Bangalore District Court
Classic Infra Energy Resources Pvt. Ltd ... vs Kashyap Constructions Pvt. Ltd on 13 November, 2024
KABC030019192021
IN THE COURT OF XXXVIII ADDL. CHIEF JUDICIAL
MAGISTRATE, BENGALURU
~:PRESENT:~
SRI. VEERESH KUMAR C.K. B.A.L, LL.M, CC [Cyber Laws]
XXXVIII ADDL. CHIEF JUDICIAL MAGISTRATE
BENGALURU
C.C. No.544/2021
Date Of Judgment: 13th day of November, 2024
Classic Infra Energy Resources Private Limited
company incorporated under
provisions of the Companies Act, 1956
Having its Registered office at:
No.44, 3rd Cross, Parvathinagar
Bellary-583 103
Rep. By its Authorized Signatory/Director
Sri.Harish Yechreddy
Also at:
No.32, 28th Cross, Industrial Layout
BSK II Stage, Bengaluru-560 070. ...Complainant
(By Smt.Tejaswini.B.R, Advocate)
----//VERSUS//----
1. Kashyap Constructions Pvt. Ltd.
No.216/1, I Floor, 2nd Block
3rd Phase, 100 Feet Ring Road
BSK III Stage, Bengaluru-560 085.
Also at:
No.1833, 3rd Floor, 41st Cross
Jayanagar, 9th Block,
Bengaluru-560 069.
2. Mr.Santhosh Sreerangaraju Lakkenahalli
S/o.Sreerangaraju
Director
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3. Mrs.Bharathi Santhosh
W/o.Santhosh
Director
4. Mr.Sreerangaraju Lakkenahalli
S/o.L.Venkatramaiah
Director
5. Mrs.Vani Sreerangaraju
W/o.Sreerangaraju
Director
( all A.2 to A.5 are C/o.
Kashyap Constructions Pvt. Ltd.
No.216/1, I Floor, 2nd Block
3rd Phase, 100 Feet Ring Road
BSK III Stage,
Bengaluru-560 085.
Also at:
No.Jyoshta, No.537, III Main
BSK III Stage, Girinagar
Bengaluru-560 085. ...Accused
(Rep.By Sri.Mahabaleshwar.G.C, Advocate )
:: J U D G M E N T ::
T his case emanates from a private complaint filed by the complainant alleging that the accused has committed an offence punishable under section 138 of the Negotiable Instruments Act, 1881, by issuing cheque for the amount of Rs.20,00,000/-, and the same was dishonored. KABC030019192021 JUDGMENT CC N O.544/2021
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2 . THE ESSENTIAL FACTS:
The complainant company is engaged in the business of production, collection and distribution of electricity and it is represented by its Director to represent the present proceedings. The accused No.1 is the company engaged in the business of construction of buildings, roads and other infrastructure projects. The accused Nos.2 to 5 are the directors of accused No.1 and they are the in-charge of day to day affairs and are responsible to conduct the business of the accused No.1 company. Based on the request of the accused, complainant advanced certain sums to the accused for the purposes of running its business. After some time the complainant sought for return of the amounts advanced for which an agreement dated 20/06/2013 was executed between complainant and accused company by its Directors. The accused acknowledged their debt of Rs.2,31,00,000/- towards the complainant and also agreed to repay the amount of Rs.2,00,00,000/- in installments in discharge of the said KABC030019192021 JUDGMENT CC N O.544/2021
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liability to the complainant. Thereafter, the accused No.1 failed to repay the installments as agreed in the agreement and upon the request of accused Nos.1 to 5, a revised payment schedule was entered into between the complainant and accused for which an addendum to the agreement dated 28/7/2014 was entered. The accused agreed to repay the sum of Rs.2,10,00,000/- against the sum of Rs.2,00,00,000/- in discharge of liability to the complainant. However, the accused Nos.1 to 5 repaid only an aggregate amount of Rs.65,00,000/- to complainant in partial discharge of their liability. Despite several follow ups and reminders, the accused defaulted to pay remaining balance amount of Rs.1,45,00,000/-. After repeated reminders, the accused issued two cheques bearing No.265122 and 265123 dated 25/5/2017 and 25/10/2017 respectively. The said cheques on presentation were returned with an endorsements as 'funds insufficient'. For which CC No.29753/2017 and 774/2018 are filed against the accused and same are pending before XXVIII KABC030019192021 JUDGMENT CC N O.544/2021
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Addl.C.M.M., Bengaluru. In the meanwhile the complainant had also initiated Corporate Insolvency Resolution process by filing C.P.(IB) No.44/BB/2018 before the National Company Law Tribunal, Bengaluru in the year 2018. In the said proceedings, the accused entered into compromise and filed Joint Memo for settlement before the National Company Law Tribunal [NCLT for short] and handed over nine post dated cheques in favour of the complainant aggregating to an amount of Rs.1,45,00,000/-. The accused assured complainant that said cheques would be duly honored upon its presentation. Accordingly, the said company petition was disposed as with drawn. In the wake of the said circumstances, the complainant presented one of the cheque issued by the accused under said joint memo in partial discharge of their liability to the complainant i.e., cheque bearing No.481348 dated 30/06/2020 for a sum of Rs.20,00,000/-. The said cheque returned with an endorsement as 'funds insufficient'. On receiving the KABC030019192021 JUDGMENT CC N O.544/2021
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intimation of the said dishonor of cheque, the complainant got issued demand notice on the accused. In-spite of service of demand notice, the accused did not come forward to make payment. The accused has intentionally issued the cheque without maintaining sufficient balance in their bank account and the accused have committed an offence punishable u/S.138 of the N.I. Act. Hence, the present complaint.
