Bangalore District Court
Sri. K. Nanda Kumar vs Sri. Rajesh Kanna on 21 January, 2022
KABC020173942019
IN THE COURT OF THE JUDGE COURT OF SMALL CAUSES
AND A.C.M.M, AT BENGALURU
Present: UMESHA.H.K, B.A., LL.B.,
JUDGE, Court Of Small Causes,
Bengaluru.
Dated this the 21st day of January, 2022
C.C. No: 3834/2019
Complainant: Sri. K. Nanda Kumar,
S/o Keshavan,
Age 43 years,
Residing at No. 36,
Near Srinivasa Kalyana Mantapa,
1st Main, 2nd Cross, Pipe Line Road,
Mathikere, Bengaluru-560054.
(By Sri.Shankaraiah B- Adv.)
-Vs-
Accused: Sri. Rajesh Kanna
S/o Balasubramanyam,
Age 45 years, Residing No.20/1,
18th B Cross, Muthyalamma Nagara,
Bandeyappa Garden,
Bengaluru-560054.
(By Sri.T.R. Nagabhushana-Adv)
SCCH-09 2 CC.3834/2019
JUDGMENT
Complainant has filed this private complaint under Sec. 200 of Cr.P.C., against accused for an offence punishable under Sec.138 of Negotiable Instruments Act.
2. It is the case of the complainant that, accused is known to the complainant. The accused approached the complainant on 16.01.2019 for hand loan of Rs.3,00,000/- for his personal commitment and agreed to repay the hand loan within 2 months. The complainant has paid a sum of Rs.3,00,000/- by way of cash to the accused on 16.01.2019. Accused issued post dated cheque bearing No.064436 dated 16.03.2019 for Rs.3,00,000/- drawn of Punjab National Bank, RMV Extension Branch, Bengaluru. On presentation of said cheque through his banker i.e.,Andra Bank, Chamarajpet Branch, Bangalore, and said cheque was returned on 18.05.2019 with endorsement "Refer to Drawer".
3. It is further case of complainant that he issued legal notice, dated 29.05.2019 through RPAD, the said notice was duly served on 30.05.2019. However, accused did not paid the SCCH-09 3 CC.3834/2019 aforesaid amount. As such accused committed an offence punishable under Section 138 of N.I.Act and prays to convict accused.
4. My Predecessor in Office by taking cognizance for the offence punishable U/Sec.138 of N.I. Act, registered the case as PCR. Sworn statement of complainant was recorded. Thereafter, by perusing the averments of complaint, documents, this court has registered the case as CC in register No.3 and issued summons to accused. In pursuance of summons accused appeared through his Advocate and he is on bail. Plea read over as per the provisions of U/Sec.251 of Cr.P.C. accused pleaded not guilty and claimed to be tried.
5. During PCR stage, sworn statement of complainant recorded. Ex.P1 to 6 documents marked. As per the decision of Hon'ble Apex Court in Indian Bank Association and Union of India and others reported in (2014) 5 SCC 590, this court has treated the sworn statement of complainant as complainant evidence as PW-1. Accused has filed the application U/Sec. 145(2) of N.I. Act for recall of PW.1 for the SCCH-09 4 CC.3834/2019 purpose of cross examination. The said application came to be allowed. PW-1 was partly cross examined. Since accused has not deposited and complied the order of this Court in depositing 20% of the cheque amount. The prayer of accused for further cross-examination was rejected in view of the decision of Hon'ble High Court in Ravi V/s Moganna Gowda Crl.Pn.No.462/2020 dated 13.10.2020. Thereafter statement of accused U/Sec. 313 of Cr.P.C was recorded. Since accused even after that has not deposited the amount. Hence, defense evidence is taken as closed.
6. Heard arguments of complainant and an opportunity was given to the accused counsel to address the arguments but he has not addressed the arguments. Hence, arguments of accused is taken as heard. However, liberty was given to learned counsel for accused to file his written argument on or before 19.01.2022. But, he has not filed written argument.
7. The following points are arise for my consideration:
1. Whether the complainant proves that accused has committed an offence SCCH-09 5 CC.3834/2019 punishable under Sec.138 of N.I. Act as stated in the complaint? ?
