Bangalore District Court
C Prasad vs M/S Lalit Asia Dwellings Pvt Ltd on 11 January, 2024
KABC010163032019
Presented on : 23-05-2019
Registered on : 23-05-2019
Decided on : 11-01-2024
Duration : 4 years, 7 months, 19 days
BEFORE THE LXVI ADDL.CITY CIVIL & SESSIONS
JUDGE, BENGALURU CITY.
(CCH67)
DATED: This the 11th day of January, 2024
PRESENT
Sri.S.Nataraj, BAL.,LL.B.,
LXVI Addl.City Civil & Sessions Judge,
Bengaluru.
Crl.Appeal.No. 1196 of 2019
Appellant: Sri.C.Prasad,
Aged about 61 years,
S/o late V.Chandrashekar,
R/at No.247A, 4th Cross Street,
J.Nagar, Panaiyur,
Chennai - 600 119.
(By Smt.K.M.Prathibha, Adv.)
/Vs/
Respondent : M/s Lalit Asia Dwellings Pvt.Ltd.
Having its office at No.1543,
3rd Floor, 19th Main, I Sector,
Next to Myntra.com,
HSR Layout, Bengaluru 560 102.
Rept.by its Managing Director,
2
Crl.A.No.1196/2019
Mr.Prasanth M.L.
Aged about 47 years.
(By Sri.PDS,Adv.)
JUDGMENT
This is accused filed appeal under Section 374(3) CrPC challenging the impugned judgment in CC.No.23641/2017 dated 22.4.2019 passed by the 14 th Addl. Small Causes Judge and 39 th Addl. Chief Metropolitan Magistrate (SCCH10) (for short herein after refereed to as 'trial Court'), wherein the appellant/accused was convicted for the offence punishable under Section 138 of NI Act and;
a) sentenced to pay a fine of Rs.8,20,000/ in default shall undergo simple imprisonment for 6 months;
b) out of fine amount of Rs.8,20,000/ sum of Rs.8,10,000/ is ordered to be paid to complainant as compensation and Rs.10,000/ shall be appropriated to State.
2. The appellant is the accused, respondent is the complainant before the trial Court. For the sake of 3 Crl.A.No.1196/2019 convenience the parties are referred by their ranks before the trial Court.
3. The brief facts of the case are as follows; The complainant filed complaint before the trial Court alleging that the accused is the owner of residential site No.114, HL Katha No.314/102/114, New Katha No.626/114 formed in converted Sy.No.102/2 measuring 80x60 ft situated at Doddatoguru village, Begur Hobli, Bengaluru South Taluk. The accused had entered into joint development agreement, (for short JDA) on 15.9.2014 with the complainant to construct the apartments and share the proportionate shares respectively. Subsequently, the JDA was cancelled. The accused towards refund of security deposit amount of Rs.8,20,000/ issued cheque No.026670 dated 28.6.2017 for a sum of Rs.8,20,000/ drawn on Axis Bank Ltd. HSR Layout Branch, Bengaluru. The said cheque was presented to its banker, State Bank of Travancore, HSR Layout Branch, Bengaluru, which was returned with bankers slip dated 11.7.2017 as 'Alternation Require Drawers Authentication'. The complainant got 4 Crl.A.No.1196/2019 issued a legal notice on 10.08.2017 demanding the accused to pay the cheque amount within 15 days from the date of receipt of notice. The notice was duly served on 12.08.2017. The accused did not pay the amount within 15 days from the date of receipt of legal notice. Thereafter, within one month the complaint was filed against the accused for the offence under Section 138 of NI Act.
4. The trial Court recorded sworn statement of complainant by way of affidavit. Thereafter the cognizance was taken, the summons was issued against the accused for the offence under Section 138 NI Act. The accused appeared through his counsel, he was released on bail. The plea was recorded. He pleaded not guilty, claims to be tried. The sworn statement affidavit is treated as chief examination evidence on behalf of complainant as PW1, Ex.P1 to 11 documents are marked closed their side of evidence.
