Bangalore District Court
Smt.Pushpa Prabhakar W/O Prabhakar vs M/S Shriram Chits (Karnataka) Ltd on 9 January, 2019
IN THE COURT OF THE LX ADDITIONAL CITY CIVIL &
SESSIONS JUDGE, BENGALURU
(CCH-61)
Dated this the 9th day of January, 2019
:Present:
Sri Vidyadhar Shirahatti, LL.M
LX Addl. City Civil & Sessions Judge,
Bengaluru.
Crl. A. No. 165/2017,
APPELLANT Smt.Pushpa Prabhakar W/o Prabhakar,
Aged about 58 years, R/at No106/202,
Madhu Kiran, R.V.-8, Apartments
th th
between 13 and 14 Cross, Margo's
road, Malleshwaram, Bengaluru-560003.
(Sri Chikkavenkataiah, Adv)
VS.
RESPONDENT M/s Shriram Chits (Karnataka) Ltd., At
No.280, II Floor, 10th Cross, Wilson
Garden, Bengaluru-560027,
Reptd by Lingaraj.G.M, S/o
M.Gurulingappa, Aged about 31 years.
(By Sri.A.L.M. Adv )
JUDGMENT
This appeal filed U/sec. 374(3) of Cr.P.C., by the appellant, being aggrieved by the judgment of conviction and sentence passed in C.C.No.9279/2013, dt.30.12.2016 for 2 Crl.A.No.165/2017 offence punishable u/s 138 of N.I.Act on the file of XL ACMM, Bengaluru.
2. The appellant was the accused and respondent herein was the complainant before the trial Court and they are referred to as per the ranks assigned to them before the lower court.
3. The brief facts leading to this appeal can be stated as under:-
The complainant is registered company doing its chits business under the Chits Act 1982. The accused is a subscriber in chit group ticket bearing No.71007/14, for Rs.1,50,000/-. The accused had to pay Rs.5,000/- per month for 40 months. The accused had participated in the chit auction bid held on 14.11.2008 and had bidden the chit for Rs.60,000/-. She had received the prize money of Rs.90,000/-. At the time of receiving the prize money, the accused issued cheque towards the repayment of outstanding amount and towards the discharge of her liability 3 Crl.A.No.165/2017 under the chit business. When the said cheque was presented for encashment it was dishonoured for the reasons 'Account closed '. Then the complainant got issued legal notice to the accused who neither replied the notice nor repaid the cheque amount.
4. Then the complainant presented the complaints under section.200 of Cr.P.C., for offence punishable under Sec.138 of Negotiable Instruments Act. Learned Magistrate took cognizance and registered the case against the accused for offence punishable u/Sec. 138 of Negotiable Instruments Act and secured the presence of accused who after appearance, pleaded not guilty. Then the complainant examined himself as PW1 and one G.K.Amarnath as PW2 and got marked documents as per Ex.P.1 to Ex.P.13. After recording of statement of accused under Sec.313 of Cr.P.C., the accused examined one Siddarth as DW1 and got exhibited Ex.D1 to 3 her behalf.
4 Crl.A.No.165/2017
5. The learned Magistrate on hearing the arguments on both sides, found the accused guilty and proceeded to convict the accused for offence u/s. 138 of Negotiable Instruments Act and sentenced her to pay a fine of Rs.1,70,000/- and in default of payment of fine amount, the accused shall undergo S.I. for a period of six months. Besides, the trial Court awarded compensation of Rs.1,60,000/- out of the fine amount to the complainant acting u/s.357 of Cr.P.C., by passing the impugned judgment on dt.30/12/2016.
