Bangalore District Court
M/S Bafana Clothing Co. Pvt. Ltd vs M/S Bhargarv Enterprises on 12 February, 2025
C.C.NO.24528/2021
0
KABC030676782021
Presented on : 22-09-2021
Registered on : 22-09-2021
Decided on : 12-02-2025
Duration : 3 years, 4 months, 20 days
IN THE COURT OF THE XXVIII ADDL. CHIEF JUDICIAL
MAGISTRATE, BENGALURU CITY
Present:
Soubhagya.B.Bhusher,
B.A.,LL.B.,LL.M
XXVIII A.C.J.M, Bengaluru City.
DATED; THIS THE 12th DAY OF FEBRUARY-2025
C.C.NO.24528/2021
Complainant: M/s.Bafana Clothing Co.,Pvt.,Ltd.,
No.7/1, 11 the Cross, Lalbagh Road,
Bengaluru-560027.
R/by its Authorized agent,
Mr.Dinesh S/o Chaganlal Ji,
Age: 54 years.
(By Sri.L.Ashok Kumar.,Adv.,)
V/s
Accused: M/s.Bhargarv Enterprises,
G.Floor, 13-1-T-1/4, Excel
Mischief Mall, K.S.Rao Road,
Mangaluru-575003.
R/by Authorized Signatory,
Mr.Naveen Rai.
(By Sri.S.Rajashekar & Ors.,Advs.,)
:JUDGMENT:
This case arises out of the private complaint filed by the complainant against the accused under section C.C.NO.24528/2021 1 200 of Cr.P.C., for an offence punishable under section 138 of Negotiable Instruments Act.
2. The case of the complainant's in brief is as under:
It is the case of the complainant is that the complainant is registered under the companies act. The complainant are doing business in sale of readymade shirts and pants on cash and credit basis. Further stated that the accused is a customer of the complainant and has purchased goods on credit from 2018 to 06.03.2020 and as on day he is found due a sum of Rs.4,12,168/- towards principle plus interest at 24% P.A. The accused has cleared all bills except invoice No.12568 Rs.45,606/-, Invoice No.11718 Rs.30,929/-, Invoice No.11239 Rs.1,20,414/-, Invoice No.11213 Rs.38,171/-, Invoice No.11011 Rs.22,643/-, Invoice No.10615 Rs.45,509/-, Invoice No.10333 Rs.19,308/-, Invoice No.9726 Rs.89,588/- and Invoice No.9031 Rs.59,178/-. Further stated that the accused promised to pay the amount within one month but failed to do so and as per terms of invoices he is liable to pay interest since transaction is commercial in nature. Further the accused towards payments of the said legally recoverable dues had issued the cheque No.000036 dated: 05.03.2020 for Rs.4,12,168/- drawn on Bandhan Bank, Mangaluru. The complainant had presented the said cheque for encashment through its banker Kotak Mahindra Bank Ltd., K.H.Road branch, C.C.NO.24528/2021 2 Bangalore. But the said cheque was dishonored on 06.03.2020 as "Funds Insufficient". Thereafter, on 10.03.2020 the complainant got issued a legal notice to the accused through its counsel, calling upon him to pay the cheque within 15 days from the date of receipt of the said notice. The said notice was duly served to the accused on 13.03.2020. After service of the legal notice the accused neither reply to the notice nor paid the cheque amount. As such, the accused have committed an offence punishable under section 138 of N.I.Act. Hence, the present complaint came to be filed before this court on 13.08.2020.
3. After the complaint was filed, the cognizance of the offence cited therein was taken and it was registered as P.C.R No.10548/2020. Sworn statement of the complainant was recorded. Since there were sufficient materials to proceed against the accused, an order was passed on 21.09.2021 to register the case in Register No.III.
4. Thereafter, summons was issued to the accused and he appeared before the court through advocate and secured bail. He was furnished its necessary papers as complied under section 208 of Cr.P.C. Thereafter, the plea of the accused was recorded by the court. He has pleaded not guilty and claimed to be tried.
5. The complainant in support of its case, have C.C.NO.24528/2021 3 examined its Authorized Person as PW.1 and got marked 18(a) documents at Ex.P.1 to 18(a) and closed its side.
6. After closer of the evidence of the complainant, the statement under section 313 of Cr.P.C, was recorded. The accused has denied the incriminating evidence appeared against him. In his defence, the accused examined himself as DW.1 and no documents were marked on his behalf. But during the course of cross examination of PW.1 01 document was marked at Ex.D.1 by way of confrontation.
7. I have heard the arguments on both the sides and perused the written argument filed by the learned counsel for the complainant and also perused the material placed on record.
8. Upon hearing the arguments and on perusal of the material placed on record, the following points arise for my consideration:
1.Whether the complainant proves the existence of legally enforceable debt/liability.?
2.Whether the complainant further proves that the accused had issued the cheque-
Ex.P.1, towards the discharge of the said legally enforceable debt/liability.?
3.Whether the complainant further proves that the cheque-Ex.P.1 was dishonored for the reasons "Funds Insufficient" and thereafter the accused had failed to repay C.C.NO.24528/2021 4 the same within the statutory period, inspite of receipt of legal notice.?
