Bangalore District Court
Dr.S.N.Anegundi vs M/S. Blue Valley Properties on 29 February, 2020
1 C.C.No.21191/2014 J
IN THE COURT OF THE XVI ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE, BENGALURU CITY
Dated: This the 29th day of February, 2020
Present: Sri.S.B.HANDRAL, B.Sc., L.L.B(SPL).,
XVI Addl.C.M.M., Bengaluru City.
Case No. : C.C.No.21191/2014
Complainant : Dr.S.N.Anegundi,
S/o.Narayanrao Anegundi,
Aged about 71 years,
R/at.No.13,
100 feet road, 6th Block,
3rd Phase,
Banashankari 3rd Stage,
Bengaluru-560085.
(Rep. by Sri.Raghavendra
Prasad.,Advs.,)
- Vs -
Accused : 1. M/s. Blue Valley Properties
Private Ltd,
Blue Valley Celestial,
No.41,
Nandidurga Main Road,
Jayamahal Extension,
Bengaluru-560 046.
Rep by its Managing
Director.
2. Mr.K.Suryanarayana Raju,
Director,
M/s. Blue Valley Properties
2 C.C.No.21191/2014 J
Private Ltd,
Blue Valley Celestial,
No.41,
Nandidurga Main Road,
Jayamahal Extension,
Bengaluru - 560 046.
3. Mr.K.Suryanarayana Raju,
Father name not known to
the complainant
Aged Major,
No.41,
Nandidurga main road,
Jayamahal Extension,
Bengaluru - 560046.
4. Mr.M.C.Indu Mouli,
Director,
M/s. Blue Valley Properties
Private Ltd,
Blue Valley Celestial,
No.41,
Nandidurga Main Road,
Jayamahal Extension,
Bengaluru-560 046.
(Rep.by Sri. Sampath., Adv.,)
Date of Institution : 25.1.2014
Offence complained : U/s 138 of N.I Act
of
Plea of Accused : Pleaded not guilty
Final Order : Accused is convicted
Date of order : 29.02.2020
3 C.C.No.21191/2014 J
JUDGMENT
The Complainant has filed this complaint against the Accused for the offence punishable u/Sec.138 of the Negotiable Instruments Act.
2. Briefly stated the case of the Complainant is that, he is the doctor by profession and the first Accused is a company incorporated under the Indian company's Act 1956 and the 2nd and 4th Accused are its full time working Directors and the 3rd Accused is also made as a party in his individual name, during the year 2007 all the Accused persons had approached him requesting to become an investor in a project as they were planning to develop near Mysore and represented him that, money was required for development of a project near Mysore and if he invests Rs.16 Lakhs he would be entitled returns in a sum of Rs.30 Lakhs, though initially he was skeptical and was not interested in investing but all the Accused persons enticed him into parting with Rs.16 Lakhs. It is further contended that, a Memorandum of Understanding dated:-26.3.2007 was entered into between the Accused persons and him under which he paid all the Accused persons 4 C.C.No.21191/2014 J sum of Rs.16 Lakhs which is evidence in the MOU. In consideration of receiving Rs.16 Lakhs, the MOU stipulated that, the Accused persons would pay the complainant a sum of Rs.30 Lakhs on or before 15 months from the date of approval of sanction and permission being granted for the development of a residential villa layout or any other suitable purpose as approved by the competent authorities and all the Accused persons had also represented that, approvals were almost done and he might have receive a sum of Rs.30 Lakhs within 15 months from the date of MOU, however all the Accused persons failed to honour the representations and contractual terms and avoided repayment to him, thereafter he and his son had corresponded with Accused persons regularly requesting payment as per the MOU but the Accused persons had been delaying repayment on one pretext or other, eventually a cheque bearing No. 881742 for sum of Rs.2 Lakhs was sent to the complainant in part payment of said amount of Rs.30 Lakhs and the said cheque was deposited by him and was realized into his account on 11.6.2012 but not without standing the said payment the Accused persons continued to owe to him a sum of 5 C.C.No.21191/2014 J Rs.28 Lakhs and his son continued their follow-up with all the Accused persons but they started to evade payment by citing untenable reasons finally on 11.9.2013 another cheque bearing no.033793 dated:
11.9.2013 drawn on UTI Bank, Cox town Bengaluru for sum of Rs.15 Lakhs was sent to him as part payment and the said cheque was deposited by him for realization in his bank but it was returned with an endorsement dated: 12.9.2013 "Funds Insufficient' in the account maintained in the name of 3rd Accused, once again the said cheque was deposited by him again it was returned dishonoured with an endorsement of "Funds Insufficient' on 9.10.2013 in the account maintained in the name of 3rd Accused. Thereafter a statutory legal notice dated: 17.10.2013 to all the Accused persons was issued calling upon them to pay the cheque amount within 15 days from the date of receipt of said notice failing which he would be constrained to initiate proceedings against them. It is further contended that, subsequently once again he has deposited the said cheque for realization and the cheque was once again dishonoured with an endorsement dated:
7.12.2013 for "Funds Insufficient' in the account 6 C.C.No.21191/2014 J maintained in the name of 3rd Accused and again 2nd statutory legal notice dated: 11.12.2013 to all the Accused persons was issued calling upon them to pay the cheque amount within 15 days from the date of receipt of said notice, and the said notice was duly served on all the Accused persons on 13.12.2013 but the Accused persons have not bothered to make any payments to him. Hence, he has filed this complaint against all the Accused, since the cheque in question was issued by the 3rd Accused on behalf of all the Accused persons in part clearance of liability in respect to the transaction had with him and the 2nd and 4th Accused being the directors were completely aware and involved in the entire transaction and are working full time directors of the 1st Accused and are responsible for clearing liabilities, the issuance of cheque and consequent dishonour and they are in-charge and responsible for the affairs and business of the 1st Accused company and have connived and colluded and knowing committed the offence. Hence the complainant has filed this present complainant against all the Accused persons for the offence punishable U/s.138 of Negotiable Instruments Act.7 C.C.No.21191/2014 J
3. Before issuing process against the accused, the Complainant has filed his affidavit-in-lieu of his sworn statement, in which, he has reiterated the averments of the complaint, along with original documents.
4. Prima facie case has been made against the Accused No.1 to 4 and summons was issued against them in turn the Accused No.2 to 4 have appeared before the Court and they have been enlarged on bail and the substance of the accusation has been read over to them, to which they pleaded not guilty and have claimed the trial.
5. The complainant himself examined as PW.1 and he has filed his affidavit in lieu of his examination-in-chief wherein has reiterated the entire averments of the complaint. In support of his sworn statement, P.W.1 has relied upon the documentary evidence as per Ex.P.1 to P.9 i.e, Original Cheque dated:-11.9.2013 as per Ex.P.1, the signature on the said cheque identified by P.W.1 as that of the accused as per Ex.P.1(a), the Bank Memos as per Ex.P.2 and P.3, the office copy of the 8 C.C.No.21191/2014 J Legal Notice as per Ex.P.4, postal acknowledgements as per Ex.P.5 to P.8 respectively, Original Memorandum of Understanding dated: 26.3.2007 as per Ex. P.9, signatures of the Accused No.2 on MOU i.e. total 15 signatures together marked as per Ex.P.9(a) and 15 signatures of the Accused No.4 on MOU together marked as per Ex.P.9(b) and the signatures of the complainant are together marked as per ExP.9(c).
6. Thereafter the statement of the Accused No. 2 to 4 as required U/s.313 of Cr.P.C. has been recorded, the Accused have denied the incriminating evidence appearing against them and chosen to lead their rebuttal evidence. The Accused No.2/3 himself examined as DW.1 and as many as three documents marked as per Ex.D.1 to D.3 during the course of cross-examination of the complainant i.e. copy of the legal notice dated: 17.10.2013 as per Ex.D.1, and certificates issued by the Axis Bank, Cox Town Branch, Bengaluru dated: 25.9.2018 are as per Ex.D.2 and D.3 respectively and closed his side.9 C.C.No.21191/2014 J
7. Heard the arguments by both sides and perused the perused the materials on record and decisions submitted by the both learned counsels for the complainant and Accused. i.e., 1) (2013) 1 SCC 177 incase of MSR Leathers Vs. S.Palaniappan & another., 2) AIR 2018 SC 3601 in case of T.P.Murugan Vs. Bojan 3) AIR 2015 SC 2579;
incase of Mainuddin Abdul Sattar Shaikh vs.Vijay D.Salvi, ) Crl.Appeal No. 1664/2003 , C/w. 1663/2003 in case of R.Mallikarjun Vs. H.R. Sadashivaiah.