6. This judgment of conviction and sentence which is now under challenge by the appellant/accused on the following grounds:-
The impugned judgment of conviction and sentence passed by the trial court is opposed to the settled principles of law, facts and probabilities of the case. The learned Magistrate grossly erred in not properly appreciating the oral and documentary evidence available on record in proper 5 Crl.A.No.165/2017 perspective. The learned Magistrate failed to consider the fact that chit fund bid auction was held on 14.11.2008 and Ex.P.7 discloses that, the signature of the appellant obtained on blank paper and there is no seal or signature of the accused. The learned Magistrate did not apply his mind properly, effectively, efficiently that the chit fund bid auction was held on 14.11.2008 and Ex.P.1 cheque pertains to dated 22.1.2013 for Rs.89,101/- which are all filled up by the complainant except the signature on blank cheque. Since the chit fund bid prized amount of Rs.90,000/-has not been paid to the accused for which the accused stopped the remaining payment of chit fund value. The complainant has filed Arbitration in dispute No.275/2012-13 and obtain an award to recover a sum of Rs.1,26,415/- from the accused and the same has been challenged before the Joint Registrar of Cooperative societies for chit fund. The learned Magistrate has not looking into the evidence of DW1 who has examined on behalf of accused, as deposed that transaction pertaining to the cheque Ex.P.1 The trial judge failed to 6 Crl.A.No.165/2017 consider the cheque in question was not issued for discharge of debt or liability. The impugned judgment of conviction is unsustainable and not tenable in the eye of law. Hence, prayed to set aside the impugned judgment of conviction and to acquit the accused by allowing the appeal.
7. After filing of this appeal, notice duly served on the respondent who made his appearance through a counsel. The trial Court records, have been secured.
8. Heard arguments of learned counsel for appellant and respondent.
9. Perused the records.
10. In the light of the contentions taken up in the memorandum of appeals, the common points that arise for my determination are as follows;
1) Whether the Court below erred in not properly appreciating the defense set up by the accused in proper perspective?
7 Crl.A.No.165/2017 2) Whether the learned Magistrate erred in convicting the appellant/accused for offence punishable U/sec. 138 of Negotiable Instruments Act? 3) Are there any grounds to interfere with the order of conviction and sentence? 4) What order? 11. 11. My findings on the above points are as follows: Point No.1 : In the Negative Point No.2 : In the Negative Point No.3 : Partly in the affirmative Point No.4 : As per final Order REASONS
12. Point Nos.1 to 3:- All these points are taken together for discussion for the sake of convenience and to avoid repetition of facts.
13. I have carefully gone through the contents of appeal memo, trial Court records and the impugned judgment.
8 Crl.A.No.165/2017
14. It is the specific case of the complainant that accused is a subscriber in chit group ticket bearing No.71007/14 for Rs.1,50,000/-. The accused had participated in the chit auction bid held on 14.11.2008 and had bidden the chit for Rs.60,000/-. The accused had issued the cheque for Rs.89,101/- in favour of the complainant towards the repayment of the outstanding amount and towards the discharge of her liability under the chit. It is the further case of the complainant that since the cheque which were issued by the accused came to be bounced back as account closed, the accused is liable to be convicted for offence punishable u/Sec. 138 of Negotiable Instruments Act.
15. On the other hand, it is defense set up by the accused that the cheque in question was issued to the complainant as a security and misused the said cheque for filing the complaint. It is further defense set up by the accused that the complainant himself had not been paid amount of Rs.90,000/- and hence, she stopped the remaining 9 Crl.A.No.165/2017 payment of chit amount and hence, she is not liable to pay the said cheque amount.
16. Keeping in view the rival contentions of both the parties, I have carefully gone through the evidence let in by both the parties to answer the points in controversy.
17. Obviously, the burden is on the complainant to prove that the cheque in question were issued towards discharge of legally recoverable debt or liability. In this regard, the complainant examined himself as PW1 who in his evidence has reiterated the averments of the complaint and got marked original cheque, memo issued by the bank, receipt, copy of legal notice, postal receipt, postal acknowledgements, promissory note, agreement, incorporation, copy of commencement of certificate as per Ex.P.1 to 13.
18. In the cross examination on behalf of the accused, PW1 states that the accused bid the chit fund and 10 Crl.A.No.165/2017 she is a due a sum of Rs.89,101/- and in order to repay the installments, the accused has issued cheque in question. He has stated all these facts in his notice. He denied the suggestion that the accused has paid all the installments amount. He denied the suggestion that the accused has issued the cheque in question as a security and he misused the same.
