Bangalore District Court
Kenz Associates vs Unique Building Solutions on 21 August, 2025
KABC0C0033712021
IN THE COURT OF XXXIV ADDL. CHIEF JUDICIAL MAGISTRATE,
MAYO HALL UNIT, BENGALURU (ACJM-34)
PRESENT: Smt. PARVEEN A BANKAPUR,B.Com.LLB.
XXXIV ADDL. CHIEF JUDICIAL MAGISTRATE,
Dated : This the 21st day of August, 2025
C.C.No.51022/2021
COMPLAINANT : M/s. Kenz Associates
No. 6, 1st Block, 3rd Cross, Akshaya
Nagar, Doorvaninagar P.O.,
Bengaluru -16.
Rep by its Partner
Mr. K John Kennedy
(By Mr.Thushanath C.V.-Advocate)
V/s
ACCUSED : 1. M/s. Unique Building Solutions
Reg. Office at No.82, 2nd Floor,
Vijaya Plaza, Behind RTO Office,
Old Madras Road, Medahalli,
Bengaluru.
Rep by its Proprietor,
Mr. Puroshothama
2: Mr. Puroshothama
Proprietor of Unique Building
Solutions,
Reg Office at No.82, 2nd Floor
Vijaya Plaza, Behind RTO Office,
Old Madras Road,
Medahalli
Bengaluru - 49.
3.Mrs. Gowramma
W/o.Hanumaiah,
Aged about 52 years
No.82, 2nd Floor, Vijaya Plaza,
Behind RTO Office, Old Madras
Road, Medahalli,
Bengaluru -49.
Also available at
R/at Mutsandra,
Bellikere,Bengaluru Rural District.
(By Mr. Sudhanva - Advocates)
3
C.C.No.51022/2021
1 Date of Commencement 30.07.2020
of offence
2 Date of report of offence 17.12.2020
3 Presence of accused
3a. Before the Court 08.12.2021
3b. Released on bail 08.12.2021
4 Name of the Complainant M/s. Kenz Associates
5 Date of recording of 08.02.2021
evidence
6 Date of closure of evidence 05.08.2025
7 Offences alleged U/s 138 of the Negotiable
Instruments Act.
8 Opinion of Judge Accused are found guilty.
JUDGEMENT
The Private Complaint filed by the Complainant under Section 200 of Cr.P.C. against the accused alleging that they have committed the offence punishable under Section 138 of Negotiable Instruments Act.
2. The brief facts of the complaint are as follows:
The complainant submits that, it is doing business of structural consultant, builders and developers and Accused being a proprietor of Unique Building Solutions, who is doing the business of building solutions as steel trading in and around Bengaluru and Complainant is the partnership firm and both are doing their business. In usual course of business Complainant has approached the Accused on the basis of Accused's quotation letter dtd.18.2.2020 for purchasing the steels as mentioned in the 4 C.C.No.51022/2021 quotation to the Complainant. Accepting the Accused's quotation, the Complainant has ordered the material and transferred the entire amount to Accused's account as advance payment, the products details for purchase is as below:
Sl. Material Descriptions Approximate Price pet Total in Rs.
No. Quantity MT
1 0.8 mm Pulkit TMT Fe 550 3.0 MT Rs.45,500/- Rs.1,36.500/-
2 10 mm Pulkit TMT Fe 550 1.0 MT Rs.45,500/- Rs.45,500/-
3 12 mm Pulkit TMT Fe 550 2.0 MT Rs.45,500/- Rs.91,000/-
4 16 mm Pulkit TMT Fe 550 1.5 MT Rs.45,500/- Rs.68,250/-
5 20 mm Pulkit TMT Fe 550 1.0 MT Rs.45,500/- Rs.45,500/-
6 25 mm Pulkit TMT Fe 550 1.5 MT Rs.45,500/- Rs.68,250/-
Total 10.0 MT Rs.45,500/- Rs.4,55.000/-
It is further submitted that on the basis of Accused quotation dtd.18.2.2020 vide Q U No.4278-19/20 as following terms and conditions that, the prices are including loading, unloading and transportation, GST, 100% advance to be paid and delivery within one or two days from the date of payment. As such, believing with Accused's assurance and Complainant necessity, the Complainant issued a purchase order on 19.2.2020 and also paid entire sale consideration of TMT Steels amount through NEFT to Andhra Bank, account No.304111100001486, branch Medahalli.5
C.C.No.51022/2021 It is further submitted that but as per the assurance Accused have not supplied the material within stipulated time as agreed. When the Complainant not received the materials and after lapse of 2 days, the Complainant tried to contact the Accused, but in initial stage Accused kept on postponing the supply of material by giving false assurance. As such, the Complainant and its employees have visited the Accused office on several times, but in the office also Accused's employees have not given proper reply or information. Subsequent to that, the Accused office also closed on several occasions. Hence, Complainant tried to contact Accused through phone when Accused have not given proper reply in phone then the Complainant sent several requests through whatsapp e-mail and SMS etc. Even though the Accused have not given any proper reply and not sent the material till today.