The decisions relied upon by the learned counsel for the Accused i.e.,1) (2007) 2 SCC 258 in case of Kalyani Baskar Vs. M.S.Sampoornam
2) (2008) 5 SCC 633 in case of T.Nagappa Vs. Y.R.Muralidhar.
8. On the basis of complaint, evidence of complainant and documents the following points that are arise for consideration are:-
1. Whether the complainant proves that the accused has cheque bearing no.033793 dated: 11.9.2013 drawn on UTI Bank, Cox town 10 C.C.No.21191/2014 J Bengaluru for sum of Rs.15,00,000/-, to discharge legally recoverable debt to the complainant and when the complainant has presented cheque for encashment through his banker but the said cheque has been dishonoured for the reasons "Funds Insufficient" on 7.12.2013 and the complainant issued legal notice to the accused on 11.12.2013 and inspite of it the accused has not paid the cheque amount within prescribed period there by the accused has committed an offence U/s.138 of the Negotiable instruments Act?
2. What Order?
9. The above points are answered as under:
Point No.1: In the Affirmative Point No.2: As per final order for the following:
REASONS
10. Point No.1 : Before appreciation of the facts and oral and documentary evidence of the present case, it is relevant to mention that under criminal jurisprudence prosecution is required to establish guilt of the Accused beyond all reasonable doubts however, a proceedings U/s.138 of N.I.Act is 11 C.C.No.21191/2014 J quasi criminal in nature. In these proceedings proof beyond all reasonable doubt is subject to presumptions as envisaged U/s.118, 139 and 136 of N.I.Act. An essential ingredient of Sec. 138 of N.I.Act is that, whether a person issues cheque to be encashed and the cheque so issued is towards payment of debt or liability and if it is returned as unpaid for want of funds, then the person issuing such cheque shall be deemed to have been committed an offence. The offence U/s.138 of N.I. Act pre-supposes conditions for prosecution of an offence which are as under:
1. Existence of legally enforceable debt or liability and issuance of cheque in discharge of said debt or liability;
2. Cheque shall be presented for payment within specified time i.e., from the date of issue before expiry of its validity.
3. The holder shall issue a notice demanding payment in writing to the drawer within one month from the date of receipt of information of the bounced cheque and
4. The drawer inspite of demand notice fails to make payment within 15 days from 12 C.C.No.21191/2014 J the date of receipt of such notice.
If the above said conditions are satisfied by holder in due course gets cause action to launch prosecution against the drawer in respect of bounced cheque and as per Sec.142(b) of the N.I. Act, the complaint has to be filed within one month from the date on which cause of action arise to file complaint.
11. It is also one of the essential ingredient of Sec. 138 of N.I.Act that, a cheque in question must have been issued towards legally recoverable debt or liability. Sec. 118 and 139 of N.I.Act envisages certain presumptions i.e.,U/s.118 a presumption shall be raised regarding 'consideration' 'date' 'transfer' 'endorsement' and holder in course of Negotiable Instrument. Even Sec.139 of the Act are rebuttable presumptions shall be raised that, the cheque in question was issued regarding discharge of a legally recoverable or enforceable debt and these presumptions are mandatory presumptions that are required to be raised in cases of negotiable instrument, but the said presumptions are not conclusive and or rebuttable one, this proportion of law has been laid down by the Hon'ble Apex Court of 13 C.C.No.21191/2014 J India and Hon'ble High Court of Karnataka in catena of decisions.
12. In the present case the complainant got examined as PW.1 by filing his affidavit evidence wherein the complainant has reiterated the entire averments of the complaint, the complainant/PW.1 in his evidence testified that, he is the doctor by profession and the first Accused is a company incorporated under the Indian company's Act 1956 and the 2nd and 4th Accused are its full time working Directors and the 3rd Accused is also made as a party in his individual name, during the year 2007 all the Accused persons had approached him requesting to become an investor in a project as they were planning to develop near Mysore and represented him that, money was required for development of a project near Mysore and if he invests Rs.16 Lakhs he would be entitled returns in a sum of Rs.30 Lakhs, though initially he was skeptical and was not interested in investing but all the Accused persons enticed him into parting with Rs.16 Lakhs. The complainant/PW.1 further testified that, a Memorandum of Understanding dated:
14 C.C.No.21191/2014 J26.3.2007 was entered into between the Accused persons and him under which he paid all the Accused persons sum of Rs.16 Lakhs which is evidence in the MOU. In consideration of receiving Rs.16 Lakhs, the MOU stipulated that, the Accused persons would pay the complainant a sum of Rs.30 Lakhs on or before 15 months from the date of approval of sanction and permission being granted for the development of a residential villa layout or any other suitable purpose as approved by the competent authorities and all the Accused persons had also represented that, approvals were almost done and he might have receive a sum of Rs.30 Lakhs within 15 months from the date of MOU, however all the Accused persons failed to honour the representations and contractual terms and avoided repayment to him thereafter he and his son had corresponded with Accused persons regularly requesting payment as per the MOU but the Accused persons had been delaying repayment on one pretext or other, eventually a cheque bearing No. 881742 for sum of Rs.2 Lakhs was sent to the complainant in part payment of said amount of Rs.30 Lakhs and the said cheque was deposited by 15 C.C.No.21191/2014 J him and was realized into his account on 11.6.2012 but not without standing the said payment the Accused persons continued to owe to him a sum of Rs.28 Lakhs and his son continued their follow-up with all the Accused persons but they started to evade payment by citing untenable reasons finally on 11.9.2013 another cheque bearing no.033793 dated:
11.9.2013 drawn on UTI Bank, Cox town Bengaluru for sum of Rs.15 Lakhs was sent to him as part payment and the said cheque was deposited by him for realization in his bank but it was returned with an endorsement dated: 12.9.2013 "Funds Insufficient' in the account maintained in the name of 3rd Accused, once again the said cheque was deposited by him again it was returned dishonoured with an endorsement of "Funds Insufficient' on 9.10.2013 in the account maintained in the name of 3rd Accused. Thereafter a statutory legal notice dated: 17.10.2013 to all the Accused persons was issued calling upon them to pay the cheque amount within 15 days from the date of receipt of said notice failing which he would be constrained to initiate proceedings against them. The complainant/Pw.1 further testified that, subsequently once again he 16 C.C.No.21191/2014 J has deposited the said cheque for realization and the cheque was once again dishonoured with an endorsement dated: 7.12.2013 for "Funds Insufficient' in the account maintained in the name of 3rd Accused and again 2nd statutory legal notice dated: 11.12.2013 to all the Accused persons was issued calling upon them to pay the cheque amount within 15 days from the date of receipt of said notice, and the said notice was duly served on all the Accused persons on 13.12.2013 but the Accused persons have not bothered to make any payments to him.
13. In support of the oral evidence of the complainant, he produced the documentary evidence as per Ex.P.1 to P.9 i.e, Original Cheque dated:-
11.9.2013 as per Ex.P.1, the signature on the said cheque identified by P.W.1 as that of the accused as per Ex.P.1(a), the Bank Memos as per Ex.P.2 and P.3, the office copy of the Legal Notice as per Ex.P.4, postal acknowledgements as per Ex.P.5 to P.8 respectively, Original Memorandum of Understanding dated: 26.3.2007 as per Ex. P.9, signatures of the Accused No.2 on MOU i.e. total 15 17 C.C.No.21191/2014 J signatures together marked as per Ex.P.9(a) and 15 signatures of the Accused No.4 on MOU together marked as per Ex.P.9(b) and the signatures of the complainant are together marked as per ExP.9(c).
