Bangalore District Court
By Its Manager - Mr. Ekanatha .S vs District - 572 129 on 8 September, 2022
1
IN THE COURT OF XIV ADDL. CHIEF METROPOLITAN
MAGISTRATE, MAYO HALL, BENGALURU
PRESENT
SRI.OONKAR MURTHY K.M.,
B.Sc., L.L.M.,
XIV ADDL. C.M.M., BENGALURU
DATED THIS THE 8th DAY OF SEPTEMBER, 2022
CASE NO C.C. NO.54201/2019
M/S. MAYUR YARN & THREAD PVT., LTD,.
Business at No.01, M.H. Bhavan, 1st 'B' Cross,
Near Telugu Chettiar Kalyana Mantapam,
Sudhamanagar, Bengaluru - 560 027
COMPLAINANT By its Manager - Mr. Ekanatha .S
S/o. S.K. Shankar Rao
Aged about 43 years,
Mob : 73537 76504
E-mail : [email protected]
(By Sri. Gopal Sing - Adv.,)
1. M/S. KANVA FASHION LIMITED
Registered Office at Sy. No.7/1, Kongenahalli
Kasaba Hobli, Koratagere Taluk, Tumakuru
ACCUSED District - 572 129.
2. MR. NARAYANAPPA NANJUNDAIAH
Director - M/s.Kanva Fashion Ltd.,
No.861, Kanva Sri Sai Complex,
West of Chord Road,
2
Opp : Modi Hospital
Rajajinagar, Bengaluru - 560 086.
Also at;
M/s.Kanva Fashion Ltd.,
No.361, 19th Main Road, Adjacent to Diacon
Hospital, 1st Block, Rajajinagar, Bengaluru -
560 010.
(By Sri. H.M. Anand - Adv.,)
OFFENCE U/s.138 of Negotiable Instruments Act
PLEA OF THE
ACCUSED Pleaded not guilty
FINAL ORDER Accused is convicted
(OONKAR MURTHY K.M)
XIV ADDL. C.M.M.,
BENGALURU
JUDGMENT
The complainant has approached this court with the complaint under Sec.200 Cr.PC against the accused alleging offence punishable under Section 138 of Negotiable Instruments Act, 1881.
3The brief facts of the complaint are as follows ;
2. The complainant company is a registered under the provisions of the Companies Act and he is deal with wholesale supply of yarn and threads and other fabric materials. Accused No.1 company represented by its Director/accused No.2 is also into similar line of business and the accused are customers of the complainant making credit purchase and have maintained a running account in the course of business.
The accused has made several purchases under different invoices. In partial discharge of the said liability, the accused has issued the following four cheques detailed below;
Sl. Cheque Cheques Amount
Nos. Numbers Date
1 427117 30.1.2019 Rs.7,04,043/-
2 426679 27.2.2019 Rs.4,26,653/-
3 427118 27.2.2019 Rs.7,01,126/-
4 427119 28.3.2019 Rs.6,77,577/-
Total Rs.25,09,399.00
4
The above cheques are drawn at Canara Bank, Nelamangala branch, Bengaluru and they have presented for encashment through complainant's banker i.e., IDFC Bank, Residency Road branch, Bengaluru, the same were returned unpaid with an endorsement "Funds Insufficient"
dtd.26.04.2019. The said fact was brought to the notice of the accused by issuing notices dated 15.05.2019 through three registered post of which one is served on 16.5.2019, another notice returned with postal endorsement dtd.17.05.2019 as "not claimed returned to sender". In spite of demand for payment of cheque amount, no payment made by the accused and thereby the accused has committed the offence punishable under Sec.138 of Negotiable Instruments Act, 1881. Hence the complaint.
3. On filing of the complaint, cognizance has been taken for the offence punishable under Sec.138 of Negotiable Instruments Act, 1881 and a private complaint was registered in PCR.No.53671/2019. Affidavit in lieu of sworn statement is filed by the complainant. On hearing the complainant and by considering the documents on record, summons was issued to the accused by registering the criminal case in C.C.No.54201/2019. Thereafter, the accused has appeared before the court through his counsel and has 5 been enlarged on bail. Plea of the accused has been recorded and accused has pleaded not guilty and h a s claimed to be tried. Hence the matter was posted for trial.
