Bangalore District Court
Sri. C. Hemanth Kumar vs M/S. Spectra Lamps Pvt. Ltd on 4 February, 2015
IN THE COURT OF THE XXII ADDL.CHIEF METROPOLITON
MAGISTRATE, BANGALORE CITY
Dated this the 4th day of February 2015
PRESENT: SRI. NAGARAJEGOWDA.D, B.Com., LL.B.,
XXII Addl.C.M.M., Bangalore City.
JUDGMENT U/S 355 OF Cr.P.C.
Case No. : C.C No. 31986/2009
Complainant : Sri. C. Hemanth Kumar,
S/o. K. P. Chandra shekar
Murthy, Aged about years,
R/at. No.45, NAL Layout,
Jayanagar 4th 'T' Block,,
East End Road,Bangalore.
(By Sri. K.T.D.Associates, Adv.)
Accused : 1. M/s. Spectra Lamps Pvt. Ltd.,
A Company Registered under the
Company's Act, 1956, Rep. by its
Managing director
Sri. Vijayendra Babu,
At No. 16A,
Sommanahalli Industrial Area,
Maddur Taluk, Mandya District.
2. Sri.Vijayendra Babu,
Managing Director of
M/s. Spectra Lamps Pvt. Ltd.,
At No. 138, 2nd stage, Ist Block,
H-Cross, Nagarabhavi,
Behind BDA Complex,
Bangalore.072.
2 C.C.No.31986/2009
3. Smt. M. Menaka,
W/o. Vijayendra Babu,
And Director of
M/s. Spectra Lamps Pvt. Ltd.,
At No. 138, 2nd stage, Ist Block,
H-Cross, Nagarabhavi,
Behind BDA Complex,
Bangalore.072.
(Dropped as per High Court
Order)
(By G.S., Adv.)
Date of Institution : 17/09/2009
Offence complained of : U/s 138 of N.I.Act.
Plea of the accused : Pleaded not guilty.
Final Order : Accused is acquitted.
Date of Order : 04.02.2015.
The complainant filed the private complaint u/s 200 of Cr.P.C
alleging that, the accused person has committed an offence
punishable u/s 138 of N.I.Act.
2. As per Ex.P-23 complaint, the complainant contended that,
the accused No.1 is a Private Limited company registered under the
Indian company's Act controlled by its directors, the accused No.2 and
3. One Shivalingaiah Senior Police Officer introduced the accused
No.2 to the complainant. Accused No.2 being the Managing director of
the accused No.1 company and he is very much in need of money for
3 C.C.No.31986/2009
his urgent business requirements and also to discharge the loan
raised with KSFC, Banks and other Financial Institutions. The
complainant agreed to part with money as loan on the assurance that
the accused personal shall repay the amount with interest. The
complainant had agreed to advance the amount as loan to the
accused persons with an idea to bail out the accused persons from
their imminent financial commitments and accused persons
represented themselves that they hails from very respectable family
and having good reputation in the society. The accused persons had
executed several security documents, borrowed amounts from the
complainant commencing from July 2006 through cheques as well as
cash. The accused persons from time to time acknowledging the
receipt of the amount as and when same was paid. The said
acknowledgements were made by accused No.2 on behalf of accused
No.1 company. The accused No.2 also executed documents in favour
of complainant towards security for the repayment of the amount
borrowed by them. The accused persons were totally due a in a sum
of Rs. 1,90,50,000/- to the complainant including interest as on
5/1/2009. After advancement of amount stated above the
complainant came to know that accused No.2 made several mis-
representations to others and there were cases pending against the
accused persons. The complainant on coming to know about the said
facts and demanded to return the amount so lent to the accused
persons. The accused persons had agreed to return the entire amount
4 C.C.No.31986/2009
within a period of 5 months provided all their security documents are
returned and in this regard a meeting was held in the presence of the
well wishers and accordingly, the accused No.2 on behalf of the
accused No. 1 executed an acknowledgement, acknowledging the
amount due by the accused persons to the complainant dt: 5/2/2009
The accused No.1 in consideration of refund of said amount issued 3
post dated cheques to a sum of Rs. 1,60,50,000/- The details of the
cheque sand amounts are as follows;-
a) Cheque bearing No. 551950, dt: 5/6/2009 for a sum of Rs.
1,60,00,000/- drawn on Indian Bank, M.G.Road Branch, Bangalore.
b) Cheque bearing No. 205674, dt: 5/6/2009 for a sum of Rs.
25,000/- drawn on ICICI Bank Ltd, Malleswaram Branch, Bangalore
c) Cheque bearing No. 205675, dt: 5/6/2009 for a sum of Rs.
