Bangalore District Court
Parvathi vs Nirmala on 6 January, 2024
KABC030458982020
IN THE COURT OF XX ADDL.CHIEF METROPOLITAN
MAGISTRATE AT BENGALURU CITY
PRESENT: BHOLA PANDIT,
B.Com.,LL.M.,
XX ADDL. C.M.M.
Bengaluru.
Dated this the 6th day of January 2024
C.C.No.11613/2020
Complainant : Smt.Parvathi,
W/o Sri.Yatiraj,
Residing at No.14,
"SRI SHAKTI NILAYA",
3rd Main Road, Havanoor Extanation,
Nagasandra Post, Bengaluru - 73.
{ By Sri.G.H.Vinay - Advocate }
Vs.
Accused : Smt.Nirmala,
W/o Sri.Chandraiah,
No.16, "Muneshwar Nilaya",
10th Cross Road, Bagalagunte,
2 C.C.11613/2020
Nagasandra Post,
Bengaluru- 560 073.
{ By Sri.Anjanappa.P - Advocate }
Offence complained : U/S. 138 of N.I. Act.,
Plea of accused : Pleaded not guilty
Final Order : Accused is Convicted
Date of Order : 06-01-2024
JUDGMENT
The present complaint is filed under section 2(d) read with section 200 of code of criminal procedure against the accused seeking to punish her for the offence punishable under section 138 of the Negotiable Instruments Act ( in short referred as "N.I. Act").
02. The factual matrix of the complaint is summarized as under;
It is stated in the complaint that, since many years, the accused and complainant are neighbors and known to 3 C.C.11613/2020 each other. The accused was in need of money and was sustaining financial crises. Accordingly, on the request of the accused, the complainant has advanced a sum of Rs.4,00,000/- in the month of September 2017, at that time, the accused has assured to repay the said amount within a year. It is further stated that, in the third week of December 2019, the accused has issued two cheques bearing No.881318 and 881321 for Rs.2,00,000/- each dated 26.12.2019, drawn on National Bank, Mahalakshmi Layout Branch, Bengaluru in favour of the complainant. When the complainant has presented both the said cheques for encashment through her banker, unfortunately, both the cheques have returned with bank return memo dated 27.01.2020 with a shara as "non CTS chq- clearing not allowed" as per banker's memo dated on 27.01.2020. Immediately, the complainant has contacted the accused and informed about the dishonor of both the cheques. Thereafter, on 14.02.2020, the complainant got issued demand notice to the accused by RPAD and the same was duly served upon the accused 4 C.C.11613/2020 on 15.02.2020. But, the accused neither has paid the cheque amount not has given any reply. With these pleadings in the form of assertions, the complainant has sought to convict the accused under section 138 of NI Act and impose her penalty and thereby to award her compensation as per section 357 of Code of Criminal Procedure.
03. On presentation of the complaint and after verification of the averments of the complaint as well as the annexed documents, this court took the cognizance for the offence punishable under section 138 of NI Act. As per the verdicts of the Hon'ble Apex court in the case of Indian Bank Association and others V/s Union of India and others, the sworn statement of the complainant has been recorded by way of examination-in-chief as PW.1 and got marked in all six documents at Ex.P.01 to Ex.P.06. After scrutinizing the oral and documentary evidence of the complainant prima-facie case is made out for the trial. Accordingly, by 5 C.C.11613/2020 registering criminal case in Register No. III, summons has been issued against the accused.
04. In response to the summons, the accused put her appearance before the court through her counsel and filed bail application under section 436 of Code of Criminal Procedure, the accused has been enlarged on bail. The substance of accusation has been recorded and read over to the accused, she pleaded not guilty and wants to put forth her defense. On filing application by the complainant under section 145(1) of NI Act, sworn statement of the complainant has been treated as examination in chief. Similarly, on filing application under section 145(2) of NI Act, the accused has been permitted to cross examine PW.1. On completion of the trial of the complainant's side, the statement of accused under section 313 of Code of Criminal Procedure has been recorded and read over to the accused, the incriminating material found in the trial of the case of the complainant. The accused has denied the same in toto and gave 6 C.C.11613/2020 explanation stating that, "there is no money transaction taken place between the complainant and the accused". The accused also wants to lead her defense evidence. Similarly, the accused has entered in the witness box and adduced the defense as DW.1 and not produced any documents before the court.