5. The statement of accused under Section 313 Cr.PC was read over, she denied the incriminating circumstances appeared against him. He is examined as DW1. Got 5 Crl.A.No.1196/2019 marked one document Ex.D1 in his support. After hearing arguments of both sides. Considering, the material evidence on record, the trial Court passed the impugned judgment dated 22.4.2019. Wherein, the accused was convicted and sentenced to pay a fine of Rs.8,20,000/ out of which Rs.8,10,000/ was ordered to be paid to the complainant as compensation.
6. Being aggrieved by the impugned judgment the accused/appellant is before the Court on various grounds
(a) The judgment of the trial Court is opposed to facts and law.
(b) There has been non compliance of provisions of law.
(c) The trial Court has not properly appreciated the evidence and convicted erroneously by ignoring the admissions given by PW1 in the crossexamination.
(d) The trial Court failed to consider the evidence and documents, that there is no mention about the existence of liability in respect of JDA, the trial court wrongly drawn the presumption in favour of complainant. 6
Crl.A.No.1196/2019
(e) The trial Court totally ignored that the bankers slip at Ex.P2 returned as material alteration it requires the authentication of the drawer, it does not give cause of action to invoke Section 138 of NI Act.
(f) The trial Curt failed to consider that Section 138
(b) the statutory notice is not served to the correct address.
(g) The trial Court failed to consider the defence of the accused is probable and discharge the presumption, it is for the complainant to prove its case.
With the above said grounds he prayed to set aside the judgment of the trial court.
7. After registering the case on issuing notice to respondent, he appeared through counsel. Trial court records are secured.
8. Counsels for both parties submitted written arguments along with citations. Perused the trial court record, impugned judgment.
9. Out of above said facts and circumstances of the case, the points that arose for the due consideration of this Court are;
7
Crl.A.No.1196/2019 Point No.1: Whether the finding of trial Court that the return of cheque by the bank for the reason alternation requires drawers authentication attracts section 138 of NI Act, is justified?
Point No.2: Whether the finding of trial Court that the accused failed to discharge the presumption under Section 139 of NI Act with probable defence that the cheque was not issued for discharge of legally enforceable debt or liability is justified?
Point No.3: Whether the finding of trial court that the complainant proved that the cheque is issued towards discharge of legally enforceable debt i.e., towards refund of loan amount is justified?
Point No.4: Whether the impugned judgment of trial Court is capricious and erroneous and liable to be interfered?
Point No.5 : What order?
10. The answer of this Court to the above points are;
Point Nos.1 to 3 : Not Justified
Point No.4 : Affirmative
Point No.5 : As per the final order for the
following reasons.
8
Crl.A.No.1196/2019
REASONS
11. POINT Nos.1 to 4: Since these points are
interlinked with each other, they are taken up together for discussion in order to avoid repetition.
The appellant counsel in his written arguments has reiterated the appeal memo grounds. The main contention that the return of cheque is due to alternation of cheque it requires drawers attention, it does not come within the purview of Section 138 of NI Act, there is no existing legally enforceable debt. He has relied upon judgment 1998 Crl.L.J. 4750 Babu Lal Nainmal Jain Vs Khimji Rathan Shi Dedhia and Others wherein it has held: cheque returned due to structural defect Section 138 is not attracted. Apart from above the appellant has also relied upon the following citations:
(1) (2019) 18 SCC 106 in Rohitbhai Jivanlal Patel Vs State of Gujarat.
(2) 2007(5) SCC 264 in S.Kamala Vs M.T.Vidyadharan.
(3) (2008) 4 SCC 54 in Krishna Janardhan Bhat Vs Dattatreya.G.Hegde.9
Crl.A.No.1196/2019 (4) ILR 2008 KAR 4629 in Shivamurthy Vs Amruthraj.
(5) Crl.Appeal No.1012/1999 of SCC in M.S.Narayana Menon Vs State of Kerala and Anr.
(6) High Court of Karnataka Crl.Appeal No.503/2004 in Shrimathi Vs Renuka AIR 2010 NOC 194 (Kar) and prayed to allow the appeal and set aside the judgment of the trial Court.
