Bangalore District Court
M/S Bhumandala Chits Pvt. Ltd vs Mr. N.M Dhananjaya on 14 August, 2024
C.C.NO.30237/2023
0
KABC030533212023
Presented on : 27-11-2023
Registered on : 28-11-2023
Decided on : 14-08-2024
Duration : 0 years, 8 months, 17 days
IN THE COURT OF THE XXVIII ADDL. CHIEF JUDICIAL
MAGISTRATE, BENGALURU CITY
Present:
Soubhagya.B.Bhusher,
B.A.,LL.B.,LL.M
XXVIII A.C.J.M, Bengaluru City.
DATED; THIS THE 14th DAY OF AUGUST-2024
C.C.NO.30237/2023
Complainant: M/s.Bhumandala Chits Pvt.,Ltd.,
Regd and Admn office at No.# 64,
1st Floor, Nehru Road, Girinagar,
Bangalore-560085.
R/by its Foreman/Director,
Sri.M.S.Rudresh S/o Shankregowda,
Age:45 years, Ph:7026638765,
Email:[email protected]
(By Sri.Suresh.C.Subbaiah.,Adv.,)
V/s
Accused: Mr.N.M.Dhananjaya S/o Maheshwarappa
Age: Major, R/at No.67, 6th Block,
KSRP Quarters, Koramangala,
Bangalore-560034.
(By Sri.E.P.Sathisha.,Adv.,)
:JUDGMENT:
This case arises out of the private complaint filed by the complainant against the accused under section C.C.NO.30237/2023 1 200 of Cr.P.C., for an offence punishable under section 138 of Negotiable Instruments Act.
2. The case of the complainant's in brief is as under:
It is the case of the complainant is that the complainant is a private limited company duly incorporated under the Indian Companies Act, being a legal entity and it has right to recover the money due from the subscribers and the guarantors. Further one Smt.Vedavathi.B subscribed to the chit group No.BCT02J-15, for the chit value of Rs.5,00,000/- which is payable at Rs.10,000/- each over a period of 50 months. In the chit auction held on 06.04.2016 Smt.Vedavathi.B have offered the highest bid agreeing to forgo a sum of Rs.2,00,000/- and which was duly confirmed by the complainant. She has received the prize amount of Rs.3,00,000/- by offering guarantors for the due payment of entire future monthly installments due by her. In the said context, several documents were executed in favour of the complainant's such as On Demand promissory note, consideration receipt and surety proposal form etc., for the satisfaction of the company, thereby making the liability of the payment of future monthly installment, in the said context the accused is also one of the surety to the future chit installment due. After receiving the prized amount the subscriber is irregular in paying the chit installments C.C.NO.30237/2023 2 and thereafter she became a defaulter. It is further stated that inspite of repeated request the accused had issued the cheque No.760753 on 07.08.2023 for Rs.1,00,000/- drawn on Canara Bank Madiwala branch towards the discharge of the said installments amount due. As per assurance of the accused the complainant presented the said cheque for collection through its banker i.e., Bank of Baroda, Girinagar branch, Bangalore. But the said cheque was dishonored on 04.10.2023 as "Funds insufficient", which came to the complainant on 05.10.2023. Thereafter, on 19.10.2023 the complainant got issued a demand notice to the accused through its counsel by RPAD calling upon him to pay the cheque amount. The said notice was returned on 20.10.2023. Inspite of issuance of the notice, the accused neither reply to the notice nor paid the cheque amount. As such, the accused have committed an offence punishable under section 138 of N.I.Act. Hence, the present complaint came to be filed before this court on 17.11.2023.
3. After the complaint was filed, the cognizance of the offence cited therein was taken. Sworn statement of the complainant was recorded. Since there were sufficient materials to proceed against the accused, an order was passed on 17.11.2023 to register the case in Register No.III and it was registered as a criminal case
4. Thereafter, summons was issued to the C.C.NO.30237/2023 3 accused and he has appeared before the court through counsel and secured bail. He was furnished its necessary papers as complied under section 208 of Cr.P.C. Thereafter, the plea of the accused was recorded by the court. He has pleaded not guilty and claimed to be tried.
5. The complainant in support of its case, have examined its Foreman/Director as PW.1 and got marked 15 documents at Ex.P.1 to 15 and closed its side.
6. After closer of the evidence of the complainant, the statement under section 313 of Cr.P.C., was recorded. He has denied the incriminating evidence appearing against him. The learned counsel for the accused has submitted no defence evidence. Hence, the defence evidence taken as nil.
7. I have heard the arguments on the complainant side and also perused the written argument filed by the learned counsels for the complainant and the accused and also perused the material placed on record.
8. Upon hearing the arguments and on perusal of the material placed on record, the following points arise for my consideration:
1.Whether the complainant proves the existence of legally enforceable debt/liability.?
2.Whether the complainant further proves that the accused had issued the cheque-Ex.P.1, C.C.NO.30237/2023 4 towards the discharge of the legally enforceable debt/liability.?
3.Whether the complainant further proves that cheque-Ex.P.1 was dishonored for the reason "Funds Insufficient" in the account of the accused and thereafter the accused had failed to repay the same within the statutory period, inspite of receipt of legal notice.?
4. Whether the accused have thus committed an offence punishable under section 138 of N.I.Act.?
5. What order?
9. My answers to the above points are as under:
Point No.1: In the Affirmative Point No.2: In the Affirmative Point No.3: In the Affirmative Point No.4: In the Affirmative Point No.5: As per final order, for the following:
:REASONS:
10. POINT NO.1 AND 2: These points are inter- related to each other and finding given on any one point will bearing on the another. Hence, in order to avoid repetition of facts and evidence, I have taken both points together for common discussion. The case of the complainant is that he was acquainted with the accused. Further Smt.Vedavathi.B has subscribed to the chit group No.BCT02J-15, for the chit amount of Rs.5,00,000/- which is payable at Rs.10,000/- each month for 50 months. In the chit auction she has offered the highest bid and same was duly confirmed C.C.NO.30237/2023 5 by the complainant. The subscriber has received the prize amount by offering guarantors and executed several documents in favour of complainant's thereby making the liability of the payment of future monthly installment, in the said context the accused is also one of the surety to the future chit installment due. Further after receiving the prized amount the subscriber has irregular in paying the chit installments and thereafter she became a defaulter. Inspite of repeated request and personal visit, the accused had issued the cheque in question in favour of the complainant towards the discharge of the said installments amount due. Based on the assurance of the accused the complainant presented the said cheque for collection through its banker. But the said cheque was dishonored for the reasons "Funds Insufficient" in the account of the accused. Thereafter the complainant got issued a demand notice to the accused through its counsel by RPAD calling upon him to pay the cheque amount. Inspite of issuance of the notice, the accused neither reply to the notice nor paid the cheque amount. As such, the accused have committed an offence punishable under section 138 of N.I.Act. Hence, the present complaint came to be filed before this court.