It is further submitted that the Accused have received the above said amount from Complainant with promise to supply the materials and utilized the same for his benefit and failed to comply agreed promise. Thereafter, the Complainant has made several repeated requests to supply the material or return the said amount of Rs.4,55,000/-. But the Accused have neither paid the said amount nor supplied the materials. Hence, the Complainant 6 C.C.No.51022/2021 has issued a legal notice dtd.7.3.2020 through his counsel and same was refused by the Accused on 9.3.2020. After lapse of some time the Accused contacted the Complainant and issued a Cheque bearing No.000758 dated 30.07.2020 for Rs.4,55,000/- drawn on UCO Bank, Bidarahalli branch, Bengaluru in favour of Complainant to discharge said liability.
It is further submitted that, as per the instruction of the Accused, the Complainant presented the said Cheque for encashment through its banker i.e., Union Bank of India, PAI Layout branch, Bengaluru on 4.8.2020. The said Cheque has not honoured and same was returned with endorsement "funds insufficient". As per the request of the Accused, the Complainant re-presented the said Cheque for encashment on 19.10.2020. But even on the second occasion also it came to be dishonoured with reason "funds insufficient" on 20.10.2020. Thereafter the Complainant got issued legal notice issued to the Accused by RPAD on 2.11.2020, for demanding payment to the value of Cheque within 15 days from the receipt of notice. But the notice was returned unserved with a shara 'addressee left his registered office" on 3.11.2020. Despite knowledge of the notice, the Accused have not paid the Cheque amount. Hence, the 7 C.C.No.51022/2021 Complainant has filed present complaint against the Accused persons for the offence punishable u/Sec.138 of N.I. Act.
3. Based on the complaint, the sworn statement affidavit, and documents etc., took cognizance of an offence punishable Under Section 138 of N.I. Act by following the guidelines of Apex Court issued in Indian Bank Association case and ordered to be registered a criminal case against the accused for the offence punishable Under Section 138 of N.I. Act.
4. After issuance of summons, accused appeared before the court and enlarged themselves on bail. Plea was recorded, read over and explained to the accused, who pleads not guilty and claims to be tried. Hence, the case is posted for complainant's evidence.
5. The Partner of the Complainant company got examined himself as PW-1 and got marked documents Ex.P.1 to Ex.P.17 and closed his side.
6. Accused were examined U/S 313 of Cr.P.C.
Incriminating evidence appearing in the complainant's evidence was read over and explained to the accused who denies the same. The 2nd and 3rd Accused got examined themselves as DW1 and DW2. They also got examined one more witness from their end 8 C.C.No.51022/2021 as DW3 and Ex.D.1 came to be marked from the side of DW3 and closed their side.
7. Heard both sides.
8. Upon hearing the arguments and on perusal of the materials placed on record, the following points arise for my consideration.
1) Whether complainant proves beyond all reasonable doubts that accused in discharge of legally recoverable debt have issued a Cheque No.000758 dated 30.07.2020 for Rs.4,55,000/- drawn on UCO Bank, Bidarahalli branch, Bengaluru in favour in favour of the complainant which came to be dishonoured with an endorsement "funds insufficient" and in spite of knowledge of notice accused has not paid the Cheque amount and thereby committed an offence under Section 138 of N.I.Act?
2) What Order?
9. My findings on the above points is:
Point No.1: In the Affirmative Point No.2: As per final order for the following:
REASONS Point No.1:-
10. 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 9 C.C.No.51022/2021 to constitute offence under section 138 of N.I.Act is summarized as below:
(i) That there must be a legally enforceable debt.
(ii) 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.
(iii)That the cheque so issued had been returned due to "insufficient funds".
11. It is the core contention of the complainant that, it is doing business of structural consultant, builders and developers and Accused being a proprietor of Unique Building Solutions, who is doing the business of building solutions as steel trading and Complainant is the partnership firm and both are doing their business. In usual course of business Complainant has approached the Accused on the basis of Accused's quotation letter dtd.18.2.2020 for purchasing the steels as mentioned in the quotation to the Complainant. Accordingly, the Complainant has ordered the material and transferred the entire amount to Accused's account as advance payment, the products details for purchase is as below:
Sl. Material Descriptions Approximate Price pet MT Total in Rs.