05. Both the Learned counsels have filed their written arguments. Perused the material evidence available on record.
In support of his written arguments, the Learned counsel for the complainant has relied the following verdicts;
01. 2019(18) SCC 106
02. 2019(4) SCC 197
03. AIR 1996 SC 2339
04. 2016(3) DCR 159- ALL
05. Notification of the RBI 7 C.C.11613/2020 In support of his written arguments, the Learned counsel for the accused relied the following verdicts;
01. 2015(1) SCC 99
02. 2010(2) KAR LJ 284 I have carefully and meticulously gone through the above relied precedents.
06. The following points that arise for my consideration are as under;
POINTS
1. Does the complainant proves beyond reasonable doubts that, the accused has issued two cheques i.e., cheques bearing No.881318 and 881321 for Rs.2,00,000/- each dated 26.12.2019, drawn on National Bank, Mahalakshmi Layout Branch, Bengaluru towards the discharge of her lawful liability of the complainant and when the said cheques were presented for encashment, they returned unpaid due to "non CTS chq- clearing not allowed" in the account of the drawer as per banker's memo and inspite of issuance of demand notice , the accused has failed to pay the cheque amount, thereby has 8 C.C.11613/2020 committed the offence punishable under section 138 of NI Act?
2. What Order or sentence ?
07. My findings to the above points is as follows;
1. Point No.1: In the affirmative
2. Point No.2: As per final order for the following;
REASONS
08. POINT No.1: It is the specific case of the complainant that, the accused had borrowed hand loan of Rs.4,00,000/- from the complainant to meet her financial crises and towards discharge of the said hand loan amount, the accused has issued the disputed cheques and when the said cheque was presented for encashment, it returned unpaid due to "non CTS chq- clearing not allowed" in the account of the drawer and inspite of receipt of demand notice, the accused has failed to make the payment of the cheques amount.
9 C.C.11613/2020
09. To substantiate and establish this fact before the court beyond reasonable doubts as per the verdict of the Hon'ble Apex court in the case of Indian Bank Association and others V/s Union of India and others , the sworn statement of the complainant has been treated as affidavit evidence. In his affidavit evidence, PW.1 has replicated the averments of the complainant. To corroborate the evidence of PW.1, the complainant has placed on record in all six documents as per Ex.P.01 to Ex.P.06. Ex.P.1 & Ex.P.2 are the disputed cheques, Ex.P.1(a) & Ex.P.2(a) are the signatures of accused, Ex.P.3 & Ex.P.4 are the banker's memos, which shows the reasons for the return of the cheques at Ex.P.1 & Ex.P.2 for unpaid is as "non CTS chq- clearing not allowed" , Ex.P.5 is the legal notice demanding for payment of cheque amount by replicating the averments of complaint. Ex.P.4 is the the postal receipt about sending legal notice at Ex.P.5 and Ex.P.6 is the postal acknowledgement about receipt of the demand notice. PW.1 has been substantially cross examined by the counsel of accused. 10 C.C.11613/2020
10. To disprove the case of the complainant as well as to rebut the statutory presumption which could be drawn in favour of the complainant and also to prove the probable defense to the touch stone of preponderance of probabilities, the accused entered in the witness box and adduced his evidence as DW.1 and no documents marked on behalf of the accused side.
11. Both the Learned counsels have filed their written argument along with citations. I have carefully and meticulously gone through the above relied judgments.