14. In the present case, the Accused persons have not disputed their acquaintance with the complainant. The Accused have also not disputed that, the Accused No.1 is the company registered under the company's act and the 2nd and 4th Accused are its full time working Directors. It is also not disputed that, the complainant had invested a sum of Rs.16 Lakh with the 1st Accused company for the development of project near Mysore i.e development of residential Villa Layout or any other suitable purpose as approved by the competent authorities and a Memorandum of Understanding dated: 26.3.2007 was entered into between the Accused persons and the complainant, under which the complainant paid the amount of Rs.16 Lakhs through cheque to all the Accused. It is also not in dispute that, the MOU stipulated that, the Accused persons would pay a sum of Rs.30 Lakhs to the complainant on completion of 15 months from the 18 C.C.No.21191/2014 J date of MOU. It is also not in dispute that, the Accused No.3 has issued the cheque in question i.e Ex.P.1 infavour of the complainant and signature found at Ex.P.1(a) is the signature of Accused No.3. It is also not in dispute by the accused persons that, the cheque in question presented for encashment and dishonoured for the reason of "Funds Insufficient" since as matter on record, proved by return memo i.e.Ex.P.2 issued by the concerned bank dated: 7.12.2013, therefore it is a matter on record and has been proved that, the cheque in question was presented within its validity period and dishonoured as per the bank endorsement issued by the banker of accused No.3. It is also not in dispute that, the cheque in question i.e. Ex.P.1 belongs to the account of the accused No.3 and has not denied signature of Accused No.3 which is appearing at Ex.P.1(a). It is also not disputed by the Accused persons with regard to service of legal notice issued by the complainant as per Ex.P.4 dated: 11.12.2013 and receipt of the said notice as per Ex.P.5 to P.8. i.e., postal acknowledgements, and the Accused have not given any reply to the said notice, hence the complainant has proved that, he has complied the 19 C.C.No.21191/2014 J mandatory requirements as required U/s.138(a) to
(c) of N.I.Act and initial presumptions are available infavour of the complainant U/s.118a and 139 of N.I. Act.
15. On careful perusal of the oral evidence of the complainant and also the documents produced by the complainant i.e Ex.P.1 to P.8 and admitted facts of the Accused in their defence i.e. in the evidence of Accused No.3 and during the course of cross-examination of the complainant, it can be held that, the complainant has proved that, during the year 2007 all the Accused persons had approached him and requested to invest a sum of Rs.16 Lakhs in a project i.e. development of a residential Villa Layout project near Mysore and also assured the complainant that, they would pay a sum of Rs.30 Lakhs to the complainant on completion of 15 months from the date of MOU. It is also proved by the complainant that, as per the MOU dated:
26.3.2007 ie. Ex.P.9 he had paid an amount of Rs.16 Lakhs to the Accused persons by way of cheque which is evidenced by Ex.P.9 MOU. It is also proved by the complainant that, towards the payment of 20 C.C.No.21191/2014 J amount o Rs.30 Lakhs the Accused persons have paid an amount of Rs.2 Lakhs to him through a cheque bearing No. 881742 but the Accused have not paid remaining amount as agreed by them to the complainant. It is also proved by the complainant that, in pursuance of the consideration amount received by the Accused persons as per the MOU i.e Ex.P.9, the Accused No.3 had issued the cheque in question i.e Ex.P.1 for sum of Rs.15 Lakhs towards part payment of agreed amount under the MOU i.e Ex.P.9. It is also proved by the complainant that, he has presented the cheque in question i.e Ex.P.1 through his banker at the first instance and it was returned dishonoured on 12.9.2013 and again it was presented on 9.10.2013 and the said cheque was returned dishonoured for the reason of 'Funds Insufficient'. It is also proved by the complainant that, he got issued statutory legal notice on 17.10.013 to all the Accused persons and the said notice was served on the all the Accused persons. On the other hand, the Accused persons during the course of cross-examination of the complainant have not disputed the issuance of cheque by the Accused No.3 and signature of the 21 C.C.No.21191/2014 J Accused No.3 on the cheque in dispute and also not disputed the amount written in the words and figures on the cheque in dispute by the Accused persons. It is also not disputed by the Accused persons that, the Ex.P.3 cheque is issued to the complainant in pursuance of the Ex.P.9. Therefore in view of the admitted facts by the Accused persons, it can be held that, the complainant has discharged his initial burden by complying the mandatory requirements as required U/s.138 of N.I. Act and initial presumptions can be drawn in favour of the complainant U/s.118a and 139 of the N.I. Act.
Consequently it is for the Accused to rebut the said presumptions available in favour of the complainant to show that, the cheque in question was not issued towards discharge of any legally recoverable debt by producing cogent and convincible evidence but not mere suggestions or even by plausible explanation. Therefore, when the presumptions U/s.118 and 139 of N.I.Act are available to the complainant, even presumption can be drawn to the extent of existence of legally recoverable debt or liability against the Accused unless and until the said presumptions are rebutted by the Accused even in the absence of 22 C.C.No.21191/2014 J documents produced by the complainant in respect of liability in question. In this regard, it is relevant here to refer the decisions reported in 2001 AIR Karnataka HCR 2154 between 'M/s.Devi Tyres V/s.Navab Jan' and in 2011 ACD 1521 (KAR) between 'Smt. Usha Suresh V/s. Shashidharn', in 2010 SC 1898 between 'Rangappa Vs. Mohan' and 2011 ACD 1412 (KAR) between 'N.Hasainar Vs. M.Hasainar, S/o. Ibrahim'. The Hon'ble High Court of Karnataka in the above decision i.e., 2001 AIR Karnataka HCR 2154 at para No.6 was pleased to hold that issuance of cheque itself was adequate proof of existence of debt or liability. In another decision of Hon'ble Apex Court of India i.e. Hon'ble Three Judges Bench Decision reported in (2010) 11 SCC 441 in the case of Rangappa Vs. Sri. Mohan ., wherein the Hon'ble Apex Court held that "
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 rebuttable in nature - Criminal Trial - Proof - Presumptions - Generally. Further 23 C.C.No.21191/2014 J held that "Signature on the cheque was his, statutory presumption under S.139 comes into play and the same was not rebutted even with regard to the materials submitted by complainant Appellant not able to prove "lost cheque" theory - Apart from not raising a probable defence appellant was also not able to contest the existence of a legally enforceable debt or liability - hence, his conviction by High Court, held, proper. In another decision of Hon'ble Apex Court of India, reported in CRIMINAL APPEAL NO. 508 OF 2018 DT 15-03-2018 between ROHITBHAI JIVANLAL PATEL Vs STATE OF GUJARAT AND ANR held that "Negotiable Instruments Act facts like source of funds are not relevant if the Accused has not been able to rebut the presumption. It is further held that " When such a presumption is drawn, the facts relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the Accused has been able to rebut the presumption or not". In another decision of Hon'ble Apex court of India decided in 24 C.C.No.21191/2014 J Crl.Appeal No.1545 of 2019 dt.17/10/2019 by the Hon'ble Apex Court of India in the case of Uttam Ram Vs. Devinder Singh Hudan and Anr. Wherein the Hon'ble Apex Court held that, "
