Bangalore District Court
Shri. R.S. Nataraj vs Shri. V. Armugam on 27 September, 2018
IN THE COURT OF XIII ADDL. CHIEF METROPOLITAN
MAGISTRATE, BENGALURU.
:: PRESENT ::
SRI. VENKATESH, B.Com, L.L.B.,
XIII A.C.M.M. Bengaluru.
C.C. NO.4309/2016
Dated: This the 27th day of SEPTEMBER-2018
COMPLAINANT/S: Shri. R.S. Nataraj,
S/o. Late. R. Shivanna,
Aged about 54 years,
Proprietor M/s. Surya Prakash,
Liberty Showroom, No.96,
7th Cross, Sampige Road,
Malleshwaram,
Bangalore-560003.
ACCUSED: Shri. V. Armugam,
S/o. Late. Venkateshan,
Aged about 53 years,
Doddaankanahalli village,
Bangarpet Taluk,
Kolar District
Offence Under Section.138 of Negotiable
Instruments Act.
Plea of the accused Pleaded not guilty
Final order Acquitted
**
JUDGMENT 2 C.C.4309/2016
:: JUDGEMENT ::
This complaint is filed against the accused under Section.200 of Cr.P.C. for the offence punishable under Section.138 of Negotiable Instruments Act.
2. The brief averments of the complaint are that:
The accused is well known to the complainant since long time. The complainant was a tenant under the accused with respect to a tenement belonging to accused bearing No.96 situated at Sampige Road, Malleshwaram, Bangalore-560003. The accused had filed eviction suit against the complainant before the Small Causes Court, Bangalore (SCCH-15) in S.C. No.1511/2013. In the said matter, both complainant and accused arrived at a compromise. The complainant agreed to quit and vacate the suit schedule premises and complainant. The accused agreed to pay a sum of Rs.6,00,000/- to the complainant and in this regard he issued a cheque bearing No.215577, dated: 16-01-2015 for Rs.6,00,000/- drawn on State Bank JUDGMENT 3 C.C.4309/2016 of India, Bangarpet Branch, Kolar District and instructed the complainant to present the cheque and relies the amount. The complainant has presented the cheque for realization through his banker i.e., Syndicate Bank on 30- 03-2015. To the utter shock and surprise the cheque was returned for the reasons 'Funds Insufficient'. On 01-04- 2016 the complainant has received return memo dated: 30- 03-2015. The complainant got issued a legal notice dated:
30-04-2015 through RPAD calling upon the accused to pay the cheque amount of Rs.6,00,000/- within 15 days. The notice sent by RPAD is served on 08-05-2015. Inspite of service of notice, accused has not repaid the cheque amount. The accused has failed to keep up his promise. Knowing fully well that the said cheque will be dishonored, with an intention to cheat the complainant the accused has issued the cheque. Therefore, the accused has committed an offence punishable under Section.138 of Negotiable Instruments Act and prays to take cognizance of the offence, issue summons to the accused, enquire into the matter and punish the accused as per law. JUDGMENT 4 C.C.4309/2016
3. On presentation of the complaint, this court has taken cognizance of the offence; sworn statement of the complainant was recorded. On perusal of the documents and on hearing the complainant, process was issued against the accused. In pursuance of the process, the accused appeared before this court. Accused is enlarged on bail. Copies of the complaint papers supplied to the accused. Substance of accusation was read over and explained to the accused. Accused did not plead guilty and claims to be tried. Hence, the matter was posted for evidence of the complainant.
4. Initially this case was filed before Additional Civil Judge and JMFC., Bangarpet Court. In view of the memo filed by the advocate for the complainant, the case file is returned for presenting before the proper court.
5. In order to prove the case of the complainant, he got examined himself as PW.1 and got marked documents as Ex.P1 to P9. After completion of the complainant's JUDGMENT 5 C.C.4309/2016 evidence, the accused was examined under Section.313 of Cr.P.C. and his statement was recorded.
6. To substantiate his defence and to falsify the claim of the complainant, the accused examined himself as DW.1 and got marked documents at Ex.D1 & D2 on his side.
7. Heard arguments.
To strengthen the case of the complainant, the advocate for the complainant has relied upon the following citations:
(1996) 7 Supreme Court Cases 524 Life Insurance Corporation of India, Bombay V/s.
