Bangalore District Court
M/S. Shriram Transport Finance Co. Ltd vs Sri. Muniraju.P on 11 January, 2023
SCCH-12 0 C.C. No.7155/2021
KABC020204072021
Before the Court of Addl.Chief Metropolitan
Magistrate at Bangalore
(SCCH-12)
Present: Smt. Poornima.N. PAI, B.Com LL.M.,
.,
SCJ and ACMM, Bangalore.
Dated this the 11th day of January, 2023
C.C.No.7155/2021
Complainant M/s. Shriram Transport Finance Co. Ltd
Regional Office at No.29/A, 2nd Floor,
K.H.Road, Bangalore-560027.
Rep.by its POA Holder.
Mr. Prashantha
S/o Chandrashekar
Aged about 31 years.
(Sri. Manjunatha.S. Advocate)
V/s.
Accused Sri. Muniraju.P
R/at No.193, Hosahalli,
Chikkajala Hobli, Hunasemaranahalli
Near Water Tank,
Bangalore-562157.
(Sri.Y.M, Advocate)
SCCH-12 1 C.C. No.7155/2021
1. Date of commencement of offence : 22.04.2021
2. Name of the complainant : M/s. Shriram
Transport Fin.Co.Ltd
3. Date of recording of the evidence : 28.07.2021
4. Date of closing of evidence : 15.10.2022
5. Offence complained of : 138 of N.I. Act
6. Opinion of the Judge : Accused found guilty
7. Complainant represented by : Sri.M.S Advocate
8. Accused defence by : Sri.Y.M. Advocate
JUDGMENT
This is a private complaint filed under section 200 of Cr.P.C. by the complainant for the offence punishable U/Sec.138 of N.I. Act.
2. The brief facts of the complainant's case are as under:
The complainant is a public limited company incorporated and engaged in the business of providing financial services under Loan-cum-Hypothecation agreement scheme for vehicles and having its regional office at the above address shown in cause title. The accused is one of the customer of complainant company and has availed vehicle loan on 17.03.2017 for a sum of Rs.3,05,000/- including financial charges for the purpose of purchase of FARM EQUIPMENT, Manufacturing year 2012, Model TAFE 1035 DI vehicle bearing registration No.KA-07- SCCH-12 2 C.C. No.7155/2021 TA-1508. The accused has executed loan agreement on 17.03.2017 under Agreement No.YELAH0703170002, and one Abhishek.M stood as his guarantor. Further the accused has become chronic defaulter in payment of monthly installments as agreed by him. The complainant demanded the accused to repay the outstanding due loan amount and accused has issued two cheques (1) cheque bearing No.926781 dt. 11.02.2021 for Rs.3,05,000/- (2) cheque bearing No.926782 dt. 15.02.2021 for Rs.1,44,107/- both drawn on Andhra Bank, Vidyanagara branch, Bangalore-
560064 towards full and final settlement of said loan.
3. As per the of the accused, the complainant company presented the said cheque through his banker, State Bank of India, Bangalore Main Branch for collection and the said cheque returned through their banker and the same was returned with an endorsement "Funds Insufficient" on 20.02.2021. Thereafter, on 15.03.2021 the complainant issued registered legal notice to the accused. Said notice was served to accused on 18.03.2021. Inspite of service of notice, he did not pay the amount. Hence, the present complaint is filed by the complainant.
4. This Court took cognizance of the offence and registered as criminal case. Summons was issued to the accused. Accused appeared on 28.06.2022 through Y.M Advocate and was granted bail. Plea was recorded and SCCH-12 3 C.C. No.7155/2021 read-over to the accused. He denied the same and claimed to be tried. Hence the case was posted for further chief of P.W.1.
5. In order to prove the case, the complainant got examined himself as PW.1 and got marked 13 documents as Exs.P.1 to P.13. On perusal of the Order Sheet, the case was posted for cross examination of PW-1 on several dates, but accused kept himself absent and his advocate prayed time for cross examination. Hence, same is taken as nil. 313 statement was recorded and accused denied the case and preferred to adduce defense evidence. Accused remained absent, hence defense is taken as nil and case was posted for arguments. On 09.01.2023 Advocate for accused and accused remained absent. No arguments on behalf of accused. Hence case is posted for judgment.