12. Before to advert for the evaluation and appreciation of oral and documentary evidences and also to consider the written arguments submitted by the both the Learned counsels, it is imperative on this court to find out whether the present complaint has been filed on fulfilling the requirements of section 138 of NI Act or not?. 11 C.C.11613/2020
13. Looking upon the material documents such as, disputed cheques, bank return memos, demand notice and postal acknowledgement, which are marked at Ex.P.1 to Ex.P.6, they reveals that, the disputed cheques have been presented to the bank within the period of their validity. Further, the demand notice has been issued within 30 days from the date of receipt of bank return memos. On perusal of the entire cross examination of PW.1, neither the service of demand notice as per Ex.P.6 has been denied nor the signature on the Ex.P.6 is disputed. On the other hand, DW.1 during her cross examination, she has admitted about receiving demand notice, but has denied her signature on Ex.P.6. When she admits service of demand notice personally, her denial of signature on Ex.P.6 do not fatals to the case of the complainant. The present complaint has been presented before the court on 11.06.2020. Thus, the present complaint has been filed within 30 days after the expiry of cooling period of 15 days. The defense side in the written argument of para No.3, it is contended that, the cheques 12 C.C.11613/2020 at Ex.P.1 & Ex.P.2 have returned with a shara as "non CTS chq- clearing not allowed" , hence these cheques are not returned as "Funds Insufficient" , therefore both the cheques do not attract the offence punishable under section 138 of NI Act as they were not issued for legally enforceable debt and this statement has been reproduced in para No.4. Per contra, in para No.15 of the written argument, it is contended from the complainant side that, as per the notification of the RBI earlier, there were separate clearing sessions for non CTS cheques. However, they were discontinued with effect from December 31 2018. As of now, non CTS cheques cannot be presented in CTS. Banks have been advised to with draw the non CTS cheques from the customers. However, non CTS cheques remain to be valid as a negotiable instrument and the same would attract an offence punishable under section 138 of NI Act. To appreciate both the contentions of the parties in their written argument, it is necessary to discuss the reals terms of CTS and non CTS cheques. The term CTS means, Cheque Truncation System. Before 2010, all the 13 C.C.11613/2020 Nationalized and Scheduled banks were used to send the cheques normally for clearance from one station to another station and the said procedure was consuming much time for the clearance of cheque. Therefore, for the benefit of customers and for the speedy clearance of cheques, this cheque truncative system has been introduced and in the cheque itself the image based clearing system is adopted. It is a online image based cheque clearing system, where cheque images and Magnetic Ink Character Recognition Data (MICR) have been installed and since 2010 all the Nationalized and Scheduled banks have adopted the CTS cheques. From time to time, the RBI has issued guidelines of all the stake holders directing them to get back all non CTS cheques from their customers and to issue CTS cheques. In this regard, the Learned Prosecuting Counsel has produced the circular issued by the RBI, which was adopted to the online on 31.10.2022, wherein about CTS cheques, a brief introduction has been given and at point No.4, it is clearly stated that, the non CTS cheques remains to be valid as a Negotiable Instrument. Meaning 14 C.C.11613/2020 thereby till the date, the non CTS cheques were not hold or declared as invalid by the RBI. As per section 138 of NI Act, if the account of the drawer of the cheque has " Insufficient Fund" to honor the cheque or that it exceeds the amount arranged to be paid from that account or the two reasons for the dishonor of cheques to attract the offence punishable under section 138 of NI Act. However, by the development of law and also laws laid down by the various Hon'ble High Courts as well as Hon'ble top court of the country, for any other reasons otherthan shown under section 138 of NI Act also have been considered to attract an offence punishable under section 138 of NI Act. In one of the leading verdict of the Hon'ble top court of the country in M/s.Laxmi Dyechem Vs. State of Gujarat & Ors in Crl.Appeal No.1870-1909/2012 in SLP No.1740-1779/2022 on 27.11.2012, it is held as under;
"The court should lean in favour of the interpretation which serves the object of the statue. The two contingencies shown in section 138 are species & the other contingencies which could be found in the return memos are geneses."15 C.C.11613/2020
From the above relied ratio of the Hon'ble Apex Court, it is clear that, the contingencies which can be shown as the reason for the return of cheques shall be considered as geneses of morethan two contingencies and would attract the offence punishable under section 138 of NI Act. That apart, another view can be taken on this issuance of non CTS cheque by the accused just to cheat the complainant. Therefore, the defense taken by the accused is not sustainable and the reasons shown for the return of cheque as non CTS cheque also would attract the offence punishable under section 138 of NI Act. Thus, now without hesitation I would like to conclude that, the complainant has presented this complaint only after the fulfillment of the requirements of section 138 of NI Act.
