Bangalore District Court
The Bangalore City Co-Operative vs Sri. Narayana Mudaliyar on 10 December, 2015
IN THE COURT OF THE XXVI ADDL.CHIEF
METROPOLITON MAGISTRATE, BANGALORE CITY
Dated this the 10th day of December 2015
:PRESENT:
SMT.SHEILA B.M. M.Com. LL.M.
XXVI Addl.C.M.M., Bangalore City.
JUDGMENT U/S 355 OF Cr.P.C
Case No. : C.C No.6087/2013
Complainant : The Bangalore City Co-operative
Bank Ltd.
H.O. No.3,
Pampmahakavi Road,
Chamarajpet,
Bangalore - 18
And Branch office at
Jayanagar, Bangalore
Rept. By its
Asst. Manager
S.N. Shashikala
w/o.Shivamadaiah
(By Sri.RP - Adv.)
Accused : Sri. Narayana Mudaliyar
@ Narayana Raju
s/o. Late V Krishnaiah
Door No.150, 9th Main,
15th cross, Wilson Garden,
Bangalore - 30
(By Sri. SVB - Adv.)
Offence complained of : U/s 138 of N.I.Act.
Plea of the accused : Pleaded not guilty.
Final Order : Accused is Convicted
Date of Order : 10.12.2015.
2 C.C.No.6087/2013
The complainant has filed this complaint against the
Accused for the offence punishable u/s 138 of Negotiable
Instruments Act.
2. The Complainant is the Co-op. Society registered
under the Co-operative Societies Act. It is stated that the late
father of the accused had obtained membership in
Complainant's bank and he had raised a loan of
Rs.1,00,000/- from the bank on 06.11.1993. He failed to pay
the installment, bank had filed arbitration proceedings before
the Joint Registrar, Co-operative Society, Bangalore. The
Complainant submitted that accused had not intimated death
of his father immediately to the bank. During the pendency of
the arbitration case the bank came to know that the father of
the accused died leaving behind the accused and other as his
legal representative to succeed to his assets and liabilities.
After prolonged litigations between the accused and bank the
arbitration award was passed on 12.01.2012 by the Joint
Registrar of Co-operative Societies, Bangalore ; that the late
father of the accused had mortgaged the property in favour of
the Complainant by executing registered mortgaged deed. The
accused is residing in the mortgaged property. After obtaining
the arbitration award recovery staff of the bank had visited the
3 C.C.No.6087/2013
mortgaged the property on 18.04.2012 to serve the notice and
recover the loan amount. The accused called the official of the
bank inside the house and then issued two cheques bearing
No. 213445 dated 28.04.2012 for Rs. 50,000/- and No.213446
dated 23.5.2012 for Rs. 2,60,000/- drawn on Syndicate Bank,
Bangalore in favour of the Complainant; that the accused
voluntarily issued cheque to discharge loan standing in the
name of his late father and to retain the mortgaged property.
3. It is stated that in order to cheat the bank the accused
lodged the complaint before the police with false allegations.
The bank officials have given statement before the police. The
accused had also written the letter to Syndicate Bank to "stop
payment" with an intention to cheat the bank. The
Complainant had presented one cheque dated on 28.04.2012
for encashment through and the same was returned on
30.04.2012 with an endorsement "payment stopped by
Drawer" ; that the accused issued the cheques in favour of the
bank to discharge the loan now the version of the accused
has totally changed. After receipt of the information on
30.04.2012 efforts were made to intimate the same to the
accused but the same was not fruitful. The legal notice was
issued to the accused on 14.05.2012 and was returned with
4 C.C.No.6087/2013
endorsement "door lock" on 16.05.2012. It is stated that the
accused has issued cheque without keeping sufficient funds in
the bank and intentionally, dishonestly and induced it to
accept the cheque and thereby the accused has committed an
offence punishable under section 138 NI Act.
4. On presentation of the complaint, cognizance and
statement of the Complainant was recorded and case was
ordered to register against the accused for the offence
punishable u/s 138 of Negotiable Instruments Act. Notice
was sent to the accused.
5. The accused appeared before the court through his
counsel and was enlarged on bail. Copies of the papers were
furnished to him. The summons and the substance of the
accusation for the offence punishable u/s 138 of Negotiable
Instruments Act was read over and explained to the accused.
The accused pleaded not guilty and claimed trial.
6. Sri. S.N. Shashikala examined as PW1 and P.S.
Shivashankar examined as PW2 and got marked Ex-P1 to P22.
