Indian Kanoon - Search engine for Indian Law

Bangalore District Court

Pvt Ltd vs The Accused on 15 September, 2022

                                 1           C.C.No.4437/2018
                                              SCCH-26

 KABC020235982018




       BEFORE THE COURT OF XXIV ADDITIONAL SMALL
         CAUSES JUDGE AND THE MOTOR ACCIDENT
         CLAIMS TRIBUNAL & A.C.M.M. (SCCH­26) AT
                      BENGALURU

            DATED THIS THE 15th DAY OF SEPTEMBER 2022


         PRESENT:          SRI.ARUN SADASHIV GUDIGENAVAR.
                                     B.A., LLB.,(Hon's) LL.M.
                 XXIV ADDL. SCJ & ACMM & MEMBER ­ MACT
                 BENGALURU.
1.

Sl. No. of the Case C.C.4437/2018

2. The date of 27­03­2019

2. commencement of evidence

3. The date of closing 06­07­2022 evidence20­09­2021

4. Name of the AKARSH DEEPA CHITS INDIA Complainant PVT LTD Registered under Chit Fund Act 1982 Having its registered office at No.66, Devika Complex, Near Old Check Post, 2 C.C.No.4437/2018 SCCH-26 NH­4, Tumkur Road, T.Dasarahalli, Bangalore ­560 057.

Represented by its Manager Sri.Balesh M.K. S/o Late.Kempegowda Aged about 36 years (By Sri.M.V.M.­Advocate)

5. Name of the Accused Anjanappa N S/o Narayanappa Aged about 56 years Residing at No.3, 6th main, Laxman Nagar, Hegganahalli cross, Opp. To RES Polytechnic college Bangalore­560 091 Working address:

Working as a Driver, Token No.7101 Karnataka State Road Transport Corporation Bangalore Central Division, Depot No.4, Volvo Department K.H.Road, Shanthi Nagar, Bangalore­560 027.

(By Sri.C.G.B.­Advocate) 3 C.C.No.4437/2018 SCCH-26

6. The offence U/s.138 of the complained of Negotiable Instruments Act

7. Opinion of the judge Accused found guilty ­: JUDGMENT :­ The complainant has filed this complaint Under Section 200 of Cr.P.C against the accused alleging that the accused has committed an offence punishable Under Sec.138 of the Negotiable Instruments Act, 1881. (In short N.I.Act).

2. The brief facts of the complainant's case are as under:

It is the case of the complainant that on 15­11­ 2013 he has commenced new chit group for value of Rs.10 lakhs for a period of 25 months. Further he has stated that one Sri.S.K.Narayana Kumar has 4 C.C.No.4437/2018 SCCH-26 subscribed the said chit group and became member under ticket No.ADF1/HO/BGL/22. On 15­02­2014 the said Sri.S.K.Narayana Kumar has successfully bid the chit amount and on the very same day he has executed on demand promissory note, consideration receipt and other documents in his favour. Further it is the case of the complainant that for the said transaction, the accused has stood as a guarantor and executed agreement of guarantee in his favour and also signed promissory note and consideration receipt as a surety.

3. Further it is the case of the complainant that, on 18­2­2014 he has paid sum of Rs.6,94,974/­ in favour of Sri.S.K.Narayana Kumar through cheque bearing No.883801 drawn on Karnataka Bank Ltd., Hesaraghatta main road branch, Bangalore. 5 C.C.No.4437/2018

SCCH-26 Thereafter, the said Sri.S.K.Narayana Kumar has failed to pay the chit installments even after repeated requests and demands. The said chit group has been closed on 15­11­2015. Even after closure of the chit group the said S.K.Narayana Kumar and the accused have failed to pay the chit amount. Therefore, as on 10­04­2018 the said S.K.Narayana Kumar and the guarantor the accused herein were due by sum of Rs.5,42,325/­ including interest. After repeated request and demand, on 16­05­2018 the accused has issued cheque bearing No.158587 for Rs.5,42,325/­ drawn on Vijaya Bank, Dasarahalli branch, Bangalore for payment of balance chit amount. Further it is the case of the complainant that he has presented the said cheque on 30­07­2018 for collection at his banker. But the said cheque has been returned to him on 02­08­ 2018 with endorsement "Funds Insufficient". 6 C.C.No.4437/2018

SCCH-26 Thereafter, on 10­08­2018 legal notice has been issued to the accused to both his residential and working address. The notice sent to residential address has been duly served, whereas, the notice sent to his working address has been returned with endorsement "Intimation Delivered". In spite of it the accused has not paid cheque amount and also not given any reply to the notice. Hence, this complaint.

