Bangalore District Court
Sri. Keshava Murthy.K vs Sri.Shivakumar.B.K on 2 February, 2023
KABC030523832020
Presented on : 28-10-2020
Registered on : 28-10-2020
Decided on : 02-02-2023
Duration : 2 years, 3 months, 5 days
IN THE COURT OF THE XVIII ADDL.CHIEF
METROPOLITAN MAGISTRATE, BENGALURU CITY
PRESENT: MANJUNATHA M.S. B.A., LL.B.
XVIII ADDL.C.M.M., BANGALORE
DATED : THIS THE 2 nd DAY OF FEBRUARY 2023
C.C. No.14014/2020
COMPLAINANT: Sri. KESHAVA MURTHY.K
S/o Sri.Kulladimmaiah,
Aged about 44 years,
R/at Provident Welworth Apartments
Marasandra Village,
Doddaballapura Main Road,
Bengaluru
(By Sri.S.R.S.- Advocate)
// Versus //
ACCUSED: 1.Sri.SHIVAKUMAR.B.K.
S/o B.Kempayya,
Aged about 28 years,
R/at No.00, 2nd Floor,
Addiganahalli, Rajanukunte,
Bengaluru North Taluk,
Bengaluru-560 004.
Also at
Mr.Shivakumar.B.K.
S/o B.Kempayya,
Aged about 28 years,
Employee No.2725,
2 Judgment C.C.14014/2020
Designation: Member special
Process
C/o INDO MIM, Indo- US MIM
Tec.
Pvt Ltd., #45, {P} KIADB
Industrial Area, Bashettihalli,
Doddaballapura,Bengaluru-561 203.
2.Mr.PRASHANTH.M.S
S/o Sri.Shankare Gowda,
Aged about 29 years,
R/at :Govindappa Building,
Addiganahalli, Rajankunte,
Bengaluru North Taluk,
Bengaluru
Also at
Mr.PRASHANTH.M.S
S/o Sri.Shankare Gowda,
Aged about 29 years,
Employee No.2281,
Designation:Member special
Process
C/o INDO MIM, Indo-US MIM
Tec.Pvt Ltd., #45, {P} KIADB
Industrial Area,Bashettihalli,
Doddaballapura,Bengaluru-561 203.
3.Mr.DEEPU.C.B.,
S/o Sri.Basappa,
Aged about 29 years,
R/at No.23, 2nd floor,
Addiganahalli,Hesaraghatta Hobli,
Rajankunte, Bengaluru North
Taluk, Bengaluru
Also at
3.Mr.DEEPU.C.B.,
S/o Sri.Basappa,
Employee No.2301,
3 Judgment C.C.14014/2020
Designation:Member special
Process
C/o INDO MIM, Indo-US MIM
Tec Pvt Ltd., #45, {P}
KIADB Industrial
Area, Bashettihalli, Doddaballapura
Bengaluru-561 203.
(By Sri.S.K.- Advocate)
Offence complained : U/Sec.138 of Negotiable
Instrument Act.
Name of the complaint : Sri. KESHAVA MURTHY.K
S/o Sri.Kulladimmaiah,
Date of commencement
of evidence : 18-02-2021
Date of closing evidence : 22-12-2022
Opinion of the Judge : Accused No.1 found guilty.
Accused No.2 and 3 found
not guilty
(MANJUNATHA M.S.)
XVIII A.C.M.M.,BANGALORE.
JUDGMENT
The complainant has filed this complaint under section 200 of Code of Criminal Procedure read with section 138 of the Negotiable Instruments Act against the accused No.1 to 3 alleging that, they have committed the offence punishable under section 138 of NI Act.
