Bangalore District Court
M/S Swastik International vs Smt. Rekha V. Shah on 6 November, 2021
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Crl.A.No.743/2014
IN THE COURT OF LV ADDL. CITY CIVIL & SESSIONS
JUDGE, BENGALURU (CCH-56)
:Present :
Sri. Krishnamurthy R. Padasalgi,
B.Sc., LL.M., HDSE
LV Addl. City Civil & Sessions Judge,
Bengaluru.
Crl.A.No.743/2014
DATE: THE 6th DAY OF NOVEMBER 2021.
APPELLANT :: M/s Swastik International,
No.63, 3rd Floor,
Rama Iyengar Road,
V.V.Puram, Bengaluru-560 004.
Represented by its Partner
Sri. Dharmil R. Shah
(Rep. By Sri. K.R.L., Advocate)
-V/s-
RESPONDENT :: Smt. Rekha V. Shah,
W/o Vijay J. Shah,
Aged about 52 years,
Residing at No.20,
Ground Floor,
Kumarapark West,
Bengaluru-560 020.
Represented by her husband and
GPA Holder
Sri. Vijay J. Shah.
(Rep. By Sri C.M.D., Advocate)
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Crl.A.No.743/2014
JUDGMENT
This is an appeal under Section 374(3) of Cr.P.C. by the the appellant/accused being aggrieved by the judgment and order passed by learned XXI A.C.M.M., Bengaluru City in C.C.No.37871/2010 dated 18.06.2014 for convicting him for the offence punishable u/Sec.138 of N.I. Act sentencing him to pay compensation of Rs.7,10,000/- to complainant/respondent with fine of Rs.10,000/- to state in default simple imprisonment for 6 months.
2. The parties will be referred as per the Rank before the trial Court.
3. The facts of the case of complainant are that, the complainant and her husband are known to the accused from the past thirty years, since both of them are distant relatives, having a very cordial and close relationship from a long time. The accused who is engaged in the business of textiles in readymade garments and due to global recession and in order to tide over temporary financial crises, the accused had approached the complainant for financial help in running his business, the complainant had 3 Crl.A.No.743/2014 advanced of Rs.5,00,000/- to the accused repayable on demand within two months. The complainant and after expiry of two months, on persistent demand made by the complainant to repay the loan amount, the accused said that, the complainant to present the cheque issued by him on the Federal Bank Ltd., Gandhinagar Branch, Bangalore cheque bearing No.034979, dated 28.5.2010 for Rs.7,00,000/-. The complainant presented the cheque on 1.6.2010, it was returned with an endorsement, that insufficient funds on 3.6.2010. Later the complainant got issued a legal notice on 9.6.2010 through his counsel, it was served on the accused on 10.6.2010. The accused has not kept sufficient amount in his account, when the cheque was presented for encashment. In spite of service of notice, the accused has not complied the same. Hence, the complaint.
4. The trial Court after taking cognizance issued the summons, the accused appeared enlarged on bail, plea was read over. The complainant was examined as P.W.1 and got marked 5 documents as Exs.P.1 to Ex.P.5 and accused was examined u/Sec.313 of Cr.P.C. and his answers were recorded, the accused has not 4 Crl.A.No.743/2014 adduced any evidence. The learned magistrate after hearing both passed the impugned order.
5. The appellant/accused has following ground for the appeal.
"Grounds for Appeal."
