Bangalore District Court
Housing & Urban Development vs M/S. Hotel Blue Bird on 1 June, 2019
IN THE COURT OF THE XVII ADDL. JUDGE, COURT OF
SMALL CAUSES &
ADDL. CHIEF METROPOLITAN MAGISTRATE,
MAYO HALL UNIT, BENGALURU (SCCH-21).
Dated: This the 1st Day of June 2019
PRESENT: Smt. VANI A. SHETTY, B.A. Law L.L.B,
XVII ADDL. JUDGE, Court of Small
Causes & ACMM, Bengaluru.
C.C. No. 15376/2018
Complainant/s : Housing & Urban Development
Corporation Ltd.,
'Regional Office', at 7th Floor,
Manipal Center, No.47,
Dickenson Road,
Bangalore - 42.
Rep. by its
Sri. S.M. Sreenivas,
Legal Officer, Hudco.
(By Sri/Smt. S.M., Advocate)
V/s.
Accused/s : 1. M/s. Hotel Blue Bird,
Rep. by its Managing Partner,
Smt. Nirmala Shivakumar Malaghan,
Near Medical College and DC Complex,
Nav Nagar,
Bagalkot - 587 101.
2. Smt. Nirmala Shivakumar Malaghan,
W/o. Shivakumar Sangappa
Malaghan,
Managing Partner,
Door No.438, Ward No.II,
Mudhol, Bagalkot Dist.
3. Shri Ningappa Thippanna Huggi,
S/o. Tippanna Huggi,
Parner,
Post Machaknur Village,
Mudhol Taluk.
SCCH-21 2 C.C. No.:15376/18
4. Dr. Satish Sangappa Malaghan,
S/o. Sangappa Malaghan,
Partner, Door No.438, Ward No.II,
Mudhol,
Bagalkot District.
(By Sri/Smt. V.H.P., Advocate)
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JUDGEMENT
The accused in this case are tried for the offence punishable under Section 138 of Negotiable Instrument Act 1881, on the complaint of the complainant.
2. The summary of the complainant's case is that:
The accused have borrowed loan from the complainant of Rs.200 lakhs under the scheme No.18949. In discharge of the said amount, the accused No.2 issued for and on behalf of accused No.1 with the knowledge of accused No.3 and 4 a cheque bearing No.174252 dated 25.09.2009 for Rs.5,00,000/- drawn on the Bagalkot Central Co-op. Bank Ltd., Bagalkot, assuring that the cheque would be honoured if presented for payment. The complainant presented the said cheque for encashment through its banker Corporation Bank, CAPS Branch, Bengaluru. But the said cheque came to be dishonoured on the ground of 'Funds Insufficient' on 25.09.2009. Thereafter, on 05.11.2009 complainant got issued legal notice by RPAD demanding for repayment of the cheque amount within 15 days from the date of receipt of the notice. The notice sent through RPAD was served on the accused No.1 on 12.11.2009 and accused No.2 to 4 on SCCH-21 3 C.C. No.:15376/18 10.11.2009. The accused neither paid the amount nor replied the notice and therefore, this complaint is filed on 22.12.2009. The record reveals that initially the complaint was filed before 14th ACCM, Bengaluru and then, transferred to V ASCJ and XXIV ACMM, Court of small causes, Bengaluru. Later, this complaint is returned to the complainant to present the same before the jurisdictional court by order dated 25.07.2017 and thereafter, again this complaint is presented on 15.09.2017.
3. On filing of the complaint cognizance was taken for the offence punishable under section 138 of N.I. Act and sworn statement was recorded. As there was sufficient ground to proceed further, a criminal case has been registered against the accused and they were summoned. The substance of accusation is orally stated to the accused and their plea was recorded. Accused pleaded not guilty and submitted that they have defence to make.
4. In support of the complainant's case, the sworn statement filed by representative of the complainant during the pre-summoning stage is considered as evidence of the complainant and Ex.P1 to Ex.P8 documents are marked. The statements of the accused No.2 to 4 are recorded under Section 313 of Cr.P.C and their answers were recorded. The accused have submitted that they have defence evidence. But, they have not led their defence evidence.