14. Section 118(a) of the NI Act contemplates one of the legal presumptions relating to Negotiable Instrument and as per this provision, when the cheque has been issued by the drawer from his account to any person, the same could be considered that, it has been issued for some 16 C.C.11613/2020 consideration. Another legal presumption provided under section 139 of NI Act contemplate that, it shall be presumed unless the contrary is proved that the holder of the 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. The Learned Defense Counsel in his written argument has highlighted the verdict of Hon'ble Apex Court reported in 2015(1) SCC 99, wherein with reference to the section 118, 138 and 139 of NI Act, the Hon'ble Apex Court held that:-
"When the complainant fails to prove his source of income for advancing the alleged loan, that itself leads to rebut the statutory presumption under section 118(a) & 139 of NI Act."
But, in the case on hand, the accused did not gave reply to the demand notice contending and taking defense that, the complainant has no financial capacity to advance such a loan amount and even during the cross examination of PW.1 or in his oral evidence, the accused has not taken such a defense that, the complainant has no financial capacity, under such circumstances, with due 17 C.C.11613/2020 respect to the ratio relied by the Learned Defense Counsel, is not applicable to the case on hand. On the other hand, the Learned Prosecuting Counsel has relied the verdict of the Hon'ble Apex Court reported in 2019(18) SCC 106 in the case of Rohitbhai Jeevan Lal Patel Vs. State of Gujarath and another , it is held as under ;
" Presumption mandated by section 139 of NI Act does indeed include existence of legally enforceable debt or liability- it is open to accused to raise defense wherein 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 complainant."
The Learned counsel also relied another verdict of the Hon'ble Apex Court reported in Bir Singh Vs. Mukesh Kumar reported in 2019(4) SCC 197, wherein it is held that;
" Section 139 mandates that, unless the contrary is proved, it is to be presumed that, the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge in whole or any part of any debt or liability."18 C.C.11613/2020
From the above ratio of the Hon'ble Apex Court, now it has became a well settled law that, once the accused admits the issuance of cheque from his account and his signature thereon, the legal presumptions shall goes in favour of the complainant and operates against the accused. It is incumbent on the accused to rebut the statutory presumption under section 118(a) & 139 of NI Act by bringing cogent and acceptable evidence on record and a quality of evidence required by the accused is on preponderance of probabilities. Further, in order to rebut the statutory presumption under section 118(a) & 139 of NI Act, the accused shall put forth his probable defense and thereby to prove the same. Apart from that, while proving his defense, the accused may produce his own evidence or he may rely upon the evidence produced by the complainant. With this settled proposition of law, now I proceed to scrutinize and appreciate the oral and documentary evidences produced by the complainant as well as the accused.