11. At this juncture, it is necessary to go through the provisions of N.I.Act before proceeding further. The C.C.NO.30237/2023 6 provisions under Section 118(a) and 139 of the Act., 1881 are extracted and they reads thus;
"118. Presumptions as to negotiable instruments:- Until the contrary is proved, the following presumptions shall be made:-
(a) of consideration-that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
(b) as to date:- that every Negotiable Instrument bearing date was made or drawn on such date;
"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."
12. On plain perusal of the provisions under Section 118(a) and 139 of the N.I.Act., as extracted herein above, it can be seen that initially the presumptions constituted under these two provisions C.C.NO.30237/2023 7 favour the complainant. However, it is open to an accused to raise a defence to rebut the statutory presumptions. An accused can raise a defence, wherein the existence of legally enforceable debt or liability can be contested.
13. It is also well established that an accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused have constitutional rights to maintain silence. Standard of proof on part of the accused and that of the prosecution in a Criminal case is different. The prosecution must prove the guilt of an accused beyond all reasonable doubts, the standard of proof so as to prove a defence on the part of an accused is "Preponderance of probabilities".
14. Under the light of above extracted provisions of the Act, I have perused the oral and documentary evidence on record. In support of the case, the complainant have examined its Foreman/Director as P.W.1 and 15 documents were marked at Ex.P.1 to 15. In the chief examinations P.W.1 has repeated the contents taken by the complainant in the complaint. Ex.P.1 is the cheque issued by the accused in favour of the complainant on 07.08.2023 for a sum of Rs.1,00,000/-. Ex.P.1(a) is the signature of the C.C.NO.30237/2023 8 accused. Ex.P.2 is the bank memo dated: 04.10.2023 informing of the dishonor of the cheque as Funds Insufficient in the account of the accused. Ex.P.3 is the office copy of legal notice dated: 19.10.2023. Ex.P.4 is the postal receipt. Ex.P.5 is the returned postal cover. Ex.P.5(a) is the returned legal notice. Ex.P.6 is the ledger extract. Ex.P.7 is the certificate under section 65(b) of Indian Evidence Act. Ex.P.8 is the certified copy of the resolution passed by the complainant company. Ex.P.9 is the certified copy of the Incorporation certificate of the complainant company. Ex.P.10 is the complaint. Ex.P.11 is the chit auction minute. Ex.P.12 is the Ondemand promissory note. Ex.P.13 is the guarantee letter. Ex.P.14 is the surety proposal form. Ex.P.15 is the chit license.
15. I have perused the exhibits on which the complainant have placed their reliance. On perusal of the exhibits, it is clear that cheque in question was presented for encashment within its validity. The bank endorsement with a shara "Funds Insufficient". The complainant issued the legal notice within one month from the date of receipt of memo. The notice was returned as refused. The complaint was filed on 17.11.2023, which is within limitation. The transaction with the complainant is admitted and issuance of the cheque and the signature on the cheque at Ex.P.1 is also admitted. Therefore, the documents on record C.C.NO.30237/2023 9 clearly shows that the complainant have complied the ingredients of section 138(a) to (c) of the N.I.Act. Therefore the presumptions under section 118 and 139 of the N.I.Act arise in favour of the complainant. The presumptions are rebuttable and the burden is on the accused to rebut the presumptions. The presumption is that the cheque was issued for legally enforceable debt/liability. However actual existence debt/liability can be contested. The accused can rebut the presumptions by raising probable defences and proving it relying on the evidence of the complainant or by leading his direct evidence.
16. The case was seriously contested by the accused and the service of notice was disputed. The notice was not served on the accused. It was returned with a shara 'refused'. The accused also denied the service of notice. The counsel for the accused cross- examined PW.1 in respect of non service of notice. But PW.1 denied the same. Further contended that the notice sent to the accused not served'; that the accused has no knowledge of the notice as it was not served on him; that the accused did not give reply notice as the notice was not served on him; that he did not produce any documents to show that the accused was not residing at the said address and that the accused did not issue reply notice as he was not residing at the said address. The counsel for the C.C.NO.30237/2023 10 accused argued that no legal presumption can be raised as the notice was sent to the wrong address and the accused was not residing at the said address. When the notice at Ex.P.3, wherein the name of accused is appearing, was confronted.
17. On perusal of Ex.P.3, it is clear that the name of the accused is appearing in the notice. The same notice was sent to the accused. The accused not given reply. There is no evidence on record to show that the accused was residing at some other address other than the address mentioned in the notice at Ex.P.3. The above discussion clearly shows that the address mentioned in the notice is the correct address of the accused. As the notice was given to the accused and the same notice was sent to him through RPAD, an inference can be drawn that the notice was also served on the accused. Further the address mentioned in the notice being the correct address of the accused, the presumption as per Section 27 of General Clauses Act can be drawn. It states that the notice sent through post shall be deemed to be served, if it is properly addressed to a person to whom it is sent. Therefore, even though the notice sent to the accused through RPAD returned with a postal shara 'refused', it is to be considered as deemed service of notice. Even otherwise as per the judgment of the Hon'ble Supreme Court of India in Crl Appeal No.767 of 2007 (Arising out C.C.NO.30237/2023 11 of SLP (Crl) No.3910 of 2006 between C.C Alavi Haji V/s Palapetty Muhammed and another decided on 18.05.2007, wherein it has been held para No.17 as under;
17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint u/s.138 of the Act, cannot obviously contend that there was no proper service of notice as required u/s.138, by ignoring statutory presumption to the contrary under section 27 of the G.C.Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran's case (supra), if the 'giving of notice' in the context of Clause (b) of the proviso was the same as the 'receipt of notice' a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act.