4 Judgment C.C.14014/2020
02. The sum and substance of the complaint is as follows; The complainant and the accused No.1 are well acquainted each other. On that acquaintance, the accused No.1 has borrowed a sum of Rs.1,00,000/- from the complainant on 13.12.2018. Thereafter , he has introduced accused No.2 & 3 to him and on his assurance he has lend a hand loan of Rs.2 lakhs to accused No.2 on 4.2.2019 and Rs.1,00,000/- to the accused No.3 on 8.7.2019 through online transfer and cash. The accused No.1 has stood as guarantor to the loan borrowed by accused No.2 & 3 and three of them have executed loan agreement in favour of him. But they have not kept up their promise and failed to repay the loan amount. As such the complainant has lodge police complaint against them before Vishwanathapura Police station and a compromise was entered into between them in the police station, accordingly the complainant has returned all the security cheques to accused No.1 to 3, but they have not repaid the amount as per compromise. The accused No.1 to 3 have repaid only Rs.90,000/-. Therefore, again the complainant has approached the police and on their instruction the accused No.1 to 3 have issued cheque in question bearing No.000020 dated 6.7.2020 for Rs.3,10,000/-drawn on HDFC Bank, Yelahanka Branch, 5 Judgment C.C.14014/2020 Bengaluru towards repayment of the balance loan amount and also promised that the cheque will be honoured on its presentation. As per the assurance of the accused persons, the complainant has presented the said cheque for encashment through his banker i.e., Axis Bank, Yelahanka Branch, Bengaluru. But the said cheque was returned unpaid for the reason "DRAWERS SIGNATURE DIFFERS" as per bank endorsement dated 31.7.2020. Thereafter, the complainant has got issued demand notice on 10.08.2020 to the accused No.1 to 3 through RPAD by demanding the payment of cheque amount. The said notice was duly served on the accused No.1 to 3. The accused No.1 to 3 have issued untenable reply dated 17.8.2020. Despite of the service of demand notice the accused No.1 to 3 have not paid the cheque amount and thereby they have committed an offence punishable under section 138 of N I Act.
03. After filing of complaint, this court has taken cognizance of the offence punishable under section 138 of Negotiable Instrument Act, sworn statement of the complainant was recorded. Being satisfied that there are prima-facie materials to proceed against accused No.1 to 3, summons was issued. After appearance, accused No.1 to 3 enlarged on bail and plea was recorded as per section 251 6 Judgment C.C.14014/2020 of Cr.P.C. The accused No.1 to 3 have not pleaded guilty but submitted that they have defense to make.
04. As per the direction of Hon'ble supreme court in "Indian Bank Association V/s Union of India and others reported in (2014) 5 SCC 590, this court has treated the sworn statement of the complainant as complainant evidence. The accused has filed application under section 145(2) of NI Act for recall of PW1 for the purpose of cross-examination. The said application came to be allowed. The defence counsel has fully cross-examined PW1. After completion of complainant's evidence, statement of accused as contemplated under section 313 of Code of Criminal Procedure was recorded. The accused No.1 to 3 have denied all the incriminating material appears against them in the complainant's evidence. Therefore the case was posted for defence. The accused No.1 to 3 submits there is no defence evidence to make. Hence defence evidence taken as Nil vide order dated 22-12-2022 and posted the case for arguments.
05. Heard the arguments of complainant and defence counsels. The Defence counsel has filed memo with decision in the case of 7 Judgment C.C.14014/2020 Alka Khandu Avhad Vs Amar Syamprasad Mishra & anr (Crl.A.No. 258/2021). I have perused the materials available on record.
06. The points that arise for my consideration are as follows;
1. Whether the complainant proves that, accused No.1 to 3 have issued cheque bearing No.000020 dated 06.07.2020 for Rs.3,10,000/- towards discharge of their liability, which was returned unpaid on presentation for the reason "DRAWERS SIGNATURE DIFFERS" and despite of notice they have not paid the cheque amount and thereby committed an offence punishable under section 138 of Negotiable Instruments Act?
2. What Order?
07. My answer to the above points is as follows;
Point No.1: In the Affirmative so far as accused No.1 is concerned.
In the Negative so far as accused No.2 & 3 are concerned.
Point No.2: As per final order for the following;
REASONS
08. POINT No.1: The Complainant has filed this complaint alleging that the accused No.1 to 3 have committed offence 8 Judgment C.C.14014/2020 punishable under section 138 of N.I. Act. He pleads and asserts that, the accused No.1 to 3 have availed a hand loan of Rs.4,00,000/- and towards discharge of said liability accused No.1 to 3 have issued cheque bearing No.000020 dated 06.07.2020 for Rs.3,10,000/-. He has presented the said cheque for encashment through his banker. But the said cheque was returned unpaid with an endorsement "DRAWERS SIGNATURE DIFFERS" on 31.07.2020.
