Bangalore District Court
Mr. Venkatesh M vs Sri. S. Noorulla Khan on 9 January, 2020
SCCH-21 1 CC No.56150/18
IN THE COURT OF THE XVII ADDL. JUDGE, COURT OF
SMALL CAUSES &
ADDL. CHIEF METROPOLITAN MAGISTRATE,
MAYO HALL UNIT, BENGALURU (SCCH21).
Dated: This the 9th Day of January 2020
PRESENT: Smt. VANI A. SHETTY, B.A. Law L.L.B,
XVII ADDL. JUDGE, Court of Small
Causes & ACMM, Bengaluru.
C.C. No.56150/2018
Complainant : Mr. Venkatesh M.,
S/o. Muniswamappa,
Aged about 46 years,
Residing at No.11,
"Akshya Krupa Nilaya",
1st Floor, 1st Cross Road,
S.M.R.Layout,
K.Channasandra Village,
Horamavu Post,
Bengaluru - 560 043.
Ph: 9845407643
(By Sri. A.V.V., Advocate)
V/s.
Accused : Sri. S. Noorulla Khan,
Aged about 38 years,
Residing at 3rd Floor,
LIC Raju Building,
Kondarajanahalli,
Maderanahalli Post,
Kolar Taluk and District.
Ph: 9449961738.
(By Sri. L.S., Advocate)
SCCH-21 2 CC No.56150/18
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 entrusted to the accused the task of procurement of lands to him and in this connection, accused took advance amount of Rs.30,00,000/ from the complainant. But, accused failed to perform his obligation. In discharge of said amount paid by the complainant, the accused issued three cheques bearing Nos.000001, 000002, 000003 dated 24.04.2018, 16.05.2018 and 30.04.2018 for a sum of Rs.10,00,000/ each respectively, drawn on Kotak Mahindra Bank, Doddapet Branch, Bengaluru, assuring that the cheques would be honored if presented for payment. The complainant presented the said cheques for encashment through his banker in State Bank of India, Horamavu Main Road Branch, Bengaluru. But the said cheques came to be dishonored on the ground of 'Funds insufficient' on 30.05.2018. Thereafter, on 07.06.2018 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 to the accused has been duly served and accused sent untenable reply dated 18.06.2018. The accused has not paid the amount and therefore, this complaint is filed on 17.07.2018.SCCH-21 3 CC No.56150/18
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 he was summoned. The substance of accusation is stated to the accused and his plea was recorded. Accused pleaded not guilty and submitted that he has defence to make.
4. In support of the complainant's case, the sworn statement filed by the complainant by way of affidavit during the presummoning stage is considered as evidence of the complainant and 18 documents are marked as per Ex.P1 to Ex.P18. The statement of the accused is recorded under Section 313 of Cr.P.C and his answers were recorded. The accused got examined himself as DW.1 and he got marked documents as per Ex.D1 to Ex.D7.
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:
SCCH-21 4 CC No.56150/18
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 filed by the complainant during the presummoning stage is considered as the evidence of the complainant. In the affidavit, complainant has testified regarding payment of the amount, issuance of cheques, issuance of demand notice and also failure of the accused to pay the cheque amount. The complainant has produced cheques bearing Nos.000001, 000002, 000003 dated 24.04.2018, 30.04.2018 and 16.05.2018, for a sum of Rs.10,00,000/ each respectively, drawn on Kotak Mahindra Bank, Doddapet Branch, Bengaluru, alleged to be issued by the accused as per Ex.P1 to 3. Ex.P1 to 3 stands in the name of complainant for Rs.10,00,000/ each. Ex.P4 to 6 is the endorsement issued by the bank stating dishonor of Ex.P1 to 3 cheques. Ex.P4 to 6 shows that Ex.P1 to 3 were dishonored for 'funds insufficient'. Ex.P7 is the office copy of legal notice dated 07.06.2018. Ex.P8 is the postal receipt for having sent SCCH-21 5 CC No.56150/18 legal notice to the accused. Ex.P9 is the postal acknowledgment.
10. In the present case, cheques are dated 24.04.2018, 30.04.2018 and 16.05.2018 respectively. Ex.P4 to 6 shows that those cheques were dishonored on 30.05.2018. As per Ex.P4 to 6, it appears that cheques in question were presented within the period of three months from the dates of cheque. The notice was issued within the statutory period of time. The notice issued to the accused was served on 10.06.2018 as per Ex.P9. The cause of action for filing the complaint arose on 26.06.2018. The complainant has filed this complaint on 17.07.2018 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 SCCH-21 6 CC No.56150/18 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 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 respondentclaimant that the presumption SCCH-21 7 CC No.56150/18 mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled 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 8 CC No.56150/18
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. As per the case of the complainant, accused assured that he will provide lands and with that assurance, complainant paid an advance amount of Rs.30 lakhs. Since, accused failed to fulfill his obligation and towards repayment of the same, accused issued Ex.P1 to 3 cheques for Rs.10 lakhs each. On the other hand, the accused has denied his undertaking/assurance of providing land and receiving an amount for that purpose. It is his contention that, for his financial necessity complainant himself lent Rs.20 lakhs to SCCH-21 9 CC No.56150/18 him and he has repaid a sum of Rs.15 lakhs. It is also contended by him that, complainant along with his henchmen came to his house, forcibly confined his wife and children and later forcibly obtained Ex.P1 to 3 cheques and obtained his signature on blank agreement and promissory note. Though the accused has admitted the issuance of cheques and his signature, the presumption under section 118 and 139 of N.I. Act can be raised only if it was issued voluntarily.
