence the complainant has not produced any document, therefore, the complainant does not have right to claim the amount, however, it is not the case of the accused that, he issued Ex.P1 to 3 cheques infavour of M/s Royal Enterprises a partnership firm, but, he admittedly issued Ex.P1 to 3 infavour of the complainant, as per Ex.P17 his expartner as authorized to the complainant for recover the amount, whatever, the dues payable to his firm, that apart, it is not the case of the accused that, there is a conflict between the partners about the recoveries, therefore, in absence of any conflict and cheque received infavour of the complainant, who is then partner of M/s Royal Enterprises, the locus standi cannot be doubted, further, to prove his existence the complainant has produced Ex.P11 license issued by Municipality of Malur and also GST certificate Ex.P10, wherein, the name of the complainant and his partner name Sudhakar found as partners of M/s Royal enterprises, as such, the claim of an individual i.e., complainant is not at all fatal to the 18 C.C.No.50162/2019 claim of the complainant, since, it is not the case of the accused that, the cheques were issued infavour of M/s Royal Enterprises a partnership firm, in absence of that, the complainant has right to claim the dues being the holder of the cheques, accordingly, the locus standi of the complainant can not be doubted.
19. Further, the accused except denying the claim of the complainant that, the materials not been supplied, but, not at all taken any steps admittedly against the complainant for taking back his cheques, which falsifies the defence of the accused and it is nothing but an after thought, as no prudent man would keep silence, if materials not supplied, despite issuance of cheque, therefore, as held supra, presumption drawn infavour of the complainant is a statutory presumption that, every cheques drawn by the accused towards legally enforceable liability or lawful consideration , unless until contrary is proved, however, in contrary except denial of supply of materials, nothing has brought on record the complainant, either during cross examination or through his defence evidence, accordingly, to rebut the presumption, the accused has to brought out probable 19 C.C.No.50162/2019 materials, so, that to disprove the existence of liability, mere, plausible explanation is not sufficient to rebut the presumption, at this stage, it is worth to note decision of Hon'ble Apex Court Sumethi Viz Vs. M/s. Paramount Tech. Fab. Industries, held that, " 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 didn't exist or their nonexistence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they didn't exist".
But, the accused except denial of supply of materials nothing has brought on record, why he issued Ex.P1 to 3 cheques well in advance, what legal action he has taken against the complainant for non supplying of materials as per his order, how much his bank balance as on the dates on cheques, for that, there is no explanation from the side of accused, so, all this inaction, clearly stands proved the defence of the accused nothing but an after thought, 20 C.C.No.50162/2019 accordingly, failed to brought out probable materials on record to disprove the existence of liability as claimed by the complainant.
20. So, considering the entire materials on record, the accused admitted the issuance of Ex.P1 to 3 cheques infavour of the complainant, for supply of cement and steel, but, denied the existence of liability of Rs.4,08,712/ solely on the ground that, the materials claimed by the complainant not been supplied to him, accordingly, he stopped the payment of cheques, but, out of 3 cheques only one cheque for Rs.50,000/ got bounced for payment stopped by the drawer, remaining cheques got dishonored for "Insufficient Funds" and all the cheques pertains to same account got bounced for different reasons, which clearly establishes the accused despite knowing the fact that, he did not have sufficient balance in his account had issued cheques soon after supply of materials, as per the tax invoices Ex.P15 and 16, accordingly, non supply of materials cannot be acceptable, more over, no prudent man would keep silence for not having been supplied materials despite issuance of cheques for supply of materials, therefore, it 21 C.C.No.50162/2019 is unacceptable, as such, the defence of the accused does not proved the non existence of claimed liability, hence, the complainant being the payee or holder of the cheque, admittedly, one of the partners of a partnership firm is entitle to claim the amount, therefore, the accused failed rebut the presumption drawn infavour of the complainant U/S 139 r/w 118(a) of N.I Act, as well as failed to prove non service of demand notice, therefore, the complainant has undoubtedly proved the issuance of Ex.P1 to 3 cheques by the accused towards discharge of legally enforceable liability of Rs.4,08,712/ i.e., cost of the materials supplied by the complainant to the accused, hence, the accused is found guilty of o/p/u/s 138 of N.I. Act.
