Bangalore District Court
Mr. T.P. Santhosh vs M/S Dreamz Infra India Limited on 24 February, 2023
IN THE COURT OF THE XVII ADDL. JUDGE, COURT OF
SMALL CAUSES &
ADDL. CHIEF METROPOLITAN MAGISTRATE,
MAYO HALL UNIT, BENGALURU (SCCH-21).
Dated: This the 24th Day of February 2023
PRESENT: Sri. RAJESH M. KAMATE,
B.Com., LL.B.(Spl.)
XVII ADDL. JUDGE, Court of Small
Causes & A.C.M.M, Bengaluru.
C.C. No. 15023/2019
Complainant/s : Mr. T.P. Santhosh,
S/o P.S. Prakash,
Aged about 28 years,
No.216, 3rd E Cross,
3rd Block, HRBR Layout,
Bangalore- 560 043.
Represented by GPA Holder,
Mr. P.S. Prakash,
S/o Late T.N. Siddappa,
Aged about 63 years,
No.216, 3rd 'E' Cross,
3rd Block, H.R.B.R Layout,
Bangalore- 560 043.
(By Sri/Smt.P.S., Advocate)
V/s.
Accused/s : 1. M/s Dreamz Infra India Limited,
No.577/B, 2nd floor, Outer Ring road,
Teachers Colony, Koramangala,
Near Silk Board,
Bangalore- 560 034.
(Represented by its Managing Director
Miss. Disha Choudhary)
2. Miss. Disha Choudhary
D/o Vasanth Choudhary,
SCCH-21 2 C.C. No.:15023/19
No.577/B, 2nd floor, Outer Ring road,
Teachers Colony, Koramangala,
Near Silk Board,
Bangalore- 560 034.
(By Sri/Smt. S.B., Advocate)
JUDGMENT
The accused in this case is tried for the offence punishable under Section 138 of Negotiable Instrument Act 1881, on the complaint of the complainant.
2. The summary of the complainant's case is that:
The complainant entered into memorandum of understanding with the accused on 06.01.2013 towards purchase of a resident flat and accused had obtained a booking and received two cheques dated 07.01.2013 and 01.02.2013 for a sum of Rs.3,00,000/- and Rs.3,75,000/- respectively and the same were encashed by the accused. After entering into Memorandum of understanding, a letter of allotment was sent to complainant allotting Flat No.004 on the Ground Floor, 950 sq.ft. (2 BHK) with one car parking in project Dreamz Shloka-2, Survey No.52/4, Situated at Haralakunte Village, Begur Hobli, Bangalore South Taluk. But as per the terms and conditions stipulated in the MOU accused was to hand over the possession of the flat in finished condition along with other amenities by December-2014, but accused did not start the project at all. Further it is contended that the accused has also agreed that if the project is not completed within stipulated time of 23 months including grace period then the accused shall pay the rent as SCCH-21 3 C.C. No.:15023/19 per market value. Further on account of default committed by the accused, he had paid rent of Rs.9,118/- per month for period of four months by way of Demand draft and cheque to the complainant thereafter the accused stopped payment of rents. Further the complainant had requested the accused to hand over the flat and to pay the rent till the delivery of the flats, but there was no proper response from the accused and failed to start the work.
Further it is contended that the complainant got issued a legal notice dated 01.03.2015 demanding for repayment of the amount received with 18% interest per annum and rents from September 2015 till actual payment and also seeking compensation of Rs.3,00,000/- towards deficiency in service. The accused had sent untenable reply dated 14.03.2016 and also called upon the complainant to approach the accused office between 20.04.2016 to 25.04.2016 to settle the dispute between them. Thereafter the complainant visited the office of the accused and he had agreed to pay a sum of Rs.7,53,048/- and towards payment he has issued a post dated cheque bearing No.111427 for a sum of Rs.7,53,048/- dated 10.08.2016 drawn on State Bank of India, HSR Layout branch, Bangalore and had informed the complainant to intimate before presenting the cheque to the bank.
Further the complainant's father i.e., the GPA holder had visited the office of the accused to intimate that cheque will be presented to the time, at that time he was informed not to SCCH-21 4 C.C. No.:15023/19 present the cheque as he will pay the cheque amount through demand draft or RTGS from 2 nd week of September-2016 and the accused had also issued letter to that effect on 13.08.2016. But accused failed to honor the commitment made in the letter dated 13.08.2016. further the GPA holder of complainant revisited the office of the accused and he was informed in the office to present the cheque. Accordingly the complainant had presented the aforesaid cheque, the said cheque came to be dishonored with an endorsement as 'Funds Insufficient' on 22.09.2016. Thereafter on 20.10.2016, the complainant got issued legal notice through RPAD demanding for repayment of the cheque amount within 15 days from the date of receipt of the notice. The notice sent through RPAD to the accused was received. Even after receipt of the notice, the accused neither replied nor complied with the demand made therein and failed to discharge his liability and therefore, this complaint filed on 13.12.2016.