After closing the Complainant side, the statement of the
accused u/s 313 of Cr.P.C. was recorded and the accused has
5 C.C.No.6087/2013
denied the incriminating evidence against him. The accused
examined himself as DW1 got marked Ex-D1 to D3.
7. Heard arguments. The following citations relied by the
Complainant advocate
i) AIR 2002 SC 985
ii) 2007 CRI.J.J.583(Kar.High Court)
iii) 2007 CRI.L.J. 586
vi) 2006 CRI.L.J. 3111 (Bombay High court)
v) 2007 CRI.L.J. 1486 (Kerala High Court)
vi) JT 2000 (2) SC 426
vii) 2009 CRI.L.J. 787 (SC)
The principles laid down in the said decision are taken note.
8. The points that arise for consideration are as under:
1) Whether the Complainant proves that the
accused has committed an offence u/s 138 of
NI Act.?
2) Whether the accused proves that, cheque
bearing No213445 dated: 28.04.2012 was not
issued in discharge of any legally recoverable
debt in favour of the Complainant
3) What order ?
9. My findings on the above points are as under:
Point No.1 : In the affirmative
Point No.2 : In the negative,
6 C.C.No.6087/2013
Point No.3 : As per the final order for the following:
REASONS
POINT NO.1 & 2 :
10. It is undisputed fact that the cheque issued by the
accused as per Ex-P2 has been returned with endorsement as
payment stopped by the bank as per Ex-P3.
11. In the matter of M/s. Electronic trade and
Technology Development Corporation Ltd. Secundrabad
vs. M/s.Indian Technologist and Engg. (Electornics Pvt.
Ltd.) the Hon'ble SC has observed
"it would thus be clear that when the cheque
is drawn by a person on an account
maintained by him with banker for payment
of any amount of money to another person
out of the account for the discharge of debt in
whole or in part or other liability is returned
by bank with endorsement like one (i) in this
case ' refer to the drawer' (ii) ' instruction for
stoppage of payment' (iii) ' exceed
arrangements' it amounts dishonour within
the meaning of sec. 138 of the Act. On
issuance of the notice by the payee or the
holder in due course after dishonour, to the
drawer demanding payment within 15 days
from the receipt of such notice, if he does not
pay, the statutory presumption of dishonest
intention subject to any other liability stands
satisfied"
12. It can be held even when the cheque dishonoured for
the reason stop payment instruction by virtue of section 139
7 C.C.No.6087/2013
the court can presume that the cheque was received by the
holder for the discharge in whole or in part or any debt or
liability.
13. The Complainant has stated that subsequent to the
dishonour of the cheque the bank has issued legal notice to
the accused on 14.05.2012 through RPAD and the same has
been returned with endorsement 'door lock' on 14.05.2012. It
is stated that the accused in collusion with postal authorities
might have got the endorsement returned. It is stated that the
accused has furnished the same address in the notice to the
police when he lodged the complaint against officials of the
bank. The accused in his evidence has stated that he has not
received any notice. Further it is stated that at page 3, the
Complainant issued notice of cheque bounce after receipt of
the notice he has given reply. By this statement the accused
admits that he has aware of the notice. Nothing has been
elicited from PW1 by the defense to disbelieve his evidence.
14. In the matter of Malambai Ratnaparki V Govinda R
Motade and another 2002 Cri.LJ 1188 SC held,
Once the sender establishes the fact
that notice was dispatched by the post with
8 C.C.No.6087/2013
correct address written thereon, it should be
deemed to have been served on the sender
unless he establishes that it was really not
sewed and that he was not responsible for
such non service.... That since the case
related to Society138 of the Act, it was
primarily for the petitioner to rebut the
presumption regarding the service of notice
sent to her by respondent No.1.
The said decision applies to the case on hand. The accused
has not rebutted the presumption available in favour of the
Complainant regarding the service notice.
15. The Hon'ble SC in Appeal Crl. 767 / 2007,
indiankanoon.org/doc/272690 at para 17 has held
Any drawer who claims that he did not
receive the notice sent by post, can, within 15
days of receipt of summons from the court in
respect of the complaint under section 138 of
the 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 a 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
the summons from the court along with the
copy of the complaint under section 138 of
the act, cannot obviously contend that there
was no proper service of notice as requied
under section 138, by ignoring statutory
presumption to the contrary under section 27
of the GC Act and section 114 of the evidence
act.
