Bangalore District Court
Sri.Zubin Mehta vs Sri. Yathindra Banappa on 12 April, 2021
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C.C.No.5668/2018 J
THE COURT OF THE XVI ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE, BENGALURU CITY
Dated: This the 12th day of April, 2021
Present: Sri.S.B.HANDRAL, B.Sc., L.L.B(SPL).,
XVI Addl.C.M.M., Bengaluru City.
JUDGMENT U/S 355 OF Cr.P.C.,
Case No. : C.C.No.5668/2018
Complainant : Sri.Zubin Mehta
S/o. Sri. Rajesh Mehta,
Aged about 26 years,
No.4 F, 401 Singhi Sapphire
Apartments,
Opp. B.B.M.P. Swimming Pool,
B.S.K. II Stage,
Bengaluru 560 070.
Rep. By his S.P.A. Holder,
Sri. Rajesh Mehta,
S/o. Late Sri.Ugamraj Mehta,
Aged 49 years.
Rep. by Sri.V.Padamraj Mutha and
A.D. Mithuna., Advs.,)
Vs
Accused : 1. Sri. Yathindra Banappa,
Major,
son of not known to the
complainant.
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C.C.No.5668/2018 J
2. Smt. Smitha Yathindra,
Major,
W/o.Sri.Yathindra Banappa,
Both at :
No.B3, Casa Lavelle 4,
No.12/5, Lavelle Road,
Bengaluru 560 001.
(Rep. by Sri. B & S Associates .,
Advs.,)
Case instituted : 02.02.2018
Offence complained : U/s 138 of N.I Act
of
Plea of Accused : Pleaded not guilty
Final Order : Accused No.1 is acquitted
& Accused No.2 is convicted
Date of order : 12.04.2021
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, complainant is represented by his father as his SPA holder and filed this complaint stating that, 3 C.C.No.5668/2018 J complainant is a businessmen and is represented by his father and duly constituted attorney Sri.Rajesh Mehta who is competent to sign, verify and present this complaint, adduce evidence and to conduct the proceedings before this court. The accused are the husband and wife and were in badly need of funds for meeting their urgent business commitments and thus both of them have personally approached the complainant and borrowed a hand loan of Rs.3 Lakhs on 9.3.2012 by way of cheque and by executing an On Demand Promissory Note and Consideration receipt in favour of the complainant agreeing to repay the said sum with interest at 18% p.a within short period, and thus the accused became due to the complainant in a sum of Rs.3 lakhs towards principal. The complainant further contents that, towards payment of aforesaid principal dues and interest, the second accused with due consent and connivance of the first accused had signed and issued a cheque bearing No.141574 dt:25.11.2017 for Rs.7,06,000/ drawn on ICICI Bank Ltd., BSK III Stage Branch, Bengaluru in favour of the complainant and assured the 4 C.C.No.5668/2018 J complainant of prompt honouring of said cheque and as per the assurance of the accused, the complainant presented the said cheque for encashment through his banker the said cheque was came to be returned dishonoured on 28.11.2017 with bank endorsement "Funds Insufficient", thereafter within 30 days of dishonourment of said cheque, complainant got issued demand notice dt:22.12.2017 to the accused by RPAD through his counsel demanding the payment from the accused within 15 days of receipt of the said notice, and the notice sent to the accused was served on him on 26.12.2017 but despite of service of the said notice, the accused have failed and neglected to comply with the demand made therein. Hence the complainant has filed this present complainant against the Accused for the offence punishable U/s.138 of Negotiable Instruments Act.
3. Before issuing process against the accused, the SPA holder of the Complainant has filed his affidavitinlieu of his sworn statement, in which, he has reiterated the averments of the complaint. In 5 C.C.No.5668/2018 J support of his evidence, P.W.1 has relied upon the documentary evidence as per Ex.P.1 to P.12, i.e., Special Power of Attorney as per Ex.P.1, the Original Cheque dated:25.11.2017 as per Ex.P.2, the signature on the said cheques identified by P.W.1 is that of the accused as per Ex.P.2(a), the Bank Memos as per Ex.P.3 and P.4 respectively, office copy of the Legal Notice as per Ex.P.5, postal receipts as per Ex.P.6 and P.7, two track results per Ex.P.8 and P.9, Bank memo as per Ex.P.10, Pronote and consideration receipt dt: 9.3.2017 as per Ex.P.11, signatures of accused No.1 and 2 on the said pronote as per Ex.P.11(a) to P.11(d) respectively, certified copies of the letters dt: 27.7.2017 issued by the accused No.1 and 2 to the SPA holder of the complainant as per Ex.P.12 and P.13, certificate under Sec.65(B) of Evidence Act as per Ex.P.14, Letter dt: 2.4.2018 to the complainant by accused as per Ex.P.13(A), copy of payment of Receipt as per Ex.P.14(A), Original cheque as per Ex.P.15, signature of the 1st accused found on the said cheque as per Ex.P.15(a), Bank Memo as per Ex.P.16.