4. The sworn statement of the complainant which has been recorded as CW.1 is treated as his examination-in- chief in view of the decision of the Hon'ble Apex Court reported in (2014) 5 SCC 590 - Indian Bank Association and others Vs Union of India and others - [W.P. (civil) No.18/2013]. To prove the guilt against the accused, the complainant has relied on the documents marked at Ex.P1 to Ex.P22. Incriminating circumstances appear in the evidence of the complainant have been brought to the notice of the accused and his statement under Sec.313 of Cr.PC was recorded. The accused has denied the incriminating circumstances. Further, the accused in support of his examination himself as DW.1 but no documents is marked on his behalf.
5. Heard the arguments of both the counsels. Perused the materials on record.
6. Counsel for the complainant has argued that the accused has made several purchase of threads and yarn and other fabric materials under different invoices. In partial 6 discharge of the liability under various invoices, the accused has issued alleged four cheques at Ex.P1 to P4, totally amounting to Rs.25,09,399/- drawn at Canara Bank, Nelamangala Branch, Nelamangala. When the same were presented for encashment by the complainant through its banker IDFC Bank, Residency Road, Bengaluru, all the cheques were returned unpaid for the reason "funds insufficient". Thereafter, legal notice dated 15.05.2019 was sent to the accused by three registered posts, among which one is served on 16.05.2019, one is returned as "not claimed" on 17.05.2019. In spite of receiving the notice, the accused has not made any payments. CW.1 is the representative of the complainant company and he has been authorized to file the complaint and to prosecute it under Ex.P16. In the cross-examination, CW.1 has clearly stated that he has got personal information about the alleged transactions. The complainant has produced all invoices, purchase orders, delivery challans and bill wise details showing existence of legally recoverable debt. The accused has not produced a single document in support of his defense. Therefore has sought for conviction, awarding compensation of double the cheque amount.
77. The counsel for the accused has argued that the accused is running Company by name Kanva Fashion Ltd. The accused has done only three to four transactions and amount has been paid through RTGS. No other transactions have been done by the accused. As a security for the transactions, he has issued nine blank cheques in favour of the complainant. All the documents have been seized by C.I.D and E.D during the year 2019 and therefore, the accused is not able to produced any documents. Even bank accounts have been seized. No document is produced to show that CW.1 is the Manager of the complainant company. There is no proper authorization. Minutes of Meeting has not been produced. No such purchase orders produced at Ex.P19 have been given by the accused. As per the purchase order, delivery challan address is shown as Kongenahalli Village, but the seal affixed at the back side of the delivery challans produced at Ex.P17 shows delivery to Kamakshipalya address. The delivery seal is obtained only at the security inward. The Purchase Manager has not signed the said delivery challans or the invoices produced. No goods have been delivered as contended by the complainant. In the purchase orders, it is mentioned as "Payment : 60 days from the date of GRN" . In the tax 8 invoices produced at Ex.P18, at Sl. No.2 it is mentioned as "interest at 24% will be charged if payment is not made within 30 days from the date of invoice" . No such notice is issued by the complainant demanding payment of money in accordance with the said conditions in the purchase order and tax invoices. The e-mail demanding balance if any, have not been produced by the complainant. There is no balance at all to be paid by the accused. CW.1 in his cross- examination has admitted that the tax invoices at Ex.P18 and bill wise details at Ex.P21 are computer generated documents and the same have been fed and retrieved by the sales person Sirin Taz. In the certificate produced at Ex.P22 under Sec.65-B of Indian Evidence Act, nothing has been stated in respect of the said documents as to where the said documents have been generated, the details of the computer, the custody of the computer etc, and therefore the said certificate is not in accordance with the mandate of Sec.65-B of Indian Evidence Act and therefore the said documents cannot be looked into. Neither in the complaint nor in the legal notice, the complainant has mentioned the invoice numbers, delivery challan numbers until the accused rebutted the same. There is a difference in the opening amount column for (Rs.40,71,380.44) when compared to 9 the amount mentioned in the pending amount column for (Rs.40,35,186.32) in the bill wise details produced at Ex.P21. The same is admitted by CW.1 in his cross- examination. CW.1 states that the total amount for which purchase order has been given is about Rs.12,50,000/-. E- way bill is to be mandatorily generated for all the transactions about Rs.50,000/-. The complainant has not generated E-way bills accordingly. Only with an intention of future business, the accused has not taken any action in respect of the nine blank cheques which were issued as a security to the complainant company. They are lot of discrepancies in the documents produced by the complainant. The accused has successfully shown that there is no such existence of legally recoverable debt and thereby has successfully rebutted the presumption U/s.139 of N.I. Act. The complainant has failed to prove his case beyond reasonable doubt. Hence, has prayed to acquit the accused.