18. In a nutshell it can be said that the statutory notice is an opportunity given to the accused to make payment and avoid the consequences of 138 of N.I.Act.
C.C.NO.30237/2023 12 In the case on hand, the summons was duly served on accused and he appeared through his counsel. The accused appeared before the court and contested the case by taking all probable defences. Therefore he cannot take the shelter of statutory requirement of service of notice to avoid the consequences of section 138 of N.I.Act. The complaint was filed on 17.11.2023, which is within limitation. The accused admitted the issuance of cheque in favour of the complainant and signature in the cheque. It is his defence that the cheque was issued to the complainant for the purpose of security. Therefore, the documents on record clearly show that the complainant have complied the ingredients of Section 138(a) to (c) of the N.I.Act. Therefore the presumptions under 118 and 139 of the N.I.Act arise in favour of the complainant. The presumptions are rebuttable and the burden is on the accused to rebut the presumptions. Once the issuance of cheque and signature are proved, the presumption arises in respect of the fact that the cheque was issued for legally enforceable debt/liability. The accused can rebut the presumption by raising probable defence and proving it relying on the evidence of the complainant or by leading his direct evidence.
19. The main defence of the accused is that he had issued the blank cheque in favour of the complainant company for the purpose of security.
C.C.NO.30237/2023 13 Further the complainant's have misused the said blank cheque and filed this false complaint. Further he contended that he has never admitted regarding repayment of the amount and there is no transaction between the complainant and the accused as alleged by the complainant. The accused has specifically denied having agree to repay the amount of Rs.1,00,000/-. The accused in his defence has not disputed Ex.P.1 having been issued by him and same is belongs to his bank account. He does not seriously dispute his signature on the said cheque.
20. In order to attract the offence punishable under section 138 of N.I.Act, the complainant is firstly required to prove the existence of legally enforceable debt/liability, for which the cheque came to be issued. The learned counsel for the complainant has argued that from the evidence placed on record, the fact that the accused is a surety to the chit subscriber of one Smt.Vedavathi.B for the chit value of Rs.5,00,000/- which is payable at Rs.10,000/- each over a period of 50 months. In an auction Smt.Vedavathi.B has offered highest bid and which was duly confirmed by the complainant. The said subscriber had received the prize amount by offering guarantors and also executed several documents in favour of the complainant. Further argued that after receiving the prized amount the subscriber became a defaulter. After the repeated C.C.NO.30237/2023 14 request made by the complainant, the subscriber and the accused have not paid any amount to the complainant. Further argued that the accused towards discharge of the said amount, he had issued the cheque-Ex.P.1 in favour of the complainant. He further argued that the accused has not denied Ex.P.1 being his cheque drawn on his account. When the signature is not seriously disputed, the presumption under section 139 N.I.Act is to be drawn in favour of the complainant. The accused have failed to elicit anything in the cross examination of P.W.1 to disbelieve the evidence of the said witness. The defence have failed to rebut the presumption under section 139 N.I.Act.
21. He further argued that the accused has failed to produce any believable evidence that the cheque in question issued only for the purpose of security. Under section 139 of N.I.Act, there is a presumption that the cheque has been issued for discharge of legally enforceable debt/liability. In the present case, the accused has not disputed Ex.P.1 being his cheque drawn on his account. The said presumption is available to the complainant. Further argued that the accused has failed to prove the very fact that the cheque was misused by the complainant and filed this false case against him. Moreover, under section 118 of N.I.Act, there is a presumption that the Negotiable Instruments is drawn on the date, for the amount and in C.C.NO.30237/2023 15 favour of the person as shown in it. It is for the accused to rebut the said presumption. But, in the case on hand no such evidence forthcoming. It was also argued by him that as per the defence by the accused that he had issued the blank cheque to the complainant for the purpose of security. As such, very defence of the accused is not believable. The complainant proved the case.
22. The learned counsel for the complainant has filed written argument. In his argument he has reiterated the facts of the case. Further submits that the complainant has examined as PW.1 and initially marked Ex.P.1 to 15, after completion complainant evidence PW.1 was fully cross examined by the accused lengthy, but the accused has nothing elicited in the mouth of PW.1 to support to his case. Further submits that the complainant to prove the case on behind doubt that the accused is one of the guarantor to the chit group for the future chit installment due amount for that the complainant produced the surety proposal form and account statement. Further the accused admits his signature in the cheque and the complainant proved that their was a due pending amount pertaining to the chit group. Further the subscriber as well as the accused are due as mentioned amount pertaining to the chit group amount for that the accused issued the cheque in favour of the C.C.NO.30237/2023 16 complainant. Further submits that as per the chit funds act when the subscriber was defaulter in paying the chit installment she is not eligible for dividend as such the subscriber and the accused are defaulter in make chit future due amount of Rs.3,30,022/- including interest. Further the accused come for one time settlement with the complainant. For the discussion the complainant company also agreed for the offer for the cheque amount of Rs.1,00,000/-. Hence, the accused issued the cheque for discharge of legal debt pending upon the said chit group due amount. Hence, the complainant proved the legal debt standing on the date of issuance of cheque.
23. It is further submits that the accused taken defence that the complainant has not produced all the documents pertaining to the chit transaction and legal debt is not proved, the present complaint is summary proceedings and in that evidence the accused admitted the chit transaction as a surety and also admitted in issue of cheque and admitted the signature as such it is not necessary and burden to the complaint, if any ill- legality on the payment it is the accused to prove the cogent material before this court, in that case the accused not produced any document only denied it is not sufficient to disprove the complaint as such complaint produced the relevant document before this court. For that the complaint mentioned judgments C.C.NO.30237/2023 17 reported in (2019) 18 SCC 106, (2015) 8 SCC 378, Crl.A.No.849-850/2011, ILR 2001 KAR 4122, Crl.A.No.996/2013, 2024(1) AKR 3 and Cri.Mis. No.3691/2024. Further submits that the accused taken defence that the complaint is time barred debt, it is not time barred, the time is upto ending of the chit date after that three years, for that Hon'ble Supreme Court clarify that issue of the cheque is date is promise to pay. Hence, it is not time barred debt. Further submits that the accused taken defence that the complainant as not mentioned in the complaint in the interest part amount, the transaction is based on the chit agreement once execution of agreement is admitted by the accused it is duty of the accused to clear the chit due amount as such clear of the due cheque is issued for legal debt. Further the accused taken another defence that the cheque issued for surety purpose, for that the accused not produced any document nor taken any legal action against the complainant. Hence, it is clear that the accused has issued the cheque for discharge of legal debt on payment of chit installment due amount.