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4. Primafacie case has been made out against the accused No.1 and 2 and summons were issued against the accused No.1 and 2 in turn they have appeared before the court and got enlarged on bail and the substance of the accusation has been read over to them, to which they pleaded not guilty and claims to be tried.
5. Thereafter, the statement of the accused No.1 and 2 as required under Sec.313 of the Cr.P.C. have been recorded. They have denied the incriminating evidence appearing against them and have chosen to lead their rebuttal evidence subsequently they have not lead their rebuttal evidence.
6. Heard both sides and perused the materials on record and the decisions relied upon by the learned counsel for the complainant i.e., AIR 2018 S.C.3173 - Kirshan Rao Vs. Shankargouda 2) AIR 2018 SC 3601 - T.P. Murugan Vs. Bojan, 3) AIR 2019 SC 2446 - Birsingh Vs. Mukesh Kumar,
4) AIR 2019 SC 1876 - Rohitbhai Jivanlal Patel 7 C.C.No.5668/2018 J Vs.State of Gujarat and another.
7. On the basis of complaint, evidence of complainant and documents and having heard the arguments of learned counsel for the complainant and accused, the following points that are arise for consideration are:
1. Whether the complainant proves that the accused has issued cheque bearing no.141574 dt: 25.11.2017 for sum of Rs.7,06,000/ drawn on ICICI bank, Banashankari branch, Bengaluru to discharge legally recoverable debt to the complainant and when the complainant has presented cheques for encashment through his banker but the said cheques have been dishonoured for the reasons "Funds Insufficient" on 28.11.2017 and the complainant issued legal notices to the accused on 22.12.2017 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?
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8. The above points are answered as under:
Point No.1: In the Partly Affirmative Point No.2: As per final order for the following:
REASONS
9. 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 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 presupposes three conditions for prosecution of an offence which are as under:
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1. Cheque shall be presented for payment within specified time i.e., from the date of issue or before expiry of its validity.
2. 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
3. The drawer inspite of demand notice fails to make payment within 15 days from the date of receipt of such notice.
If the above said three conditions are satisfied by holder in due course gets cause action to launch prosecution against the drawer of the 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.
10. It is also one of the essential ingredients 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 10 C.C.No.5668/2018 J 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 rebuttable one, this proportion of law has been laid down by the Hon'ble Apex Court of India and Hon'ble High Court of Karnataka in catena of decisions.
11. In the present case the complainant got examined as PW.1 by filing his affidavit evidence wherein he has reiterated the entire averments of the complaint and in his evidence testified that, complainant is represented by his father as his SPA holder and filed this complaint stating that, complainant is a businessmen and is represented by his father and duly constituted attorney Sri.Rajesh Mehta who is competent to sign, verify 11 C.C.No.5668/2018 J and present this complaint, adduce evidence and to conduct the proceedings before this court. The accused are the husband and wife and were in badly need of funds for meeting their urgent business commitments and thus both of them have personally approached the complainant and borrowed a hand loan of Rs.3 Lakhs on 9.3.2012 by way of cheque and by executing an On Demand Promissory Note and Consideration receipt in favour of the complainant agreeing to repay the said sum with interest at 18% p.a within short period, and thus the accused became due to the complainant in a sum of Rs.3 lakhs towards principal. The PW.1 further testified that, towards payment of aforesaid principal dues and interest, the second accused with due consent and connivance of the first accused had signed and issued a cheque bearing No.141574 dt:25.11.2017 for Rs.7,06,000/ drawn on ICICI Bank Ltd., BSK III Stage Branch, Bengaluru in favour of the complainant and assured the complainant of prompt honouring of said cheque and as per the assurance of the accused, the complainant presented the said cheque for 12 C.C.No.5668/2018 J encashment through his banker the said cheque was came to be returned dishonoured on 28.11.2017 with bank endorsement "Funds Insufficient", thereafter within 30 days of dishonourment of said cheque, complainant got issued demand notice dt:22.12.2017 to the accused by RPAD through his counsel demanding the payment from the accused within 15 days of receipt of the said notice, and the notice sent to the accused was served on him on 26.12.2017 but despite of service of the said notice, the accused have failed and neglected to comply with the demand made therein.