8. In support of his contentions, the counsel for the accused has relied on the following decisions ;
10i) A.C. Narayanan Vs State of Maharashtra - (AIR 2015 SC 1198)
ii) Gopal Krishnaji Ketkar Vs Mohamed Haji Latif and others - (AIR 1968 SC 1413)
iii) S.P. Chengalvaraya Naidu (dead) by LRs Vs Jagannath (dead) by LRs and others - [(1994) 1 SCC 1]
iv) M.S. Narayana Menon @ Mani Vs State of Kerala and another) - (AIR 2006 SC 3366)
v) Sri. A. Viswanatha Pai Vs Sri. Vivekananda S Bhat -
(ILR 2009 KAR 172)
vi) Arjun Panditrao Khotkar Vs Kailash Kushanrao Gorantyal and others) - [(2020) 7 SCC 1]
9. Upon considering the entire materials on record, the points that arise for my consideration are:-
1) Whether the complainant proves that the accused has issued four cheques bearing No.427117 dtd.30.1.2019 for Rs.7,04,043/-, No.426679 dtd.27.2.2019 for Rs.4,26,653/-, No.427118 dtd.27.2.2019 for Rs.7,01,126/- and No.427119 dtd.28.3.2019 for Rs.6,77,577/- in all for Rs.25,09,399/- drawn at Canara Bank, Nelamangala branch, Bengalur for discharge of legally recoverable debt and the said cheques were dishonored for the reason "funds insufficient". In 11 spite of issuance of statutory notice dated 15.05.2019, accused has failed to repay the loan amount and thereby the accused has committed the offence punishable under Sec.138 of N.I. Act, 1881?
2) What Order?
10. My findings on the above points are as under;
Point No.1 : In Affirmative,
Point No.2 : As per final order,
for the following.,
REASONS
11. Point No.1: The complainant company in
support of its contention has examined its Authorized Representative Mr.Ekanatha .S S/o. S.K. Shankar Rao, Manager as CW.1. In his chief-examination, he has reiterated the contentions of the complaint stating that the accused has made several purchases of threads, yarn and other fabric materials from the complainant under various invoices. In partial discharge of the liability, the accused has issued the alleged four cheques produced at Ex.P1 to P4 totally amounting to Rs.25,09,399/-. When the said cheques were presented for encashment through IDFC Bank, Residency Road branch, Bengaluru, all the said 12 cheques have been returned dishonored for the reason "funds insufficient". Legal notice dated 15.05.2019 demanding payment of the cheque amount was sent to the accused and the same has been served. In spite of it, the accused has not repaid the cheque amount.
12. CW.1 has produced four original cheques at Ex.P1 to P4, four endorsements dtd.26.04.2019 issued by the bank dishonouring of the said cheques have been produced at Ex.P5 to P8. Ex.P9 is the legal notice dtd.15.05.2019 sent to the three addresses of the accused which are mentioned in the complaint, wherein the complainant has demanded for payment of cheques amount within 15 days from the receipt of the notice. Ex.P10 to P12 are the three postal receipts showing dispatch of statutory notice on 15.05.2019. Ex.P13 is the postal acknowledgement showing service of said notice to the accused to his address "No.861, Kanva Sri Sai Complex, West of Chord Road, Opp : Modi Hospital, Rajajinagar, Bengaluru - 560 086". Ex.P14 is the postal cover sent to the address of the accused at "M/s. Kanva Fashion Ltd., No.361, 19th Main Road, Adjacent to Diacon Hospital, 1 st Block, Rajajinagar, Bengaluru - 560 010", which has been returned as "not claimed". Ex.P15 is the track consignment 13 report of postal department showing service of notice to address of the accused situated at Kortagere Taluk on 23.05.2019. Ex.P16 is the Board Resolution of the complainant company authorizing Mr.Ekanatha.S/PW.1/ the Manager of the Company to present, file and prosecute the cases in respect of recovery of money and under N.I. Act against M/s. Kanva Fashion Ltd.
13. In the cross-examination, CW.1 has stated that his company has supplied threads against the purchase order issued by the accused company and they have raised invoices in respect of such purchase orders. When he was questioned whether the said purchase orders and invoices can be produced before the court, CW.1 has answered in Affirmative. Thereafter, CW.1 has produced the delivery challans showing supply of threads to the accused company at Ex.P17 (from page Nos.1 to 142), tax invoices at Ex.P18 (from page Nos.143 to 298), purchase orders at Ex.P19 (from page Nos.299 to 322), e-way bills at Ex.P20 (from page Nos.323 to 327) and bill wise details is produced at Ex.P21 showing the total amount due of Rs.40,35,186/- as pending amount.