Dishonor of cheque - Statutory presumption under - burden to prove - the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability - it is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer - even a blank cheque leaf, voluntarily signed and handed over by the accused which is towards some payment, would attract presumption U/s. 139 of NI Act - the accused is held guilty of dishonour of cheque for an offence U/s.s.138 of NI Act. It is also held that, " the accused has failed to lead any evidence to rebut the statutory presumption, a finding returned by both the Trial Court and High Court. Both courts not only erred in law but also committed perversity when the due amount is said to be disputed only on the account of discrepancy in the cartons, packing materials or the rate to 25 C.C.No.21191/2014 J determine the total liability as if the appellant was proving his debt before the civil court. Therefore it is presumed that, the cheque in question were drawn for consideration and the holder of the cheques received the same in existing debt". It is also held that, " the Trial court and the High Court proceeded as if, the appellant is to prove a debt before civil Court wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due. A dishonour of cheque carries statutory presumption of consideration. The holder of cheque in due course is required to prove that, the cheque was issued by the Accused and that when the same presented , it was not honoured Since there is a statutory presumption of consideration, the burden is on the Accused to rebut the presumption that, the cheque was issued not for any debt or other liability ". It is also relevant here to refer the decision of Hon'ble High Court of Karnataka reported in ILR 2019 KAR 493 in the case of Sri.Yogesh Poojary Vs. Sri.K.Shankara Bhat, 26 C.C.No.21191/2014 J wherein the Hon'ble High Court held that, the presumption mandated by Sec.139 of N.I Act includes the presumption that, there existed a legally enforceable debt or liability, however such presumption is rebuttable in nature". In another decision of Hon'ble High Court of Karnataka in the case of Shri.V.R.Shresti Vs. Shri. Bhaskara.P. in Crl. Appeal No. 2109/2017 dated: 15.10.2019 wherein the Hon'ble High Court of Karnataka held that "the Accused has not given any reply to the notice and also in the cross- examination, he categorically admits that, the cheque has bounced on account of no sufficient fund in the bank account of the Accused. Mere non producing of the document before the court with regard to the source of income to advance a loan is not a ground to dismiss the complaint. The Accused ought to have rebutted the contention of the complainant by producing cogent evidence before the court and mere denial is not enough". In another decision of Hon'ble Apex Court of India in Crl. Appeal Nos. 132/220 in the case of D.K.Chandel Vs. M/s. Wockhardt (L) wherein the Hon'ble Apex Court held that 27 C.C.No.21191/2014 J "production of the account books/cash book may be relevant in the civil court, may not be so in the criminal case filed under section 138 of NI Act while restoring the trial court judgment, the High Court observed that "the reason given by the lower appellate court that he did not bring the cash book or order book etc, could well be understood, if civil suit is tried" but may not be so in the criminal case filed under section 138 of NI Act. This is because of the presumption raised in favour of the holder of cheque. Therefore on careful reading of the principles of law laid down by the Hon'ble Apex Court of India and High Court of Karnataka in the above referred decisions makes it very clear that, once the holder in due course i.e. the complainant proved that, the cheque in question belongs to the drawer and signature appearing on the cheque is that of the drawer i.e., Accused and complied the mandatory requirements as required U/s.138 of N.I.Act, presumptions U/s.118a and 139 of N.I.Act indeed does extend to the existence of legally recoverable debt and when such a presumption is drawn the facts relating to the want of documentary evidence in 28 C.C.No.21191/2014 J the form of receipts or accounts or want of evidence regarding source of funds were not of relevant unless the Accused rebutted the presumption available to the complainant as held by the Hon'ble Apex Court and High Court of Karnataka in the above decisions. In the present case also the complainant has complied mandatory requirements and has proved that, the Accused has issued the cheque in question in his favour and the Accused No.3 has admitted the cheque belongs to him and signature appearing on the cheque is that of his signature, in such circumstances, presumptions have to be drawn towards existence of legally enforceable debt as per Sec.139 of N.I.Act. Therefore, for the above said reasons the arguments canvassed by the learned counsel for the defence with regard to legally recoverable debt is not in existence cannot be acceptable one and the arguments canvassed with regard to fabrication of the cheque in question by the complainant cannot be acceptable one unless the Accused rebutted the presumptions available to the complainant.
16. It is the specific defence of the Accused 29 C.C.No.21191/2014 J that, during the year 2007 the Accused had entered into MOU as per Ex.P.9 with the complainant and as per the terms of MOU at Ex.P.9 they had issued the cheque in dispute to the complainant as a security cheque on 26.3.2007 and the Accused No.3 had signed on the cheque in dispute and written the amount in the words and figures in the subject cheque on 26.3.2007 but the name of the payee and date on the subject cheque have been fabricated by the complainant. In order to prove the said defence except the oral denial of the Accused during the course of cross-examination of the complainant and self serving oral statement of the Accused No.3 in his evidence, nothing has been placed before the court. It is true that, the Accused has filed an application U/s.243 r/w Sec. 243(2) of Cr.P.C. seeking direction to sent Ex.P.1 cheque to the hand writing expert for getting opinion on the question i.e whether the date and payee name appearing in the cheque in question on front page is written on the same day and time and when the said cheque was signed by the signatory and amount in words and figure mentioned on the front page of the cheque or in the other words whether the age of writings on Ex.P.1 on 30 C.C.No.21191/2014 J front page is the same as that of the amount mentioned in the words and figures and signature appearing on front page of Ex.P.1 and the said application was allowed by this court and the Ex.P.1 has been sent to the handwriting expert i.e., Truth Labs, Bengaluru to give opinion as stated in the above but after verification of the documents by the expert they had returned the Ex.P.1 cheque along with the opinion stating that, there are no scientific methods available in the forensic science laboratories for scientific assessment of accurate age of inks/writings and there is no data available regarding age of ink from any reliable scientific source/organization and etc., thereafter the Accused have not filed any objections to the report submitted by the hand writing expert, hence it goes to show that, as per the report submitted by the handwriting expert there are no scientific methods available to ascertain the exact or accurate age of ink or writings, in such circumstances the Accused have to prove their defence on the basis of oral and documentary evidence adduced by them. But the perusal of the oral and documentary evidence adduced by the Accused it cannot be held that the complainant has 31 C.C.No.21191/2014 J fabricated i.e., the name o the payee and date on the subject cheque have been fabricated by the complainant, therefore the defence taken by the Accused only a bare denial but not proved by producing cogent and convincible documentary proof or evidence. It is also relevant here to mention that, though the Accused have cross examined the complainant in length but nothing has been elicited to discard or discredit his evidence. The complainant/PW.1 has specifically denied a suggestion made to him that, he has filled up the amount in words and figures in Ex.P.1 and also denied that the Ex.P.1 and another cheque for Rs.2 Lakhs was handed over to him at the time of entering into MOU and also denied that, the amount written in the words and figure on the disputed cheque in the year 2007 and he had written his name and date on the cheque in the year 2013 and has presented the said cheque for encashment. The complainant/PW.1 has also denied a suggestion that, the cheque in dispute was handed over to him in the year 2007 at that time the amount in figures and words were only written and name of the payee and date were left blank and in the year 2013 he had 32 C.C.No.21191/2014 J filled up his name and date in the cheque in question in different inks. It is true that, the complainant has ignored the suggestions that, there were differences in writings in respect of name , date and amount mentioned in figure and words but has denied the suggestion that, his name and amount mentioned in the words are in different handwritings. Hence, on entire perusal of the cross- examination of the complainant on the contents of cheque in dispute i.e Ex.P.1 nothing has been elicited from him to believe the defence that, the complainant has fabricated the Ex.P.1 i.e. the name of the payee and date on the subject cheque has been fabricated by the complainant.