Commissioner of Income Tax, Bomby ** AIR 2010 Supreme Court 1898 Rangappa V/s. Mohan ** (2016) 14 Supreme Court Cases 370 A.R. Dahiya V/s. Securities and Exchange Board of India ** (20016) 10 Supreme Court Cases 458 Sampelly Satyanarayana Rao V/s. Indian Renewable Energy Development Agency Limited.
** JUDGMENT 6 C.C.4309/2016 To strengthen the case of the accused, the advocate for the accused has relied upon the following citations:
2009 (4) Kar.L.J. 26 Smt. H.R. Nagarathna V/s. Smt. Jayashree Prasad ** AIR 2006 SC 3366 M.S. Narayana Menon V/s. State of Kerala and Ors.
**
8. The following points arise for my consideration:
POINTS
1. Whether the complainant proves beyond all reasonable doubts that the accused had issued a cheque bearing cheque bearing No.215577, dated: 16-01-2015 for Rs.6,00,000/- drawn on State Bank of India, Bangarpet Branch, Kolar District infavour of the complainant towards legally enforceable debt?
2. Whether the complainant proves that the cheque was presented for collection, it was returned dishonored for the reason 'Funds Insufficient' on 30-03-2015?JUDGMENT 7 C.C.4309/2016
3. Whether the complainant proves that he got issued legal notice on 30-04-2015 to the accused for repayment of the cheque amount.
The accused has not cared to repay the amount within 15 days. Knowing fully well that there is no sufficient fund in his account, the accused has issued the cheque and thereby committed an offence made punishable under Section.138 Negotiable Instruments Act?
4. What order?
9. My answers to the above points are as follows:
Point No.1: In the Negative
Point No.2: In the Negative
Point No.3: In the Negative
Point No.4: As per the final order,
for the following.
REASONS
10. POINT NO.1 TO 3: These points are interrelated; therefore they are taken up together. The complainant who is examined as PW.1 states in his evidence that he was tenant under the accused with respect to property bearing JUDGMENT 8 C.C.4309/2016 No.96 situated at Sampige Road, Malleshwaram, Bangalore-03. A suit for eviction was filed by the accused in Small Causes Court in S.C. No.1511/2013. There was a compromise between the complainant and the accused. The complainant agreed to quit and vacate the premises. A compromise petition was filed before the court. The accused has agreed to pay a sum of Rs.6,00,000/- to him. In this regard, a cheque is issued bearing No.215577, dated: 16-01-2015 for Rs.6,00,000/- drawn on State Bank of India, Bangarpet Branch, Kolar District. The said cheque was presented for realization on 30-03-2015, but it was dishonored for the reason 'Funds Insufficient' on 30-03- 2015. The return memo is received by on 01-04-2015. A legal notice was issued on 30-04-2015, it was served to the accused on 08-05-2015.
11. A reading of the examination in chief coupled with the documents produced reveals that the cheque dated:
16-01-2015 is presented for collection within the period of its validity i.e., cheque is valid only for three months and it JUDGMENT 9 C.C.4309/2016 is presented on 30-03-2015. The cheque is dishonoured for the reasons 'Funds Insufficient'. Ex.P3 is the copy of legal notice. Ex.P4 is the postal receipt. The legal notice is issued within 30 days, but the notice is returned with an endorsement as 'person named in the RPAD cover is not available at the time of executing it'. It is returned on 12- 05-2015. The complainant has not produced any documents to show that the notice is served on the accused on 08-05-2015 as contended in the complaint.
12. There is deemed service of notice under Section.27 of General Clauses Act. Because, from 02-05-2015 to 11-05- 2015 there is effort to serve the notice by the postal authorities. The postal cover is not opened in this case. In fact as per procedure, the complainant has to request to remove the cover and the contents of the said cover should agree with the copy of notice at Ex.P3. It is important to note that order sheet in S.C. No.1511/2013 is produced as Ex.P7. The compromise petition as Ex.P8. Decree drawn thereon as Ex.P9.
JUDGMENT 10 C.C.4309/2016
13. In the cross-examination the witness has stated that he has not deposed false in the examination in chief that the return memo is given to him on 01-04-2015. The complainant should have produced the endorsement in CTS Inward Return report is dated: 30-03-2015. The notice is issued on 31-04-2015, is within the period of limitation. There is no much scope for argument in this regard. The witness states that he has presented the cheque in February-2015. He has not purposely suppressed it in the complaint or in notice.