1414. During recording of statement of the accused U/s.313 of Cr.PC, the accused has merely denied the incriminating evidence. However, in support of his defence, the accused himself has examined as DW.1. In his chief- examination, he has clearly admitted that the complainant company was supplying threads to his company i.e., M/s.Kanva Fashion Ltd. Also states that only three to four transactions were made with the complainant and he has paid the entire money to the complainant through RTGS Further states that he has issued nine cheques drawn at Canara Bank to the complainant company during the year 2016 as a security for supplying threads. Further states that all the documents of M/s.Kanva Fashion Ltd., is seized by C.I.D and E.D during November 2019 and therefore he is not able to produce any of the documents. However, has specifically stated that no money is due to be paid to the complainant. In the cross-examination, the accused has admitted that purchase orders were being given by his company to the complainant company with his prior permission. Also admits that for all the purchase orders, the complainant company was raising invoices. He has also admitted that the complainant company was delivering threads up to his company and after verification they used 15 to take delivery of threads by giving acknowledgement on delivery challan. Further states that they were issuing goods inward receipt from his company. He has admitted his signature on the cheques at Ex.P1(a) to Ex.P4(a). Further admits that the address mentioned in the postal acknowledgement at Ex.P13 is his correct address. But denies service of any such legal notice to him. DW.1 reiterates that for all the products purchased by its company payment has been made through RTGS. But no documents have been produced by the accused in support of his defence.
Principles:
15. In respect of the proof of the fact that the cheque has been issued for discharge of legally enforceable debt, there is a presumption of law under Sec.139 of Negotiable Instruments Act, 1881 in favour of the holder of the cheque which reads as follows:
Sec.139 - Presumption in favour of holder: it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.16
16. The presumption under Sec.139 of Negotiable Instruments Act is a presumption of law and not the presumption of fact. The presumption has to be raised in all the cases once the factum of issuance of cheque and its dishonour is established. The onus of proof to rebut the presumption lies on the accused. The accused need not rebut the presumption beyond all reasonable doubt. But the accused has to place sufficient materials to convince the court that his case is more probable when it is compared with the case of the complainant.
17. In defense, the accused has put-forth the following contentions;
No document is produced to show that CW.1 is the Manager of the complainant company. There is no proper authorization.
He has issued nine cheques to the complainant during the year 2016 as a security for supplying threads.
For all the threads supplied, payment has been made through RTGS.
Only three to four transactions were made with the complainant company. No money is due to be paid to the complainant.
17 All the documents of M/s.Kanva Fashion Ltd., is seized by C.I.D and E.D during October/November 2019 and therefore he is not able to produce any documents.
No notice has been served on him.
Authority of CW.1 in prosecuting the matter:
18. The counsel for the accused has argued that CW.1 has no authorization to prosecute this matter. Ex.P16 is the Board Resolution of the complainant company wherein it has been clearly mentioned that CW.1 Mr.Ekanatha.S is the Manager of the complainant company and is authorized to present, file and prosecute the cases for recovery of money and under Negotiable Instruments Act against M/s.Kanva Fashion Ltd., the defaulter. The said resolution has been signed by both the Directors. In the cross-examination CW.1 has clearly stated that they are only two Directors in the complainant company and they are not free to come and prosecute the matter. Under the circumstances, there is nothing on record to doubt the authority of CW.1 in prosecuting the present matter. Hence, the contention taken up by the counsel for the accused has no substantiation.
1819. In support of his contention that CW.1 has no authority to file the complaint, the counsel for the accused has relied on the decision Hon'ble Supreme Court in the case of A.C. Narayanan Vs State of Maharashtra and another; AIR 2015 S.C 1198, wherein the Hon'ble Supreme Court under the facts of that case, wherein as per the resolution of the Company i.e., Ex.P3, Managing Director and Directors are authorized to file suits and criminal complaints against the debtors for recovery of money and prosecute. They were authorized to appoint or nominate any other person to appear on their behalf in the court and engage lawyer etc., and there was nothing on record to suggest that an employee is empowered to file complaint on behalf of the company. Under those circumstances, the acquittal of the accused by learned Magistrate was up held by the Hon'ble Supreme Court. But in the case on hand, at Ex.P16 which is the Board Resolution clearly gives authority to CW.1 to present, file and prosecute the cases for recovery of money and cases under Negotiable Instruments Act against the accused. Under the circumstances, decision relied upon by the counsel for the accused is not helpful for his contention.