19 C.C.11613/2020
15. Undisputedly, the accused has failed to give reply notice to the demand notice cuased by the complainant and thereby has not put forth his defense in the beginning itself. Therefore, as per the ratio of the Hon'ble Apex Court in the case of Tedhi Singh Vs. Narayan Das Mahant, in Crl.Appeal No.362/2022 also reported in 2022 Live Law (SC) 275, in para No.9, no such financial capacity of the complainant has been questioned. There is no bar that the accused cannot take his defense during the enquiry or trial. The Learned Defense Counsel has substantially cross examined PW.1 and during the said cross examination, the issuance of both the cheques at Ex.P.1 & Ex.P.2 and signatures thereon has been denied nor has been disputed. However, in her oral evidence, the accused by name Smt.Nirmala has stated that, the disputed cheques belongs to her account, but she has denied the signatures at Ex.P.1(a) & Ex.P.2(a) are not her signatures. When the accused denies her signatures on the cheques, the burden shifts on the accused to prove the said fact. Mere denial of signatures on the cheque is of no 20 C.C.11613/2020 use and cannot be considered unless the accused has brought some material evidence on record. It is generally noticeable fact that, when a cheque has been presented for encashment to the drawer bank, firstly the drawer bank will verify the signature of the drawer of on the cheque comparing the same signature with the signature found on the specimen card available in the bank and only thereafter the bank will proceed to consider other factors. Here, in the case on hand, only after comparing the signatures, the bank might have returned these two cheques without honour by mentioning reason as "non CTS chq- clearing not allowed". That apart, the accused has not filed any application before the court seeking for the examination of her banker before the court in respect of her disputed signatures on the cheques. No such efforts has been made by the accused. Furthermore, on both the cheques, the accused put her signatures in English language. In the Ex.P.1(a) the signature of the drawer is written as "N.Nirmala", whereas the signature on the cheque at Ex.P.2(a) as "Nirmala.N". During her cross examination, 21 C.C.11613/2020 DW.1 stated that, she used to put her signature as "Nirmala.N" and nor as "N.Nirmala". On further scrutiny of her signatures on the deposition, plea and 313 statement, she has put her signature as "Nirmala.N". Which means, wherever she has put her signatures "Nirmala.N." would matches the said signatures with the signature found on Ex.P.1(a) as "Nirmala.N." The strokes found on her admitted signatures and also her disputed signatures on Ex.P.1(a) and Ex.P.2(a) prima faciely seems to one and the same. Even, the accused has not filed any application to refer the disputed signature on the cheque to hand writing expert for comparing with her admitted signatures, under such circumstances, I am of the considered opinion that, mere denial of the signatures on the cheque is not sufficient to hold that, the signatures at Ex.P.1(a) & Ex.P.2(a) are not the signatures of accused. Therefore, I am of the considered opinion that, the cheques at Ex.P.1 & Ex.P.2 have been drawn from the account of accused and she had put her signatures on both the cheques. Therefore, the legal presumptions under 22 C.C.11613/2020 section 118(a) & 139 of NI Act shall goes in favour of the complainant and operates against the accused. Now it is incumbent on the accused to rebut the statutory presumption under section 118(a) & 139 of NI Act. During the cross examination of PW.1, it has been suggested that, in the year 2017 when the complaint had been to the house of accused, at that time, the accused had kept useless non CTS cheques and the same was taken out by the accused and thereby has filed the present false case against the accused, this suggestion has been denied by PW.1. In order to prove this suggestion as a defense of the accused, no such material evidence has been culled out from the mouth of PW.1 during her entire cross examination. On the other hand, the accused by name Smt.Nirmala herself has entered in the witness box and adduced her oral evidence as DW.1 stating that, she knows the complainant and both of them have been residing in the houses situated besides the same road and both of them used to visit each others houses and she further deposed that, whenever the complaint visits her 23 C.C.11613/2020 house along with her child, she used to stay therein hours together. She further stated that, no money transaction has taken place between both of them and she had not gave disputed cheque to the complainant. She testified that, she had kept the cheque in the cupboard at her house and only upon receiving legal notice of the case, she came to know about stealing of two cheques from her house. She further deposed that, she has not issued both disputed cheques by filling the same. She further testified that, just to give harassment to her, the complainant has filed this false case against her. To corroborate her oral testimony, the accused has not produced any iota of documentary evidences.