4.Whether the accused have thus committed an offence punishable under section 138 of N.I.Act.?
5. What order?
9. My answers to the above points are as under:
Point No.1: In the Affirmative Point No.2: In the Affirmative Point No.3: In the Affirmative Point No.4: In the Affirmative Point No.5: As per final order, for the following:
:REASONS:
10. POINT NO.1 AND 2: These two points are inter-related to each other and finding given on any one point will bearing on the another. Hence, in order to avoid repetition of facts and evidence, I have taken these two points together for common discussion. The case of the complainant is that he was acquainted with the accused. Further the complainant are doing business in sale of readymade shirt and pants on cash and credit basis. Further the accused is a customer of the complainant and has purchased goods on credit from 2018 to 06.03.2020 and as on day he is found due a sum of Rs.4,12,168/- towards principle plus interest at 24% P.A. The accused has cleared all bills except invoices as stated in para 3 of the complaint. Further the accused promised to pay the amount within one month but failed to do so and as per terms of invoices C.C.NO.24528/2021 5 he is liable to pay interest since transaction is commercial in nature. Further towards payments of the said legally recoverable dues the accused had issued the cheque in question. The complainant has presented the said cheque for encashment through its banker. But the said cheque was dishonored as "Funds Insufficient". Thereafter, the complainant got issued a legal notice to the accused through its counsel, calling upon him to pay the cheque. Inspite of service of the legal notice the accused neither reply to the notice nor paid the cheque amount. As such, the accused have committed an offence punishable under section 138 of N.I.Act. Hence, the present complaint came to be filed before this court.
11. At this juncture, it is necessary to go through the provisions of N.I.Act before proceeding further. The provisions under section 118(a) and 139 of the Act, 1881 are extracted and they reads thus;
"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, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for C.C.NO.24528/2021 6 consideration.
(b). as to date: that every Negotiable Instrument bearing date was made or drawn on such date;
"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."
12. On plain perusal of the provisions under section 118(a) and 139 of the N.I.Act., as extracted herein above, it can be seen that initially the presumptions constituted under these two provisions favour the complainant. However, it is open to an accused to raise a defence to rebut the statutory presumptions. An accused can raise a defence, wherein the existence of legally enforceable debt or liability can be contested.
13. It is also well established that 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 record. An accused have constitutional rights to maintain silence. Standard of proof on part of the accused and that of the prosecution in a Criminal case is different. The prosecution must prove the guilt C.C.NO.24528/2021 7 of an accused beyond all reasonable doubts, the standard of proof so as to prove a defence on the part of an accused is "Preponderance of probabilities".
14. Under the light of above extracted provisions of the Act, I have perused the oral and documentary evidence placed on record. In support of the case, the complainant's have examined its Authorized person as P.W.1 and 18(a) documents were marked at Ex.P.1 to 18(a). In the chief examination P.W.1 has repeated the contents taken by the complainant in the complaint. Ex.P.1 is the cheque issued by the accused in favour of the complainant dated: 05.03.2020 for Rs.4,12,168/-. Ex.P.1(a) is the signature of the accused. Ex.P.2 is the bank memo dated: 06.03.2020 informing the dishonor of the cheque as "Funds Insufficient". Ex.P.3 is the office copy of the legal notice dated: 10.03.2020. Ex.P.3(a) is the postal receipt. Ex.P.4 is the postal acknowledgment. Ex.P.5 is the ledger account. Ex.P.6 is the resolution. Ex.P.7 is the complaint. Ex.P.8 is the bill wise details. Ex.P.9 to 16 are the invoices. Ex.P.17 is the certificate under section 65(b) of Indian Evidence Act. Ex.P.18 is the company master data. Ex.P.18(a) is the certificate under section 65(b) of Indian Evidence Act.
15. I have perused the exhibits on which the complainant have placed their reliance. On perusal of the exhibits, it is clear that the cheque in question was C.C.NO.24528/2021 8 presented for encashment within its validity. The bank endorsements with a shara "Funds Insufficient". The complainant issued the legal notice within one month from the date of receipt of memo. The notice was duly served to the accused on 13.03.2020. The complaint was filed on 13.08.2020, which is within limitation. The transaction with the complainant is admitted. Therefore, the documents on record clearly show that the complainant have complied the ingredients of section 138(a) to (c) of the N.I.Act. Therefore, the presumptions under section 118 and 139 of the N.I.Act, arise in favour of the complainant. The presumptions are rebuttable and the burden is on the accused to rebut the presumptions. The presumption is that the cheque was issued for legally enforceable debt/liability. However, actual existence debt/liability can be contested. The accused can rebut the presumptions by raising probable defences and proving it relying on the evidence of the complainant or by leading his direct evidence.
16. The case was seriously contested by the accused and the service of notice was disputed. The notice was duly served to the accused. The counsel for the accused cross-examined PW.1 in respect of non service of notice. But PW.1 denied the same. Further contended that the notice sent to the accused not served'; that the accused has no knowledge of the notice as it was not served on him; that the accused did C.C.NO.24528/2021 9 not give reply notice as the notice was not served on him; that he did not produce any documents to show that the accused was not doing business at the said address, the notice was not served on him and that the accused did not issue reply notice as he was not doing business at the said address. The counsel for the accused argued that no legal presumption can be raised as the notice was sent to the wrong address. When the notice at Ex.P.3, wherein the name of the accused is appearing, was confronted.
