Bangalore District Court
L.Shashidharan vs Smt.Kanchina.C.Ramesh on 2 March, 2020
IN THE COURT OF XXXIII ADDL. CHIEF
METROPOLITAN MAGISTRATE, MAYO HALL UNIT,
BENGALURU
-: PRESENT :-
PADMA PRASAD, BA (Law), LLB.
XXXIII ADDL. CHIEF METROPOLITAN MAGISTRATE,
BENGALURU.
DATED THIS THE 2ND DAY OF MARCH, 2020.
C.C.No.59871/2017
COMPLAINANT : L.Shashidharan,
S/o. Lat Lingaiah,
Aged about 50 years,
R/at No 186, 5th Main Road,
7th Cross, Pillanna Garden III
Stage, Bangalore - 560045.
.Vs.
ACCUSED : Smt.Kanchina.C.Ramesh,
W/o Ramesh,
Aged about 47 years
R/at No 468/A, Bethal Road,
Annasanddra Palya,
Bangalore 560017.
***
JUDGMENT
The complainant filed this complaint against the accused for the offence punishable under Section 138 of Negotiable Instruments Act.
2 C.C.No.59871/20172. The complaint case in nutshell is that the complainant is a agent and running chit fund by holding valid licence. One of the chit holder named Sendil Vadivu has introduced her sister i.e., accused for the chit of Rs.5,00,000/- and she has become member of the chit fund of Rs.5,00,000/-. The accused has paid subscription only for 2 month and drawn the chit and received entire cash of Rs.5,00,000/- from the complainant and there afterwards stopped paying the subscription. The accused towards the discharge of arrears of subscriptions with interest has issued the cheque bearing No.542326 dtd:16.08.2017 for Rs.6,00,000/- drawn on State Bank of India, Indiranagar Branch. The complainant when presented the said cheque for encashment that has been returned without encashment with bank memo dtd:17.08.2017 stating "Insufficient Fund". Thereafter, the complainant issued a legal notice to the accused on 21.08.2017. The said notice has been served on to the accused. The accused failed to pay the cheque amount in spite of service of notice. Hence, filed this complaint.
3. After filing the complaint, sworn statement of the complainant has been recorded and on perusing the materials on record i.e., cheque, bank endorsement, legal notice, postal receipt, 6 bank challan, notarised copy of registration certificate, notarized copy of partnership deed, authorization letter etc, the court has been taken the cognizance of offence and issued summons to the accused.
3 C.C.No.59871/20174. In response to the summons, the accused appeared through the counsel and she was on court bail. Plea has been recorded; accused pleaded not guilty and claimed to be tried.
5. In this case the complainant examined herself as P.W.1 and got marked documents at Ex.P.1 to 9. The accused not chosen to lead any defense evidence nor got marked any documents.
6. On the basis of above, the point for consideration is that;
"Whether the complainant has proved that the accused has committed the offence punishable under Sec.138 of Negotiable Instruments Act?"
7. Heard the arguments and perused the materials on record. On that basis my finding on the above point is in the "Negative" for the following;
REASONS
8. The complaint case in nutshell is that the complainant is a agent and running chit fund by holding valid licence. One of the chit holder named Sendil Vadivu has introduced her sister i.e., accused for the chit of Rs.5,00,000/- and she has become member of the chit fund of Rs.5,00,000/-. The accused has paid subscription only for 2 month and drawn 4 C.C.No.59871/2017 the chit and received entire cash of Rs.5,00,000/- from the complainant and there afterwards stopped paying the subscription. The accused towards the discharge of arrears of subscriptions with interest has issued the cheque bearing No.542326 dtd:16.08.2017 for Rs.6,00,000/- drawn on State Bank of India, Indiranagar Branch. The complainant when presented the said cheque for encashment that has been returned without encashment with bank memo dtd:17.08.2017 stating "Insufficient Fund". Thereafter, the complainant issued a legal notice to the accused on 21.08.2017. The said notice has been served on to the accused. The accused failed to pay the cheque amount in spite of service of notice. Hence, filed this complaint.