19. A careful appreciation and evaluation of the evidence of PW1 coupled with contents of Ex.P.1 to Ex.P.13, makes it clear that the accused and complainant were known to each other very well. Herein this case the accused does not dispute issuance of cheque and her signature found on the cheque in question. But it is his contention that, she has issued the cheque in question to the complainant in anther transaction and complainant has misused the same. He further contended that, the complainant himself has not paid Rs.90,000/- the chit amount, hence, she has stopped to pay 11 Crl.A.No.165/2017 the remaining amount of chit. But this contention of accused is not substantiated by any material on record.
20. Further, if really the accused had issued said cheque as security for the said chit business, she would not have kept mum without insisting complainant for returning the said cheque soon after repayment of chit fund amount. As such the defense set up by the accused is not believable and natural one.
21. Moreover, when the accused admits his signature found on Ex.P.1 and handing over the same to complainant while availing of chit fund amount, the presumption under Sec.139 of Negotiable Instruments Act would arise in favour of the complainant.
22. In this regard I would like to rely upon the decisions of Hon'ble Apex court in Kishna Rao v/s Shankar Gowda in 2018(8) SCC 165 Financial loss Monterey loss - Negotiable Instrument Act 1981- 139- presumption under 139 does when may be fallen- ingredients and scope of Sec.139- 12 Crl.A.No.165/2017 does not - probable summaries- accused liberty may adduce evidence to rebut the presumption u/Sec.139- but mere denial regarding existence of debt was not serve any purpose in the event accused is able to raise probable defense which creates doubt with regard to existence of debt or liability presumption may fall.
23. In Rangappa Vs.Mohan in AIR 2010 SC 1898 wherein it is held that, The presumption mandated by S.139 of the Act does indeed include the existence of legally enforceable debt or liability. This is of course in the nature of rebuttable presumption and it is open to the accused to raise a defense wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. S.139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of the cheque, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by S.138 can be better described as regulatory offence since the bouncing of a cheque is largely in nature of a civil wrong whose impact is usually confined to the private parties involved in 13 Crl.A.No.165/2017 commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is settled position that when an accused has to rebut the presumption under Sec.139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise. Therefore, if the accused is able to raise a probable defense which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defense and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.
24. Moreover, when the accused admits his signature found on Ex.P.1 and handing over the same to complainant while borrowing loan amount, the presumption under Sec.118 and 139 of Negotiable Instruments Act would arise in favour of the complainant. But the accused has not produced any materials to rebut the said presumption. As such, no material 14 Crl.A.No.165/2017 is produced appreciate the defense set up by accused with regard. Therefore, the learned Magistrate has rightly appreciated and evaluated the evidence of PW1 in proper perspective. As such there is no any illegality or error committed by the Court below in appreciating the evidence available on record.
25. On careful appreciation of evidence of PW1 and the defense taken by the accused, it can be said that though she states that the cheque in question was issued only security, her bald say itself cannot be relied upon. Because, if really she repaid the entire chit fund amount, she would not have left the signed cheque in the hands of complainant. She has not offered any explanation as to why she left the cheque in the hands of complainant. So, this aspect of the case goes to show that defense set up by accused is not probable.
26. Having regard to all these facts and circumstances, I am of the considered view that the learned 15 Crl.A.No.165/2017 Magistrate has rightly appreciated the oral and documentary evidence available on record in proper perspective. The learned Magistrate committed no error or illegality in appreciating and evaluating the documents relied upon by both the parties. Herein this case, the accused failed to rebut the presumption available in favour of complainant under Sec.139 of Negotiable Instruments Act. A bald denial of the case of complainant does not amount to a defense.
27. Furthermore, the accused has not replied the legal notice which was issued to her as per Ex.P.3. It appears from the records that the notice was issued through registered post and which was duly served on the accused. It shows that her action in keeping mum without replying the notice, goes to show that he purposefully kept quiet since she issued Ex.P1 towards repayment of chit fund amount.
28. Herein this case, the accused admits that the address shown in the legal notice at Ex.P.3 pertains to her residence. Such being the fact, there is a deemed service of 16 Crl.A.No.165/2017 legal notice on the accused, who neither replied the same nor paid the cheque amount. Therefore, the complainant has placed sufficient and ample materials on record to believe that the Ex.P.1 cheque was issued by accused towards repayment of loan amount of Rs.89,101/-, which she due towards the chit fund. There are no such circumstances, wherein the case of complainant can be doubted. There are no grounds so as to interfere with the reasoning and findings of the Court below. As such the learned Magistrate committed no error or illegality in believing the case of complainant.