17. On perusal of Ex.P.3, it is clear that the name of the accused is appearing in the notice. The same notice was sent to the accused and the said notice was duly served to the accused. But the accused not given any reply. There is no evidence on record to show that the accused was doing business at some other address other than the address mentioned in the notice at Ex.P.3. On the other hand, it is clear that the accused was doing business at the said address. The above discussion clearly shows that the address mentioned in the notice is the correct address of the accused. As the notice was given to the accused and the same notice was sent to him through RPAD, an inference can be drawn that the notice was served on the accused. Further the address mentioned in the notice being the correct address of the accused, the presumption as per Section 27 of General Clauses Act can be drawn. It states that the notice sent through C.C.NO.24528/2021 10 post shall be deemed to be served, if it is properly addressed to a person to whom it is sent. Therefore, even though the notice sent to the accused through RPAD duly served.
18. In a nutshell it can be said that the statutory notice is an opportunity given to the accused to make payment and avoid the consequences of 138 of N.I.Act. In the case on hand, the accused voluntarily appeared through his counsel and contested the case by taking all probable defences. Therefore he cannot take the shelter of statutory requirement of service of notice to avoid the consequences of section 138 of N.I.Act. The complaint was filed on 13.08.2020, which is within limitation. The accused has denied the issuance of the cheque for repayment of the dues. It is his defence that the said cheque was not issued to the complainant for repayment of the amount. Further defence of the accused is that he had issued the blank cheque for the purpose of security and same was misused by the complainant. Therefore, the documents on record clearly shows that the complainant have complied the ingredients of section 138(a) to (c) of the N.I.Act. Therefore, the presumptions under 118 and 139 of the N.I.Act, arise in favour of the complainant. The presumptions are rebuttable and the burden is on the accused to rebut the presumptions. Once the issuance of cheque and signature are proved, the presumption C.C.NO.24528/2021 11 arises in respect of the fact that the cheque was issued for legally enforceable debt/liability. The accused can rebut the presumption by raising probable defence and proving it relying on the evidence of the complainant or by leading his direct evidence.
19. In order to prove his defence, the accused is examined himself as DW.1 by way of affidavit and no documents were marked on his behalf. In his chief examination affidavit he has repeated the defence taken by him. During the cross examination of PW.1 the ledger account statement marked at Ex.D.1.
20. In order to attract the offence punishable under section 138 of N.I.Act, the complainant is firstly required to prove the existence of legally enforceable debt/liability, for which the cheque came to be issued by the accused. The learned counsel for the complainant has argued that from the evidence placed on record, it is fact that the complainant are doing business in sale of ready made shirts and pants on cash and credit basis. Further argued that the accused is a customer of the complaint and has purchased goods on credit from 2018 to 06.03.2020 and as on day he is found due a sum of Rs.4,12,168/- towards principle plus interest at 24% P.A. Further argued that the accused has cleared all bills except invoices-Ex.P.9 to 16. Further argued that towards payments of the said legally recoverable dues the accused had issued the C.C.NO.24528/2021 12 cheque-Ex.P.1. The complainant has presented the said cheque for encashment through its banker. But the said cheque was dishonored as "Funds Insufficient". Thereafter, the complainant got issued a legal notice to the accused through its counsel, calling upon him to make payment of cheque. Inspite of service of the legal notice the accused neither reply to the notice nor paid the cheque amount. He further argued that the accused has not denied Ex.P.1 being his cheque drawn on the account of the accused. When the signature of the accused is not disputed, the presumption under section 139 N.I.Act is to be drawn in favour of the complainant. The accused has failed to elicit anything in the cross examination of P.W.1 to disbelieve the said evidence. The defence have failed to rebut the presumption under section 139 N.I.Act.
21. He further argued that the accused has failed to produce any believable evidence that he has issued the blank cheque for the purpose of security and also why he has not returned back the same is not clear. He further argued that under section 139 of N.I.Act, there is a presumption that the cheque have been issued for discharge of legally enforceable debt/liability. In the present case, the accused has not disputed Ex.P.1 being his cheque drawn on the account of the accused. The said presumption is available to the complainant. He further argued that the accused had failed to prove C.C.NO.24528/2021 13 the very fact that the cheque in question was given to the complainant for the purpose of security and it was blank when it was given to the complainant. Moreover, under section 118 of N.I.Act, there is a presumption that the Negotiable Instruments is drawn on the date, for the amount and in favour of the person as shown in it. It is for the accused to rebut the said presumption. But in the case on hand no such evidence forthcoming. It was also argued by him that as per the defence by the accused that he had given the blank cheque as security measure. As such, very defence of the accused is not believable. He further argued that the accused has not produced any documentary evidence to prove his defence. Upon careful perusal of the entire evidence of records both oral as well as documentary evidence the complainant have proved their case.