3. On presentation of the complaint, this Court has taken cognizance for the offence punishable U/sec. 138 of N.I. Act. The summons were issued to the accused persons. In pursuance to the service of summons, the accused No.2 to 5 have put their appearance through their Counsel and were enlarged on bail.
4. The complaint copies were furnished to the accused persons as per Sec. 207 of Cr. P. C. The plea was recorded under Sec. 251 of Cr.P.C. The accusation was read over to the accused No.2 to 5 to which they have pleaded not guilty and claimed to be tried.
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5. To substantiate the case, the complainant has examined its authorized signatory as PW.1 and got marked documents as Ex.P.1 to 17. After completion of complainant evidence, the statement of the accused U/Sec. 313 of Cr.P.C.
were recorded. They have denied all incriminating circumstances appearing against them. They have chosen to lead defence evidence. Accused No.2 got examined himself as DW.1 and has got marked 3 documents as Ex.D.1 to D.3.
6. Heard the arguments of respective learned counsels for the complainant and the accused. Meticulously perused the available materials on record and citations filed by both the sides.
7. Based on the above materials the points that would arise for consideration are as follows:
POINTS FOR CONSIDERATION
1. Whether the complainant proves that the accused have issued a cheque bearing No.481348 dated: 30/06/2020 in favour of complainant for sum of Rs.20,00,000/- in discharge of legally enforceable debt and same KABC030019192021 JUDGMENT CC N O.544/2021
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is dishonored due to "Funds Insufficient' and thereby committed an offence punishable U/Sec. 138 of N.I. Act ?
2. What order ?
8. The above points are answered as below:
Point No.1: In the AFFIRMATIVE Point No.2: As per final order, for the following:-
::REASONS::
9. On Point No.1: The further narration of the entire averments of the complaint is desisted in order to avoid the repetition, as already narrated at the inception.
10. However, it is well settled that whenever complainant alleged that the accused persons have committed an offence punishable U/Sec.138 of N.I. Act, obviously, the complainant has to establish that there was a legally enforceable debt and to discharge the said legally enforceable debt, the accused persons have issued the cheques and subsequently the said cheques have been dishonored in the account of the drawer/accused. Keeping in view of these main KABC030019192021 JUDGMENT CC N O.544/2021
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and important ingredients of section 138 of N.I. Act, this Court proceeds to discuss the evidence available on record.
11. As already been stated above, the complainant has examined its authorized signatory as PW.1. He has filed affidavit in lieu of his examination in chief U/Sec.145 of N.I. Act reiterating the entire averments of the complaint and got marked Ex.P.1 to 17.
