Bangalore District Court
Equitas Small Finance Bank Ltd vs Ravut Honamallappa Kappenavar on 1 March, 2025
KABC020388102022
IN THE COURT OF THE XXII ADDL. JUDGE, COURT OF
SMALL CAUSES AND ADDL. CHIEF JUDICIAL
MAGISTRATE, BENGALURU CITY
(SCCH-24)
Presided Over by Smt. Roopashri, B.Com., LL.B.,
XXII ADDL., SCJ & ACJM,
MEMBER - MACT,
BENGALURU.
Dated: On this 1st day of March, 2025.
C.C.14727/2022
1. Sl.No. of the Case : C.C.No.14727 of 2022.
2. The date of : 23.12.2022
commission of the
offence
3. Name of the : M/s Equitas Small Finance
Complainant Bank Limited,
Previously known as Equitas
Finance Private Limited,
Office At Swami Lotus, #110/6,
Lalbagh Road Cross,
Krishnappa Layout,
Bangalore-560027.
Rep by its Legal Officer
Mr. Ravi T.J.,
Aged about 39 years,
S/o Late. T.L. Jayaram
(By Sri. Vijay S, Advocate)
SCCH-24 2 C.C.No.14727/2022
4. Name of the Sri. Ravut Honamallappa
Accused Kappenavar
C/o. Honamallappa Kappenavar
A/P Bolegoan TQ
Indi Dt, Bijapur
Surgihalli, Bijapur
Karnataka 586215
(By Sri.G.A. Prem Kumar, Advocate)
5. The offence complained : Under Section 138 of the
of or proves Negotiable Instrument Act.
6. Plea of the accused and : Pleaded not guilty
his examination
7. Final Order : Accused found not guilty
8. Date of such order for : 01-03-2025
the following
JUDGMENT
This complaint is filed under Sec. 200 of Cr. P. C. for the offence punishable under Section 138 & 142 of the Negotiable Instruments Act.
2. It is the case of the complainant that: The complainant bank was initially carrying on its banking business of providing loan/financial assistance in the course of their business. The accused had made an application for availing loan facility. The loan application was processed and he entered into loan agreement bearing No.SLBJPURO259149 with the complainant. In SCCH-24 3 C.C.No.14727/2022 accordance with the loan agreement and the applicable terms and conditions, the accused has agreed to repay the loan amount in equated installments on the stipulated dates as per repayment schedule. Subsequent to the same accused has failed to stand by his commitment for a considerable time in spite of repeated reminders/requests from the complainant bank and upon demand to repay the loan the accused had agreed to repay the outstanding liability with interest and towards discharge of his legal liability extended cheque bearing No.742187 dated 07.09.2022 drawn on Canara Bank for sum of Rs.4,50,000/-. The said cheque when remitted for encashment stands dishonored for the reason "Account Blocked" under bank memo dated 29.09.2022. Thereafter, the complainant got issued legal notice to the accused on 15.10.2022. The said legal notice sent to the address of the accused is served on 22.10.2022. Accordingly, the accused has committed an offence punishable under Sec.138 of N.I Act, hence, the complaint.
3. After recording the sworn statement of the complainant bank and also verifying the documents, cognizance was taken against the accused for the offence punishable under Sec. 138 of N.I. Act. The accused on receiving the summons appeared before this Court through his counsel and was enlarged on bail and his plea SCCH-24 4 C.C.No.14727/2022 was recorded. The accused pleaded not guilty and claimed to be tried. Hence, the case was posted for evidence of the complainant.
4. The complainant bank has examined its attorney holder as PW.1 and got marked documents as Exs.P1 to 8. Then, the case was posted for recording the statement of accused under Sec.313 Cr.P.C. In the statement U/s 313 Cr.P.C., the accused has denied all the incriminating evidence appearing against him and claimed to be tried. The accused has not led his evidence but has adduced the evidence of witness. Hence, the case was posted for arguments.
5. Heard the arguments of both sides and perused the records.
6. The following points arise for my consideration:
1. Whether the complainant proves that accused has committed an offence punishable under Sec.138 of N.I. Act?
2. What order?
7. My findings on the above points are as under:
Point No.1: In the Negative Point No.2: As per final order, for the following:SCCH-24 5 C.C.No.14727/2022
-: R E A S O N S :-
8. POINT NO.1:- It is the case of the complainant bank that, the accused has availed loan facility from the complainant and for the discharge of balance loan amount he has issued cheque bearing No.No.742187 dated 07.09.2022 for Rs.4,50,000/- and when the cheque was presented for encashment, same was returned with endorsement "Account Blocked" on 29.09.2022.. Though the said fact was brought to the notice of the accused by issuing legal notice but accused has failed to repay the cheque amount.
