Bangalore District Court
Sri. Santhosha B vs Sri. Lathesha G.P on 2 March, 2020
IN THE COURT OF THE XVII ADDL. JUDGE, COURT OF
SMALL CAUSES &
ADDL. CHIEF METROPOLITAN MAGISTRATE,
MAYO HALL UNIT, BENGALURU (SCCH21).
Dated: This the 2nd Day of March 2020
PRESENT: Smt. VANI A. SHETTY, B.A. Law L.L.B,
XVII ADDL. JUDGE, Court of Small
Causes & ACMM, Bengaluru.
C.C. No. 55520/2018
Complainant : Sri. Santhosha B.,
S/o. Basavanna,
C/o. Janaradhana Reddy,
Aged about 36 years,
R/at No.266, Near Masidi House,
Hoodi, Mahadevapura Post,
Bengaluru - 560 048.
Ph: 9741554039,
7019891918
(By Sri. A.R.K, Advocate)
V/s.
Accused : Sri. Lathesha G.P.,
S/o. Late Puttarangaiah,
Aged about 36 years,
R/at Gowdankatte Village,
Mathihalli Post,
Tipur Taluk,
Tumkur District.
Employee No.2279,
T.E. Connectivity India Pvt. Ltd.,
T.E.Park, #22, Doddanekkundi,
2nd Phase, Industrial Area,
SCCH-21 2 C.C. No. 55520/18
Near Hoody, Whitefiled Road,
Bengaluru - 560 048.
Office: 080 33195625
9901652752
(By Sri. S.L.P., Advocate)
JUDGEMENT
The accused in this case is tried for an offence punishable under Section 138 of Negotiable Instrument Act 1881, on the complaint of the complainant.
2. The summary of the complainant's case is that:
The accused borrowed hand loan of Rs.5,00,000/ from the complainant. In discharge of said amount, the accused issued a cheque bearing No.408038 dated 19.12.2017 for Rs.5,00,000/ drawn on State Bank of Mysuru, Hoodi Branch, Bengaluru, assuring that the cheque would be honored if presented for payment. The complainant presented the said cheque for encashment through his banker State Bank of Mysuru, Hoodi branch, Bengaluru. But the said cheque came to be dishonored on the ground of 'Funds Insufficient' on 21.12.2017. Thereafter, on 19.01.2018 complainant got issued legal notice to the accused by RPAD demanding for repayment of the cheque amount within 15 days from the date of receipt of the notice. The notice sent through RPAD was returned as unserved. The accused has not paid the amount and therefore, this complaint filed on 24.02.2018.SCCH-21 3 C.C. No. 55520/18
3. On filing of the complaint cognizance was taken for an offence punishable under section 138 of N.I. Act and sworn statement was recorded. As there was sufficient ground to proceed further, a criminal case has been registered against the accused and he was summoned. The substance of accusation is orally stated to the accused and his plea was recorded. Accused pleaded not guilty and submitted that he has defence to make.
4. In support of the complainant's case, the sworn statement of the complainant filed by way of affidavit during the presummoning stage is considered as evidence of the complainant and 18 documents are marked as per Ex.P1 to Ex.P18. The statement of the accused is recorded under Section 313 of Cr.P.C and his answers were recorded. The accused has not led defence evidence. But got marked 3 documents as per Ex.D1 to D3.
5. Heard the arguments.
6. The points that arise for my consideration are:
1. Whether the complainant proved that accused has committed an offence punishable under Section 138 of N.I. Act 1881?
2. What order?
7. My answer to the above points is as follows:
Point No.1 : In the Negative,
Point No.2 : As per final order for the following:
SCCH-21 4 C.C. No. 55520/18
REASONS
8. POINT No.1: In order to constitute an offence
under Section 138 of N.I. Act, the cheque shall be presented to the bank within a period of 3 months from its date. On its dishonor, the drawer or holder of the cheque as the case may be shall cause demand notice within 30 days from the date of dishonor, demanding to repay within 15 days from the date of service of the notice. If the drawer of the cheque fails to repay the amount mentioned in the cheque within 15 days from the date of service of notice, cause of action arises for filing complaint.