2. What order?
8. My findings on the above points are as under:
Point No.1 : In the Affirmative;
Point No.2 : As per the final order;
for the following:
REASONS
9. Point No.1:- Before appreciation of fact and oral, documentary evidence of the present case. It is relevant to mention that under criminal jurisprudence prosecution is required to establish guilt of the accused beyond all reasonable doubt. However, a proceeding U/Sec. 138 of N.I. Act is quasi criminal in nature and quasi civil in nature. In this proceeding proof beyond all reasonable doubt is subject to presumption as envisaged U/Sec. 118, 139 of N.I. Act. An essential ingredients of Sec. 138 of N.I. Act is that - Whether a person issues cheque to be encashed and the cheque so the issued towards payment of debt or liability and if it is returned as unpaid for want of funds, then the person issuing SCCH-09 6 CC.3834/2019 cheque, shall be deemed to have been committed an offence punishable U/Sec.138 of N.I. Act. N.I.Act presupposes conditions for prosecution of an offence which are as under:
1. Existence of legally enforceable debt or liability and issuance of cheque in discharging of said debt or liability.
2. Cheque shall be presented for payment within specified time i.e., from the date of issue before expiry of its validity.
3. The holder shall issue a notice demanding payment in writing to the drawer within one month from the date of receipt of information of the bounced cheque and
4. The drawer, inspite of demand notice fails to make payment within 15 days from the date of the receipt of such notice.
10. If the above said ingredients are satisfied by the holder in due course gets cause of action to launch prosecution against the drawer in respect of the bounced cheque and as per Sec. 142 (b) of N.I. Act the complainant has to be filed within one month from the date on which the cause of action arise to file complaint.
SCCH-09 7 CC.3834/2019
11. It is also one of the essential ingredients of Sec. 138 of N.I. Act that, a cheque in question must have been issued towards legally recoverable debt or liability. Sec. 118 and 139 of N.I. Act, envisages certain presumption. U/Sec. 118(a) presumption shall be raised regarding consideration, date, transfer, endorsement and holder, in due course of Negotiable Instrument. Even Sec.139 of N.I.Act are rebuttable presumption shall be raised that, cheque in question was issued regarding discharge of a legally recoverable or enforceable debt and these presumptions are mandatory presumptions that are required to be raised in case of Negotiable Instrument. But, the said presumptions are not conclusive and they are rebuttable one. This preposition of law has been laid down by Hon'ble Apex Court and Hon'ble High Court of Karnataka in catena of decisions.
12. In the light of above, let me discuss the case of complainant and accused in this case. It is the case of complainant that accused had borrowed hand loan of Rs.3,00,000/- for personal and other commitments and for due SCCH-09 8 CC.3834/2019 discharge of said amount, he issued cheque in dispute, on presentation it was dishonoured for 'Refer to Drawer'. Inspite of issuance of notice accused did not repaid the said amount.
13. The defense of the accused is that in the year 2016 he has borrowed loan of Rs.50,000/- and the same was discharged with 4% interest, at the time of lending loan the cheque in dispute and another cheque and on demand pronote was taken as security and the same is misused. As such, he is not liable for the prosecution and he prays to discharge him from the case.
14. I have carefully, perused the cross-examination of PW1/complainant, it is the defense of accused that in the year 2016 he has borrowed loan of Rs.50,000/- and the same was discharged with 4% interest, at the time of lending loan the cheque in dispute and another cheque and on demand pronote was taken as security and the same is misused. Admittedly, except cross-examination of PW.1 accused has not placed any contrary evidence to show that his cheque is SCCH-09 9 CC.3834/2019 misused. Admittedly, accused has not disputed issuance of cheque and signature found in Ex.P1/cheque, his defense is the cheque in dispute was issued as security to the loan borrowed in the year 2016 and the said loan was discharged with interest etc. So, once issuance of cheque and signature is admitted the presumption that holder of the cheque has received cheque for discharge wholly or in part, of any debt or liability and it is open to the accused to raise defense wherein existence of a legally enforceable debt or liability can be contested. Therefore, the initial presumption is in favour of complainant and accused is required to rebut the said presumption by placing cogent and satisfactory evidence and to displace the presumption.