25,000/- drawn on ICICI Bank Ltd, Malleswaram Branch, Bangalore
The accused persons executed confirmation/acknowledgement of
debt, promised the complainant to clear the amount on the due dates
by honouring the cheques and accordingly, the accused taken back all
documents executed by him as security for the repayment of the loan.
The complainant received the cheques referred above from the
accused persons towards discharge of the part of the debt due by the
accused persons on the assurance that, they will make necessary
arrangements to honour the cheques as and when they are presented
5 C.C.No.31986/2009
for encashment. As per the assurance of the accused persons, the
complainant presented the said cheques for encashment through his
Banker namely Amanath Co-operative Bank Ltd., BVK Iyengar road
Branch as well as ING Vysya Bank Ltd., Chickpet. The complainant
Bankers sent the said cheque for encashment to the accused Banker
the said cheques were returned unpaid with endorsement to that
effect 'Funds Insufficient' dt: 9/7/2009. These things are clearly
demonstrates that the accused persons have not made necessary
arrangements to honour the said cheques. Thereafter the
complainant got issued legal notice to the accused persons on
5/8/2009 calling upon them to pay the cheque amount. The legal
notice, returned covers along with postal receipts are produced. The
notices were sent through UCP which were issued to the accused
persons. After 15 days of receipt of notice instead of making payment,
accused got issued a untenable reply and thus, the accused persons
have committed an offence punishable u/s 138 of NI Act and punish
the accused in accordance with law by awarding compensation to the
complainant in the interest of justice and equity.
3. After presenting this case in PCR, this court has taken
cognizance of the offence and after recording the sworn statement of
the complainant's side, this court registered the criminal case against
the accused alleging that, he has committed an offence punishable
u/s 138 of N.I.Act. Summons issued to the accused. The same is
6 C.C.No.31986/2009
served upon the accused. The accused appeared through his counsel,
enlarged on bail and he denied the entire case of the complainant at
the time of recording his plea of accusation and case to be tried.
4. In support of the case of the complainant, the complainant
examined himself as PW.1 and got marked Ex.P1 to P23 and also
examined one witness Balaji singh as PW-2 and at the time of cross-
examination of DW1 got marked Ex. P-24 and P25. This PW.1 & 2
have been fully cross-examined by the accused counsel and thus, the
complainant closed his side evidence.
5. Thereafterwards, the accused No.3 challenged her status as
she made accused No.3 in this case before the Hon'ble High court of
Karnataka in Crl. Ptn. No. 4638/2010 dt: 18/1/2011. The Hon'ble
High Court of Karnataka has dropped her name from this complaint.
Accordingly accused No.3 has been dropped. Accused No.2 is only
contesting party and hence this court recorded u/s 313 of Cr.P.C
statement of accused No.2, in which, he totally denied the entire case
of the complainant and in support of his denial, he examined before
this court as DW.1 by filing affidavit, same has not been disputed by
the complainant counsel. At the time of cross-examination of PW-1
got marked Ex.D1 to D4 and in his chief-examination got marked
Ex.D5 to D10 and this DW.1 has been fully cross-examined by the
complainant counsel and thus the accused closed his side evidence.
7 C.C.No.31986/2009
6. In support of the case of complainant, the learned counsel
for complainant submitted his written arguments by narrating the
facts and circumstances of the case and submits that inspite of
issuance of legal notice for dis-honour of cheque, the accused did not
repaid the cheque amount and the complainant has fulfilled all the
ingredients of the offence punishable under Sec. 138 of NI Act and
punish the accused in accordance with law.
In support of their contentions the learned counsel for the
complainant relied on the following decisions reported in ;-
1) 2006(5) KarLJ 323,
2) ILR 2006 Karnataka 1730
3) ILR 2004 Karnataka 4423
4) (1992) 73 Company cases 80 (102 ) Kerala.
And thus complainant counsel argued that the complainant has
proved the guilt of the accused and hence convict the accused in
accordance with law.
7. In support of the case of accused No.2, accused No.2 counsel
also submitted his side written arguments by narrating the facts and
circumstances of the case and the complainant has failed to prove the
alleged guilt of the accused No.2 beyond all reasonable doubt and
hence the accused is entitled for acquittal.
8 C.C.No.31986/2009
In support of his contention he too also relied on the following
decisions reported in:-
1) 2000(4) KarLJ 145 between Ramanna .Vs. T. Jayaprakash.
2) AIR 2002 Bom. 194 between Saumil Dilip Mehta .Vs. State of
Maharastra and Ors.
Accordingly, he prays for acquittal of accused in accordance with
law.
