Bangalore District Court
M/S.Tata Capital Financial vs M/S. Rsr India on 23 April, 2019
Before the Court of XXXVI Addl. Chief Metropolitan
Magistrate at Bangalore
(SCCH-12)
Present: Shri .SIDRAM B.A, B.ED., LL.B.,
XXXVI ACMM, Bangalore.
Dated this the 23rd day of April, 2019
C.C.No.3824/2018
Complainant M/s.Tata Capital Financial
Services Ltd,
Registered Office at
Dr.V.B.Gandhi Marg, Fort,
Mumbai-400 001.
Branch Office at No.82/1,
2nd Floor, Krishna Towers,
Richmond Road,
Bengaluru-560025.
Rep. by its POA Holder,
Mr.Mallesh S/o
BRajanna
Aged about 35 years.
(Sri In-Curia Law
Chambers, Advocate)
V/s.
Accused 1. M/s. RSR India
Mercantiles Limited
No.24, N.S.Garden Street,
Seethakathi Center, First
Floor, Parrys,
Chennai-600001.
Represented by its
Managing Director
Rajasekhara Reddy,
Director-Uma Rajashekhara
Reddy and Chandramohan
Jeyanthi
2. Rajashekara Reddy
Managing Director
M/s RSR India Mercantiles
SCCH-12 2 C.C.3824/2018
Limited
No.24, N.S.Garden Stree,
Seethakathi Center, Frist
Floor, Parrys, Chennai-
600001
3. Uma Rajasekhara Reddy
Director
M/s RSR India Mercantiles
Limited
No.24, N.S.Garden Stree,
Seethakathi Center, First
Floor, Parrys,
Chennai-600001
4. Chandramohan Jeyanthi
Director
M/s RSR India Mercantiles
Limited
No.24, N.S.Garden Stree,
Seethakathi Center, Frist
Floor, Parrys,
Chennai-600001
(Smt. Uma, Sri.C.Kumar
Gowda, Advocate)
1. Date of commencement of offence : 11.07.2018
2. Name of the Complainant : M/s. Tata Capital
Financial Services Ltd
3. Date of recording of the evidence : 28.07.2018
4. Date of closing of evidence : 19.03.2018
5. Offence complained of : 138 of N.I. Act
6. Opinion of the Judge : Accused found guilty
7. Complainant represented by : Adv. In-Curia Law Chambers
8. Accused defence by : Smt. Uma,
Sri.C.Kumar Gowda.
SCCH-12 3 C.C.3824/2018
JUDGMENT
The Complainant Finance Company has filed this private complaint case against the Accused for the offence punishable U/s 138 of Negotiable Instruments Act.
2. The brief facts of the complaint are as under:
According to the Complainant, the Complainant is a Public Limited Company incorporated under the Companies Act, 1956, and registered with the Reserve Bank of India under Section 45-1A of the Reserve Bank of India Act, 1934 and carrying on the business of providing various financial services such as car loans, personal loans, business loans, consumer finance, home loans, investment etc for its various customers. The Accused No.2 being the Managing Director of M/s. RSR India Merchantiles Ltd had availed loan in the name of Accused No.1 Company i.e., M/s.RSR India Mercantiles Ltd from Complainant Company for their own use and purposes. By considering the request of the Accused, the Complainant Finance Company has sanctioned loan to the Accused under vide Loan Account No. Only BL6613331 on certain terms and conditions. The Accused agreed to abide by the terms of the loan agreement and also agreed to repay the loan amount in equated monthly installments without fail or any delay. Thereafter, to discharge the liability towards the loan amount the Accused No.2 being the Managing Director of the Accused No.1 Company upon the consent of the Accused No.3 and 4 have issued a cheque bearing No.000016 dated 10.05.2018 drawn on HDFC Bank, Chennai for a sum of Rs.16,00,000/- towards discharge of liability partly. When the said cheque presented for encashment by the Complainant through its SCCH-12 4 C.C.3824/2018 banker HDFC Bank Ltd, Richmond Road, Bangalore the same was returned as unpaid with an endorsement as 'Account closed' dated 17.05.2018. After bouncing of the cheque, the Complainant has got issued legal notice on 08.06.2018 through RPAD to the Accused by calling upon them to pay the cheque amount within 15 days from the date of receipt of the legal notice. The said legal notice issued by the Complainant to the Accused No.1 was duly served on 11.06.2018. The notices sent by RPAD to the Accused No.2 to 4 have not returned till filing of the complaint. Inspite of service of that notice to the Accused No.1 Company, the Accused No. 2 to 4 have failed to pay the cheque amount within stipulated period. Thereby the Accused has committed an offence punishable under Section 138 of N.I.Act.
