Bangalore District Court
M/S Surabhi Chits Ltd vs Smt. Kalavathi.S on 28 February, 2022
IN THE COURT OF THE XX ADDITIONAL SMALL
CAUSES JUDGE AND ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE AND M.A.C.T.,
BENGALURU (SCCH-22)
PRESENT : Smt. Savitha.P.R.,
B.A.[L]., LL.B.,
XX Addl. Small Causes Judge
and A.C.M.M., Bengaluru.
DATED : This the 28th Day of February 2022.
C.C. No.3700/2020
Complainant - M/s Surabhi Chits Ltd.,
No.1206, 1st main, 2nd block,
BEL Layout,
Vidyaranyapura,
Bengaluru-560 097.
Represented by its
GPA Holder
Sri. M.R.Ramesh.Babu
(Rept: By Sri. P.K.Venkatesh Prasad, Advocate)
- Versus -
Accused - Smt. Kalavathi.S,
W/o. Sri. Ramesh.S,
Aged 40 years,
Sri. Sapthagiri,
No.415, 6th Main, 5th Cross,
MEL Layout, H.G.Road,
Dasarahalli, Bengaluru-560057.
(Rept: By Sri.Venkatesh.G, Advocate)
SCCH-22 2 CC No.3700/2020
Dated of Institution : 18.03.2020
The offences complied : Under Sec.138 of the
off or proved Negotiable Instrument Act
Plea of the accused : Pleaded not guilty
Date of commencement : 06.11.2020
of recording evidence.
Final Order : Accused is acquitted
Date of such order : 28.02.2022
(Savitha.P.R.)
XX ADDL.S.C.J. & A.C.M.M.,
BENGALURU.
:: JUDGMENT ::
The Complainant filed this complaint under Section 200 of Cr.PC against the accused for the offence punishable under Section 138 of Negotiable Instrument Act.
2. The case of the complainant is as follows; Accused was the subscriber of a chit bearing No. VMC- 1 & TKT No. 23A in complainant company for a chit value of Rs. 10,00,000/- payable at Rs. 25,000/- for a period of SCCH-22 3 CC No.3700/2020 40 months. Accused participated in the chit auction and she was declared as the prize bidder in the said auction held on 15.03.2014. In furtherance of the said transaction the accused had executed necessary documents.
3. After receiving the prize amount she became defaulter in making further payments. Towards the discharge of over due subscription amount and its arrears interest with respect to the chit amount from July- 2016 to Jan-2020 accused had issued a cheque bearing No. 150187 for Rs. 3,58,662/- dated 05.02.2020 drawn on Axis Bank Ltd, Peenya Branch, Bengaluru. But the said cheque was dishonored and returned with an endorsement 'Account blocked'. Hence the complainant had issued a legal notice to the accused which was duly served on her. But she neither replied nor complied the notice. Hence this complainant.
4. After service of the summons, the accused appeared through her counsel and released on bail. Copy of the complaint furnished to the accused. Plea read over SCCH-22 4 CC No.3700/2020 to the accused. She denied the accusations but answered to the plea as under
"ಒಪಪವದಲಲ ವಚರಣ ಇದ. ಚಕ ನನನದ. ಸಹ ನನನದ. ಪರರದ ಬಳ ಸಸಮರಸ ವರರದ ಹಹದ ನನಪಲಲ. ಚಚಟ ಹಕದ. ಎರಸ ಷ ಹಣ ಪಡದದ ಎರಸ ಷ ಹಣಕಕ ಚಚಟ ಹಕದ ನನಗ ಗಗತತಲಲ. ಭದದತಗಗ ಚಕನಚಡದ".
5. In support of the complainant case the Assistant Legal Manager by name Naveen.P examined as PW1 and got marked 11 documents at Ex.P1 to Ex.P11 and got marked 2 documents at Ex.D1 and Ex.D1a through confrontation to PW.1. After the closure of the evidence of the complainant, the statement under Section 313 Cr.P.C was recorded. Accused denied incriminatory evidence appeared against her but admitted the issuance of the cheque and signature of her in the said cheque.
6. Heard and perused the record.
7. Now the points that arise for my consideration are as follows:
1) Whether the complainant proves that the accused issued a cheque Ex.P3 towards the discharge of legally enforceable debt?SCCH-22 5 CC No.3700/2020
2). Whether the complainant proves the guilt of the accused punishable under Section 138 of NI.Act?
