Bangalore District Court
M/S. Cox & Kings Ltd vs M/S. Indocem India (P) Ltd on 18 December, 2018
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 18th Day of DECEMBER 2018
PRESENT: Smt.VANI A. SHETTY, BA.Law, LL.B,
XVII ADDL. JUDGE, Court of Small
Causes & ACMM, Bengaluru.
C.C. No. 55537/2015
Complainant/s : M/s. Cox & Kings Ltd.,
A Company incorporated under the
Indian Companies Act, 1956,
Having its Registered office at
Turner Morrison Building,
No.16, Bank Street, Fort,
Mumbai - 400 001.
and a branch office, inter-alia at,
#22, BMH Complex, K.H.Road,
Bangalore.
Represented herein by its
Principal Officer and its authorized
signatory,
Mr. M. Raghupathi.
(By Sri/Smt. C.M.P., Advocate)
V/s.
Accused/s : 1. M/s. Indocem India (P) Ltd.,
A company registered under the
Companies Act, 1956,
Having its place of business at
Indocem House,
#327/5, Mysore Road,
Next to BHEL,
Bangalore - 560 039.
Represented by its Director.
2. Mr. Ketan Shah,
Director,
SCCH-21 2 C.C. No.:55537/15
#327/5, Mysore Road,
Next to BHEL,
Bangalore - 560 039.
Represented by its Director.
And also at
602, Sparta II Prestige Acropolis,
Hosur Road, Bangalore - 560 039.
3. Rahul Shantilal Shah,
Indocem India (P) Ltd.,
Indocem House, 8 Sundervan Society,
Opp. Gujurat Vidyapith Auda,
Ashram Road,
Ahmedabad,
Gujarat - 380 014.
And also at
71, Uganda Park,
Memnagar,
Ahmedabad - 380 052.
(By Sri R.K., Advocate)
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JUDGEMENT
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 provided tours and travel services to the accused and total cost was Rs.85,16,336/-. Out of the said amount, accused have paid an amount of Rs.78,93,000/- and balance was Rs.6,23,336/-. In discharge of the said balance amount, the accused issued cheque bearing No.739782 dated 31.07.2015 for Rs.4,00,000/- drawn on Yes Bank, Kawla Naka branch, SCCH-21 3 C.C. No.:55537/15 Kolhapur assuring that the cheque would be honoured if presented for payment. The complainant presented the said cheque for encashment through its banker Kotak Mahindra Bank, Lavelle Road Branch, Bengaluru. But the said cheque came to be dishonoured on the ground of 'Payment stopped by drawer' on 11.08.2015. Thereafter, on 28.08.2015 complainant got issued legal notice by RPAD demanding for repayment of the cheque amount within 15 days from the date of receipt of the notice. The notice sent through RPAD was served on the accused. The accused have neither paid the amount nor replied the notice and therefore, this complaint is filed on 16.10.2015.
3. On filing of the complaint 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 they were summoned. The substance of accusation is stated to the accused and their plea was recorded. Accused have pleaded not guilty and submitted that they have defence to make.
4. In support of the complainant's case, the sworn statement of the complainant filed in lieu of affidavit during the pre-summoning stage is considered as evidence of the complainant and 22 documents are marked as Ex.P1 to Ex.P22. The statements of the accused are recorded under Section 313 of Cr.P.C and their answers were recorded. The accused submitted that they have defence evidence. The SCCH-21 4 C.C. No.:55537/15 accused have not led their evidence. But, got marked Ex.D1 document.
5. Heard the arguments.
6. The points that arise for my consideration are:
1. Whether the complainant proved that accused has committed an offence punishable under Section 138 of N.I. Act 1881?
2. What order?
7. My answer to the above points is as follows:
Point No.1 : In the Affirmative,
Point No.2 : As per final order for
the following:
REASONS
8. POINT No.1: In order to constitute an offence
under Section 138 of N.I. 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 notice, cause of action arises for filing complaint.
9. The sworn statement of the complainant filed in lieu of affidavit during the pre-summoning stage is SCCH-21 5 C.C. No.:55537/15 considered as evidence of the complainant. In the affidavit, complainant has testified regarding balance amount by the accused towards the tour and travel services obtained by them, issuance of cheque, issuance of demand notice and also failure of the accused to pay the cheque amount. The complainant has produced cheque bearing No.739782 dated 31.07.2015 alleged to be issued by the accused. Ex.P4 stands in the name of complainant for Rs.4,00,000/. Ex.P11 is the endorsement issued by the bank stating dishonor of Ex.P4 cheque. Ex.P11 shows that Ex.P4 was dishonoured for 'Payment stopped by drawer' on 11.08.2015. Ex.P12 is the office copy of legal notice dated 28.08.2015. Ex.P18 to 22 is the postal receipts for having sent the legal notice and Ex.P13 to 17 are the postal acknowledgements for evidencing the service of notice by RPAD.