9. In order to substantiate the contention, the complainant bank got examined its attorney holder as Pw1 and got marked in all 8 documents as ExP1 to Ex.P8. If the documents produced by the complainant are perused, ExP3 is the cheque which bears the signature of accused. The accused nowhere has disputed the cheque which relates to his account so also his signature in the Ex.P3. It is deposed by Pw1 that cheque in question was issued by the accused for discharge of liability. The cheque in question was presented by the complainant through his banker which was returned with a memo as per ExP4 stating 'Account Blocked'. Hence, he got issued SCCH-24 6 C.C.No.14727/2022 legal notice to the accused through RPAD, which is produced at Ex.P.5. The postal receipts are marked at Ex.P.6, the tract consignment is marked at Ex.P.7 and the Statement of account is marked at Ex.P8.
10. The accused has not led his evidence but has adduced the evidence of the witness and by cross examining the PW.1 he has taken the defence that he has already repaid the loan amount and that at the time of availing the loan the complainant has received his blank signed cheque and even after the repayment of entire loan amount the complainant according to their convenience has filled up the cheque . The accused further stated that the vehicle in question in respect of which the loan was taken is sold by the complainant and the sale proceeds was adjusted towards the arrears of loan amount , hence there is no amount due by the accused. The accused has taken the further defence that the legal notice is issued after lapse of statutory period and in the return memo the complainant has over written the date so as to save the limitation period .
11. The learned counsel for the accused during the course of argument has much submitted about the incomplete details in the complaint and legal notice regarding the loan amount, the date on which loan was SCCH-24 7 C.C.No.14727/2022 sanctioned, repayment tenure, the monthly installments and the amount paid by the accused etc. The learned counsel further has stated that in the complaint and in the verified affidavit the date on which complaint was filed is not mentioned and thereby it is not made known to the court whether complaint is filed within the period of limitation or not .
12. The learned counsel has further argued that even though the complainant has seized and sold the vehicle of the accused but no document has been produced to say for how much amount the said vehicle was sold and how much amount is adjusted towards the loan amount and complainant has not produced loan application, loan agreement and other relevant documents to prove the contention taken by them.
13. In the light of the argument canvassed by the learned counsel for accused, if the averments of the complaint, legal notice and the evidence in chief of PW.1 is perused, nowhere in the complaint, legal notice and evidence, the complainant has stated the date on which loan application was filed, the date on which loan was sanctioned, how much is the loan amount sought by the accused, how much is the loan amount sanctioned by the SCCH-24 8 C.C.No.14727/2022 complainant, the rate of interest charged on the loan, the monthly equal installment at which the said loan amount is to be repaid, how much of the loan installment the accused has paid and what is the balance amount due by the accused etc . In the complaint, it is vaguely stated that the accused has availed loan but has failed to repay the loan and towards the discharge of which the accused has issued the disputed cheque. The PW.1 during his cross examination has admitted that they have not given any particulars regarding the aforesaid material aspects either in their complaint or in the legal notice, but deposed that they have statement of loan account and it would disclose the sanctioned loan amount, the loan amount repaid by the accused and the loan amount due by the accused etc.,
14. As per the evidence of PW.1, the accused has availed loan in the year 2019 for the purpose of purchase of vehicle. The Pw.1 being the responsible officer is not in a position to say how much of the loan amount the accused has repaid or the total monthly installment paid by the accused so as to say that accused has issued disputed cheque for the balance loan amount. The PW.1 during his cross examination has vaguely stated that the accused has repaid sum amount towards the loan. But has not stated in accurate how much of the amount the accused has paid.
SCCH-24 9 C.C.No.14727/202215. If the cross examination of PW.1 is perused, the complainant has seized the vehicle of the accused for the purchase of which the accused has availed loan. As per the own evidence of PW.1, they have sold the seized vehicle and adjusted the sale consideration towards the loan amount due by the accused and for the balance loan amount the accused has issued disputed cheque. It is nowhere stated by the accused for how much amount the vehicle of the accused was sold. It is deposed by PW.1 that the entry dated 21-10-2021, 23-10-2021, 31-10-2021, 31- 10-2021 and 31-10-2021 in Ex.P8 discloses the price for which vehicle was sold and adjusted towards the loan amount. But if the entries in the aforesaid dates are perused, there is no particular regarding the price for which the vehicle was sold and how much of the sale consideration was adjusted towards the balance loan amount.