3). What Order?
8. My answer to the above points are under :
Point No.1 - In the Affirmative
Point No.2 - In the Affirmative
Point No.3 - As per final order for
the following
:: REASONS ::
POINT No.1 & 2:- These points are taken up together for common discussion to avoid repetition of facts.
9. The burden of proving the ingredients of Section 138 of N.I.Act is heavily on the complainant.
10. In order to constitute an offence under Section 138 of N.I.Act, the complainant has to fulfill the following requirements which are as follows.
I) Cheque should have been issued for the discharge in whole or part of any debt or other liability.
ii) Cheque should have been presented before the bank within a period of six months or within a period of its validity whichever is earlier. SCCH-22 6 CC No.3700/2020 Iii) The payee should have issued a legal notice in writing to the drawer of the cheque within 30 days from the date of information by the bank.
iv) After the receipt of the notice, the drawer should have failed to pay the cheque amount within 15 days from the date of the receipt of the said notice.
v) On non payment of the amount due, on the dishonored cheque within 15 days from the date of the receipt of the notice by the drawer, the complaint should have been filed by the complainant within one month from the date of expiry of the grace time of 15 days before Metropolitan Magistrate or not below the rank of JMFC.
11. For that purpose, I have gone through the documentary evidence placed by the complainant. In this case, the disputed cheque which is Ex.P.3 dated 05.02.2020 which was issued by the accused in the name of the complainant for an amount of Rs.3,58,562/- drawn on Axis Bank, Peenya branch. Ex.P.4 is an endorsement given by the banker with an endorsement account blocked. Ex.P.5 is the legal notice issued to the accused by the complainant. Ex.P6 is the postal receipt. Ex.P.7 is the postal acknowledgement. Ex.P.8 is the Statement of account. Ex.P9 is the on demand promissory note. Ex.P10 SCCH-22 7 CC No.3700/2020 is the receipt. Ex.P11 is the security proposal form.
12. Now, let us see whether the ingredients of Sec. 138 of N.I.Act is complied with. On careful scrutiny of the said provisions of law, it is clear that within 6 months from the date of issuance of cheque which is at Ex.P.3 was presented for an encashment through, Karur Vysya Bank, Vidyaranyapura branch, Bangalore, but the same was dishonored as per Ex.P.4 dated 06.02.2020.
13. It is the contention of the accused that the legal notice was not served upon her. Therefore contended that complaint itself is not maintainable for non- compliance of Section 138 of NI Act. In support of her contentions she relied upon the following decisions which are mentioned below.
1) 2010 (3) KCCR 1950 of Hon'ble High Court of Karnataka in Hamjad Pasha Vs H.N. Lakshmana.
2) Judgment of the Hon'ble High Court of Karnataka Criminal Appeal No. 2137/2005 between Sri. H.S.Sathyanarayana Reddy Vs Sri. B Chinnappa. SCCH-22 8 CC No.3700/2020
3) Judgment of the Hon'ble High Court of Karnataka Criminal Appeal No. 50/2012 between Yelahanka Merchants Finance Co-op Pvt Ltd Vs Sri. S.N. Renukaputtaswamy.
4) (2000)1 SCC 397 Between Sri. Sridhar M.A Vs. Metalooyy N Steel Corporation.
14. On perusal of the Ex.P2 that is chit agreement, Ex.P9 that is on demand promissory note and the Ex.P11 that is the security proposal form it is contended that the address mentioned in the said documents is Mrs. Kalavathi.S, Sri. Sapthagiri, No.45, 6 th Mian, 5th Cross, MEL layout Bagalagunte, H.G.Road, Bengaluru. These documents were executed by the accused in favour of the complainant during the time of entering into the chit agreement. Since she has signed these documents it can be inferred that she has read the said document and signed it and also verified her address.
15. So what ever written in the said documents are within her knowledge. If she resided in some where else SCCH-22 9 CC No.3700/2020 other than the address mentioned above she would have informed the complainant to change the address of her the Ex.P2, 9 and 11. But she has not done so.
16. Here it is also important to note that her husband is also one of the surety to the chit agreement. The address mentioned in the said document is within his knowledge too. Moreover no document is produced by the accused to show that she do not reside in the said address on which legal notice issued to her.