10. In the present case cheque is dated 31.07.2015. Ex.P11 shows that cheque in question was dishonoured on 11.08.2015. As per Ex.P11, the cheque was presented to the bank within three months from its date. The notice was issued within the statutory period of time. The notice was served to the accused on 31.08.2015, 02.09.2015 and 03.09.2015 respectively as per Ex.P13 to 17 postal acknowledgments. The service of notice to the accused is disputed by them. Ex.P12 is the copy of demand notice sent under section 138 (b) of NI Act. Ex.P18 to 22 is the postal receipts. Ex.P13 to 17 is the postal acknowledgments. Accused have not specifically denied that the address mentioned in the notice are not their address. Therefore, it SCCH-21 6 C.C. No.:55537/15 is clear that notice was sent to the correct address of the accused. When a notice is sent to the correct address of the accused duly stamped, there is a presumption under section 27 of General Clauses Act that notice has deemed to be effected to the addressee unless and until the contrary is proved. Further, in the decision of Hon'ble Supreme Court rendered in the case of Alavi Haji vs. Palapetty Muhammed(2007(6) SCC 555), held that when a notice is returned with postal endorsement refused or unclaimed, due service has to be presumed. Further, in Para No.17 of the judgment, the Hon'ble Supreme Court has held as hereunder:
"It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of criminal law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can within 15 days of receipt of summons from the court in respect of the complaint under section 138 of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and therefore, the complaint is liable to be rejected. As person who does not pay within 15 days of receipt of the summons from the court along with the copy of the complaint under section 138 of the Act cannot be obviously contend that there was no proper service of notice as required under section 138, by ignoring statutory presumption to the contrary under section 27 of the G.C. Act and Section 114 of the Evidence Act in our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskar's case (supra), if the 'giving of notice in the context of clause(b) of the proviso was the same as the receipt of notice a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape consequences of Sec.138 of the Act."
In view of above, the service of demand notice deemed to have effected to the accused. Therefore, the contention of SCCH-21 7 C.C. No.:55537/15 the accused in this regard cannot be accepted. The cause of action for filing the complaint arose on 16.09.2015. The complainant has filed this complaint on 06.10.2015 i.e. within 30 days from the date of arisal of cause of action. In this way the complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act.
11. 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 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 Hon'ble Supreme Court and our Hon'ble High Court, 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, 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 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 SCCH-21 8 C.C. No.:55537/15 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) Hon'ble Supreme Court has held that, 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 reverse burden introduced by Section 139 of N.I. Act should be delicately balanced.
12. In the decision, Rangappa - Vs - Mohan (AIR 2010 SC 1898) Hon'ble Supreme has considered this issue and clarified that, existence of legally recoverable debt or liability is a matter of presumption under section 139 of N.I. Act. In para 14 of the judgment the Hon'ble Supreme Court observed as here below:
"In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned 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 SCCH-21 9 C.C. No.:55537/15 presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a 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. "SCCH-21 10 C.C. No.:55537/15
13. 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.
14. In the present case, complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act by producing the documents and evidence. It is the case of the complainant that it provided tour and travel services to the accused and total cost was Rs.85,16,336/-. It has further contended that, out of the said amount accused have paid an amount of Rs.78,93,000/- and balance was Rs.6,23,336/-. It is contended that, from and out of total due amount, accused have issued Ex.P4 cheque for Rs.4,00,000/-, which came to be dishonoured.
15. The accused have admitted the availment of services, signature in Ex.P4 cheque and its issuance. The accused have disputed the liability contending that no SCCH-21 11 C.C. No.:55537/15 invoice was raised for the same. But, Ex.P7 is the final invoice issued by the complainant. When it was forwarded to the accused on 05.08.2015 and 10.08.2015, it was received by them without any demur. The receipt of invoices on 05.08.2015 and 10.08.2015 is not disputed by the accused. The accused are the responsible persons of Private limited company. If the correctness of the invoice/statement was in dispute, certainly they would have responded to it. When the invoice/statement dated 10.08.2015 was sent to the accused, specifically demanding the balance amount including Ex.P4 cheque amount, there was a duty on the part of the accused to submit their response. The silence of the accused speaks against them. Added this, after the dishonour of cheque, complainant issued a demand notice on 28.08.2015. Inspite of service of notice, accused have not chosen to deny it.