19Existence of legally recoverable debt:
20. In the cross-examination DW.1 has categorically admitted that his company use to give purchase orders to the complainant company with his prior permission. For all the purchase orders, the complainant company was raising invoices. He also admits that the complainant company was delivering the threads up to his company and after verification they use to take the delivery of the threads by giving acknowledgement on the delivery challan. CW.1 has produced about 142 delivery challans at Ex.P17 (from page Nos.1 to 142) which clearly show that the threads have been delivered to the accused company. A seal of M/s.Kanva Fashion Ltd., at security inward has been affixed. In every delivery challans, the serial number, quantity of threads, date and time of delivery has been mentioned and has been initialled by the security. In most of the delivery challans, receivers signature is also found. Some of the delivery challans have also been affixed with the seal of M/s.Kanva Fashion Ltd., near receivers signature. Corresponding invoice numbers have also been mentioned in the delivery challans. Apart from the said documents, CW.1 has also produced tax invoices at Ex.P18 (from pages 20 143 to 298), wherein each and every invoice discloses the invoice number and date. The authorized signatory of the complainant company have affixed seal on each and every tax invoices along with signature. Most of the invoices have been stamped with the seal of M/s.Kanva Fashion Ltd., Also bear security inward seal wherein serial number, quantity, date and time is also mentioned. CW.1 has also produced bill wise details at Ex.P21, wherein the consolidated statement of each and every tax invoice produced is listed showing the invoice amount and the amount pending. When verified with the tax invoices produced, the bill wise details corresponds with the tax invoice amount along with its date. The said document shows that an amount of Rs.40,35,186/- is due for payment under all the invoices produced at Ex.P18. These documents corresponds with the above discussed admissions given by DW.1 in his cross-examination with respect to raising of invoices by the complainant for all the purchase orders issued by the accused company and also in respect of the delivery of threads to his company.
21. But the accused has taken up the contention that only three to four transactions were made by his company with the complainant and all the money has been 21 paid through RTGS; no money is due to be paid to the complainant. Except oral assertions, nothing has been produced before the court to substantiate the said contention. The sole defense taken up by the accused for non-production of the documents is that all the documents of M/s.Kanva Fashion Ltd., have been seized by C.I.D and E.D during November 2019 and therefore he is not able to produce any documents. In the cross-examination dated 22.06.2022, DW.1 has admitted that the said seizure has happened in respect of Kanva Sourdha Co-operative Society and the same is not in any way related to this matter. Further DW.1 states that the E.D case is pending before the CCH-34 and C.I.D case is pending before CCH-1. When he was questioned whether he has made any efforts to secure documents by filing application, DW.1 answers in Negative. The accused could have made all efforts to secure documents if at all his claim that there was no existing liability was true. When no such efforts have been made to secure the documents and produce the same before the court to rebut the presumption in favour of the complainant, mere oral assertions that he has paid the entire money to the complainant company cannot be appreciated. Mere oral assertions are not sufficient enough 22 to put back the burden on the complainant to prove his case beyond all reasonable doubt.
22. Another contention of the counsel for the accused is that the tax invoices at Ex.P18 and bill wise details at Ex.P21 are computer generated documents. The certificate produced U/s.65-B(4) of Indian Evidence Act is not accordance with the statute and therefore the said documents have no evidential value. In support of his contention, he has also relied on the decision of Hon'ble Supreme Court in the case of Arjun Panditrao Khotkar vs Kailash Kushanrao Gorantyal and others, wherein the Hon'ble Supreme Court in para 58 and 59 has held as follows;
Para 58. It may also be seen that the person who gives this certificate can be anyone out of several persons who occupy a 'responsible official position' in relation to the operation of the relevant device, as also the person who may otherwise be in the 'management of relevant activities' spoken of in Subsection (4) of Section 65B.
Considering that such certificate may also be given long after the electronic record has actually been produced by the computer, Section 65B(4) makes it clear that it is sufficient that such person gives the requisite certificate to the "best of his 23 knowledge and belief" (Obviously, the word "and" between knowledge and belief in Section 65B(4) must be read as "or", as a person cannot testify to the best of his knowledge and belief at the same time).
Para 59. We may reiterate, therefore, that the certificate required under Section 65B(4) is a condition precedent to the admissibility of evidence by way of electronic record, as correctly held in Anvar P.V. (supra), and incorrectly "clarified" in Shafhi Mohammed (supra). Oral evidence in the place of such certificate cannot possibly suffice as Section 65B(4) is a mandatory requirement of the law. Indeed, the hallowed principle in Taylor v. Taylor (1876) 1 Ch.D 426, which has been followed in a number of the judgments of this Court, can also be applied. Section 65B(4) of the Evidence Act clearly states that secondary evidence is admissible only if lead in the manner stated and not otherwise. To hold otherwise would render Section 65B(4) otiose.