8. On the basis of the aforesaid facts and circumstances, the
following points arise for my consideration:
1) Whether the complainant proves beyond all reasonable
doubt that, for repayment of the loan taken from the
complainant, the accused person issued 3 cheques 1)
Cheque bearing No. 551950, dt: 5/6/2009 for a sum
of Rs. 1,60,00,000/- drawn on Indian Bank, M.G.Road
Branch, Bangalore. 2) Cheque bearing No. 205674, dt:
5/6/2009 for a sum of Rs. 25,000/- drawn on ICICI
Bank Ltd, Malleswaram Branch, Bangalore 3) Cheque
bearing No. 205675, dt: 5/6/2009 for a sum of Rs.
25,000/- drawn on ICICI Bank Ltd, Malleswaram
Branch, Bangalore, in favour of complainant with the
assurance to present the cheque for collection,
accordingly, the complainant presented the said
cheque for collection to his banker, but same is
dishonoured due to insufficient funds in the account
of accused, in spite of issuance of legal notice to the
accused, he did not comply the notice and thus, he
has committed an offence punishable u/s 138 of
N.I.Act?
9 C.C.No.31986/2009
2) What Order/Sentence?
9. My answer to the above points are as follows:
1) In the Negative,
2) As per final Order,
For the following:
REASONS
10. POINT NO.1: At the out set at the time of filing of this
complaint, the complainant made accused No.3 as necessary party.
But after registering this case, accused No.3 challenged her made as
necessary party in this case before the Hon'ble High court of
Karnataka in Crl. Ptn. No. 4638/2010 dt: 18/1/2011, the Hon'ble
High Court of Karnataka ordered to dropping of her name from this
complaint. Accordingly the case against accused No3 has been
dropped. Accused No1 is the company, accused No2 is the Managing
director of the accused No1 company. The accused No.2 contest this
case and plea has been recorded in this case and case posted for
recording the evidence of complainant side. Accordingly complainant
led his evidence and got marked certain documents and when the
case posted for cross-examination of PW-1 on 19/4/2013 my learned
predecessor in Office passed the order by converting this case into
warrant trial. But before recording plea of accusation, case cannot be
10 C.C.No.31986/2009
converted as warrant trial. However the complainant has been fully
cross-examined by the accused counsel. In support of the case of
complainant, the complainant adduced his oral evidence filed by way
of affidavit, as PW-1, in which, he reiterated the complaint contention,
got marked Ex. P1 to P3 are the cheques and identified the signature
of the accused as Ex.P-1.a. to P-3.a. As per Ex. P1.a. to P3.a. accused
No.2 put his signature as director of accused No.1 company and Ex.P-
2 and P3 cheques appears to be signed by accused No.2, same are
stands in his personal name. This issuance of the cheques in favour of
complainant for discharge of legal liability has been disputed by the
accused stating that the alleged cheques are not issued by him for
discharge of legal liability, except this issued as security etc., Further
got marked Ex.P4 to P6 are the endorsement issued by the Bankers
with respect to P1 cheque concerned, said cheques are dishonoured
due to 'Insufficient funds" Ex.P-7 is the copy of legal notice,. Notice
has been sent to accused No.1 to 3. As per Ex.P-8 to P11 are the
RPAD receipts. Ex.P11 to P15 are the UCP Receipts. RPAD notice sent
to the accused No.2 & 3 are duly served as per Ex.P16 and P17 are
postal acknowledgements. The legal notice, sent to accused No.1
company by RPAD are returned unserved with the endorsement to the
effect 'Not claimed' and left etc., As Ex.P.20 is the reply notice issued
by accused No.2 Vijayendra, accused No.3 Menaka Vijayendra in
which they have contended that they are not the Managing directors
of the accused No.1 company. On the other hand complainant
11 C.C.No.31986/2009
himself made them as the Managing directors of the accused
company. Further stated that complainant purchased share of
accused No.1 company and they have taken over the management of
said company as the Directors there of and he has representing the
said company. But the complainant has not properly stated these
things in his legal notice. Further, stated that complainant evinced
interest to lent money to accused No.1 company which was carrying
on business of manufacturing of tube lights, florescent lights and
other lighting products. The complainant know that said company
had procured orders from the Crompton Grieaves for supply of Lamps
and Tubes to it in a bulk. The complainant with a view to make a
profit, approached the company and representing that he would pay
for all the materials to be procured by the said company for
manufacturing of lamps and tubes and that in turn a portion of profit
from the supplies made by the company would be taken by the
complainant. In that regard an agreement dt: 27/6/2006 came to be
entered into between the complainant with accused No.1 company
which was at that point of time represented by accused No.2 and 3.
They never took active part in the affairs of the company nor was
involved in carrying on its business. In pursuance of this agreement,
the complainant agreed to pay a sum of Rs. 20,00,000/- as earnest
money and further pay a sum of Rs. 30,00,000/- towards meeting
working capital requirement of the company by paying suppliers of the
company as and when materials were purchased by the company.