No. Quantity
1 0.8 mm Pulkit TMT Fe 3.0 MT Rs.45,500/- Rs.1,36.500/-
550
10
C.C.No.51022/2021
2 10 mm Pulkit TMT Fe 550 1.0 MT Rs.45,500/- Rs.45,500/-
3 12 mm Pulkit TMT Fe 550 2.0 MT Rs.45,500/- Rs.91,000/-
4 16 mm Pulkit TMT Fe 550 1.5 MT Rs.45,500/- Rs.68,250/-
5 20 mm Pulkit TMT Fe 550 1.0 MT Rs.45,500/- Rs.45,500/-
6 25 mm Pulkit TMT Fe 550 1.5 MT Rs.45,500/- Rs.68,250/-
Total 10.0 MT Rs.45,500/- Rs.4,55.000/-
It is further submitted that on the basis of Accused quotation dtd.18.2.2020 vide Q U No.4278-19/20 as following terms and conditions that, the prices are including loading, unloading and transportation, GST, 100% advance to be paid and delivery within one or two days from the date of payment. As such, believing with Accused's assurance and Complainant necessity, the Complainant issued a purchase order on 19.2.2020 and also paid entire sale consideration of TMT Steels amount through NEFT to Andhra Bank, account No.304111100001486, branch Medahalli.
12. It is further submitted that even after several requests also, the Accused not supplied the materiel and avoiding Complainant. Thereafter, the Complainant has made several repeated requests to supply the material or return the said amount of Rs.4,55,000/-. But the Accused have neither paid the said amount nor supplied the materials. Hence, the Complainant has issued a legal notice dtd.7.3.2020 through his counsel and 11 C.C.No.51022/2021 same was refused by the Accused on 9.3.2020. After lapse of some time the Accused contacted the Complainant and issued a Cheque bearing No.000758 dated 30.07.2020 for Rs.4,55,000/- drawn on UCO Bank, Bidarahalli branch, Bengaluru in favour of Complainant to discharge said liability which was returned with endorsement "funds insufficient". As per the request of the Accused, the Complainant re-presented the said Cheque for encashment on 19.10.2020. But even on the second occasion also it came to be dishonoured with reason "funds insufficient"
on 20.10.2020. Thereafter the Complainant got issued legal notice issued to the Accused by RPAD on 2.11.2020, for demanding payment to the value of Cheque within 15 days from the receipt of notice. But the notice was returned unserved with a shara 'addressee left his registered office" on 3.11.2020. Despite knowledge of the notice, the Accused have not paid the Cheque amount. Hence, the Complainant has filed present complaint against the Accused persons for the offence punishable u/Sec.138 of N.I. Act.
13. In order to bring home the guilt of the accused, the Partner of the Complainant company got examined himself as PW1 and reiterated the contents of complaint in his examination- in-chief. He has also placed original Cheque bearing No.000758 12 C.C.No.51022/2021 dated 30.07.2020, bank endorsements at Ex.P2 and 3, postal receipt at Ex.P4, unserved postal covers at Ex.P5 to 8, Ex.P5(a) is the copy of notice dtd.7.3.2020, office copy of legal notice issued by the Complainant to the Accused on 2.11.2020 at Ex.P9, Quotation at Ex.P10, purchase order at Ex.P11, Account statement at Ex.P12, copies of complaints given to the police at Ex.P13 and 14, certified copy of FIR at Ex.P15, Authorization letter at Ex.P16 and charge sheet Ex.P17.
14. The documents produced by the complainant of course established that complainant meets out the procedural requirements of Section 138 of Negotiable Instrument Act, but it is to be considered whether all these documents establish the offence committed by the accused.
15. The Negotiable Instruments Act raises two presumptions. One contained in Section 118 and the other in Sec. 139 thereof. For the sake of convenience Sec 118(1) of the N.I. Act is extracted here below:
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 13 C.C.No.51022/2021 that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
1. To (g) . . . . . . . . . . . .
Provided that where the instrument has been obtained from its lawful owner, or from an person in lawful custody thereof, by means of an offence of fraud, or has been obtained from the maker or acceptor thereof by means of an offence of fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him".
16. Further Section 139 of the Negotiable Instruments Act reads as under:
"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."
Scope and ambit and function of the presumption U/s 118(a) and Sec 139 of NI Act came to be considered by the Hon'ble Apex Court of Indian in Krishna Janardhan Bhat Vs Dattatraya G.Hegde (2008 AIAR (Criminal 151) The Supreme Court has laid down the law in the following phraseology.
"D Negotiable Instruments Act 1881, Secs 139, 138
--Presumption under-same arises in regard to second aspect of the matter provided under Sec 138--Existence 14 C.C.No.51022/2021 of legally enforceable debt is not a matter of presumption under Sec 139- It merely raises presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability - Merely an application of presumption contemplated under Section 139 of N.I.Act should not lead to injustice or mistaken conviction."