15. At this juncture, I would like to quote decisions of Hon'ble Apex Court reported in (1999) 7 SCC 510 K.Bhaskaran V/s Shankaran Vaidhyan Balan and another decision reported in (2010) 11 SCC 441 Rangappa V/s. Mohan, (2020) 12 SCC 724 APS Forex Services Pvt. Ltd., - Versus - Shakti International SCCH-09 10 CC.3834/2019 Fashion linkers and ors." by reiterating the principles laid down in K.Bhaskaran V/s Shankaran Vaidhyan Balan's case and "Rangappa Vs. Mohan's" case. The Hon'ble Apex in APS Forex case has held that: "The fact that the accused has admitted the issuance of cheque and his signature on the cheque and that the cheque in question pertaining to the account, there is a presumption u/Sec. 139 of NI Act, that there exists a legally enforceable debt or liability." Even our Hon'ble High Court relying on the Hon'ble Apex Court decision recently in Criminal Appeal No.140/2011, dtd. 20 th November-2020 - Muralidhar Rao Vs. P. Nageshwar Rao" has held that "a person who signs a cheque and make it over to the payee remains liable unless he adduces the evidence and rebut the presumption that the cheque had been issued for payment of debt or in discharge of a liability and the onus shifts on the accused to establish a probable defence." Further recently the Hon'ble Apex Court in Triyambaka S Hedge SCCH-09 11 CC.3834/2019 v/s S.Sripad Cr.L.Appeal No.849-850/2011, dated 23.09.2021 reported in L.L (Live Law) 2021 SC 492 by reiterating the same principles as held - that applying the proposition of law that when once signature is admitted to be that of accused, the presumption envisaged in Sec.118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Sec.139 of the Act enjoins on the court to presume that the holder of the cheque received it for discharge of any debt or liability. The question to be looked into is as to - whether any probable defense was raised by accused.
16. In the light of above dictum of Hon'ble Apex Court and Hon'ble High Court of Karnataka, once signature and issuance of cheque is admitted the heavy burden is on accused to place rebuttable evidence to displace the statutory presumption available in favour of complainant. So, in the light of above, let me discuss, whether accused is able to displace the SCCH-09 12 CC.3834/2019 presumption available in favour of complainant and able to prove his defence.
17. The main defense of the accused is that he has borrowed loan of Rs.50,000/- from complainant in the year 2016 and he has discharged the same with interest and complainant misused his cheque which was given at the time of taking loan as security. Admittedly, except part cross- examination of PW1, accused has not adduced any evidence or placed contrary documents to show that he has borrowed only Rs.50,000/- and the cheque in dispute was issued as security to the said loan. During the cross-examination learned counsel for accused has suggested the said defense to the PW1/complainant but PW1, specifically denied and stated that in the year 2016 accused had borrowed loan of Rs.2,00,000/- and he has returned the same by way of cash and by way of payment through bank and he specifically denied the cheque in dispute was issued at that time for the said loan as security. During the cross-examination learned counsel for accused confronted bank statement of accused SCCH-09 13 CC.3834/2019 and shown the payment made to complainant under various dates and complainant has admitted the same and he stated the said payment made under Ex.D1 is in respect of earlier loan.
18. Admittedly, notice issued by complainant under Ex.P3 was duly served on the accused under Ex.P5. Accused denied the service of notice. But, he has not placed any contrary evidence to show that notice was not served on him.
19. As per Sec.27 of General Classes Act, if the notice is sent through registered post or any post to the correct address, it is the duty of the court to presume that the notice was duly served to the addressee. Therefore, the drawer i.e., the accused is the competent person to rebut the presumption about non service of notice and show that he had no knowledge that the notice was brought to his address or that the address mentioned in the cover was incorrect or that the letter was never tender or that the report was incorrect etc., Unless and until, the contrary is proved by the addressee/accused service of notice is deemed to have been SCCH-09 14 CC.3834/2019 effected, at the time of which the letter could have delivered in the ordinary course of business. Therefore, in view of the said presumption when stating that a notice has been sent by registered post to the address of accused. It is mandatory on the part of court to raise the presumption regarding service of notice. As already stated above except some denial in the cross-examination of PW1 accused has not placed any other contrary evidence to the evidence placed by complainant to show that, the notice which was issued under Ex.P3 was not duly served on him etc. Therefore, the defense of the accused that he was not served with the mandatory notice is not acceptable one.