22. The learned counsel for the complainant has filed written argument. In his written argument it is submits that the accused is a customer of the complainant and has received goods under 9 invoices as stated in para No.3 of the complainant was found due a sum of Rs.4,12,168/- as per the account statement Ex.P.5. Ex.D.1 also shows that there was due of Rs.4,12,168/- and the accused issued cheque and that was taken in account statement-Ex.D.1 as receipt if the cheque would have been honored the balance would have been clear but since the cheque C.C.NO.24528/2021 14 bounce it was entered in account statement and debited to his account showing balance of Rs.4,12,168/- that is cheque amount. The accused towards the payment of the said dues issued cheque to the complainant for a sum of Rs.4,12,168/- and the same was dishonored with shara Funds Insufficient on 06.03.2020 P.1 & 2. The plaintiff got issued legal notice on 10.03.2020 P.3 and the same has been served to the accused on 13.03.2020 P.4 since he failed to pay the amount the present complaint was filed. The complainant has led evidence both orally and by way of documents and proved his case beyond doubts.
23. Further submits that the accused disputed the receipt of goods and raised objections to the invoices produced but failed to elicit anything from the complainant. The accused at para No.3 of his evidence has clearly submitted that he had placed orders for supply of goods and has made payment. The accused in his cross examination has clearly sated that he had made payments to complainant by cheque/NEFT and cash but not produced any documents to prove and also in his evidence has no were stated that regarding payments made when and how much and by what means which clearly shows that the accused is giving false evidence that he has paid amounts without producing receipt or details or his account statement. Further the cheque was misused even though he has made payments, he has admitted in cross examination C.C.NO.24528/2021 15 that he has not issued any notice to the complainant stating that he has paid the amount and to return the cheque nor he has taken any legal action against the complainant for misusing the cheque. Wherefore the presumption lies in their favour and the accused has not rebutted evidence by way of evidence to prove he has made payments. The admission made by the accused is sufficient to hold the accused has committed offence under section 138 of N.I.Act. Hence, he prays to convict the accused.
24. The learned counsel for the accused argued that the accused had issued the cheque to the complainant at the time of business transaction with the complainant for the purpose of security. When the cheque was given to the complainant it was blank. Further argued that the accused had already paid entire amount to the complainant. Further the accused never admitted regarding repayment of the said amount and there is no transaction between the complainant and the accused as alleged by the complainant. The accused has specifically denied having agree to repay the amount of Rs.4,12,168/- to the complainant. Further argued that the accused is not liable to pay the amount covered under the cheque. Further argued that the complainant miserably failed to prove the complaint averments. The complainant unable to prove that subject cheque was issued in discharge of duly C.C.NO.24528/2021 16 enforceable debt/liability. Further argued that the complainant have not produced any material to show that they have supplied the materials to the accused as per Ex.P.9 to 16. Thus the complainant failed to prove that the accused had issued the subject cheque for a sum of Rs.4,12,168/-. Further argued that the accused created doubt against the story putforth by the complainant in the complaint. The pharse "debt or other liability" means a legally enforceable debt or other liability. There was no convincing evidence from the complainant's side as to existence of any existing debt or liability to be discharged by the accused. The accused has discharged the onus that the subject cheque was not received by the complainant for any existing debt/liability. The accused entitled to acquittal. The complainant having received the subject cheque as security and it has misused by filing huge amount. The complainant has miserably failed to prove the liability to the tune of the amount covered by the cheque. The offence is deemed to be committed if amount covered by cheque is either in discharge of the liability incurred by the accused either full or in part. It cannot be any way in excess of the liability incurred. Therefore, the section 138 of N.I.Act cannot be said to be applicable.
25. He further argued that at the time of business transaction with the accused the complainant had demanded the accused issue cheque for the purpose C.C.NO.24528/2021 17 of security. As per the demand made by the complainant the accused handed over the signed blank cheque. The complainant with an intention to cheat and extract money from the accused has misused the cheque issued by the accused as a security purpose. Further argued that the accused has not committed any offence much less the alleged offence. The complainant has filed instant frivolous complaint against the accused, though the accused has not given the cheque towards the discharge of legally enforceable debt. Further argued that there is no legally recoverable debt as alleged in the complaint. The entire allegation made in the complaint are false and frivolous and the alleged allegations are made only with an intention to make unjust enrichment and unlawful gain at the accused cost. Further argued that the accused had approached the complainant for purchase goods, pursuant to discussion, the accused had placed orders to purchase the goods and paid the amount. Since the complaint had agreed to supply the goods to the accused company, as a security the accused had issued the cheque-Ex.P.1. The complainant had filled up the said cheque as per his whims and fancies. Though the complainant had agreed to present the cheque at Ex.P.2, only after delivery of the purchased goods, the complainant had presented same without delivering requisite goods. Further argued that though the cheque in question issued for security purpose C.C.NO.24528/2021 18 same has been misused by the complainant and ventured to file this false and frivolous complaint. Further argued that there is no liability to be paid by the accused to the complainant. The complainant by misusing the cheque which was given as a security, has presented the said cheque and subsequently filed this case taking undue advantage of the cheque in question to make unjust enrichment and unlawful gains. Further argued that the complainant has admitted during the course of cross examination that there is difference in the signature on the cheque and rest of the material in cheque-Ex.P.1. The documents produced by the complainant at Ex.P.5 is concocted and created document and that ledger extract have not been counter signed by the accused which is evident from the document produced by the complainant.