Thereafter, he got issued demand notice on 10.08.2020 to the accused No1 to 3 by demanding the payment of cheque amount. Despite of the notice the accused No.1 to 3 have not paid the amount within 15 days, which gave raise cause of action to file this complaint.
09. To substantiate its case, the complainant has stepped into witness box and examined as PW.1 and got marked as many as 9 documents as Exs.P-1 to 9. The complainant has reiterated the contents of the complaint in his affidavit evidence about lending loan of Rs.1 lakh to the accused No.1, Rs.2 lakhs to the accused No.2 and Rs.1 lakh to the accused No.3 and issuance of cheque in question for repayment of said debt and its dishonour for "DRAWERS SIGNATURE DIFFERS", issuance of legal notice 9 Judgment C.C.14014/2020 to the accused No.1 to 3 calling upon them to pay the amount covered under the said cheque and their failure to comply the same.
10. In this scenario, let me scrutinize the documents relied by complainant in order to examine the compliance of statutory requirements envisaged under section 138 of N.I. Act. Ex.P.1 is cheque dated 06.07.2020. The said cheque was returned unpaid with an endorsement "DRAWERS SIGNATURE DIFFERS " as per Ex.P.2 bank endorsement dated 31.07.2020, Ex.P.3 is legal notice dated 10.08.2020 under which the complainant has demanded the payment of cheque amount, Ex.P.4 is postal receipts, Ex.P.5 to 7 are Postal acknowledgments, Ex.P.8 is Reply Notice dated 17.8.2020 and Ex.P.9 is Bank statement. A careful scrutiny of the documents relied by the complainant goes to show that, statutory requirements of section 138 of N.I. Act have been complied with and this complaint is filed within time. The complainant by examining as PW1 and by producing aforesaid documents has discharged his initial burden. No doubt the cheque in question was dishonoured for reason "DRAWERS SIGNATURE DIFFERS " and not for funds insufficient, then also section 138 of NI Act is attracted as held by the Hon'ble supreme court in the case of Lakshmi Dyechem Vs. 10 Judgment C.C.14014/2020 State of Gujarath and others, reported in (2012) 13 SCC 375 since the accused No.1 who is the drawer of the cheque has not established that as on the date of presentation of cheque there was sufficinet balance in his account to honour the cheque . In the said case Hon'ble supreme court held that; We find ourselves in respectful agreement with the decision in NEPC Micon Ltd. (supra) that the expression "amount of money is insufficient" appearing iin section 138 of the Act is a genus and dishonour for reasons such "as account closed", "payment stopped", "referred to the drawer" are only species of that genus. Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in section 138, so also dishonour on the ground that the "signatures do not match" or that the "image is not found", which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of section 138 of the Act.
11. The defence of the accused is that they have borrowed loan of Rs.4 lakhs from the complainant by issuing blank signed cheque as security. Thereafter, the complainant has lodged a police complaint against them before the Vishwanthapura Police station. In the police 11 Judgment C.C.14014/2020 station a compromise was arrived between them and as per said compromise the complainant has failed to return the security cheque even though the accused No.1 has paid Rs.90,000/- and ready to clear remaining amount in installments. Later on the complainant has misused the said security cheque and filed present case. Hence section 138 of NI Act is not attracted. The defence counsel also contended that the accused No.2 & 3 are not the signatory or the drawers of the cheque as such section 138 of NI Act is not attracted on them. Hence, on these grounds the accused No.1 to 3 have prays to acquit them from the charges.