12 C.C.No.31986/2009
The company agreed to pay a sum of Rs. 1,50 per tube for a period of
6 months and Rs 2 per tube after 6 months it was agreed that
separate Bank account will be opened and complainant would be
entitled to operate the account. The complainant also required GPA to
be executed by accused No.2 in respect of his personal property (A site
required title deed to be retained by him as security). Thereafter there
were further ingredients between the complainant and accused No.1
company it was decided that earlier agreement would be cancelled
and different agreement be entered into, which agreement was
executed on 5/3/2007 in which the complainant agreed to treat
whatever monies that had been expended by the complainant in the
earlier agreement as a loan and further agreed to advance further
sums to the said company, so that entire amount be advanced would
comes to Rs. 1.21 crores to be repayable with certain interest. It
was also agreed that complainant would pay on behalf of said
company an amount payable to KSFC towards one time settlement of
the claim of KSFC and that the title deeds pertaining to the property
belongs to the company would be taken by the complainant on the
claim of KSFC being settled. It was also agreed that complainant
would have transfer deed in respect of his shares held in the
company. Accused No.2 be handed over to complainant along with
share certificate. Further required post dated cheques issued by the
company as security towards loan agreed to be made. The
complainant had come into possession of certain cheques pertaining
13 C.C.No.31986/2009
to accused No.1 company in connection with agreement dt: 5/3/2007
when the arrangement dt: 27/7/2006 was commencing., the
complainant was operated the account of the company and he was in
possession of the cheque books pertaining to the company including
the cheques having signatures of the then director of the company.
Even though the arrangements as per the agreement dt: 27/7/2006
changed, complainant obviously continued to remain in possession of
such cheques, which was not thought of otherwise at that point of
time, considering the relationship and trust which was existed at that
point of time. After the agreement dt: 5/3/2007 the complainant
started evincing interest in taking over the management of the
accused No.1 company instead of having a situation of the company
having to repay any amount to him. Further stated that interest in
taking over shares in the first accused company in taking over
completely the management of the company. Accordingly on
14/2/2008 a MOU came to be executed between the complainant with
accused No.1 company. This was not super session of the earlier
agreement dt: 5/3/2007 etc., and he denied the rest of the contents of
the notice and contended that though the complainant had
undertaken to close the existing bank account as per the MOU dt:
14/2/2008, it appears that he has not done so and is now trying to
take undue advantage of his own fault and trying to concoct cheques,
presenting them on the ground which have been remaining dormant
and un-operated since quite sometimes and claim as if monies are
14 C.C.No.31986/2009
due to him etc., Against to Ex.P-20 reply notice complainant has not
issued any rejoinder or counter by admitting or denying the facts
stated in the reply notice except in complaint as stated the accused
persons issued evasive reply. Further Ex.P-21 is the search report of
company secretary, in which the accused No.2 and 3 and others
were also active participate in accused No.1 company and in this
report mentioning the authorize his share capital as paid up capital
etc., Further got marked Ex.P-22 letter addressed by accused No.2
as Director of accused No.1 company to the complainant on 5/2/2009
that said settlement of loan account of accused No.1 company with
him in which he has stated that he is the Managing director of the
accused company due in sum of Rs. 1,90,50,000/- to the
complainant as on this day being the total amount borrowed by the
company along with interest. Towards discharge of said amount, he
acknowledged the issuance of cheques in favour of complainant drawn
in the account of M/s. Spectra Lamps Pvt. Ltd., by mentioning the
cheque numbers of the alleged cheques in this case and he
undertaken one of the said cheque on the due dates and confirmed
that on their earlier agreements, understandings are here by cancelled
and confirmed having taken back and original documents executed by
him and company in favour of the complainant and agreed with except
honouring of the cheque there is no settlement between them
whatsoever etc., Identified the signatures of one Balaji singh as
Ex.P22.b. Ex.P-23 is the complaint in dispute and at the time of cross-
15 C.C.No.31986/2009
examination DW-1 got marked Ex.P-23 as the letter head of accused
No.1 company addressing to the Manager of the Bank of India,
Bangalore on 10/1/2007 in which the subject is change of signature
for current account etc., signed by accused No.2 in which he informed
that the complainant ceases to be a signatory w.e.f. 9th march 2007.
and this accused No.2 is the director shall be signatory to operate
the above mentioned account until further notice etc., Further got
marked Ex.P-25 as certified copy of the judgment in the case C.C.No.
24021/2006 on the file of XX ACMM, Bangalore in which also filed
private complaint against present accused No.1 company herein and
accused No.2 and one Gopalakrishna and after this court was
convicted the accused in that case.
11. In support of the case of complainant, the complainant
examined one witness as PW-2 Balaji Singh his evidence has been
filed by way of affidavit in which he has stated that he knows both
complainant and accused and he is one of the member of the Lions
club at Jayanagar, as such he knows each other from last 10 years.