9. The complainant in support of his case got marked documents at Ex.P.1 to 9. The Ex.P.1 is the cheque, Ex.P.2 is the Bank Return Memo, Ex.P.3 is the O/c of the legal notice, Ex.P.4 is the postal receipt, Ex.P.5 is the postal acknowledgement, Ex.P.6 are the six challan, Ex.P.7 is the notarised copy of registration certificate, Ex.P.8 is the notarized copy of partnership deed, Ex.P.9 is the authorization letter. The complainant presented the said cheque for encashment in time, the cheque has been dishonoured for want of funds in the bank account of the accused, legal notice issued in time and the complaint is also filed in time. The issuance of cheque in favour of the complainant and the signature of the accused in the cheque 5 C.C.No.59871/2017 is not in dispute. Hence, certainly the initial presumption under Sec.139 of N.I.Act can be drawn in favour of the complainant.
10. When the complainant made out a prima-facie case to draw the initial presumption under Sec.139 of N.I.Act in favour of the complainant, the burden shifts on the accused to prove the contrary to the complaint case and also give a rebuttal evidence to the complaint case.
11. The accused during the course of trial made a case that this cheque has been issued by her sister to the complainant and also disputed the chit fund transaction as well as issuance of cheque towards the discharge of any debt and transaction claimed by the complainant. Hence, the burden shifts on the complainant to prove that he was running the chit fund and this accused has subscribed the chit and also she has participated in the bid and received the prized chit fund money and thereafter towards the payment of balance chit fund along with interest she has issued the cheque involved in this case then only the case of the complainant can be accepted.
12. The complainant in the complaint para No.3 itself claimed that the complainant is a chit agent and running a chit fund by holding valid license. The complainant in order to substantiate the said fact produced the notarized copy of 6 C.C.No.59871/2017 the chit fund license at Ex.P.7 which discloses that the complainant was running the chit fund in the name of Rehoboth Chits and the said license has been issued on 20.06.2017. The complainant also produced partnership deed at Ex.P.8 as per the said document the Rehoboth Chits have 2 partners including complainant and his wife. Therefore, the complainant made out a case that he had some license to run the chit fund under the name of Rehoboth Chits but whether the transaction claimed in the complaint relating to Rehoboth Chits or other chit is not properly explained by the complainant either in the complaint or legal notice. The entire complaint is totally silent about the conducting of the chit under the name of Rehoboth Chits. It is also relevant to note that this complaint is also not filed by Rehoboth Chits but the present complaint has been filed by L.Shashidharan in his individual capacity.
13. In fact there is no document before the court to show that the transaction claimed in the complaint is relating to Rehoboth Chits. Of course the complainant has produced the authorization letter at Ex.P.9 and the said document dtd:16.09.2017 discloses that the wife of the complainant has authorized him to prosecute the case but this complaint is not at all filed on behalf of Rehoboth Chits. Why this complaint is not filed on behalf of Rehoboth Chits is without any explanation. Apart from that the cheque involved in this 7 C.C.No.59871/2017 case is also not issued in the name of Rehoboth Chits but the cheque is in the name of complainant L.Shashidharan. However, by producing the authorization letter and license along with partnership deed this complainant tried to make out a case that this accused has subscribed the chit conducted by Rehoboth Chits. If it were so, the complainant has to prove her case in accordance with the provisions of Chit Fund Act.
14. If the Ex.P.7 document is accepted then this complainant has obtained the chit fund license as on 20.06.2017. There is no material before the court to show that even prior to the said date i.e., 20.06.2017 this complainant was running the chit fund business in the name of Rehoboth Chits. The complaint or legal notice nowhere discloses that when actually chit fund transaction taken place. The particulars of the chit fund transaction with the accused is not stated by the complainant either in the complaint or in the legal notice. However, during the trial the P.W.1 / complainant stated that alleged chit fund transaction has been commenced in the year 2014. No license has been produced by the complainant to show that he had any valid license to run the chit fund in the year 2014.