17. It is also relevant here to mention that, the Accused No.3 himself examined as DW.1 and in his evidence has stated that, they have issued Ex.P.1 cheque as a security in terms of the MOU i.e Ex.P.9 to the complainant on 26.3.2007 and the Accused No.3 had signed on the cheque and also written the amount in words and figures in the subject cheque on 26.3.2007, but as it is already held in the above that, there are no documents produced by the 33 C.C.No.21191/2014 J Accused to prove the said defence. On the contrary the Accused No. 3 himself has admitted that, the cheque in question issued to the complainant and signature found at Ex.P.1 (a) is that of his signature. Once signature on the negotiable instrument act is admitted , in that circumstances sec. 20 of N.I. Act comes into play i.e. as per Sec. 20 of N.I.Act if the blank or incomplete Negotiable Instrument is given to the holder in due course, it is to be presumed that, he had given authority to the holder in due course to fill up the remaining portion. In this regard, it is relevant here to refer the decision of Hon'ble High Court of Karnataka reported in ILR 2006 KAR 2054 in the case of H.S.Srinivasa Vs. Girijamma and another wherein the Hon'ble High Court held that " a reading of sec.20 of the act which is extracted above reveals that, the words used are ' either wholly blank or having written therein an incomplete negotiable instrument' . The instrument may be wholly blank or incomplete in a particular in either case, the holder has authority to make or complete the instrument as a negotiable one. The authority implied by a signature to a blank instrument is 34 C.C.No.21191/2014 J so vide that, the party so signing is bound to be a holder in due course. Promissory notes are often executed in the name of the payer and left unfilled to be afterwards filled by the actual holder, the object being to enable the owner to pass it off to another without incurring the responsibility as an endorser. Thus, it is seen that, person in possession of an incomplete instrument in maternal particulars has the authority prima facie to fill it and thus the executants becomes liable to pay the amount due'. In another decision of Hon'ble High Court of Madras reported in 2005 (1) DCR 85 in the case of P.A. Thamatharan Vs. Dalmia cements (B) Ltd., wherein it is held that " Negotiable Instrument Act 1991 - Sec. 138 - dishonour of cheque - plea
-body of cheque was not written by Accused - held it is not mandatory and no law prescribes that, the body of cheque should also be written by the signatory to the cheque, a cheque could be filled up anybody and if it is signed by the account holder of the cheque'. In another decision of Hon'ble Apex court to India reported in (2002) 7 SCC in the case of P.K. Manmadhan Karthra 35 C.C.No.21191/2014 J Vs.Sanjeeva Raj., wherein it is held that " As long as signature on the cheque is admitted, whether the ink with which the other particulars are filled up is different or that the hand writing is not that of drawer does not matter. Until rebutted, the presumption that, cheque was issued for consideration exists". In another decision of Hon'ble High Court of Karnataka at Bengaluru in a case of Crl. Appeal No. 1664/2003 C/w. Crl.Appeal No.1663/2003 dated: 18.6.2008 in the case of R.Mallikarjuna Vs. H.R.Sadashivaiah wherein the Hon'ble High Court at para No.19 held that " But, the question is, whether that renders instrument unenforceable. In this regard, it must be observed that, this court similar circumstances in the case of S.R. Muralidar Vs. Ashok G.Y. reported in 3001 (4) KAR. LJ K. 122 referring to the provisions of Sections 20, 138, 139, and 140 of the Act and after interpreting alteration and filling up of the cheque observed thus " The trial court has made much about the difference in ink. Admittedly, Accused cheque is issued bearing signature of the Accused. It is the contention of 36 C.C.No.21191/2014 J the defence that, blank cheques issued for the business transactions have been illegally converted as a subject matter to this case fastening false liability........ It is not objectionable or illegal in law to receive a inchoate negotiable instrument duly signed by the maker despite the material particulars are kept blank if done with an understanding and giving full authority to the payee to fill up the material contents as agreed upon. Such a course of action in law cannot vitiate the transaction nor can invalidate the negotiable instrument issued and such transaction fully begins the maker of the negotiable instrument to the extent it purports to declare........ The fact that, a document executed is inchoate with regard to some of the material particulars would not render such contract invalid nor make the instrument illegal or inadmissible. Voluntarily, if a person were to deliver an inchoate instrument authorizing the receiver to fill up the material contents as agreed upon, the cheque does not get tainted as in admissible nor it amounts to tampering with the material 37 C.C.No.21191/2014 J particulars...... In the present case there is no categorical defence version, it is only by conjunctures and surmises, a case is made out from the difference in ink between the signature of the cheque and the other handwritten contents.
Therefore in view of the principles of law of Hon'ble Apex court of India and also Hon'ble High Court of Karnataka and Madras referred above, In the present case the Accused has admitted the signature on Negotiable Instrument i.e. cheque and he also admitted issuance of the cheque to the complainant, it is prima-facie proof of authorizing the holder in due course i.e. the complainant to fill up the remaining contents of the Negotiable Instrument, therefore it cannot lie in the mouth of the Accused that, the complainant had misused or fabricated the cheque in question given by him and the defence of the Accused cannot be acceptable one as the instrument i.e., cheque in question cannot be rendered unenforceable merely because the contents have been filled by different ink, as it would not render such instrument illegal or inadmissible, the complainant certainly can base action on it.
38 C.C.No.21191/2014 J18. The learned counsel for the defence during the course of argument has argued that, the complainant during the course of cross-examination has admitted that, there is a difference in writings in the disputed cheque i.e the name , date and the amount mentioned in the words and figures and the ink used to write the name of the complainant and the ink used to write amount in the words and figure are different inks, hence it goes to show that the complainant has fabricated the cheque in question by mentioning his name and date on the cheque and it was presented in the year 2013 though the cheque was given in the year 2007. As it is already held in the above that, in view of the principles law laid down by the Hon'ble Apex court and also High Courts that, cheque in question cannot be rendered unenforceable merely because the contents have been filled by different ink, as it would not render such instrument illegal or inadmissible, the complainant certainly can base action on it and when the Accused has admitted issuance of cheque and signature on the cheque is that of his signature in such circumstances prima facie proof of authorizing the holder in due course to 39 C.C.No.21191/2014 J fill up the remaining contents of the Negotiable Instruments, in such circumstances the arguments canvassed by the learned counsel for the Accused cannot be acceptable one. The transaction in question took place in the year 2007 and the cheque in question bears the date i.e 11.9.2013 i.e in the year of 2013 and the complainant deposing before the court in the year 2017, hence it goes to show that, there is a long gap between the period and it is also settled law that while scanning the evidence of various witnesses the court has to inform itself that, variances in respect of discrepancies , contradictions etc., and court has to consider entire evidence of the witness not by taking particular word or sentence in the deposition. It is also true that, the perusal of Ex.P.1 cheque it appears that, the name of the payee i.e the complainant is written in black ink in Ex.P.1 cheque and the amount mentioned in words and figure and date and signature of the Accused written in blue ink in Ex.P.1. Even for sake of discussion if it is assumed that, Accused has given cheque in question without mentioning the name of the payee and date to the complainant in such circumstances also it attracts the penal liability as 40 C.C.No.21191/2014 J contemplated U/s.138 of N.I. Act. In this regard, it is relevant here to refer decision of Hon'ble Apex Court of India reported in AIR 2019 SC 2446 in the case of Birsingh Vs. Mukesh Kumar., wherein the Hon'ble apex Court held that, "presumption U/s.139 is presumption of law, distinguished from presumption of facts and also held that, presumptions are rules of evidence and do not conflict with presumption of innocence which requires prosecution to prove case against the Accused and also held that obligation on the prosecution may discharged with the help of presumptions of law and presumption of fact unless the accused adduces evidence showing reasonable plausibility of non existence of presumed fact." In the present case though the Accused has denied the contents of the cheque in question except his signature but he did not proved his defence or produced any documents or satisfactory evidence to rebut the presumptions as available U/s.139 of the N.I.Act, under such circumstances in view of the above principles of law, it can be presumed even on fact also that the complainant has proved his case by discharging his 41 C.C.No.21191/2014 J burden and complying the mandatory provisions. In the said decision the Hon'ble Apex court has also held that, "presumption as to legally enforceable debt is rebuttable, the signed blank cheque if voluntarily presented to payee towards payment payee may fill up amount and other particulars and it in itself would not invalidate cheque and onus would still be on the accused to prove that, cheque was not issued or discharge of debt or liability by adducing evidence." In another decision of Hon'ble Apex court of India decided in Crl.Appeal No.1545 of 2019 dt.17/10/2019 by the Hon'ble Apex Court of India in the case of Uttam Ram Vs. Devinder Singh Hudan and Anr. Wherein the Hon'ble Apex Court held that, " Dishonor of cheque - Statutory presumption under - burden to prove - the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability - it is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer - even a blank cheque leaf, voluntarily signed and handed over by the 42 C.C.No.21191/2014 J accused which is towards some payment, would attract presumption U/s. 139 of NI Act - the accused is held guilty of dishonour of cheque for an offence U/s.s.138 of NI Act. In such circumstances even if it is assumed that, the complainant has written his name and date on the cheque in question in such circumstances also in view of the principles of law laid down in the above decision that itself would not invalidates the cheque in question and it can be presumed that, the said cheque has been issued towards discharge of legally recoverable debt.
19. It is also relevant here to refer the decision of Hon'ble Apex court held in (2016) 10 SCC 458 in the case of Sampelly Sathyanarayana Rao Vs. Indian Renewable Energy Development Ltd, wherein the Hon'ble Apex Court held that " (a) Negotiable Instrument Act 1881 - S.138 - If on the date of the cheque liability or debt exist or the amount has become legally recoverable- S.138 will apply - not otherwise". In another decision of Hon'ble High Court of Bombay decided in CRM-M No.2607/2018 (O & M) dated: 27.8.2019 43 C.C.No.21191/2014 J in the case of Kailash vati Vs. M/s. Ludhiyana Beverages., wherein the Hon'ble High Court held that " A. Negotiable Instrument Act 1881 - S.138 and 6 - Dishonour of cheque- date of drawn - Determination of - The date on which the cheque is drawn has to be with reference to the date mentioned in the column in the cheque and not the date on which it is bar was signed- Date when the cheque is drawn is not defined in the act - If date of singing cheque is accepted then all post dated cheques cannot be treated as valid cheques within and drawer of cheques would stand absolved from criminal prosecution if cheques are presented after three months of the date on which signature were appended". Hence in view of the principles of law laid down by the Hon'ble Apex Court of India, it can be held that, the liability of the debt existed as on the date mentioned on the cheque not as on the date of signature on the cheque, even for sake of discussion the arguments canvassed by the learned counsel for the Accused taken into consideration but in view of the principles of law laid down by the Hon'ble Apex Court and High Court of Bombay it is to be 44 C.C.No.21191/2014 J considered that the date on which cheque is drawn has to be with reference to the date mentioned in the cheque but not the date on which it is or was signed., therefore the arguments canvassed by the learned counsel for the defence cannot be acceptable one.