9 C.C.No.6087/2013
16. The accused after appearing before the court has not
paid cheque amount. In view of the above decision it can be
held that the accused cannot contend there is no proper
service of notice as required under section 138.
17. Once the cheque relates to the accused and his
signature on the said cheque is proved an initial presumption
as contemplated u/s. 138 of Negotiable Instruments Act has
to be raised by the court in favour of the Complainant. Sec.
139 of the Negotiable Instrument Act contemplates that it
shall be presumed unless contrary is proved that the holder of
the cheque received the cheque of the nature referred to in
the Sec.138 for the discharge of the whole or in part any debt
or liability. The presumption referred to u/s 138 of
Negotiable Instruments Act is mandatory presumption and in
general presumption. But the accused is entitled to rebut the
said presumption. What is required to be established by the
accused in order to rebut the presumption is different from
each case under given circumstances. But the fact remains
that mere plausible explanation is not expected from the
accused and it must be more than plausible explanation by
way of rebuttal evidence. In other words the defense raised by
10 C.C.No.6087/2013
way of rebuttal evidence must be probable and capable of
being accepted by the court.
18. It is undisputed fact that the father of the accused
had borrowed loan from the Complainant. The Complainant
had filed it raised dispute in year 1996. After prolonged
litigation, proceedings were initiated to recover the amount
against accused and 4 other family members. The Joint
Registrar of Co-operative Society by its order dated 12.01.2012
in JDR/UBF/T2732/ 2005-06 has allowed the dispute and
has stated that the LRs of respondent to are equally and
jointly liable to pay Rs. 2,95,604/- as per Ex-P6.
19. DW1 has stated that, after passing of the award by
JRC, Sale Officer, Shivshankar along with 4 others stating
that they were court ameen and police came to his house. At
that time he was not present in the house and only his wife
and daughter were present; that the five members asked his
wife and daughter to go out of the house as they were
auctioning the property. This was informed to him by his
daughter and so he returned to home. The official informed
him that they will be auctioning his house and if he will give
the cheque they will stop the proceedings. Five members
11 C.C.No.6087/2013
forcibly obtained the cheque from him and also obtained the
letter from him ; that he has gave the cheque under protest .
Thereafter he asked the members to acknowledge about
the receipt of the cheque so they issued acknowledgment by
making zerox copy of the cheque on his letter. Finally they
had issued Form No.6 as per Ex-P13; that he lodged
complaint against the Complainant Shivashankar as they had
forcibly collected the cheque; that the police informed him that
since the matter is Civil in nature and asked him to contact
advocate and to stop the further payment. It is stated that the
thereafter KET passed an order for staying the proceedings;
that he informed the Complainant about the stay order and
also furnished copy; that the Complainant issued notice to
him only after they received notice from him.
20. During the cross-examination PW2 admits the zerox
copy of the letter and the two cheque which are confronted
him which are marked as Ex-D4. It is elcited that as per Ex-
P11 they have to only serve the form No.6 to accused.
21. Ex-P9 is the execution petition at page 3 discloses
that accused has signed
12 C.C.No.6087/2013
"£ÀªÀÄä vÀAzÉAiÀÄ ¸Á®zÀ ºÀtªÀ£ÀÄß MAzÀÄ wAUÀ¼À PÁ¯ÁªÀ¢ü ¤ÃrzÀÝ°è
ªÀÄÄA¢£À ¢AzÀ 2 ZÀPÀÌUÀ¼À£ÀÄß ¤ÃqÀĪÀÅzÁV w½¹zÀ ¥ÀæAiÀÄÄPÀÛ ¢£ÁAPÀB
28.04.2012 gÀÆ.50,000 ºÁUÀÆ ¢£ÁAPÀ 23.05.2012 PÉÌ gÀÆ. 2,60,000
PÉÌ ZÉPÀÌUÀ¼À£ÀÄß ªÀÄ£À ¥ÀÇgÀPÀªÁV «vÀj¹zÁégÉ . ºÁUÉà F 2
ZÉPÀÌUÀ¼À£ÀÄß AiÀiÁªÀÅzÉà PÁgÀtªÀ£ÀÄß ¤ÃqÀzÉà ¤UÀ¢PÀgÀt UÉƽ¸ÀĪÀÅzÀÁV
w½¹zÁÝæÉ
. MAzÀÄ ªÉÃ¼É F r¸ÀD£Àgï CzÀ°è PÁ£ÀÆ£ÀÄ jÃvÁå PÀæªÀÄ
PÉÊUÉƼÀÀÄzÀÄ . ¥sÁgÀA 6£ÀÄß ¸ÀºÀ «vÀj¹gÀÄvÉÛãÀ. "
The said documents does not discloses that threat have
been caused by the Complainant while taking the cheque from
the accused.
