Bangalore District Court
Mr.M.V.M.Murali Krishna vs M/S. Malgudi Properties on 16 April, 2019
IN THE COURT OF THE XXXIII ADDL. CHIEF
METROPOLITAN MAGISTRATE, BENGALURU CITY.
(SCCH5)
DATED THIS THE 16TH DAY OF APRIL 2019
PRESENT: SMT. SHARMILA S. B.Com, LLB.,
VIII ADDL. SCJ & XXXIII ACMM
MEMBER MACT
BENGALURU.
C.C No.27078/2012
COMPLAINANT : Mr.M.V.M.Murali Krishna
Aged about 32 years
S/o. Sri. M.V.Ramanaiah
R/at. No.6, Flat No.301,
Krish Apartments, 9th Main,
Malleshpalya,
New Thippasandra Post,
Bangalore 560 075.
(By Sri.Arun Bhat, Adv.,)
V/s
ACCUSED : 1. M/s. Malgudi Properties
No.35, Ranga Nivas,
9th Cross, 2nd Stage,
Brindavan Extension,
Mysore 570 020,
Represented by its authorized
signatory
Mr.Y.R.Rajesh Kumar
2 CC NO.27078/2012
SCCH5
2. Mr.Y.R.Rajesh Kumar
S/o. Late. Sri.Chakrapani
Proprietor,
M/s. Malgudi Properties,
No.35, Ranga Nivas,
9th Cross, 2nd Stage,
Brindavan Extension,
Mysore 570 020.
(A1 & A2
By Sri.Vinay Naik, Adv.,)
*****
::JUDGMENT::
The Complainant has filed a private complaint under Section 200 of Cr.P.C. against the Accused for the offence punishable under Section 138 of Negotiable Instrument Act [in short NI Act].
2. The case of the Complainant is that, Accused No.2 is the Proprietor of Malgudi Properties, involved in the development of the property, represented to the Complainant that he has entered into an agreement with the land owner in respect of the property bearing Sy.No.46, measuring 20 guntas, situated at 3 CC NO.27078/2012 SCCH5 Dadahallivillage, Jayapura Hobli, Mysore Taluk and that the landowner has got the marketable title over the same and assured the Complainant that he will get the necessary conversion order for nonagricultural residential purposes and approved layout plan from the competent authority. Based on his representations, the Complainant agreed to purchase the residential plot in the layout known as Diya Enclave, supposed to be formed in Sy.No.46, measuring 20 guntas, situated at Dadahalli Village, Jayapura Hobli, Mysore Taluk. Accordingly, the Accused entered into an agreement to sell dated 06.06.2009 with the Complainant agreeing to sell 1200 square feet in the above said property. On the date of entering into an agreement the Complainant had paid a sum of Rs.2,00,000/ towards the part sale consideration to the Accused. Subsequent to entering into an agreement to sell, the Accused could not execute 4 CC NO.27078/2012 SCCH5 the sale deed by receiving the balance sale consideration as agreed in the agreement by furnishing the necessary documents and permissions from the competent authority.
3. Further the Complainant contends that, the Accused agreed to return the advance sale consideration amount paid by the Complainant and accordingly the Accused issued a cheque bearing No.989102 dated 20.11.2011 for Rs.2,00,000/, drawn on HDFC Bank Ltd., Saraswathipuram Branch, Mysore, assuring the Complainant that the same would be honoured on presentation and that Accused No.2 had issued the cheque to Complainant towards the legal debt owed by Accused to the Complainant. Accordingly, the Complainant presented the said cheque to his banker Axis Bank, M.G.Road Branch, Bangalore for realization of the said amount on 16.11.2011, to the shock and 5 CC NO.27078/2012 SCCH5 surprise of the Complainant the said cheque was returned as "funds insufficient' with an endorsement from the Accused Bank and the same was communicated to Complainant by his banker. After dishonor of the cheque, the Complainant has personally met the Accused and informed him about the dishonor of the cheque and to make necessary arrangement for alternative payment. The Accused deliberately not made any arrangements to refund the amount or to honour the cheque.