24. It is further submits that the accused himself has signed and the delivered the cheque in favour of the complainant. Further the accused voluntarily issued the cheque for repayment of chit due chit amount. After the dishonor and issue of the legal notice the accused C.C.NO.30237/2023 18 has not taken any legal action nor produced any document before this court to disprove the same and not adduced his evidence. Further the legal notice was not served to the accused. The notice sent through RPAD through his residential address and same was served to the accused to discharge the same the accused has not produced any documents to show that he was not residing in the cause title address, as per the General Class Act notice is duly issued and served to the accused. Hence, the complainant has complied as the requirement of the Section 138 of N.I.Act as such it is crystal clear that the accused was very much residing in the cause title address. Further accused has signed the surety proposal form as prescribed under the chit fund act as such for the rebuttable document the accused not evidence not produced any document to disprove the complaint against the accused. The complainant proved the case to in all the ingredients of the 138 N.I.Act. Hence, he prays to convict the accused.
25. The learned counsel for the accused argued that the accused had issued a blank cheque to the complainant for the purpose of security. Further the complainant have misused the said blank cheque and filed false complaint against the accused. Further argued that the accused has never admitted regarding repayment of the said amount and there is no C.C.NO.30237/2023 19 transaction between the complainant and the accused as alleged by the complainant. The accused has specifically denied having agree to repay the amount of Rs.1,00,000/- to the complainant. He further argued that PW.1 in his chief examination reiterated the above narrated averments of the legal notice and complaint. The accused denied the complaint averments. The accused took up contention that the complainant had collected the blank cheque and documents from the accused for the security purpose. Further the accused took up a contention and proved that the subscriber has paid the installments, hence he is not liable to pay the amount covered under the cheque. Further argued that the complainant miserably failed to prove the complaint averments. The complainant unable to prove that the subject cheque was issued in discharge of duly enforceable debt/liability. The complainant have not come with a clean hands before this court. Indubitably, Ex.P.6, the document relied on by the complainant would indicate that as on 17.08.2018 the subscriber was due of Rs.40,000/- and the subject dishonored cheque presented on 04.10.2023. As on the date of the presentation of the cheque subscriber and the accused is not in due of Rs.1,00,000/- to the complainant. The complainant in order to harass the accused fill up the cheque and presented to the bank. Hence, the accused is not liable to pay the cheque amount.
C.C.NO.30237/2023 20
26. It is further argued that the evidence placed before this court clearly shows that the complainant in order to make illegal monetary gain has presented a blank cheque given as security, by filling up the cheque and for the purpose of this case he has created documents and no transaction has been carried out between the complainant and the accused as alleged in the complaint. Hence, the accused has proved that the cheque was issued as security and not for discharge any legally enforceable debt/liability. For an offence under section 138 of N.I.Act to attract, the accused must have issued the cheque to discharge any legally enforceable debt/liability. But in the present case, since there is no due amount from the accused thus there lies no legally enforceable debt. Also the accused has successfully managed to rebut the evidence of the complainant with detailed cross examination, thereby rebutting the presumption under section 139. On the date of presentation of the cheque, the accused was not in due of Rs.1,00,000/-. The complainant has not produced any material documents to show that when the subscriber defaulted monthly installment before presentation of the cheque. Thus the complainant failed to prove that the accused had issued the subject cheque for a sum of Rs.1,00,000/-. The complainant has misused the cheque obtained from the accused. Therefore, the complaint averments are concocted and C.C.NO.30237/2023 21 the accused issuing the subject cheque for repayment of the due is far away from truth. The complainant unable to prove the case that the accused had issued the cheque to them in lieu of liability recoverable debt. Further the accused created doubt against the story putforth by the complainant in the complaint. The pharse "debt or other liability" means a legally enforceable debt or other liability. There was no convincing evidence from the complainant's side as to existence of any existing debt/liability to be discharged by the accused. The accused has discharged the onus that the subject cheque was not received by the complainant for any existing debt/liability. The accused entitled to acquittal. The complainant having received the subject cheque as security and it was misused by filling huge amount. The actual amount payable is less than the dishonored of the cheque amount and the subscriber has paid most of the installments. The alleged balance amount remains unexplained. The complainant has miserably failed to prove the liability to the tune of the amount covered by the cheque. The offence is deemed to be committed if amount covered by the cheque is either in discharge of the liability incurred by the accused either full or in part. It cannot be any way in excess of the liability incurred. Therefore, the section 138 of N.I.Act cannot be said to be applicable.
C.C.NO.30237/2023 22
27. The learned counsel for the accused has filed written argument. In the written argument it is submits that the complainant has filed this complaint alleging that the accused is the surety to the due amount of one Vedavathi and for the repayment of the said dues, the accused had issued subject cheque. The said cheque was presented through Bank of Baroda, Girinagar Branch, Bengaluru, and the same was returned unpaid for the reason "Funds Insufficient". The complainant issued a legal notice demanding the cheque through RPAD, the same returned, and hence filed the complaint and filed his affidavit evidence along with 15 documents. This court took cognizance of the offence and issued summons, the accused has appeared and recalled the complainant witness/PW1 and cross examined the complainant. The salient features from the admission of PW.1 in the cross examination and the complaint and the documents are that the accused is the surety to the chit amount of one Vedavathi, who is the subscriber of the chit. As per Ex.P.6, subscriber ledger of the said Vedavathi in respect of chit ticket NO.BCT02J-15, the date of termination of the chit is on 28.12.2018 and as on 17.08.2018, the subscriber is due only an amount of Rs.40,000/- and the complainant is claiming the said due was not paid by the subscriber since then, i.e., 28.12.2018, being the chit termination date, and now after 5 years lapse, the complainant has C.C.NO.30237/2023 23 presented the cheque, which is clearly a time barred debt, which the complainant is claiming from the surety of the chit amount, without giving any notice to the said claim to the surety-accused herein. When the amount due by the subscriber-Vedavathi is only Rs.40,000/- as per Ex.P.6 produced by the complainant, the surety cannot be held liable for an amount more than the subscriber, hence claiming Rs.1,00,000/- from the surety-accused is illegal and arbitrary, and hence the same is not a legally recoverable debt and cheque claiming in excess of legally recoverable debt is not within the ambit of section 138 of the Negotiable Instruments Act, and as such also the complaint is bad in law and is liable to be dismissed.