(Emphasis supplied)
23. The Hon'ble Supreme Court in the above precedent has held that the certificate required U/s.65B(4) of evidence act is a condition precedent to be admissibility of evidence by way of electronic record. No doubt the certificate filed by the complainant U/s.65B of evidence act produced at Ex.P22 do not fulfill the requirement stated in 24 the section and cannot validate the purchase orders (Ex.P19) and e-way bills (Ex.P20) generated electronically. But whether the documents produced at Ex.P18 and P21 really falls within the definition of electronic records is to be considered.
24. Section 2(o) and (t) of the Information Technology Act, 2000, defines "data" and "electronic record" as follows;
Sec 2 (o) "data" means a
representation of information,
knowledge, facts, concepts or
instructions which are being prepared or have been prepared in a formalised manner, and is intended to be processed, is being processed or has been processed in a computer system or computer network, and may be in any form (including computer printouts magnetic or optical storage media, punched cards, punched tapes) or stored internally in the memory of the computer;
Sec 2 (t) "electronic record" means data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche".
(Emphasis supplied) 25
25. So, "data" means a representation of information, knowledge, facts, concepts or instructions which are being prepared or have been prepared in a formalised manner and is intended to be processed, is being processed or has been processed in a computer system or computer network. But the electronic record generated without any processing using the computer as only a tool do not fall within the definition of electronic records. The documents such as letters, application, petition drafted and typed on the computer and then print out is taken and thereafter, author appended his signature after verifying the content of the document without any processing by the software or value addition in terms of computer generated data, itself diminish the role of computer as a mechanical device. The fact that the print out is taken at the time of production will take away any challenge as to storage or meta data of the content and any manipulation. It would be equivalent to a person writing a letter by a pen or a typewriter and sign the same after verifying the content. Under such circumstances, the documents which are generated on the computer through human feeding and print out is taken and authenticated at the same time by affixing the signature would not be a 26 computer out put but authored by a person like a hand written documents. The production of such documents would not require a certificate U/s.65B before the court. The author of such document can prove the document in the court like any other non-digital documents.
26. In the case on hand, the tax invoices produced at Ex.P18 have been taken print out from the computer on the date of generation of tax invoice, the same have been signed and affixed with the seal of the complainant company on the particular date. The accused company has also affixed its seal and signature during delivery by mentioning the date and time along with quantity of the goods supplied with serial number. These documents have been acknowledged and authenticated by the accused company with its seal and signature. Under the circumstances, the contention that the said documents are electronic records and the same needs certificate U/s.65B(4) of Indian Evidence Act do not hold any water. Under the circumstances, the decision of Hon'ble Supreme Court in Arjun Panditrao Khotkar's case is not helpful for the contention of the accused.
2727. Similarly, Ex.P21 is bill wise details which has been prepared by the complainant company using computer as a tool. It is nothing but consolidated statement of the tax invoices produced at Ex.P18 showing the total amount due under the said invoices as Rs.40,35,186/-. When the entries in the bill wise details at Ex.P21 corresponds to the tax invoices produced at Ex.P18, no such doubt can be casted upon the genuinity of the entries made in the said document. The said document also in my opinion will not fall within the definition of electronic records and accordingly the requirement of certificate under Sec.65B(4) of Indian Evidence Act is not warranted. Therefore, the contention of the counsel for the accused that the documents at Ex.P18 and P21 are not admissible without certificate under Sec.65B(4) of Indian Evidence Act finds no appreciation.
cheques as a security:
28. The accused contends that he has issued the alleged cheques as a security to the complainant company for supplying the threads. In adjudicating whether the cheque issued as a security attracts offence punishable U/s.138 of N.I. Act, I would like to rely upon the decision of 28 Hon'ble Supreme Court in the case of Sripati Sing Vs. State of Jharkhand and another, wherein the Hon'ble Supreme Court at para 17 and 18 has held as follows;
Para 17. "A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified time frame and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow".
Para 18. "When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security' cannot be presented prior to the loan or the instalment maturing for 29 repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an 'on demand promissory note' and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation".