17. Interestingly the summons issued by this court through RPAD is also sent to the very same address mentioned in the legal notice which returned with an endorsement unclaimed. Therefore without any hesitation this court can infer that the legal notice is sent to the accused to her correct address where she resided.
18. Therefore this court is of the opinion that there is a proper service of the legal notice to the correct address of the accused and it is served upon her but she neither replied nor complied the notice.
SCCH-22 10 CC No.3700/2020
19. At this juncture it is also important to note the decision of the Hon'ble Supreme Court in Appeal (crl.) 767 of 2007 between C.C. Alavi Haji vs Palapetty Muhammed & anr in which Hon'ble Supreme Court held as under;
"It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence SCCH-22 11 CC No.3700/2020 Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran case (supra), if the giving of notice in the context of Clause (b) of the proviso was the same as the receipt of notice a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act".
20. As per the ratio laid down in the above said decision the accused can take the plea of non service of legal notice only when he deposits the cheque amount after 15 days of the receipt of the summons by the court. However the accused has not deposited the cheque amount before this court. So the accused cannot take a defence of non- service of legal demand notice unless she deposits the cheque amount before this court within 15 days of service of summons to her.
21. So by the above discussion I am of the opinion that legal notice issued as per Ex.P5 is served to the accused on 17.02.2020 and the plea of non service of SCCH-22 12 CC No.3700/2020 notice itself is not sustainable in view of the ratio laid down in the Hon'ble Appex Court in the above said decision. Since accused has not complied the notice the complaint is filed on 18.03.2020, which is within time as per the provisions of 138 of N.I.Act. Hence, all the ingredients of Sec.138 of N.I.Act is complied by the complainant.
22. Now before proceeding to consider the contentions thus raised it would be necessary to refer to few undisputed facts, which are as mentioned below;
1. The chit transaction of the accused with that of the complainant company.
2. Issuance of the cheque and the signature of the accused in the said cheque.
23. Now, it is also necessary to discuss the about provision of law enshrined under the Negotiable Instrument Act which says about the presumption of law regarding Negotiable Instruments.
24. Section 139 of NI Act says that about the SCCH-22 13 CC No.3700/2020 presumption available to the holder of cheque. Under the said provision of law it is presumed that the holder of the cheque received the same in discharge of any debt or liability in whole or in part. Therefore prima face reading of the provision will reveal that a presumption in favour of the complainant in law.
25. Even under Section 118(a) of NI Act. There is presumption that every Negotiable Instrument made shall be presumed to be drawn for consideration.
26. In the decision, Rangappa - Vs - Mohan (AIR 2010 SC 1898), Hon'ble Supreme Court has reconsidered this issue and clarified that, existence of legally recoverable debt or liability is a matter of presumption under section 139 of N.I.Act. In para 14 of the Judgment the Hon'ble Supreme Court observed as here below:
''In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned SCCH-22 14 CC No.3700/2020 observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of -course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption, which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act, specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probabile SCCH-22 15 CC No.3700/2020 defence, which creates doubts about the existence of a legally enforceable debt or liability, the presumption can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence on his/her own."
27. In view of the above decision, now it is clear that the presumption mandated by section 139 of N.I.Act does indeed include the existence of legally enforceable debt or liability. It is a rebuttable presumption. It is open to the accused to raise the defence wherein the existence of legally enforceable debt or liability can be contested. For rebutting the presumption, the accused need not adduce evidence with unduly high standard of proof but, the standard of proof for doing so with that of preponderance of probabilities. If the accused is able to raise a probable defence, which creates doubt about the existence of legally enforceable debt or liability, the onus shifts back to the complainant. It is also clear that for rebutting the presumption, accused can rely on the materials submitted by the complainant or his cross examination and he need not necessarily adduce his SCCH-22 16 CC No.3700/2020 evidence.
28. As discussed in the preceding paragraphs, there is statutory presumption under section 118(a) and 139 of the Act in favour of complainant regarding interalia the following aspects: firstly, the impugned cheque was issued by the accused for consideration; Secondly that there exists a legally enforceable debt in favour of the complainant; and thirdly that the impugned cheque has been issued in discharge of a legally enforceable debt.