12. In support of his evidence, P.W.1 has relied upon the documentary evidence as per Ex.P.1 to P.12, i.e., Special Power of Attorney as per Ex.P.1, the Original Cheque dated:25.11.2017 as per Ex.P.2, the signature on the said cheques identified by P.W.1 is that of the accused as per Ex.P.2(a), the Bank Memos as per Ex.P.3 and P.4 respectively, office copy of the Legal Notice as per Ex.P.5, postal receipts as per Ex.P.6 and P.7, two track result as per Ex.P.8 and P.9, Bank memo as per Ex.P.10, 13 C.C.No.5668/2018 J Pronote and consideration receipt dt: 9.3.2017 as per Ex.P.11, signatures of accused No.1 and 2 on the said pronote as per Ex.P.11(a) to P.11(d) respectively, certified copies of the letters dt:
27.7.2017 issued by the accused No.1 and 2 to the SPA holder of the complainant as per Ex.P.12 and P.13, certificate under Sec.65 B of Evidence Act as per Ex.P.14, Letter dt: 2.4.2018 to the complainant by accused as per Ex.P.13(A), copy of payment of Receipt as per Ex.P.14(A), Original cheque as per Ex.P.15, signature of the 1st accused found on the said cheque as per Ex.P.15(a), Bank Memo as per Ex.P.16.
13. In the present case, it is not in dispute by the accused No.1 and 2 that, the cheque in question belong to the account of accused No.2 and signature found at Ex.P.1(a) is that of the accused No.2. It is also not in dispute that, the cheque in question was presented for encashment within its validity period and the said cheque has been returned as dishonoured for want of sufficient funds as per the returned memo issued by the concerned bank i.e Ex.P.3 and P.4, hence matter on record it is proved 14 C.C.No.5668/2018 J by the complainant that, the cheque in question was dishonoured for want of sufficient funds.
14. In relation to the service of notice the Accused No.1 and 2 during the course of cross examination of the PW.1 have denied service of notice upon them by contending that, the notice issued by the complainant was not served on the accused and no postal acknowledgement has been produced before the court. But the accused have admitted that, the complainant has produced the postal track consignment record. The complainant in order to prove service of notice upon the Accused No 1 and 2 has produced the documents i.e copy of the legal notice ie., Ex.P.5, postal receipts are at Ex.P.6 and 7, postal track consignment records are at Ex.P.8 and P.9. The perusal of Ex.P.5 to P.9 it appears that, the complainant had issued legal notice on 22.012.2017 to the accused No.1 and 2 through his advocate by RPAD as per Ex.P.6 and P.7 and said notices have been served upon the accused No.1 and 2 on 26.12.2017 as per Ex.P.8 and P.9 ie. track consignment report published by the concerned postal authorities in the concerned 15 C.C.No.5668/2018 J website belongs to the Department of Posts, Ministry of Communications, Government of India. The accused have not disputed the issuance of notice by the complainant through his advocate by RPAD to their correct address and have also admitted that, the complainant has produced the track consignment reports but only their dispute is the complainant has not produced postal acknowledgement , in such circumstances in view of Ex.P.8 and P.9 track consignment reports it can be held that, the legal notice issued by the complainant were duly served on the accused No.1 and 2 on 26.12.2017 and the accused have not denied or disputed Ex.P.8 and P.9 and even they have not examined the postal authorities or produced any documentary proof to show that, Ex.P.8 and P.9 are created by the complainant. In addition to that, the accused No.1 and 2 have also not disputed their address mentioned in the legal notice postal receipt as not of their correct address or it is also not their case that, as on the date of issuance of legal notice or service of the notice they were not residing in the address mentioned in the legal notice, therefore in 16 C.C.No.5668/2018 J view of non disputing of the address by the accused it can be held that, the complainant got issued legal notice through RPAD to the correct address of the accused No.1 and 2, therefore, it can be held that, the notice sent by the complainant is to the correct address of the Accused No.1 and 2 and presumed to have been served on them as per Sec.27 of General Clauses Act. In this regard, It is relevant here to refer the decision reported in 2008(4) Civil code cases 027 (SC) "M/s. Indo Automobiles Vs., M/s. Jai Durga Enterprises and others." wherein the Hon'ble Apex Court held that, "notice sent by registered post with acknowledgement to a correct addressservice of notice has to be presumed". In addition to that, it is relevant here to refer the decision reported in 2007 AIR SCW 3578 in the case of C.C.Alavi Haji Vs. Palapetty Muhammed and another., wherein the Hon'ble Apex court held that " the drawer of the cheque is permitted to deposit the cheque amount within 15 days from the date of his appearance before the court in pursuance of the service of 17 C.C.No.5668/2018 J summons on him and in such situation, his defence of non service of the legal notice cannot be available to him'. Hence, in view of the said principles of law, even for sake of discussion, though there is no cogent and reliable documentary proof to substantiate the claim of the complainant with regard to address of the Accused to show there is due service of the legal notice on the Accused, in view of settled position of law by virtue of the above said decision of Hon'ble Apex Court of India, the Accused is not entitled to the technical defence of the alleged non service of the legal notice. Therefore, the contentions taken by the learned counsel for the accused that, the notice issued by the complainant was not served on them and the complainant has not complied the mandatory requirements of Sec.138(b) of N.I.Act and complaint are not maintainable cannot be acceptable and are not sustainable in law.