3. After receipt of complaint, same has been registered as PCR and cognizance taken for the offence punishable under Section 138 of N.I.Act.
4. After recording the sworn statement of Complainant, process issued to the Accused.
5. Summons served upon Accused.
6. Accused No.2 being a Managing Director of M/s. RSR India Mercantiles Ltd appeared before this court through his Counsel and he has filed bail application under Section 436 of Cr.P.C same has been allowed and Accused No.2 is on bail during trial. Accused No.3 and 4 appeared before this Court through their Counsel. They have also filed bail application. They have been released on bail. They are on bail during the course of trial. Thereafter plea recorded. Accused pleaded not guilty and claimed to be tried.
SCCH-12 5 C.C.3824/20187. The sworn statement of Complainant treated as examination in chief of Complainant and case was posted for further chief of P.W.1. Thereafter, Complainant filed application for substitution of representative of Complainant. Said application came to be allowed. One Sri. Mallesh S/o Rajanna has been substituted in the place of Sri.Ajay Kumar K.B. as representative of Complainant. The oral evidence of P.W.1 discarded. The new representative of Complainant namely Sri.Mallesh has been examined as P.W.2. He has filed his sworn affidavit in lieu of examination-in-chief. In which, entire complaint averments have been reiterated. P.W.2 got marked 13 documents as Ex.P.1 to Ex.P.13. Thereafter, case was posted for cross of P.W.2.
7. Inspite of sufficient opportunity given to the Accused they failed to cross examine the P.W.2. Ultimately, cross of P.W.2 taken as nil. In view of non cross examination of P.W.2 by the Accused recording of Accused statement dispensed with and case was posted for defense evidence. Inspite of sufficient opportunity given to the Accused they have filed to lead evidence on their behalf. Ultimately taken as defense evidence nil and case was posted for arguments.
8. Heard Counsel for Complainant. Inspite of sufficient opportunity given to the Accused argument not submitted. Hence, taken as argument not submitted on behalf of Accused and case was posted for judgment.
9. The points that would arose for my consideration are as follows:-
1) Whether the Complainant proves that, Accused No.2 being a SCCH-12 6 C.C.3824/2018 Managing Director of Accused No.1 Company and he had issued a Cheque bearing No.000016 dated
10.05.2018 drawn on HDFC Bank, Chennai for a sum of Rs.16,00,000/- towards discharge of liability partly in favour of Complainant and on presentation for encashment it was dishonored for the reasons 'Account Closed' and inspite of issuance of legal notice dated 08.06.2018, the Accused have not paid the Cheque amount and thereby they have committed an offence punishable under Section 138 of N.I.Act?
2) What order?
10. My answer to the above points are as follows:
Point No.1: In the Affirmative Point No.2: As per final order for the following:
REASONS
11. Point No.1: It is the specific case of the Complainant that, the Complainant is a Public Limited Company incorporated under the Companies Act, 1956, and registered with the Reserve Bank of India under Section 45-1A of the Reserve Bank of India Act, 1934 and carrying on the business of providing various financial services such as car loans, personal loans, business loans, consumer finance, home loans, investment etc for its various customers. The Accused No.2 being the Managing Director of M/s. RSR India Merchantiles Ltd had availed loan in the name of Accused No.1 Company i.e., M/s.RSR India Mercantiles Ltd from Complainant Company for their own use and purposes. By considering the request of the Accused, the SCCH-12 7 C.C.3824/2018 Complainant Finance Company has sanctioned loan to the Accused under vide Loan Account No. Only BL6613331 on certain terms and conditions. The Accused agreed to abide by the terms of the loan agreement and also agreed to repay the loan amount in equated monthly installments without fail or any delay. Thereafter, to discharge the liability towards the loan amount the Accused No.2 being the Managing Director of the Accused No.1 Company upon the consent of the Accused No.3 and 4 have issued a cheque bearing No.000016 dated 10.05.2018 drawn on HDFC Bank, Chennai for a sum of Rs.16,00,000/- towards discharge of liability partly. When the said cheque presented for encashment by the Complainant through its banker HDFC Bank Ltd, Richmond Road, Bangalore the same was returned as unpaid with an endorsement as 'Account closed' dated 17.05.2018. After bouncing of the cheque, the Complainant has got issued legal notice on 08.06.2018 through RPAD to the Accused by calling upon them to pay the cheque amount within 15 days from the date of receipt of the legal notice. The said legal notice issued by the Complainant to the Accused No.1 was duly served on 11.06.2018. The notices sent by RPAD to the Accused No.2 to 4 have not returned till filing of the complaint. Inspite of service of that notice to the Accused No.1 Company, the Accused No. 2 to 4 have failed to pay the cheque amount within stipulated period. Thereby the Accused has committed an offence punishable under Section 138 of N.I.Act.
