Bangalore District Court
Became The Member Of The Chit Group For ... vs In All Registers. She Furnished Four ... on 25 April, 2022
1 CC.26974/2019 (J)
IN THE COURT OF THE XV ADDL CHIEF METROPOLITAN
MAGISTRATE AT BANGALORE CITY.
Dated this the 25th Day of April2022
Present: Lokesh Dhanapal Havale. B.A.L.L.B.,
XV Addl.C.M.M., Bangalore.
Judgment U/s.355 of the Cr.P.C. 1973.
1.Sl.No.of the case CC.No.26974/2019
2.Name of the Complainant: Smt.T.S.Latha,
W/o.Govardhan S.,
Aged about 44 years,
R/at No.184, 7th Cross,
Asha Township,
Bileshivale Village,
Kothnur Post,
Bangalore560 077.
3.Name of the accused: Bhoosiri Chits Pvt. Ltd.,
Represented by its M.D.
Bommanahalli Yalakki gowda
Thimmegowda,
Aged about 55 years,
R/at No.57, 3rd Main,
1st Cross,
New Kempegowda Layout,
Banashankari, 3rd Stage,
Bangalore85.
He having office at
Bhoosiri Chits Pvt. Ltd.,
No.11, 1st Floor,
Dattatreya Road,
Near National Cooperative Bank Ltd.,
Basavanagudi,
Bangalore560 004.
Reptd by its M.D.
Bommanahalli Yalakkigowda
Thimmegowda.
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4.The offence complained of : U/s.138 of Negotiable Instruments
Act.
5.Plea of the accused: Pleaded not guilty.
6.Final Order: Acting U/s.255(1) Cr.P.C. accused is
Acquitted.
7.Date of final Order 25.04.2022
***
This complaint is filed U/Sec.200 of Cr.P.C. against the accused
for the offence punishable U/Sec.138 of the Negotiable Instruments
Act, 1881.
2. The facts of the complaint in brief are as under:
The the accused company is running chit fund business. The
complainant became the member of the chit group for chit value of a
sum of Rs.12,00,000/ for the period of 30 months commencing from
04.02.2018 on the request of the Managing Director of the accused
company. She paid 17 installments i.e., up to 7.02.2019 amounting to
Rs.6,80,000/. She became the highest bidder for a sum of
Rs.9,88,800/ in the chit auctioned on 4.06.2019. It was entered by the
accused in all registers. She furnished four blank and undated cheques
as security for remaining chit installments on the demand of the
accused. After obtaining all the required documents, the accused issued
account payee cheque bearing No.002725 dated 10.07.2019 for a sum
of Rs.9,88,800/ drawn on Karur Vysya Bank, Basavanagudi branch,
Bengaluru for discharge of his liability. The accused postponed the
presentation of the cheque several times by making requests and finally
he asked to present the cheque on 19.09.2019 with the promise that it
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would be honoured. The complainant presented the cheque for
encashment on 19.09.2019 through Canara Bank, R.T.Nagar Branch,
Bengaluru. The cheque was returned dishonoured with shara "Funds
Insufficient" on 21.09.2019. She issued legal notice to the accused on
25.09.2019 and it was duly served on 26.9.2019. The accused issued
cheque for discharge of legal liability, which was dishonored and failed
to pay the amount even after 15 days from the date of service of notice.
Hence prayed to punish the accused and compensate the complainant.
3. After the institution of the complaint, cognizance was
taken and the case was registered as PCR No.13918/2019. The sworn
statement of the complainant was recorded and on the basis of sworn
statement and other materials on hand, the criminal case was
registered against the accused and summons was issued to him. In
response to the service of summons the accused appeared through his
learned counsel and got enlarged on bail. The prosecution papers
supplied to the accused and the substance of accusation for the offence
punishable U/s.138 of Negotiable Instruments Act was read over to the
accused. He pleaded not guilty and claimed to be tried.
4. During trial the complainant examined herself as PW1
and got marked Ex.P.1 to P.20. The statement of the accused U/s. 313
of Cr.P.C. was recorded. The accused lead the defence evidence. Ex.D.1
to 7 were marked during the crossexamination of PW1 by way of
confrontation. ExD.8 to 22 were marked during the defence evidence.
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5. I have heard the arguments of both the learned counsels
and perused the entire materials. The following points would arise for
my consideration;
1. Whether the complainant proves that the accused
issued cheque bearing No.002725 dated 10.07.2019
for a sum of Rs.9,88,800/ drawn on Karur Vysya
Bank, Basavanagudi branch, Bengaluru in her
favour towards the discharge of legally enforceable
debt/liability and on their presentation for
encashment, it was dishonored with an
endorsement of "Funds Insufficient" in the account
maintained by the accused and the accused has not
paid the amount even after 15 days from the date of
service of notice and thereby accused committed an
offence punishable U/Sec.138 of N.I. Act, 1881 ?