16. Since the complainant has not produced loan agreement there is no materials before the court to say as to what was the price of the vehicle in question which was hypothecated to the bank and as observed supra there is no material for what price the said vehicle was sold.
SCCH-24 10 C.C.No.14727/202217. The PW.1 has deposed that they have document with them regarding the seizure and sale of the vehicle of the accused and that prior to the seizure and sale of the vehicle; they have issued notice to the accused. But complainant has failed to produce the said material documents to let the court know for what price vehicle was sold. The complainant ought to have produced the document pertaining to the seizure and sale of the vehicle in question.
18. If the statement of loan account at ExP8 is perused, it discloses that sum of Rs,5,50,000/- was sanctioned to the accused in monthly installment of Rs.19,190/-. There is no reference as to the tenure of monthly installment. It also does not disclose the rate of interest charged on the loan amount. The complainant has not produced either the loan agreement or hypothecation agreement to let the court know the terms and condition of the loan transaction held between the complainants and accused. Further ExP8 does not disclose the value of the vehicle bearing Reg. no KA 28 -B 7326 as on the date of loan availed by the accused.
19. During the cross examination of Pw.1 suggestion was posed that accused has repaid entire loan amount SCCH-24 11 C.C.No.14727/2022 and there is nothing due by him. It is true that Pw.1 has denied the said suggestion. But to prove that as on the date of issuance of disputed cheque the accused was due of Rs.4,50,000/-, the complainant has not produced any worth believing document. It is true that complainant has produced the statement of loan account at ExP8. When it is an admitted fact that the vehicle of the accused was sold by the complainant and said amount is adjusted towards the loan amount and when the loan amount was only Rs.5,50,000/- out of which admittedly the accused had paid some monthly installment, under such circumstances unless worth believing document is produced to prove for how much amount the said vehicle was sold by the complainant and unless satisfactory clarification is given by the complainant as to the entries referred in the Ex.P8 , it is hard to believe that accused is due of Rs.4,50,000/-, for the discharge of which he had issued the disputed cheque. It is true that accused nowhere has disputed the cheque in question and the signature there in but has taken the specific defense that he has given signed blank cheque during the year 2019 as security for the loan transaction .
20. As observed supra, the learned counsel for accused has strenuously argued that the legal notice is SCCH-24 12 C.C.No.14727/2022 issued after lapse of statutory period and in order of save the limitation period, the complainant has made correction in the date of return of cheque. Hence, on that count also the complaint is liable to be dismissed.
21. The learned counsel for accused in order to prove the said contention has examined the Manager, Rajajinagar Branch as DW.1. The DW.1 has deposed that in the Ex.P4 some correction is made regarding the date. When it was questioned to the Dw.1, whether Ex.P4 is issued from their bank, the DW.1 has pleaded ignorance and deposed that the said endorsement is given from the clearance office. The Dw.1 being a responsible bank manager has gone to the extent of deposing that if any correction is made in the bank endorsement there is no practice of putting initial or bank seal on the said correction. The court can take judicial notice that if any correction is made in any of the documents, the person who made such correction has to put his initial but if Ex.P4 is perused, one can find to the naked eye the correction made as to the date of return of the cheque.
22. As per the own case of the complainant, cheque in question was issued on 07-09-2022 and it was presented on 07-09-2022. If the Ex.P4 is perused, it appears that cheque was dishonoured and return memo is SCCH-24 13 C.C.No.14727/2022 sent on 09-09-2022. But in order to save the limitation, the complainant cleverly has over written the date as 29- 09-2022. When cheque is presented on 07-09-2022 and when it is dishonored, the intimation memo will be send immediately within 2-3 days and there is no need to take 22 days time to send the return memo so as to say that return memo was given on 29-09-2022. Hence, it can be said without any hesitation that return memo was send on 09-09-2022 but not on 29-09-2022.
23. The legal notice as per Ex.P5 was issued on 15- 10-2022 i.e., after lapse of nearly 36 days from the date of intimation regarding dishonour of cheque is received.
24. Sec. 138 of the Negotiable Instrument Act reads that :
"Section 138: dishonour of cheque for insufficiency etc., of funds in the account where any cheque drawn by a persons on an account maintained by him with a banker for payment of any amount of money to another persons 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 SCCH-24 14 C.C.No.14727/2022 that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions 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 was 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 a demand for the payment of the said account of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him 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".