12. The counsel for respondent in his written arguments as well as oral arguments has contended that the return of cheque for the reason alternation requires drawers authentication also attracts Section 138 of NI Act for which he relied upon the judgment 1995 Crl.L.J. 1882 Veeraraghavan Vs Lalith Kumar wherein in para Nos.22 and 24 of the judgment has held return of cheque with endorsement of bank of any contingencies or eventualities even other than once mentioned in Section 138 would be sufficient.
13. The learned counsel also relied upon two other judgments in (1996) 2 SCC 739 Electronic Trade and 10 Crl.A.No.1196/2019 Technology Development Corporation Ltd. Secundarabad Vs Indian Technologist and Engineers Pvt.Ltd. wherein it has held: drawer of cheque having insufficient funds to his credit cannot escape liability under Section 138 by issuing stop payment instructions to the bank. It is further held when he fails to make payment within 15 days of receipt of notice, the presumption is satisfied.
14. AIR 2023 Supreme Court 5018 Rajesh Jain Vs Ajay Singh wherein it is held: cheque issued by the accused towards repayment of debt, accused neither replied notice nor presented rebuttal evidence and claimed that blank cheque had been misused by the complainant nor provided evidence or filed police complaint, the presumption is that the cheque was issued towards legally enforceable debt.
15. Based on above said judgments the learned counsel submitted that there no grounds to interfere in the judgment the issuance of cheque and signature is 11 Crl.A.No.1196/2019 admitted, there is no alternation in the cheque and prayed for dismissal of appeal.
16. After considering the contentions of appellant in the appeal Memo and arguments of both parties as well as citations. For determination of the point as to whether the trial Court was justified in convicting the appellant/accused for the offence under Section 138 of NI Act, the basic questions to be addressed are;
a) As to whether the complainant/respondent had established the ingredients of Section 118 and 139 of the NI Act, so as to justify drawing of the presumption envisaged therein?
b) If so, as to whether the appellant accused had been able to displace such presumption and to establish a probable defence, thereby, the onus would again shift to the complainant/respondent?
17. It is useful to take note of Section 118 and 139 of NI Act as follows:
12
Crl.A.No.1196/2019 " 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 that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration:
(b) as to date - that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance - that every accepted bill of exchange was accepted within reasonable time after its date and before tis maturity
(d) as to time of transfer - that every transfer of a negotiable instrument was made before its maturity
(e) as to order of endorsements - that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamps - that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course -
that the holder of a negotiable instrument is a holder in due course PROVIDED that, where the instrument has been contained from its lawful owner, or from any person in lawful custody thereof, by means of an 13 Crl.A.No.1196/2019 offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
Section 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."
18. So for as, the question of existence of basic ingredients for drawing of presumption under Sections 118 and 139 of NI Act is concerned, apparent is that the accused has not denied his signature in Ex.P1 cheque that has been issued in favour of complainant on an account maintained by her for a sum of Rs.8,20,000/. The said cheque was presented to the bank within the period of its validity and which was returned as 'Alternation Requires Drawers Authentication' as per Ex.P2 bank memorandum. The accused contended that the cheque is defective, the proceedings under Section 138 is not maintainable. In the instant case a peculiar situation has been arisen where the very factum of the instrument being 14 Crl.A.No.1196/2019 a valid cheque has been challenged. In this regard it is useful to refer judgment of Hon'ble High Court of Karnataka in Crl.A.1420/2012 in M/s Shreyas Exports Vs Sapna Vijay, wherein the question for consideration whether the return of cheque for alternation requires drawers authentication attract Section 138 of NI Act. Hon'ble High Court be referring the judgment of Babulal Nainmal Jain relied by the appellant counsel, in para No.6 of the judgment, observed as follows:
" 6. It is relevant to mention here that Ex.P6 is the cheque issued by the respondent towards part payment of the dues. There is an alteration so far as the dare is concerned and it is for this reason that the bank returned the said cheque with the endorsement at Ex.P.7. It is towards "alteration required drawers authentication". In this context, it is relevant to refer to the provisions under Section 138 of the Act. The said provision requires that when a cheque is issued on an account maintained by the accused and when the said cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of 15 Crl.A.No.1196/2019 that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account, it is in such circumstances that action could be taken under Section 138 of the N.I.Act and it would amount ot an offence under the said provisions. So, to fulfill the requirement under Seciton 138 of the Act, it is necessary for the appellant to establish that return of the cheque was for insufficient funds, to honour the cheque or that the cheque amount exceeds the arrangement made. So, looking to the ingredients for the aforesaid offence, the return of the cheque for the reasons other than one mentioned in the said provisions do not attract the provisions of Section 138 of the NI Act. On this aspect of the matter, learned counsel for the respondente has placed reliance on the decision reported in 1998 Crl.L.J. 4750 (Babulal Nainmal Jain Vs Khimji Ratanshi Dedhia).
