Bangalore District Court
Malur Taluk vs Also At; on 2 February, 2023
1
IN THE COURT OF XIV ADDL. CHIEF METROPOLITAN
MAGISTRATE, MAYO HALL, BENGALURU
PRESENT
SRI.OONKAR MURTHY K.M.,
B.Sc., L.L.M.,
XIV ADDL. C.M.M., BENGALURU
DATED THIS THE 2 nd DAY OF FEBRUARY, 2023
CASE NO C.C. NO.54768/2021
Chariot International Private Limited,
A Company incorporated under Companies
Act, 1956
Sy. No.97, Chudagondanahalli Village,
COMPLAINANT Malur Taluk, Malur - 563 130
Represted by its Senior Manager -
Mr. Ramamurthy .E
(By Sri. Poornachandra B. Pattar - Adv.,)
1) M/s. Eluramman Exports
A Proprietorship concern,
No.42, Jothi Rama Lingam Ullagaram,
Chennai - 600 091.
ACCUSED
Also at;
New No.6, Old No.B-12,
AGS Colony, Nanganallur,
Chennai - 600 091.
2
2) Mr. Kumar Vijay - Proprietor
Having Office at No.42,
Jothi Rama Lingam Ullagaram,
Chennai - 600 091.
(By Sri. K.R. Tulsi - Adv.,)
OFFENCE U/s.138 of Negotiable Instruments Act
PLEA OF THE
ACCUSED Pleaded not guilty
FINAL ORDER
Accused is convicted
Digitally signed by
ONKARMURTHY
ONKARMURTHY K M
KM
Date: 2023.02.02
17:50:05 +0530
(OONKAR MURTHY K.M)
XIV ADDL. C.M.M.,
BENGALURU
JUDGMENT
The complainant has approached this court with the complaint under Sec.200 Cr.PC against the accused persons alleging offense punishable under Section 138 of Negotiable Instruments Act, 1881.
3The factual matrix of the case are as follows ;
2. The complainant company incorporated under the Companies Act, 1956 is engaged in export business of locally quarried natural stone since 1994 and is represented by its Authorized Representative Mr.Ramamurthy.E. 2.1) One M/s.Stone Bros SDN BHD and (2) M/s.Sky Speed Logistics, approached the complainant for supply of granite slabs to be shipped to Malaysia. Accused No.1 is the agent of the above said Firms. Accused No.2 is the Proprietor of accused No.1 Firm. As per the terms agreed, the complainant supplied the granite slabs and thereafter raised invoices. 100% payment was to be made on copy of bill of lading sent via mail/fax. The invoices raised by the complainant company are as follows;
Sl. Customer Invoice Nos. Amount
Nos. (USD)
1 Sky Speed CI/INV-288/20-21 12760.70
Logistics
2 Stone Bros CI/INV-313/20-21 12057.93
SDN BHD
3 Sky Speed CI/INV-367/20-21 11761.68
Logistics
TOTAL 36580.31
4
2.2) The shipment was delivered to the port of discharge i.e., Portklang West Port. Since the complainant had not received the payment due from M/s.Stone Bros SDN BHD and M/s.Sky Speed Logistics, the complainant via e-mail dtd.19.03.2021 instructed the shipping agent Mr.Khaja Mohideen not to release the container till payment is cleared. Also has sought for procedure for return of the shipment and costs involved. On 22.03.2021 an e-mail was received from the shipping agent stating that consignment has been released upon the instructions of accused No.1 that the complainant has received payment which was due. But actually the complainant had not received the payment and had given instructions to accused No.1, not to release the container till payment is cleared. Vide e-mail dtd.25.03.2021, the complainant had expressed its shock and surprise with accused No.1 in respect of release of container without the due authorization from the company. Thereafter, the complainant got issued notice dtd.03.04.2021 through his counsel seeking payment of outstanding amount of USD 36,580.31 with interest at the rate of 18% per annum 5 from the date of outstanding bills till the date of realization. Accused No.1 voluntarily accepted that he had exceeded his authority and having realized their liability, to clear the said outstanding dues, as a part payment the accused issued cheque bearing No.419638 dtd.25.03.2021 for Rs.8,58,015/- drawn at Syndicate Bank, Kamaraj Salai, Madipakkam, Chennai in favour of the complainant. When the said cheque was presented before Canara Bank, SME branch, Malur, the same was returned dishonoured with return memo dtd.10.05.2021 for the reason "funds insufficient". Thereafter, the complainant has issued legal notice on 25.05.2021 to both the accused via e-mail dtd.25.05.2021 and also whats-up demanding payment of Rs.8,58,015/-. The said notice was received by the accused on 25.05.2021, but have failed to make payments. Therefore, the accused have committed the offense punishable under Sec.138 of Negotiable Instruments Act, 1881. Hence, the complaint.