9. The sworn statement of the complainant filed by way of affidavit during the presummoning stage is considered as the evidence of the complainant. In the affidavit, complainant has testified regarding the lending of Rs.5,00,000/ to the accused, issuance of cheque, issuance of demand notice and also failure of the accused to pay the cheque amount. The complainant has produced cheque bearing No.408038 dated 19.12.2017 for Rs.5,00,000/ drawn on State Bank of Mysuru, Hoodi Branch, Bengaluru, alleged to be issued by the accused. Ex.P16 stands in the name of complainant for Rs.5,00,000/. Ex.P18 is the endorsement issued by the bank stating dishonor of Ex.P16 cheque. Ex.P18 shows that Ex.P16 was dishonored for 'Funds Insufficient'. Ex.P3 is the office copy of legal notice dated 19.01.2018. Ex.P4 is the postal receipt for having sent legal notice to the accused.
SCCH-21 5 C.C. No. 55520/18Ex.P5 is the postal acknowledgement evidencing the service of notice to the accused.
10. In the present case, cheque is dated 19.12.2017. Ex.P17 pay in slip shows that cheque was presented on 19.12.2017 i.e., within the period of three months from the date of cheque. Ex.P18 shows that cheque in question was dishonored on 21.12.2017. The notice was issued within the statutory period of time. The notice issued to the accused was served on 20.01.2018 as per Ex.P5 postal acknowledgment. The cause of action for filing the complaint arose on 05.02.2018. The complainant has filed this complaint on 24.02.2018 i.e. within 30 days from the date of arisal of cause of action. In this way, the complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act.
11. Section 118 of N.I. Act lays down that, until the contrary is proved, it shall be presumed that every Negotiable Instrument was made or drawn for consideration. Section 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 Section 138 for the discharge, in whole of any debt or liability. In the decision reported in 2001 Crl.L.J. page 4647 (SC) (Hiten P.Dalal -Vs Bratindranath Banerjee) and in various other decisions of Hon'ble Supreme Court and our Hon'ble High Court, repeatedly observed that in the proceeding under Section 138 SCCH-21 6 C.C. No. 55520/18 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 of presumption under Section 118 and 139 of N.I. Act in his favour. It is also observed that, by virtue of these presumptions, accused has to establish that, the cheque in question was not issued towards any legally enforceable debt or liability. Later in the year 2006, the Hon'ble Supreme Court in the decision M.S. Narayan Menon @ Mani - vs State of Kerala and another (2006 SAR Crl. 616) has held that, the presumption available under Section 118 and 139 of N.I. Act can be rebutted by raising a probable defence and the onus cast upon the accused is not as heavy as that of the prosecution. It was compared with that of a defendant in civil proceedings. Subsequently, in the year 2008, in Krishna Janardhana Bhat -Vs Dattatreya G. Hegde (2008 Vo.II SCC Crl.166) Hon'ble Supreme Court has held that, existence of legally recoverable debt is not a presumption under Section 138 of N.I. Act and the accused has a constitutional right to maintain silence and therefore, the doctrine reverse burden introduced by Section 139 of N.I. Act should be delicately balanced.
12. In the decision, Rangappa - Vs - Mohan (AIR 2010 SC 1898) Hon'ble Supreme has considered this issue and clarified that, existence of legally recoverable debt or liability is a matter of presumption under section 139 of N.I. Act. In para SCCH-21 7 C.C. No. 55520/18 14 of the judgment the Hon'ble Supreme Court observed as here below:
"In light of these extracts, we are in agreement with the respondentclaimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 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 Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 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 discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 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 doubts about the existence of a SCCH-21 8 C.C. No. 55520/18 legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. "
13. In view of the above decision, now it is clear that the presumption mandated by Section 139 of N.I. Act does indeed include the existence of legally enforceable debt or liability. It is a rebuttable presumption. It is open to the accused to raise the defence wherein the existence of legally enforceable debt or liability can be contested. For rebutting presumption, the accused do not adduce evidence with unduly high standard of proof but, the standard of proof for doing so with that of preponderance of probabilities. If the accused is able to raise a probable defence, which creates doubt about the existence of legally enforceable debt or liability, the onus shifts back to the complainant. It is also clear for rebutting the presumption accused can rely on the materials submitted by the complainant or his crossexamination and he need not necessarily adduce his evidence in all the cases.