16. It is contended by the accused that, Ex.P4 cheque was issued for security. In fact, when the service was availed by the accused, there was no need to issue cheque for security. The liability of the accused is only towards the payment of service amount. The complainant has given the particulars of the amount of liability. The accused have not able to explain as to in what way it is incorrect. It is contended that the service cost per head was Rs.1,69,500/- and for 48 members it comes Rs.81,36,000/- and in the invoice, the total amount mentioned is 83,05,500/-. This submission is countered by the complainant stating that total amount includes the GST as stated in Ex.P3. This explanation given by the complainant SCCH-21 12 C.C. No.:55537/15 appears to be true as narrated in Ex.P3. Therefore, the contention of accused fails.
17. It is also contended by the accused that the complainant claimed that the balance amount is of Rs.6,23,336/- and it has not taken any steps for the recovery of balance amount of Rs.2,23,336/-. But, merely because a portion of right over the amount is relinquished, the claim made by the complainant cannot be suspected especially when there are sufficient materials on record. Since the accused have not issued cheque for remaining amount of Rs.2,23,336/-, there was no occasion to prosecute the accused for the said amount. It can be taken note of the fact that O.2 R.2(1) of CPC also permits the relinquishment. Hence, this contention of the accused is misconceived.
18. Finally it is argued that, the complainant has not provided the service as assured by it and therefore, there was no legally enforceable debt. It is specifically contended that instead of providing 5 star hotel facilities, only 4 star hotel facility was provided. This contention is raised belatedly without substantiating the same. As rightly argued by the learned counsel appearing for the complainant if there was deficiency of service, the accused should have established the same in appropriate proceedings. In the present proceedings, this court cannot consider the stand taken by the accused. Further, the quantum of amount required to be compensated for the deficiency of service also cannot be determined in this case.
SCCH-21 13 C.C. No.:55537/15Under these circumstances, in the absence of adjudication and decision pertaining to the deficiency of service, it cannot be urged as defence in this case.
19. Considering the above aspects, none of the defences raised by the accused are capable of over-turning the strong presumption available in favour of the complainant. On the other hand, the very admission of the accused in respect of availment of service is sufficient to establish the liability. Having regard to these aspects, the complainant has proved the guilt of the accused for the offences punishable under section 138 of NI Act. Hence, I answer Point No.1 in the AFFIRMATIVE.
18. POINT No.2: 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 31.07.2015 for Rs.4,00,000/- (Rupees four lakhs only). The complainant was deprived of money that was rightfully due to it for a period of three years and four 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 SCCH-21 14 C.C. No.:55537/15 Negotiable Instrument Act and also appropriate in default sentence. Having regard to all these fact, I pass the following:
ORDER Acting under Sec.265 of Cr.P.C, the accused are found guilty for the offence punishable under Sec.138 of N.I. Act and they are sentenced to pay a fine of Rs.5,75,000/- (Rupees Five lakhs seventy five thousand only).In default to pay fine, the accused No.2 and 3
shall undergo simple imprisonment for a period of one year.
Further, acting under Section 357(1)(b) of Cr.P.C., out of the fine amount, a sum of Rs.5,65,000/-(Rupees Five lakhs sixty five thousand 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 and typed by her, same is corrected, signed and then pronounced by me in the open court on this the 18th day of December 2018) (VANI A. SHETTY) XVII ADDL. JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.SCCH-21 15 C.C. No.:55537/15
ANNEXURE List of witnesses examined on behalf of the complainant:
P.W 1: M. Raghupathy List of documents exhibited on behalf of the complainant:
Ex.P.1 : Board Resolution
Ex.P.2 : Copy of E-mail dt.16/04/2015
Ex.P.3 : Copy of tour itinerary and tour cost
Ex.P.4 : Cheque
Ex.P.5 : Copy of E-mail dt.16/04/2015
Postal receipts
Ex.P.6 : Copy of E-mail dt.03/08/2015
Ex.P.7 : Copy of E-mail dt.04/08/2015
Ex.P.8 : Copy of E-mail dt.05/08/2015
Ex.P.9 : Copy of E-mail dt.10/08/2015
Ex.P.10 : Sec.65B certificate
Ex.P.11 : Bank endorsement
Ex.P.12 : Cory of legal notice
Ex.P.13-17 : Postal acknowledgments
Ex.P.18-22 : Postal receipts
List of witnesses examined on behalf of the defence: Nil List of documents exhibited on behalf of the defence:
Ex.D.1 : Copy of E-mail dt.20.07.2015
(VANI A. SHETTY)
XVII ADDL. JUDGE,
Court of Small Causes &
ACMM, Mayo Hall Unit, Bengaluru.
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