21. So, far as sentence and compensation is concern, an o/p/u/s.138 of N.I. Act, is a civil wrong and compensatory in nature, punitive is secondary, considering, the above settled principal of law with facts and circumstances of the case, clearly reveals that, the transaction is a commercial transaction i.e., claimed amount is cost of materials supplied i.e., cement and steel in the year 2017, therefore considering the nature of 22 C.C.No.50162/2019 transaction, duration of pendency, litigation expenses, I am of the opinion that, if sentence of fine of Rs.5,10,000/ is imposed that would meet the ends of justice, accordingly, the accused is hereby sentenced to pay a fine of Rs.5,10,000/, out of that, the complainant is entitled for sum of Rs.5,05,000/, as a compensation as per Sec.357(1) of Cr.P.C., remaining amount of Rs.5,000/, is to be appropriated to the state, in case of default, the accused shall under go simple imprisonment for a period of 6 months. Accordingly, I answered the above point in "Affirmative".
22. Point No.2: In view of above finding to Point No.1, I proceed to pass following;
ORDER Acting under section 255(2) of Criminal Procedure Code, the accused is convicted for an offence punishable U/s 138 of Negotiable Instrument Act.
The accused is sentenced to pay a fine of Rs.5,10,000/, (Rupees five lakh ten 23 C.C.No.50162/2019 thousand only) in default, the accused shall undergo simple imprisonment for a period of six months. Out of the fine amount received, Rs.5,000/, is to be appropriated to the State and by way of compensation as per the provision u/Sec.357(1) of Cr.P.C., the complainant is entitled for Rs.5,05,000/.
The bail bond and surety bond of the accused shall stand cancelled.
Office is directed to furnish a free copy of the judgment to the accused.
(Dictated to the Stenographer transcribed and typed by her, corrected, signed and then pronounced by me in the open court, on this the 14th day of February, 2023) (M.Vijay), XXXIII ACMM, BENGALURU.
ANNEXURE
1. Witnesses examined on behalf of Complainant:
P.W.1 : Sri. Waheed Khan M.A.
2. Documents marked on behalf of complainant:
Ex.P.1 to 3 : Original cheque's 24 C.C.No.50162/2019 Ex.P.1(a) to 3(a) : Signatures of the accused Ex.P.4 to 6 : Bank return memos Ex.P.7 : Office copy of the legal notice Ex.P.8 : Postal receipt Ex.P.9 : Returned postal cover Ex.P.9(a) : Returned postal cover opened in the open court and notice therein marked Ex.P.10 : GST registration certificate Ex.P.11 : Trade license Ex.P.12 to 16 : 5 tax invoices Ex.P.17 : Dissolved letter dated 25.10.2018 Ex.P.18 : Settlement of account dated 13.01.2018 Ex.P.19 : Balance sheet dated 23.09.2018 Ex.P.20 : ITR for 201819 along with balance sheet Ex.P.21 : Certificate U/S. 65(b) of evidence act. Ex.P.22 : Goods and service tax Ex.P.23 : Copy of the sale deed Ex.P.24 : C/c of the mortgage deed
3. Witnesses examined on behalf of Accused:
NIL
4. Documents marked on behalf of Accused:
Ex.D1 : Goods and service tax
Ex.D2 : Notarized copy of Aadhar
Ex.D3 : Notarized copy of the DL
Ex.D4 & 5 : 2 postal covers
Ex.D6 : Letter dated 27.06.2019
25
C.C.No.50162/2019
Ex.D7 : Letter dated 23.01.2018
(M.Vijay),
XXXIII ACMM, BENGALURU.