12. The Ex.P.1 is the Board Resolution, Ex.P.2 is the cheque bearing No.481348 dated 30/06/2020 for a sum of Rs.20,00,000/-, Ex.P.2(a) is the signature of accused on the cheque, Ex.P.3 is the Bank Endorsement as "Funds Insufficient", Ex.P.4 is the copy of Legal notice, Ex.P.5 is the 13 postal receipts, Ex.P.6 to 14 are the postal acknowledgments, Ex.P.15 is the board resolution, Ex.P.16 and P.17 are the Joint Memo before NCLT and order of NCLT. On perusal of Ex.P.2 makes it clear that it supports the stand taken by the complainant herein, Ex.P.3 endorsement, which discloses that the aforesaid cheques have been dishonored on KABC030019192021 JUDGMENT CC N O.544/2021
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09/07/2022 for the reason of funds insufficient, alterations require drawer's authentication. As per clause (a) of proviso to Sec.138 of N.I. Act the cheque is to be presented for encashment within the period of its validity from the date on which the cheque has been issued. The Ex.P.2 bears date 30/06/2020 and it was presented on 09/07/2020, which is within the prescribed period.
13. As per clause (b) of proviso to Sec. 138 of N.I. Act, the complainant is required to issue notice, in writing, to the drawer/accused making a demand for repayment of the said cheque amount within 30 days from the date of receipt of information about the dishonor of the cheque. Ex.P.4 is the copy of Legal notice, Ex.P.5 is the 13 postal receipts, Ex.P.6 to 14 are the postal acknowledgments. Thereby, it is found that the complainant has issued legal notice within 30 days from the date of knowledge of dishonor of cheque. Thus, the provisions of clause (a) & (b) of proviso to Sec.138 of N.I. Act have been complied with.
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14. As per clause (c) of the proviso to Sec. 138 of N.I. Act, the drawer/accused is entitled to have 15 days time to make the payment of the cheque amount. Even after elapse of 15 days time for making payment the accused has not made payment. Further the clause (b) of Sec. 142 of N.I. Act makes it clear that the complaint has to be filed within 30 days from the date of cause of action arose. The endorsement made by this Court on the complaint reveals that the complainant presented the complaint on 10/09/2020 and as such, this complaint is well within the period of limitation. Therefore, this Court is of the considered opinion that the complainant has complied all the necessary components which attracts section 138 of N.I. Act. Even the accused persons have not challenged any of the mandatory requirements to be complied by the complainant.
15. As per the Judgment of Hon'ble Supreme in case of APS FOREX SERVICES PRIVATE LTD., vs. SHAKTI INTERNATIONAL FASHION LINKERS AND ORS., reported in KABC030019192021 JUDGMENT CC N O.544/2021
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[2020] ACR 457 wherein it is held that, once accused has admitted issuance of cheque which bears his signature, there is presumption that there exists legally enforceable debt or liability under Sec.139 of N.I. Act. In the present case the issuance of the cheque and the signature on the cheque is not disputed by the accused persons. The said decision is aptly applicable for raising presumption in favour of complainant.
16. Therefore, when once it is proved that the cheque belongs to the accused persons coupled with proof that the cheque bears the signature of the accused. The presumption must be that the cheque was issued for a legally enforceable debt or liability. As this Court holds that the complainant has proved the execution of Ex.P.2. More so, the accused have not challenged signature on the cheque. As a result, the presumption U/sec.139 of N.I. Act is drawn in favour of complainant. Now it is adverted below to the rebuttal of presumption by the accused.
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ANALYSIS AND EVALUATION OF REBUTTAL OF PRESUMPTION BY THE ACCUSED.
17. In order to rebut the presumption the accused persons has set up the defence that, • the complaint per-se is not maintainable as the cheque is of the accused No.2, in his personal capacity and he is not personally not arrayed as accused in the present case and he is arrayed as accused in the present case in his personal capacity, • accused No.3 to 5, are falsely implicated in the present case, thought they have nothing to do with the cheque, • the Complainant had to approach the NCLT for recovery of money and thereby the present case is not maintainable.
18. At the outset the undisputed aspects relevant for the consideration are, the cheque is executed by the accused No.2 and it bears his signature. The cheque is issued in favour of the complainant. The demand notice issued by the KABC030019192021 JUDGMENT CC N O.544/2021
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complainant is duly served on all the accused persons. The cheque is returned for the reason i.e., for funds insufficient.
OF ENFORCEABLE LIABILITY.