3. On filing of the complaint, the cognizance was taken for the offence punishable under section 138 of N.I. Act and sworn statement was recorded. As there was sufficient ground to proceed further, a criminal case has been registered against the accused and he was summoned. The substance of accusation is stated to the accused and his plea was recorded. The accused pleaded not guilty and submitted that he has defence to make.
4. In support of the complainant's case, the sworn statement filed by way of affidavit of the Power of attorney SCCH-21 5 C.C. No.:15023/19 holder of the complainant during the pre-summoning stage is considered as evidence and got marked 6 documents as per Ex.P1 to Ex.P6.
The accused has appeared before the court through Sri S.B. Advocate and got enlarged on bail along with application under Sec.145(2) of NI Act. Accordingly plea and the statement of the accused under Section 313 of Cr.P.C and his answers were recorded. The accused submitted that he has defence evidence. But, accused in spite of sufficient opportunity has neither cross examined PW.1 nor led his defence evidence. Hence, the same has been taken as nil.
5. Heard the arguments.
6. The points that arise for my consideration are:
1. Whether the complainant proves that it has complied the ingredients of Section 138 of N.I. Act in order to constitute an offence?
2. Whether the complainant further proves that accused has committed an offence punishable under Section 138 of N.I. Act 1881?
3. What order?
7. My answer to the above points is as follows:
Point No.1 : In the Affirmative,
Point No.2: In the Affirmative,
Point No.3 : As per final order for
the following:
SCCH-21 6 C.C. No.:15023/19
REASONS
8. POINT No.1: In order to constitute an offence under Section 138 of Negotiable Instruments Act, the cheque shall be presented to the bank within a period of 3 months from its date. On its dishonor, the drawer or holder of the cheque as the case may be shall cause demand notice within 30 days from the date of dishonor, demanding to repay within 15 days from the date of service of the notice. If the drawer of the cheque fails to repay the amount mentioned in the cheque within 15 days from the date of service of the notice, the cause of action arises for filing the complaint.
9. The sworn statement filed by way of affidavit of the authorized representative of the complainant during the pre- summoning stage is considered as evidence. In the affidavit, the complainant has testified regarding issuance of cheque, issuance of demand notice and also failure of the accused to pay the cheque amount. The complainant has produced Ex.P.-1 cheque bearing No.111427 dated 10.08.2016 for Rs.7,53,048/- drawn on State Bank of India, HSR Layout Branch, alleged to be issued by the accused as Ex.P1 which stands in the name of the complainant for Rs.7,53,048/-. Ex.P2 is the endorsement issued by the bank stating dishonor of Ex.P1 cheque for the reason 'Funds Insufficient' on 22.09.2016. Ex.P3 is the office copy of legal notice dated 20.10.2016. Ex.P4 is the postal receipt for having sent legal notice to the accused, Ex.P5 is the postal acknowledgment for having received the notice by the accused SCCH-21 7 C.C. No.:15023/19 on 21.10.2016 and Ex.P.6 is the copy of General Power of attorney.
10. In the present case, the cheque is dated 10.08.2016. The cheque was presented on 19.09.2016 i.e., within three months from the date of cheque as could be seen from Ex.P2. Ex.P2 further shows that cheque in question was dishonored on 22.09.2016. The notice was issued within the statutory period of time as per Ex.P3 on 20.10.2016. The notice issued to the accused was served as per Ex.P5 postal acknowledgment on 21.10.2016. The cause of action for filing the complaint arose on 06.11.2016. The complainant has filed this complaint on 13.12.2016 and thereafter as per order dated 11.02.2019 the delay condonation application of 8 days was allowed and by condoning the delay complaint was registered on 11.02.2019. Hence, the complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act. Accordingly, I answer Point No.1 in the Affirmative.
11. Point No.2: In this point burden is on Complainant to prove the Accused has committed offence punishable under Section 138 of N.I. Act.