28. It is further submits that even in the cross examination, the complainant has clearly admitted that, there is no mention in Ex.P.6 as due amount of Rs.1,00,000/- by Vedavathi. The accused successfully raised a doubts as to the quantum of the debt not being the cheque amount, the burden of the proof of the legally recoverable debt shifts on the complainant, the complainant has failed to prove that the amount due by the subscriber as on the date of cheque was Rs.1,00,000/- and hence the presumption in favour of the complainant is rebutted by the accused. Even the complainant claims that he has issued notices to the accused as to the debt amount being Rs.1,00,000/-
C.C.NO.30237/2023 24 which is not produced before this court. The copy of the agreement wherein the complainant claims to charge interest on the due amount are not produced. The claim as to when the amount due was promised to be paid is not produced before this court by the complainant. The complainant has also not produced the check list of the documents obtained by the subscriber and the surety at the time of chit agreement and also at the time of receiving the prized money, wherein it would be clear that the alleged cheque is received by the accused as security to the installment amounts, even as per the chit fund rules, keeping a record of the documents received/surety obtained for the installment dues is mandatory, which is denied by the complainant, though there is a check list maintained by the complainant, the same are not produced before this court, since the same would clearly reveal that the cheques are received for the purpose of security and now the complainant in order to claim other dues of the Vedavathi of other chit ticket, where the accused not a surety has presented the alleged cheque for an elated amount, which is much more than the legally recoverable amount, hence the provisions of section 138 of N.I.Act does not attract to the present case, and the complaint deserved to be dismissed.
29. The Hon'ble High Court of Karnataka, in Crl.A.No.200057/2016, dated: 17.12.2020, between C.C.NO.30237/2023 25 The Bidar Urban Co-operative bank ltd., V/s Giris, has held that mere issuance of cheque is not an acknowledgment of the time barred debt, and hence has dismissed the appeal confirming the acquittal order. Even in K.N.Raju V/s Manjunath T.V, Crl.A.302/2010 dated 16.03.2018, has held that time barred debt is not legally recoverable debt and hence upheld the acquittal order. Even in the present complaint, the allegation of the complainant is that the subscriber was due of the amount of Rs.40,000/- since from 17.08.2018 and the termination of the agreement is on 28.12.2018, now 5 years have lapsed from the date due by the subscriber, now the same cannot be claimed from the subscriber, by presenting the cheque for an exorbitant amount, and hence the provisions of section 138 of the Negotiable Instruments Act is not applicable to the present complaint and the same is required to be dismissed.
30. In the judgment reported in 2012 Crl.L.J NOC 568, between Ashok Leyland Finance Limited V/s State of Rajasthan and another, the Hon'ble Rajasthan High Court has held that on the failure of the complainant to produce the loan papers and account statement which are in their possession it amount to the presumption available under section 139 of N.I.Act, being rebutted by the accused. In the above complaint also, the complainant has failed to produce cogent material C.C.NO.30237/2023 26 evidence, to show that the subscriber was due an amount of Rs.1,00,000/- as on the date of presentation of the cheque, hence the complaint is liable to be dismissed. In judgments reported in 2013(3) Crimes 141 (SC) in the case of "Vijaya V/s Laxman and Anr", 2010(2) DCR 700 in the case of "Amzad Pash V/s H.N.Lakshmana", 2014(1) Bankmann 400 (SC) in the case of "John.K Abraham V/s Simon.C", 2009 ALL MR (Crl) Journal 73 in the case of "Binod Kumar Lal V/s State of Jarkhand and another, 2010 ALL Mr (Crl) 1530 in the case of "Mrs.Rosa Maria Fernandes W/o Marian Fernandes V/s Mr.Nauso.N.Kepkar", the Hon"ble courts have observed that the accused if reasonably produces evidence to probables his defence, it is sufficient to discharge presumption. Then the burden is on the complainant to produce probable evidence. In the present complaint, the accused has raised reasonable doubts as to the due amount and also the document Ex.P.6 shows that the due amount of the subscriber is only Rs.40,000/- as on 17.08.2018, in such a situation, the complaint for the offence punishable under section 138 of N.I.Act cannot be maintained for an amount of Rs.1,00,000/-, the accused is required to be acquitted with compensation and damages. In the judgment reported in 2011 ALL MR (Crl) 1922, in the case of "Bhalla Autotmobiles V/s Rajesh S/o Rambhau Maurya"
this court has discussed that the complainant has to C.C.NO.30237/2023 27 take all grounds available to him at the filing of the complaint and he cannot be permitted to change his sand at different times. In such circumstances the accused is entitled for benefit of doubt. In the present case also, the complainant has no where in the notice or in the complaint has stated as to the interest amount and the notices issued to the accused or the subscriber as to the payment of due amount of Rs.1,00,000/- since from 17.08.2018 or even after termination of the chit ticket, i.e., 28.12.2018, in such a case, without any documents produced before this court, the benefit of doubt has to be given to the accused and thereby acquitted of the alleged offenses.