During February 2009 he went to the Office of complainant in order to
discuss some progress connecting to the Lions club, at that time
accused No.2 was also present in his chamber and both are requested
him to sign 2 papers connecting to settlement of dispute amongst
themselves. Accordingly, he put his signatures at Ex.P-22 and
identified the signature as P-22.b. in his cross-examination he has
stated that he knows the complainant had paid loan amount to
16 C.C.No.31986/2009
accused No.2 till he reached the office of complainant, he do not
having any knowledge of the money transaction with complainant
and accused No.2. At the time of putting his signature and also he
was not present at the time of preparing the said document and hence
could not able to say what is that document and he deny that in order
to support the case of the complainant he deposed falsely etc., on the
basis of the cross-examination of PW-2 his evidence will not helpful to
the case of complainant to support his case.
12. The accused has denied the entire case of the complainant.
In support of his denial accused counsel filed affidavit of accused No.2
as DW-1 same is not objected by complainant counsel, in which, he
has stated as per the contents of the reply notice and got marked
Ex.D5 as the agreement taken place between complainant and
accused No.1 company on 27/7/2006. As per this agreement the
complainant herein is the Ist party and accused No.2 Vijayendra Babu
is the second party. As per the terms of agreement the first party
agreed to pay for the materials i.e., the second party purchased
periodically directly to the suppliers and agreed to collect money on
production and marketing of the tube light etc., Further the first
party agreed to pay a sum of Rs. 20 lakhs to IInd party as earnest
money which is refundable on expiry of the termination of this
agreement. Further agreed the first party invested Rs.30 lakhs
towards meeting working capital of the second party in the form of
17 C.C.No.31986/2009
selling raw materials etc., Further agreed to pay consideration for
investment made by the Ist party on the basis of the sale calculation
and also agreed to open separate Bank account and some other
conditions and put the signature by both parties. Further got
marked Ex.D-6 as agreement dt: 5/3/2007 in which both
complainant and accused No.2 agreed with agreement dt: 27/7/2006
and now mutually decided to cancel the said agreement and this
present agreement has been taken place between them and the Ist
party agreed to part Rs. 1,21,000/- from the IInd party at the interest
at the rate of 24 % P.A. on reducing balance. Further agreed the IInd
party to settle KSFC loan out standing against Ist party is determined
by KSFC. Further the documents collected from KSFC will be held by
IInd party as security etc., on some other terms and conditions as per
contents of reply notice. Further got marked Ex.D-7 letter addressed
by accused No.2 on 10/2/2009 to the Registrar of companies with the
subject Resignation of Director of the company of Ist accused. Ex.D-7
is another letter issued by accused No.2 on 21/1/2009 to Branch
Manager, Bank of India which is the subject matter payment of dues
by first accused company regarding saying that company has been
taken over by complainant and complainant is the Managing director
of the company copy of the take over agreement is enclosed for
reference etc., Further got marked Ex.D-9 is another copy of letter of
address by accused No.2 on 5/2/2009 to the Branch Manager, Bank
of India quoting previous letter saying that it was decided yesterday to
18 C.C.No.31986/2009
publish photo and file against company before 5th February with
minimum of 1.5 lakhs cash with post dated cheques for remaining
amount not deposited or on before 31st January, now it is up to you
regarding etc., Further it is mentioned that he had substantially
explained to the Banker present positing of first accused company
giving true copies of Memorandum of Understanding. Further, it is
stated that himself and accused No.3 no longer continued as directors
of first accused company etc., Further got marked Ex.D-10 is the
certified copy of the Judgment passed in OS No. 3374/2010 on the
file of 12th Addl. City Civil and Sessions Judge, Bangalore in which
the Bank of India filed suit against the Ist accused herein and also
defendants No.2 to D-5 who are the accused No.2 and 3 and the
complainant in this case and against one Sheela Kumar for recovery
of money. The said suit was instituted on 24/5/2010 after contest
the said suit was decreed against the defendant No.1 company and
the defendant No.1 company is liable to pay amount with interest
etc., and suit against defendants No. 2 to 5 is dismissed. At the time
of cross-examination of PW-1 accused counsel got marked Ex.D-1
Misc. No. 1/2001 on the file of District Judge, Mandya filed by KSFC
against the accused No.1 to 3 herein and also one Savitha and
Anuradha under Sec. 31(1) and (a) under Sec. 32 of the Karnataka
Financial Corporation Act as the copy of the petition and in which he
seeking recovery of total sum of Rs. 3,37,52,313/- and also minutes of
the meeting of board of directors of the first accused company herein
19 C.C.No.31986/2009
in which the director of company discussed about the transfer of
shares and identified his signature of complainant herein as D-1.a.,
D1.b. Further got marked Ex.D-2 another minutes taken between