20. At this juncture, I would like to rely upon a decision reported in; 2007 (5) Supreme 277 C.C Alavi Haji Vs. Palapetty Muhammed, wherein the Hon'ble Apex Court as held in para 17 as under:
PARA 17 - It is also to be borne in mind that the requirement of giving notice is a clear departure from the rule of criminal law, where there is no stipulation of SCCH-09 15 CC.3834/2019 giving of a notice before filing a complaint. Any drawer, who claims that he did not receive the notice sent by post, within 15 days of receipt of summons from the court in respect of complaint under Section 138 of N.I.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 the copy of complaint with the summons) and therefore, the complaint is liable to be rejected. A person, who does not pay within 15 days of receipt of summons from the Court along with copy of complaint U/Sec. 138 of N.I.Act., cannot obviously contend that there was no proper service of notice as required U/Sec. 138 of N.I. Act., by ignoring statutory presumption to the contrary U/Se.c27 of General Clause Act and Sec. 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 SCCH-09 16 CC.3834/2019 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 Sec.138 of N.I.Act. So, in the light of above, dictum of Hon'ble Apex Court - A person, who does not pay within 15 days of receipt of summons from the Court along with copy of complaint U/Sec. 138 of N.I.Act., cannot obviously contend that there was no proper service of notice as required U/Sec. 138 of N.I. Act. So, the contention of accused that notice was not served on him and he has no knowledge about notice etc., is not acceptable one. When once notice is served and if really, the complainant has misused his cheque, which was alleged to have been given in the year 2016, immediately he would have replied to the notice. Admittedly, accused has not replied to the said notice. So, it means the said defense of accused is an after thought defense.
21. Further, accused has not taken any legal action against complainant for misusing of the security cheque. If SCCH-09 17 CC.3834/2019 really, his cheque is misused as contended by him he could have lodged the complaint against complainant or he could have filed a private complaint before the Court against complainant for alleged misuse of his cheque. No such legal action are taken by accused till this day. So, it crystal clear that it is only an after thought defense and it is taken just to escape from liability if possible. No prudent man would keep quite without taking any legal action if his cheque is misused.
22. The defense of the accused is that he has borrowed loan of Rs.50,000/- in the year 2016 and he has repaid the said amount with interest and cheque in dispute was issued as security to said loan along with other documents. If the accused has discharged the loan as contended by him why he remained silent without taking back the said cheque, which was issued as security and what prevented him to take back the said security cheque and other documents. The conduct of accused in not taking back the security documents would goes to show that the said defense taken by accused is false or an after thought defense just to escape from liability. The SCCH-09 18 CC.3834/2019 natural conduct of human being if that is the situation he would not keep quite without taking the back the documents after after repayment of entire amount. Thus the said defense of accused is not acceptable and believable one.
23. Further, during the cross-examination learned counsel for accused suggested PW1 regarding source of income and non production of documents with regard to said Rs.3,00,000/- amount etc. PW1 has admitted that he is having documents to show the said amount of Rs.3,00,000/- in his hand and denied other material suggestions of accused counsel. Mere non production of documents regarding source of income will not affect the case of complainant. Since accused has not denied the signature found in Ex.P1 and issuance of cheque mere denial or creation of doubt with regard funds would not rebut the presumption U/Sec.139 of N.I.Act. Since, the onus shifted upon the accused unless he discharged onus by bringing on record such facts and circumstances as to show preponderance of probabilities tilting in his favour, any doubt on complainant's case could not have been raised for want of SCCH-09 19 CC.3834/2019 evidence regarding source of funds for advancing loan to the accused as held by Hon'ble Apex Court in the decision reported in - (2019) 18 SCC 106 Rohit Bhai Jivan Lal Patel V/s State of Gujarat and anr. So, in view of the above dictum of Hon'ble Apex Court unless the accused had discharged onus by bringing on record such facts and circumstances has to show preponderance of probabilities tilting in his favour any doubt cannot be raised on complainant's case. So, the said defense taken during the cross-examination by learned counsel for accused regarding source of income cannot be considered.
24. Mere, plausible explanation is not sufficient or enough to rebut the presumption available in favour of complainant. Sec.139 of N.I.Act mandates that unless the contrary is proved, it is to be presumed that holder of the cheque received the cheque of the nature referred to U/Sec. 138 of N.I.Act for the discharge in whole or in part, of any debt or other liability. Needless to mention that the presumption contemplated U/Sec.139 of N.I.Act is rebuttable presumption. SCCH-09 20 CC.3834/2019 However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque.
Sec.139 introduces an exception to the General Rule as to the burden of proof and shifts the onus on the accused. The presumption U/Sec.139 of N.I.Act is presumption of law, as distinguished from presumption of facts. Presumption or rules of evidence and donot conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond all reasonable doubt. The obligation on the prosecution may be discharged with the help of presumption of law and presumption of facts, unless the accused adduces evidence showing the reasonable possibility of the non existence of presumed fact as held by Hon'ble Apex Court in the decision of - Hiten P Dalal V/s Bratindranath Banerjee reported in (2001) 6 SCC 16.