14. The witness states that he has presented the cheque three times for collection. There is no law which says that before presenting the cheque for collection, it should be intimated to the accused. On Ex.P8 i.e., compromise petition. Of course, there is no mention that it should be presented for collection three times. But it is settled position of law that a cheque can be presented any number of times during the period of its validity. The witness has given an important admission that as per Ex.P8 JUDGMENT 11 C.C.4309/2016 compromise petition, Rs.6,00,000/- is not paid. It is not specifically written that it should be presented for collection. However, first of all, money is to be given and cheque is to be taken back. The witness denies that the notice is not served on the accused. The witness further states that when he was about to hand over the possession of the property, accused has given an application to BBMP and the premise was demolished. He denies that the accused has not got the property demolished through BBMP.
15. A plain reading of the evidence of PW.1 reveals that this entire case revolves around the compromise in S.C. No.1511/2013. Therefore, the compromise petition and the resultant decree are important documents. In the compromise petition Ex.P8, it is mentioned that plaintiff Armugam has already handed over the cheque bearing No.215577, dated: 16-01-2015 drawn on State Bank of India, Bangarpet Branch for a sum of Rs.6,00,000/- to Defendant No.1. The defendant No.1 Natarajan i.e., JUDGMENT 12 C.C.4309/2016 complainant in this case. It is specifically written in first para itself that the plaintiff has returned the entire advance security deposit to defendant No.1, which he has paid at the time of entering as complainant in the schedule property. It is not known, what was the advance amount and how much is returned. However, there is no mention in this compromise petition, why the owner has agreed to handover a cheque for Rs.6,00,000/- to the complainant. Be that as it may, the compromise petition further mentions at the time of handing over the vacant possession of schedule property, the plaintiff Armugam will pay the cheque amount and take back the cheque i.e., given to defendant No.1.
16. The payment of amount and delivery of vacant possession will be within 71 days. Defendant No.2 has agreed to cooperate. This defendant No.2 is stated to be a sub-tenant of defendant No.1 Natarajan. He is said to have agreed that he will pay rent of Rs.30,000/- every month directly to the plaintiff up to March-31st - 2015. The JUDGMENT 13 C.C.4309/2016 compromise is dated: 20-01-2015. Only two months rents of Rs.60,000/- is to be paid to the landlord owner of the premises by the sub-tenant directly. This Rs.6,00,000/- has to be given by the complainant to the defendant No.1. At the time of handing over the vacant possession of the property and take back the cheque, words indicates that the cheque is given only as a security. There was no any existing debt or other liability on the date of entering into a compromise. In terms of the joint memo decree is drawn and therefore advocate for complainant vehemently contended before me that if the accused does not pay Rs.6,00,000/- as per compromise, complainant will have a right to present the cheque for collection and therefore complainant has presented the cheque, it is dishonored. He has proved all the ingredients of Section.138 of Negotiable Instruments Act.
17. On the other hand, it is the case of the defence that the cheque is given only as a security, there was no existing liability or any debt on the date of issuing the JUDGMENT 14 C.C.4309/2016 cheque. It appears that Rs.6,00,000/- mentioned in the compromise petition is to be paid like a compromise to the tenant, since he agreed to vacate the premises. On the happening of an event i.e., handing over the vacant possession, this Rs.6,00,000/- was to be paid by the accused to the complainant.
18. DW.1 states in his evidence that the complainant is his tenant. However, without brining it to his notice, the complainant had given it on lease to some others and introduced a sub-tenant. There was a compromise between them. He states that according to the conditions in the compromise petition within 31-03-2015, he has to give Rs.6,00,000/- to the complainant. If not he may continue in possession of the shop premises. The signature on Ex.P1 cheque is admitted. It is also admitted fact that Ex.P1 is cheque drawn on his account, but the witness states that the details are not written by him. The witness states on 31-03-2015, he had to give Rs.6,00,000/- and cheque was to be taken back. However, without bringing it to his JUDGMENT 15 C.C.4309/2016 notice, the complainant got issued a legal notice through Corporation and demolished the premises. A reading of this part of evidence reveals that the complainant is making allegations against the accused that he got issued a notice through corporation and got demolished the shop premises, according to the accused, the complainant has done it. On both these aspects, there is no evidence. They are only self-serving testimony of PW.1 and DW.1. According to the accused, he has paid entire amount of Rs.6,00,000/- to the complainant, but he has not returned the cheque. The accused has not adduced any evidence of payment of amount to the complainant. DW.1 further states that he has not given the cheque towards any debt due or other liability. It is only a cheque given as security, the complainant has misused it.