15. The accused during the course of cross examination have questioned the competency of the SPA holder with regard to transaction in question.
18C.C.No.5668/2018 J The SPA holder of the complainant has produced the Special Power of Attorney document which is at Ex.P.1and in the said document clearly mentioned that, Sri. Rajesh Mehta i.e the PW.1 is his father and he has appointed him as his Law full attorney due to his other obligations and commitments and he is personally unable to take care of his money matters, other disputes and court matters as such he has appointed his father as his SPA holder and also mentioned that, his attorney is managing and looking after his personal money transactions and affairs and well aware about it. Hence, on plain reading of the Ex.P.1 makes it clear that, the complainant has appointed his father as his SPA holder to represent this case and also the attorney holder is managing and looking after his money transactions and affairs and aware about the transactions, therefore it can be held that, the SPA holder of the complainant I.e PW.1 is having personal knowledge of the transaction in question and is competent to represent as SPA holder of the complainant. Apart from that, during the course of cross examination the PW.1 has specifically stated 19 C.C.No.5668/2018 J that, complainant is his son and he is his SPA holder and has filed this complaint and his son is doing garment business and he is unable to attend the court and to give evidence and also stated that, at the time of transaction in question he was also present and he himself handed over the cheque of his son to the accused. Hence, the statement made by the PW.1 during the course of his cross examination also makes it clear that, he is having personal knowledge about the transaction in question and he was also present at the time of transaction in question took place, in such circumstances it can be held that, PW.1 is competent person to represent the complainant as his SPA holder. In this regard, it is relevant here to refer the decision of Hon'ble Apex court of India, reported in 2015 Cr.L.J. 147 in case of V.S.Rao Vs. M/s.Essen corporate where it is held that "
complaint can be filed through Power of Attorney holder - there can be no dispute about the fact that, in this case, the power of attorney holder being the husband of the appellant has witnessed all the transaction and he possesses 20 C.C.No.5668/2018 J due knowledge about them". In the present case also the PW.1 is none other than the father of the complainant and the oral and documentary evidence of PW.1 and Ex.P.1 discloses that, the PW.1 is also having due knowledge about the transaction in question, therefore the complaint filed by the complainant through his SPA holder is maintainable.
16. The accused No.1 and 2 in their defence have specifically denied the claim of complainant by contending that, as on the date of lending of the loan amount to the accused, the complainant was not having sufficient funds and has not produced any documents to show that, he has paid an amount of Rs.3 Lakhs to the accused No.1 and 2. The complainant in order to prove his claim has produced cheque in question ie. Ex.P.2, bank endorsement ie Ex.P.4, original On demand promissory note and consideration receipt executed by the accused No.1 in favour of the complainant is at Ex.P.11, letters issued by the accused No.1 and 2 in favour of the PW.1 which are at Ex.P.12, P.13, P.13(A) and payment receipt is at Ex.P.14(A) and 21 C.C.No.5668/2018 J original cheque issued by the accused No.1 dt:
2.4.2018 which is at Ex.P.15, and endorsement issued by the bank is at Ex.P.16. On careful perusal of the Ex.P.11 ie. On Demand Promissory note and consideration receipt it appears that, the accused No.2 has executed the On Demand Promissory note and consideration receipt in favour of the complainant for having received sum of Rs.3 Lakhs from the complainant by agreeing to pay the said amount with interest at the rate of 1.5% p.m and the accused No.1 has affixed his signatures on On demand promissory note and also on consideration receipt. It is also seen from Ex.P.12 and 13 that, the accused No.1 and 2 have given letter to the SPA holder of the complainant by admitting their hand loan and also exchange of cheques stating that, the cheques bearing No.000400, 000401, and 000402 for Rs.6,96,620/ 11,37,850, 3 Lakhs respectively have to be replaced due to cheques being returned and same have been replaced by issuing the cheques bearing Nos. 000434, 000425, 000426 for the same amount of Kotak Mahindra Bank, I.e, cheque bearing No. 000424, in favour of complainant for 22 C.C.No.5668/2018 J Rs.6,96,620/ and cheque baring No.000425 in the name of Sampurna Mehta for Rs.11,37,850/ and cheque baring No.000436 in the name of PW.1 ie Rajesh Mehta Rs.3 Lakhs. It is also seen from Ex.P.13(a) letter issued by the accused No. 1 by admitting issuance of new cheques against case No.1773/2018, 1774/2018 and 1776/2018 by admitting the liability. It is also seen from Ex.P.14(a) ie. payment receipt which discloses that, the complainant issued the said receipt for having received the amounts mentioned from the accused on respective dates i.e Rs.75,000/ as part of interest from 1.4.2014 to 31.03.2015 on different dates for the hand loan of Rs.3 Lakhs I.e the last interest amount of Rs.15,000/ received on 28.6.2014. It is also seen from Ex.P.15 and P.16 that, the accused No.1 has issued a cheque bearing No.000344 in favour of the complainant for sum of Rs.7,06,000/ ie during the course of trial the accused No.1 has issued the said cheque in favour of the complainant and same has been dishonorued on its presentation for reason of Account Blocked (situation covered in 2125) as per Ex.P.16. Hence, on 23 C.C.No.5668/2018 J careful perusal of the Ex.P.2, P.4, P.11 to P.16, it appears that, the