3. On filing of the complaint, cognizance has been taken for the offense punishable under Sec.138 of Negotiable Instruments Act, 1881 and a private complaint 6 was registered in PCR. No.52576/2021. Sworn statement of the complainant has been recorded by way of affidavit. On hearing the complainant and by considering the documents on record, summons were issued to the accused persons by registering the criminal case in C.C.No.54768/2021. Thereafter, in response to summons issued, the accused persons have appeared before the court through their counsel and have pleaded for bail. The accused have been enlarged on bail. Plea of the accused have been recorded and accused have pleaded not guilty and have claimed to be tried. Hence the matter was posted for trial.
4. The sworn statement of the representative of the complainant Mr.Narayana Sharma who was examined as CW.1 was treated as examination-in-chief in view of the decision of the Hon'ble Apex Court reported in (2014) 5 SCC 590 - Indian Bank Association and others Vs Union of India and others - [W.P. (civil) No.18/2013]. CW.1 to prove the guilt against the accused persons, has relied on the documents marked at Ex.P1 to Ex.P10. The incriminating circumstances emanating from the evidence 7 of CW.1 have been brought to the notice of the accused persons and their statement under Sec.313 of Cr.PC was recorded. The accused has denied the incriminating circumstances. Thereafter, the earlier representative of the complainant/CW.1-Mr.Narayana Sharma has left the job. He has been substituted and the new representative Mr.Rama Murthy.E has been examined as PW.1. Complainant Company's Authorization in favour of PW1 is produced at Ex.P11. The accused has failed to cross- examine CW.1 and PW.1 in spite of sufficient opportunities. Further, the accused has also not led any evidence to rebut the case of the complainant.
5. Heard the arguments of counsel for the complainant. Counsel for accused has not addressed his arguments.
6. The counsel for the complainant has relied on the decision in Dashrathbhai Trikambhai Patel Vs Hitesh Mahendrabhai Patel and another - (2022 SCC OnLine SC 1376).
87. Perused the materials on record. The points that arise for my consideration are:-
1) Whether the complainant proves that the accused has issued cheque bearing No.419638 dtd.25.03.2021 for Rs.8,58,015/-
drawn at Syndicate Bank, Kamaraj Salai, Madipakkam, Chennai for discharge of legally recoverable debt and the said cheque was dishonoured for the reason "Funds Insufficient". In spite of issuance of legal notice dated 25.05.2021, accused has failed to repay the cheque amount and thereby the accused has committed the offense punishable under Sec.138 of N.I. Act, 1881?
2) What Order?
8. My findings on the above points are as under;
Point No.1 : In Affirmative, Point No.2 : As per final order, for the following., REASONS
9. Point No.1: In support of its case, the complainant company has examined its representative Mr.Narayan Sharma as CW.1. Further to substantiate the contentions of the complainant company, CW.1 has 9 produced original cheque bearing No.419638 dtd.25.03.2021 for Rs.8,58,015/- drawn at Syndicate Bank, Kamaraj Salai, Madipakkam, Chennai at Ex.P1. Ex.P2 is the bank endorsement dtd.10.05.2021 showing dishonour of the said cheque for the reason "Funds Insufficient". Ex.P3 is the copy of statutory legal notice dtd.25.05.2021 issued to accused No.1 demanding the cheque amount within 15 days from the date of its receipt. Ex.P4 is the copy of e-mail dtd.25.05.2021 addressed to accused Nos.1 and 2 along with attachment of legal notice at Ex.P3. Ex.P5 is the copy of whats-up message showing sending of legal notice to Stone Bros, Malaysia. Ex.P6 is the Board Resolution dtd.13.07.2021 authorizing Mr.Narayan Sharma/CW.1 to prosecute the matter against the accused persons. Ex.P7 is the copies of three invoices out of which two have been raised in the name of Sky Speed Logistics and one invoice has been raised in the name of Stone Bros SDN BHD. Ex.P8 is the copy of e-mail dtd.19.03.2021 addressed to the shipping agent Mr.Khaja Mohideen requesting him not release the containers in respect of three invoices produced at Ex.P7.