31. In the case of Krishna Janardhana Bhat V/s Dattatreya Hegde, reported in AIR 2008 SC 1325, the Hon'ble Apex Court held that the accused not required to step into witness box, he may discharge his burden on the basis of materials already bought on record. He can rely on the materials already on record. It was further observed that the standard of proof to prove the defence in preponderance of probabilities. The accused in the present case, has rebutted the presumption by effectively in the present case, has rebutted the presumptions by effectively cross examining PW.1 and relying on the document Ex.P.6 produced by the complainant himself, hence the accused has not committed any offence so as to attract section 138 of C.C.NO.30237/2023 28 the N.I.Act. Hence, he prays to acquit the accused.
32. In the case on hand the complainant and the accused having some transaction has not been seriously disputed by the accused. Further the accused has not seriously disputed he had issued the cheque in favour of the complainant. It is not disputed that the complainant is a private limited chits company and the accused is a surety to one Smt.Vedavathi.B and he had issued the cheque in favour of the complainant. Whereas, the accused has contended that the cheque was given for security measure. When he had given the cheque, which was blank. The accused has specifically denied having debt/liability had issued the cheque on 07.08.2023 towards discharge of any debt/liability. He contends that the blank cheque given by him for the purpose of security as was misused by the complainant and a false complaint was filed.
33. In order to attract the offence of the section 138 of N.I.Act, the main ingredients of the existence of the legally enforceable debt/liability, for which the cheque drawn on the account of the accused was given for discharge of the same, are to be proved. The complainant in order to prove its case, have examined its Directors/Foreman as PW.1 and 15 documents were marked at Ex.P.1 to 15. In chief examination P.W.1 has repeated the averments made by the complainant in the complaint. In the present case, the accused has not C.C.NO.30237/2023 29 disputed Ex.P.1 being his cheque drawn on his account. The said presumption is available to the complainant.
34. As per the section 139 of N.I.Act, there is a presumption regarding the existence of legally enforceable debt/liability. Such presumption is rebuttable presumption and it is opinion to the accused to raise defence discharging the existence of a legally enforceable debt/liability. In the case on hand also the accused has disputed the existence of legally enforceable debt/liability, for which cheque was issued. In order to prove his defence, the accused has failed to produce any oral as well as documentary evidence before this court.
35. Since, the presumption under section 139 of N.I.Act is a rebuttable presumption the accused is firstly required to produce some probable evidence to rebut the same. Though in the criminal cases, the standard of the proof required for the accused is not so strict as required for the complainant to prove the case. Further the accused has to produce some probable evidence, which creates doubt about the existence of legally enforceable debt/liability. In the present case, as per the defence taken by the accused is that the cheque was given for security. Except, the said defence, he has not produced any materials to prove such defence. If he had given the blank cheque to the complainant for C.C.NO.30237/2023 30 the purpose of security, what prevented the accused to file the complaint immediately after the alleged illegal act made by the complainant. Further what prevented the accused to file the complaint against the complainant for misusing of the said cheque. On which date he came to knew about the alleged illegal act of the complainant, he did not whisper about on what date he came to know the alleged cheque illegally misused by the complainant. Admittedly the accused is having knowledge of the financial transaction, why he has given the blank cheque to the complainant without anticipating the consequence is not explained by him. So also, he has not stated anything as to what steps he took to receive back the blank cheque. Moreover, immediately after the alleged blank cheque misused by the complainant he has not lodge complaint before concerned police station. No steps have been taken to receive back the blank cheque, after he came to know about the same. Further on perusal of Ex.P.6 it reveals that the accused was a surety to the subscriber in chit group No.BCT02J-15 for chit value of Rs.5,00,000/- and monthly subscription of Rs.10,000/- each. But the accused has denied the same. In order to prove his defence he has not produce any documents before this court.
36. Once issuance of cheque and signature are admitted, the statutory presumptions would arise under C.C.NO.30237/2023 31 sections 118 and 139 of the N.I.Act that the cheque was issued by the drawer for legally payable debt or liability and for valid consideration. The Hon'ble Supreme Court has held in Rangappa V/s Mohan, reported in 2010 AIR SCW 296, the presumption that the cheque was drawn in discharge of legally recoverable debt is a presumption of law that ought to be raised in every case, though, it is a rebuttable presumption. Of course, the presumption under section
139 and 118 of the N.I.Act are rebuttal presumption. Further it is also held that mere plausible explanation by the drawer is not sufficient and proof of that explanation is necessary. The principle of law laid-down in the above decision is applicable to the facts of this case. In the instant case, since the complainant is in possession of the cheque-Ex.P.1 the court has to draw the initial presumption that he is the payee of that cheque. Once the initial burden is discharged by the complainant, the onus shifts on the accused to rebut the complainant's case.
37. Further the learned counsel for the accused has taken contention that the cheque was given to the complainant for the purpose of security. Hence, an offence punishable under section 138 of N.I.Act is not attracted. In this regard once issuance of cheque and signature are admitted, the statutory presumptions would arise under sections 138 of N.I.Act that cheque C.C.NO.30237/2023 32 was issued by the drawer for legally payable debt/liability and for valid consideration. In the case of Sripati Singh (Since deceased) through his son Gaurav Singh V/s State of Jarkhand and another, reported in 2021 SCC Online SC 1002, the Hon'ble Supreme court categorically held that; once the cheque is issued as security for the loan and if the loan is not paid back then if the cheque is dishonored which attract 138 of N.I.Act. The principle of law laid-down in the above decision is applicable to the facts of this case. Therefore, the contention of the accused cannot be acceptable that the cheque was given only for security purpose, but without producing any documents, then the accused has to pay the cheque amount when it is presented for encashment which is legally recoverable debt.
38. In the case of K.S.Ranganatha V/s Vittal Shetty, reported in 2021 SCC Online SC 1191, the Hon'ble Supreme Court held that once the cheque is admitted to be that of the accused, the presumption envisaged in section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability. It is further held that the position of law makes it crystal clear that when a C.C.NO.30237/2023 33 cheque is drawn out and is relied upon by drawee, it will raise a presumption that it is drawn towards a consideration which is a legally recoverable amount; such presumption of course, is rebuttable by proving to the contrary. The onus is on the accused to raise a probable defence and the standard of proof for rebutting the presumption is on preponderance of probabilities.
39. In the case of Kalamani Tex and another V/s. P.Balasubramanian, reported in (2021) 5 SCC 283, the Hon'ble Supreme Court has observed that even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under section 139 of the Negotiable instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.