8 C.C.No.59871/201715. The complainant also in the complaint claimed that he is a chit agent and running a chit fund but under which company he was a chit fund agent is without any explanation. Admittedly, as per Ex.P.7 the complainant has obtained the license as on 20.06.2017. The chit fund transaction claimed in the complaint is of the year 2014. If it were so, the transaction claimed by the complainant in the complaint between him and the accused is at the time when the complainant was a chit fund agent. If it were so, the complainant has to explain that under which firm he was agent or to which firm he has subscribed the accused for chit fund transaction. Absolutely there is no explanation whatsoever. It is also not the case of the accused that even prior to the obtaining of license at Ex.P.7 he was conducting the chit fund transaction.
16. Even if the case of the complainant is accepted that he is the chit fund agent and running the chit fund by holding valid license then the rules or law governing the chit fund is applicable to him. Hence, the provisions of Chit Fund Act 1982 is applicable to the complainant. As per Sec.39 of the Chit Fund Act foreman has to be appointed and he is the person responsible for conducting of the chit, hence the complainant must show that who is the foreman to conduct the chit fund claimed by him.
9 C.C.No.59871/201717. Apart from that there must be chit agreement as per Sec.6 of Chit Fund Act between the foreman and the person who subscribes the chit. If it were so, there must be an agreement between the complainant and accused in connection with the chit fund transaction. No such chit fund agreement or document has been placed by the complainant before the court to show that there was a chit fund transaction between the complainant and the accused. The chit fund agreement is a material document that discloses all particulars about the chit fund. In the absence of any such agreement, the claim of the complainant that the accused is the subscriber of his chit fund cannot be accepted.
18. The claim of the complainant is that the accused has paid the subscription only for 2 months and thereafter she has withdrawn the amount. It is well known fact that in a chit fund, there shall be a bid or auction of chit fund amount to decide the prized subscriber. As such when and where the said auction of chit fund has been held has to be explained but that was without any explanation. Apart from that auction or bid of the chit fund has to be recorded as a minutes of proceedings immediately after the closure of draw and said minutes of proceedings to be signed by the prized subscribed and foreman and other two subscribers of the chit as per Sec.17 of the Chit Fund Act. In the case on hand the complainant has not at all produced any such 10 C.C.No.59871/2017 document before the court to show that there was a draw or auction of bid of chit fund as per the provisions of chit fund transaction.
19. The claim of the complainant is that the accused has received the entire amount of Rs.5,00,000/- but that cannot be accepted because the accused is the subscriber of the chit fund hence she is entitled only for the prized money. Now, what is the prized money has been defined under Sec.2(m) of the Chit Fund Act that reads as; Prized amount means the difference between the chit amount and the discount, and in the case of a fraction of a ticket means the difference between the chit amount and the discount proportionate to the fraction of the ticket, when the prize amount is payable otherwise than in the case the value of the prize amount shall be the value at the time when it becomes payable. Hence, certainly this accused is not entitled to receive entire Rs.5,00,000/- which is the total chit fund amount. Even this fact creates some doubt about the payment of Rs.5,00,000/- to the accused. In fact there is no material on record to show that what is the prized money that has been decided in the auction is without any explanation.
20. As per the rules of chit fund act whenever the subscriber receives the prized money she has to furnish the security for the payment of future installments as per Sec.31 11 C.C.No.59871/2017 of the Chit Fund Act. The complainant has not at all explained what are the security he has received from the accused to ensure the payment of all future subscriptions from the accused is without any explanation. Further, as per Sec.32 of the Chit Fund Act, if the prized subscriber fails to make the payment of future installments then the complainant or the foreman of the chit fund is entitled to collect all the future subscriptions forthwith. If the claim of the complainant is accepted this accused after the receipt of prized money has not at all paid even single installments. Admittedly, the chit has been commenced in the year 2014 and this accused paid subscription only for 2 chits and thereafter received the prized money and not paid any future installments. In spite of that this complainant has not taken any steps to receive any or entire future installments and the said fact creates some suspicion.
21. It is also relevant to note that the complainant during the cross examination dtd:16.02.2019 at page No.5 submitted that he has no impediment to produce the document to show that the accused has participated in the chit conducted by him. In spite of that the complainant has not produced any document to show that there was any chit agreement between the complainant and the accused nor the accused has been participated in the auction of chit fund. Even there is no material on record to show that what 12 C.C.No.59871/2017 is the amount that has been received by the accused as a prized money.