complainant the accused with respect of company of accused No.1
herein and identified the signatures of both the complainant and
accused No.2 as Ex. D-.2.a. to D-2.(h). Ex.D-3 is the letter stands in
the name of first accused company herein addressed to one Ramesh
H.K. acceptance of resignation dt: 26/2/2008 and this complainant is
the Managing director issued said letter. Ex.D-4 is the memorandum
of understanding taken between the complainant with accused No.1 to
3 company in which the first party i.e., the complainant herein in this
case take over the company and on consideration of transfer of entire
shares and the accused No.2 has tendered his resignation as director
of company etc., on the basis of the oral and documentary evidence of
accused, the accused has given rebuttal evidence of case of
complainant, the complainant failed to give contrary evidence to the
case of accused as per the contents of reply notice. Hence, prima-
facie case of complainant has doubtful whether he really advanced
loan amount as per the contents of complaint and for discharge of
legal liability accused issued the cheques in question, same are
dishonoured etc., Accused counsel cross-examined PW1 in the cross-
examination elicited that one Shivalignaiah has instigated to
complainant etc., but he has stated that instigation means
introducing etc., Further at page 12 of the cross-examination stated
20 C.C.No.31986/2009
he do not know the amount paid to the accused in lump sum, but
various dates he paid the said amount and he could not able to say
what are all the dates and how much amounts has been paid to the
accused, but he has stated that some of amount given by way of
cheque and some of amount given by way of cash, but exactly how
much amounts has been paid by cheque and by way of cash, the
accused himself has agreed to repay the said amount with interest at
the rate of 2 % P.M. For that in the agreement nothing has been
mentioned except as full and final settlement word has been
mentioned and the amount given to accused is obtained from his
personal bank account. For that he has not produced any Bank
statement or pass book. It came to know that accused himself is
defaulter in various banks in the year 2008 and from the year 2008 he
demanded the accused to repay the amount and compromise meeting
was held in his office itself, and he do not know when it was held, at
that item one Balaji singh and Nagesh and one of the persons belongs
to accused company were present. Further as per Ex.P22 as full and
final settlement documents and the green sheet at Ex. P-22 has got
typed by the accused himself and in this document it is mentioned
taken back original documents that means there was a separate
agreement taken between them etc., and in this document there is
recital for return of documents and he is earning 2 lakh PM and he
undertakes earning, but he has not able to produce the documentary
evidence etc.,
21 C.C.No.31986/2009
13. In the further cross-examination of PW-1 he denied that he
has not made all the directors of the company as necessary parties,
but he voluntarily stated that he paid the amount from the side of the
company. Further he has stated that as per Ex.P-20, he has not given
any reply to the reply notice issued by the accused. Further he
admitted that he made documents for having taken over first accused
company for that whether he has produced any documents or not is
to be seen. But he denied that the accused No.2 and 3 have resigned
to the said company and he denied that at the time of taking over the
first accused company on 23/3/2008 there was resolution passed
but he admitted that the signatures found on the resolution at Ex.D-1
belongs to him. As per this resolution accused No.2 and 3 herein
have resigned to the Post of directors of the accused No.1 company.
Further, he denied that their resignations has been accepted. Further
he has admitted that during the year 2007-08 as per the assessment
of Income tax return the Managing director of the company has not
signed and he denied that accused No.2 and 3 have sold accused No.1
company herein in the month of February 2008 and they have sent
their resignation to the said company. For that he has stated
ignorance, but he admitted that himself and one Jaya Srinivasan are
good friends and purchasers of the first accused company. He has
not made any documents, but he admitted that there was signatures
of accused No.2 on Ex.D3 and identified the signature of accused No.2
as Ex.D2.a to D2.h. As per this Ex.D2, accused No.2 has sold the
22 C.C.No.31986/2009
entire Assets and liability of the company. But he voluntarily stated
that all these documents have taken as security and he denied that
accused No.2 and 3 are not at all directors of the accused No.1
company herein and he admitted that he has not sent legal notice to
the directors, except accused No.2 and 3. Further on 23/2/2008 he
made a signature on the resolution and as per Ex. D1, resolution as
security he put his signature and he denied that he being the
Managing director of the company he put his signature and he denied
that one Vijayendra Babu and one Menaka sent their resignation to
the first accused company. For that the same has been accepted. But
he denied that the signature found on Ex.D3 is not his signature. But
it appears to be signed by this witness and as per Ex.D4 Memo of
understanding, he has not purchased the accused No.1 company.