14. In the present case, complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act. As per the case of the complainant, accused has borrowed hand loan of Rs.5 lakhs from him and towards discharge of the same, accused issued Ex.P16 cheque for Rs. 5 lakhs. On the other hand, accused has contended that he borrowed a sum of Rs.8 lakhs from one Smt. Umamaheshwari and issued Ex.P16 SCCH-21 9 C.C. No. 55520/18 cheque to her as security for the said loan transaction held between him and Umamaheshwari.
15. The accused has not admitted the issuance of Ex.P16 cheque to the complainant. It is well settled law that the presumption under section 139 of N.I. Act can be raised only if issuance of cheque either admitted or proved. This has been constantly laid down by the Hon'ble Supreme Court in the decisions rendered in the case of Kumar Exports Vs. Sharma Carpets ((2009) 2 SCC 513) and in the recent decision of Hon'ble Supreme court rendered in the case of APS Forex Services Pvt Ltd vs Shakti International Fashion Linkers and others(2020 SCC Online SC 193). Therefore in the present case, complainant is required either to prove the issuance of cheque or passing of consideration.
16. It is the definite defence of the accused that there was loan transaction of Rs.8 lakhs in between him and one Smt. Umamaheshwari and Ex.P16 cheque was issued to said Umamaheshwari as security for the loan transaction by executing an agreement. It is further contention of the accused that complainant himself was the witness for the said agreement and issuance of Ex.P16 cheque is also specifically mentioned in the agreement. In order to establish his defence, learned counsel appearing for the accused confronted a document in the crossexamination of PW.1 said to be executed in between the accused and Umamaheshwari. The SCCH-21 10 C.C. No. 55520/18 complainant himself has admitted it and therefore, the said document is marked as Ex.D1. Further, the complainant has specifically admitted in the crossexamination that Ex.D1 was executed between the accused and Umamaheshwari for which he was signatory as a witness and he himself wrote his name and address in it. The specific portion of the evidence of PW.1 in this regard is reproduced as hereunder:
"ಸಕಗ ಒಒದದ ದಖಲಯನದ ನ ತತತರಸದಗ ಅದರಲರದವ ಅವರ ಹಸರದ, ತಒದ ಹಸರದ ಹಗತ ವಳಸವನದ ನ ಅವರದ ಎಒದದ ಒಪಪತತರ . ಅದರಲ ಬರದರದವ ನನನ ಹಸರದ ಹಗತ ವಳಸವನದ ನ ನನತ ಬರದರದತತತನ. ಸದರ ನ ನಡ1 ಎಒದದ ಗದರದತಸಲಯತದ. ನಡ1 ರಲ ಉಮಮಹತಶಶರ ದಖಲಯನದ ಎನದ ದ ಅವರ ಪರಚಯ ನನಗ ಇದ. ನಡ1 ರಲರದವ ಲತತಶ ನ ವವರದ ಸಹ ಮಡದದ ದ ಆಗರದತತದಒದರ ಜ.ಪ. ಎಒದದ ನಮತದದ ಇರದವ ಹಸರದ ಆರತತಪಯವರದದ ನನಗ ಗತತತಲಲ. ನನನ ದತರನಲ ತಳಸರದವ ಆರತತಪಯವರ ವಳಸ ಹಗತ ನಡ1 ರಲರದವ ಲತತಶರವರ ವಳಸ ಒಒದತಯಗರದತತದಒದರ ಸರ.