(Emphasis supplied by me) 30
29. In the above precedent, it is clearly held that if a loan is advanced and the borrower agree to repay the amount in a specified time frame and issues a cheque as security to secure such repayment, if the loan amount is not repaid, the cheque which is issued as a security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of Negotiable Instruments Act would flow. In the case on hand, the complainant has clearly shown that the accused is due for Rs.40,35,186/- as per the invoices produced at Ex.P20. The accused has not produced any iota of evidence showing that he has paid money for the goods supplied under the said invoices. Under the circumstances, even though if it is presumed that the accused has issued cheque as security to secure such repayment, the same would mature for presentation and drawee of the cheque would be entitled to present the same. On such presentation, if the cheque is dishonoured the consequences U/s.138 of N.I. Act will follow. Under the circumstances, the contention of the accused that the cheque was issued as a 31 security and therefore the offence U/s.138 of N.I. Act is not attracted holds no water.
30. The counsel for the accused has also relied on the decision of Hon'ble Supreme Court in the case of M.S. Narayana Menon @ Mani V/s. State of Kerala and another, wherein the Hon'ble Supreme Court in the circumstances of the case therein, where books of accounts maintained by the second respondent were found to be not reflecting the correct state of affairs and the defence has been accepted as probable has held that if a cheque is issued for security or for any other purpose the same would not come within the purview of section 138 of NI Act. But in the case on hand no such materials are brought on recort to accept the defence of the accused as probable and therefore the decision relied upon by the accused is of no aid to the accused.
Service of Statutory Notice:
31. The accused contends that the legal notice has not been served upon him. In adjudicating the said fact, I would like to rely upon the decision of Hon'ble High Court of Karnataka in the case of State Through GDCC Bank Ltd., Vs Hanmayya, wherein at para 8 and 9 has held as follows;
32Para 8. It is to be noted Section 27 of General Clauses Act 1897, prescribes the statutory presumption under certain circumstances, the Court has to presume the service of notice by post, which reads thus:
"Where any (Central Act) or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression 'serve' or either of the expressions 'give' or 'send' or any other expressions is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and, unless that contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."
Para 9. "Therefore on plain understanding of the above said provisions, if a notice is sent by a Registered Post to a person concerned, to his proper address then it is deemed to be served on him in due course, unless contrary is proved and further if there is any endorsement as 'not claimed' that is also sufficient to prove deemed service of notice. Whether a notice therefore sent by himself by registered post and the same is returned by the opponent person with an endorsement even with 'refusal' or if it is not returned then also it would be presumed that, the notice has been served, unless the rebuttal is given in respect of non service of notice".
(Emphasis supplied) 33
32. In the case on hand, the accused has not disputed the correctness of the three addresses mentioned in the complaint. The statutory notice produced at Ex.P9 is also addressed to the said three addresses. Ex.P10 to P12 are the postal receipts showing dispatch of the said notices on 15.5.2019. Ex.P13 is the postal acknowledgement showing service of notice on 16.5.2019 to the accused. Ex.P14 is the postal cover which has been returned as "not claimed". Ex.P15 is the track consignment report of the postal department showing service of notice to the accused to his Korategere taluk address on 23.5.2019. In the cross- examination DW.1 has clearly admitted that the address mentioned in Ex.P13 postal acknowledgement is his correct address. Even otherwise when the accused has not denied his addresses to which the notice has been sent, by relying upon the above precedent, service of notice to the accused shall be inferred. Nothing contrary is brought on record by the accused. Therefore, the contention of the accused that notice was not served upon him is left with no substantiation.
34Other Decisions relied upon by the accused:
33. In Gopal Krishnaji Ketkar's case cited supra at para 5, Hon'ble Supreme Court has held that even if the burden of proof does not lie on a party the court may draw an adverse inference if he withholds important documents in his possession which can throw light on the facts at issue.
34. The Hon'ble Supreme Court in S.P. Chengal Varaya Naidu's case cited supra, it is held that A litigant, who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well a on the opposite party.
35. In the case on hand, the complainant has produced all the invoices and delivery challans on the basis of which the legally enforceable debt is sought to be recovered under the alleged cheque. On the contrary, the accused has not produced even a single document to substantiate any of his contentions. Under the circumstances, the above two decisions relied upon by the accused is not helpful in any way to substantiate the contentions raised by the accused.
3536. In A. Viswanatha Pai's case cited supra, the Hon'ble High Court of Karnataka has held that Existence of legally recoverable debt is not a matter of presumption under Sec.139 of the Act; as, Sec.139 merely raises a presumption in favour of the complainant that the cheque was issued for discharge of any debt and other liability. In the case on hand, the complainant has clearly shown that legally recoverable debt is due to be paid by the accused. Under the circumstances, the decision is not helpful for the contentions raised by the accused.