12. In the back drop of aforesaid rival contentions, this court has given anxious consideration to the material on record and the submission made by the defence counsel. At the outset, it is pertinent to mentioned that the accused No.1 has not disputed issuance of cheque and his signature in the cheque in question. The only contention of the accused No.1 is that he has issued signed blank cheque as security and the complainant has misused the same, by taking such contention the accused No.1 has admitted the issuance of cheque as well as signature found thereon. When the drawer has admitted the issuance of cheque as well as the signature 12 Judgment C.C.14014/2020 present therein, the presumptions envisaged under section 118 read with section 139 of NI Act, would operate in favour of the complainant. The Hon'ble Supreme Court in M/S Kalamani Tex and another V/s P. Balasubramanian (2021) 5 SCC 283 has held that the Statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these 'reverse onus' clauses become operative, such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. Therefore once the drawer has admitted the issuance of cheque as well as on the signature present therein or it is established that signature in cheque belongs to accused, then the presumption envisaged under section 118 and 139 of NI Act, would operate in favour of the complainant. The said provision lays down a special rule of evidence applicable to negotiable instrument. The presumption is one of law and thereunder court shall presume that the Negotiable instrument was endorsed for consideration. So, also in the absence of contrary evidence on behalf of the accused, the presumption under section 118 and 139 of NI Act goes in favour of the complainant. In the present case also as stated above the accused No.1 has admitted issuance of cheque and his signature found in 13 Judgment C.C.14014/2020 Ex.P1 cheque. As such presumption under section 118 and 139 of NI Act has to be drawn in favour of the complainant. Section 118 reads as here:- "That every negotiable instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration". Further Section 139 of the Negotiable Instruments Act provides for presumption in favour of a holder. It reads as here: - "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, or any debt or other liability." A combined reading of above said sections raises a presumption in favour of the holder of the cheque that he has received the same for discharge in whole or in part of any debt or other liability.
13. No doubt, the said statutory presumptions are rebuttable in nature. It is for the accused to place cogent and probable defence to rebut presumption raised in favour of the complainant. As discussed above when the complainant has relied upon the statutory presumption enshrined under section 118 read with section 139 of NI Act. It is for the accused to rebut the said presumption with 14 Judgment C.C.14014/2020 cogent and convincing evidence. To put it other way, the burden lies upon the accused to prove that Ex.P.1 cheque was not issued for discharge of any debt, but it was issued as a security . It is worth to note that section 106 of Indian Evidence Act postulates that, the burden is on the accused to establish the fact which is especially within his special knowledge. This provision is exception to the General Rule that, the burden of proof is always on the prosecution to establish their case beyond all reasonable doubt. In that view of the matter the burden is on the accused to prove that cheque in question was issued for security and not for discharge of any debt or liability.
14. To rebut the said presumption the accused have fully cross- examined PW1, but they have not led any defence evidence. During the cross-examination, the complainant has admitted that he has lodged a police complaint before the Vishwanthapura Police station, on the basis of the said complaint the police have registered NCR No. 411/1878/2019. During the enquiry of the said complaint the police inspector has compromised the case and as per the said compromise he has agreed to return all security cheques. But he denied the suggestion that except cheque in question he has returned 15 Judgment C.C.14014/2020 all other cheques. He further deposed that the accused have failed to honour the compromise as such he again approached the police and police inspector has instructed the accused to give cheque as such the accused have issued Ex.P.1 cheque for repayment of the remaining balance amount. He has admitted that out of Rs.4 lakhs loan the accused No.1 has repaid Rs. 90,000/-. He denied the suggestion that he has misused the security cheque obtaining from the accused No.1. He denied the suggestion that the accused No.2 and 3 have no way connected to the Ex.P.1 cheque. He further deposed that the accused No.1 to 3 have jointly issued Ex.P.1 cheque. He deposed that the accused have taken back loan agreement from him and issued Ex.P.1 cheque for repayment of the loan amount. He denied the suggestion that the accused No.1 has repaid the entire loan amount and the accused No.2 & 3 have assured that they will repay the loan amount in installments, despite of the same, he has filed a false complaint against them. He has admitted that accused No. 2 & 3 have not signed the Ex.P.1 cheque. He further deposed the accused No.1 has handed over the Ex.P.1 cheque to him.