40. Applying the above said principles to the present case and before considering the point whether the accused succeeded to rebut the presumptions and to establish his defence to the extent of probabilities, it is just and necessary to accumulate undisputed facts in this case.
41. It is not in dispute that bounced cheque belongs to the bank account of the accused. It is also not in dispute that signature appearing on the bounced C.C.NO.30237/2023 34 cheque is the signature of the accused. It is also not in dispute that the cheque presented by the complainant came to be dishonored by the banker of the accused for the reason stated in the dishonor memo. To consider whether the accused succeeded to rebut the presumption and established the defence to the extent of probabilities, the accused has not produced any documents in this regard.
42. In the defence there is no ill-will between the complainant and the accused. Hence, misuse of the security cheque and filing a false case is not possible. The accused admittedly having knowledge of business. It is implies, he is conversant with financial transaction. If the complainant misused the said cheque and had not return the same, inspite of collecting cheque leaves from him, as a prudent man, the accused should have inquired with the complainant and demanded to return that cheque. No ordinary prudent man would keep quite in such circumstances, without taking any steps. The conduct of the accused is very unusual, because he did not take any legal action against the complainant, even after filing of the complaint based on Ex.P.1. Further he could have issued a notice to his banker to stop payment or legal notice to the complainant or he could have given complaint to the police station immediately. No such steps were taken by the accused. He simply makes a bald allegation of misuse of security cheque C.C.NO.30237/2023 35 against the complainant.
43. Moreover, the complainant have got issued a legal notice to the accused by registered through its counsel calling upon the accused to make repayment to the complainant. Before a person is held to be guilty of an offence punishable under section 138 of N.I.Act, the complainant have to prove the compliance of the requirement under section 138 of N.I.Act. It is not in dispute that Ex.P.1 being his cheque drawn on account of the accused. In view of the above discussions, it is also held to be proved that it was drawn for discharge of legally enforceable debt/liability. From the evidence of P.W.1 and also cheque return memo-Ex.P.2 it is established that the cheque was dishonor for the reasons "Funds Insufficient''. A legal notice being issued as per Ex.P.3 within one month from the date of dishonor of the cheque is also not in dispute. In the case on hand the accused has not seriously disputed regarding notice send by the complainant on his address. Ex.P.4, 5 and 5(a) are the postal receipt and returned notice. The notice was returned as refused. But the accused contention was that the said notice was not served on him. However, the accused had never asserted in his cross examination that the address mentioned in those documents was not his address. The presumption under section 114 of the Evidence Act and section 27 of the General Clauses C.C.NO.30237/2023 36 Act is that the notice was deemed to have been served. In the context of section 138 of the Act, makes it clear that if once the sender dispatches the notice by post with correct address written the notice is deemed to have been served by the sender. But, the accused failed to reply the notice, immediately after he received the demand notice. Thereby, he could have asserted his defence at an earliest available opportunity. In the case on hand the notice is sent to the accused at his address. When the accused has not seriously disputed, the notice sent to the correct address is sufficient compliance under section 138 of N.I.Act. Therefore, there is sufficient proof of due service of the legal notice.
44. It is not the contention of the accused that thereafter he has paid the cheque amount within stipulated time of 15 days on receiving the notice. Therefore, in the case on hand on perusal of the evidence placed on record, all the essential ingredients under section 138 N.I.Act, have been complied with. As the accused has not paid the cheque amount within stipulated period and failed to give reply to the notice, as such the accused has committed an offence punishable under section 138 of Negotiable Instruments Act. The present complaint is filed within the period of one month after the accused failed to repay the cheque amount. Even he did not whisper C.C.NO.30237/2023 37 anything about the defence while his plea was recorded under section 251 of Cr.P.C. In view of judgment of the Hon'ble Supreme Court in Indian Bank Association V/s Union of India and others, reported in 2010 (5) SCC 590, it is clear that while recording the plea under section 251 of Cr.P.C., it becomes the duty of the accused to state whether he has any defence to make or he pleads guilty. Thus, unlike under section 240 of Cr.P.C., the accused has no option under section 251 of Cr.P.C., just to deny the allegations made against him. If he is not willing to plead guilty, he must explain what are the defences he want to take. As such, it has to be considered, whatever defence raised by the accused during the trial are all after thought, just to get ride of statutory burden cast on him.
45. In addition to this in the case of T.P.Murugan (Dead) through legal representatives V/s Bojan, reported in 2018 (8) SCC 469, the Hon'ble Apex Court held that once the cheque has been signed and issued in favour of the holder of the cheque, there is statutory presumption that the cheque is issued in respect of legally enforceable debt or liability: rebuttal of such presumption must be by adducing credible evidence. Mere raising a doubt without cogent evidence with respect to the circumstances, presumption under section 139 of N.I.Act, cannot be discharged. The principle of law laid-down in the above decisions are C.C.NO.30237/2023 38 applicable to the facts of this case. Except some bald contentions, the accused has not been able to make out a probable case on his behalf.
46. As per the version of the accused is that he has nowhere denied transaction. The accused himself has admitted that he is the holder of alleged cheque. It is sufficient hold that he has issued the cheque-Ex.P.1 and even after the accused has not repaid the cheque amount the getting of receipt of notice. However, in any manner as the complainant have complied all the terms of ingredients of the provisions of 138 of N.I.Act. The accused is liable for dishonor of the cheque. In case of dishonor of the cheque, once the execution of cheque is admitted by the accused, then it for him to first rebut presumption arising out of section 139 of N.I.Act. Accordingly, PW.1 has established the case of the complainant that the accused had issued the cheque- Ex.P.1 in order to repay the legally recoverable amount. Therefore, the accused has failed to probables the defence taken by him. Therefore, the accused has failed to rebut the presumption under section 139 of N.I.Act. In the said circumstances, the complainant is not at all required to produce any material as to the financial transaction between the complainant and the accused, since the initial presumption is still available, when there is no rebuttal evidence.