ಉಮಮಹತಶಶರ ಕತತಒ ಕ.ಎನ.ಚಒದದಶತಖರ ಎಒದದ ನಡ1 ರಲ ನಮತದರದವ ವವಕತಗಳದ ನನಗ ಗತತದತ. ಆರತತಪಯವರದ ಉಮಮಹತಶಶರಯವರಒದ ರತ.8 ದ ಲಕ ಹಣ ಪಡದ ಬಗಗ ನಡ1 ರಒತ ಕರರದ ಮಡಕತಒಡದದ ಅದಕಕ ನನದ ಸಕಯಗ ಸಹ ಮಡರದತತತನಒದರ ಸರ. "
The contents of Ex.D1 clearly reveals that Ex.P16 cheque was issued to Umamaheshwari as security. The relevant portion of Ex.D1 is reproduced as here below.
SCCH-21 11 C.C. No. 55520/18"AND WHEREAS the borrower given property's 2 Sale Deeds and three Cheques bearing No.1) 408036
2) 408037 3) 408038, Drawn on State Bank of Mysore, Hoodi Branch, Bangalore, to the money lender, after clearing the said amount by borrower, Lender will return the original sale document and Blank Cheque to the borrower."
17. The evidence of PW.1 and contents of Ex.D1 makes it clear that Ex.P16 cheque was issued by the accused to Umamaheshwari. It is not the case of the complainant that after fulfillment of the obligation mentioned in Ex.D1 agreement, accused took back the Ex.P16 cheque from Smt. Umamaheshwari and later reissued it to the complainant. On the other hand, the very fact that the complainant himself was a witness to Ex.D1 agreement led to an inference that he was in good terms with Umamaheshwari and therefore, securing Ex.P16 cheque from her is probabled as contended by the accused.
18. It is also pointed out that earlier accused and complainant were working in NMC company and complainant was suspended in the year 2017. It is the case of the complainant that the amount was paid in the aforesaid company. The suspension of the complainant from the employment during the year 2017 is also admitted by him in the crossexamination. Hence, the presence of the complainant in the company and payment of such a huge amount of Rs. 5 lakhs in cash in the company is also not probabalised.
SCCH-21 12 C.C. No. 55520/1819. As already observed above, the issuance of cheque is not proved. Further, there is nothing on record to show that the complainant had possessed such a huge amount as on the date of alleged lending. There is no evidence for passing of consideration. Under these circumstances, the guilt of the accused is not proved. Hence, I answer Point No.1 in the Negative.
20. POINT No.2: In view of answer given to the above point, accused is acquitted for an offence punishable under Section 138 of N.I. Act. Accordingly, I pass the following:
ORDER Acting under Sec.265 of Cr.P.C., the accused is found not guilty and acquitted for an offence punishable under Sec.138 of N.I. Act.
The bail bond and surety bond of the accused stands cancelled.
(Dictated to the Stenographer, transcribed and typed by her, same is corrected, signed and then pronounced by me in the open court on this the 2nd day of March 2020) (VANI A. SHETTY) XVII ADDL. JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.SCCH-21 13 C.C. No. 55520/18
ANNEXURE List of witnesses examined on behalf of the complainant:
P.W 1: Santhosha B. List of documents marked on behalf of the complainant:
Ex.P.1 : C.C of Cheque
Ex.P.2 : C.C of Bank endorsement
Ex.P.3 : Legal notice
Ex.P.4 : Postal receipt
Ex.P.5 : postal acknowledgement
Ex.P.6 : Postal cover
Ex.P.7 : Account pay in slip
Ex.P.8 : Original sale deed
Ex.P.9 to 11 : Income tax returns forms
Ex.P.12 : Pay slip
Ex.P.13 : HDFC bank disbursement advise form
Ex.P.14 & 15 : Bank passbooks
Ex.P.16 : Original Cheque
Ex.P.17 : Account pay in slip
Ex.P.18 : Original Bank endorsement
List of witnesses examined on behalf of the accused:
Nil List of documents marked on behalf of the accused: Ex.
Ex.D1: Handloan agreement
Ex.D2: C/c. Copy of complaint in C.C. No.55664/18
Ex.D3: C/c. Copy of complaint in C.C. No.55521/18
(VANI A. SHETTY)
XVII ADDL. JUDGE,
Court of Small Causes &
ACMM, Mayo Hall Unit,
Bengaluru.
SCCH-21 14 C.C. No. 55520/18