19. In the further examination in chief he states that he had issued a cheque for security of the loan. In the Small Causes Court, there was compromise between them. Repeatedly the same thing was stated and therefore court JUDGMENT 16 C.C.4309/2016 has observed that same questions should not be put in examination in chief. The advocate for the accused submitted that he will produce some documents and took time. DW.1 has produced Ex.D1 a licence agreement between Mr. R.S. Nataraj and Mahender Singh. The complainant has sublet the premises, however the document Ex.D1 is worded as license in order to avoid calling it as sublease. Merely because, the word license is used, it will not become a licence. There is lot of difference between a licence and lease. Taking room in a lodge for one or two days, may be a licence, but if it is taken on rent basis for more than a month or so, then it is lease. Here in this case as per Ex.D1 the complainant has permitted running of liberty showroom in the capacity of his lawful possession as a tenant. Therefore it is a sub-lease.
20. There are no documents to show that there was any agreement in writings between the accused and the complainant. Therefore, whether there was any clause for prohibition of sublet or not could not be ascertained. JUDGMENT 17 C.C.4309/2016 However, since a lessee cannot sublet premises, giving the property to some one else, itself is illegal. The accused has produced certified copy of notice given by the BBMP to him. On 05-10-2013 a notice is issued stating that, his building is too old and about to fall down, therefore vacate it immediately. A notice issued by BBMP to the owner. There is no presumption that the complainant has instigated BBMP to demolish it. Because if it is demolished, he will not get right to continue in its possession.
21. DW.1 states in his cross-examination that for the last 35 years, complainant is in the premises. For 15 years, he was giving rent to father of the accused. The same compromise in Small Cause Court in S.C. No.1511/2013 are put to the witness and he has agreed. The accused has contended that till payment of Rs.6,00,000/-, cheque was to be retained by the complainant. He admits that if Rs.6,00,000/- is not given to defendant, he will continue as a tenant after 31-03-2015. This is also one of the terms of the compromise. The accused has not adduced any JUDGMENT 18 C.C.4309/2016 evidence to show that he has paid entire amount of Rs.6,00,000/- to the complainant. He admits that he has not issued any 'Stop payment' directions. He admits that he has not filed any case against the complainant when cheque is not returned. Though receipt of notice is denied by the accused. Now it is settled position of law that once the notice is sent to the correct address, presumption under Section.27 of General Clauses Act applies. Even when notice is not so served after receipt of summons in the complaint, accused can pay the amount and if the amount is paid, there is no offence under Section.138 of Negotiable Instruments Act.
22. In the ruling reported in C.C. Alavi Haji V/s. Palapetty Muhammed and another reported in (2007) 6 SCC 555, the Hon'ble Supreme Court has held that;
"The words in Clause(b) of the proviso to Section.138 of the act show that payee has the statutory obligation to make a demand by giving notice. The thrust in the clause is on the need to make a demand. It is only the mode for making such demand which the legislature has prescribed. A payee can send the notice for JUDGMENT 19 C.C.4309/2016 doing his part for giving the notice. Once it is dispatched his part is over and the next depends on what the sendee does."
23. There is an important admission in the cross- examination that during 2008-09 the complainant came to know that a liberty showroom is put up in his premises, he did not know that the complainant has sublet it at the time of filing the suit, the building was not demolished. Even at the time of compromise, there was no demolition. It is suggested that in order to avoid payment of Rs.6,00,000/- he has instigated the Corporation Officers to issue notice and demolish the building. DW.1 denies it.