19. The cheque is personal cheque of accused No.2 and 3, probably of their joint bank account. Even the accused No.2 in his evidence has admitted that the cheque belongs to him not of the accused No.1 company. On perusal of the cheque in question at Ex.P.2, it is found that only the accused No.2 has signed and it does no bear the signature of the accused No.3, though her name is found on the cheque. In view of the same she is not liable for any proceedings on the said cheque for the simple reason that it does not bear her signature. In so far as other accused are concerned i.e., accused No. 4 and 5, are also not liable for the said cheque, as the cheque does not belong to them. At the outset accused No.1, 3 to 5 have no liability over the said cheque and they are entitled for acquittal from the present proceedings initiated against them. KABC030019192021 JUDGMENT CC N O.544/2021
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20. In so far as accused No.2 is concerned he has issued the said cheque in favour of complainant before NCLT. Even there is no dispute in regard to the aspect of liability. The accused No.2 has not disputed the liability towards the cheque amount in his defence. However, the initial burden is on the complainant to show the liability of the accused No.2 before the Court. The liability of the accused is traced from Ex.P.16 and 17, which are the joint memo reporting settlement and the order of NCLT. The accused No.2, in pursuance to the settlement had filed the joint memo and based on the same orders came to be passed by NCLT. On perusal of the order of NCLT it is found that accused No.2 issued the said cheque in favour of complainant accepting the liability towards the complainant. Thereby no much of discussion is called for the purpose of liability.
21. The defence of the accused No.2, that he is arrayed as accused in the present case but not in individual capacity. Thereby the complainant is not liable to maintain the present KABC030019192021 JUDGMENT CC N O.544/2021
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proceedings. The said argument does not hold much of the significant because the accused No.2 is the in-charge of day to day affairs of accused No.1 company. He has signed for the Joint Memo for settlement before the NCLT. The accused No.1 company was the party before the NCLT and it was represented through accused No.2 only, he has solely participated in the proceedings before NCLT. It is also necessary to note that the demand notice issued by the complainant to accused No.2, in the capacity of director and also in the individual capacity. However, there is no reply to the said notice by accused No.2. The accused No.2, before the NCLT had individual standing. He was all along acting in the capacity of director of accused No.2. He had issued his personal cheque before NCLT because he was concerned with accused No.1 company in the capacity of director. The same is in the present case. The natural person and director of company are not two different entities and the distinction between the juristic person and natural person is not KABC030019192021 JUDGMENT CC N O.544/2021
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applicable to the present set of facts and circumstances. Only the natural persons can be director of the company which is the juristic person. Thereby there would be no bearing on the accused No.2 was arrayed in the individual capacity or not. The accused No.2 cannot evade the liability under the grab of his individual capacity. The director of the company is individually liable for the acts of the company. There cannot be any distinction under to bifurcate the same natural persons under the two capacities. There is no legal basis for the defence/arguments of the accused in this regard.
22. The another argument of the accused No.2, is that the complainant has wrongly initiated the present proceedings and the issue required to be addressed before the NCLT not by filing proceedings under sec. 138 of N.I Act. Even the said arguments hold no water because the criminal proceedings is different from the civil or statutory proceedings. The proceedings under N.I are in criminal in nature and they are KABC030019192021 JUDGMENT CC N O.544/2021
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the standalone proceedings and has no bearing on it if there are any parallel proceedings.
OF NOTICE.
23. It is borne out from the records that the complainant has sent demand notice on all the accused persons, the postal receipts and acknowledgments are produced as Ex.P.5 and Ex.P.6 to P.14. However, none of the accused persons have replied to the notice The statutory notice u/S.138 of N.I.Act leads to an inference that there was merit in the complainant's version, apart from raising a probable defence by the accused. Issuing a reply to the complainant is a first opportunity to the accused to set up their defence. Not replying to the notice which is duly served is fatal to the defence of the accused. Any version taken during the course of the trial amounts to an after thought and the same requires to be considered with a pinch of salt. It is also found from the records that the accused No.2 had no impediment to give reply to the demand notice issued by the KABC030019192021 JUDGMENT CC N O.544/2021
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complainant. A ordinary prudent man would immediately issue a reply notice alleging the grievances if the demand notice or the claim is false. The said position is settled and fortified in a decisions of the Hon'ble Supreme Court and High Court of Karnataka in cases of Rangappa Vs. Mohan, reported in AIR 2010 SC 1898, Muralidhar Rao Vs. P.Nagesh, reported in 2021(2) KLJ 647, and in case of Jayalakshmma Vs. Shashikala, reported in 2021(2) KCCR 1511. The Hon'ble High Court of Karnataka in case of S. K. Honnappa vs. S. A. Murthy reported in NC : 2024 : KHC: 34108, was pleased to hold that, "As a corollary to this, in order to hold the defence version probable the drawer of the cheque must come out with his defence in his reply notice, any defence introduced for the first time either at the time when complainant or his witnesses are cross-examined or when he leads evidence does not carry as much weight as it carries if there was disclosure at the earliest point of a time i.e., before the criminal action is initiated."