29. Therefore, the burden of proof lies on the accused to prove the contrary. The standard of proof required by the accused is based on preponderance of probabilities which means that the accused is only required to create doubt in the complainant's claims and is not required to prove his own defence beyond reasonable doubt. The accused can examine his witnesses or file his own evidences for this purpose. He can even draw inferences from the evidences filed on record by the complainant in order to create doubts in the complainant's claims. SCCH-22 17 CC No.3700/2020
30. So in order to decide whether accused has sufficiently rebutted the presumption available under Section 139 and 118(a) or not can only be decided by going in to the factual matrix of this case and the materials brought on record and having regard to the legal principles governing the same.
31. Since the accused has not disputed the execution of the cheque and the signature in the said cheque the court can safely draw a presumption under Section 139 and 118(a) of NI Act.
32. However the accused has taken three fold defenses which are as follows;
Firstly, the Ramesh Babu had no authority to filed a complaint.
Secondly, there is no legal enforceable debt. Thirdly, the debt is time barred. Hence it cannot be considered as legally recoverable debt. Let me discuss the above said contentions of the accused one by one.
SCCH-22 18 CC No.3700/2020
33. First contention is that the Ramesh Babu had no authority to file the complaint. For this purpose it is necessary to go through the entire case record. During the filing of the complaint M.R.Ramesh Babu along with the complaint filed one xerox copy of the extract of minutes of meetings of the board resolution which clearly shows that on 14.12.2019 the complainant company authorized M.R.Ramesh Babu to represent Civil and Criminal case on behalf of the Company, but during the pendency of the proceedings due to his illness, one Naveen.P S/o. Subramanyan.C who is the Senior Manager is substituted in the place of Ramesh Babu to prosecute this case as per the board resolution passed by the complainant which is marked at Ex.P1. These two document clearly establishes the fact that the complainant authorized both the person to prosecute the complainant on behalf of it.
34. The other two contentions of the accused is that there was no legally recoverable debt and the claim of SCCH-22 19 CC No.3700/2020 the complainant is time barred.
35. Now as could be seen from the cross- examination of the complainant it is clear that the accused has not denied the chit transaction with that of the complainant. Though the accused has entered into chit agreement on 24.02.2014 the accused continued to make payment till 10.09.2019 which is her last payment.
36. As per Ex.P8 as on the date of issuance of the cheque she was in due of Rs. 3,58,562/- for payment. The Ex.P8 also shows that accused failed to make payment from 10.09.2019. Moreover as per the case of the complainant chit agreement was commenced on 24.02.2014 and terminated on 15.04.2017.
37. At this juncture it is necessary to quote the decision which is relied by the accused in support of her case reported in 2014 ALL MR (Cri) Journal 334 between Manjit Singh Vs S.K.Mehta and Co. which read as here under;
"At This juncture, it would SCCH-22 20 CC No.3700/2020 also be appropriate to take note of Section 18 of the Limitation Act which deals with the acknowledgement and explanation of limitation which reads as under:
"18 effect of acknowledgment in writing.
(1) where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed.
(2) where the writing containing the acknowledgement is undated oral evidence may be given of the time when it was signed but subject to the provision of the Indian Evidence Act, 1872 (1 of 1872) oral evidence of its contents shall not be received.
A bare perusal of the aforesaid provision clearly goes to show that for analyzing the limitation of a Civil liability SCCH-22 21 CC No.3700/2020 beyond a period of three years, the acknowledgement if any must be there before period of limitation is over, which is not the case".
38. So as per the ratio laid down in the above case if the complainant has claimed the debt due after the laps of 3 years from the date when the debt becomes due then the claim of the complainant is barred by the law of limitation.
39. In this case the chit agreement is entered on 24.02.2014 for a price amount of 10,00,000/- which has to be paid in 40 installments which terminates on 24.04.2017.
40. So from 25.04.2017 the limitation begins to run. So the claim of the complainant should be within 3 years from the date of termination of the chit agreement.
41. Here the accused issued a cheque on 05.02.2020 which was dishonored by the Bank. Later the complainant issued legal notice calling upon the accused to make payment of the cheque amount but the accused neither SCCH-22 22 CC No.3700/2020 replied nor repaid the amount. Hence the complaint was filed on 18.03.2020.
42. If the accused issued the cheque after 25.04.2020 then it can be said that accused issued a cheque for the recovery of time barred debt but the accused issued the Ex.P3 on 05.02.2020 before the expiration of the limitation period. This shows that the claim of the complainant is not time barred and it is legally recoverable debt. Therefore, contentions taken up by the accused are not at all sustainable under the eyes of law.