16. As per the evidence of both the parties, admittedly they are known to each other and have been residing in the houses which are situated in the same locality. When it is the specific defense of the accused that, the disputed cheques have been stolen from her house by the complainant, then whey she did not lodge a complaint to 24 C.C.11613/2020 the jurisdictional police, so also, whey she did not issue any stop payment letter to her banker. DW.1 said in her chief evidence that, only upon receiving the demand notice, she came to know about stealing of her two cheques. If that being so and to be believable as true, then why she did not gave reply to the demand notice narrating the said fact. Thus, mere taking defense and allegations that, the complainant had stolen disputed cheques from her house cannot be believable that too the complainant being an employee of reputed company and receiving handsome salary. Thus, from the oral evidence of DW.1 and also the cross examination directed to PW.1, it appears that, the accused has failed to put forth a probable defense and thereby to prove the same on preponderance of probabilities. The self serving testimony of DW.1 only appears just to defeat the claim of the complainant. On the other hand, during the cross examination of PW.1 on page No.8, a suggestion made stating that, any transaction of Rs.20,000/- or morethan requires to be made only through bank account or by 25 C.C.11613/2020 issuance of cheque. In respect of this evidence, the Learned Defense Counsel in the written argument of para No.3 has referred the provision of section 269SS of Income Tax Act 1961 relied and also relied the judgment of Hon'ble High Court of Karnataka, reported in 2010(2) KAR LJ 284. I have carefully perused the said relied judgment (hard copy not furnished). However, in a recent verdict of the Hon'ble High Court of Karnataka in the case of M/s Gajanana Glass and Plywoods, which has been decided in the month of November 2022, wherein while interpreting section 269SS of Income Tax Act, the Hon'ble High Court of Karnataka pleased to held;
" A cash transaction will not became vode on account of the contravention of section 269 SS of IT Act and that provision do not applies to the cheque bounce cases registered under section 138 of NI Act."
Thus, from the relied recent verdict of the Hon'ble High Court of Karnataka, now it is crystal clear that, for the contravention of section 269 of IT Act, do not fatals to the case of the complainant filed for the offence punishable under section 138 of NI Act and the ratio relied by the 26 C.C.11613/2020 Learned Defense Counsel is not applicable to the case on hand. Thus, from the consideration of all these material evidences produced, I am of the considered opinion that, the accused has miserably failed to establish and prove her defense before the court. Hence, the question of shifting onus on the complainant to prove her case beyond all reasonable doubts does not arise at all. Hence, I answered point No.1 in the affirmative.
17. POINT NO.2: In view of the reasons stated and discussed above, the complainant has proved the guilt of the accused punishable under section 138 of N.I. Act It is worth to note that, the offence is of the nature of civil wrong. Hence, it is proper to award sentence of fine, instead of awarding sentence of imprisonment. Accordingly, this court proceed to pass the following;
ORDER
Acting under section 255 (2) of
Criminal Procedure Code, accused is
27 C.C.11613/2020
hereby convicted for the offence
punishable under section 138 of
Negotiable Instrument Act and
sentenced to pay fine of
Rs.5,10,000/- (Rupees Five Lakhs
Ten Thousand only). In default, the
accused shall undergo simple
imprisonment for 1 (One) Year.
Acting under section 357(1) of
code of criminal procedure, it is
ordered that an amount of
Rs.5,00,000/- ( Rupees Five Lakhs
only), there from shall be paid to the
complainant as a compensation,
remaining fine amount of
Rs.10,000/- (Rupees Ten Thousand
only) is defrayed to the state for the
expenses incurred in the prosecution.
28 C.C.11613/2020
The bail bond of accused stands canceled subject to appeal period.
Supply free copy of judgment to the accused.
{Dictated to the stenographer, transcribed and computerized by her, revised corrected and then pronounced in the open court on this 6th day of January 2024}.
(BHOLA PANDIT) XX ACMM, Bengaluru.
ANNEXURE List of witnesses examined on behalf of complainant:
P.W.1 Smt.Parvathi List of documents produced on behalf of complainant:
Ex.P.1 & Ex.P.2 Cheques
29 C.C.11613/2020
Ex.P.1(a) & Ex.P.2(a) Signatures of the accused
Ex.P. 3 & 4 Bank endorsements
Ex.P. 5 Copy of the legal notice
Ex.P. 6 Postal acknowledgement
List of witnesses examined on behalf of accused:
D.W.1 Smt.Nirmala List of documents produced on behalf of accused:
-Nil-Digitally signed
PANDIT by PANDIT S BHOLA S BHOLA Date: 2024.01.06 17:53:09 +0530 XX A.C.M.M., Bengaluru.