6. Heard the argument of Sri.M.S., Advocate for the complainant.
7. The points that arise for my consideration are as under:
1. Whether the complainant has made out the ingredients of section 138 of N.I.Act against the accused?
2. What order?SCCH-12 4 C.C. No.7155/2021
8. My findings on the above points are as under:
Point No.1: Affirmative.
Point No.2: As per final order for the following:
REASONS
9. POINT NO.1 : It is well settled that in order to maintain a complaint U/Sec.138 of NI Act, five main facts to be established by the complainant before the court -
(i) The cheque in question should have been issued in discharge of whole or in part of a debt or liability.
(ii) The cheque in question should be presented for payment within six months or its specific validity period, whichever is earlier.
(iii) The Payee or holder should given notice of demand within 30 days of receiving the information of dishonor which may be due to insufficient of funds or amount payable exceeds the arrangement.
(iv) The drawer gets 15 days time after receipt of notice to make the payment and if he fails to pay he is liable to be prosecuted.
(v) Complaint can be made only by payee or the holder in due course within one month of arising of the cause of action.SCCH-12 5 C.C. No.7155/2021
Unless these five factors have been cumulatively established before the court by the complainant, no complaint U/Sec.138 will be maintainable. If any one of the factors is lacking such complaint is not maintainable.
10. In order to prove his case the complainant got himself examined as P.W.1 and got marked 13 documents in his favour. The original Cheque 926781 dated 11.02.2021 for Rs.3,05,000/- drawn on Andhra Bank, Bangalore issued on the account belonging to the accused is marked as Ex.P.1 and signature of the accused therein is marked as Ex.P.1(a). another original Cheque 926782 dated 15.02.2021 for Rs.1,44,107/- drawn on Andhra Bank, Bangalore issued on the account belonging to the accused is marked as Ex.P.2 and signature of the accused therein is marked as Ex.P.2(a). The cheque return memo issued by S.B.I dated 20.02.2021 is marked as Ex.P.3 & 4. The Copy of Legal Notice dated 15.03.2021 issued to the accused is marked as Ex.P5. The Postal receipt is marked as Ex.P6. Unclaimed postal cover is marked as Ex.P.7. Ex.P.8 is certified copy of power of attorney, Ex.P.9 is Loan-cum Hypothecation agreement, Ex.P.10 is repayment schedule, Ex.P.11 is 'B' extract, Ex.P.12 is statement of account and Ex.P.13 is Certificate under Section 65 B of Indian Evidence Act. Based on only these documents the complainant has stated that he has complied all the ingredients of section 138 of N.I. Act hence, prays for conviction of accused. On SCCH-12 6 C.C. No.7155/2021 perusal of Exs. P.1 to P.13, it is clear that the complainant has made out all the ingredients of section 138 of N.I. Act except legally recoverable debt.
11. Under Sec. 138 of N.I.Act, regarding burden of proof sec. 118 of N.I.Act lays down that until the contrary is proved, it shall be presumed that every Negotiable Instrument was made of drawn for consideration. Sec. 139 of N.I.Act contemplates that unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque of the nature referred to in Sec. 138 for the discharge, in whole of any debt or liability. In a decision reported in 2001 Crl. Law Journal, page 4647 (SC) (Hiten P. Dalal V/S. Bratindranath Banerjee) it is observed that in the proceeding under Sec. 138 of N.I.Act, the complainant is not required to establish either the legality or the enforceability of the debt or liability since he can avail the benefit or presumption under Sec. 118 of 139 of N.I.Act in his favour. By virtue of these presumptions, accused has to establish that the cheque in question was not issued towards any legally enforceable debt or liability. In the year 2008, In Krishna Janardhan Bhat V/s Dattatreya G Hegde (2008 Vol. 2 SCC Crl. 166) the Hon`ble Supreme Court has held that existence of SCCH-12 7 C.C. No.7155/2021 legally recoverable debt is not a presumption under Sec 138 of N.I.Act and the accused has a constitutional right to maintain silence and therefore it was argued later that the presumption u/s 139 of N.I.Act should be delicately balanced.