17. Further, said decision was followed by Hon'ble High Court of Karnataka in Kempanarasimhaiah Vs P.Rangaraju & Others (2008 (5) KCCR 3371). Relevant paragraph of the said judgment reads as under: -
"12. As to the provisions of Sections 138 of N.I.Act, the following principles emerge from the above observations of Hon'ble Supreme Court at para Nos 21, 23, 25, 26 and 34 of its Judgment in the above said case of Krishna Janardhan Bhat Vs Dattatraya G.Hegde, AIR 2008 SC 1325.
(i) Section 139 of the Act merely raises a presumption that the cheque was issued towards discharge in whole or in part in any debt or other liability, which presupposed legally enforceable debt. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability." (para 21)
(ii) The question as to whether the presumption stood rebutted or not, must be determined keeping in view the other evidences on record. Where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal 15 C.C.No.51022/2021 requirements are required to be taken into consideration. (para 26)
(iii) 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 records (para 23)
(iv) Standard of proof on the part of an accused and that of the prosecution in a criminal case is different. Further more where as prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is "preponderance of probabilities"(para 23 & 25)
(v) Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies ( para 25)
(vi) Other important principles of legal jurisprudence, namely presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be deliberately balanced (para 34)
18. Thus from the observations extracted above, it is clear that presumption Under Section 139 of the N.I. Act is only to the extent that the cheque was drawn for discharge in full or in part of any debt or other liability and the said presumption do not relate to the existence of legally enforceable debt or liability. Therefore, before drawing the presumption under Section 139 of the N.I.Act, it is the duty of the Court to see whether or not the complainant has discharged his initial burden as to existence of legally enforceable debt. No doubt, as per Section 118(a) of the Act, there is a rebuttable presumption that every negotiable 16 C.C.No.51022/2021 instrument, is accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration."
19. Factual matrix of the case is required to be tested on the anvil of principles emerging from the above-referred decisions.
20. The defence taken by the Accused is that, the cheque issued for the security purpose was misused by the Complainant.
21. To substantiate his claim the partner of the Complainant firm got examined himself as PW1. In the evidence he deposed that, Complainant doing business of structural consultant, builders and developers in the name of Kenz Associates. It is further deposed that the Accused is a proprietorship by name Unique Building Solutions represented by proprietor. It is further deposed that, in the course of business Complainant approached the Accused on the basis of quotation letter dtd,18.2.2020 for purchasing of the steels mentioned in the quotation by accepting the quotation and ordered the material to the Accused. It is further deposed that, as per the Accused's quotation, the total value of the material is Rs.4,55,000/- and by following the terms and conditions of the quotation Accused has paid entire amount in advance and issued purchase order on 19.2.2020. It is further deposed that, as per the assurance of the 17 C.C.No.51022/2021 Accused, he was not supplied the material within stipulated time i.e., two days. It is further deposed that, when Complainant not received the materials within two days, he contacted the Accused but, initially Accused keep on postponing the supply of materials and thereafter the Complainant and his employee visited the Accused's office on several time but, in the said office Accused's employees have not given proper reply and information. It is further deposed that, on several times, the office of the Accused was closed and when Complainant contacted the Accused through phone they have not given property reply to the phone and even whatsapp and SMS. It is further deposed that, the Accused have received entire amount from the Accused but not supplied the material with malafide intention, therefore, the Complainant got issued legal notice to the Accused as per Ex.P5(a) but, the same is returned as refused by Accused. It is further deposed that, after lapse of sometime, the Accused contacted the Complainant and issued Ex.P1 cheque in favour of Complainant and assured that cheque will be honoured on its presentation. It is further deposed that, as per the instruction of the Accused, the Complainant presented the cheque for encashment which was dishonoured and on the request of Accused, the Complainant re-presented the cheque, then also it 18 C.C.No.51022/2021 returned for the reason "funds insufficient" as per Ex.P2 and 3. It is further deposed that, thereafter the Complainant got issued legal notice to the Accused through his counsel as per Ex.P9. It is further deposed that, said notice was returned with shara "addressee left". It is further deposed that, thereafter, the Complainant approached jurisdictional police but, the police authority neglected and refused to register the complaint and then the Complainant approached the Commissioner of Police and thereafter, the jurisdictional police have registered the case against the Accused. It is further deposed that, inspite of knowledge of the notice, neither the Accused have paid cheque amount nor replied the notice.