SCCH-12 8 C.C.3824/201812. As stated above, in order to prove the case of the Complainant, the GPA holder of the Complainant Sri.Mallesh himself got examined as P.W.2. The Complainant relied upon Ex.P.1 to Ex.P.13.
13. I have perused the materials available on record.
14. As stated above, the Complainant Company has got marked following documents as Ex.P.1 to Ex.P.13.
Ex.P.1 Cheque, Ex.P.1(a) Signature of Accused on Ex.P.1, Ex.P.2 Bank Memo, Ex.P.3 Office Copy of Legal Notice, Ex.P.4 to 7 Postal Receipts, Ex.P.8 Postal Acknowledgment, Ex.P.9 to 11 Postal Track Consignments & Ex.P.12 and 13 GPA.
15. The Ex.P.1 is a cheque. The said cheque bears date of issuance of cheque as 10.05.2018. The said cheque is issued in favour of Tata Capital Financial Services Ltd., for a sum of Rs.16,00,000/-. It is pertinent to note here that, the Accused have not denied the issuance of cheque as well as signature appearing on Ex.P.1 cheque as Ex.P.1(a). The Complainant has submitted Ex.P.1 Cheque for consideration of the Court. The oral evidence of P.W.2 goes to show that, the said cheque is relating to the Account maintained in the name of Accused No.1 Company and Ex.P.1(a) is the signature of the Accused No.2, who is Managing Director of Accused No.1 Company. Further, on Ex.P.1 name of the Account holder is also appearing as for - RSR India Mercantiles Limited. On the basis of oral evidence of P.W.1 and the name of Account holder reflecting on Ex.P.1, it can be said that, the Ex.P.1 Cheque is relating to the Accused No.1 Company and the signature appearing on Ex.P.1 cheque SCCH-12 9 C.C.3824/2018 as Ex.P.1 (a) is the signature of the Accused No.2. The Ex.P.2 Bank Memo dated 17.05.2018 goes to show that, the Ex.P.1 Cheque bearing No.000016 has been dishonored for the reason that 'Account closed'.
16. The oral evidence and Ex.P.1 and Ex.P.2 go to show that, the Accused had issued Ex.P.1 Cheque in favour of Complainant for a sum of Rs.16,00,000/- and same has been dishonored for the above said reason. It is pertinent to note here that, the Accused neither denied nor admitted about issuance of cheque in favour of Complainant. But the oral evidence of P.W.1 clearly goes to show that, said cheque has been issued by the Accused herein in favour of Complainant for a sum of Rs.16,00,000/. Therefore, at this juncture, it can be said that the above said cheque is relating to the Account maintained in the name of Accused No.1 Company and the Accused No.2 has issued above said cheque in favour of Complainant with the consent of Accused No.3 and 4.
17. Once the issuance of cheque is admitted or established by the Complainant then, the provision U/s 118 and 139 of N.I.Act will come into play. As per Section 118(b) there is a statutory presumption regarding date of issuance of cheque. As per Section 139 of N.I.Act it shall be presumed unless the contrary is proved that, the holder of a cheque received the same in respect of the nature required under Section 138 for the discharge in whole or in part or any debt or other liability. Further provision under Section 118(a) of Negotiable Instruments Act speaks regarding presumption of issuance of cheque for consideration. The provision under Section 118 and 139 of N.I.Act reads as follows;
SCCH-12 10 C.C.3824/2018118- Presumptions as to negotiable instruments of consideration:-
Until the contrary is proved, the following presumption shall be made -
(a) That every negotiable instrument was made or drawn for consideration, and that after 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 appearing a date was made or drawn on such date;
(c) xxx
(d) xxx
(e) xxx
(f) xxx
(g) That holder is a holder in due course; that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
Section 139 speaks as follows:-
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 in Section 138 for the discharge, in whole or in part, or any debt or other liability.