22. Ex-P11 is form No.6 in the said letter it is written
issue the cheque to BCC bank in protest. Ex-P12 is the
complaint given by the accused to SHO of Adugodi Police
Station. It discloses that on 18.04.2012 in at the Sales Officer
and two officials of the Complainant bank came to his house
and informed him that there is an order issued by the Asst.
Registrar of Co-op. Society for attachment of movables
belonging to him and his family members in the house in
which they were residing in certain proceedings initiated by
them ; that the said person even without serving the copy of
the attachment order threatened him and his family members
that they are going to seize the movables from his house and
threatened his and him family members; that they are going to
13 C.C.No.6087/2013
seize movables and take away the same if immediately they
does not pay a sum of Rs. 3,10,000 /- of the alleged amount
payable to BCC Bank. Since the threat held out by the said
alleged Sales Officer was so imminent and two other persons
who accompanying him have also reiterated the same and as
insisted by the said person, he has given two post dated
cheques. After receipt of two cheque the said Shivashankar
and other two other persons of the said bank handed over
Form 6 stating that same is the warrant with regard to the
attachment of the movables. In view of the sudden turn out
of events and he was totally confused and have not even read
the form No.6 immediately. .... It is only thereafter he has
realized that the said Form No.6 is only a notice and not the
order of attachment. The said officials have misrepresented
and specially the said Shivashankar has misused the official
power and also committed criminal breach of trust. "
23. Ex-P13 is the reply given by the Sales Officer of the
Complainant bank which discloses that the accused himself
voluntarily given the cheque when they had gone to serve
attachment warrant and form No.6.
14 C.C.No.6087/2013
24. From the materials it discloses that the accused has
issued the cheque under protest. Under protest is a term
commonly used to refer to payment made subject to a
dispute. The payer typical makes the payment with notice to
the payee that the payment is being made under protest,
thereby reserving the right to object to the obligation later.
This does not mean that cheque has been obtained under
threat.
25. The documents discloses that the cheque has been
returned as accused has issued stop payment instruction.
The accused has not produced copy of the instructions given
to the bank to know for what reason he has issued the said
instructions.
26. The Hon'ble Court MMTC Ltd. and Anr. V Medchl
Chemical and Pharma (Petitioner) Ltd. and Anr. (Manu
/SC/0728/2001) made the following observations
"The accused can thus show that the "Stop
payment" instructions were not issued because
of insufficiency or paucity of funds. If the
accused shows that in his account there were
sufficient funds to clear the amount of the
cheque at the time of presentation of the cheque
for encashment at the drawer bank and that the
stop payment notice had been issued because of
other valid causes including that there was no
15 C.C.No.6087/2013
existing debt or liability at the time of
presentations of cheque for encashment, then
offence u.s 138 would not b e made out. The
important thing is that the burden so proving
would be on the accused. Thus a court cannot
quash the complaint on this ground.
27. In Laxmi Dyechem vs State of Gujarat
(Manu/SC/1030/2012) the Hon'ble SC had made
observations.
As already noted, the legislature intends to
punish only those who are well aware that they
have no amount in the bank and yet issue a
cheque in discharge of debt or liability which
amounts to cheating and not to punish those who
bonafides issues the cheque and in return gets
cheated giving rise to disputes emerging from
breach of agreement and hence contractual
violation. To illustrate this, there may be a
situation where the cheque is issued in favour of
supplied who deliver the goods which is found
defective by the consignee before the cheque is
encashed or a post dated cheque towards full
and final payment to a builder after which the
apartment owner might notice breach of
agreement for several reasons. It is not un
common that in that event the payment might be
stopped bonafide by the drawer of the cheque
which becomes the contentious issue relating to
breach of contract and hence the question
whether that would constitute an offence under
the NI act. There may be yet another example
where the cheque is issued in favour of a hospital
which undertakes to treat the patient by
operating the patient or any other method of
treatment and the doctor fails to turn up and
operate and in the process the patient expires
even before the treatments is administered.