The perusal of the facts and the principles laid down in the aforesaid decision reveal lthat it is the case of cheque returned for Accordingly, other reason other than the alteration and the authentication is not essential. If the cheque is issued without any 16 Crl.A.No.1196/2019 authentication, it may be either a bonafide mistake or an intentional mistake. If there are malafides on the part of the respondent, the action could be taken against him for any other offence other than Section 138 of the NI Act. But, anyhow, looking to the material placed on record, I am of the opinion that the requirement of Section 138 of the NI Act are not satisfied and therefore, the first appellate Court was justified in setting aside the trial Court's judgment and Order. For this reason, the appeal has no merits and therefore, it is accordingly dismissed."
19. If the above said judgment is applied to the case on hand, in the present case also the cheque at Ex.P1 was returned for the reasons the alternation requires drawers authentication. As there was alternation in the date in the month instead of "7" altered as "6", which has not been authenticated by the drawer by putting signature. As per the observation of Hon'ble High Court if the cheuqe is issued without any authentication, it may be either a bonafide mistake or an intentional mistake. If there are 17 Crl.A.No.1196/2019 malafide on part of the respondent, the action could be taken against him for any other offence other than Section 138 of NI Act. As for as Section 138 NI Act is concerned, the requirement of said section is not satisfied. Therefore, the very taking cognizance and issuance of summons and convicting the accused is not justified. The trial Court in the impugned judgment has not at all considered the said fact in terms of above said judgment. So, on this ground alone the appellant has rebutted the presumption he is entitled for acquittal. The consideration of other grounds does not arise. Accordingly, The judgment of trial court in convicting and sentencing the accused on the basis of defective cheque without there being authentication from the drawer on alternation and initiation proceedings under Secton 138 is not justified liable to be interfered. The accused is liable to be acquitted for the offence under Section 138 of NI Act. Accordingly, answer points No.1 to 3 not justified and 4 in Affirmative.
20. POINT No.5: In view of findings given on point Nos.1 to 4, this Court pass the following order. 18
Crl.A.No.1196/2019 ORDER The Appeal filed by the appellant under Section 374(3) of Cr.P.C. is allowed.
Consequently, the impugned Judgment of conviction and sentence in CC.No.23641/2017 dated 22.4.2019 passed by the 14 th Small Causes Judge and 39th Addl. Chief Metropolitan Magistrate (SCCH10) is set aside.
The appellant/accused is acquitted for the offence under Section 138 of NI Act.
Office is directed to transmit the record to the trial Court with copy of this Judgment. (Dictated to the Judgment Writer directly on computer, corrected by me and then pronounced in the open Court on this the 11th day of January, 2024) (S.NATARAJ), LXVI Addl.CC & SJ, Bengaluru.
19 Crl.A.No.1196/2019 The Judgment is pronounced in the open Court vide separate Judgment with following operative portion.
ORDER The Appeal filed by the appellant under Section 374(3) of Cr.P.C. is allowed.
Consequently, the impugned
Judgment of conviction and
sentence in CC.No.23641/2017
dated 22.4.2019 passed by the 14th
Small Causes Judge and 39th Addl.
Chief Metropolitan Magistrate
(SCCH10) is set aside.
The appellant/accused is
acquitted for the offence under
Section 138 of NI Act.
Office is directed to transmit
the record to the trial Court with
copy of this Judgment.
LXVI Addl.CC & SJ,
Bengaluru .