SCCH-09 21 CC.3834/2019
25. As stated above mere plausible explanation or mere denial by the accused is not enough. The accused has to prove by cogent evidence that there was no debt or liability. As discussed above accused has not placed any such cogent evidence to rebut the presumption. Even he has not stepped into the witness box to substantiate his defense, which was taken during the course of cross-examination of PW1. A meaningful reading of the provision of N.I.Act including, in particular Sec.20, 87, 118, 138 , 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 cheque had been issued for payment of a debt or in discharge of liability. Further, it is immaterial that the cheque may have been filled by any person other than the drawer, if the cheque is duly signed by the drawer and it would attract the provisions of Sec.138 of N.I.Act.
26. As discussed above, accused has miserably failed to place any evidence except some denial in the cross- examination to rebut the presumption. So, under such SCCH-09 22 CC.3834/2019 circumstances, this Court is of the opinion that the accused has failed to rebut the presumption and he has not placed any evidence before the Court that there was no debt or liability and the cheque was misused by complainant.
26. Therefore, considering all these aspects of the case and totality of the circumstances and on careful and meticulous appreciation of evidence adduced on behalf of complainant, the complainant has successfully established beyond all reasonable doubt that he had had advanced amount of Rs.3,00,000/- to the accused and accused is due a sum of Rs.3,00,000/- to the complainant and for due discharge he has issued Ex.P1/cheque. On the other hand, accused has failed to rebut the presumption available in favour of complainant with regard to the existence of legally recoverable debt under Ex.P1/cheque. Therefore, accused has committed an offence punishable U/Sec.138 of N.I.Act. Thus, considering the overall evidence available on record, this Court is of the opinion that complainant has proved the ingredients of Sec.138 of N.I.Act. On the other hand, accused SCCH-09 23 CC.3834/2019 has miserably failed to substantiate his contention and he has not placed any acceptable and positive evidence to rebut the presumption available in favour of complainant. Hence, for the above reasons, I answer Point No.1 in the Affirmative.
27. Point No.2: As discussed in point No.1, the complainant has proved the guilt of the accused. It is worth to note that the offence is of the nature of quasi civil and quasi criminal wrong. Hence, it is proper to award sentence of fine only instead of imposing sentence of imprisonment to the accused. At this juncture, it is worth to place the reliance of recent decision of Hon'ble Apex Court reported in 2020 (1) SCC 283 Kalamani Text. and another V/s. P Balasubramaniam, Wherein the Hon'ble Apex court at head note D has held that Negotiable Instrument Act 1881- Sec. 138 - compensation under - there needs to be a consistent approach towards awarding it compensation and unless there exist special circumstance, the court should uniformly Levy fine of up to the double of SCCH-09 24 CC.3834/2019 cheque amount along with simple interest at 9%. So considering the pendency of the case from 2019 and loan transaction this court, feels an amount of Rs.3,50,000/- can be awarded as compensation to the complainant, which would meet the ends of justice. Thus for the above reasons, I proceed to pass the following:
ORDER Acting under Section 255[2] of Cr.P.C, the accused is hereby convicted for the offence Punishable U/s. 138 of the N.I. Act.
The accused is sentenced to pay total fine amount of Rs.3,55,000/-. In default of payment of fine amount, the accused shall under go Simple Imprisonment for a period six months.
After deposit of fine amount an amount of Rs.3,50,000/- shall be paid to the Complainant as compensation as provided U/s.357(3) Cr.P.C. The remaining amount Rs.5,000/- be appropriated to the state as fine.
The bail bond of the accused is hereby stand cancelled.SCCH-09 25 CC.3834/2019
Office is directed to furnish free copy of this judgment to the accused.
(Dictated to the stenographer on computer, corrected and then pronounced by me in the open court on this the 21 st day of January, 2022.) (Umesha.H.K) Judge, Court of Small Causes & ACMM Bengaluru.
ANNEXURE List of Witnesses examined on behalf of complainant:
PW1 K.Nandakumar List of Documents marked on behalf of complainant:
Ex.P1 Cheque Ex.P1(a) Signature of accused Ex.P2 Bank endorsement Ex.P3 Notice Ex.P4 Postal receipt Ex.P5 Postal acknowledgment Ex.P6 Lease agreement
List of Witnesses examined on behalf of accused:
Nil List of documents marked on behalf of accused Nil (Umesha.H.K) Judge, Court of Small Causes & ACMM, Bengaluru.