47. PW.1 in his evidence has specifically deposed C.C.NO.30237/2023 39 that one Smt.Vedavathi.B subscribed to the chit group No.BCT02J-15 conducted by the complainant for the chit value of Rs.5,00,000/-. The said chit was payable at the rate of Rs.10,000/- each for a period of 50 months. In an auction of chit held on 06.04.2016 Smt.Vedavathi.B have offered highest bid agreeing to forego sum of Rs.2,00,000/- and which was duly confirmed by the complainant and she has received prized amount of Rs.3,00,000/- by offering guarantors for the due payment of entire future monthly installment. The subscriber and the accused have executed necessary documents. After receiving the chit amount the said subscriber became a defaulter in payment of chit installments and in order to repayment of the amount the accused had issued the cheque in question. The accused has failed to get the tender. Accordingly, the complainant became entitled to receive the said amount from the accused, this is not disputed by the accused. So also it is not in disputed that the complainant and the accused are known to each other, some point of period. Further the accused has failed to rebut the presumption under section 139 of N.I.Act, non furnishing of details of financial transaction and other documents no consequences to disbelieve the case of the complainant. With these reasons, I answer point No.1 and 2 in the Affirmative.
48.POINT NO.3 AND 4: In order to avoid C.C.NO.30237/2023 40 repetition of facts, these points are taken together for common discussion. Before a person is held to have committed an offence punishable under section 138 of N.I.Act, the complainant have to prove all the requirements of section 138 of N.I.Act. Ex.P.1 being his cheque drawn on the account of the accused is not in dispute. The said cheque having been dishonored, when it was presented by the complainant before the bank for encashment is also not seriously disputed by the accused. The accused has not taken up any contention that thereafter he had paid the cheque amount within stipulated time of 15 days, after service of the notice. As such, in the present case from perusal of documents, the essential requirements of section 138 of N.I.Act, have been complied with. In this case if the accused has issued the blank cheque in favour of the complainant for the purpose of security and why he has not produced any documents. After service of notice the accused has not paid the said amount and failed to give reply to the said notice. Hence, the present complaint came to be filed before the court on 17.11.2023 within the period of one month from the date of cause of action. While discussing the point No.1 and 2, this court has already observed that the complainant have proved that the cheque was issued for discharge of legally enforceable liability/debt and in view of the mandatory requirements under section 138 C.C.NO.30237/2023 41 of N.I.Act, being complied with. The accused is found to have committed an offence punishable under section 138 of N.I.Act. With these reasons, I answer point No.3 and 4 in the Affirmative.
49. POINT NO.5: The accused is held to have committed an offence punishable under section 138 of N.I.Act. The complainant have proved its case. The accused has failed to prove his rebuttal for the reasons mentioned above and in view of the mandatory requirements of section 138 of N.I.Act, being complied with. The accused is found to have committed an offence punishable under section 138 of N.I.Act. Since, the said offence is an economic crime, the accused is not entitled for the beneficial provisions of probation of offenders Act. In view of the above discussions and the findings on point No.1 to 4, I proceed to pass the following;
:ORDER:
Acting under section 255(2) of Cr.P.C. the accused is convicted for an offence punishable under section 138 of N.I.Act.
The bail bond of the accused hereby stands canceled.
The accused is sentence to pay fine of Rs.1,05,000/- (Rupees one lakh five thousand only) to the complainant.
It is further ordered that out of the said C.C.NO.30237/2023 42 fine amount an amount of Rs.1,00,000/- (Rupees one lakh only) shall be paid to the complainant as compensation as per Section 357(1)(b) of Cr.P.C., and remaining amount of Rs.5,000/- (Rupees five thousand only) shall be remitted to the State.
In default of the payment of fine amount, the accused shall undergo simple imprisonment of six months.
(Dictated to the stenographer directly on computer typed by her, corrected by me and then judgment pronounced in the open court on 14 th day of August 2024) Digitally signed by SOUBHAGYA SOUBHAGYA B BHUSHER B BHUSHER Date:
2024.08.19 12:03:18 +0530 (Soubhagya.B.Bhusher) XXVIII Addl. Chief Judicial Magistrate, Bengaluru City.
ANNEXURE List of witness examined on behalf of the complainant:
PW.1 : Sri.Rudresh.M.S. List of documents marked on behalf of the complainant:
Ex.P.1 : Cheque.
Ex.P.1(a) : Signature of the accused.
Ex.P.2 : Bank endorsement.
Ex.P.3 : Office copy of legal notice.
Ex.P.4 : Postal receipt.
Ex.P.5 : Returned postal cover.
C.C.NO.30237/2023
43
Ex.P.5(a) : Returned notice.
Ex.P.6 : Ledger extract.
Ex.P.7 : Certificate U/s.65(b) of I.E.Act.
Ex.P.8 : Certified copy of the Resolution.
Ex.P.9 : Certified copy of the Incorporation certificate.
Ex.P.10 : Complaint.
Ex.P.11 : Chit auction minute.
Ex.P.12 : Ondemand.
Ex.P.13 : Guarantee letter.
Ex.P.14 : Surety proposal form.
Ex.P.15 : Chit license.
List of witnesses examined on behalf of the accused:
-Nil-
List of documents marked on behalf of the accused:
-Nil-
Digitally
signed by
SOUBHAGYA
SOUBHAGYA B BHUSHER
B BHUSHER Date:
2024.08.19
12:03:25
+0530
XXVIII Addl. Chief Judicial
Magistrate, Bengaluru City.
C.C.NO.30237/2023
44
14.08.2024 (Judgment pronounced in the Open
Court Vide Separate Sheet)
:ORDER:
Acting under section 255(2) of
Cr.P.C. the accused is convicted for an offence punishable under section 138 of N.I.Act.
The bail bond of the accused hereby stands canceled.
The accused is sentence to pay fine of Rs.1,05,000/- (Rupees one lakh five thousand only) to the complainant.
It is further ordered that out of the said fine amount an amount of Rs.1,00,000/- (Rupees one lakh only) shall be paid to the complainant as compensation as per Section 357(1)(b) of Cr.P.C., and remaining amount of Rs.5,000/- (Rupees five thousand only) shall be remitted to the State.
In default of the payment of fine amount, the accused shall undergo simple imprisonment of six months.
XXVIII Addl. Chief Judicial Magistrate, Bengaluru City.