1010. Ex.P9 is the copy of e-mail communications between the complainant company and shipping agent Mr.Khaja Mohideen. The said document shows that on 22.03.2021 at 4.14 p.m., Mr.Khaja Mohideen has intimated the complainant about release of three containers. The communication is extracted below for better understanding;
" Further to our telecom, Three containers released please talk to you Mr.Vijay.
Tomorrow morning we will come to your office with Mr.Vijay".
On 22.03.2021 at 16.40 hours complainant has sent the following communication to Mr.Khaja Mohideen.
" We are shocked that you have released the following shipment to consignee without our confirmation and knowledge, when we have not surrendered the OBL and payment also pending from buyer side.......
Now we want our payment within tomorrow otherwise we want bring back these containers in India".
On 25.03.2021 complainant has addressed communication to Khaja Mohideen stating that no 11 information was issued to release the cargo to the consignee. Also has sought to speak to the consignee and get payments. Ex.P10 is the certificate U/s.65-B of Indian Evidence Act in respect of tax invoices, whats-up chats, e-mails and legal notice generated electronically.
11. CW.1 has not been cross-examined by the accused in spite of sufficient opportunities. Thereafter, the counsel for the accused has raised objections in respect of jurisdiction of this court to try the matter. Vide order dtd.22.06.2022, it is ordered that this court has jurisdiction to try the matter and has directed the accused to proceed with the matter by posting the matter for cross-examination of CW.1. On 18.07.2022 the complainant has come up with application for substituting the representative of the complainant company stating that the earlier representative/CW.1 has left the job. Accordingly, new representative Sri.Ramamurthy.E has been substituted and further he has been examined as PW.1. Copy of the Board Resolution authorizing PW.1 to represent the case on behalf of the complainant company 12 is produced by him at Ex.P11. In spite of sufficient opportunities, the accused has not cross-examined PW.1.
12. Further the counsel for the accused by relying upon the decision of Hon'ble Supreme Court in the case of Dasharath Roopsingh Rathod Vs State of Maharastra and another ; (2014) 9 SCC 129, has also filed application U/s.257 of Cr.PC seeking dismissal of the complaint and acquittal of the accused contending that the territorial jurisdiction to file the complaint U/s.138 of N.I. Act falls before the jurisdictional Magistrate where a cheque was dishonored. On 19.09.2022 the said application was dismissed. The accused has not challenged the order of this court dtd.22.06.2022 and order dtd.19.09.2022. Thereafter, in spite of providing sufficient opportunities, the accused has failed to cross-examine PW.1 and also failed to lead any defense evidence on his behalf. Under the circumstances, the evidence of CW.1 and PW.1 has remained unchallenged and unrebutted. The documents produced by the said witnesses at Ex.P1 to P11 clearly substantiates the case of the complainant.
13Principles:
13. In support to the proof of the fact that the cheque has been issued for discharge of legally enforceable debt there is a presumption of law under Sec.139 of Negotiable Instruments Act, 1881 in favour of the holder of the cheque which reads as follows:
Sec.139 - Presumption in favour of holder: it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.