That impugned judgment is opposed to law, facts and materials, the Court below erred in appreciating that false complaint was filed, there was no written agreement / loan agreement between the complainant and accused to establish that the complainant had allegedly borrowed hand loan of Rs.7,00,000/- from the complainant / respondent. The complainant / respondent has stated that he had lent the alleged loan of Rs.7,00,000/- to the accused / appellant and towards the repayment of the said loan, the appellant / accused had allegedly issued the cheque amounting to Rs.5,00,000/-, strangely the complainant never stated on date the alleged amount was given to the accused. The trial Court has failed to consider that the cheque in question was never given to the respondent for legally enforceable debt. Further, the trial Court has failed to consider fact that there was no transaction between the complainant and the accused at any point of time. Further, the trial 5 Crl.A.No.743/2014 Court has failed to consider that the respondent claims to be an Income Tax Assessee and he has stated that, the alleged hand loan of Rs.7,00,000/- was mentioned in the Income Tax returns. But the respondent has failed to produce the Income Tax returns for the alleged period. Further, the trial Court has failed to consider that the respondent did not produce any bank account details / pass book to show that he had money to lend the alleged hand loan to the appellant / accused. Further, the trial Court has failed to consider the various crucial admissions made by PW1 in the cross examination and thereby misread the evidence on record and has drawn erroneous conclusions which has resulted in grave injustice to the appellant / accused. Hence, the judgment passed by the trial Court is not proper and liable to be set aside. The judgment is capricious, perverse and hence prays to set aside the impugned order.
6. After issuance of notice respondent appeared, trial Court has records were secured, heard counsels for the appellant and respondent. The counsel for the appellant filed written arguments, Perused.
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Crl.A.No.743/2014
7. Based on the above points are that arise for consideration;
1. Whether the appellant / accused proves that the cheque in question was issued by the firm and notice issued to the appellant and hence, there is no mandatory notice as contemplated under Section 138 of N.I. Act?
2. Whether the appellant / accused proves that there is no loan transaction or legally enforceable debt between himself and the complainant?
3. Whether the complainant proves that the in order to discharge his legally enforceable debt, appellant/accused issued cheque bearing No.034979 dated 28.05.2010 for Rs.7,00,000/- drawn on Federal Bank Ltd., Gandhinagar Branch, Bengaluru ***?
4. Whether the judgment and sentence passed by the trial Court requires interference by this Court?
5. What order ?
8. The above points are answered as under:
Point No.1 : In the Negative Point No.2 : In the Negative 7 Crl.A.No.743/2014 Point No.3 : In the Affirmative Point No.4 : In the Negative Point No.5 : As per final order for the following.......
REAS O NS
9. POINT No.1 :: The first and foremost fact is to be considered is with regard to issuance of notice, it is contended in the appeal and also argument that notice under Section 138 of N.I. Act was not served on the firm and the accused is a firm M/s Swastik International, but it is issued to accused by name Sri.Dharmil R. Shah. In this connection the available oral evidence requires to be scrutinized.
10. In the cross examination PW 1 admits that as per his instructions the counsel for the respondent has issued legal notice and legal notice was issued to one Sri.Dharmil R. Shah and complaint is filed against M/s Swastik International and no notice was issued to the said firm for dishonour of cheque. It is also admitted by PW 1 that the cheque belongs to accused firm and hand loan is given to Dharmil R. Shah and not to the complainant firm.
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Crl.A.No.743/2014
11. This evidence shows that cheque in question was issued by the firm and notice was issued to one Sri.Dharmil R. Shah. The counsel for the appellant has also relied upon the judgment in Crl. Appeal No. 731/2014 passed by the LIX Addl. City Civil Judge, Bangalore dated 08.04.2015 which was filed by M/s Swastik International (Appellant of this case) against Sri.Vijay J. Shah i.e. PW 1 herein, wherein the court has set aside the judgment of 21 st ACMM, Bangalore dated 18.06.2014 in C.C.No.37932/2010 on the ground that the complaint is not filed against Sri.Dharmil R. Shah and not his individual capacity and the same was filed against M/s Swastik International Partnership firm. Hence, the accused M/s Swastik International partnership firm is liable to be acquitted and notice was not issued to partnership firm.