2. Whether the accused rebuts the presumption
U/s.139 of N.I.Act?
3. What order?
6. My answers to the above points are as under.
Point No.1 : In the Negative
Point No.2 : In the Affirmative
Point No.3 : As per final order for the following;
REASONS
7. Point No.1 & 2: The points are taken together for discussion
to avoid repetition of facts and evidence. At this juncture it is necessary
to discuss the provisions under Section 138, 118(a), 139 and 141 of the
N.I. Act., 1881 and the said provisions are extracted and they read as
under;
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138. Dishonour of cheque for insufficiency, etc.,
of funds in the account - Where any cheque drawn
by a person on an account maintained by him with a
banker for payment of any amount of money to
another person from out of that account for the
discharge, in whole or in part, of any debt or other
liability, is returned by the bank unpaid, either
because of the amount of money standing to the credit
of that account is insufficient to honour the cheque or
that it exceeds the amount arranged to be paid from
that account by an agreement made with that bank,
such person shall be deemed to have committed an
offence and shall, without prejudice to any other
provision of this Act, be punished with imprisonment
for a term which may be extended to two years, or
with fine which may extend to twice the amount of
the cheque, or with both:
Provided that nothing contained in this section
shall apply unless:
(a) the cheque has been presented to the bank
within a period of six months from the date
on which it is drawn or within the period of
its validity, whichever is earlier;
(b) the payee or the holder in due course of
the cheque, as the case may be, makes
demand for the payment of the said amount
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of money by giving a notice in writing, to the
drawer of the cheque, within thirty days of
the receipt of information by him from the
bank regarding the return of the cheque as
unpaid; and
(c) the drawer of such cheque fails to make
the payment of the said amount of money to
the payee or as the case may be, to the holder
in due course of the cheque within fifteen days
of the receipt of the said notice.
Explanation: For the purposes of this
section, "debt or other liability" means a
legally enforceable debt or other liability.
118. Presumptions as to negotiable instruments.
-Until the contrary is proved, the following
presumptions shall be made;
(a) of consideration - that every negotiable
instrument was made or drawn for
consideration, and that every such
instrument, when it has been accepted,
indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or transferred
for consideration;
(b) as to date: that every Negotiable
Instrument bearing date was made or drawn
on such date;
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139. Presumption in favour of holder. It shall be
presumed, unless the contrary is proved, that the
holder of a 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.
141. Offences by companies:(1) If the person
committing an offence under section 138 is a
Company, every person who, at the time the offence
was committed, was in charge of, and was responsible
to the Company for the conduct of the business of the
Company, as well as the Company, shall be deemed to
be guilty of the offence and shall be liable to be
proceeded against and punished accordingly;
Provided that nothing contained in this sub
section shall render any person liable to punishment
if he proves that the offence was committed without
his knowledge, or that he had exercised all due
diligence to prevent the commission of such offence;
Provided further that where a person is
nominated as a Director of a Company by virtue of
his holding any office or employment in the Central
Government or State Government or a financial
corporation owned or controlled by the Central
Government or the State Government, as the case
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may be, he shall not be liable for prosecution under
this Chapter.
(2) Notwithstanding anything contained in sub
section (1), where any offence under this Act has been
committed by a Company and it is proved that the
offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the
part of, any director, manager, secretary or other
officer of the Company, such director, manager,
secretary or other officer shall also be deemed to be
guilty of that offence and shall be liable to be
proceeded against and punished accordingly.
Explanation: For the purposes of this section;
(a) "Company" means and Board of
Directorsy corporate and includes a firm or
other association of individuals; and
(b) "director", in relation to a firm, means a
partner in the firm.
8. On plain perusal of the provisions under Section 118(a)
and 139 of the N.I.Act., as extracted herein above, it can be seen that
initially the presumptions constituted under these two provisions
favour the complainant. However, it is open to an accused to raise a
defence to rebut the statutory presumptions. An accused can raise a
defence, wherein the existence of legally enforceable debt or liability
can be contested.