25. As per Sec.138 (b) of the NI Act, a complainant /or person holder in due course of the cheque is required to issue notice upon the accused persons within 30 days of intimation from the bank of dishonour of SCCH-24 15 C.C.No.14727/2022 cheque/instrument. There is no power to condone delay in issuing notice as contemplated under Section 138 (b) of the Act. Sec 138 (b) of the NI Act is a mandatory requirement and it has to be complied and there is no provision provided under the NI Act to condone the delay in issuing the demand notice.
26. Now at this juncture has referred the judgment reported in 2008 (3) Crimes (HC) 230 (Gujarat) between B.K Sarkar & Anr., Vs. State of Gujarat & Anr. In the said case there is delay of one day in issuing demand notice. The Hon'ble Gujarat High Court by referring Sec. 138 (b) of NI Act has observed that there is no power to condone delay in issuing notice u/Sec. 138 (b) of the Act. Power to condone delay provided under Section 142 of the Act was with regard to delay in filing complaint within one month and could not be extended to condone delay with regard to other lapses. In the said case, complaint was dismissed as not maintainable and proceedings were quashed on that sole ground.
27. In the light of the observation made in the aforesaid ruling, coming to the case in hand, in the present case admittedly there is delay of 7 days in issuing demand notice and the delay in demand notice cannot be SCCH-24 16 C.C.No.14727/2022 condoned and it is a procedural lapses and complaint is liable to be dismissed on that sole ground.
28. Now after considering the entire materials placed on record it can be said that there is every possibility of the complainant taking the disputed blank signed cheque as security at the time of sanctioning the loan amount and there after presenting the said cheque by filling the amount to suit their case. Though the complainant has produced the statement of account, but there is no clarity in the said entry and as observed supra even the Pw1 was not able to explain the entries in the ExP8 to say that accused is due of cheque amount to the complainant. The leaned counsel for complainant by relying upon the fact that accused has not disputed the cheque relates to his account so also his signature in the said cheque has referred the judgment rendered in Criminal Appeal No. 1020 of 2010 Between Rangappa and Sri Mohan, but the accused has probalised his defense and there by rebutted the presumption raised under section 139 and 118 of NI Act
29. In a ruling reported in 2021 (1) KCCR SN Lahu / Dhanaji Rao Ramachandra Haibati the Hon'ble High court confirmed the order of acquittal of accused. In the said case the complainant has not mentioned the particulars of SCCH-24 17 C.C.No.14727/2022 transaction in the complaint, even purpose of borrowing money by accused is also not mentioned but it is mentioned only at the time of leading evidence. Even date of lending money also not mentioned and he has not produced any document in support of the case. Under the given set of facts it was held that complainant has failed to prove the guilt of the accused and accordingly acquitted the accused.
30. The observation made in the aforesaid ruling is aptly applicable to the case in hand, as in the present case also the complainant has failed to mention the particulars of the transaction, the purpose of borrowing money, the date of lending money and the amount lend by the complainant etc.
31. In the light of the discussion made herein above, this court is of the considered opinion that complainant has failed to prove that accused has issued disputed cheque for the arrears of loan amount. Hence the complainant has failed to prove that accused has committed offence punishable under Section 138 of Negotiable Instruments Act. Accordingly, I answer point No.1 in the Negative.
SCCH-24 18 C.C.No.14727/202232. POINT No.2 :- In the light of the reasons on the point No.1, I proceed to pass the following;
ORDER Acting under Sec. 255 (1) of Cr.P.C, the accused is found not guilty of the offence punishable under Sec. 138 read with section 142 of NI Act.
The bail bond of accused and that of surety stands cancelled.
(Dictated to the stenographer directly on computer, corrected and then pronounced by me in open court, on this the 1 st day of March 2025.) (ROOPASHRI) XXII Addl.SCJ & ACJM Bengaluru.
:ANNEXTURE:
LIST OF WITNESSES EXAMINED ON BEALF THE COMPLAINANT P.W.1 : Mr.Hareesha S L LIST OF DOCUMENTS MARKED ON BEHALF COMPLAINANT:
Ex.P.1 : Notarized copy of SPA
Ex.P.2 : Copy of Licence
Ex.P.3 : Copy of Cheque
Ex.P3(a) : Signature of accused
Ex.P.4 : Bank Endorsement.
SCCH-24 19 C.C.No.14727/2022
Ex.P.5 : Legal notice
Ex.P.6 : Postal Receipts
Ex.P.7 : Postal consignment tracking
Ex.P8 : Statement of account
LIST OF WITNESSES EXAMINED BY THE ACCUSED
- DW.1 - Mahadeva Naik LIST OF DOCUMENTS MARKED ON BEHALF OF ACCUSED:
-NiL-
XXII Addl. SCJ & ACJM Bengaluru.