4. After perusing the contents of the complaint and documents, this court has taken cognizance of offence punishable u/s 138 of NI act and registered PCR. Thereafter, this court has recorded the sworn statement of the complainant and got marked in total 20 documents as Ex.P.1 to Ex.P.20. Since, the complainant has made­out prima­facie case to proceed against accused, the case has been registered in 7 C.C.No.4437/2018 SCCH-26 Criminal Register No.III and issued summons to the accused. The accused, in response to the summons, has appeared before this court and obtained bail. Thereafter, the plea of the accused has been recorded. He has pleaded not guilty and claims to be tried. The learned counsel for the complainant has submitted to adopt sworn statement of PW1 and documents marked at Ex.P.1 to Ex.P.20 as complainant evidence. Thereafter, the statement of the accused u/s 313 Cr.P.C. has been recorded and he has denied the incriminating circumstances appearing in the complainant evidence. But he has chosen to lead defence evidence. However, he has not stepped into witness box to adduce his evidence. Hence, the defence evidence of the accused has been taken as Nil. 8 C.C.No.4437/2018

SCCH-26

5. The following points arise for my consideration:­ POINTS

1. Whether the complainant proves that the accused has issued cheque bearing No.158587 dt.16­05­2018 for Rs.5,42,325/­ drawn on Vijaya Bank, Dasarahalli branch, Bangalore in discharge of the legally enforceable debt or liability as contended by him?

2. Whether complainant proves that the accused has committed the offence punishable under Sec.138 of NI Act?

3. Whether the complainant is entitled for the relief as prayed in the complaint?

4. What order?

6. Heard both sides. Perused the entire documents placed on record.

7. My answer to the above points is as follows :­ Point No.1 to 3 : In the Affirmative Point No.4 : As per final order for the following :­ 9 C.C.No.4437/2018 SCCH-26 REASONS

8. POINT NO.1 to 3 :­ These three points are taken together for common discussion as they are interlinked with each other and also to avoid repetition of facts and evidence.

9. It is the case of the complainant that one Sri.S.K.Narayana Kumar has subscribed to a chit group bearing No.ADF1/HO/BGL/22 for Rs.10 lakhs. Further it is the case of the complainant that on 15­2­ 2014 the said Sri.S.K.Narayana Kumar has become successful bidder and received sum of Rs.6,94,974/­ and executed on demand promissory note, consideration receipt and other documents in his favour. Further it is the case of the complainant that for the said transaction the accused has stood as a guarantor and executed agreement of guarantee in his 10 C.C.No.4437/2018 SCCH-26 favour. Thereafter, the said S.K.Narayna Kumar has become defaulter and as on 10­4­2018 the said S.K.Narayna Kumar and the accused herein are due by sum of Rs.5,42,325/­. After repeated requests and demands, on 16­5­2018 the accused has issued cheque bearing No.158587 dt.16­05­2018 for Rs.5,42,325/­ drawn on Vijaya Bank, Dasarahalli branch, Bangalore for payment of balance amount. Further it is the case of the complainant that on 30­7­2018 he has presented the said cheque for collection at his banker. But the same has been returned to him on 2­8­2018 with endorsement "Funds Insufficient". Thereafter, he has issued legal notice to the accused on 10­08­2018 and it has been duly served on him. In spite of it the accused has not paid the cheque amount and also not replied to the notice.

SCCH-26

10. As already stated supra the complainant has examined himself as PW­1 and got marked 20 documents as Ex­P1 to P20. PW­1 has filed affidavit in lieu of examination­in­chief reiterating the entire averments of his complaint. Ex­P1 is the cheque dt.16­5­2018 and Ex­P3 is the bank endorsement dt.2­ 8­2018. As per these two documents, it appears that the complainant has presented the said cheque for collection but the same has been returned to him with endorsement "Funds Insufficient". Ex­P4 is the legal notice dt.10­8­2018, Ex­P5 is RPAD cover, Ex­P6 is the track consignment letter. As per these documents it appears that the legal notice has been duly served on the accused.

11. Ex­P7 is the documentation sheet, Ex­P8 is the chit agreement, Ex­P10 is the promissory note, Ex­ 12 C.C.No.4437/2018 SCCH-26 P11 is the consideration receipt. As per these documents it appears that one Narayana Kumar is the subscriber to the chit group No.ADF1/HO/BGL/22 for chit value of Rs.10 lakhs. It also appears that the said Narayana Kumar has become successful bidder and received sum of Rs.6,94,974/­ on 15­02­2014 by way of cheque bearing No.883801. Further it appears that the accused herein has stood as a surety for the said transaction and in this regard the accused has executed agreement of guarantee in favour of complainant company. Further it appears that the accused has put his signature to all the documents executed in favour of complainant company.