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9. It is also well established that an accused for discharging
the burden of proof placed upon him under a statute need not examine
himself. He may discharge his burden on the basis of the materials
already brought on record. An accused has constitutional rights to
maintain silence. Standard of proof on part of the accused and that of
the prosecution in a Criminal case is different. The prosecution must
prove the guilt of an accused beyond all reasonable doubts, the
standard of proof so as to prove a defence on the part of an accused is
"Preponderance of probabilities". The burden of proving the defence is
on the accused. However, in a case, where a Company is an accused
and its directors are to be made vicariously liable, then it is necessary
for the complainant to prove that its directors were in charge of and
responsible to the conduct of its business at the time of commission of
the offence. Once the complainant proves it, the onus shifts on an
accused to prove that the offence was committed without his
knowledge or he had exercised all due diligence to prevent the
commission of offence, if not, the directors are vicariously liable.
10. Under the light of above extracted provisions of the Act, I
have perused the oral and documentary evidence on record. In order to
prove his case the complainant examined himself as PW.1 and got
marked Ex.P.1 to P.20. Ex.P.1 is the cheque bearing No.002725 dated
10.07.2019 for a sum of Rs.9,88,800/ drawn on Karur Vysya Bank,
Basavanagudi branch, Bengaluru and Ex.P.1(a) is the signature of the
accused on the cheque. Ex.P.2 is the Bank endorsement dated
21.09.2019, which was issued with a Shara "Funds Insufficient". Ex.P.3
and 4 are the office copies of the statutory notices dated 25.09.2019
demanding repayment of the cheque amount sent to two addresses f
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the accused. Postal receipts are produced for having sent the statutory
notice to the accused through registered post, which were marked as
Ex.P.5 and 6. Ex.P.7 and 8 are the postal acknowledgements for having
served the notice on the accused on 26.09.2019. Ex.P.9 to 20 are the
receipts issued by the accused for having paid installments in respect of
chit group No.6BP/ST/2018 Ticket No.8. On perusal of the receipts, it
is found that the complainant paid total amount of Rs.5,44,800/. The
receipts bear the seal of the accused company.
11. I have perused the exhibits on which the complainant has
placed her reliance. On perusal of the exhibits, it is clear that the
cheque at Ex.P.1 bearing No.002725 dated 10.07.2019 for a sum of
Rs.9,88,800/ drawn on Karur Vysya Bank, Basavanagudi branch,
Bengaluru was presented through the Bank within its validity for
encashment and the Bank issued endorsement as per Ex.P.2 on
21.09.2019 with shara "Funds Insufficient". The complainant issued
statutory notices dated 25.09.2019 as per Ex.P.3 and 4 within time
from the date of receipt of Bank Memo to the two addresses of the
accused. As per ExP.7 and 8 the notices are served on the accused on
26.09.2019. The service of notice was disputed. The accused lead
defence evidence but he did not lead any evidence to show that the
notices were not served and the addresses mentioned in the notices are
not his addresses. However during his cross examination, the accused
admitted that the addresses mentioned in the notices are his correct
addresses and the signature found in ExP.8 is that of his wife by name
C.S.Vijayalakshmi. The admission leads to draw presumption as per
Section 27 of General Clauses Act, which states that the notice sent
through post shall be deemed to be served, if it is properly addressed to
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a person to whom it is sent. Even otherwise as per the Judgment of the
Hon'ble Supreme Court of India in Crl.Appeal No.767 of 2007 (Arising
out of SLP (Crl) No.3910 of 2006 between CC Alavi Haji
Vs.Palapetty Muhammed and another decided on 18.5.2007, wherein it
has been held by the Hon'ble Supreme Court of India para No.17 as
under;
17. 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
U/s.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. A person who does
not pay within 15 days of receipt of the summons from
the Court along with the copy of the complaint
u/s.138 of the Act, cannot obviously contend that there
was no proper service of notice as required u/s.138, by
ignoring statutory presumption to the contrary u/s.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 Bhaskaran's case (supra), if the 'giving of
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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
from legal consequences of Section 138 of the Act.
12. In a nutshell it can be said that the statutory notice is an
opportunity given to the accused to make payment and avoid the
consequences of 138 of N.I.Act. In the case on hand, the summons was
duly served on accused as per order sheet dated 18.02.2020. He
appeared before the Court and contested the case by taking all
probable defences. Therefore he cannot take the shelter of statutory
requirement of service of notice to avoid the consequences of Section
138 of N.I.Act. The complaint was filed on 08.11.2019. The complaint
is within limitation.