12. In a decision of Hon`ble Supreme court in the case of Rangappa V/s Mohan reported in A.I.R. 2010 SC page 1898, the Hon`ble Supreme Court has reconsidered this issue and clarified that the existence of legally recoverable debt or liability is a matter of presumption under Sec. 139 of N.I.Act. In para 14 of the judgment, the Hon`ble Supreme Court has observed that:
" Sec. 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act, specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Sec. 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Sec. 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to SCCH-12 8 C.C. No.7155/2021 discharge an unduly high standard or proof. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Sec. 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence, which creates doubt about the existence of a legally enforceable debt or liability, the presumption can fail. As clarified in the citation, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence on his/her own."
Relying upon the citation referred above wherein the Hon'ble Supreme Court has clarified regarding legally enforceable debt and the presumptions. Now it is clear that the presumption mandated by Sec. 139 of N.I.Act does not include existence of legally enforceable debt or liability. It is a rebuttable presumption. It is for the accused to prove his defence wherein he has to raise a probable defence which creates doubt about existence of legally enforceable debt or liability. Once he creates such doubt, then the burden shifts back to the complainant.
13. In the present case the advocate for complainant has argued that, the accused has availed vehicle loan of Rs.3,05,000/- on 17.03.2017. When he became defaulter and demanded for repayment, he issued Cheque No. 926781 dated 11.02.2021 for Rs.3,05,000/- and another SCCH-12 9 C.C. No.7155/2021 Cheque No.926782 dated 15.02.2021 for Rs.1,44,107/- drawn on Andhra Bank, Bangalore. It is stated that, the accused has signed and executed loan document in favour of complainant as security as may be required in respect of said loan and when the same was presented to his Bank for collection, it was returned for the reason "Funds insufficient". Hence, he got issued a legal notice dated 15.03.2021 which was served to the accused on 18.03.2021. Hence, sufficient opportunities were given to the accused to repay the amount, but he failed to repay the same. He has not replied to the legal notice. Hence, he has prayed that he has proved the ingredients of section 138 of N.I.Act. So prays for conviction of accused.
14. The objectives of the proceedings of Section 138 of the Act are that the cheque should not be used by persons as a tool of dishonesty and when cheque is issued by a person, it must be honored and if it is not honored, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he must face the criminal trial and consequences.
15. The Hon'ble Supreme Court in Electronics Trade & Technology Development Corporation Ltd., Secunderabad v/s. Indian Technologists & Engineers (Electronics) (P) Ltd. and Another (1996) 2 SCC 739 has also held as follows:
SCCH-12 10 C.C. No.7155/2021The object of bringing Section 138 on statute appears to be to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Despite civil remedy, Section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a book and induce the payee or holder in due course to act upon it. Section 138 draws presumption that one commits the offence if he issues the cheque dishonestly. It is seen that once the cheque has been drawn and issued to the payee and the payee has presented the cheque and thereafter, if any instructions are issued to the bank for non-payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of Section 138...."
The Hon'ble Supreme Court had already observed earlier in Goa Plast (P) Ltd. V/s Chico Ursula D'Souza (2004) 2 SCC 235, this Court, while dealing with the objects and ingredients of Sections 138 and 139 of the Act, observed as follows :-
"The object and the ingredients under the provisions, in particular, Sections 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions, particularly, ofcheque as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of commercial transactions, it was noted that thecheque were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheque in commercial transactions SCCH-12 11 C.C. No.7155/2021 was eroded to a large extent. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. Parliament, in order to restore the credibility of cheque as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a civil court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee."