29. The learned counsel for the accused has relied upon the decision of Hon'ble High Court of Karnataka in 2013(3) Kar.L.J.31 in the case of Shriram Chits (K) Private Limited, Bengaluru Vs. The Additional Registrar of Cooperative Societies (Industrial Cooperative societies), Bengaluru and others.
17 Crl.A.No.165/2017
(A) CHIT FUNDS ACT, 1982, Sections, 9, 20, 23 and 64- Chit business 0- Be careful -M/s Shriram chits-Not registered its chits as required under law - No legal sanctity to run chit business - Seeks enforcement of promissory note against its subscribers-Dispute raised by the company- Rejected by both authorities - Held, a company which do not comply with the mandatory requirements of law cannot seek any relief thus writ petitions are dismissed.
30. By relying the judgment, he vehemently argued that, ratio laid down in the above judgment is clearly applicable to the case in hand. The complainant is not a company in the said judgment. The complainant did not produce any single document on record to show that he complied all the requirements under the different provisions of Chit Fund Act 1982 and the complainant has not complied with the requirements under the provisions of said Act. Further it is held that, the said company is not running a chit between 1995 and 1998 and petitioner did not obtain sanction from the State Government nor was any State 18 Crl.A.No.165/2017 Authority registered in accordance with law and provisions of said Act.
31. That case in hand, it is very clear that the ratio laid down in the above judgment is in the period between 1995 and 1998 the said company has not produced any document in respect of sanction, but in the present case, is registered in the year 2013. The accused has not taken defense that complainant has not taken prior sanction of the State Government or any other State Authority registered in accordance with provision of Chit Fund Act 1982. Being silent of the accused that presuming that the complainant is running chit fund business with a valid license/sanction. It is the duty of accused to establish that the complainant company is not running a illegal chit fund business. Therefore, I feel that, above decisions of the Hon'ble High Court of Karnataka in Shriram Chits (K) Private Limited, Bengaluru (Supra) is not applicable to the case in hand. 19 Crl.A.No.165/2017
32. Further that the accused has taken defense that, chit fund amount is not a debt. In support of said point, the accused has cited the judgment of the Hon'ble Supreme Court in AIR 1992 Karnataka 52 in Venkatamuniyappa V/s M/s Sudarshan Trading Co.Ltd., Karnataka Debt Relief Act (29 of 1980), Ss.2(5), 3(b) and 4 -Debt -chit fund transaction is not a debt
- chit Hence,, judgment- debtor subscriber cannot claim benefit of discharge of his liability by invoking portions of the Act.
33. Wherein it is held that chit fund transactions which relied in a civil court decree is not a debt within the meaning of Karnataka Debt Act.
34. On going through the above decisions, the main question is that whether the transaction between the accused and complainant is a debt or not. On plain reading of Sec.138 of N.I.Act it is very clear that, debt should be legally recoverable or other liability. Here also the present case the accused is not having debt. But it came in the purview of 20 Crl.A.No.165/2017 other liability. The accused has to pay contribution of monthly installments for the payment of contribution the accused had given cheque to the complainant company. The amount is not a debt, but it come under other liability. Hence, the accused is bounded duty to pay the amount which is mentioned in the cheque. Therefore, the above decision is not applicable to the case on hand.
35. Having regard to the facts and circumstances of the case, I am of the view that the impugned judgment of conviction and sentence passed by the learned Magistrate is in accordance with settled principle of law, facts and probabilities of the case. Absolutely there are no grounds to interfere in the reasoning and findings given by the Court below so as to convict the accused. As such the impugned judgment of conviction is in accordance with the settled principles of law, facts and probabilities of the case. Hence, the impugned judgment of conviction deserves to be confirmed with.