13. The accused admitted the cheque but denied the issuance
of cheque and his signature on the cheque. The accused also took the
defence that as the accused company is the private limited company, at
least two directors have to sign the cheque for it to be honoured and
the cheque bears only his signature. Therefore the accused took two
contradictory stands in his defence. Further he did not lead any
evidence to show that the signature on Ex.P.1 is not his signature. He
also did not take any steps to prove it. Merely denying the signature
and issuance of cheque is not sufficient. Moreover he admitted his
signature in his chief examination by stating that he did not know as to
how the cheque went into the possession of the complainant but it
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bears his signature. It shows that the signature found on the cheque is
that of the accused. Therefore, the documents on record clearly show
that the complainant has complied the ingredients of Section 138(a) to
(c) of the N.I.Act. Therefore the presumptions U/s.118 and 139 of the
N.I.Act arise in favour of the complainant. The presumptions are
rebuttable and the burden is on the accused to rebut the presumptions.
Once the issuance of cheque and signature are proved, the presumption
arises in respect of the fact that the cheque was issued for legally
enforceable debt/liability. The accused can rebut the presumption by
raising probable defence and proving it relying on the evidence of the
complainant or by leading his direct evidence.
14. The accused lead defence evidence. It is the defence of the
accused that the accused company by name Bhoosiri Chits Pvt. Ltd. is
company incorporated under the companies Act. There are four
Directors in the company. The other Directors are C.G.Anand, K.Raju
and S.Manoj. The financial affairs of the company had been looked into
by the Director by name Manoj Siddegowda. The chit business is being
run by taking permission of the Registrar of Chits, Government of
Karnataka. The chit group No. 6BP/ST/2018 (Ticket No.8) is the chit
group run by his company, which is having the chit value of Rs.12
lakhs. As per the Chit Fund Act, the company has to deposit chit
amount with the Registrar of Chits and thereafter the chit has to be
conducted. The company had deposited Rs.1,24,00,000/ in the Karur
Vysya Bank in the name of the company and the details of the deposit
with documents have been given to Registrar of Chits. The complainant
did not contacted the accused company in respect of chit group
No.6BP/ST/2108. Any person to become member of the chit has to file
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application in prescribed form. The complainant did not sign the
application and the chit agreement was not executed in her favour. The
husband of the complainant signed the documents. The cashier in the
company used to issue receipts for having paid the installments of chit.
The ledger was maintained in respect of each chit member and
similarly in respect of chit of the complainant. The complainant never
visited the company and the amounts were paid by her husband. He
paid Rs.5,44,800/ in respect of the chit of the complainant. The
complainant is non prized subscriber. As per the rules of Chit Fund Act,
in case of bid, the two cheques of the member, and other relevant
documents, photo and address proof. The complainant gave the said
documents assuming that the bid would be conducted but the bid was
not conducted and the documents taken from the complainant were
returned to her. The complainant did not pay all the chit installments
and she being the defaulter is not entitled to the dividend. She did not
complied with the requirements of conditions for being member of the
chit. He did not issue cheque in favour of the complainant. The
signature of at least two Directors is necessary for the cheque to be
honoured. The Director by name Manoj Siddegowda retired on
14.12.2019. He misused the cheques of the company and issued the
cheques amounting to Rs.1,63,00,500/ to the members of the same
family and cheated the company. The complaint was filed against him
by the accused and another Director by name Raju.K. in the
Basavanagudi P.S. He did not know as to how the cheque went into the
possession of the complainant but he admitted that the signature
belongs to him. The cheque bounce cases were filed against him as the
Director of the company by name Manoj Siddegowda misused the
cheques and issued to members. Apart from that the Deputy Registrar
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of chits also filed complaint against the company in Basavanagudi P.S.
The said case is pending before Hon'ble Special Court. All the Directors
have not been made as parties.
15. In order to substantiate his defence, he got marked the
documents as Ex.D.1 to D.22. Ex.D.8 to D.10 are the Certificate of
Incorporation, Memorandum of Association and Articles of Association.
They clearly show that the company of the accused is the Private
Limited Company. Ex.D.11 to 14 are the computer generated
documents to show that there are other Directors in the company.
Ex.D.15 is the Certificate U/s.65B of Indian Evidence Act.
16. Ex.D.1 to 7 are marked during the crossexamination of
PW1 by way of confrontation and on her admission. Ex.D.1 is the
application and Ex.D.2 is the Chit Agreement. It is clear from Ex.D.1
and 2 that the application for subscription of chit and the chit
agreement do not bear the signature of the complainant. Ex.D.1 and
D.2 bear the signatures of the husband of the complainant. Ex.D.3 is
the list of subscribers and the name of the complainant is shown at
ticket No.8 and the complainant is shown as non prized subscriber.