15. I have carefully examined the defence raised by the accused. The main contention urged by the accused is that, cheques were obtained by force. In this regard, accused has also contended that he has lodged a complainant before the Rural police station, Kolar in Crime No.286/18 against the complainant and 8 other persons. He has also produced some photographs and disc to substantiate his defence. I have examined the audio and video disc produced by the accused in the laptop. I am unable to find out from the audio and video disc, any material in support of the defence raised by the accused. It is also relevant to note that, there is nothing on record to show that the conversation and also the video picture is relevant to Ex.P1 to Ex.P3 cheques. The photographs produced by the accused also does not disclose the force alleged to be used by the complainant.
16. Accused has contended that, he lodged a criminal case against the complainant for his forcible act. But, the SCCH-21 10 CC No.56150/18 complainant himself has produced the BReport submitted by rural police station, Kolar on the complaint filed by the accused at Ex.P14. I have also examined the report submitted by the investigating officer on the complaint lodged by the accused. Investigating Officer has given detailed reason for filing Breport wherein, he has assigned some important reasons for his conclusion. The report entirely goes against the claim of the accused. Accused has also maintained his complete silence about the contents of BReport. Therefore, the complaint filed by the accused supports the case of the complainant rather than the accused. Hence, there is nothing on record to show that complainant obtained Ex.P1 to 3 cheques forcibly from the accused. Under these circumstances, the complainant is entitled for the benefit of presumption under section 118 and 139 of N.I. Act. Now, it is for the accused to rebut the presumption.
17. The learned counsel appearing for the accused relied on the rulings reported in 2014(3) Crimes 291 (SC) (Ramdas Vs.Krishnananda), 2013(3) Crimes 246(SC) (Vijay vs. Laxman and anr.), 2018(2) Crimes 580(Karn) (Manjula G. vs. Manjula B.T), 2019(3) KCCR 2126(SC) (Anss Rajashekar vs. Augustus Jeba Ananth), K.Subramani vs. K. Damodara Naidu(Crl. Appeal No.2402/2014) and Basalingappa vs. Mudibasappa (Crl. Appeal No.636/19) and raised the defence that, complainant was not financially capable to lend such a huge amount. But, the accused himself has stated that, he SCCH-21 11 CC No.56150/18 has borrowed Rs.20 lakhs from the complainant. Further, the case of the accused is that complainant himself lent such a huge amount. Therefore, the contention of the accused itself shows that, the complainant was financially capable to lend huge amount. Therefore, the decisions relied by the accused are not helpful to his case. Hence, this contention of the accused fails.
18. The accused has also contended that, he has returned Rs.15 lakhs to the complainant. But, there is nothing on record to probabalise the repayment stated to be made by the accused. The accused has not even explained as to the date or year of repayment. Therefore, the court can safely come to the conclusion that, admittedly accused was due to the tune of Rs.20 lakhs.
19. In the reply notice submitted by accused at Ex.P10, he has contended that he never met complainant prior to November 2017. As per the case of the complainant, accused met in the month of June 2017 for the land dealings. In the cross examination, accused has admitted that he met the complainant in the month of June 2017. Therefore, the very statement given by the accused in the reply notice falsifies by his own answer given in the crossexamination. The elicitation made in the crossexamination also supports the case of the complainant about the transaction.
20. Accused has also contended that, without registering in the Real Estate project, the complainant was SCCH-21 12 CC No.56150/18 doing the real estate business which is prohibited under the Real Estate(Regulation and Development) Act, 2016. If the complainant is doing his business without registration, the concerned authority will take appropriate action against him. For that reason, the complainant is not prevented from instituting the criminal prosecution. Therefore, none of the defences raised by the accused are capable to rebut the presumption available in favour of the complainant. Hence, I hold that complainant has proved the guilt of the accused for the offence punishable under Section 138 of N.I. Act. Accordingly, I answer Point No.1 in the AFFIRMATIVE.
21. 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. These cheques in question were issued on 24.04.2018, 30.04.2018 and 16.05.2018 for Rs.10,00,000/ each. The complainant was deprived of money that was rightfully due to him for a period more than one and half year. 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 13 CC No.56150/18 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 is found guilty for the offence punishable under Sec.138 of N.I. Act and he is sentenced to pay a fine of Rs.33,00,000/(Rupees thirty three lakhs only). In default to pay fine, the accused shall undergo simple imprisonment for a period of six months.
Further, acting under Section 357(1)(b) of Cr.P.C., out of the fine amount, a sum of Rs.32,95,000/(Rupees thirty two lakhs ninety 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 09th day of January 2020) (VANI A. SHETTY) XVII ADDL. JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.
ANNEXURE List of witnesses examined on behalf of the complainant:
P.W.1 : M.Venkatesh SCCH-21 14 CC No.56150/18 List of documents marked on behalf of the complainant:
Ex.P.1 to 3 : Cheques
Ex.P.4 to 6 : Bank endorsements
Ex.P.7 : Legal notice
Ex.P.8 : Postal receipts
Ex.P.9 : Postal acknowledgement
Ex.P.10 : Reply
Ex.P.11 : IT Returns 201819
Ex.P.12 : C/c. Sale Agreement
Ex.P.13 : Receipt/Acknowledgement
Ex.P.14 : Charge Sheet, FIR, complaint and other
police documents
Ex.P.15 to 18 : Bank statements
List of witnesses examined on behalf of the accused:
DW.1: : S.Noorulla Khan List of documents marked on behalf of the accused:
Ex.D1 to 3 : Photos
Ex.D4 & 5 : CDs'
Ex.D6 & 7 : Letters
(VANI A. SHETTY)
XVII ADDL. JUDGE,
Court of Small Causes &
ACMM, Mayo Hall Unit, Bengaluru.
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SCCH-21 15 CC No.56150/18