4. Immediately within 30 days of receipt of the dishonor of the cheque, the Complainant got a legal notice dated 07.12.2011 issued through RPAD and speed post to the Accused. The notice sent through RPAD to the address mentioned in the cause title is served on the Accused on 10.12.2011. In spite of receipt of legal notice, the Accused did not comply with the demand made in the notice, instead of making arrangement for payment of the 6 CC NO.27078/2012 SCCH5 cheque amount, the Accused got issued an untenable reply. Hence, the Complainant filed a private complaint against the Accused.
5. After perusal of the material available on record and on primafacia material grounds, this Court took cognizance and thereafter sworn statement was recorded and summons was issued to Accused persons. The Accused No.2, Proprietor of the Accused No.1 Company, appeared through his counsel and got enlarged himself on bail and substance of accusation was recorded as to the alleged offence under Section 138 of Negotiable Instrument Act. The Accused pleaded not guilty and claimed to be tried.
6. The Complainant -Mr.M.V.M.Muralikrishna, himself examined as PW1 and got marked Ex.P.1 to Ex.P.7 documents on his behalf and closed his side. The 7 CC NO.27078/2012 SCCH5 Accused No.2 himself examined as DW1 and got marked Ex.D.1 to Ex.D.8 and closed his side.
7. The statement of the Accused under Section 313 of Cr.P.C. was recorded. The Accused denied all the incriminating evidence appearing against him. The Accused has chosen to lead defence evidence on his side.
8. Heard the arguments of both the sides and perused the materials placed before the Court. Both the counsels have filed their written arguments in addition to their oral arguments.
9. The learned counsel for the Complainant relied on a decision reported in 2001 CRI.L.J.950 in between Pankajbhi Nagjibhai Patel V/s. State of Gujarat and Ant.
10. The learned counsel for the Accused has relied on following decisions;
8 CC NO.27078/2012
SCCH5
i) 1992 CRI.L.J. 2282 in between Anil Kumar and Anr. V/s. Ajai Butail and Anr.
ii) 2000 CRI.L.J.1988 in between Shanku Concretes Pvt. Ltd., V/s. State of Gujarat and Anr.
iii) 2003 (2) CRIMES 122 in between Capital Syndicate V/s. Jameela
iv) 2008 AIR SCW 738 in between Krishna Janardhan Bhat V/s. Dattatraya G. Hegde
v) 2008 AIR SCW 748 in between Kulwinder Kaur @ Kulwinder Gurcharan Singh V/s.Kandi Friends Education Trust & ors.
vi) ILR 2009 KAR 1633 in between Kumar Exports V/s. Sharma Carpets
v) 1994 CRI.L.J. 2768 in between Pradeep Chandran V/s. Nimmi Velappan and Anr.
11. From the above facts of the case, the points that arise for my consideration are: 9 CC NO.27078/2012 SCCH5 ::POINTS FOR CONSIDERATION::
1. Whether Complainant proves that the Accused No.2 is the Proprietor of Accused No.1 has entered in to an agreement of sale on 06.06.2009 and agreeing to sell 1200 square feet, as per the sale agreement the Complainant had paid a sum of Rs.2 lakhs towards part sale consideration, but he could not execute the sale deed and failed to furnish necessary documents and permission from concerned authority. To refund the advance amount, the Accused has issued a cheque bearing No.989102 dated 20.11.2011 for Rs.2,00,000/ drawn on HDFC Bank, Saraswathipuram Branch, Mysore and on presentation, it was dishonoured for the reason "Funds Insufficient" and despite receipt of legal notice, the Accused did not make payment of the cheque amount within the stipulated period, but replied with false allegations, thereby committed an offence under section 138 of N.I.Act?
2. What Order?
12. My findings to the above points are:
Point No.1: In the Affirmative, Point No.2: As per final order for the following: 10 CC NO.27078/2012 SCCH5 ::REASONS::
13. Point No.1: Existence of legally recoverable debt is a sine qua non for prosecuting the case under Section 138 of Negotiable Instruments Act. For convenient purpose the essential ingredients to constitute offence under Section 138 of N.I.Act is summarized as below:
(1) That there must be a legally enforceable debt.