20. It is also relevant here to mention that, the Accused No.3/DW.1 in his evidence has taken specific defence that, the cheque in question had issued to the complainant as a security as per the terms of MOU i.e Ex.P.9 in the year 2007 and he had signed on the cheque and written the amount in the words and figures. The Accused No.3/DW.1 has also stated that, the UTI bank was not in existence in the year 2013, therefore there is no possibility of issuing the cheque in dispute in the year 2013 to the complainant. In support of his evidence has produced Ex.D.2 and D.3 i.e., the certificates issued by the Axis Bank, Cox Town, Bengaluru. But during the course of cross-examination of the complainant, nothing has been elicited to believe the defence of the Accused that, the cheque in question has been issued as a security in terms of the Ex.P.9 MOU in 45 C.C.No.21191/2014 J the year 2007 to the complainant. Even on perusal of Ex.P.9 it is nowhere mentioned or referred that, the cheque in question has been issued by the Accused in favour of the complainant as a security in terms of Ex.P.9, if really the cheque in question was issued in the year 2007 to the complainant, definitely the same would have been referred in the MOU i.e Ex.P.9 but no such reference has been made in MOU, on this count also the defence of the Accused cannot be acceptable one. Even for sake of discussion, if the defence of the Accused i.e. the cheque in question has been given to the complainant towards security of the investment invested by the complainant as per MOU i.e Ex.P.9 is considered as true , in such circumstances also it attracts the offence U/s.138 of N.I. Act, in this regard, it is relevant here to refer the decision of Hon'ble Apex court of India reported in (2016) 10 SCC 458 in the case of Sampelly Sathyanarayana Rao Vs. Indian Renewable Energy Development Ltd, wherein the Hon'ble Apex Court held that " Even cheque issued as security for payment of loan installments also covered under the purview of sec. 138 of Negotiable 46 C.C.No.21191/2014 J Instruments Act" In another decision of Hon'ble High Court of Karnataka reported in 2015 (1) KCCR 235 in the case of Lale Patel Vs. Sharanabasappa., wherein the Hon'ble High Court held that " NEGOTIABLE ISNTRUCEMTNS ACT, 1881- section 138 - Dishonour of cheque for insufficiency of funds - Plea of accused that he had given a blank cheque signed as security for a transaction and complainant filled up the contents and denied existence of any debt or loan - Conviction by Trial court - Affirmed by Appellate Court - Revision against. Hence the Hon'ble High Court of Karnataka in the above decision clearly held that, if the Accused has taken defence that, the a blank signed cheque has been issued as a security for transaction and the complainant filled up the contents and the accused denied the existence of debt or loan in such circumstances it is for the accused to prove his defence by producing cogent and convincible evidence, if the Accused has not proved the same in such circumstances, it cannot be held that, the cheque in question was issued for the purpose of security in connection with the transaction. In 47 C.C.No.21191/2014 J another decision reported in 2015 (4) KCCR 2881 (SC) in the case of T. Vasanthakumar Vs. Vijayakumari wherein the Hon'ble Apex court held that " NEGOTIABLE INSTRUMENTS Act, 1881- Section s138 and 139 - acquittal - If justified- Accused not disputing issuance of cheque and his signature on it- Plea that it was issued long back as security and that loan amount was repaid- Not supported by any evidence - Fact that date was printed, would not lend any evidence to case of accused- Acquittal not proper. Hence in the present case also it is the main defence of the Accused that the cheque in dispute was given to the complainant as a security in terms of MOU but the said cheque has been fabricated by the complainant but in this regard the accused has not produced documents or proof in such circumstances by applying the principles of law laid down in the above decision the defence of the Accused cannot be acceptable one. In another decision of Hon'ble Apex court of India decided in Crl.Appeal No.271/2020 in the case of APS Forex Services Pvt. Ltd., Vs. Shakthi International Fashion Linkers and others., wherein the Hon'ble 48 C.C.No.21191/2014 J Apex Court held that "the defence of the Accused that, cheques were given by way of security is not believable in the absence of further evidence to rebut the presumption. It is also held that, once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always presumption infavour of the complainant that there exists legally enforceable debt or liability and thereafter it is for the Accused to rebut such presumption by leading evidence". In the present case the Accused has admitted that, the cheque was issued and signature is also admitted but it is the defence of the Accused that, it was issued towards security and complainant has fabricated the cheque, in such circumstances the defence of the Accused cannot be acceptable one in the absence of further proof of evidence to rebut the presumption.
21. It is also relevant here to mention that, the accused No.3/DW.1 in his evidence has stated that, the cheque in question was issued to the complainant as a security on 26.3.2007 and he has signed on the cheque and also writing the amount in 49 C.C.No.21191/2014 J words and figure on the subject cheque on 26.3.2007 itself but the name of the payee and date on the subject cheque have been fabricated by the complainant and the UTI bank was not existence in the year 2013 , hence the complainant has misused the cheque which was issued in the year 2007 by mentioning his name and putting the date on the cheque and has presented the same to the bank and has filed this case. The Accused No.3/DW.1 in his cross-examination has denied the suggestion made to him that, he had issued cheque i.e Ex.P.1 in pursuance of Ex.P.9 and he has refunded the money to the complainant in the year 2009 or 2010 and in the year 2009 and 2010 orally asked the complainant to return the cheque in dispute but the complainant assured him that, cheque will be returned back and he has not taken any action against the complainant for return of cheque since the UTI bank was not in existence in the year 2013. It is relevant here to mention that, the Accused No.3/DW.1 during the course of his cross- examination has taken divergent view to his own defence that, he has return the money to the complainant in the year 2009-10 but no such 50 C.C.No.21191/2014 J documents have been produced before the court to show that, he has refunded the money to the complainant and also contended that, he had asked the complainant for return of cheque in dispute and has not taken any action against the complainant for return of cheque though the UTI bank was not existence in the year 2013, in such circumstances it can be held that, if really the Accused has refunded the amount to the complainant in the year 2009 or 2010 and though he has requested complainant to return the cheque in dispute but the complainant has not return the cheque to him, in such circumstances the Accused definitely he would have taken or initiate action against the complainant either by lodging the complaint before the police or court or atleast by issuing notice to the complainant for return of his alleged signed cheque handed over to him as a security or by issuing stop payment instructions to his banker, but no such efforts have been made by the Accused even after receipt of the legal notice by them and even after their appearance in this case, therefore except the bare denial of the Accused person is not sufficient to hold that, they has rebutted the presumptions available 51 C.C.No.21191/2014 J to the complainant U/s.118 and 139 of the N.I. Act. It is also relevant here to mention that, the conduct of the Accused in not taking the action against the complainant for alleged fabrication of the cheque in question by the complainant may leads to draw an adverse inference against them that, the Accused have not initiated any action against the complainant since the cheque in question has been issued by the Accused to the complainant towards discharge of the liability in question but not for any other purpose. In this regard it is relevant here to refer the decision of Hon'ble Apex Court of India reported in AIR 2018 SC 3601 in a case of T.P.Murugan(dead) Thr. Lrs.V. Bhojan Vs. Posa Nandi, rep. Thr. Lrs. PA holder, T.P. Murugan V. Bhojan, wherein the Hon'ble apex Court held that "Negotiable Instruments Act (26 of 1881) Ss.118, 138, 139 - Dishonour of cheque - Presumption as to enforceable debt- cheques allegedly issued by accused towards repayment of debt- Defence of accused that 10 cheques issued towards repayment of loan back in 1995 - behavior of accused in allegedly issuing 10 blank cheques back in 1995 and never asking their return for 7 52 C.C.No.21191/2014 J years, unnatural - Accused admitting his signature on cheques and pronote, presumption under S.139 would operate against him - Complainant proving existence of legally enforceable debt and issuance of cheques towards discharge of such debt - Conviction, Proper". Hence in view of the principles of law laid down by the Hon'ble Apex Court are aptly applicable to the case on hand since in the present case also the accused have not made any efforts to get return of cheque alleged to have been given to the complainant for security in terms of MOU, under such circumstances, the said unnatural conduct of the accused in non taking of action, an adverse inference can be drawn against the accused that, the cheque in question issued by the accused persons towards discharge of the liability and presumption U/s.139 of N.I.Act would operate against them, as they have admitted the signature and cheque in question is belongs to Accused No.3.