accused No.1 and 2 have admitted their liability to pay a loan amount of Rs.3 Lakhs and also interest as agreed by them in total to an extent of Rs.7,06,000/ and the accused No.2 has issued Ex.P.2 cheque in question towards discharge of the loan amount including the principle and interest as claimed by the complainant. It is also important here to mention that, the accused during the course of crossexamination have not disputed the documents I.e Ex.P.2, P.4, P.11 to P.16 and have not disputed their signatures on the said documents. Even during the course of cross examination the accused have admitted that, they have paid part of payment ie. Rs.20,000/ in this case towards the loan amount borrowed by them from the complainant , hence it goes to show that, the accused have admitted that, they have borrowed the loan amount of Rs.3 Lakhs from the complainant by agreeing to pay the interest on the said loan amount and in turn as on the date of filing of this complaint the accused have not paid the loan amount and interest to the complainant.24
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17. The accused during the course of cross examination of the complainant have also taken defence that, the complainant has not produced the document to show that, he has paid the loan amount in question by way of cheque and has not produced the document to show that, as on the date of alleged lending of loan amount he was having sufficient funds with him. It is true that, the complainant has not produced the document to show that, he has paid the loan amount in question by way of cheque but the accused themselves have admitted that, they have borrowed the amount from the complainant and have repaid the entire loan amount on different dates and different amounts but nothing has been produced before the court to show that, they have paid the entire loan amount in question, on the contrary they have admitted the issuance of cheque in question by the accused No.2 in favour of the complainant. On entire perusal of the cross examination of the PW.1 nothing has been elicited to believe the defence of the accused that, they have paid entire amount to the complainant.
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18. It is relevant here to mention that, the SPA holder of the complainant has produced cheque in question ie., Ex.P.2 to show that the cheque in question issued towards repayment of the loan amount and interest by the accused No.2 and also held in the above that, the complainant has proved that the cheque in question was issued by the accused No.2 to the complainant and the signature appearing on the cheque is that of the accused No.2 but the Accused No.2 has not produced any documentary proof to show that, cheque in question has not been issued to the complainant towards discharge of legally recoverable debt, therefore unless and until the Accused No.2 rebut the presumption available infavour of the complainant, it cannot be held that, there is no existence of legally recoverable debt as against the Accused No.1 and 2. 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 26 C.C.No.5668/2018 J 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. The Hon'ble Apex Court has also held in the decision referred above, the Hon'ble Apex Court in 2010 SC 1898 in case of 'Rangappa Vs. Mohan' that, presumptions U/sec.118(a) and 139 of N.I. Act indeed does extend to the existence of legally recoverable debt, of course the said presumption is rebuttable one, the accused has to rebut the presumption by taking probable defence. In another decision of Hon'ble Apex court of India reported in CRIMINAL APPEAL NO. 508 OF 2018 DT 15032018 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 27 C.C.No.5668/2018 J 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 High Court of Karnataka reported in ILR 2019 KAR 493 in the case of Sri.Yogesh Poojary Vs. Sri.K.Shankara Bhat, 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 crossexamination, he categorically admits that, the cheque has bounced on account of no sufficient fund in the 28 C.C.No.5668/2018 J 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 reported in ICL 2021(2) SC 529 in the case of M/s. Kalamani Tex Vs. P.Balasubramanian , dt: 10.02.2021 wherein the Hon'ble Apex court held that " once the accused had admitted his signatures on the cheque and deed, the trial court ought to have presumed that, the cheque was issued as consideration for legally enforceable debt". Hence the principles of law laid down by the Hon'ble Apex Court of India and Hon'ble High Court of Karnataka in the above referred decisions are aptly applicable to the case on hand, since in the present case also the complainant has proved that, the cheque in question belonging to the account of the 29 C.C.No.5668/2018 J Accused No.2 and signature appearing on the cheque is that of the Accused No.2 and it was issued to the complainant, in such circumstances, this court has drawn presumption of existence of legally enforceable debt as per Sec.139 of N.I. Act. Therefore under these circumstances the defence of the accused i.e. complainant has failed to prove his source of income and also failed to prove that, he has lent loan amount in question to the accused No.1 and 2 and in turn the accused No.2 has issued the cheque in question in favour of the complainant to discharge the debt in question cannot be acceptable one. Therefore from careful perusal of the oral and documentary evidence adduced by the complainant makes it clear that, a presumption can be drawn that, the complainant has established and discharged his initial burden that was casted on her that, he has paid an amount of Rs.3,00,000/ to the accused No.1 and 2 as hand loan and in turn accused No.2 has issued cheque in question ie., Ex.P.2 to the complainant towards repayment of the loan amount and interest.