26. Further argued that the documents produced by the complainant are fabricated, forged and manipulated documents so as to file false claim of the complainant. When there is no dues and when there is no legally recoverable debt, then the question of honoring the alleged cheque does not arise at all. Hence, holding of the cheque of the accused by the complainant will not create any manner of rights or power to present the said cheque, as such presenting cheque by the complainant amounts to breach of trust and cheating. Further argued that the complainant has deliberately with a malafide intention by misusing the C.C.NO.24528/2021 19 cheque given as a security has filed the present complaint as per his wish and whims and has forged the documents for filing this criminal case. Further argued that the authorized signatory of the complainant company is not having any personal knowledge of the case in hand and not having authorization to represent. Hence, the complaint is deserves to be dismissed. Further argued that the complainant has not produced any supporting documents to show that he supplied the materials to the accused. The complainant has not stated the dates of invoices in the complaint and has not produced E-way bills. The document confronted at Ex.D.1 clearly deficits the conduct of the complainant. The complainant has made entry in their ledger book according to their whims and fancies. Even according to the complaint the accused has stopped transaction with the complainant during December 2018 to January 2019. That being the case question of issuing the disputed cheque on 05.03.2020 does not arise for consideration. Ex.P.5 shows that the complainant is trying to unjust enrichment and unlawful gain. Hence, he prays to dismiss the complaint and acquit the accused.
27. In order to attract the offence punishable under section 138 of N.I.Act, the main ingredients of the existence of the legally enforceable debt/liability, for which the cheque drawn on the account of the accused was given for discharge of the same, are to be proved.
C.C.NO.24528/2021 20 The complainant's in order to prove its case, have examined its Authorized person as PW.1 and 18(a) documents were marked at Ex.P.1 to 18(a). In chief examination, P.W.1 has repeated the averments made by the complainant in the complaint. In the present case, the accused has not disputed Ex.P.1 being his cheque drawn on the account of the accused. The said presumption is available to the complainant.
28. As per the section 139 of N.I.Act, there is a presumption regarding the existence of legally enforceable debt/liability. Such presumption is rebuttable presumption and it is opinion to the accused to raise defence discharging the existence of a legally enforceable debt/liability. In the case on hand also the accused has disputed the existence of legally enforceable debt/liability, for which cheque-Ex.P.1 was issued. In order to prove his defence, the accused has failed to produce any documentary evidence before this court except Ex.D.1. PW.1 during his cross- examination has specifically denied the suggestions made to him that Ex.P.1-cheque was issued in favour of the complainant for the purpose of security and same was blank at the time of receiving the same. Further he has denied that the accused has paid entire amount to the complainant and there is no due from the accused.
29. Since, the presumption under section 139 of N.I.Act is a rebuttable presumption the accused is firstly C.C.NO.24528/2021 21 required to produce some probable evidence to rebut the same. Though in the criminal cases, the standard of the proof required for the accused is not so strict as required for the complainant to prove the case. Further the accused has to produce some probable evidence, which creates doubt about the existence of legally enforceable debt/liability. In the present case, as per the defence taken by the accused is that he had given blank signed cheque to the complainant for the purpose of security and the complainant have not supplied the materials as mentioned in the invoices. Further he has already paid entire amount to the complainant. Except, the said defence, he has not produced any material to prove such defence. If he had given blank cheque to the complainant for the purpose of security, what prevented the accused to file the complaint immediately after the alleged illegal act made by the complainant. Further what prevented the accused to file the complaint against the complainant for misusing of the said cheque. On which date the accused came to knew about the alleged illegal act of the complainant, he did not whisper about on what date he came to know the alleged cheque illegally misused by the complainant. Admittedly the accused is a businessman and having knowledge of the financial transaction, why he has given blank cheque to the complainant without anticipating the consequence is not explained by him. So also, he has not stated anything as to what steps he C.C.NO.24528/2021 22 took to receive back the blank cheque. Moreover, immediately after the alleged blank cheque misused by the complainant he has not lodge complaint before concerned police station. No steps have been taken to receive back the blank cheque, after he came to know about the same.
30. Once issuance of cheque and signature are admitted, the statutory presumptions would arise under sections 118 and 139 of the N.I.Act that the cheque was issued by the drawer for legally payable debt/liability and for valid consideration. The Hon'ble Supreme Court has held in the case of Rangappa V/s Mohan, reported in 2010 AIR SCW 296, the presumption that the cheque was drawn in discharge of legally recoverable debt is a presumption of law that ought to be raised in every case, though, it is a rebuttable presumption. Of course, the presumption under section 139 and 118 of the N.I.Act, are rebuttal presumption. Further it is also held that mere plausible explanation by the drawer is not sufficient and proof of that explanation is necessary. The principle of law laid down in the above decision is applicable to the facts of this case. In the instant case, since the complainant is in possession of the cheque-Ex.P.1 the court has to draw the initial presumption that he is the payee of that cheque. Once the initial burden is discharged by the complainant, the onus shifts on the accused to rebut the complainant's case.