Ex.D.4 is the ledger account of the complainant. It clearly shows that
the complainant paid only Rs.5,44,800/ in respect of her chit. It also
shows that only 17 installments till 07.06.2019 were paid and
remaining installments were not paid. Ex.D.5 is the Register
maintained by accused in respect of the chits run by it. Ex.D.5(a) is the
page pertaining to the chit group No.6BP/ST/2018 in respect of the
chit of the complainant. It shows that the date of bid was 04.05.2019
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and minimum bid amount was Rs.2,28,000/. The complainant is
shown as Prized Subscriber as per Ex.D.5(a). Ex.D.6 is the check list of
documents furnished by the complainant in respect of the bid to be
conducted. Ex.D.7 is the receipt and Ex.D.7 (a) and (b) are the
signatures of complainant and her husband. As per Ex.D.7, the
documents shown at Ex.D.6 were taken back by the complainant.
17. Ex.D.16 is the letter issued by the Karur Vysya Bank to the
accused company on its request. It discloses the authorized signatories
pertaining to the account No.1325135000005080 as on 10.07.2019,
which is the account of the accused company. It also discloses that the
account shall be operated by accused, who is the Managing Director,
jointly with any one of the other Directors namely Manoj. S, K.Raju and
Anand C.G. Therefore the accused alone can not operate the account.
18. Ex.D.17 is the certified copy of complaint filed by the
accused company through the accused, who is the Managing Director
along with the Director by name K.Raju against another Director by
name Manoj Siddegowda for having cheated the company by
misappropriating the funds of the company. Ex.D.18 is the certified
copy of FIR registered in Crime No.75/2020 dated 21.09.2020 on the
basis of Ex.D.17 for the offences punishable U/s.403, 406, 419 and 420
of IPC. Ex.D.19 is the certified copy of complaint filed by filed by the
Registrar of Chits against the accused company in Basavanagudi P.S.
for not returning the amount of the chit subscribers. Ex.D.20 is the
certified copy of the FIR registered against the accused company and its
Directors in Crime No.145/2019 dated 22.10.2019 for the offences
punishable U/s.76 of Chit funds Act and S.406 and 420 R/w 34 of IPC.
17 CC.26974/2019 (J)
Ex.D.21 is the certified copy of order sheet and Ex.D.22 is the certified
copy of the plaint in O.S.6208/2021. They disclose that the accused
company through the Managing Director, who is the accused herein,
and another Director by name K.Raju filed the suit against another
Director by name Manoj Siddegowda praying to restrain him from
misusing the documents including the cheques, letter heads, property,
seals and legal documents pertaining to the company and its customers
and also for mandatory injunction directing him to return the said
documents.
19. The counsel for the accused argued that the complaint is
not maintainable as all the directors are not made as parties. The
counsel for the complainant argued that the Managing Director has
been made as party and it is sufficient. On perusal of the documents, it
is clear that there are 4 directors in the accused company. The
complainant however made only the Managing Director as party in the
case. In cases where an offence is committed by a company, a Company
being juristic person has to be represented by natural persons and the
vicarious liability is to be attracted on officers of the Company. The
category of persons who are liable Section 141 are: (1) the Company
which committed the offence, (2) everyone who was in charge of and
was responsible for the business of the Company, and (3) any other
person who is a director or a manager or a secretary or officer of the
Company, with whose consent or connivance or due to whose neglect
the Company has committed the offence. Section 141 extends criminal
liability on account of dishonor of cheque in case of a Company to
every person who at the time of the offence, was in charge of, and was
responsible for the conduct of the business of the Company. By the
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provision contained in Section 141, such a person is vicariously liable
to be held guilty for the offence under Section 138 and punished
accordingly. A director of a Company, who was not in charge of and
was not responsible for the conduct of the business of the Company at
the relevant time, will not be liable for a criminal offence under the
provisions. But for making directors liable for the offences committed
by the Company under Section 141, there must be specific averments
against the directors, showing as to how and in what manner they were
responsible for the conduct of the business of the Company. However
specific averments against the Managing Director or Joint Managing
Director are not required to be made in the complaint. By virtue of the
office they hold as Managing Director or Joint Managing Director, these
persons are in charge of and responsible for the conduct of business of
the Company. Therefore, they get covered under Section 141. So far as
the signatory of a cheque which is dishonoured is concerned, he is
clearly responsible for the incriminating act and will be covered under
subsection (2) of Section 141 of the Act. It is not necessary that all the
directors have to be made as parties. It is sufficient if the Managing
Director is made as party, who by virtue of the office he holds is in
charge of and responsible for the conduct of business of the Company.