24. On the point of existence of debt or other legal liability, advocate for the complainant has contended that the accused has agreed in the Small Causes Court that he will pay Rs.6,00,000/- to the complainant and therefore there is existence of liability. On the other hand, advocate for the accused contended that there is no such liability, because issue of notice by the Corporation and subsequent demolition of the property is not within his hands, it is an JUDGMENT 20 C.C.4309/2016 act of the crown etc. On going to the contents of compromise petition, it is not clear as to why the accused should have paid Rs.6,00,000/- to the complainant. At the time of vacation of the property, this amount is to be paid and complainant should vacate the premises after handing over the cheque to the accused. This fact reveals that the cheque is issued as a security and not towards an existing debt or other liability.
25. The advocate for complainant has relied upon the rulings reported in:
(1996) 7 Supreme Court Cases 524 Life Insurance Corporation of India, Bombay V/s.
Commissioner of Income Tax, Bomby ** With due respect, this is not applicable to the case on hand.
*** (1999) 7 Supreme Court Cases 510 K. Bhaskaran V/s. Sankaran Vaidhyan Balan & another Negotiable Instruments Act, 1881 - S.138 - Criminal Procedure Code, 1973 - S.178(d), 177 and 179 - Territorial jurisdiction of courts relating to offence under Section.138 Negotiable Instruments Act - Held is clear from S.178(d) CrPC that complainant can chose any one of those courts JUDGMENT 21 C.C.4309/2016 having jurisdiction over any one of the local areas within the territorial limits of which any one of the following five acts, the complainant of the offence, took place ------- .
It is application to the case on hand. The accused has not disputed the territorial jurisdiction of this court also.
** AIR 2010 Supreme Court 1898 Rangappa V/s. Mohan Negotiable Instruments Act (26 of 1881), S.138 - Dishonour of cheque - On account of 'stop payment' instructions sent by accused to Bank in respect of post dated cheque - S.138 is attracted - Insufficiency of funds in account, respective --------.
This is applicable to the case on hand.
** (2016) 14 Supreme Court Cases 370 A.R. Dahiya V/s. Securities and Exchange Board of India C. Doctrines and Maxims - Commodum ex injury sua non habere debet - No one can be allowed to be benefited from his own wrongful act - Appellant issued post-dated cheques to acquire shares under buy-back agreement, but later dishonouring said post-dated cheques only to say that there was no sale and said sale price cannot be put against him for fixing minimum offer price to acquire shares of target company - Tenability
- Held, post-dated cheques amounted to promise to pay and that promise would be fulfilled on the date mentioned on the cheque - Said promise to pay amounted to sale of shares/equity - Further, as the buy-back was in JUDGMENT 22 C.C.4309/2016 pursuance of an agreement, there was consensus ad idem
- Thus, subsequent dishonouring of post-dated cheque does not affect said transaction - Appellant cannot be permitted to take advantage of his own wrongful act - Securities, agreement - Binding effect - Contractual Obligations and Rights - Accrual of Contractual Obligation.
There was a contractual obligation in this case. Is there any wrongful act on the part of the accused in the demolition of the property by BBMP will be the main question. Therefore, with due respect, this is not applicable to the case on hand.
** (20016) 10 Supreme Court Cases 458 Sampelly Satyanarayana Rao V/s. Indian Renewable Energy Development Agency Limited.
C. Debt, Financial and Monetary Laws - Negotiable Instruments Act, 1881 - Ss.138 and 139 - Dishonour of post-dated cheque issued for discharge of debt or liability - Maintainability of criminal proceedings - Principles summarized.
- Held, depends upon facts of each case - Post-dated cheque is well-recognized mode of payment - Presumption under Section.139 - When arises, and rebuttal thereof - S.138 of Negotiable Instruments Act is attracted, if on date of issuance of cheque, there existed liability or debt or amount which had become legally recoverable - Issuance of cheque and admission of signature thereon would invoke presumption of legally enforceable debt in favour of holder
- Accused needs to rebut such presumption. JUDGMENT 23 C.C.4309/2016
If a post dated cheque is issued for discharge of debt or liability, it is still recognized mode of payment. However, while entering into a compromise, it is not stated in the compromise petition as to why the amount of Rs.6,00,000/- is to be paid by the accused to the complainant.