22. Considering the oral and documentary evidence of the Complainant placed before the court, prima facie presumed that, Ex.P1 was issued by the Accused towards discharge of legally enforceable debt. To rebut the presumption, the learned Counsel for Accused cross examined the PW1 in full length. In cross examination PW1 stated that, since from 30 years he is doing construction business and till today he completed about 100 projects and also he is an income tax assessee. It is further deposed that, in company books of accounts he maintained the 19 C.C.No.51022/2021 account of Accused and as per account, the Accused is liable to pay the amount. He further deposed that he was sent notice to the Accused No.3 Smt.Gowramma and Accused No.3 is a proprietor of Accused No.1. He further admits that he was lodged complaint against No.2. He further stated that for enquiring of purchase of steel, his site Engineer Sri Suresh, Ashok and Srinivas were went to the Accused No.1 and Accused No.1 office was situated at K.R.Puram, RTO Office back side. He further stated that he was not aware about the handwriting on Ex.P1 and he admits that, the signature on Ex.P1 ink and other writing ink were different. He denied that, he was sent legal notice to the Accused on incomplete address. He further stated that after filing of complaint before the police Accused NO.2 was arrested. He denied that police have forcibly took cheque from Accused No.2. He further denied that the Accused have paid entire amount to him but, he was misused the cheque by filing of false complaint.
23. To rebut the presumption the Accused No.2 got examined himself as DW1. He deposed that he is an employee of Accused No.1 company and he was getting Rs.20,000/- salary per month. He further deposed that the Complainant was placed order for TMT steel and within prescribed time they unable to supply TMT steel to the Complainant. He further deposed that 20 C.C.No.51022/2021 they have returned the amount which taken in advance from the Complainant. He further deposed that thereafter, from Accused No.1 company they have issued one security cheque to the Complainant on which he was signed on the cheque. He further deposed that there is a delay in returning of amount, the Complainant was lodged police complaint against him at K.R. Puram police station and police were arrested him. He further deposed that thereafter, through Mr.Anand and Subramanya he paid amount to the Complainant and thereafter he released on bail. He further deposed that the charge sheet filed against him by K.R. Puram police was quashed by the Hon'ble High Court of Karnataka.
24. In the cross-examination DW1 stated that since from 10 years he was doing business and Accused No.1 concern was registered and also he admits address of the Accused No.1 concern as shown in the cause title of the complaint. He further stated that Accused No.3 was his aunt. He further stated that Rs.4,55,000/- was returned to the Complainant in his office by cash. He further stated that that amount was paid by him in the presence of Mr. Anand and Subramanya. He further stated that Mr.Anand was employee of his company and Mr. Subramanya is his uncle. He denied that he was not paid any amount to the 21 C.C.No.51022/2021 Complainant. He further stated that, in the month of January 2020 he left the Accused No.1 company. He further stated that in the month of February 2020 there was short circuit in the company and all documents were burned. He further stated that he resigned to his job but, there is no any document for resignation. He further stated that after short circuit the Accused No.1 company was closed.
25. Further, the Accused No.3 herself examined as DW2. She deposed that in the year 2020 she was paid Rs.4.5 lakhs to the Complainant and Accused No.1 company was in her name and all the transaction and business were look after by her husband and son. She further deposed that she was not signed on the cheque and Complainant was filed false complaint against her.
26. In the cross-examination she stated that, she is a house maker and all the transaction of Accused No.1 were look after by her husband and son. She further admits that the address of Accused No.1 was correct as shown in the cause title of the complaint. She further stated that till today the Accused No.1 company was in existence. She further stated that Accused No.2 is her son in law. She denied that, Accused No.2 was working in 22 C.C.No.51022/2021 her company. She further admits that, any post was served to the address mentioned in the cause title.
27. Further the son of the Accused No.3 was examined as DW3. He deposed that at the time of returning of amount to the Complainant by Accused No.2, he was present. He further deposed that after receipt of amount, Complainant told that, he forgot to bring the cheque with him. He further deposed that he was typed one letter in the letter head of Accused No.1 and he typed as per the say of Accused No.2 that Complainant was received amount from them and within two days Complainant will return the cheque. He further deposed that in the said letter Complainant and Accused No.2 were signed and he also signed as a witness in the presence of his father Mr. Subramani. He further deposed that the Complainant was not returned the cheque and on 11.1.2020 there is a fire incident in Accused No.1 company. He produced report of K.R. Puram with respect of fire incident as per Ex.D1.
28. In the cross-examination he admits that the Accused No.3 is his mother and Accused No.2 is his brother in law and he was working in Accused No.1. He further stated that since December 2019 to 31.1.2020 he was working in Accused No.1 23 C.C.No.51022/2021 company. He further stated that in the month of January 2020 in his presence the amount paid to the Complainant in the office of Accused No.1. He further stated that he has no any document with respect of typed letter and also closing of the Accused No.1. He further stated that fire incident was took place on 11.1.2020 and he left the job in Accused No.1 company on 31.1.2020.