5. Heard the argument by the learned counsel appearing for the complainant. Accused have not advanced their arguments.
SCCH-21 4 C.C. No.:15376/186. The points that arise for my consideration are:
1. Whether the complainant proved that accused has committed an offence punishable under Section 138 of N.I. Act 1881?
2. What order?
7. My answer to the above points is as follows:
Point No.1 : In the Affirmative,
Point No.2 : As per final order for
the following:
REASONS
8. POINT No.1: In order to constitute an offence
under Section 138 of N.I. Act, the cheque shall be presented to the bank within a period of 3 months from its date. On its dishonor, the drawer or holder of the cheque as the case may be shall cause demand notice within 30 days from the date of dishonor, demanding to repay within 15 days from the date of service of the notice. If the drawer of the cheque fails to repay the amount mentioned in the cheque within 15 days from the date of service of notice, cause of action arises for filing complaint.
9. The sworn statement filed by representative of the complainant during the pre-summoning stage is considered as evidence of the complainant. In the affidavit, he has testified regarding lending of loan to the accused, issuance of cheque, issuance of demand notice and also failure of the accused to pay the cheque amount. The complainant has produced cheque bearing No. 174252 dated 25.09.2009 SCCH-21 5 C.C. No.:15376/18 alleged to be issued by the accused No.2. Ex.P1 stands in the name of complainant for Rs.5,00,000/. Ex.P2 & 3 are the endorsements issued by the bank stating dishonor of Ex.P1 cheque. Ex.P2 & 3 show that Ex.P1 was dishonoured for 'Funds Insufficient'. Ex.P4 is the office copy of legal notice dated 05.11.2009. Ex.P5 to 8 are the speed post acknowledgments evidencing the service of notice.
10. In the present case, cheque is dated 25.09.2009. The complainant has presented the cheque for second time on 05.10.2009 i.e. within three months from the date of cheque as it could be seen from Ex.P3. Ex.P3 further shows that intimation of dishonor of cheque in question was delivered on 16.10.2009. The notice was issued within the statutory period of time. The notice was served to accused No.2 to 4 on 10.11.2009 as per Ex.P5 to 7 postal acknowledgments. The cause of action for filing the complaint arose on 26.11.2009. The complainant has filed this complaint on 22.12.2009 i.e. within 30 days from the date of arisal of cause of action. But, by order dated 25.07.2017, complaint was returned to the complainant to present it before proper Court and again the complaint is presented on 15.09.2017. However, complainant has filed an application for delay condonation and it came to be allowed by order dated 20.08.2018 by this court. In this way the complainant has complied all the mandatory requirements of Section 138 of N.I. Act.
11. Section 118 of N.I. Act lays down that, until the contrary is proved, it shall be presumed that every Negotiable SCCH-21 6 C.C. No.:15376/18 Instrument was made or drawn for consideration. Section 139 of N.I. Act, contemplates that unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole of any debt or liability. In the decision reported in 2001 Crl.L.J. page 4647 (SC) (Hiten P.Dalal -Vs- Bratindranath Banerjee) and in various other decisions of Hon'ble Supreme Court and our Hon'ble High Court, repeatedly observed that in the proceeding under Section 138 of N.I. Act the complainant is not required to establish either the legality or the enforceability of the debt or liability since he can avail the benefit of presumption under Section 118 and 139 of N.I. Act in his favour. It is also observed that, by virtue of these presumptions, accused has to establish that, the cheque in question was not issued towards any legally enforceable debt or liability. Later in the year 2006, the Hon'ble Supreme Court in the decision M.S. Narayan Menon @ Mani -vs- State of Kerala and another (2006 SAR Crl. 616) has held that, the presumption available under Section 118 and 139 of N.I. Act can be rebutted by raising a probable defence and the onus cast upon the accused is not as heavy as that of the prosecution. It was compared with that of a defendant in civil proceedings. Subsequently, in the year 2008, in Krishna Janardhana Bhat
-Vs- Dattatreya G. Hegde (2008 Vo.II SCC Crl.166) Hon'ble Supreme Court has held that, existence of legally recoverable debt is not a presumption under Section 138 of N.I. Act and the accused has a constitutional right to maintain silence and therefore, the doctrine reverse burden introduced by Section 139 of N.I. Act should be delicately balanced.