It is clear from the evidence of the complainant that she did not know
about any other directors. Therefore the stand of the accused that all
the directors have not been made as parties and therefore complaint is
not maintainable is not tenable.
20. The counsel for the accused argued that the cheque is not
issued by the accused and the contents are not written by him. The
signature on the cheque is also disputed. The counsel for the
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complainant argued that the cheque issued by the accused and the
signature on the cheque is that of the accused and it is immaterial that
who wrote the cheque. On perusal of Ex.P.1, it makes clear that the
writings on the cheque and signature appears to have written with the
different ink. PW.1 was cross examined in that regard but nothing was
elicited. It is admitted by the accused that he signed the cheque in
question. He disputed the name and details written on the cheque.
Such aspects have no bearing on the case because as per the
presumption U/s.118(b) of N.I.Act every Negotiable Instrument bearing
a date was made or drawn on such date and as per Section 20 of the
N.I.Act, if the person signs and delivers Negotiable Instrument and it is
left incomplete and thereby he authorizes the holder to complete the
Negotiable Instrument and thereby he is liable for the amount
mentioned in the Negotiable Instrument. Therefore, the defence of the
accused is not tenable. Further in view of the Judgment rendered by
the Hon'ble Supreme Court of India in Bir Singh V/s.Mukesh Kumar
reported in AIR2019 SC 2446 also the above defence is not tenable. It
was held by the Hon'ble Apex Court that
"If a signed blank cheque is voluntarily presented to
a payee, towards some payment, the payee may fill up the
amount and other particulars. This in itself would not
invalidate the cheque. The onus would still be on the
accused to prove that the cheque was not in discharge of a
debt or liability by adducing evidence. Even a blank cheque
leaf, voluntarily singed and handed over by the accused,
which is towards some payment, would attract
presumption under Section 139 of the Negotiable
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Instruments Act, in the absence of any cogent evidence to
show that the cheque was not issued in discharge of a debt.
21. The counsel for the accused argued that the complainant is
non prized subscriber as per ExD.3 and she never bid in the auction.
The counsel for the complainant argued that the complainant is prized
subscriber and she is the highest bidder in the auction conducted on
04.06.2019. On perusal of ExD.3, the complainant is shown as non
prized subscriber but as per ExD.5 and ExD.5 (a), which is the register
maintained by the accused company, she is shown as prized subscriber.
If at all she is not prized subscriber, there is no necessity of mentioning
as such in the register and there is also no necessity to collect
documents as per ExD.6 in respect of the bid. It is pertinent to note that
as per conditions of chit agreement the documents have to be collected
after the bid i.e. after declaration of the subscriber as prized subscriber
and before the payment of prize amount. Therefore this Court is of the
opinion that the complainant is a prized subscriber.
22. It is the case of the complainant that she is the subscriber
of chit group No.6BP/ST/2018 (Ticket No.8) of the chit value of
Rs.12,00,000/. She did not produce any other documents except the
receipts at Ex.P.9 to P.20 to show that she is the subscriber of the said
chit group run by the accused company. The receipts disclose the
payment made in the name of the complainant. Ex.D.1 and D.2 are the
application for subscription of chit and chit agreement. They bear the
name of the complainant but do not bear her signature. The signatures
are made by the husband of the complainant. Therefore legal
21 CC.26974/2019 (J)
requirements for being member of the chit group are not complied as
the complainant has not made any application for subscription of the
chit and there is no agreement between accused company and the
complainant.
23. The counsel for the accused argued that there are many
inconsistencies and contradictions in the version of the complainant.
The counsel for the complainant argued that the case of the
complainant is clear and the accused is misleading on the basis of
manipulated documents of the company. As per the averments in the
complaint, the complainant subscribed the chit as per the request of the
accused, who is Managing Director. She stated in her evidence that she
did not know any other directors. However Ex.D.1 shows that the
complainant was introduced by the Anand, who is the Additional
Director of the company. Ex.D.1 and 2 show that the husband of the
complainant subscribed for the chit in the name of his wife and the list
of subscribers at Ex.D.3 includes the name of the complainant at Ticket
No.8 as one of the subscribers. As per the averments of the complaint,
the complainant paid 17 installments totally amounting to
Rs.6,80,000/ till 07.06.2019 and she became the highest bidder in the
bid conducted on 04.06.2019 for an amount of Rs.9,88,800/. However
Ex.P.9 to 20 and Ex.D.4 show that the complainant paid 17
installments but only amounting to Rs.5,44,800/ and not
Rs.6,80,000/ as claimed by her in the complaint. She neither produced
any document in respect of the bid conducted by the accused company
on 04.06.2019 nor tried to take steps to summon the documents. PW1
stated during her crossexamination that she had paid all the
installments and she has the documents to prove the same and she can
22 CC.26974/2019 (J)
produce them. Even the counsel for the complainant suggested the
accused that the complainant has paid all the installments, which was
denied by him. She did not produce any documents to show that she
paid all the installments. Therefore adverse inference can be drawn
that either she had no such documents or if such documents are
produced would go against her. There is inconsistency between the
averments of the complaint and the evidence. Hence the version of the
complainant is not believable.