29. Considering the oral and documentary evidence placed by both parties, it is admitted fact that, there is a business transaction between Complainant and Accused. Further it is admitted fact that the Complainant was placed purchase order for supplying of TMT Steel to the Accused. It is further admitted fact that the advance amount of Rs.4,55,000/- was paid by the Complainant to the Accused. It is further admitted fact fact that the Accused have not supplied materials to the Complainant. The contention of the Complainant that, towards refund of the said amount the Accused have issued Ex.P1 cheque which was dishonoured with reason "funds insufficient". On the other hand, the contention of the Accused is that, they have paid entire amount to the Complainant. But, the Complainant has not returned the cheque which was issued for the security purpose. 24
C.C.No.51022/2021
30. During the course of arguments, the learned counsel for Accused taken defence that, Accused No.3 is a impleaded party and no notice issued to her and no allegation against Accused No.3 in the complaint. It is pertaining to note that, when Complainant filed application u/Sec.319 of Cr.P.C. seeking impleading the proprietor of the Accused No.1 as Accused No.3 in the complaint and considering the objection filed by the Accused, the detail order passed by this court by ordered that Complainant is permitted to implead the Accused No.3 in the complaint and as per the order dtd.29.5.2023 Accused No.3 was impleaded. In this regard, it is useful to report decision of Hon'ble High Court of Karnataka in 2020 SCC online Karnataka 1591 in the case of MPP Technologies Pvt. Ltd. represented by L.G. Satish, Marketing Manager V/s. Rupa Banerjee wherein the Hon'ble High Court by observing the decisions of Hon'ble Apex Court in the case of Hardeep Singh V/s. State of Punjab, Sarbjit Singh V/s. State of NCT of Delhi and M.Tech Developers Pvt. Ltd., V/s. State of NCT of Delhi held that;
"The reason to arrive at this conclusion is that the petitioner had business with the proprietorship concern. Cheques are issued by the proprietorship concern. The proceedings are instituted against the proprietorship concern added with person whom the petitioner was in contact to be the proprietor. The plea now put up is that 25 C.C.No.51022/2021 the Complainant has, shot an arrow to a wrong target is untenable. If it were to be a company, then the Managing Director or the Directors would have been responsible if they had any role to play in the transaction. If it were to be a partnership concern, it would have been a circumstance altogether different, as there would be more than one person in a proprietorship concern, but the case at hand is a proprietorship concern. There can only be one proprietor or proprietrix, as the case would be. The Accused is proprietorship concern but who the proprietor or proprietrix would become immaterial, more so, in the light of fact that at no point in time no person divulged that, either Jolly Banerji is the proprietor or Mrs. Rupa Banerji is the proprietrix. It is in certain civil proceedings, the Complainant comes across both Jolly Banerji and Mrs. Rupa Banerji claiming to be proprietor or proprietrix of RNB. It is then the application is filed. The evidence though was by the Complainant's witness that proprietrix is Mrs. Rupa Banerji and on that score holding that, the petitioner was always aware it was Mrs. Rupa Banerji who is the proprietrix is contrary to records.
It is well settled that a sole proprietorship firm has no separate legal entity, but in fact it is a business name of the sole proprietor. Any reference to proprietorship firm means and includes the sole proprietor. Sole proprietorship firm or a concern would not fall within the meaning of partnership firm or association of individuals. Vicarious liability cannot be the concept against any employee or firm as it is the sole proprietor who would be responsible for the affairs of the proprietorship concern. In the case at hand, the proprietorship concern is the Accused and it is the sold proprietor, be it Mr. Jolly Banerji or Mrs.Rupa Banerji would have to answer the allegations.
Having issued Cheques for the amount in all 26 C.C.No.51022/2021 transactions, the Accused cannot now wash of their liability on a technical plea that notice is not issued to Mrs.Rupa Banerji and the plea of Jolly Banerji that, he is not the signatory to the Cheques or any other hypertechnical plea cannot be taken to escape the clutches of law. As observed hereinabove, the proprietorship concern is answerable through the proprietor or the proprietrix, be it Mr. Jolly Banerji or Mrs. Rupa Banerji. It is an admitted fact that, Mrs. Rupa Banerji is the Proprietrix. Therefore, the learned Magistrate was right in allowing the application filed u/ Sec.319 of the Cr.P.C. and permitting Mrs. Rupa Banerji and P.K. Majumdar to be arrayed as Accused along with proprietorship concern and they will have to meet the accusation. Mr. P.K. Majumdar is roped in on ground that he is signatory to several Cheques. A Caveat, this principle would not become applicable to a company or a partnership firm. These observations and findings are limited only to a proprietorship concern, as there cannot be more than one proprietor or proprietrix.