18. Further, in the Case Law reported in (2010)11 SCC 441 Rangappa V/s Sri.Mohan. The Hon'ble Apex Court held that, the presumption mandated by Section 139 includes a SCCH-12 11 C.C.3824/2018 presumption that there exists a legally enforceable debt or liability. This is of course in the nature of a rebutable presumption and it is opened to the Accused to raise a defense wherein the existence of a legally enforceably debt or liability can be contested.
Head Notes A & B of Case Law reads as follows;
A. Negotiable Instruments Act, 1881-S. 139- Presumption under Scope of -
Held, presumption mandated by S. 139 includes a presumption that there exists a legally enforceable debt or liability-However, such presumption is rebutable in nature-
Criminal Trial-Proof- Presumptions-
Generally.
B. Negotiable Instruments Act, 1881- Ss.138 and 139-purpose relative scope and functioning of, explained-
Rebutable presumption under S.139- Standard of proof for rebutting, stated-manner in which defence can be raised by Accused, outlined-
Reliance on prosecution materials by Accused to prove defence, held, permissible-Criminal Trial-Proof-
Burden and onus of proof-Reverse onus statutory clauses-Interpretation of-Standard of proof in such cases.
19. Recently in another Case Law reported in AIR 2018 SC 3173 in between Kishan Rao V/s Shankar Gowda, the Hon'ble Apex Court referred Rangappa V/s Sri. Mohan case and held that, presumption mandated by Section 139 includes a presumption that there exists a legally enforceable debt or liability.
SCCH-12 12 C.C.3824/201820. Once the issuance of cheque is admitted or Complainant able to establish existence of debt then the burden of proof shifted on the Accused to rebut the presumption with probable defense and cogent evidence and also disprove the case of the Complainant. In order to rebut the presumption under Section 139 of N.I.Act as well as 118 of the N.I.Act, the Accused by cogent evidence has to prove the circumstances under which cheque was issued in favor of the Complainant. But, in the present case, the Accused did not lead evidence or cross examined the P.W.1 to show that, the said cheque was not issued towards repayment of legally recoverable debt or any other liability. Therefore, by considering the oral and documentary evidence submitted by Complainant and the available statutory presumption under Section 118 and 139 of N.I.Act, I am of the opinion that the Complainant has established the fact that the Accused has issued Ex.P.1 Cheque for discharge of part loan amount in favor of the Complainant and same has been dishonored due to Account Closed situation.
21. Now, it is just and necessary to consider the required ingredients to constitute the offence punishable under Section 138 of N.I.Act. The following ingredients have to be satisfied to constitute an offence punishable under Section 138 of N.I. Act.
(i) A person/drawer must have drawn a cheque on an Account maintained by him in a Bank for payment of certain amount of money to another person from out of that Account for the discharge of any debt or other liability.
SCCH-12 13 C.C.3824/2018(ii) The payee has to present the cheque to the Bank within a period of three months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(iii) The cheque is returned by the Bank unpaid either because of the amount of money standing to the credit of the Account is insufficient to honor the cheque or that it exceeds the amount arranged to be paid from that Account by an agreement made with the Bank.
(iv) The payee or the holder in due course of the cheque makes a demand for the payment of the said amount of cheque by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information by him from the Bank regarding which the return of the cheque as unpaid.
(v) The drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
22. In the present case, the cheque has been marked as Ex.P.1. As stated above, the said cheque is relating to the Account maintained in the name of the Accused No.1 Company herein. The signature appearing on Ex.P.1 cheque as Ex.P.1 (a) Cheque is not denied by the Accused No.2. The said cheque is dated 10.05.2018. Ex.P.2 goes to show that, the Ex.P.1 Cheque has been presented for encashment on 17.05.2018. It means that, the said cheque has been presented within its validity period as well as within three months period. The Ex.P.2 goes to show that, the said SCCH-12 14 C.C.3824/2018 cheque has been dishonored due to Account closed situation.