21 Crl.A.No.165/2017
36. However, the facts and circumstances involved in the case on hand, do warrant this Court to interfere with regarding imposing of sentence amount and requires to modify the sentence imposed on accused by trial Court. Because the transaction between the complainant and accused is chit business. The accused issued the cheque in question towards the repayment chit fund amount. But the learned Magistrate awarded compensation double the cheque amount without assigning any reasons and without any basis. Though it is permissible under law to impose fine to the tune of double the cheque amount, sufficient justifiable grounds need to be assigned by Court to impose fine or award compensation to the tune of double the cheque amount.
37. Herein this case, absolutely, no reasons are assigned by the learned Magistrate to award compensation double the cheque amount. It appears, the loan transaction has taken place under the close acquaintance of complainant with accused. Even there is no such agreement to pay 22 Crl.A.No.165/2017 interest on the loan amount. Even no document was obtained from the accused either as a security or with regard to payment of any interest. Therefore, these facts would go to show that the complainant had no intention to claim any interest on such amount. Such being the fact, the learned Magistrate is not justified in awarding compensation double the cheque amount.
38. Furthermore, the thing would have been different if the learned Magistrate assigned any reasons for awarding compensation double the cheque amount. As such, the learned Magistrate is not justified in awarding compensation double the cheque amount without assigning any reasons to that effect. So, on these facts, I am of the view that the impugned order of sentence deserves to be interfered so as to modify the quantum of compensation awarded to complainant. Therefore, considering the fact that the transaction has taken place between the complainant and the accused company with regard repayment of amount, which he received from the complainant towards execution of 23 Crl.A.No.165/2017 project, I feel that the accused shall be directed to pay compensation of Rs.1,00,000/- instead of Rs.1,70,000/- as awarded. Hence, the impugned order of sentence deserves to be interfered only with regard to quantum of compensation awarded by learned Magistrate. Hence, impugned judgment of conviction deserves to be confirmed with by modifying the quantum of sentence as observed above. Accordingly, I answer point No.1 and 2 in the negative and point No.3 partly in the affirmative.
39. Point No.4: In view of my findings on point No.1 to 3, I proceed to pass the following:
ORDER The appeal filed by appellants U/sec. 374 of Code of Criminal Procedure is hereby allowed in part.
The impugned judgment of conviction
passed by the XL ACMM, Bengaluru, in CC
24 Crl.A.No.165/2017
No.9279/2013 dt.30/12/2016 is confirmed.
However the sentence stands modified as under:-
Acting u/s. 264 of Cr.P.C, the accused is hereby convicted and sentenced to pay fine of Rs.1,00,000/- for the offence punishable u/Sec.138 of Negotiable Instruments Act and in default of payment of fine amount, the accused shall undergo S.I. for a period of six months.
Out of the fine amount, a sum of Rs.1,00,000/- an amount of Rs.90,000/- is ordered to be paid as compensation to the complainant under Sec.357 of Cr.P.C., and remaining Rs.10,000/- shall be appropriated to the government.
Send a copy of this judgment to the lower Court along with LCR.
*** (Directly dictated to the stenographer on computer and then pronounced by me in the open court on this the 9th day of January, 2019) (Vidyadhar Shirahatti) LX Addl.City Civil & Sessions Judge, Bengaluru.25 Crl.A.No.165/2017
Order pronounced in the open court. Vide separately ORDER The appeal filed by appellants U/sec. 374 of Code of Criminal Procedure is hereby allowed in part.
The impugned judgment of conviction passed by the XL ACMM, Bengaluru, in CC No.9279/2013 dt.30/12/2016 is confirmed. However the sentence stands modified as under:-
26 Crl.A.No.165/2017
Acting u/s. 264 of Cr.P.C, the accused is hereby convicted and sentenced to pay fine of Rs.1,00,000/- for the offence punishable u/Sec.138 of Negotiable Instruments Act and in default of payment of fine amount, the accused shall undergo S.I. for a period of six months.
Out of the fine amount, a sum of Rs.1,00,000/- an amount of Rs.90,000/- is ordered to be paid as compensation to the complainant under Sec.357 of Cr.P.C., and remaining Rs.10,000/- shall be appropriated to the government.
Send a copy of this judgment to the lower Court along with LCR.
(Vidyadhar Shirahatti) LX Addl.City Civil & Sessions Judge, Bengaluru.