19. The accused in their defence have 30 C.C.No.5668/2018 J specifically contended that, they have borrowed loan amount from the complainant and at the time of lending the loan amount the complainant had collected their cheques and after receiving the loan amount they have compromised with the complainant and have paid part amount of Rs.20,000/ by way of bank transfer and also paid amounts on different dates and have repaid the entire amount to the complainant despite of it, the complainant did not return the cheque in question and has misused the cheque in question and filed this false complaint against them. In order to substantiate the defence of the accused, except the denial nothing has been produced before the court to prove their defence, therefore the defence of the accused appears to be denial in nature and not substantiated with documentary proof . If really the accused have paid entire loan amount to the complainant and inspite of it, the complainant did not return the cheque in question, definitely they would have initiated legal action against the complainant either by lodging the complaint before the police or filing the complaint before the courts of 31 C.C.No.5668/2018 J law alleging that, the complainant inspite of repayment made by them did not return the cheque in question and misusing the cheque in question, but the accused have not made any efforts to that effect, therefore the conduct of the accused in non initiating the action against the complainant for alleged misuse of the cheque in question may leads to draw an adverse inference against them that, the cheque in question has been issued towards discharge of the debt in question not for any other reason. 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 32 C.C.No.5668/2018 J accused in allegedly issuing 10 blank cheques back in 1995 and never asking their return for 7 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 by applying the above principles of law to the present facts of the case in the present case, the Accused have not produced any document to prove their defence that they have paid entire loan amount to the complainant, under such circumstances, it can be held that, the accused have not made any efforts to get return of the cheque in question and have not initiated any action against the complainant for alleged misuse of the cheque in question and presumption U/s.139 of N.I. Act would operate against them, as accused No.2 has admitted her signature and cheque in questions belongs to her.
33C.C.No.5668/2018 J
20. It is settled law that, the accused can rebut the presumption only on the basis of materials produced by the complainant even without entering into the witness box but in the present case the Accused have failed to substantiate their defence version in order to rebut the presumption available to the complainant and to prove the defense of the accused, under such circumstance, it is for the accused to disprove the case of the complainant or rebut the presumption then only the onus will be shifted on the complainant to prove their case. Admittedly the accused No.1 and 2 did not entered in to the witness box, therefore an adverse inference can be drawn against them that they have failed to rebut the presumption available to the complainant. Therefore it is clear that, except having denial of the case of the Complainant in the cross examination of complainant, the Accused have not taken any interest so as to prove their defence. In this regard it is relevant here to refer the decision of Hon'ble Apex Court of India reported in 2001 (4) crimes 376 in the case of K.N.Beena Vs. Muniappan wherein it is held that " Negotiaable Instruments Act, 1881, 34 C.C.No.5668/2018 J Sections 139, 138 and 118 Debt or liabiltiy Dishonour of cheqeu - complaint under section 138 of Negotiable Instruments Act In complaints under section 138, the court has to presume that the cheque had been issued for a debt or liability This presumption is rebuttable However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused Denial by accused is not sufficient to shift the burden on complainantAccused has to prove by leading cogent evidence, that there was no debt or liability." and in another decision of Hon'ble Apex Court of India reported in "AIR 2018 SC 3173 in a case of Kishan Rao Vs. Shankargouda" wherein the Hon'ble Apex Court held that " Negotiable Instruments Act (26 of 1881), Ss. 138, 139 Dishonour of cheque - Presumption as to - Accused issuing cheque of Rs.2 Lakhs towards repayment of loan to Complainant said cheque dishonoured on account of insufficiency of funds Complainant 35 C.C.No.5668/2018 J proving issuance of cheque having signatures of Accused - Accused failing to rebut presumption raised against him and no evidence led by him in his support - Acquittal of Accused by High Court in revisional jurisdiction on ground of doubt in mind of Court with regard to existence of loan, improper Accused, liable to be convicted. In another decision 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 accused which is 36 C.C.No.5668/2018 J 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 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. Therefore the principles of law laid down in the above decisions are aptly applicable to the case on hand, since in this case also the complainant proved the fact that he has lent an amount of Rs.3 Lakhs to the accused No.1 an 2 as hand loan and in turn the accused No.2 has issued 37 C.C.No.5668/2018 J cheque in question towards repayment of the said amount along with interest as per Ex.P.2. The accused have also failed to enter into witness box to rebut the statutory presumption in support of their defense in such circumstances the defense taken by the accused No.1 and 2 during the course of cross examination of PW.1 cannot be acceptable one.