16. The Hon'ble Supreme Court has given directions to all the courts in India dealing with cases under Section 138 of N.I. Act to follow mandatory directions in order to bring uniformity in procedure and disposal of huge pendency of negotiable instrument cases in decision reported in Indian Bank Association & Ors vs Union Of India & others by Hon'ble Justice K.S. Radhakrishnan, and Vikramajit Sen in WRIT PETITION (CIVIL) NO.18 OF 2013 as under;
Many of the directions given by the various High Courts, in our view, are worthy of emulation by the Criminal Courts all over the country dealing with cases under Section 138 of the Negotiable Instruments Act, for which the following directions are being given :-
DIRECTIONS:SCCH-12 12 C.C. No.7155/2021
1) Metropolitan Magistrate/Judicial Magistrate (MM/JM), on the day when the complaint under Section 138 of the Act is presented, shall scrutinize the complaint and, if the complaint is accompanied by the affidavit, and the affidavit and the documents, if any, are found to be in order, take cognizance and direct issuance of summons.
2) MM/JM should adopt a pragmatic and realistic approach while issuing summons. Summons must be properly addressed and sent by post as well as by e-
mail address got from the complainant. Court, in appropriate cases, may take the assistance of the police or the nearby Court to serve notice to the accused. For notice of appearance, a short date be fixed. If the summons is received back un-served, immediate follow up action be taken.
3) Court may indicate in the summon that if the accused makes an application for compounding of offences at the first hearing of the case and, if such an application is made, Court may pass appropriate orders at the earliest.
4) Court should direct the accused, when he appears to furnish a bail bond, to ensure his appearance during trial and ask him to take notice under Section 251 Cr.P.C. to enable him to enter his plea of defence and fix the case for defence evidence, unless an application is made by the accused under Section 145(2) for re- calling a witness for cross-examination.
(5) The Court concerned must ensure that examination- in-chief, cross-examination and re-examination of the complainant must be conducted within three months of assigning the case. The Court has option of accepting affidavits of the witnesses, instead of examining them in Court. Witnesses to the complaint and accused must be available for cross-examination as and when there is direction to this effect by the Court.
SCCH-12 13 C.C. No.7155/2021We, therefore, direct all the Criminal Courts in the country dealing with Section 138 cases to follow the above-mentioned procedures for speedy and expeditious disposal of cases falling under Section 138 of the Negotiable Instruments Act. Hence, when direction is given by the Hon'ble Supreme Court it is mandatory to follow the procedure as laid down in the aforesaid case in trial of N.I.Act cases. Hence, this court has followed the procedures and directions issued from time to time by the Hon'ble Supreme Court and also the directions issued in the case of Indian Bank Association & Ors vs Union Of India & others.
17. In the present case the advocate for complainant has argued that, based on Ex.P.1 to P.13 as already explained the complainant has proved existence of legally recoverable debt based on sufficient documents and also proved that, the accused issued cheques for having admitted the balance due from the accused and towards repayment of the same and when same was presented to his Bank for collection, it was returned for the reason 'Funds insufficient' on 02.02.2021. The complainant also got issued legal notice dated 15.03.2021 calling upon the accused to make the payment covered in the cheque along with interest within 15 days from the date of receipt of legal notice and the notice was returned unserved with a postal shara as 'Addressee left". Inspite of service of notice to the accused to repay the amount, but he failed to repay the same. Hence, he has prayed that he has proved the SCCH-12 14 C.C. No.7155/2021 ingredients of section 138 of N.I.Act. So prays for conviction of accused.
18. As stated above, the complainant has established the fact that, the accused has issued cheque for repayment of loan in favour of the complainant and same has been bounced for above said reason. The complainant also established all required ingredients to constitute an offence punishable under section 138 of N.I.Act.