C.C.NO.24528/2021 23
31. Further the accused has taken defence that the cheque was given as a security at the time of business with the complainant. Further he has taken the defence that the complainant not supplied any materials to the accused as stated in the invoices. Further he has already paid entire amount to the complainant. But the complainant have misused the security cheque. Hence, an offence under section 138 of N.I.Act is not attracted. In this regard once issuance of cheque and signature are admitted, the statutory presumptions would arise under sections 138 of N.I.Act that cheque was issued by the drawer for legally payable debt/liability and for valid consideration. In the case of Sripati Singh (Since deceased) through his son Gaurav Singh V/s State of Jarkhand and another, reported in 2021 SCC online SC 1002, the Hon'ble Supreme court has categorically held that; once the cheque is issued as security for the loan and if the loan is not paid back then if the cheque is dishonored which attract 138 of N.I.Act. The principle of law laid-down in the above decision is applicable to the facts of this case. Therefore, the contention of the accused cannot be acceptable that the cheque was given only for security purpose, without producing any documents, then he has to pay the cheque amount when it is presented for encashment which is legally recoverable debt.
C.C.NO.24528/2021 24
32. In the case of K.S.Ranganatha V/s Vittal Shetty, reported in 2021 SCC Online SC 1191, the Hon'ble Supreme Court held that once the cheque is admitted to be that of the accused, the presumption envisaged in section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability. It is further held that the position of law makes it crystal clear that when a cheque is drawn out and is relied upon by drawee, it will raise a presumption that it is drawn towards a consideration which is a legally recoverable amount; such presumption of course, is rebuttable by proving to the contrary. The onus is on the accused to raise a probable defence and the standard of proof for rebutting the presumption is on preponderance of probabilities.
`33. In the case of M/s Kalemani Tex V/s P. Balansubramanian, reported in (2021) 5 SCC 283, the Hon'ble Apex Court has observed that even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under section 139 of the Negotiable instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.
C.C.NO.24528/2021 25
34. In the present case also, as the accused never disputed his signature and did not deny issuing cheque from the account of the accused. The accused did not dispute cheque return memo also. The cheque was returned for the reasons "funds insufficient". Thus, the act clearly lays down presumptions in favour of the complainant with regard to the issuance of the cheque by the accused towards the discharge of the liability in favour of the complainant. Further under scheme of the Act, the onus is upon the accused to rebut the presumption in favour of the complainant by raising a probable defence. Such being the legal position, it would be pertinent to refer to the defences raised by the accused to rebut the presumptions in favour of the complainant in this case.
35. Applying the above said principles to the present case and before considering the point whether the accused succeeded to rebut the presumptions and to establish his defence to the extent of probabilities, it is just and necessary to accumulate undisputed facts in this case.
36. It is not in dispute that bounced cheque belongs to the bank account of the accused. It is also not in dispute that signatures appearing on the bounced cheque is the signature of the accused. It is also not in dispute that the cheque presented by the complainant came to be dishonored by the banker of C.C.NO.24528/2021 26 the accused for the reason stated in the dishonor memo. To consider whether the accused succeeded to rebut the presumption and established the defence to the extent of probabilities, in this regard the accused have not produced any documents. It was also contended by the accused that he had given the blank signed cheque to the complainant for the purpose of security and the said blank cheque was misused by the complainant. But the accused has failed to produce any believable evidence before this court.
37. In the defence there is no ill-will between the complainant and the accused. Hence, misuse of cheque and filing the false case is not possible. The accused admittedly having knowledge of business. It is implies, he is conversant with financial transaction. If the complainant misused the said security cheque and had not returned the same, inspite of collecting cheque leaves from him, as a prudent man, the accused should have inquired with the complainant and demanded to return that cheque. No ordinary prudent man would keep quite in such circumstances, without taking any steps. The conduct of the accused is very unusual, because he did not take any legal action against the complainant, even after filing of the complaint based on Ex.P.1. Further he could have issued a notice to his banker to stop payment or legal notice to the complainant or he could have given complaint to the C.C.NO.24528/2021 27 police station immediately. No such steps were taken by the accused. He simply makes a bald allegation of misuse of security cheque against the complainant. It appears, just to escape from their legal liability, he has taken such contentions without any valid basis.
38. Moreover, the complainant have got issued a legal notice to the accused by registered through its counsel calling upon the accused to make repayment of amount to the complainant. Before a person is held to be guilty of an offence punishable under section 138 of N.I.Act, the complainant have to proved the compliance of the requirement under section 138 of N.I.Act. It is not in dispute that Ex.P.1 being his cheque drawn on account of the accused. In view of the above discussions, it is also held to be proved that it was drawn for discharge of legally enforceable debt/liability. From the evidence of P.W.1 and also cheque return memo at Ex.P.2 it is established that the cheque was dishonored for the reasons "Insufficient Funds''. A legal notice being issued as per Ex.P.3 within one month from the date of dishonour of the cheque is also not in dispute. In the case on hand the accused has not seriously disputed regarding notice sent by the complainant on his address. But, the accused has failed to reply to the notice, immediately after he received the demand notice. Thereby, he could have asserted his defence at an earliest available opportunity. In the case on hand the notice is sent to C.C.NO.24528/2021 28 the accused at his address. When the accused has not seriously disputed, the notice sent to the correct address is sufficient compliance under section 138 of N.I.Act. Therefore, there is sufficient proof of due service of the legal notice.