24. The counsel for the accused argued that the complainant
gave the list of documents as per ExD.6 but she took back all the
documents as per ExD.7 as the bid was not conducted. She can not
claim bid amount without complying the requirements such furnishing
surety and guarantee for future installments. She also can not claim as
she is the defaulting subscriber. The counsel for the complainant
argued that the ExD.7 is the created document. The complainant has
supplied all the necessary documents and after satisfying himself, the
accused issued the cheque in question.
On perusal of the chit agreement at ExD.2, it is clear that there
are conditions to be complied by both the parties i.e. foreman and the
subscriber.
i) As per the conditions of the chit agreement, if the subscriber
fails to pay the subscriptions successively for two installments he shall
be treated as defaulting subscriber. The complainant paid only 17
installments and she did not pay remaining installments. She became
the defaulting subscriber.
23 CC.26974/2019 (J)
ii) As per the conditions of the chit agreement, the subscriber
shall on being declared as Prized subscriber, furnish adequate
security/surety/guarantee to the satisfaction of the foreman. As per the
conditions, if the future liability is Rs.5,00,001/ and above, the
subscriber has to furnish any government bond, fixed deposits in or
bank guarantee/scheduled banks, certified gold, Life Insurance policies,
Mortgage/deposit of title deeds of immovable properties having proper
title and free from all kind of encumbrances and not being agricultural
lands situated within the limits of Mahanagara Palike shall be furnished
with personal guarantee of one individual. The company shall pay the
prize amount before the next installment draw of the chit after the
security/surety/guarantee offered by prized subscriber is accepted and
after registration of security. The prize subscriber and his
surety/guarantors shall execute on demand promissory note for total
amount of future chit subscriptions as well as the consideration receipts
for having received the payment at the time of company paying the
prize amount. As per the averments in the complaint, the complainant
claimed that she become the highest bidder in the auction alleged to
have conducted on 4.06.2019. No document is on record for having
conducted bid on that day. The complainant on being declared as
prized subscriber has to comply the conditions of the chit agreement as
aforesaid. She paid Rs.5,44,800 and the chit value is Rs.12,00,000/.
Therefore the value of future installments would be Rs.6,55,200/. The
future liability is more than Rs.5,00,000/. The complainant furnished
the documents as per ExD.6 but she did not furnish all the documents
as required as mentioned in the conditions of the chit agreement more
importantly the property documents and on demand promissory note.
Therefore unless the requirements are complied, she can not claim the
24 CC.26974/2019 (J)
prize amount. There is no document on record to show that she has
complied all the requirements to claim the prize amount. Therefore
until then it can not be termed as legally enforceable debt. The
prosecution U/s 138 of the Act can be sustained, if the debt or liability
is not legally enforceable. Further the documents furnished by the
complainant were taken back by her as per ExD.7. It is admitted
document. The complainant after admitting the document can not
claim that it is created one. Moreover no efforts were made to prove
that the ExD.7 is created document except making suggestions.
Therefore it is clear that the inherent infirmities in the case of the
complainant are sufficient to rebut the presumption of legal liability.
Thus the complainant has failed to establish one of the fundamental
ingredients of Section 138 of the Act, i.e. that the dishonoured cheque
was issued in discharge of a legally recoverable debt or liability.