16 Judgment C.C.14014/2020
15. The complainant claims that the accused No.1 has borrowed a loan of Rs.1 lakhs, accused No.2 has borrowed loan of Rs.2 lakhs and accused No.3 has borrowed Rs.1 lakh from him, for repayment the said loan they have jointly issued Ex.P.1. He also claims that accused No.1 to 3 have jointly executed loan agreement and accused No.1 has stood as guarantor to the loan borrowed by accused No.2 & 3. The said loan agreement was taken back by the accused No. 1 to 3 in the police station and issued cheque in question for repayment of the balance loan amount in terms of the compromise. The accused have repaid only Rs. 90,000/- and liable to repay the balance amount of Rs.3,10,000/-. In support of said contention the complainant has produced photocopy of the said loan agreement as such same was not got marked. Therefore, no document was got marked regarding the borrowing of loan by the accused No.1 to 3. However, in the reply notice Ex.P.8 the accused No.1 to 3 have clearly admitted that they have borrowed hand loan of Rs.4 lakhs from the complainant and issuance of Ex.P.1cheque. In the reply notice the accused have stated that they have repaid Rs.90,000/- only and ready to pay remaining loan amount in installments if the complainant has return the cheque No.000002. From the said reply 17 Judgment C.C.14014/2020 notice it is clear that the accused have borrowed loan of Rs.4 lakhs from the complainant and repaid only Rs.90,000/- and they were in due of Rs.3,10,000/-.The bank statement produced by the complainant further clarify that the complainant has transfer major portion of the loan amount through online to the accused No.1 to 3. Thereby the complainant has successfully proved that the accused No.1 to 3 are in due of Rs.3,10,000/-.
16. The main contention of the learned counsel for the accused is that the case against the accused No.2 & 3 is liable to be dismissed, inasmuch as they have not a signatory to the subject mater of the cheque in question. In this context it is appropriate to extract Section 138 of N.I.Act, which reads as follows: "Section 138 - Dishonour of cheque for insufficiency, etc., of funds in the account - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made 18 Judgment C.C.14014/2020 with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. As per the mandate given under Section 138 of N.I Act, where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or 19 Judgment C.C.14014/2020 other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence. Section 138 of the NI Act does not speak about the joint liability.
17. In Alka Khandu Avhad Vs Amar Syam Prasad Mishra and anr reported in (2021) 4 SCC 675 , cited by the learned counsel for the accused, the Hon'ble Apex Court observed as follows: "Para 7: On a fair reading of Section 138 of the NI Act, before a person can be prosecuted, the following conditions are required to be satisfied: i) that the cheque is drawn by a person and on an account maintained by him with a banker; ii) for the payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability; and iii) the said cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account. Therefore, a person 20 Judgment C.C.14014/2020 who is the signatory to the cheque and the cheque is drawn by that person on an account maintained by him and the cheque has been issued for the discharge, in whole or in part, of any debt or other liability and the said cheque has been returned by the bank unpaid, such person can be said to have committed an offence. Section 138 of the NI Act does not speak about the joint liability. Even in case of a joint liability, in case of individual persons, a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence Under Section 138 of the NI Act. A person might have been jointly liable to pay the debt, but if such a person who might have been liable to pay the debt jointly, cannot be prosecuted unless the bank account is jointly maintained and that he was a signatory to the cheque.
18. In Mrs. Aparna A. Shah Vs Sheth Developers Pvt Ltd, and anr reported in (2013) 8 SCC 71, the Hon'ble Apex Court took the view that under Section 138 of the N.I. Act, it is only the drawer of the cheque who can be prosecuted. In the said case, the husband had drawn the cheque on the account, which was being jointly maintained by him and his wife. The Hon'ble Supreme Court held that in case of issuance of a cheque from joint account, a joint 21 Judgment C.C.14014/2020 account holder cannot be prosecuted unless the cheque has been signed by each and every person who has a joint account holder. The Hon'ble Supreme Court observed as follows: "Para 23:
We also hold that under Section 138 of the N.I. Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder. The said principle is an exception to Section 141 of the N.I. Act which would have no application in the case on hand. The proceedings filed under Section 138 cannot be used as an arm twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138. The culpability attached to dishonour of a cheque can, in no case "except in case of Section 141 of the N.I. Act" be extended to those on whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act. Even the High Court has specifically recorded the stand of the appellant that she was not the signatory of the cheque but rejected the contention that the amount was not due and payable by her solely on the ground
22 Judgment C.C.14014/2020 that the trial is in progress. It is to be noted that only after issuance of process, a person can approach the High Court seeking quashing of the same on various grounds available to him. Accordingly, the High Court was clearly wrong in holding that the prayer of the appellant cannot even be considered. Further, the High Court itself has directed the Magistrate to carry out the process of admission/denial of documents. In such circumstances, it cannot be concluded that the trial is in advanced stage."