(2) That the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes the legally enforceable debt. (3) That the cheque so issued had been returned due to insufficiency of funds.
14. It is the core contention of the Complainant that the Accused No.2 is Proprietor of A1 Company, involved in the development of property has represented 11 CC NO.27078/2012 SCCH5 and entered into agreement with the land owner of Sy.No.46 measuring 20 guntas of Dadahalli Village, Chaitara Hobli, Mysore and assured that he will get necessary conversion order for nonagricultural residential purpose, he had agreed to purchase plot in the layout known as Diya Enclave to be formed in Sy.No.46. The Accused entered into agreement of sale on 06.06.2009 agreeing to sell 1200 Sq.ft in the said property. On the date of agreement, the Complainant had paid Rs.2 Lakhs towards part sale consideration. Subsequently, Accused could not execute the sale deed and failed to furnish necessary documents and permission from concerned authority. Therefore, to refund the advance amount, Accused issued a cheque for Rs.2 Lakhs dated 20.11.2011 drawn on HDFC Bank and the same was presented for encashment through Axis Bank and came to be dishonoured for the reason 12 CC NO.27078/2012 SCCH5 'insufficient funds' in the account of Accused. The Bank issued endorsement on 23.11.2011, thereafter he got issued legal notice on 07.12.2011 and the said notice served and the Accused sent reply dated 10.12.2011 denying their liability and not paid the cheque amount.
15. In order to bring home the guilt of the Complainant examined himself as PW1 and reiterated the contents of complaint in his examinationinchief. He has also placed on record Original Cheque No.989102 for Rs.2,00,000/ dated 20.11.2011 at Ex.P.1. The Complainant has also placed on record memo issued by the HDFC Bank Ltd., on 23.11.2011 at Ex.P.2. Ex.P.3 is the copy of Legal Notice, Ex.P.4 Postal Receipts, Ex.P.5 & Ex.P.6 are the Postal Acknowledgements, Ex.P.7 Reply by the Accused. The Accused's counsel crossexamined the Complainant wherein it was suggested regarding return of original agreement of sale to him, that means to say 13 CC NO.27078/2012 SCCH5 original agreement of sale is with the Accused. Further it is the defence of the Accused that in June 2011, Complainant requested the Accused to return the initial advance of Rs.2 Lakhs at that time Accused indicated to Complainant that in terms of agreement to sell, Accused was entitled to forfeit 10% of the total sale consideration and return the remaining amount to the Complainant, but he was not agreeable to the same, the Complainant launched a blog title as "Rajesh Kumar YR=Money Launder?' as defame against the Accused and initiated vilifying campaign to destroy and tarnish Accused marked reputation by informing Accused common friends and relatives and indulged in threatening the Accused and further jeopardized Accused Visa, official documents and Financial standing by blacklisting him. After some negotiations Accused agreed to refund the amount on the condition that Complainant ceases ad desists form 14 CC NO.27078/2012 SCCH5 defamatory campaign against Accused and only to indicate his bonafides handed over a cheque to Complainant. It was agreed and understand between them cheque was to be deposited/encashed only if Complainant were enter into a cancellation agreement and further only Complainant ceasing to defame statement against Accused deleting the defamatory blog.
16. Further the Accused contends that, mutual understanding that Complainant must enter into a cancellation agreement wherein the original agreement to sell must be cancelled and upon a further understanding that Complainant will desist from withdraw the defamatory campaign against Accused and also Accused forwarding cancellation of agreement on 19th August 2011, Complainant has failed to cooperate and sign the letter of cancellation. In spite of repeated reminders from Accused, Complainant has failed to execute the 15 CC NO.27078/2012 SCCH5 cancellation agreement and Accused requested the Complainant to return to the cheque, but Complainant illegally with malafide intention deposited the cheque without there being a debt due to the Accused, thus since without entering into a letter of cancellation and withdrawing from the defamatory campaign is not complied by the Complainant. Without made compliance Complainant has present the cheque and he has filed present complaint.