Further, in the decision of Hon'ble High Court of Karnataka, Dharwad Bench in Cri. Apl. No.100295/2016 in he case of Mahantesh V/s. T.R.Venkatesha Murthi, wherein the Hon'ble High Court held that;
"Apart from the above, it is a recognized statutory principle that if during the course of the evidence the court comes to the conclusion that some other person has also committed the offence along with the Accused who is already before the court, the court is bound to invoke the provisions of 319 of Cr.P.C. It is not that the party has to move the court to bring another Accused also as a party, but it is the responsibility of the court to see that who has committed the offence, he should be 27 C.C.No.51022/2021 punished.
Sec.139 of Cr.P.C. is a very unique provision under the Code of Criminal Procedure, 1973, where it empowers the court to bring any person before the court, where the court find that person has also committed the offence. The said provision reads as under;
"319 - Power to proceed against other persons appearing to be guilty of offence
--Where, in the course of any inquiry into, or trial of, an offence, it appears from the evidence that any person not being the Accused has committed any offence for which such person could be tried together with the Accused, the court may proceed against such person for the offence which he appears to have committed.
--Where such person is not attending the court, he may be arrested or summoned, as the circumstances of the case may require, for the purpose aforesaid
- Any person attending the court although not under arrest or upon a summons, may be detained by such court for the purpose of the inquiry into, or trial of, the offence which he appears to have committed."
31. In the light of above principles of decisions as stated supra in the present case also Accused No.3 is proprietrix of Accused No.1 concern and GST Registration Certificate also discloses that she is the proprietrix. Accused No.1 is the sole proprietorship concern and Accused No.3 is the sole proprietrix. Hence, she is the necessary party to the present complaint and notice issued Accused No.1 who is the sole proprietorship 28 C.C.No.51022/2021 concern. Therefore, the separate notice to the Accused No.3 is not necessary. Further, in the complaint the Complainant has made allegations against the Accused No.1 concern which binding on Accused No.3. Hence, defence taken by the Accused is not sustainable
32. Further Ex.P1 is the cheque issued by Accused to Kenz Associates and Accused No.2 was signed on the cheque. The account is in the name of Accused No.1 - Unique Building Solutions. Accused No.2 himself admits that he was signed on the cheque. Therefore, it is presumed that, Accused No.2 had authority to sign the cheque of the company. Accused No.2 stated that he was employee of Accused No.1. Further, it is contention of the Accused that, the said cheque was issued to the Complainant as a security purpose and cheque was not signed by the Accused No.3 and moreover, entire amount was paid by the Accused to the Complainant. Hence, Accused are not liable to pay the cheque amount.
33. In this regard, it is useful to refer the decision of Hon'ble Apex Court. 2001(1) Crimes 132 (SC) in the case of K.P.G. Nair Vs. M/s. Jindal Menthol India Ltd., wherein the Honble ape Court held that;
29
C.C.No.51022/2021 "Where a company committed an offence u/Sec.138 of N.I Act, then not only the company but also every person who at the time when the offence was committed, was in charge of and was responsible to be company for the conduct of business of the company shall be deemed to be guilty of the offence and liable to be prosecuted."
34. Further, in the decision of Hon'ble Supreme court of India in 2003 (1) AWC 612 SC, III (2005) BC 575 SC, JT 2002 (10) SC 134, (2002) 7 SCC 655 in the case of Smt. Katta Sujatha V/s. Fertilizers and Chem. Travancore, wherein the Hon'ble Apex Court observed that;
"However, one thing is clear that the appellant was in no way involved in any of the transaction referred in the complaint and it was not stated that she was in- charge of the business and was not responsible for the conduct of the business of the firm in terms of the Sec.141 of the Act nor was there any other allegation made against the appellant that she had connived with any other partner in the matter of issue of Cheque. In these circumstances, the High Court ought to have examined the matter from this angle but, on the other hand, the High Court merely stated that all the Accused are not only in charge but are reasonable to the conduct of the business of the firm. Indeed the same question has come up before this court for examination in State of Karnataka V/s. Pratap Chanda and others. wherein, the question has who is a "person in charge" of business of firm in the contest of Sec.18(A) Drugs and Cosmetics Act, was considered by this court. This court explained the meaning by observing that the term "person in charge' must mean that the person should be in over all 30 C.C.No.51022/2021 control of the day to day business of the company or firm."
35. In the present case Accused No.2 is the employee of the Accused No.1 and he is involved and got authority to signed the Accused No.1 cheque. Further, even though Accused No 3 is not involved in the business but, she is the proprietrix of the Accused No.1 and she is also control over the business. Hence, the Accused are liable to pay the cheque amount.