12. In this case the said notice is at Ex.P4. It is addressed to Dharmil R. Shah dated 09.06.2010. Ex.P5 is acknowledgement and there is no dispute with regard to receipt of notice. Now the question comes having regard to the admission of PW 1 and judgment in Crl. Appeal No. 731/2014 that whether there was proper notice issued to the firm. The cheque in question at Ex.P2 9 Crl.A.No.743/2014 was issued by M/s Swastik International . In this connection it is relevant to note the ruling reported in (2015) 16 SCC 744, Jitendra Vora Versus Bhavana Shah (para 9 to 11) wherein it is held that -
We have heard the learned counsel appearing for the parties and we have perused the evidence placed before us. From a bare reading of Section 138 of the NI Act, the first and foremost essential ingredient for attracting a liability under this Section is that the person who is to be made liable should be the drawer of the cheque and should have drawn the cheque on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for discharge, in whole or part, of any debt or other liability. In this context, this Court in the case of Krishna Texport and Capital Markets Ltd. v. Ila A. Agrawal & Ors, (AIR 2015 SC 2091), has held as under-
"The notice under Section 138 is required to be given to the 'drawer' of the cheque so as to give the drawer an opportunity to make the payment and escape the penal consequences. No other person is contemplated by Section 138 as being entitled to be issued such notice. The plain language of Section 138 is very clear and leaves no room for any doubt or ambiguity. There is nothing in Section 138 which may even remotely suggest the issuance of notice to anyone other than the drawer." The learned counsel for the respondents has relied upon the case of Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1, wherein this Court held - "Normally an offence can be committed by human beings who are natural persons. Such offence can be tried according to the procedure established by law. But there are offences which could be attributed to juristic person also. If the drawer of a cheque happens to be a juristic person like a body corporate it can be prosecuted for the offence under 10 Crl.A.No.743/2014 Section 138 of the Act. Now there is no scope for doubt regarding that aspect in view of the clear language employed in Section 141 of the Act. In the expanded ambit of the word 'company' even firms or any other associations of persons are included and as a necessary adjunct thereof a partner of the firm is treated as director of that company." (Emphasis supplied) "Thus when the drawer of the cheque who falls within the ambit of Section 138 of the Act is a human being or a body corporate or even firm, prosecution proceedings can be initiated against such drawer. In this context the phrase 'as well as' used in Sub- section (1) of Section 141 of the Act has some importance. The said phrase would embroil the persons mentioned in the first category within the tentacles of the offence on a par with the offending company. Similarly the words 'shall also' in Sub- section (2) are capable of bringing the third category persons additionally within the dragnet of the offence on an equal par. The effect of reading Section 141 is that when the company is the drawer of the cheque such company is the principal offender under Section 138 of the Act and the remaining persons are made offenders by virtue of the legal fiction created by the legislature as per the section. Hence the actual offence should have been committed by the company, and then alone the other two categories of persons can also become liable for the offence." In our opinion, the High Court has correctly come to the conclusion that the liabilities of M/s. Shah Agencies were never taken over by M/s. Shah Enterprises. Therefore, the reasoning given by the High Court, in our opinion, is absolutely flawless and we find no ground to interfere with the concurrent findings of the Trial Court and the High Court. Therefore, the present appeal is devoid of any merit. Accordingly, this appeal is dismissed."
13. So in this case, the undisputedly drawer is Sri.Dharmil R. Shah. Having regard to the above proposition of law the Drawer is 11 Crl.A.No.743/2014 liable for prosecution which means that he is a person whom the notice under Section 138 of NI Act shall be addressed.
14. In another ruling reported in (1999) 5 SCC 693 - M/S BILAKCHAND GYANCHAND COMPANY VS. A. CHINNASWAMI. When the notice is issued to the Managing Director of the company who has signed the cheque it was held that there was no infirmity in the notice.
15. The evidence clearly indicate that the notice issued to Sri Dharmil R. Shah who was authorized signatory on behalf of M/s Swastik International and notice issued is valid notice and he is the person liable for prosecution. It is also essential to say that the firm is not a necessary party as reported in ILR 1994 KARNATAKA 2991 - V.N. SAMANT VS. K.G.N. TRADERS, wherein it is held that carrying firm as party, a person incharge and responsible for conduct all business of firm can be proceeded against.