17. From this evidence the Accused has taken a defence that along with his reply he sent draft copy of cancellation of agreement to sell and due to said reasons he is not honour the said cheque. In the said reply the Accused admitted that he had entered into an agreement to sell on 9th June 2009 wherein the Complainant agreed to purchase a plot in Divya Enclave for a total consideration of Rs.4,80,000/ and the Complainant had 16 CC NO.27078/2012 SCCH5 paid an amount of Rs.2,00,000/ as advance for concluding the final sale deed.
18. In order to substantiate their contention the 2nd Accused himself examined as DW1 and got marked Ex.D.1 & Ex.D.8 documents. In the course of cross examination, the Accused deposed that:
"The Complainant known to him through his relative one Sampath. Complainant has paid advance amount of Rs.2 lakhs. In that regard sale agreement has been executed in July 2009. He has received cheque from the Complainant as per agreement and realized the amount in their firm name. In the year 2011 Complainant is asked for cancellation of agreement, they tried to resolve in other manner, but finally it was agreed to cancel. The cancellation was agreed by him that Complainant had made defamation blog in his name and his company name is to be removed and cancellation 17 CC NO.27078/2012 SCCH5 agreement is to be entered and he has promise to repay as agreed. In the month of May 2011 they orally agreed to comply the condition and then he issued post dated cheque, the post date may be of four or five months".
19. From the above evidence, it reveals that the Accused had admitted the issuance of cheque to the Complainant in respect of the agreement entered between them and the Complainant. The only contention of the Accused is that the Complainant filed by the present complaint for recovery of money i.e., repayment of advance sale consideration amount, said transaction is purely civil in nature and present criminal prosecution is not maintainable.
20. In the written arguments the Accused's counsel relied on a decision reported in 1991 CLJ 2282 18 CC NO.27078/2012 SCCH5 (Himachal Pradesh) between Anil Kumar Vs Ajai Butail wherein it was held that:
"In case of breach of agreement to sell flats and due amount was recovered by complainant in civil proceedings and hence continuation of Criminal proceedings on the basis of complainant for cheating would amount to abuse of process of Court".
21. Since this is not civil suit like, specific performance of contract, but it is specific case under Section 138 of NI Act as per the special enactment, question of trial of the case is with respect to the probability of the preponderance and not beyond any reasonable doubt and strict liability to be construed.
22. Further the Accused contends that, he has given blank cheque with specific rider on made proper due compliance prior presentation of cheque, but the Complainant without making proper compliance filling 19 CC NO.27078/2012 SCCH5 the blank cheque and present the same through its banker.
23. It can be presumed that, no any ordinary prudent man will issue signed blank cheque to any other persons without having monetary transaction between themselves and so also Accused being a very well educated and he being authorized signatory of the Accused No.1 and thereby, he know the cause and consequences when the signed blank cheques issued to any other persons and the said cheques were dishonoured under the process of law. Hence, the probability of the preponderance is higher on the side of the Complainant, rather than the Accused. Ordinarily offence under Sec.138 of N.I.Act mensrea is not essential, under Sec.138 of NI.Act, is bring in to operation rule of strict liability, whereas, mensrea is essential ingredients in criminal offences. Therefore, the Complainant has 20 CC NO.27078/2012 SCCH5 proved his case against the Accused, since element of mensrea has been excluded in general public interest to curb the instances of dishonouring of cheques and to lend the credibility to the commercial transaction. Therefore, in this case also the Accused knowing fully he was borrowed advance amount in question from the Complainant and for payment of the earnest amount he has issued Ex.P.1 to the Complainant.
24. At this stage it is useful to refer a recent decision decided on February 9, 2019 between Bir Singh Vs Mukesh Kumar wherein the Hon'ble Supreme Court of India held that:
"Negotiable Instruments Act, Presumption Under Section 139, 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 NI Act, in the absence of 21 CC NO.27078/2012 SCCH5 any cogent evidence to show that the cheque was not issued in discharge of a debt.
Further Held: 37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139 , makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer, if the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.
38. If the signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the 22 CC NO.27078/2012 SCCH5 cheque was not in discharge of a debt or liability by adducing evidence".