36. The Accused are taken contention that, they have refund the entire amount paid by the Complainant for purchasing of materials. Further, DW3 stated that he drafted and typed the letter wherein it is mentioned that the Complainant was received amount in their office and Complainant and Accused No.2 were signed on that letter. But, the Accused have failed to produce the said letter before the court to show that they have paid entire amount to the Complainant. Further, the Accused have contention that, the fire incident all documents are burned. In this regard they have produced Ex.D1 police report wherein it is only mentioned that laptops C.C. Camera computer system, A.C. TV and electronic items cheque books and other documents were sustained loss. It is pertaining to note that the 31 C.C.No.51022/2021 fire incident was took place on 11.1.2020 and DW3 was left the company on 31.1.2020. Further, to establish that the said letter was burned in the fire incident the Accused have not furnished any material. Therefore, it presumed that, Ex.P1 cheque was issued by the Accused towards discharge of legally enforceable liability.
37. As discussed above, it has to be presumed that the cheque in question was issued by the accused to discharge the legally recoverable debt or liability. The accused can place rebuttal evidence so as to show that the cheque was not issued for consideration. As appreciated supra, accused have failed to put acceptable and satisfactory evidence to probabilise the defence. Therefore, there is no question of saying that the cheque was not issued for liability. Therefore, complainant has discharged his initial onus laid on him. When he has discharged his initial onus, it raises presumption U/s 118(a) and 139 of Negotiable Instruments Act. Accused have failed to rebut the presumption either in cross-examining PW-1 or in their evidence.
38. So, far as sentence and compensation is concern, an offence punishable under Section 138 of N.I. Act, is a civil wrong and compensatory in nature, punitive is secondary, considering, 32 C.C.No.51022/2021 the above settled principle of law with facts and circumstances of the case, which clearly reveals that, towards discharge of advanced amount, the cheque in question of issued by the accused to the complainant. Therefore, considering the nature of transaction, duration of pendency, litigation expenses, I am opinion that, if sentence of fine of Rs.5,83,300/- (Rupees Five Lakhs Eighty-three Thousand and Three Hundred only) is imposed that would meet the ends of justice, accordingly, the accused is hereby sentenced to pay a fine of Rs.5,83,300/- (Rupees Five Lakhs Eighty-three Thousand and Three Hundred only) out of that, the complainant is entitled for a sum of Rs.5,78,300/- (Rupees Five Lakhs Seventy-eight Thousand and Three Hundred only)s a compensation as per Sec.357(1) of Cr.P.C., remaining amount of Rs.5,000/-, is to be appropriated to the State, in case of default the accused shall undergo simple imprisonment for a period of 6 months. Accordingly, the Point No.1 is answered in Affirmative.
39. POINT No.2: In view of discussion held in Point No.1, I proceed to pass the following:
ORDER Acting U/S 255(2) of Cr.P.C., the accused are convicted for the offence punishable Under Section 138 of Negotiable Instrument Act.33
C.C.No.51022/2021 Accused are sentenced to pay fine of Rs.5,83,300/- (Rupees Five Lakhs Eighty-three Thousand and Three Hundred only) in default Accused No.2 and 3 shall undergo simple imprisonment for 6 months. Further, it is made clear that out of fine amount, Rs.5,78,300/- (Rupees Five Lakhs Seventy-eight Thousand and Three Hundred only) is to be paid to the complainant as compensation and Rs.5,000/- is ordered to be remitted to the State.
Bail bond stands cancelled.
Supply the free copy of this judgement to the Accused forthwith.
(Dictated to the stenographer, transcribed by her, corrected by me and then pronounced in the open court on this 21st August, 2025) Digitally signed by PARVEEN A PARVEEN A BANKAPUR BANKAPUR (PARVEEN A BANKAPUR) Date: 2025.08.22 XXXIV ACJM, BENGALURU.
11:08:31 +0530 ANNEXURE
1. Witnesses examined on behalf of Complainant:
P.W.1 Mr. John Kennedy
2. Documents marked on behalf of complainant:
Ex.P.1 Cheque Ex.P.2 & 3 Bank endorsements Ex.P.4 Postal receipt Ex.P.5 to 8 Unserved Postal Covers Ex.P.5(a) Copy of notice Ex.P.9 Office copy of legal notice Ex.P.10 Quotation Ex.P.11 Purchase order Ex.P.12 Account statement
Ex.P.13 & 14 Copies of complaints given to the police Ex.P.15 Certified copy of FIR Ex.P.16 Authorization letter Ex.P.17 Certified copy of FIR
3. Witnesses examined on behalf of Accused: 34
C.C.No.51022/2021 D.W.1 Mr. Puroshothama D.W.2 Mrs. Gowramma D.W.3 Mr. Anand
4. Documents marked on behalf of Accused:
Ex.D.1 Certified copy of Report of K.R. Puram Police station Digitally signed by PARVEEN A PARVEEN A BANKAPUR BANKAPUR Date: 2025.08.22 11:08:24 +0530 (PARVEEN A BANKAPUR) XXXIV ACJM, BENGALURU.