SCCH-21 7 C.C. No.:15376/1812. In the decision, Rangappa - Vs - Mohan (AIR 2010 SC 1898) Hon'ble Supreme has considered this issue and clarified that, existence of legally recoverable debt or liability is a matter of presumption under section 139 of N.I. Act. In para 14 of the judgment the Hon'ble Supreme Court observed as here below:
"In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the SCCH-21 8 C.C. No.:15376/18 accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. "
13. In view of the above decision, now it is clear that the presumption mandated by Section 139 of N.I. Act does indeed include the existence of legally enforceable debt or liability. It is a rebuttable presumption. It is open to the accused to raise the defence wherein the existence of legally enforceable debt or liability can be contested. For rebutting presumption, the accused do not adduce evidence with unduly high standard of proof but, the standard of proof for doing so with that of preponderance of probabilities. If the accused is able to raise a probable defence which creates doubt about the existence of legally enforceable debt or liability, the onus shifts back to the complainant. It is also clear, for rebutting the presumption accused can rely on the materials submitted by the complainant or his cross- examination and he need not necessarily adduce his evidence in all the cases.
14. In the present case, complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act by producing the documents and evidence. To rebut the same, the accused have not cross examined PW.1. It is not disputed by the accused that the accused No.1 is partnership firm, accused No.2 is the managing partner and accused No.3 and 4 are the partners of accused No.1. The case of the complainant remained uncontested. Therefore, the SCCH-21 9 C.C. No.:15376/18 complainant has proved guilt of the accused for the offence punishable under Section 138 of N.I. Act. Accordingly, I answer Point No.1 in the AFFIRMATIVE.
15. POINT No.2: Section 138 of N.I. Act empowers the Court to sentence the accused upto two years and also to impose fine which may extend to twice the amount of cheque or with both. This cheque in question was issued on 25.09.2009 for Rs.5,00,000/-(Rupees five lakhs only). The complainant was deprived of money that was rightfully due to it for a period of more than nine years. However, having regard to the facts of the case and the amount involved, there are no warranting circumstances to award the sentence of imprisonment as substantive sentence. Directing the accused to pay fine and also awarding compensation to the complainant would meet the ends of justice. But adequate default sentence shall have to be imposed to ensure the recovery of fine imposed to the accused. Therefore, the complainant is required to be suitably compensated as per section 80 and 117 of the Negotiable Instrument Act and also appropriate in default sentence. Having regard to all these fact, I pass the following:
ORDER Acting under Sec.265 of Cr.P.C, the accused are found guilty for the offence punishable under Sec.138 of N.I. Act and they are sentenced to pay a fine of Rs.10,00,000/- (Rupees ten lakhs only). In default to pay fine, the accused No.2 to 4 each shall undergo simple imprisonment for a period of one year.SCCH-21 10 C.C. No.:15376/18
Further, acting under Section 357(1)(b) of Cr.P.C., out of the fine amount, a sum of Rs.9,90,000/-(Rupees nine lakhs ninety thousand only) on recovery shall be paid as compensation to the complainant.
The office is directed to supply a free copy of judgment to the accused.
(Dictated to the Stenographer directly on computer, typed by her, same is corrected, signed and then pronounced by me in the open court on this the 1st day of June 2019) (VANI A. SHETTY) XVII ADDL. JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.
ANNEXURE List of witnesses examined on behalf of the complainant:
P.W 1: S.M.Sreenivas List of documents exhibited on behalf of the complainant:
Ex.P.1 : Cheque Ex.P.2 & 3 : Bank endorsements Ex.P.4 : Copy of Legal notice Ex.P.5 to 8 : Postal acknowledgments
List of witnesses examined on behalf of the accused: NIL List of documents exhibited on behalf of the accused: NIL (VANI A. SHETTY) XVII ADDL. JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.
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