Conclusions:
37. It is settled principle that to disprove the presumption U/s.139 of N.I. Act in favour of the complainant, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration did not exists or its non-existence was so probable that a prudent man would under the circumstances, act upon the plea that they did not exist. In the case on hand, the accused has not disputed the business transaction with the complainant company in respect of supply of threads. Further he has failed to substantiate his contention that he has paid all the 36 money due to the complainant under the invoices under which thread was supplied to his company. But the complainant by producing the tax invoices and delivery challans has proved the existence of legally recoverable debt to the tune of Rs.40,35,186/-. Also the accused has failed to show that alleged cheques were issued as a security for supplying of threads. Under all these circumstances, the accused has failed to rebut the presumption in favour of the complainant U/s.139 of N.I. Act. On the contrary, the complainant has proved that the alleged cheques have been issued by the accused towards partial discharge of the liability under the invoices produced at Ex.P18. Also has shown that the said cheques have been dishonoured for "funds insufficient" as per the bank endorsement produced at Ex.P5 to P8 dated 26.04.2019. Thereafter, the statutory notice dated 15.5.2019 was also issued which has been served on the accused on 16.5.2019. But the accused has failed to reply to the said notice and also has failed to make payment against the said invoice. Under the circumstances, the complainant has proved all the necessary ingredients of Sec.138 of N.I. Act. Hence, the accused is found guilty for the offence 37 punishable U/s.138 of N.I. Act. Accordingly, I hold Point No.1 in Affirmative.
38. Point No.2: The punishment prescribed for the offence punishable U/s.138 of N.I. Act is imprisonment for a term which may extend to twice the amount of cheque or with both. Considering the facts and circumstances of this case, nature, year of the transaction, nature of the transaction along with the rules of compensation under Sec.117 of N.I. Act, coupled with cost of litigation and the proposed interest by Hon'ble Supreme Court in the case of R.Vijayan Vs Baby - 2012 (1) SCC 260, this court is of the considered view that it is just and desirable to impose fine of Rs.34,20,000/-. Out of the said amount, it would be proper to award a sum of Rs.20,000/- to the State and the remaining amount of Rs.34,00,000/- is to be given to the complainant as compensation as provided U/s.357(1)(b) of Cr.PC and accordingly, I proceed to pass the following.., ORDER In exercise of power vested under section 255(2) of Cr.P.C., I hereby convict the accused for the offence punishable under 38 Sec.138 of Negotiable Instruments Act, 1881.
The accused is sentenced to pay fine of Rs.34,20,000/- (Thirty Four Lakhs Twenty Thousand only) for the offence punishable U/s.138 of Negotiable Instruments Act, 1881. In default of payment of fine, the accused shall under go simple imprisonment for a period of six months.
In exercise of powers vested under section 357(1)(b) of Cr.P.C., out of fine amount a sum of Rs.34,00,000/- (Thirty Four Lakhs only) is ordered to be paid to the complainant as compensation and the remaining Rs.20,000/- shall go to the State.
The bail bond of the accused stands canceled.
Free copy of the judgment shall be supplied to the accused forthwith.
(Dictated to the stenographer, transcript thereof, computerized and print out taken by him is verified, corrected and then pronounced by me in open court on this the 8th day of September, 2022) (OONKAR MURTHY K.M) XIV ADDL. C.M.M., BENGALURU 39 ANNEXURE List of witnesses examined by complainant:
CW.1 : Sri. Ekanatha .S List of documents marked by complainant:
Ex.P1 to P4 : Four Cheques
Ex.P1(a) to P4(a): Signatures of the accused
Ex.P5 to P8 : Four bank endorsements
Ex.P9 : Legal Notice
Ex.P10 to P12 : Three Postal receipts
Ex.P13 : Postal acknowledgement
Ex.P14 : Postal cover
Ex.P15 : Track Consignment report
Ex.P16 : Board Resolution dtd.17.6.2019
Ex.P17 : Delivery Challans (page nos.1 to 142)
Ex.P18 : Tax invoices (page nos.143 to 298)
Ex.P19 : Purchase orders (page nos.299 to
322)
Ex.P20 : E-Way Bills (page nos.323 to 327)
Ex.P21 : Bill-wise details
Ex.P22 : Certificate U/s.65-B of Evidence Act.
List of witnesses examined by defence:
DW.1 : Sri. N. Nanjundaiah
List of documents marked by defence:
NIL
(OONKAR MURTHY K.M)
XIV ADDL. C.M.M.,
BENGALURU