19. The accused has not led any evidence to create a doubt in the mind of the Court that there was no such transaction taken place. The materials brought on record are not sufficient to shift the burden of proof upon the complainant and the accused has not discharged his primary onus. It is observed that, the accused has taken more than sufficient time to drag the case with the reason of settlement and such a defense which is not at all proved by him. There was sufficient opportunity given to the accused to produce any documents before the Court or to lead evidence on his behalf. The accused has not led any evidence to prove his defense. In the directions given by the Hon'ble Supreme Court in the case of Indian Bank Association & Ors vs Union Of India & others (supra) - one of the direction is that the accused must lead evidence or cross examine the complainant when the date was fixed for the same and the case must be decided within three months from the date of filing, but the accused has kept himself absent and repeatedly SCCH-12 15 C.C. No.7155/2021 adjournments are sought for cross examination by keeping the accused absent. Hence, the accused has failed to putforth any defense to rebut the presumption available in favour of complainant under Section 118 and 139 of N.I.Act. The defense taken by the accused is not plausible defense to create a doubt in the mind of court that there are no such transactions between the complainant and accused. In such case, the presumption always lies in favour of complainant and the complainant has proved the legally recoverable debt. With these observations I am of the opinion that the complainant has succeeded to prove the ingredients of section 138 of N.I.Act against the accused. Hence I have answered Point No.1 in the "Affirmative".
20. POINT NO.2 : The very purpose of enactment of N.I.Act is to promote the use of Negotiable Instrument while to discard the issuance of cheque without having sufficient funds in their account. Such being the case, the intention of the legislature is that the complainant be suitably compensated by accused be punished for his act. There is no provision in the Code of Criminal Procedure for imposing default sentence for enforcement of payment of compensation. In this regard, the Hon'ble Supreme Court in a decision reported in 1988(4) SCC 551 in the case of Hari Singh vs. Sukhbir Singh and others at para No.11 of the judgment was pleased to hold that, the court may enforce an order by imposing sentence by default. This view of SCCH-12 16 C.C. No.7155/2021 Hon'ble High Court was again re-affirmed in a decision reported in 2002(2) SCC 420 in the case of Suganthi Suresh Kumar Vs. Jagadheeshan at para No.11 of the judgment and it is pleased to hold that:
When this court pronounced in the case of Hari Singh vs. Sukhbir Singh that a court may enforce an order to pay compensation by imposing the sentence in default it is open to all courts in India to follow the said course. The said legal position would continue to hold good until it is overruled by a Bench of this court.
Therefore, it is deemed fit to provide a default sentence in order to enforce the payment of compensation. Upon the discussion made above, I proceed to pass the following:
ORDER Acting U/Sec.255 (2) of Cr.P.C. accused is found guilty for having committed the offence punishable under section 138 of Negotiable Instruments Act.
The accused is hereby convicted and sentenced to pay a fine of Rs.4,54,107/-and in default to pay the fine, he shall undergo a simple imprisonment for a period of one year.
Out of the fine amount recovered, an amount of Rs.4,49,107 /- shall be paid to the SCCH-12 17 C.C. No.7155/2021 complainant as compensation under section 357(3) of Cr.P.C. and the remaining Rs.5,000/- shall be confiscated to the State towards expenses of the court proceedings.
Office is directed to issue copy of this judgment to the accused free of cost.
Issue conviction warrant against the accused.
The Bail bond and surety bond executed by the accused stands cancelled.
(Dictated to the stenographer, transcription revised, typed by her on computer, corrected by me and then pronounced in the Open Court on this 11th day of January, 2023) (Poornima.N. Pai), XI Addl. Small Causes Judge and ACMM, Bangalore.
ANNEXURE List of the witnesses examined on behalf of complainant:
PW1 Prashantha.C. List of the documents exhibited on behalf of complainant: SCCH-12 18 C.C. No.7155/2021 Ex.P.1 & 2 Cheque Ex.P.1(a)& 2(a) Signature of accused Ex.P.3 & 4 Bank memos Ex.P.5 Copy of Legal Notice Ex.P.6 Postal Receipt Ex.P.7 Postal acknowledgment Ex.P.8 Notarized copy of special Power of attorney Ex.P.9 Loan cum hypothecation letter Ex.P.10 Repayment schedule Ex.P.11 Vehicle 'B' extact Ex.P.12 Statement of account Ex.P.13 Certificate under Section 65 B of Indian Evidence Act.
List of the witnesses examined on behalf of accused:
- NIL-
List of the documents marked on behalf of accused:
-NIL-
(Poornima.N.Pai), XI Addl. Small Causes Judge and ACMM, Bangalore.