19. In the instant case, it is evident from the material placed on record and admission of complainant that the accused No.2 & 3 are not the signatory to the subject matter of cheque in question. Further it is revealed from the record that the cheque in question belongs to the account of accused No.1 alone and accused No.1 alone is the drawer of the said cheque. The Penal provisions should be construed strictly, but not in a routine/casual manner. The words used in Section 138 of N.I. Act that "such person shall be deemed to have committed an offence" refers to a person who has drawn the cheque, but not any other person, except the contingencies mentioned under Section 141 of the N.I.Act. In view of the aforesaid proposition of law, the accused No.2 & 3 who are not a 23 Judgment C.C.14014/2020 drawer or the signatory to the Ex.P1 cheque, cannot be prosecuted under Section 138 of N.I.Act and complaint against accused No.2 & 3 are liable to dismissed on the said ground as ingredients of section 138 of NI Act not made out against them . However it is made it clear that so far as against accused no.1 is concerned he being the drawer and signatory of the cheque is liable for prosecution under section 138 of NI Act as the complainant has made out all the ingredients of section 138 of NI Act against him. In Mrs. Aparna A. Shah's case the Hon'ble Apex Court has quashed the proceedings only against the appellant as she is not the signatory of the cheque and permitted to continue the proceedings against the husband of the appellant who is the signatory of the cheque. The said proposition of law is aptly applicable in the present case since the accused No.1 alone is the signatory of the cheque and the complainant has complied all the ingredients so far as accused No.1 is concerned.
20. The next question before this court for consideration is that whether the cheque issued for repayment of someone's debt is attracted section 138 of NI Act. It is trite that if a cheque is issued by a person in discharge of the liability of the another person and if 24 Judgment C.C.14014/2020 the said cheuqe is dishonoured, the person who issued the cheque can be prosecuted under section 138 of NI Act. The Hon'ble Supreme Court in ICDS Ltd Vs Beena Sabir and anr reported in (2002) 6 SCC 426 has discussed the above said aspect and held that if a cheque is issued for someone's liability the drawer of the cheque is liable for prosecution under section 138 of NI Act. In view of the said proposition of law even though the accused No.1 has borrowed Rs.1 lakh only he has issued a cheque in question in respect of the liability of accused No.2 & 3 is liable to pay the cheque amount.
21. The next contention of the accused is that the complainant has misused security cheque. In that connection he has brought to the notice of the court regarding the admission of the complainant that he has agreed to return all the security cheques as per the compromise arrived in the police station. Even it is proved that the complainant has misused security cheque then also section 138 of NI Act is attracted as the accused No.1 to 3 have failed to repay the loan amount. Hon'ble Supreme court reported in 2021 SCC online SC 1002 in the case of Sripati Singh( Since deceased) Through His Son Gaurav Singh Vs. Sate of Jharkhan and 25 Judgment C.C.14014/2020 another. In the said Judgment, the Hon'ble Apex court held that "A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfillment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified time frame and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of NI Act would flow. When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security' cannot be presented prior 26 Judgment C.C.14014/2020 to the loan or the installment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an 'on demand promissory note' and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the 27 Judgment C.C.14014/2020 cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation."
22. If the above said principle is kept in view, as already noted, the accused have failed to repay the loan amount. Therefore, prima facie the cheque which was taken as security had matured for payment as on the date of presentation of the cheque and the complainant was entitled to present the cheque for encashment. Admittedly, the said cheque was dishonoured for funds insufficient as per Ex.P2 bank endorsement, as such section 138 of NI Act attract to Ex.P1 cheque.