Thereafter, if the payment is stopped by the
drawer of the cheque, the obvious question would
16 C.C.No.6087/2013
arise as to whether that would amount to an
offence u/s 138 of NI Act by stopping the
payment ignoring sec. 139 which makes it
mandatory by incorporating that the offence u/s
138 of NI Act is rebuttable. Similarly, there may
be innumerable situations where the drawer of
the cheque for bonafide reason might issue
instructions of 'stop payment' to the bank inspite
of sufficiency of funds in his account
To sum of it can be said that a person has a right
to stop payment of the cheque and escape
punishment if both the following conditions are
satisfied:
a. On the day of the dishonour of cheque there was
sufficient funds in the bank account of the
drawer
b. There was a bonafide reason for the drawer to
stop payment
The above decision applies to the case on hand. The
important thing is that the burden of proving is on the
accused.
28. The accused has not placed any documents to show
that as on the date of presentation of cheque he has sufficient
funds in his bank account. Having failed to prove the
condition No.1 the question of considering whether there was
bonafide reason for the accused to stop payment does not
arise. The accused has failed to rebut the presumption
available in favour of the Complainant. In view of the above
17 C.C.No.6087/2013
discussion I answer this point No.1 in the affirmative and
point No. 2 in the negative.
POINT No.3
29. In view of the discussion made above, I am of the
opinion that the Complainant has proved that the accused has
issued Ex-P2 cheque in his favour in discharge of legally
enforceable debt which came to be dishonoured and accused
has failed to pay back the cheque amount.
30. Now the aspect to be considered whether the accused
is entitled for the benefit Probation Offenders Act. In view of
the facts and circumstances of the case and in view of the fact
that the provision of 138 have been inserted to regulate
growing business, trade commerce and industrial activities of
the country strict liability to promote greater vigilance in
financial matters and to safeguard, faith of the creditor in
drawer of the cheque which is essential to the economic life of
the developing country like, India, I am of the view that the
accused is not entitled for the benefit of probation of offenders
Act. The evidence of PW1 discloses that after issue of legal
notice the accused deposited a sum of Rs. 30,000/- in
compliance with the order passed by KET, Bangalore. So the
18 C.C.No.6087/2013
cheque amount is Rs. 50,000/- the balance amount payable
by the accused would be Rs. 20,000/-. Accordingly I proceed
to pass the following order
ORDER
The accused is convicted under Sec. 255(2) of Cr.P.C. for the offence punishable u/s 138 of Negotiable Instrument and sentenced to fine of Rs.40,000/- in case of default he shall undergo simple imprisonment for a period of 3 months.
Out of the fine amount Rs. 35,000/- shall be paid to the Complainant and Rs.5,000/- shall go to the state.
Office is directed to furnish the copy of this Judgment at free of cost to the accused. (Dictated to the Stenographer, transcribed and computerized by her, corrected and then pronounced by me in the open court on this the 10th day of December 2015) (SHEILA B.M.) XXVI ACMM, Bangalore City.
ANNEXURE Witnesses examined for the Complainant:
PW.1 S N Shashikala PW.2 P S Shivashankar
Witness examined for the accused:
DW.1 Narayana Raju 19 C.C.No.6087/2013 List of Documents marked for the Complainant:
Ex.P1 Authorization letter Ex.P2 Original cheque vide No. 213445 Ex.P2(a) Signature of the Accused Ex.P3 Memo issued by Syndicate Bank Ex.P4 Office copy of legal notice Ex.P4(a) Postal receipt Ex.P5 Unserved RPAD Covers Ex.P5a RPAD opened in open court notice Ex.P6 Certified copy of the order passed in dispute No. JRD/UBF/T-2752/2005-06 Ex.P7 Statement of account Ex.P8 Complaint Ex.P9 Execution petition Ex.P10 Facing Sheet Execution petition Ex.P11 Form No.6 Ex.P12 Certified Copy of complaint given to SHO By Narayana Mudaliar Ex.P13 CC of reply letter to the complaint Ex.P14 Certified copy of order issued by Asst. Registrar of Co-op. Societies, 2nd zone, Bangalore Ex.P15 Portion of board resolution Ex.P16 Death certificate Ex.P17 Judgment in revision petition 84/2006 Ex.P18 Order in WP No.1775/2007 Ex.P19 Rejoinder WP No.7275 by the petitioner Ex.P20 Order in WP No. 6597/2002 Ex.P21 JRD/UPF/T2732/05-06 Ex.P22 Certified copy of resolution 20 C.C.No.6087/2013 List of Documents marked for the accused:
Ex-D1 CC of Judgment passed in WP No.6597/02 Ex-D2 CC of Judgment passed in WA No.1677/09 Ex-D3 CC of Order No.7275/07 XXVI ACMM, Bangalore.