12. As discussed at Point No.1, the complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act. It is the case of the complainant had entered into memorandum of understanding with the accused on 06.01.2013 towards purchase of a residential flat and accused had also SCCH-21 8 C.C. No.:15023/19 received two cheques dated 07.01.2013 and 01.02.2013 for a sum of Rs.3,00,000/- and Rs.3,75,000/- respectively which were encashed by the accused. Further the accused due to non- completion of the project within stipulated time, he had paid rent of Rs.9,118/- per month for a period of 4 months by way of demand draft and cheque to the complaint. Thereafter the accused stopped paying the rents and the complainant sent legal notice dated 01.03.2015 demanding for repayment of the amount received with interest 18% interest per annum from September-2015 till actual payment and also seeking compensation of Rs.3,00,000/- towards deficiency in service. After discussion the accused had agreed to pay a sum of Rs.7,53,048/- and had issued a post cheque bearing No.111427 for a sum of Rs.7,53,048/- dated 10.08.2016 drawn on State Bank of India, H.S.R. Layout branch, Bangalore. Thereafter, the complainant presented the cheque through its bank Union Bank Hennur Road branch, Bangalore which was returned with memo of "Funds Insufficient" and accordingly, has issued demand notice and inspite of which the accused has not made any payments and constrained by the same, the complainant has filed the present complaint u/S.138 of N.I. Act. In order to prove the same, the representatives of the complainant have filed an affidavit and examined themselves as PW.1 and got marked Ex.P1 to 6 documents. Whereas in spite of sufficient opportunity the accused and the counsel has remained absent and also there was no representation by the counsel for accused. Hence, cross of PW.1 is taken as Nil. Per contra, there is also no rebuttal evidence by the accused in his defence.
SCCH-21 9 C.C. No.:15023/1913. Having regard to the above oral and documentary evidence it can be seen that, as per the case of the complainant the accused has issued the cheque as per Ex.P1 for an amount of Rs.7,53,048/- and also the same has been dishonored and returned with an endorsement of Funds Insufficient at Ex.P2 for which they had issued notice to the accused which has been served to the accused. Further, as per the legal requirement they had got issued legal notice through their counsel for which neither the accused has replied nor made any payment to disbelieve the case of the complainant that the accused has issued the said cheque at Ex.P1 for an amount of Rs.7,53,048/-.
14. Apart from it, goes to show that there is no cross examination to PW-1 and also even inspite of sufficient opportunity the accused has not led any defence evidence by way of rebuttal evidence to disprove the case of the complainant and as per section 119 and 139 of N.I. Act it is crystal clear that the presumption always goes in favour of the complainant and unless the rebuttal evidence is led by the accused to disprove the case of the complainant, the said evidence of complainant led by way of oral and documentary evidence holds good as per the presumption in favour of the complainant.
15. Further, the Section 118 of N.I. Act lays down that until the contrary is proved, it shall be presumed that every Negotiable Instrument was made or drawn for consideration. Section 139 of N.I. Act, contemplates that unless the contrary is proved, it shall be presumed that the holder of the cheque SCCH-21 10 C.C. No.:15023/19 received the cheque of the nature referred to in Section 138 for the discharge, in whole of any debt or liability. In the decision reported in 2001 Crl.L.J. page 4647 (SC) (Hiten P.Dalal -Vs- Bratindranath Banerjee) and in various other decisions of the Hon'ble Supreme Court and our Hon'ble High Court has repeatedly observed that in the proceeding under Section 138 of N.I. Act the complainant is not required to establish either the legality or the enforceability of the debt or liability since he can avail the benefit of presumption under Section 118 and 139 of N.I. Act in his favour. It is also observed that by virtue of these presumptions, the accused has to establish that the cheque in question was not issued towards any legally enforceable debt or liability. Later in the year 2006, the Hon'ble Supreme Court in the decision of M.S. Narayan Menon @ Mani -vs- State of Kerala and another (2006 SAR Crl. 616) has held that the presumption available under Section 118 and 139 of N.I. Act can be rebutted by raising a probable defence and the onus cast upon the accused is not as heavy as that of the prosecution. It was compared with that of a defendant in civil proceedings. Subsequently in the year 2008, in Krishna Janardhana Bhat - Vs- Dattatreya G. Hegde (2008 Vo.II SCC Crl.166), the Hon'ble Supreme Court has held that the existence of legally recoverable debt is not a presumption under Section 138 of N.I. Act and the accused has a constitutional right to maintain silence and therefore, the doctrine of reverse burden introduced by Section 139 of N.I. Act should be delicately balanced.
SCCH-21 11 C.C. No.:15023/19In the decision, Rangappa - Vs - Mohan (AIR 2010 SC 1898), the Hon'ble Supreme has considered this issue and clarified that the 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 has observed as here below:
"In light of these extracts, we are in agreement with the respondentclaimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled SCCH-21 12 C.C. No.:15023/19 position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. "
In view of the above decision, now it is clear that the presumption mandated by Section 139 of N.I. Act does indeed include the existence of legally enforceable debt or liability. It is a rebuttable presumption. It is open to the accused to raise the defence wherein the existence of legally enforceable debt or liability can be contested. For rebutting presumption, the accused do not adduce evidence with unduly high standard of proof but, the standard of proof for doing so with that of preponderance of probabilities. If the accused is able to raise a probable defence, which creates doubt about the existence of legally enforceable debt or liability, the onus shifts back to the complainant. It is also clear for rebutting the presumption accused can rely on the materials submitted by the complainant or his cross-examination and he need not necessarily adduce his evidence in all the cases.