22. It is also important to note here that, the Accused No.3 has not denied or disputed that the cheque in question as well as the signature therein 53 C.C.No.21191/2014 J do belong to him and though he has taken the specific defence that, the cheque in question has been given to the complainant as security in terms of MOU and it has been fabricated by the complainant and has filed this false case against them but the Accused have not proved the said defence by producing cogent and convincible evidence , in such circumstances it can be held that, the Accused have failed to explain and prove how the cheque in question has come to the possession of the complainant, this would also give rise to an adverse inference against him, this proposition of law finds support from the decisions of Hon'ble High Court of Karnataka reported in 2010(1) KCCR 176 in the case of "Siddappa Vs. Manjappa" and in the decision of Hon'ble Apex court of India decided in Crl.A.No.664 of 2012 dated: 19.9.2019 in the case of "M.Abbas Haji Vs. T.M.Chennakeshava"
held that, " the Accused has to explain how the cheque entered into the hands of complainant".
Therefore for the above said reasons the defense taken by the accused cannot be acceptable one and accused have miserably failed to rebut the presumption available in favour of the complainant 54 C.C.No.21191/2014 J by producing cogent and convincible evidence.
23. The learned counsel for the Accused has also argued that the complainant in his complaint and evidence has stated that, the cheque in question has been presented by him through his banker for the first time and same was returned dishonoured with endorsement dated: 9.10.2013 as Funds Insufficient thereafter on 17.10.2013 he got issued legal notice to the Accused persons calling upon them to pay the cheque amount within15 days from the date of receipt of notice , failing which he would be constrained to initiate proceedings U/s.138 of N.I.Act and the said legal notice was served on all the Accused persons but they did not make the payment inspite of receipt of the notice. But on the basis of the said notice, the complainant has not filed any complaint or initiated proceedings against the Accused persons U/s.138 of N.I.Act and subsequently again the cheque in question has been presented by the complainant and it was dishonoured on 7.12.2013 for Funds Insufficient and the complainant had given second legal notice dated: 11.2.2013 to all Accused persons calling 55 C.C.No.21191/2014 J upon them to pay cheque amount and the said notice was served upon them and he has field the present complaint on the basis of second notice, hence the present complaint is not maintainable since the cause of action was arose to file the complaint against the Accused at the time of issuing of first notice and service of the first notice on the Accused persons, therefore the complaint filed by the complainant on the basis of second notice itself not maintainable. The arguments canvassed by the learned counsel for the defence cannot be acceptable one in view of the principles of law laid down by the Hon'ble Apex court of India reported in (2013) 1 SCC 117 in the case of MSR Leathers Vs. S.Palaniappan and another wherein the Hon'ble Apex court held that " A. Negotiable Instrument Act 1981-Ss 138 proviso and 142 (b) - dishonour of cheque - Repeated presentations /dishonour of cheque -multiple causes of action/cause of action if arises afresh each time - Held - prosecution based upon second or successive dishonour of cheque is permissible so long as it satisfies all the requirements stipulated in proviso to S.138. It is also held that "D. 56 C.C.No.21191/2014 J A. Negotiable Instrument Act 1981-Ss 138 and 142 (b) - Failure to file complaint within limitation period after first notice issued - prosecution based on subsequent or successive dishonour- permissibility of - held by reason of fresh presentation of cheque followed by a fresh notice in terms of Sec.138 proviso Cl. (b) drawer gets an extended period to make payment and gets a further opportunity to pay- to avoid prosecution - such fresh opportunity cannot held defaulter get a complete absolution from prosecution - so long as cheque is valid and so long as it is dishonoured upon presentation to bank, holders right to prosecute the drawer for default committed by drawer remains valid and exercisable.
F. Negotiable Instrument Act. 1881- Ss.138, 142(b) and S.142(b) Proviso (inserted in 2002)- Failure of payee to file complaint against defaulting drawer within prescribed period, held, does not provide 'absolution', to drawer simply because period of 30 days has expire or payee for other reasons deferring filing of 57 C.C.No.21191/2014 J complaint against the defaulter - by amendment, S.142(b) Proviso now permits payee to institute the defaulter proceedings against a defaulting a drawer even after expiry of period of one month - Hence if failure of payee to file a complaint within prescribed period was to result in 'absolution' U/s.142(b), proviso would not absolution - interpretation of statues - basic rules, purposive constructions/ interpretation - objection of legislation- consideration of. In another decision of Hon'ble Apex Court of India in the case of " M/s. Sicagen India Ltd., Vs. Mahindra Vadineni and ors., wherein also the Hon'ble Apex court by referring the above cited decision has held that "the complaint based on the second statutory notice is not barred".
Hence, in view of the principles of law laid down by the Hon'ble Apex Court of India are aptly applicable to the case on had even if it is admitted by the complainant that, he has not filed complaint against the Accused persons after the first notice is issued within the limitation period even in such circumstances also the complaint filed by the 58 C.C.No.21191/2014 J complainant on the basis of subsequent or successive dishonour of cheque i.e., on the basis of second notice it cannot be held that failure of complainant to file complaint against Accused on the basis of first notice within the prescribed period does not provide right to file complaint on the basis of successive dishonour of cheque as contended by the learned counsel for the defence during the course of his argument. It is also relevant here to refer another decision of Hon'ble High Court of Karnataka decided on 28.4.2015 in Crl. Petition No. 2550/2015 wherein the Hon'ble High Court held that "cheque bounce cases- presentation of cheque any number of time within its validity is permissible, even issuance of a second statutory notice and filing complaint after the second legal notice, permissible. Though no complaint was filed aster issuance of first notice a second notice was sent and complaint was filed after issuance of the second legal notice. The same is permissible". Therefore in view of the said reasons the argument canvassed by the learned counsel for the Accused cannot be acceptable one and not sustainable in law.
59 C.C.No.21191/2014 J24. It is also the defence of the Accused that the cheque in question i.e., Ex.P.1 is issued by the Accused No.3 and it belongs to his personal account and not of the company's account i.e Accused No.1 company's account, therefore the complaint filed by the complainant against the 1st Accused company and against the directors of the 1st Accused i.e 2nd and 4th Accused is not maintainable. In support of the said defence the Accused No.3 has produced certificates issued by the Axis Bank, Cox Town Bengaluru branch which are at Ex.D.2 and D.3 respectively. On perusal of Ex.D.2 it appears that, the Accused No.1 company is holding current account No. i.e 231010200004244 with its bank since 5.8.2006 and Ex.D.3 discloses that, the saving account number 231010100031329 with its bank since 27.3.2006. It is also true that the cheque in question i.e Ex.P.1 belongs to the account bearing No. 231010100031329 i.e. SB Account of the Accused No.3. It is the specific claim of the complainant that, the cheque in question was issued by the 3rd Accused on behalf of all the Accused persons in part clearance of the liability in respect of the transaction they had with him and the 2nd and 60 C.C.No.21191/2014 J 4th Accused being directors were completely aware and involved in the entire transaction and they are working full time directors and are responsible for clearing liabilities and the issuance of cheque and consequent dishonour and they were in charge and aware of the transaction in question, hence all the Accused have connived and colluded have issued the cheque in question and have committed offence punishable U/s.138 of N.I. Act.