**
26. The advocate for the accused has relied upon the rulings reported in:
2009 (4) Kar.L.J. 26 Smt. H.R. Nagarathna V/s. Smt. Jayashree Prasad Criminal - Acquittal - Section.138 of the Negotiable Instruments Act, 1881 - Additional Chief Metropolitan Magistrate acquitted accused-respondent from offence of dishonour of cheque - Hence, this appeal - Whether, trial court was justified in acquitting accused - Held, it was not established that there was debt existing as on date of cheque in question and debt remained unpaid as per agreed terms and complainant presented cheque to Bank for its encashment - Evidence of PW.1-complainant had stated in her cross-examination that accused issued cheque in question as security towards said loan amount - Thus, it was clear that this evidence of PW.1 was quite contrary to her case as alleged in complaint - However, complainant had to established his case beyond reasonable doubt against accused as alleged in complaint but not case which was quite contrary to one alleged in complaint - Therefore, no offence under Section.138 of Negotiable Instruments Act could be made out against accused - Hence, there was no reasons to interfere with order of acquittal - Appeal dismissed. Ratio Decidendi "Accused in criminal case need not prove his defence beyond JUDGMENT 24 C.C.4309/2016 reasonable doubt, but complainant has to prove his case beyond reasonable doubt."
This is applicable to the case on hand.
** AIR 2006 SC 3366 M.S. Narayana Menon V/s. State of Kerala and Ors.
Negotiable Instruments Act, 1881 - Section.118(a), 138 and 139 - Dishonour of cheque - Appellant accused raised plea that complainant was in dire financial assistance - And cheque in question was given by way of loan to enable him to tide over difficulties - Evidence also adduced by him before trial court - Trial court opined that appellant had failed to discharge onus placed on him in terms of Section.138 - Appellant held guilty by trial court -
And sentenced to one year R.I. - Judgement of trial court set aside in appeal concluding that explanation offered by appellant was more probable - High court allowed appeal of complainant - Whether justified? - Held, "no" - Evidence adduced by parties before trial court - Leading to one conclusion that appellant able to discharge his initial burden - Burden thereafter shifted to complainant to prove hi case - But he failed to do so - Appellant clearly stated that nothing was due to complainant - And cheque was issued by way of security - Said defence accepted as probable - Hence, cheque cannot be held to have been issued in discharge of debt - If cheque issued for security or for any other purpose - It would not come within purview of Section.138 - Impugned judgment unsustainable - And set aside.
This citation is applicable to the case on hand.
**
27. The pre-condition in the agreement between the complainant and accused is that on 31-03-2015, the JUDGMENT 25 C.C.4309/2016 complainant will handover the vacant possession, accused will pay Rs.6,00,000/- and take back the cheque. That means, cheque is issued only towards security. Moreover, by subletting the premises without permission of the owner, complainant has not acted lawfully. If by act of BBMP, the premises itself is demolished, there is nothing in the hands of the accused. On an overall consideration of the evidence available on record, it reveals that the cheque is issued as security and not towards discharge of any debt or other liability. For all these reasons, I answer Point No.1 to 3 in the Negative.
28. POINT NO.4: As Point No.1 to 3 are answered in the Negative, I proceed to pass the following:
ORDER Exercising power under Section.255(1) Cr.P.C., the accused is acquitted for the offence punishable under Section.138 of Negotiable Instruments Act.JUDGMENT 26 C.C.4309/2016
The accused is set at liberty, subject to condition that the bail bond and cash surety of the accused shall continue during the appeal period and for six months under Section.437(a) of Cr.P.C.
(Dictated to the stenographer, corrected and then pronounced by me in the open court on this the 27th day of September-2018.) (VENKATESH) XIII A.C.M.M., Bengaluru.
ANNEXURE Witnesses examined on behalf of the complainant:
PW.1 : R.S. Nataraj Documents marked on behalf of the complainant:
Ex.P1 : Cheque
Ex.P2 : Endorsement
Ex.P3 : Legal Notice
Ex.P4 : Postal Receipt
Ex.P5 : Returned RPAD cover
Ex.P6 : Complaint
Ex.P7 : C/c of Order sheet in S.C.1511/2013
Ex.P8 : C/c of Compromise petition in SC.1511/13
Ex.P9 : C/c of Decree in S.C.1511/2013
JUDGMENT 27 C.C.4309/2016
Witnesses examined on behalf of the accused:
DW.1 : B.V. Armugam Documents marked on behalf of the accused:
Ex.D1 : C/c of Agreement of Licence & Understanding Ex.D2 : C/c of Notice issued by BBMP (VENKATESH) XIII A.C.M.M., Bengaluru.