In the present case, the accused No.2 lost an opportunity to present his defence at the first instance when he failed to KABC030019192021 JUDGMENT CC N O.544/2021
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reply to the demand notice issued by the complainant. More so all the defences of the accused No.2 is an after-thought of the present proceedings.
OF CONCLUSION.
24. On conjoint reading of the entire materials it is found that though PW.1 is cross-examined in detail however there is nothing material could be elicited so as to weaken the evidence/case of the complainant. The outstanding due of payment of amount by the accused No.2 as per Ex.P.2 is Rs.20.00.000/- which is legally recoverable debt of the complainant. All that is tried is to deny the case of the complainant and the liability. There is nothing that would support the defence of the accused No.2 in the portion of the cross-examination of PW.1 nor in their evidence. The defense of the accused No.2 cannot be accepted. As a result the accused No.2 has failed to rebut the presumption on the standard of preponderance of probability as held in the decision of the Hon'ble Supreme Court reported in 2006 (3) KABC030019192021 JUDGMENT CC N O.544/2021
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Crimes 117 (S.C.) between M.S.Narayana Memon @ Mani V/s. State of Kerala and Another.
25. From the evidence on record, it is clear that the accused No.2 has failed to rebut the presumption, on the other hand the tenor of cross-examination of PW.1 clearly indicates that they have proved the existence of the liability and also issuance of cheque for discharge of the said liability. Admittedly the complainant has complied with all requirements of Section 138 of the N.I. Act. The statutory notice as required by law had been issued. The version of complainant is certain and stands proven than the defence of the accused. Hence, the above point is answered accordingly.
26. ON POINT NO. 2 : In view of the above findings the accused No.2 is found guilty for the offence punishable under section 138 of N.I. Act. Under the present set of facts and circumstances of the case, it is just and proper to sentence the accused No.2 to pay fine equivalent to the cheque amount KABC030019192021 JUDGMENT CC N O.544/2021
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along with appropriate penalty on the scale of the cheque amount. Thereby, proceed to pass the following:
:: ORDER ::
• In exercise of Sec. 255 (1) of Cr.P.C., the accused No.3 to 5 are acquitted of the offence punishable U/Sec. 138 of N.I. Act.
• In exercise of Sec. 255 (2) of Cr.P.C., the accused No.2 is convicted for the offence punishable U/Sec. 138 of N.I. Act and sentenced to pay fine of Rs.25,00,000/-, in default of payment of fine the accused Nos.2 is sentenced to undergo simple imprisonment for a period of one year.
• Out of fine amount of Rs. 25,00,000/-, a sum of Rs. 24,00,000/- shall be paid to the complainant as compensation as per Section 357 (3) of Cr.P.C and the remaining amount is defrayed to state as its expenses.
• The bail bond of the accused persons stand canceled.
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• Office is directed to supply this Judgment to the accused No.2 free of cost.
(Dictated to the Stenographer directly on computer, same was corrected by me and then pronounced in the Open Court, on this the 13th day of November, 2024.) (VEERESH KUMAR C.K.) XXXVIII ADDL.C.J.M., BENGALURU.
ANNEXURE
1. List of Witnesses examined for Complainant:
PW.1: Sri.P.R.Sreenivasa Murthy PW.2: Sri.Harish Yeshreddy
2. List of Witnesses examined for Defence:
DW.1: Santhosh Sreerangaraju Lakkenahalli.
3. List of Documents marked for Complainant:
Ex.P.1 : Board Resolution. Ex.P.2 : Cheque Ex.P.2(a) : Signature of accused. Ex.P.3 : Bank endorsement. Ex.P.4 : Copy of legal notice. Ex.P.5 : Thirteen postal receipts.
Ex.P.6 to 14 : Postal acknowledgments.
Ex.P.15 : Board Resolution.
Ex.P.16 & 17 : Joint memo before NCLT and order of NCLT.
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4. List of Documents marked for Defence:
Ex.D.1 : Notice.
Ex.D.2 : Complaint copy in XXVIII ACMM
in CC No.29753/2017.
Ex.D.3 : C/c of Agreement.
(VEERESH KUMAR C.K.)
XXXVIII ADDL.C.J.M.,
BENGALURU.