But, he has stated that as per Ex.D4, he taken this Ex.D-2 as security
and he denied contents of Ex.D-2. But as per Ex.D2 he taken over all
the company affairs to himself, but he has voluntarily stated that he
returned back the said documents etc., Further he came to know that
accused No.2 obtained various loans from the Bankers and financial
institutions and he denied that Ex.D-2, accused No.1 company has
been taken over by himself and his wife and whenever he met
accused No.2 asking for cheque, at that time of asking the cheques,
no one present, but admitted that accused No.2 was met with an
accident in the year 2007 and he has stated ignorance about issuance
of cheque to accused No.2, dishonour of cheque etc., In this case
23 C.C.No.31986/2009
except total denial of contention of accused, nothing has been proved
by the complainant to show that for existence of legal liability, accused
issued cheques in question, same are dishonoured etc.,
14. In support of case of complainant, the complainant counsel
submitted his written arguments by narrating both parties facts and
circumstances and he relied on the decisions reported in;
1) 2006(5) KarLJ 323, Between STP Limited, Bangalore. Vs. Usha
Paints and Decorators, Bangalore and Another, wherein it is held:
Negotiable Instruments Act, 1881, Sec. 138- Dishonour of cheque-
No distinction between cheque issued for repayment and issued as
security for repayment- Held- Dishonour-Offence under Sec. 138.
2) ILR 2006 Karnataka 1730 between Dr. B.S. Sampathkumar .Vs.
Dr. K.G.V. Lakshmi. Wherein it is held:
Negotiable Instruments Act, 1881, Sec. 139, 138- Dishonour of
cheque- Cheque issued as 'Security'- Cheques issued only as security
for repayment of the loan and blank cheques issued- complaint
dismissed- Legality of dismissal challenged- Held- The dismissal of the
complaint on the plea that it was issued only as security and hence no
prosecution would lie is an untenable view. A Cheque whether issued
for repayment of loan or as security makes little difference under
Section, 138 of the Act, In the event of dishonour, legal consequences
24 C.C.No.31986/2009
are same without distinction. When once issue of cheque is proved, a
presumption under section 139 of the Act would arise with regard to
consideration.
3) ILR 2004 Karnataka 4423, Between Goa Plast (P) Ltd., .Vs.
Chico Ursula D'souza. Where in it is held:
(A) Negotiable Instruments Act, 1881, Sec.s 138, 139 & 142- Stop
Payment instructions in case of post dated cheques-Whether
presumption under Sec. 139 could be invoked-Cheques issued
towards repayment of amount misappropriated by respondent -
Subsequent letter admitting liability but not responsibility for that
liability-On facts and evidence presumption under Sec. 139 could be
invoked-Trial Court and High Court failed to appreciate the object
behind provisions of Sections 138 and 139.
4) (1992) 73 Company cases 80 (102) Kerala. Between
Mathrushumi Printing and Publishing Co. Ltd., .Vs. Vardhaman
Publishers Ltd and Others. Wherein it is held:
Transfer of Shares- Board of Directors-Refusal to register-
requirements of Sec. 108 mandatory-Transfer deeds-"Duly stamped"-
Meaning of adhesive stamps should be cancelled at time of execution-
Stamps cancelled at time of lodgment with company-Deeds not only
stamped- No valid lodgment-Transfer fee not paid-Companies Act,
25 C.C.No.31986/2009
1956.Ss. 108, 155;Sch.I,Table A Art 22, Indian stamp Act,1899,Ss.
2(11),12,63.
15. On the basis of the aforesaid decision, coupled with entire
evidence of PWs-1 and 2 are not supported his case to prove that for
existence of legal liability, accused persons issued cheques in question
same is dishonoured due to 'Insufficient funds'. Instead of
complainant approaching the Civil court, he filed this case against the
accused alleging that the accused have committed the offences
punishable under Sec. 138 of NI Act as against the ingredients of
offence punishable under Sec. 138 of NI Act. Hence, the complainant
has not approached this court with clean hands.
16. In support of the denial of case of complainant, the
accused lead his defence evidence as DW-1, in which, he reiterated
reply notice contents and in his cross-examination by the complainant
counsel except total denial of defence taken by accused, nothing has
been proved that accused obtained loan amount from this
complainant and for repayment of said amount issued cheques in
question, same are dishonoured etc., This DW1 has admitted that
signatures found on the alleged cheque in question are belongs to
him. Apart from his signatures, there are some other signature found
on the cheques and he denied that at no point of time the complainant
and his wife never being directors of accused No.1 company and he
26 C.C.No.31986/2009
denied that Ex.D-1 to D5 documents have been created for the
purpose of this case.
17. In support of the case of accused, the learned counsel for
the accused submitted written arguments, in his written argument
narrated both parties facts and circumstances of the case. In support
of his contention, he relied on the decisions reported in :
1) 2000(4) KarLJ 145 between Ramanna .Vs. T. Jayaprakash.