25. In the light of the above observation as per the case of the Complainant, the Accused No.2 has executed sale agreement by receiving earnest amount and he has failed to execute the registered sale deed and for discharge the earnest amount, the Accused No.2 being the Proprietor and authorized signatory of the Accused No.1 Firm and to that effect he has issued Ex.P.1. Further prior to filing of the present complaint, the Complainant has complied all the necessary ingredients under Section 138 of NI Act and it was duly served upon the Accused No.1 Firm and they have gave reply to the same. The Accused had produced draft copy of cancellation of agreement to sell and email blogs as Ex.D.1 to 8 under Section 65 B of Indian Evidence Act. The above said documents were marked subject to 23 CC NO.27078/2012 SCCH5 objection. In the reply the Accused contends that, "However, in the interest of bringing a quietus to this matter, my clients calls upon your client to sign and execute the cancellation letter at the earliest and undertake to stop any and all defamatory campaign including withdrawing their defamatory statements against my client, subject to the fulfillment of the above, your client may represent the cheque on 30 th January 2012, only if your client signs and executes the cancellation letter and put an end to the defamatory by undertaking, my client would immediately honour the cheque. Even during the course of crossexamination of PW1 the Accused's counsel put a suggestion that if the defamatory blogs were removed the Accused is ready to pay the cheque amount. From this the Accused admitted that he has issued the cheque for Rs.2 Lakhs and ready to return the cheque amount. Except putting the bald 24 CC NO.27078/2012 SCCH5 suggestion to the Complainant during the cross examination, nothing has been elicited to disbelieve the version of the Complainant. The burden is on the Accused to disprove the presumption under Section 138 and 139 burden which he failed to discharge at all. In Rangappa versus Sri Mohan, Hon'ble Supreme Court held that, "once issuance of a cheque and signature thereon are admitted, presumption of a legally enforceable debt in favour of the holder of the cheque arises".
26. In the instant case also the Accused admitted that he has issued blank signed cheque for the purpose of payment of advance amount. The Accused has admitted that he has received the cheque under the Agreement of sale from the Complainant and it was realized in the firm name. The Accused admitted the Cheque and the signature on the Ex.P.1 and the Court 25 CC NO.27078/2012 SCCH5 can presume that the cheque has been issued for discharging the debt or liability. Hence, it cannot be accepted that cheque was obtained by Complainant illegally.
27. Now let us consider whether the Accused is able to rebut the presumption available to the Complainant U/s.118(a) and Sec.139 of Negotiable Instruments Act. In a ratio laid down by Highest Court of the land in (2001) 3 SCC 16 (Hiten P. Dalal Vs. Bratindranath Banarjee) which reads thus:
B. Negotiable Instruments Act, 1881-- Ss.138, 139 and 118--Presumptions under-- Nature of--Standard of requisite proof for rebuttal--Held, it is obligatory on the court to presume the liability of the drawer for the amount of the cheque in every case where the factual basis for such presumption is established--Such a presumption can be 26 CC NO.27078/2012 SCCH5 rebutted by the drawer by proving on evidence that the holder of the cheque had not received the same towards the discharge of any liability
--Such rebuttal does not have to be conclusively established--The court must either believe the defence to exist or consider its existence to be reasonably probable--But mere explanation given by the drawer, although plausible, held would not suffice....."
28. In the instant case also, Complainant is able to discharge his onus. Therefore the principles enunciated in the above referred decision is squarely applicable to the facts of the present case. As already noticed, Complainant has discharged his onus by placing Ex.P.1 to show that Accused had borrowed loan from him. Under such circumstances, the presumption U/s.118(a) and Sec.139 of Negotiable Instruments Act arises in favour of Complainant. Therefore, principles enunciated in the decisions relied upon by the learned counsel for 27 CC NO.27078/2012 SCCH5 Accused is not applicable to the present facts of the case. Even it is well settled principle of law that cheque issued in discharge of other person's liability also attracts offence U/s.138 of Negotiable Instruments Act.