14. The presumption under Sec.139 of Negotiable Instruments Act is a presumption of law and not the presumption of fact. The presumption has to be raised in all the cases once the factum of dishonour is established. Also there is a presumption of passing of consideration as to Negotiable Instruments under Sec.118 of the said Act unless the contrary is proved. The onus of proof to rebut the presumption lies on the accused. The accused need not rebut the presumption beyond all reasonable doubt. But the accused has to place sufficient materials to convince the court that his case is more probable when it 14 is compared with the case of the complainant. But in the case on hand, the accused has failed to cross-examine CW.1 and PW.1. Also the accused has not even led any defense evidence putting forth his defense. Except bare denial, nothing is stated by the accused during recording of his statement U/s.313 of Cr.PC. Hence, the accused has failed to rebut the presumption Sec.139 of Negotiable Instruments Act available in favour of the complainant.
15. In the case on hand, the accused Nos.1 and 2is stated to be the agent of Sky Speed Logistics and Stone Bros SDN BHD in India. The accused No.2 is the Proprietor of accused No.1 Firm. It is also stated that the payments have not been received from the said M/s.Sky Speed Logistics and M/s.Stone Bros SDN BHD. Further a notice was issued on 25.05.2021 to the accused persons demanding outstanding amount of USD 36,580.31 with 18% interest per annum. After receiving the said notice, the accused persons have issued the alleged cheque at Ex.P1 towards part payment of total outstanding amount. Now it is for me to decide whether the cheque issued towards liability of M/s.Sky Speed Logistics and M/s.Stone 15 Bros SDN BHD by the accused will attract the offense punishable U/s.138 of N.I. Act. In adjudicating the said issue, I would like to rely upon the decision of Hon'ble Supreme Court in the case of Anil Sachar and another Vs Shree Nath Spinners Private Limited - [(2011) 13 SCC 148], wherein at para 20 the Hon'ble Supreme Court has held as follows;
Para 20. We may also refer to the judgment delivered by this Court in the case of ICDS Ltd. In the said judgment this Court has referred to the nature of liability which is incurred by the one who is a drawer of the cheque. If the cheque is given towards any liability or debt which might have been incurred even by someone else, the person who is a drawer of the cheque can be made liable under Section 138 of the Act. The relevant observation made in the aforestated judgment is as under:
"The words "any cheque" and "other liability" occurring in Section 138 are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. These expressions leave no manner of doubt that for whatever reason it may be, the liability under Section 138 cannot be avoided in the event the cheque stands returned by the banker unpaid. Any contra-interpretation would defeat the intent of the legislature. The High Court got carried away by the issue of guarantee and guarantor's liability and thus has overlooked the 16 true intent and purport of Section 138 of the Act.
The language, however, has been rather specific as regard the intent of the legislature. The commencement of the section stands with the words "where any cheque". The above noted three words are of extreme significance, in particular, by reason of the user of the word "any" - the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment."
(emphasis supplied)
16. In the above precedent, it is clearly held that if the cheque is given towards any liability or debt which might have been incurred even by someone else, the 17 person who is a drawer of the cheque can be made liable under Section 138 of the Act.
17. The counsel for the complainant has relied on the decision of the Hon'ble Supreme Court in the case of Dashrathbhai Trikambhai Patel supra, wherein the Hon'ble Supreme Court at para 33 has held as follows;
Para 33. In view of the discussion above, we summarise our findings below:
(i) For the commission of an offense under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation;
(ii) If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque;
(iii) When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offense under Section 138 will stand attracted;
(iv) The first respondent has made part- payments after the debt was incurred and 18 before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the 'legally enforceable debt' on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds; and
(v) The notice demanding the payment of the 'said amount of money' has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138. Since in this case, the first respondent has not committed an offense under Section 138, the validity of the form of the notice need not be decided.
(emphasis supplied)
18. In the case on hand, there is no such contentions that the accused has paid any part payment between the period when the cheque is drawn and when it is encashed upon maturity. Under the circumstances, the said decision is not applicable to the facts of this case.
Conclusion:
1919. The complainant has clearly proved the issuance of alleged cheque at Ex.P1 by the accused towards discharge of legally recoverable debt. The same has been presented within its life time for encashment. The said cheque has been dishonored under the bank endorsement dtd.10.05.2021 for the reason "funds insufficient". Legal notice is also issued on 25.05.2021 through E-mail which has been served on the accused on the same day. The complaint was required to be filed on or before 10.07.2021. But it is filed on 22.07.2021 with delay. The Hon'ble Supreme court in su-motu Writ Petition (C) No.3 of 2020, in RE: COGNIZANCE OF EXTENTION OF LIMITATION, in Para 5 (III) and IV has held as follows;
III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022 notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022......
IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996. Sec.12A of the Commercial Courts Act, 2015 and provisos (b) and
(c) of Sec.138 of Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court 20 or tribunal can condone delay) and termination of proceedings.
Therefore, the period of limitation from 15.03.2020 till 28.02.2022 stands excluded. The present complaint is filed on 22.07.2021 which falls within the period of exclusion and therefore, it is to be held that the complaint is filed well within the period of limitation. Therefore the complainant has complied all the requirements of Sec.138 of N.I. Act. On the contrary, the accused has failed to bring in any materials to rebut the presumption available U/s.139 of N.I. Act in favour of the complainant. Hence, the accused is found guilty for the offense punishable U/s.138 of N.I. Act. Accordingly, I hold Point No.1 in Affirmative.
20. Point No.2: The punishment prescribed for the offense U/s.138 of Negotiable Instruments Act is imprisonment for a period which may extend to two years or with fine. Considering the facts and circumstances of this case, nature, year of the transaction, nature of the instrument involved, cost of litigation and the rate of interest proposed by Hon'ble Supreme Court in 2012 (1) SCC 260 (R.Vijayan Vs Baby), this court is of the 21 considered view that it is just and desirable to impose fine of Rs.10,50,000/- and out of the said amount, it seems to be proper to award a sum of Rs.10,45,000/- as compensation to the complainant as provided U/s.357(1)
(b) of Cr.PC and the remaining sum of Rs.5,000/- shall go to the State. In view of the discussions made while answering Point No.1, I proceed to pass the following.., ORDER In exercise of power vested under section 255(2) of Cr.P.C., I hereby convict the accused for the offense punishable under Sec.138 of Negotiable Instruments Act, 1881.
The accused is sentenced to pay fine of Rs.10,50,000/- (Ten Lakhs Fifty Thousand only) for the offense punishable U/s.138 of Negotiable Instruments Act, 1881.
In default of payment of fine, the accused shall under go simple imprisonment for a period of six months.
22In exercise of powers vested under section 357(1)(b) of Cr.P.C., out of fine amount a sum of Rs.10,45,000/- (Ten Lakhs Forty Five Thousand only) is ordered to be paid to the complainant as compensation and the remaining Rs.5,000/- (Five Thousand only) shall go to the State.
The bail bond of the accused stands canceled. The cash security deposited by the accused is ordered to be continued till expiry of the appeal period.
Free copy of the judgment shall be supplied to the accused forthwith.
(Dictated to the stenographer, transcribed thereof, computerized and print out taken by him is verified, corrected and then pronounced by me in open court on this the 2nd day of February, 2023) Digitally signed by ONKARMURTHY ONKARMURTHY K M KM Date: 2023.02.02 17:50:21 +0530 (OONKAR MURTHY K.M) XIV ADDL. C.M.M., BENGALURU 23 ANNEXURE List of witnesses examined by complainant:
PW.1 : Sri. Ramamurthy .E List of documents marked by complainant:
Ex.P1 : Cheque Ex.P1(a) : Signature of the accused Ex.P2 : Bank endorsement Ex.P3 : Copy of legal notice dtd.25.05.2021 Ex.P4 : Copy of e-mail dtd.25.05.2021 Ex.P5 : Copy of whats-up messages Ex.P6 : Board Resolution dtd.13.07.2021 Ex.P7 : Copy of three invoices Ex.P8 : Copy of e-mail dtd.19.03.2021 Ex.P9 : Copy of e-mail Ex.P10 : Certificate U/s.Sec.65-B(4) of the Indian Evidence Act. Ex.P11 : Notarized copy of Board Resolution dtd.06.07.2012
List of witnesses examined by defence:
NIL List of documents marked by defence:
NIL Digitally signed by
ONKARMURTHY
ONKARMURTHY K M
KM
Date: 2023.02.02
17:50:29 +0530
(OONKAR MURTHY K.M)
XIV ADDL. C.M.M.,
BENGALURU