23. From the discussion made supra, it is clear that, the accused No.1 neither taken probable defence nor taken steps to prove the same. To put it other way, the accused No.1 has not taken and proved probable defence to rebut the presumption of law available in favour of the complainant, envisaged under section 118 read with section 139 of N.I. Act. Accordingly, the case of the complainant is acceptable. The complainant has proved that, for discharge of 28 Judgment C.C.14014/2020 liability accused No.1 has issued Ex.P.1 cheque and he has intentionally not maintained sufficient amount in his account to honour the said cheque. Hence, this point No.1 under consideration is answered in the Affirmative so far as accused No.1 is concerned and negative so far as accused No.2 & 3 are concerned.
24. POINT NO.2: In view of the reasons stated and discussed above, the complainant has proved the guilt of the accused No.1 punishable under section 138 of N.I. Act. Hon'ble Supreme Court of India in a decision reported in, (2015) 17 SCC 368, in a case of H.Pukhraj Vs. D.Parasmal, observed that, having regard to the length of trial and date of issuance of the cheque, it is necessary to award reasonable interest on the cheque amount along with cost of litigation. Further the Hon'ble Apex Court in its recent decision in M/s. Meters & instrument Pvt Ltd. Vs. Kanchana Mehta reported in (2018)1 SCC-560 held at para 18 that "The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may 29 Judgment C.C.14014/2020 be found acceptable to the parties or the court. " Therefore, keeping in mind the time when the transaction has taken place and primary object of the provision, this court is of the opinion that, rather than imposing punitive sentence, if sentence of fine is imposed with a direction to compensate the complainant for his monitory loss, by awarding compensation U/Sec.357 of Cr.P.C, would meet the ends of justice. The complainant has advance loan amount of Rs.4,00,000/- in the year 2018-19. The date of cheque is 6-7-2020. The complainant has spent considerable time and money in prosecuting the case against the accused to take back his hard earned money. If the complainant has deposited the said amount in any nationalized bank it would earn good interest. By considering all these aspects, this court is of the opinion that, it is just and proper to imposed fine amount of Rs.,3,50,000/-, which includes interest and cost of litigation, out of which compensation of Rs.3,45,000/- has to be awarded to the complainant U/s 357 Cr.P.C. Accordingly, this court proceeds to pass the following;
ORDER Acting under section 255 (1) of Criminal Procedure Code, accused No.2 & 3 are here by acquitted of 30 Judgment C.C.14014/2020 the offence punishable under section 138 of Negotiable Instrument Act.
Acting under section 255 (2) of Criminal Procedure Code, accused No.1 is here by convicted for the offence punishable under section 138 of Negotiable Instrument Act and he has been sentenced to pay fine of Rs.3,50,000/-(Rupees Three Lakhs and Fifty Thousand only). In default thereof he shall undergo simple imprisonment for the term of 6(Six) months.
Acting under section 357(1) (b) of code of criminal procedure, it is ordered that, Rs.3,45,000/- ( Rupees Three lakhs and Forty Five Thousand only), therefrom shall be paid to the complainant as a compensation, remaining fine amount of Rs.5,000/-(Rupees Five Thousand only) is defrayed to the state for the expenses incurred in the prosecution.
Bail bond of accused No.2 & 3 are stand cancelled.
31 Judgment C.C.14014/2020 Office is directed to supply free copy of the judgment to the accused No.1.
(Directly dictated to the Stenographer on computer, typed by him, corrected by me and then signed and judgment pronounced in the open court on this the 2 nd day of February , 2023) (MANJUNATHA M.S.) XVIII A.C.M.M.,BANGALORE.
ANNEXURE I. List of witnesses on behalf of complainant:
P.W.1 : Sri.Keshava Murthy.K. II. List of documents on behalf of complainant:
Ex.P-1 : Original Cheque;
Ex.P-2 : Bank memo;
Ex.P-3 : Legal notice;
Ex.P-4 : Postal receipts;
Ex.P-5to7 : Postal acknowledgments
Ex.P-8 : Reply Notice
Ex.P-9 : Statement
[
III. List of witnesses for the accused:- Nil -
IV. List of documents for accused:Nil
(MANJUNATHA M.S.)
XVIII A.C.M.M.,BANGALORE.
Digitally signed by
MANJUNATHA M
MANJUNATHA S
MS Date: 2023.02.02
17:33:39 +0530