In so far as the payment of the amount by the accused in the cheque having been signed by him, the presumption for passing of the consideration would arise as provided u/s. 118(A) of N.I. Act as to presumption of Negotiable instrument SCCH-21 13 C.C. No.:15023/19 until the contrary is proved and also that consideration of every negotiable instrument was made or drawn for consideration and that every such instrument, when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred to the effect that such presumption would remain until the contrary is proved. Hence, once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was issued for the discharge of the debt or other liability and the onus is on the accused to raise the probable defence and as such the standard of proof for rebutting the presumption is that of preponderance of probablities. Inference of preponderance of probabilities can be drawn not only from the materials brought on the record by the parties but also by reference to the circumstance upon which they rely.
16. Further, u/S.139 of N.I. Act, unless the contrary is proved, the holder of a cheque who has received the cheque of the nature referred to in section 138 of the Act for the discharge, in whole or in part, or of any debt or other liability. However, the said presumption of law is not absolute and is rebuttable. Hence, for an offence which is alleged to have been committed u/S.138 of N.I. Act the initial burden of proof is on the accused to prove the non-existence of consideration by bringing on record such facts and circumstances which would lead the court to believe the non-existence of legally enforceable debt or liability either by direct evidence or by preponderance of probabilities SCCH-21 14 C.C. No.:15023/19 that the existence of legally enforceable debt or liability was improbable, doubtful or illegal.
17. Hence by considering all these aspect and materials place before this court, it goes to show that the accused has totally failed to prove or probabalise by way of defence and to rebut the statutory presumption in favour of the complainant and also it clearly appears there is no defence evidence. As already stated, unless the accused rebuts the statutory presumption with convincing and cogent evidence the burden cannot be shifted on the complainant. Hence, the complainant has placed sufficient materials to establish his contention as put by him and the evidence place before the court is sufficient to accept the case of complainant that the accused has issued cheque at Ex.P1 towards discharge of legally recoverable debt and has proved the requirements of Section 138 of N.I. Act, so as to constitute the offence against the accused.
18. Therefore, in view of my discussion it clearly goes to show that the complainant has proved that the accused has issued cheque as per Ex.P1 dated 10.08.2016 for an amount of Rs.7,53,048/- towards the repayment of loan amount borrowed from complainant and hence, I am of the opinion that in this point the complainant has proved the guilt of the accused for the offence punishable under Section 138 of N.I. Act. Accordingly, Point No.2 is answered in the Affirmative.
SCCH-21 15 C.C. No.:15023/1919. POINT No.3: Section 138 of N.I. Act empowers the Court to sentence the accused upto two years and also to impose fine which may extend to twice the amount of cheque or with both. This cheque in question was issued on 10.08.2016 for Rs.7,53,048/-(Rupees Seven lakh, fifty three thousand, forty eight only). The complainant was deprived of money that was rightfully due to it for a period of 6 years 6 months. However, having regard to the facts of the case and the amount involved, there are no warranting circumstances to award the sentence of imprisonment as substantive sentence. Directing the accused to pay fine and also awarding compensation to the complainant would meet the ends of justice. But adequate default sentence shall have to be imposed to ensure the recovery of fine imposed to the accused. Therefore, the complainant is required to be suitably compensated as per Section 80 and 117 of the Negotiable Instrument Act and also appropriate in default sentence. Accordingly, I pass the following:
ORDER The accused is found guilty for the offence punishable under Sec.138 of N.I. Act and they are sentenced to pay a fine of Rs.10,24,145/- (Rupees Ten lakh twenty four thousand one hundred and forty five only). In default to pay fine, the accused shall undergo simple imprisonment for a period of three months.
Further, acting under Section 357(1)(b) of
Cr.P.C., out of the fine amount, a sum of
SCCH-21 16 C.C. No.:15023/19
Rs.10,14,145/- (Rupees Ten lakh fourteen thousand one hundred and forty five only) on recovery shall be paid as compensation to the complainant.
The office is directed to supply a free copy of judgment to the accused.
(Dictated to the Stenographer, transcribed by her, corrected, signed and then pronounced by me in the open court on this the 24th day of February 2023) (RAJESH M. KAMATE) XVII ADDL.JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.
ANNEXURE List of witnesses examined on behalf of the complainant:
P.W 1 : P.S. Prakash List of documents marked on behalf of the complainant:
Ex.P.1 Cheque Ex.P.2 Endorsement Ex.P.3 Legal notice Ex.P.4 Postal receipt Ex.P.5 Postal Acknowledgment Ex.P.6 Power of Attorney
List of witnesses examined on behalf of the accused: Nil List of documents marked on behalf of the accused:
-- NIL - -
(RAJESH M. KAMATE) XVII ADDL.JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.