Where in it is held:
Banking-Dishonour of cheque-Sections 138 and 142 Negotiable
Instruments Act, 1881-Whether serving of demand notice under
Section 138 compulsory before- Magistrate takes cognizance of
offence of dishonour of cheque-under Sec 138 and 142(b) cause of
action arises on service of notice to accused by complainant and on
expiry of fifteen days from service of notice-complainant to show
that he had duly served demand notice to accused-Magistrate to
take cognizance only when valid cause of action arises- cognizance
of offence by magistrate without any materials as to service of
demand notice without jurisdiction.
2) AIR 2002 Bom 194 Between Saumil Dilip Mehta .Vs. State of
Maharastra and Ors. Wherein it is held:
(A) Companies Act,1956-Section 303(2), Form 32- Retirement of
Director- Resignation by director addressed to the Chairman-
27 C.C.No.31986/2009
Acceptance of resignation by the Board of Directors-Director ceases to
be director-Filling of Form 32 and completing other requirements of
Company Law is the duty of the Company Secretary.
18. On the basis of the aforesaid decisions coupled with defence
taken by the accused are supports his case, the complainant failed to
give contrary evidence to the defence taken by the accused, except
total denial to the case of accused. As such on the basis of the above
said facts and circumstances, the complainant failed to prove that for
existence of legal liability, accused persons issued the cheques in
question, same are dis-honoured due to 'Insufficient funds'. Accused
has given rebuttal evidence to the case of complainant to show that
complainant has not approached the court with clean hands and
failed to prove the alleged guilt of the accused beyond all reasonable
doubt. In the circumstances, the accused is entitled for acquittal.
Accordingly, I answer point No.1 in Negative.
19. POINT NO.2: For the above said reasons, I proceed to pass
the following:
ORDER
Acting U/s 255(1) of Cr.P.C., the accused No.1 and 2 are acquitted of the alleged offence punishable u/s 138 of N.I.Act.
28 C.C.No.31986/2009The accused was awarded compensation of Rs. 25,000/- from the complainant for the false case filed against him and same shall be paid to the accused within a period of 30 days from the date of order.
Accused is set at liberty and his bail bond and surety bond shall stand cancelled.
(Dictated to the Stenographer, transcribed and computerized by her, corrected and then pronounced by me in the open court on this the 4th day of February 2015) (NAGARAJEGOWDA.D) XXII Addl. Chief Metropolitan Magistrate, Bangalore City.
*** ANNEXURE Witnesses examined for the Complainant:
PW.1. C. Hemantha kumar. PW.2. R. Balaji Singh. Witness examined for the accused:
DW.1. R. Vijayendra Babu.
List of Documents marked for the Complainant:
Ex.P1
to P3 Cheques
Ex.P1(a)
to P3(a) Signature of accused
Ex.P4
to P6 Bank Endorsement.
29 C.C.No.31986/2009
Ex.P7 Copy of legal notice
Ex.P8
to P15 Postal receipts
Ex.P16
& P17: Postal Acks.
Ex.P18
To P19 Unserved Covers.
Ex.P20. Reply notice.
Ex.P21 Search Report.
Ex.P22. Settlement of Loan. Ex.P22.a. Signature of accused. Ex.P22.b. Signature of PW-2. Ex.P23. Complaint.
Ex.P24. Copy of letter to Bank of India. Ex.P25. Certified copy of the of Judgment in C.C.No.24021/2006.
List of Documents marked for the accused: Ex.D1 Copy of Misc. No.1/2001 at DJ Mandya. Ex.D.1.a. Signature of complainant. Ex.D.1.b. Signature of complainant.
Ex.D2 MOU dt: 25/2/2008 EX.P2.a. to 2.h. Signature of complainant & accused. Ex.D3: Resignation Ltr. Dt: 26/2/2008 Ex.D4. MOU dt: 4/2/2008.
EX.D5. Agreement dt: 27/7/2006 Ex.D6: Agreement dt: 5/3/2007 Ex.D7: Letter to Registrar of Companies. Ex.D.8: Certified copy of the of Letter to Manager Bank of India dt: 21/1/2009. Ex.D.9: Certified copy of the of Letter to Manager Bank of India dt: 5/2/2009. Ex.D.10. Certified copy of the of decree in O.S. No. 3374/2010.
XXII ACMM, Bangalore.30 C.C.No.31986/2009
04.02.2015 Compt.
Accd.
For Judgment Judgment pronounced in the open court (vide separate order with the following operative portion Acting U/s 255(1) of Cr.P.C., the accused No.1 and 2 are acquitted of the alleged offence punishable u/s 138 of N.I.Act.
The accused was awarded compensation of Rs. 25,000/- from the complainant for the false case filed against him and same shall be paid to the accused within a period of 30 days from the date of order.
Accused is set at liberty and his bail bond and surety bond shall stand cancelled.
XXII Addl. Chief Metropolitan Magistrate, Bangalore City.