12. From the documents produced by PW­1, it is clear that he has complied with the mandatory provisions of Section 138 of NI Act. Therefore, it gives 13 C.C.No.4437/2018 SCCH-26 raise to presumption in favour of complainant u/s 118 and 139 of N.I. Act that he received the cheque in question for discharge of legally enforceable debt or other liability. However, the presumptions available in favour of complainant are rebuttable in nature. The accused has chosen to rebut the presumptions by way of cross­examination of PW­1.

13. The learned counsel for the accused has cross examined PW­1 at length. I have perused the entire cross­examination of PW­1. The main defence of the accused is that the complainant has not complied with the rules relating to chit fund business. Further he has taken­up defence that PW­1 is not authorized to give evidence before this court on behalf of the complainant company. He has also taken­up a defence that the complainant company has not 14 C.C.No.4437/2018 SCCH-26 produced any statement of account of Sri.S.K.Narayana Kumar. He has also taken­up a defence that the cheque in question given by the accused as a security in the year 2014 has been misused by the complainant company. He has also taken­up a defence that the complainant company has not taken any action against principal subscriber Sri.S.K.Narayna Kumar. Further it is the defence of the accused that he has not been served with mandatory notice prior to lodging of this complaint. It is also the defence of the accused that the complainant company has created documents only for the purpose of this case. It is relevant to note that the defences taken­up by the accused are blatantly denied by PW­1.

14. The first defence of the accused is that PW­1 is not authorized person to give evidence before this 15 C.C.No.4437/2018 SCCH-26 court on behalf of complainant company. But as per Ex­P16 the board resolution of complainant company specifically empowered PW­1 to give evidence on behalf of the company. Therefore, the contention taken­up by the accused that PW­1 is not a authorized person to give evidence, holds no water. It is further relevant to note that the accused has not placed any material to show that the complainant has violated the rules relating to chit fund business. It is also relevant to note that the PW­1 has produced account statement dt.13­04­2018 as per Ex­P17 pertaining to the principal subscriber Narayana Kumar. As per this document as on 13­04­2018 the said Narayana Kumar was due by Rs.3,16,885/­ excluding interest. Therefore, the contention taken­up by the accused that the complainant company has not produced statement of account of Sri.Narayana Kumar holds no water. 16 C.C.No.4437/2018

SCCH-26

15. It is also relevant to note that according to accused he handed over cheque in question in favour of complainant company as a security in the year 2014 for the transaction entered between Narayana Kumar and the complainant company. I have perused Ex­P8 and Ex­P9 chit agreement and guarantee agreement respectively. In these documents there is no mention of receipt of cheque in question from the accused as a security as contended by him. During the cross­examination of PW­1 he has clearly deposed that on 16­05­2018 the accused himself visited the office of the complainant company and requested to present the cheque in question for collection. It is relevant to note that the learned counsel for the accused has not elicited anything from the mouth of PW­1 to disbelieve his version. Therefore, this court is not inclined to 17 C.C.No.4437/2018 SCCH-26 accept the contention taken­up by the accused that he handed over the cheque in question as a security in favour of complainant company in the year 2014.

16. According to accused the complainant company has not taken any action against Narayana Kumar for whom he stood as a surety. It is relevant to note that from the entire evidence of PW­1 in the light of his cross­examination it is clear that the accused admitted that he stood as a surety for one Narayana Kumar and executed agreement of guarantee as per Ex­P9 in favour of complainant company. Therefore, it is settled law that the liability of surety is co­ extensive with that of the principal. At this juncture, it is pertinent to refer the decision of Hon'ble Supreme Court of India reported in AIR 2002 Supreme Court 3014, at para No.11 it has been held as under:­ 18 C.C.No.4437/2018 SCCH-26 The issue as regards the co­extensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the N.I. Act, neither the same calls for any discussion therein. The language of the statute depicts the intent of the law makers to the effect that where­ever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act. ' Any cheque ' and ' other liability ' are the two key expressions which stands as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. Any contra interpretation would defeat the intent of the legislature.

17. In view of the above decision, it is clear that the provisions of Section 138 of NI Act applies to the guarantor who issued cheque for discharge of debt or other liability on behalf of the principal. Therefore, the option is for the complainant whether to prosecute the 19 C.C.No.4437/2018 SCCH-26 principal borrower or the guarantor for recovery of the debt. Therefore, the contention of the accused that the complainant company has not taken any action against Narayana Kumar, holds no water.