25. It is also relevant here to mention that, Accused No.3 during the course of his cross- examination admitted that, Accused No.1 company still is in existence and at present himself, Bharati Raju and one Subbalakshmi are the directors of the Accused No.1 company. It is also admitted that, Accused No.4 was a director of the Accused No.1 company but now he is not a director and was resigned in the year 2014 or 2015. It is also admitted that, at the time of transaction with the complainant, the Accused No.4 was also one of the director of the first Accused company. It is also admitted that, the complainant has filed this complaint against him as a director and also in his 61 C.C.No.21191/2014 J individual capacity as Accused No.2 and 3 and complainant had also issued legal notice to him by showing him as director and individual capacity. Hence the above admissions of the Accused No.3 makes it clear that, though the Accused No.3 has issued the cheque in question but the cheque in question was issued towards discharge of the liability involved under the MOU i.e Ex.P.9 i.e in pursuance of the terms of the MOU the cheque has been issued to the complainant. It is an admitted fact by the Accused No.1 to 4 that, the complainant has paid a sum of Rs.16 Lakhs to the Accused No.1 company in pursuance of the MOU and as per the terms of the MOU the Accused No.1 to 4 have agreed to refund the amount of Rs.30 Lakhs to the complainant after completion of the 15 months from the date of MOU and it is also admitted that, they have already paid an amount of Rs.2 Lakhs to the complainant by way of cheque towards partial liability. It is also not disputed by the Accused No.4 either by adducing his oral evidence or producing the documents to show that, he is not responsible for issuance of the cheque by the Accused No.3 in respect of discharging the liability covered under the 62 C.C.No.21191/2014 J MOU i.e. Ex.P.9, in such circumstances it can be held that, the Accused No.1, 2 and 4 are joint and severally responsible for issuance of the cheque in question by the Accused no. 3 i.e Accused No. 2 as a director has issued the cheque in question towards discharge of the liability covered under MOU i.e. the 1st Accused company. Therefore for the said reasons the Accused No.1, 2 and 4 along with Accused No.3 are liable to pay the cheque amount and the cheque in question though it was issued by the Accused No.3 towards discharge of the liability of the Accused No.1 company, all the Accused are jointly and severally liable to pay the amount covered under the dishonour cheque and also committed an offence punishable U/s.138 of N.I.Act. It is also relevant here to mention that, the cheque in question issued by the 3rd Accused on behalf of all the Accused in part clearance of the liability in respect of transaction had with the complainant and the 2nd and 4th Accused being the directors of 1st Accused company and were collectively aware and involved in the entire transaction as per Ex.P.9 i.e MOU, therefore they are also responsible and liable for clearing the liabilities and issuance of the cheque in 63 C.C.No.21191/2014 J question and consequent of its dishonour, therefore for the said reasons the defence taken by the Accused that, the cheque in question is belongs to the personal account of the Accused No.3 and it is not of the 1st Accused company's account, accordingly the complaint filed against the Accused No.1, 2 and 4 is not maintainable cannot be acceptable one. On the contrary the Accused No.1 to 4 are jointly and severally liable and responsible for issuance of the cheque in question and have committed the offence punishable u/138 of N.I. Act.
26. Therefore considering all these aspects of the case and totality of the circumstances and on careful and meticulous appreciation of evidence adduced on behalf of the complainant and accused the complainant has successfully established beyond all reasonable doubt that, the Accused have issued the Ex.P.1 cheque in question in his favour towards discharge of part clearance of the liability in respect of the transaction had with the complainant as per MOU i.e Ex.P.9 and thereafter the complainant has presented the said cheque through his banker and same was returned dishonoured with an 64 C.C.No.21191/2014 J endorsement of "Funds Insufficient" and thereafter he got issued legal notice to the accused persons and the said notice was served upon them inspite of it, the Accused persons have not paid the cheque amount, hence the complainant filed the present complaint against the accused persons. On the other hand, the accused persons have failed to rebut the presumption available infavour of the complainant with regard to the existence of legally recoverable debt under Ex.P.1 Cheque. Therefore accused No.1 to 4 have committed an offence punishable U/s.138 of N.I. Act, accordingly for the above said reasons this point is answered in the Affirmative.
27. Point No.2: Negotiable Instrument Act was enacted to bring credibility to the cheque and the very purpose of enactment is to promote the use of negotiable instrument, while to discourage the issuance of cheque without having sufficient funds in their accounts. Such being the case the intention of the legislature is that, complainant be suitable compensated while accused be punished for their act. Hence while awarding the compensation the 65 C.C.No.21191/2014 J said fact is to be kept in mind and suitable compensation is awarded to the complainant certainly it will not cause injustice to the accused, accordingly the complainant is entitled for the compensation as ordered by the court and for the said reasons, it is just and proper to pass the following :-
ORDER Acting U/sec.255(2) of Cr.P.C.
the accused No.1 to 4 are convicted for the offence punishable U/sec.138 of N.I.Act.
The accused No.2 to 4 are jointly ad severally sentenced to pay a fine of Rs.20,10,000/= (Rupees Twenty Lakhs and Ten Thousand only) within one month from the date of order, in default Accused No.2 to 4 shall under go simple imprisonment for a period of (6) six months for the offence punishable U/sec.138 of N.I.Act.
Further acting U/sec.357(1) of Cr.P.C. out of the fine amount on recovery, a sum of Rs.20,00,000/= (Rupees Twenty Lakhs only) shall be paid as compensation to the complainant.66 C.C.No.21191/2014 J
Further acting U/sec.357(1)(a) of Cr.P.C. out of fine amount on recovery a sum of Rs.10,000/= (Rupees Ten Thousand only) shall be defrayed as prosecution expenses to the state.Bail bond of the Accused No.2 to 4
are stands cancelled.
. Office is directed to furnish free certified copy of this judgment to the Accused No.2 to 4 incompliance of Sec.363(1) of Cr.P.C.
(Directly dictated to the stenographer online, printout taken by her, verified, corrected and then pronounced by me in the open Court on this the 29th day of February 2020).
(SRI.S.B. HANDRAL), XVI ACMM, Bengaluru City.
ANNEXURE
1. List of witness/s examined on behalf of the Complainant:-
P.W.1 : Sri. S.N.Anegundi.
2. List of documents exhibited on behalf of the Complainant:-
Ex.P-1 : Original Cheque;
Ex.P-1(a) : Signature of the Accused;
Ex.P-2 & 3 : Bank Memos;
Ex.P-4 : Office copy of the Legal Notice;
Ex.P-5 to P.8 : Postal acknowledgements;
67 C.C.No.21191/2014 J
Ex.P-9 : Original Memorandum of Understanding
dated: 26.3.2007
Ex.P-9(a) : 15 signatures of the Accused No.2 on
MOU
Ex.P-9(b) : 15 signatures of the Accused No.4 on
MOU;
Ex.P-9(c) : 15 signatures of the complainant
3. List of witness/s examined on behalf of the Accused:-
DW.1 : Sri. K.Surya Narayana Raju;
4. List of documents exhibited on behalf of the Accused:-
Ex.D1 : copy of the legal notice dated:
17.10.2013;
Ex.D.2 & D.3 : certificates issued by the Axis Bank, Cox Town Branch, Bengaluru dated:
25.9.2018 (SRI.S.B.HANDRAL), XVI ACMM, Bengaluru City.
68 C.C.No.21191/2014 J
29.2.2020 Accused No.2 to 4 Absent, counsel for
Accused No.2 to 4 absent, No
representation. Judgment pronounced since the fine amount and default sentence is only imposed against the Accused No.2 and 4, no separate sentence is imposed against the Accused No.2 and 4 vide separate order.
ORDER Acting U/sec.255(2) of Cr.P.C.
the accused No.1 to 4 are convicted for the offence punishable U/sec.138 of N.I.Act.
The accused No.2 to 4 are jointly ad severally sentenced to pay a fine of Rs.20,10,000/= (Rupees Twenty Lakhs and Ten Thousand only) within one month from the date of order, in default Accused No.2 to 4 shall under go simple imprisonment for a period of (6) six months for the offence punishable U/sec.138 of N.I.Act.
Further acting U/sec.357(1) of Cr.P.C. out of the fine amount on recovery, a sum of Rs.20,00,000/= (Rupees Twenty Lakhs only) shall be paid as compensation to the complainant.
Further acting U/sec.357(1)(a) of Cr.P.C. out of fine amount on recovery a sum of Rs.10,000/= (Rupees Ten 69 C.C.No.21191/2014 J Thousand only) shall be defrayed as prosecution expenses to the state.
Bail bond of the Accused No.2 to 4are stands cancelled.
. Office is directed to furnish free certified copy of this judgment to the Accused No.2 to 4 incompliance of Sec.363(1) of Cr.P.C.
XVI ACMM, B'luru.