22. As per the provisions of Chit Fund Act while making the payment of prized money the chit fund holder or the person who running the chit fund has to obtain the securities. What are the securities have been obtained by the complainant while paying the prized money is without any explanation. Why the complainant or the foreman of the chit fund has not obtained any other securities while making the payment of prized money is without any explanation. Sec.31 of the Chit Fund Act makes it clear that prized subscribed to furnish the security in respect of all the due payment of the future subscriptions. In the case on hand this complainant is not able to state about the commencement of the chit fund as well as conclusion of the chit fund. However, the complainant stated that the installment amount was Rs.10,000/- and duration is 60 months. If the installment amount is Rs.10,000/- and duration is 60 months then the claim of the complainant that the total chit amount is Rs.5,00,000/- cannot be accepted as that comes to Rs.6,00,000/-. Even this fact creates some suspicion about the chit fund transaction.
23. The complainant in the complaint claimed that the accused has issued the cheque involved in this case but during the course of cross examination it is admitted by the 13 C.C.No.59871/2017 complainant that the cheque has not at all issued by the accused to the complainant but it is the sister of the accused has issued the cheque. The material on record also shows that the sister of the accused namely Sendil Vadivu also subscribed the chit fund. It is the claim of the accused that the cheque has been issued or obtained by the complainant as a security in the transaction of chit fund of sister of the accused. The said claim of the accused looks probable particularly when the complainant has failed to make out a case that there was a chit fund transaction claimed by him and this accused has subscribed the chit fund of the complainant. In fact even there is no material on record to show that whether the complainant has conducted the chit fund under his firm called Rehobotho Chits or individual chit. As per the provisions of chit fund Act no person can run a chit fund without obtaining any license. The complainant indirectly claimed that he has the chit fund license and the claim of the complainant that he was running the chit fund legally under the name of Rehobotho chits. If it were so, the provision of law contemplated under the Chit Funds Act is applicable to the complainant and the said chit to be within the frame work of the provisions of the chit fund act. Therefore, the complainant has to obtain the chit commencement certificate, the complainant has to explain who is the foreman of the chit fund, there must be chit agreement between the foreman and subscriber of the chit, 14 C.C.No.59871/2017 there must be minutes of proceedings regarding the auction of prized winner as well as payment of prized money but the complainant int eh case on hand the complainant has failed to make out any such case. Non complying of aforesaid provisions of chit fund act certainly creates a serious doubt about the chit fund claimed by the complainant. In fact there is no material on record to show that this accused is liable to pay the amount claimed in the complaint or the amount stated in the cheque is the total outstanding of future installments with interest. The complainant failed to comply the statutory requirements of law contemplated under the chit funds act. Therefore, certainly it cannot be held that the amount stated in the cheque is the legally enforceable debt. Accordingly I answer the above point in the "Negative". In the result, following;
ORDER Acting under Sec.255(1) of Cr.P.C. the accused is hereby acquitted for the offence punishable under Sec.138 of Negotiable Instrument Act.
The bail bond stands cancelled.
(Dictated to the Stenographer, transcript thereof is corrected and then pronounced by me in the open court on this the 2nd day of March, 2020) (PADMA PRASAD), XXXIII ACMM, BENGALURU.
15 C.C.No.59871/2017ANNEXURE
1. Witnesses examined on behalf of Complainant:
P.W.1 : Sri.L.Shashidharan
2.Documents marked on behalf of complainant:
Ex.P.1 : Original cheque Ex.P.1(a) : Signature of the accused Ex.P.2 : Bank Endorsement Ex.P.3 : O/c of the legal notice Ex.P.4 : Postal receipt Ex.P.5 : Postal Acknowledgment Ex.P.6 : 6 bank challan Ex.P.7 : Notarized copy of registration certificate Ex.P.8 : Notarized copy of partnership deed Ex.P.9 : Authorization letter
3. Witnesses examined on behalf of Accused:
Nil
4. Documents marked on behalf of Accused:
Nil (PADMA PRASAD) XXXIII ACMM, BENGALURU.