25. It is the defence of the accused that it is necessary that the
cheque has to be signed by Managing Director and any one of the
additional directors for it to be valid. The counsel for the accused
argued that the cheque is not valid as it was not signed by any one of
the additional directors along with Managing Director, who is the
accused in this case as the account of the company has to be operated
by two directors. The counsel for the complainant argued that the
cheque is valid even if the Managing Director alone signs it. If at all the
cheque has to be signed by two directors as alleged by the accused, the
bank would have given the said endorsement. The bank gave
endorsement as Fund Insufficient and therefore the defence of the
accused is not tenable. The accused produced Ex.D.16 to substantiate
the fact that cheque has to be signed by Managing Director and any one
25 CC.26974/2019 (J)
of the additional directors for it to be honoured. On perusal of the
Ex.D.16, it is clear that the bank account of the accused company has to
be operated by the authorized signatories, who shall be the Managing
Director and any one of the remaining Directors. During the cross
examination of DW1, the counsel for the complainant suggested that if
at all the cheque need to be signed by two Directors, the bank would
have specifically mention the said shara but the cheque was dishonored
with shara 'Funds Insufficient', DW1 answered that he asked the Bank
Manager about the bank memo issued with shara 'Funds Insufficient'
and the Bank Manager replied that they would first check the
sufficiency of balance and if the sufficient balance available in the
account to honour the cheque, they would check other details and if
the balance is insufficient they would issue the bank memo with said
shara. The explanation offered by the accused for issuance of bank
memo with shara 'Funds Insufficient' appears to be probable. The
counsel for the complainant also suggested DW.1 that the cheques
signed by him alone were honoured. It was denied by DW.1. It is mere
suggestion and there is no proof for cheques of the accused company
being honoured which were signed by the Managing Director alone.
The complainant did not make any effort to disprove ExD.16. Therefore
once it is proved that the cheque has to be signed by the Managing
Director and any one of the directors, the cheque in question becomes
invalid as it is signed by the Managing Director alone.
26. The aforesaid reasons are sufficient to hold that the
complainant failed to prove the issuance of cheque by the accused in
his favour in discharge of the legally enforceable debt as alleged. It is
well settled that the accused needs to prove his defence by
26 CC.26974/2019 (J)
preponderance of probabilities. It is sufficient if the doubt is created on
the alleged transaction. The accused has created the doubt on the
alleged issuance of cheque in favour of complainant as alleged in the
complaint. Therefore this Court is of the opinion that the accused
rebutted the statutory presumption U/s.139 and 118(a) of the Act.
Accordingly, the accused is found not guilty for the offence punishable
U/s.138 of the N.I.Act. Hence, the Point No.1 is answered in the
Negative and Point No.2 is answered in the Affirmative.
27. Point No.3 : In view of the reasons assigned on Point No.1
and 2, I proceed to pass the following:
ORDER
As per the provisions of Sec.255(1) Cr.P.C. the accused is hereby acquitted of the offence punishable u/s.138 of NI Act, 1881.
The personal bond executed by the accused stands cancelled and cash surety of Rs.6,000/ deposited by the accused shall be refunded after appeal period is over.
(Dictated to the Stenographer, transcript thereof is computerized and printout taken by him, is verified and then pronounced by me in Open Court on this the 25th day of April 2022.) (Lokesh Dhanapal Havale) XV Addl. CMM., Bangalore.
27 CC.26974/2019 (J) ANNEXURE Witnesses examined for the Complainant: PW.1 T.S.Latha Documents marked for the Complainant: Ex.P.1 Cheque.
Ex.P.1a Signature of the accused.
Ex.P.2 Bank endorsement.
Ex.P.3 & 4 Two Legal Notices.
Ex.P.5 Two Postal receipts.
Ex.P.6 Two Postal Receipts.
Ex.P.7 & 8 Two Postal acknowledgements.
Ex.P.9 to P.20 Twelve Receipts.
Witnesses examined For Defence: DW1 B.Y.Thimmegowda.
[ Documents marked for Defence: Ex.D.1 Application for chit subscription.
Ex.D.2 Chit Agreement.
Ex.D.3 Chit members List.
Ex.D.4 Ledger Extract.
Ex.D.5 Register of Chits.
Ex.D.5(a) Page No.225 paerating to complainant.
Ex.D.6 Check list of documents.
Ex.D.7 Receipt.
Ex.D.7(a) Signature of the complainant.
Ex.D.7(b) Signature of the Husband of complainant.
Ex.D.8 Certified copy of Incorporation Certificate.
28 CC.26974/2019 (J)
Ex.D.9 & D.10 Certified copies of M.O.A. and A.O.A. Ex.D.11 Company Master Data Ex.D.12 Copy of Form No. DIR12. Ex.D.13 & 14 Copies of Form No.DIR2. Ex.D.15 Certificate U/s. 65B of I.E.A. .
Ex.D.16 Bank Letter.
Ex.D.17 & 18 Certified copies of complaint & FIR.
Ex.D.19 & 20 Certified copies of the complaint & FIR.
Ex.D.21 Certified copy of order sheet in
the O.S.6208/2021
Ex.D.22 Certified copy of plaint in O.S.6208/21.
(Lokesh Dhanapal Havale)
XV Addl. CMM., Bangalore.