39. It is not the contention of the accused that thereafter he has repaid the cheque amount within stipulated time of 15 days on receiving the notice. Therefore, in the case on hand on perusal of the evidence placed on record, all the essential ingredients under section 138 N.I.Act, have been complied with. As the accused has not paid the cheque amount within stipulated period, as such the accused have committed an offence punishable under section 138 of Negotiable Instruments Act. The present complaint is filed before this court after the accused failed to repay the cheque amount. Even he did not whisper anything about the defence while his plea was recorded under section 251 of Cr.P.C. In the judgment of the Hon'ble Supreme Court in Indian Bank Association V/s Union of India and others, reported in (2010 (5) SCC 590), it is clear that while recording the plea under section 251 of Cr.P.C., it becomes the duty of the accused to state whether he has any defence to make or he pleads guilty. Thus, unlike under section 240 of Cr.P.C., the accused has no option under section 251 of Cr.P.C., just to deny the allegations made against him. If he is not willing to C.C.NO.24528/2021 29 plead guilty, he must explain what are the defences he want to take. As such, it has to be considered, whatever defence raised by the accused during the trial are all after thought, just to get ride of statutory burden cast on him.
40. In addition to this in the case of T.P.Murugan (Dead) through legal representatives V/s Bojan, reported in 2018 (8) SCC 469, the Hon'ble Apex Court held that once the cheque has been signed and issued in favour of the holder of the cheque, there is statutory presumption that the cheque is issued in respect of legally enforceable debt or liability: rebuttal of such presumption must be by adducing credible evidence. Mere raising a doubt without cogent evidence with respect to the circumstances, presumption under section 139 of N.I.Act cannot be discharged. The principle of law laid down in the above decisions are applicable to the facts of this case. Except some bald contentions, the accused has not been able to make out a probable case on his behalf.
41. The learned counsel for the accused argued except signature other writings on Ex.P.1-cheque is not in his handwriting, which was filled up by the complainant and it amounts to material alterations, so, the complaint is liable to be dismissed. As narrated above, when the accused admits their signatures, they cannot take up a defence that other contents of cheque C.C.NO.24528/2021 30 was filled up by the complainant and it amounts to material alteration. In this respect, ruling reported in 2019 SCC On-line (SC) 138), between Bir Singh V/s. Mukesh Kumar, the Hon'ble Apex Court held as under:
"37.A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer, if cheque is otherwise valid, the penal provision of Section 138 would be attracted.
38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still the on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.
40. Even a blank cheque leaf, voluntarily signed and handed over by the accused which is towards some payment. Would attract presumption U/sec.139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in C.C.NO.24528/2021 31 discharge of a debt."
42. The principles emerging from the above referred decision make it clear that, it is not mandatory and no law prescribes that the contents of cheque should be written by the signatory to the cheque. A cheque can be written by anybody and if the account holder of the cheque signs it, the presumption under section 139 of N.I.Act arises. The principle of law laiddown in above decision is aptly applicable to the facts of this case. In view of section 20 of N.I.Act, cheque being an inchoate instrument, if the drawer signs and delivers to the drawee, thereby he gives authority to the drawee thereof to make or complete the instrument.
43. As per the version of the accused is that the accused has nowhere denied transaction. The accused himself has admitted that the accused firm is the holder of alleged cheque. It is sufficient hold that the accused has issued the cheque-Ex.P.1 and even after he has not repaid the cheque amount the getting of receipt of notice. However, in any manner as the complainant have complied all the terms of ingredients of the provisions of 138 of N.I.Act. In case of dishonor of cheque, once the execution of cheque is admitted by the accused, then it for them to first rebut presumption arising out of section 139 of N.I.Act. Accordingly, PW.1 has established the case of the complainant, the C.C.NO.24528/2021 32 accused has issued the cheque-Ex.P.1 in order to repay the legally recoverable amount. Therefore, the accused has failed to probables the defence taken by them that Ex.P.1 was the blank cheque given to the complainant for the purpose of security. Therefore, the accused has failed to rebut the presumption under section 139 of N.I.Act. In the said circumstances, the complainant is not at all required to produce any material as to the financial transaction between the complainant and the accused, since the initial presumption is still available, when there is no rebuttal evidence.
44. PW.1 in his evidence has specifically deposed that the complainant are doing business in sale of ready made shirts and pants on credit basis. The accused is a customer of the complainant and has purchased the goods on credit from 2018 to 06.03.2020 and as on day he is found due a sum of Rs.4,12,168/- towards principle and interest at 24% P.A. Further deposed that the accused in order to payment of the said dues had issued the cheque in question in favour of the complainant. So also it is not in disputed that the complainant and the accused are known to each other, some point of period, the complainant is a private limited company and the accused is a customer of the complainant and had purchased the goods on credit basis, this is not disputed by the accused. The accused C.C.NO.24528/2021 33 has failed to rebut the presumption under section 139 of N.I.Act, non furnishing of details of financial transaction no consequences to disbelieve the case of the complainant. The accused has failed to probables his defence. With these reasons, I answer point No.1 and 2 in the Affirmative.