18. The main defence of the accused is that he has not been served with mandatory notice as contemplated under section 138 of N.I. Act. I have perused Ex­P4­legal notice dt.10­08­2018, Ex­P5­ RPAD cover and Ex­P6­track consignment letter. It appears that the complainant company has issued demand notice as per Ex­P4 to the address No.3, 6 th main, Lakshman Nagar, Hegganahalli cross, Opposite to RES Polytechnic College, Bangalore and also to the address token No.7101, Karnataka State Road Transport Corporation, Bangalore Central Division, Depo No.4, Volvo department, K.H Road, 20 C.C.No.4437/2018 SCCH-26 Shanthinagar, Bangalore. Further it appears that as per Ex­P5, the intimation has been delivered to the accused and as per Ex­P4 the notice has been duly served on accused on 13­08­201. Therefore, in view of Section 27 of General Clauses Act, if any letter is sent through registered post acknowledgment due, then the same is deemed to be served to the proper address unless the contrary is proved. In the present case, the accused has not produced any materials or led any evidence to prove that he has not been served with the mandatory notice as alleged by him. Therefore, in the absence of any evidence to that effect, this court is not inclined to accept the defence of the accused that he has not been served with the mandatory notice as per Section 138 of NI Act. As already stated supra, the accused has not addued any evidence to show that the complainant has created all 21 C.C.No.4437/2018 SCCH-26 the documents to file this case. Therefore, in the absence of any any evidence to that effect, this court is not inclined to accept the contention of the accused that the complainant has created this document only for the purpose of this case.

19. On over all appreciation of evidence of PW­1 in the light of his cross­examination, it is clear that the accused has failed to probable his defence so as to rebut the presumptions available to the complainant u/s 118 and 139 of NI Act. Therefore, in my opinion, on the other hand the complainant has successfully proved that the accused has issued cheque in his favour as per Ex­P1 to make balance payment of chit amount of Sri.Narayana Kumar. Further the complainant has proved that the accused has committed an offence punishable u/s 138 of NI Act. 22 C.C.No.4437/2018

SCCH-26 Therefore, the complainant is entitled for the relief as sought. Accordingly, I answer point No.1 to 3 in the Affirmative.

20. Point No.4: For the aforesaid reasons, I proceed to pass following :­ ­: ORDER :­ By Acting U/s 255(2) of Cr.P.C the accused is hereby convicted for the offence punishable U/s 138 of NI Act.

The accused is hereby sentenced to pay fine of Rs.5,45,000/­ (Rupees Five Lakhs Forty Five Thousand only). In default, the accused shall undergo simple imprisonment for period of six months.

Acting U/s 357(3) of Cr.P.C. out of the total fine amount payable by the accused, a sum of Rs.5,42,325/­ (Rupees Five Lakhs Forty Two Thousand Three Hundred and Twenty Five only) shall be paid to the complainant as compensation and remaining amount of Rs.2,675/­ (Rupees Two 23 C.C.No.4437/2018 SCCH-26 Thousand Six Hundred and Seventy Five only) shall be defrayed as state expense.

It is further made it clear that if the accused opt to undergo imprisonment, it does not absolve him from liability of paying compensation to the complainant.

Office is hereby directed to supply free certified copy of this judgment to the accused forthwith. (Dictated to the stenographer, directly over computer, typed by her, corrected by me and then pronounced in the open Court on this day 15 th September 2022) (ARUN SADASHIV GUDIGENAVAR) XXIV ADDL. SMALL CAUSES JUDGE & A.C.M.M. BENGALURU.

::A N N E X U R E::

LIST OF WITNESSES EXAMINED ON BEHALF OF THE COMPLAINANT:

PW1 : M.K.Balesh LIST OF DOCUMENTS MARKED ON BEHALF OF THE COMPLAINANT:

Ex.P.1 Cheque, Ex­P1(a) Signature of accused 24 C.C.No.4437/2018 SCCH-26 Ex.P.2 Karnataka Bank Ltd., pay in slip Ex.P.3 Bank memo Ex.P.4 Legal notice Ex.P.5 RPAD cover Ex.P.6 Copy of track consignment Ex.P.7 Documentation sheet Ex.P.8 Chit member surety letter Ex.P.9 Agreement of guarantee Ex.P.10 Promissory note Ex.P.11 Consideration receipt Ex.P.12 Auction date details Ex.P.13 Payment voucher Ex.P.14 Bid payable memo Ex.P.15 Authorization letter Ex.P.16 Extract of the resolution passed in meeting of the board of directors Ex.P.17 Account statement dt.13­4­2018 Ex.P.18 Legal Notice Ex.P.19 & 20 Letter issued by post office LIST OF WITNESSES EXAMINED ON BEHALF OF THE ACCUSED:

NIL LIST OF DOCUMENTS MARKED ON BEHALF OF THE ACCUSED:

NIL (ARUN SADASHIV GUDIGENAVAR) XXIV ADDL. SMALL CAUSES JUDGE & A.C.M.M. BENGALURU.

SCCH-26 26 C.C.No.4437/2018 SCCH-26 27 C.C.No.4437/2018 SCCH-26