21. It is also important to note here that, the Accused No.2 has not denied or disputed that the cheque in question as well as the signature therein do belong to her and she has failed to explain as to how her cheque has come to the possession of the Complainant, this would also give rise to an adverse inference against her. This preposition 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". In another 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".38
C.C.No.5668/2018 J Hence in the present case also the Accused No.2 has failed to explain how the cheque in question was 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 by adducing cogent and convincible evidence.
22. It is important here to mention that, on careful perusal of the complaint and evidence of the PW.1 and cheque in question i.e Ex.P.2 and legal notice Ex.P.5, it appears that, as per the claim of the complainant that, towards payment of the loan amount dues and interest thereon the accused No.2 with due consent and connivance of the 1 st accused had signed and issued the cheque in question for sum of Rs.7,06,000/ in favour of the complainant. Hence it goes to show that, it is an admitted fact that, the accused No.1 is not a signatory to the cheque in question and even it is not the case of the complainant that, accused No.1 is also signatory to the cheque in question. Therefore it is clear from the 39 C.C.No.5668/2018 J averments of the complaint and evidence of PW.1 and Ex.P.2 cheque in question and Ex.P.5 legal notice that it is alleged that, only the accused No.2 is signatory to the cheque in dispute is said to have issued the same to the complainant. In such circumstances the accused No.1 is neither the drawer nor the signatory to the cheque in question, therefore the complainant might have remedy as against the accused No.1 in other appropriate alternative forum but not in the present proceedings. Therefore the question of determining the liability of the accused No.1 in the present proceedings U/s.138 of NI Act does not arise at all and there is no cause of action available to the complainant as against the accused No.1. It is well settled law that, it is only the drawer of the cheque who is liable for the offence punishable U/s.138 of NIAct and not any other person, even if there is an allegation of connivance or collusion by such other person with the drawer or signatory of the cheque. In this regard, it is relevant here to refer the decision of Hon'ble Apex Court of India decided in Crl. Appeal No.258/2021 in the case of Alka Khandu 40 C.C.No.5668/2018 J Avhad Vs. Amar Syamprasad Mishra and Anr., dt: 08.03.202021 held that " Sec.138 of the N.I.Act and observed that, to prosecute a person the following conditions should be met "(1) the cheque should be drawn bya person in an account maintained by him with a banker ; (2) the payment made should be discharge a liability or debt and (3) the cheque was dishonoured either due to insufficient funds or the amount exceeded the available funds". and also held that, "a person who is signatory to the cheque and the cheque is drawn by that person on an account maintained by him and cheque has been issued for the discharge, in whole or in part, or other liability and the said cheque has been returned by the bank unpaid, such person can be said to have been committed an offence" and also held that, "even in joint liability cases, the person who has not drawn the cheque could not be prosecuted if he /she did not sign the cheque , and the joint account 41 C.C.No.5668/2018 J has to be held both the liable persons". In another decision reported in In Aparna A.Shah Vs Sheth Developers Private Ltd., and another., reported in (2013) 8 SCC 71, wherein it has been clearly held that: "Only the drawer of the cheque is liable for prosecution U/s.138 of N.I.Act and in case of joint accounts, each and every account holder cannot be prosecuted, unless he had signed on the cheque and that no one can be fastened with criminal liability for the acts of others, except as expressly provided by law and the element of common intention is not relevant in N.I. Act, unless the proceedings are initiated under the Penal Code". In another decision of High Court of Karnataka in the case of Smt. Sathyabama Vs. Sm.t Bhageerathi Katti, wherein it has been held that " The complaint cannot be prosecute against the respondent therein for the offence punishable under Sec.138 of the NI Act, for the dishonour of the cheuqe alleged to have been issued by her 42 C.C.No.5668/2018 J husband". Hence, in view 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 are aptly applicable to the case on hand in this case also the cheque in question has not been drawn from the account maintained by the accused No.1 and accused No.1 is not signatory to the cheque in question i.e Ex.P.2 in view of the above decisions i.e in order to prosecute a person the cheque should be drawn by a person in an account maintained by him with a banker and he/she must be signatory to the cheque therefore in such circumstances it can be held that, the complaint filed by the complainant itself not maintainable against the accused No.1. However, it is already held in the above that, accused No.2 is admitted the cheque in question belongs to her account and signature found at Ex.P.2(a) is that of her signature and the complainant has proved that, the accused No.2 has issued the cheque in question towards repayment of the loan amount and interest, accordingly accused No.2 is held liable to pay the cheque amount in question.