16. Hence, in this case also there is no infirmity in notice. The notice issued is proper. The hand loan lent to Dharmil R. Shah and notice issued to the firm and prosecution against the firm is proper. 12
Crl.A.No.743/2014 The suggestion that the complaint as given to Dharmil R. Shah clearly establishes that the complainant / respondent has lent hand loan to Sri.Dharmil R. Shah, who is accused herein. Hence, point No.1 is answered in Affirmative.
17. POINTS NO.2 AND 3: The discussions are made while concluding the above point that the suggestion is given to PW 1 that the hand loan was lent to Dharmil R. Shah and not to M/s Swastik International. The PW 1 has also admitted the same. So her the lending of hand loan is admitted. It is also elicited that in 2010 the said cheque was issued by the accused and totally 7 cheques were issued by the accused. It is also further elicited in order to get the contradictory admissions that the complainant used to lend money to the accused as per his necessities on various occasions. Therefore,the above fact establishes that the cheque was issued by the accused.
18. Another aspect is with regard to GPA it is stated that it is improper and permission under Section 302 of Cr.P.C. was not 13 Crl.A.No.743/2014 taken, but the GPA / PW 1 is none other than the husband of the complainant. He is acquainted with all the transactions. Hence, such arguments cannot be accepted. The grounds for appeal (ground No.8 that misusing of cheque by respondent) is not suggested to PW 1. It is only made as ground for appeal, only which is narration.
19. PW 1 admits that lending the said amount by the complainant is shown in income Tax assessment. It is contended that the said assessment were not shown. , but not produced. But here non-production of income tax assessment will not invalid the cheque issued. As the complainant has discharged presumption envisaged under Section 139 of NI Act. The reveres onus of rebutting the presumption is not done by the accused. Hence, the cheque in question was issued in discharge of legally enforceable debt which was bounced for insufficient of funds and notice issued is valid and despite on receipt of notice, within the stipulated time, the accused has not repaid the amount and committed offence punishable under Sections 138 of NI Act. Hence, the point No.2 is 14 Crl.A.No.743/2014 answered in Negative and Point No.3 is answered in the Affirmative.
20. POINT NO.4: The trial Court has properly appreciated the oral and documentary evidence available, rightly drawn the legal presumptions and applied the same and passed the judgment and sentence in accordance with law, it cannot be find fault with. Hence, this point is answered in Negative.
21. POINT NO.5: Hence, proceed to pass the following...
ORDER This is an appeal under Section 374(3) of Cr.P.C. by the the appellant/accused by name Dharmil R. Shah being aggrieved by the judgment and sentence passed by learned XXI A.C.M.M., Bengaluru City in C.C.No.37871/2010 dated 18.06.2014 is hereby dismissed with costs.
The judgment and sentence of trial Court passed in C.C.No.37871/2010 dated 18.06.2014 by learned XXI A.C.M.M., Bengaluru City is confirmed. 15
Crl.A.No.743/2014 Office to send back the trial Court records with copy of this judgment.
[Dictated to the Judgment Writer, transcribed by him, transcription corrected and then pronounced by me in open court, dated this the 6 th day of November, 2021.] (Krishnamurthy R. Padasalgi) LV Addl. City Civil & Sessions Judge, Bengaluru.
16Crl.A.No.743/2014 Judgment passed and pronounced in the open court. The operative portion of the order reads thus:
ORDER This is an appeal under Section 374(3) of Cr.P.C. by the the appellant/accused by name Dharmil R. Shah being aggrieved by the judgment and sentence passed by learned XXI A.C.M.M., Bengaluru City in C.C.No.37871/2010 dated 18.06.2014 is hereby dismissed with costs.
The judgment and sentence of trial Court passed in C.C.No.37871/2010 dated 18.06.2014 by learned XXI A.C.M.M., Bengaluru City is confirmed.
Office to send back the trial Court records with copy of this judgment.
(Krishnamurthy R.Padasalgi), LV ACC&SJ, Bangalore (CCH-56) 17 Crl.A.No.743/2014