23. The Ex.P.3 is the copy of Legal Notice dated 07.06.2018. Ex.P.4 to 7 are Postal Receipts, Ex.P.8 is Postal Acknowledgement, Ex.P.9 to 11 are Postal Track Consignment and Ex.P.12 and 13 are GPA. The legal notice has been issued within 30 days from the date of receipt of information regarding dishonor of the Ex.P.1 Cheque. The legal notice which was sent to the address of the Accused were served upon them. It is held that, legal notice served upon all the Accused. In the legal notice Complainant called upon the Accused to pay the cheque amount within 15 days from date of receipt of notice. In the legal notice the Complainant duly made demand for making of cheque amount. On careful consideration of oral and documentary evidence it appears to be that, the Complainant has fulfilled all the requirements to constitute an offence punishable under Section 138 of N.I.Act and the complaint is also filed within its limitation period.
24. As stated above, the Complainant has established the fact that, the Accused has issued cheque for repayment of loan amount and same has been dishonored due to 'Accent Closed' situation. The Complainant also established all required ingredients to constitute an offence punishable under Section 138 of N.I.Act. Further, the Accused has failed to rebut the presumption and disprove the case of the Complainant and also failed to make payment of cheque amount within 15 days from the date of receipt of legal notice.
SCCH-12 15 C.C.3824/201825. By considering all these oral and documentary evidence and statutory presumption available under Section 118 and 139 of N.I. Act, I am of the opinion that, the Complainant has proved the fact that the Accused have committed an offence punishable under Section 138 of N.I. Act. At the same time the Accused have failed to rebut the statutory presumption which are available to the Complainant and disprove the case of the Complainant and pay cheque amount within prescribed time. Further, in the complaint it is specifically stated that the Accused No.2 is the Managing Director of the Accused No.1 Company. The remaining Accused No.3 and 4 are the Directors of the Accused No.1 Company. On consent of Accused No.3 and 4, Accused No.2 had issued a cheque in favour of Complainant for repayment of loan amount which availed in the name of Accused No.1 Company. Admittedly, the Ex.P.1 cheque is relating to the Account maintained in the name of Accused No.1 Company. As per Section 142 of N.I.Act the Accused No.2 to 4 being the Managing Director and Directors of Accused No.1 Company they are liable to pay the cheque amount to the Complainant Company. Hence, I answer Point No.1 in the Affirmative.
26. Point No.2: In view of my answer to the point No.1, I proceed to pass the following:
ORDER Acting U/s 255(2) of Cr.P.C. the Accused No.1 to 4 are convicted for the offence punishable u/s 138 of N.I. Act SCCH-12 16 C.C.3824/2018 Further, the Accused No. 1 to 4 shall pay fine an amount of Rs.17,50,000/-. F In default the Accused No.2 to 4 shall undergo Simple Imprisonment for a period of six months.
Further, Out of the fine amount
Rs.17,40,000/ is awarded as
compensation to the Complainant.
Further, the compensation amount shall be paid within two months period from the date of this order.
Office to furnish a copy of judgment to the Accused at free of cost immediately.
The Bail bond and surety bond
executed by the Accused stands
cancelled.
(Dictated to the stenographer, transcript thereof, corrected by me and then pronounced in the open court this the 23rd day of April, 2019).
(Sidaram), XI Addl. Small Causes Judge and XXXVI ACMM, Bangalore.
ANNEXURE List of the witnesses examined on behalf of Complainant :
P.W.1 Ajay Kumar P.W.2 Mallesh.R
List of the documents exhibited on behalf of Accused :SCCH-12 17 C.C.3824/2018
Ex.P1 Cheque Ex.P1(a) Signature of Accused on Ex.P.1 Ex.P2 Bank Memo Ex.P3 Office Copy of Legal Notice Ex.P4to 7 Postal Receipts Ex.P8 Postal Acknowledgment Ex.P9 to 11 Postal Track Consignments Ex.P12 & 13 GPA
List of the witnesses examined on behalf of Plaintiff :
-NIL-
List of the documents marked on behalf of Defendant :
-NIL-
(SIDRAM) XI Addl. Small Causes Judge & XXXVI ACMM, Court of Small causes, Bangalore.