29. In this regard it is useful to refer to the ratio laid down by Hon'ble High Court of Karnataka in 2004(1) KCCR 8 (M/s GPR Housing Private Limited and Another Vs. K. Venugopala Krishna) which reads as under:
"CODE OF CRIMINAL PROCEDURE, 1973-- Section 482--Quashing of proceedings--Cheque dishonour proceedings--Accused approaching the High Court to quash the proceedings on the ground that the subjectmatter cheque was issued in a frustrated transaction and there was no valid consideration--Cheque was issued in favour of the respondent pursuant to the contract between the third parties, intending purchasers, from whom petitioners had collected the amounts. Whether proceedings could be quashed?28 CC NO.27078/2012
SCCH5 Held: Whatever liabilities which the petitioner had with the purchasers is sought to be discharged and if the cheque is issued in favour of the respondent it cannot be said that the cheque is not supported by consideration. The consideration flowing from a third party is also a valid consideration. I am unable to agree with the contention that the cheque issued is one without consideration and that the provisions of Section 138 would not attract."
30. Even though it is not incumbent upon the Accused to step into witness box to rebut the presumption available U/s.118(a) and 139 of Negotiable Instruments Act and in the instant case Accused has failed to rebut presumption available to Complainant under both these sections. Hence, the inevitable conclusion is that Accused has committed an offence punishable U/s.138 of Negotiable Instruments Act. Hence, I am of the considered opinion that Complainant is able to prove beyond all reasonable doubts that 29 CC NO.27078/2012 SCCH5 Accused has committed the offence punishable U/s.138 of Negotiable Instruments Act.
31. Regarding quantum of compensation, the materials placed on record depict that during 2011 Accused had received advance amount of Rs.2,00,000/ from the Complainant. Hitherto, Accused has not paid the same which amounts to unjust enrichment. Therefore, Complainant is entitled for reasonable compensation as contemplated U/s.143 of NI Act. Accordingly, I answer Point No.1 in the affirmative.
32. Point No.2 : For the discussion made above I proceed to pass following:
::ORDER::
Acting U/s.255(2) of Cr.P.C the Accused No.1 and 2 are convicted for the offence punishable under Section 138 of Negotiable Instrument Act and sentenced to pay a fine of 30 CC NO.27078/2012 SCCH5 Rs.50,000/ in default Accused No.2 shall undergo simple imprisonment for 6 months.
Further, it is made clear that the Accused persons is to be paid an amount of Rs.2,00,000/ to be paid to the Complainant as compensation as provided under Section 357[3] of Cr.P.C.
In default of payment of both compensation, the Accused shall undergo Simple Imprisonment for a period of three months.
Office is directed to supply certified copy of this judgment to the Accused on free of cost in compliance of Sec.363(1) of Cr.P.C. (Dictated to the Stenographer directly on the computer, typed by her, transcript revised corrected and then pronounced by me in the Open Court on this the 16th day of April 2019) (SHARMILA S.) VIII ADDL. SCJ & XXXIII ACMM MEMBER - MACT, BENGALURU.31 CC NO.27078/2012
SCCH5 ::A N N E X U R E::
LIST OF WITNESSES EXAMINED ON BEHALF OF THE COMPLAINANT:
PW1 : Sri. M.V. Murali Krishna LIST OF DOCUMENTS MARKED ON BEHALF OF THE COMPLAINANT:
Ex.P.1 : Original Cheque Ex.P.1(a) : Signature Ex.P.2 : Bank Endorsement Ex.P.3 : Copy of Legal Notice Ex.P.4 : Postal Receipts Ex.P.5 & : Postal Acknowledgments Ex.P.6 Ex.P.7 : Reply Notice
LIST OF WITNESSES EXAMINED ON BEHALF OF THE ACCUSED:
DW1 : Sri. Y.R. Rajesh Kumar LIST OF DOCUMENTS MARKED ON BEHALF OF THE ACCUSED:
Ex.D.1 to : Copy of Email Messages
Ex.D.6
Ex.D.7 : Copy of Cancellation of Sale
Agreement
Ex.D.8 : Copy of Email ID
(SHARMILA S.)
VIII ADDL. SCJ & XXXIII ACMM
MEMBER - MACT,
BENGALURU.