45.POINT NO.3 AND 4: In order to avoid repetition of facts, these points are taken together for common discussion. Before a person is held to have committed an offence punishable under section 138 of N.I.Act, the complainant have to prove all the requirements of section 138 of N.I.Act. Ex.P.1 being his cheque drawn on the account of the accused is not in dispute. The said cheque having been dishonored for the reasons "funds insufficient", when it was presented by the complainant before the bank for encashment is also not seriously disputed by the accused. The accused has not taken up any contention that thereafter he had paid the cheque amount within stipulated time of 15 days, after issuance of the notice. As such, in the present case from perusal of documents, the essential requirements of section 138 of N.I.Act, have been complied with. In this case if the accused has issued blank signed cheque in favour of the complainant for the purpose of security and why he has not produced any documents. After service of notice the accused neither reply to the notice nor paid the cheque amount. Hence, the present complaint C.C.NO.24528/2021 34 came to be filed before the court on 13.08.2020. While discussing the point No.1 and 2, this court has already observed that the complainant's have proved that the cheque-Ex.P.1 was issued for discharge of legally enforceable liability/debt and in view of the mandatory requirements under section 138 of N.I.Act, being complied with. The accused is found to have committed an offence punishable under section 138 of N.I.Act. With these reasons, I answer point No.3 and 4 in the Affirmative.
46. POINT NO.5: The accused is held to have committed an offence punishable under section 138 of N.I.Act. The complainant's have proved its case. The accused has failed to prove his rebuttal for the reasons mentioned above and in view of the mandatory requirements of section 138 of N.I.Act, being complied with. The accused is found to have committed an offence punishable under section 138 of N.I.Act. Since, the said offence is an economic crime, the accused is not entitled for the beneficial provisions of probation of offenders Act. In view of the above discussions and the findings on point No.1 to 4, I proceed to pass the following;
:ORDER:
Acting under section 255(2) of Cr.P.C., the accused is convicted for an offence punishable under section 138 of N.I.Act.
The bail bond executed by the C.C.NO.24528/2021 35 accused is hereby stands canceled.
The accused is sentence to pay fine of Rs.4,30,000/- (Rupees four lakhs thirty thousand only) to the complainant.
It is further ordered that out of the said fine amount an amount of Rs.4,20,000/- (Rupees four lakhs twenty thousand only) shall be paid to the complainant as compensation as per Section 357(1)(b) of Cr.P.C., and remaining amount of Rs.10,000/- (Rupees ten thousand only) shall be remitted to the State.
In default of the payment of fine amount, the accused shall undergo simple imprisonment of six months.
(Dictated to the stenographer directly on computer typed by her, corrected by me and then judgment pronounced in the open court on 12 th day of February-2025) (Soubhagya.B.Bhusher) XXVIII Addl. Chief Judicial Magistrate, Bengaluru City.
ANNEXURE List of witness examined on behalf of the complainant:
PW.1 : Sri Dinesh.
List of documents marked on behalf of the complainant:
Ex.P.1 : Cheque.
Ex.P.1(a) : Signature of the accused.
Ex.P.2 : Bank endorsement.
Ex.P.3 : Office copy of the legal notice.
Ex.P.3(a) : Postal receipt.
C.C.NO.24528/2021
36
Ex.P.4 : Postal acknowledgment.
Ex.P.5 : Ledger account.
Ex.P.6 : Resolution.
Ex.P.7 : Complaint.
Ex.P.8 : Bill wise details.
Ex.P.9 to 16 : Invoices.
Ex.P.17 : Certificate U/s.65(b) of I.E.Act.
Ex.P.18 : Company master data.
Ex.P.18(a) : Certificate U/s.65(b) of I.E.Act.
List of witnesses examined on behalf of the accused:
DW.1 : Mr.Naveen Rai.
List of documents marked on behalf of the accused:
Ex.D.1 : Ledger account.
XXVIII Addl. Chief Judicial Magistrate, Bengaluru City.
C.C.NO.24528/2021 37 12.02.2025 (Judgment pronounced in the Open Court Vide Separate Sheet) :ORDER:
Acting under section 255(2) of Cr.P.C., the accused is convicted for an offence punishable under section 138 of N.I.Act.
The bail bond executed by the accused is hereby stands canceled.
The accused is sentence to pay fine of Rs.4,30,000/- (Rupees four lakhs thirty thousand only) to the complainant.
It is further ordered that out of the
said fine amount an amount of
Rs.4,20,000/- (Rupees four lakhs
twenty thousand only) shall be paid to the complainant as compensation as per Section 357(1)(b) of Cr.P.C., and remaining amount of Rs.10,000/- (Rupees ten thousand only) shall be remitted to the State.
In default of the payment of fine amount, the accused shall undergo simple imprisonment of six months.
XXVIII Addl. Chief Judicial Magistrate, Bengaluru City.