43C.C.No.5668/2018 J
23. 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, the complainant has successfully established beyond all reasonable doubt that, complainant has proved that, he has lent an amount of Rs.3,00,000/ to the accused No.1 and 2 as hand loan and accused No.2 in turn has issued cheque in question i.e. Ex.P.2 for repayment of the said loan amount and interest and the complainant has presented the said cheque through his banker and same was returned dishonoured with an endorsement of "Funds Insufficient" and thereafter he got issued legal notice to the accused No.1 and 2 and inspite of service of the said notice, the Accused No.1 and 2 did not repaid loan amount with interest borrowed by them, hence the complainant filed the present complaint against the accused No.1 and 2. On the other hand, the accused have failed to rebut the presumption available infavour of the complainant with regard to the existence of legally recoverable debt under Ex.P.2 Cheque. Therefore accused No.2 has committed an 44 C.C.No.5668/2018 J offence punishable U/s.138 of N.I. Act, accordingly for the above said reasons this point is answered in the Party in Affirmative.
24. 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 No.2 be punished for her act. Hence while awarding the compensation the 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 No.2, 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.2 is convicted for the offence punishable U/sec.138 of N.I.Act.
45C.C.No.5668/2018 J The accused No.2 is sentenced to pay a fine of Rs.7,15,000/ (Rupees Seven Lakhs and Fifteen Thousand only) within one month from the date of order, in default accused No.2 shall under go simple imprisonment for a period of (3) three 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.7,10,000/ (Rupees Seven Lakhs and Ten Thousand 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.5,000/= (Rupees Five Thousand only) shall be defrayed as prosecution expenses to the state.
The complaint filed U/s.138 of NI Act against the accused No.1 is hereby dismissed consequently accused No.1 is acquitted for the offence punishable U/s.138 of NI Act.
The Bail bond of the Accused No.1 and 2 stands cancelled after appeal period is over.
46C.C.No.5668/2018 J Office is directed to furnish free certified copy of this judgment to the Accused No.2 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 12h day of April 2021).
(SRI.S.B. HANDRAL), XVI ACMM, Bengaluru City.
ANNEXURE
1. List of witness/s examined on behalf of the Complainant: P.W.1 : Sri. Rajesh Mehta ( SPA Holder)
2. List of documents exhibited on behalf of the Complainant: Ex.P.1 : Special Power of Attorney Ex.P.2 : Original Cheque;
Ex.P.2(a) : Signature of the Accused;
Ex.P3 & 4 : Bank Memos;
Ex.P.5 : Office copy of the Legal Notice;
Ex.P.6 & 7 : Postal Receipts;
Ex.P.8 & 9 : Track results
Ex.P.10 : Bank Memo
Ex.P.11 : On Demand Promissory note & Consid
eration Receipt;
Ex.P.11 (a) to : Signatures of the Accused No.1 and 2
(d)
47
C.C.No.5668/2018 J
Ex.P.12 & : certified copies of the letters dt:
P.13 27.7.2017 issued by the accused No.1
and 2 to the SPA holder of the com
plainant
Ex.P.14 : certificate under Sec.65(B) of Evidence
Act;
Ex.P.13(A) : Letter dt: 2.4.2018 to the complainant
by accused,
Ex.P.14(A) : Copy of the payment of Receipt ,
Ex.P.15 : Original cheque
Ex.P.15(a) : Signature of accused
Ex.P.16 : Bank Memo
3. List of witness/s examined on behalf of the Accused: Nil
4. List of documents exhibited on behalf of the Accused: Nil (SRI.S.B.HANDRAL), XVI ACMM, Bengaluru City.
48C.C.No.5668/2018 J 12.4.2021 Case called out, Both complainant and accused and their respective counsels absent. No representation. Judgment pronounced, since fine amount and default sentence is only imposed against the Accused No.2, no separate sentence is imposed against the Accused No.2 vide separate order, ORDER Acting U/sec.255(2) of Cr.P.C.
the accused No.2 is convicted for the offence punishable U/sec.138 of N.I.Act.
The accused No.2 is sentenced to pay a fine of Rs.7,15,000/ (Rupees Seven Lakhs and Fifteen Thousand only) within one month from the date of order, in default accused No.2 shall under go simple imprisonment for a period of (3) three 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.7,10,000/ (Rupees Seven Lakhs and Ten Thousand only) shall be paid as compensation to the complainant.
49C.C.No.5668/2018 J Further acting U/sec.357(1)(a) of Cr.P.C. out of fine amount on recovery a sum of Rs.5,000/= (Rupees Five Thousand only) shall be defrayed as prosecution expenses to the state.
The complaint filed U/s.138 of N.I.Act against the accused No.1 is hereby dismissed consequently accused No.1 is acquitted for the offence punishable U/s.138 of N.I. Act.
The Bail bond of the Accused No.1 and 2 stands cancelled after appeal period is over.
Office is directed to furnish free certified copy of this judgment to the Accused No.2 incompliance of Sec.363(1) of Cr.P.C.
XVI ACMM, Bengaluru City.