43. On perusal of the cross-examination of PW.1 it is evident that there is no single suggestion put forward by the accused that she has paid all the due amount and there is no balance as amount claimed by the complainant. Therefore this court has to come to the conclusion that in order to pay the balance amount which is mentioned in Ex.P8 the accused issued a cheque, Ex.P3 to the complainant.
44. Of course it is true that the accused has to rebut SCCH-22 23 CC No.3700/2020 the presumption based on preponderance of probability but the evidence led by her should be more probable and rational view of the case.
45. When the accused has not disputed chit transaction, issuance of the cheque and her signature on the said cheque she ought to have placed cogent evidence to show that she had paid all the installments and there is no due as claimed in the complaint. But she has not palced any material evidence to disprove the claim of the complainant.
46. By the above observation this court is of the opinion that the accused has failed to place the rebuttal evidence which is more probable and therefore this court has to come to the conclusion that accused issued a cheque in discharge of the legally recoverable debt.
47. Therefore I am of the opinion that accused is guilty of the offence punishable under Section 138 of the N.I Act. Therefore I answer point No.1 and 2 in the affirmative.
SCCH-22 24 CC No.3700/2020
48. POINT No.3: In view of the above discussion, I proceed to pass the following:
:: ORDER ::
The accused is found guilty of the offence punishable U/s 138 of N.I.Act.
In exercise of powers conferred U/s 255(2) of Cr.P.C., the accused is hereby convicted for the offence punishable U/s 138 of N.I. Act.
The accused is liable to pay Rs.3,68,562/- in favour of the complainant. In default she shall undergo S.I for a period of one year.
Further, it is also ordered that out of the amount deposited by the accused, the accused shall liable to pay compensation amount of Rs.3,58,562/- to the complainant U/s 357 of Cr.P.C and remaining amount of Rs.10,000/- shall be confiscated to the state towards the state expenses.
Bail bond of the accused and surety bond shall stands cancelled.
Furnish free copy of this Judgment to the accused forthwith.
(Dictated to the stenographer, transcribed by her, corrected by me and then pronounced in the open court SCCH-22 25 CC No.3700/2020 on this the 28th day of February 2022.) (Savitha.P.R) XX A.S.C.J. & A.C.M.M., Bengaluru.
:: ANNEXURE ::
List of witnesses examined on behalf of the complainant:
P.W.1 - Sri. Naveen.P List of witnesses examined on behalf of the accused:
- Nil -
List of documents marked on behalf of the complainant:
Ex.P.1 - Board Resolution Ex.P.2 - Chit Agreement Ex.P.3 - Cheque Ex.P.3 a - Signature of accused on cheque Ex.P.4 - Bank Endorsement. Ex.P.5 - Legal notice. Ex.P.6 - Postal Receipt. Ex.P.7 - Postal Acknowledgment. Ex.P.8 - Bank statement Ex.P.9 - On demand promissory note Ex.P.10 - Receipt Ex.P.11 - Security proposal form List of documents marked on behalf of the accused: SCCH-22 26 CC No.3700/2020 Ex.D1 - Vacalath of the Complainant Ex.D1a - Signature of the complainant (SAVITHA.P.R) XX A.S.C.J. & A.C.M.M., BENGALURU. SCCH-22 27 CC No.3700/2020 28.02.2022
(Judgment pronounced in open court, vide separate judgment).
OR D E R The accused is found guilty of the offence punishable U/s 138 of N.I.Act.
In exercise of powers conferred U/s 255(2) of Cr.P.C., the accused is hereby convicted for the offence punishable U/s 138 of N.I. Act.
The accused is liable to pay Rs.3,68,562/- in favour of the complainant. In default he shall undergo S.I for a period of one year.
Further, it is also ordered that out of the amount deposited by the accused, the accused shall liable to pay compensation amount of Rs.3,58,562/- to the complainant U/s 357 of Cr.P.C and remaining amount of Rs.10,000/- shall be confiscated to the state towards the state expenses.
Bail bond of the accused and her surety shall stands cancelled.
Furnish free copy of this Judgment to the accused forthwith SCCH-22 28 CC No.3700/2020 (Savitha P.R) XX A.S.C.J. & A.C.M.M., BENGALURU.