Bangalore District Court
Has Requested And Demanded The Dues In vs And Approached And Demanded The Accused on 4 October, 2021
IN THE COURT OF THE XXVIII ADDL. CHIEF
METROPOLITON MAGISTRATE NRUPATHUNGA ROAD,
BENGALURU CITY
Present: Sri. MANJUNATHA, B.A, LL.B.,
XXVIII A.C.M.M, Bengaluru City.
Dated this the 4th day of October, 2021
CC.No.5135/2018
JUDGMENT
1. Sl.No. of the case : C.C.No.5135/2018
2. The date of commence of Evidence : 17.09.2019
3. The date of Institution : 23.12.2017
4. Name of the Complainant :M/s M.S.S.R Chits Pvt Ltd No.39/31, 1st 'E' Cross, 5th Main, REMCO Layout, Vijayanagara, Bengaluru560040.
Rep by its Foreman Mr. Nagaraj. K.N
5. Name of the Accused : Mr. Raghavendra .V Aged about 35 years, S/o Shri Venkatesh, R/at No.285, 9th Cross, 1st Stage, Bhuvaneshwarinagara, Jnanabharathi Post, Bengaluru560056.
6. The offence complained : U/s.138 of N.I. Act
7. Plea of the accused on his examination : Pleaded not guilty
8. Final Order : Accused is Convicted CC.No. 5135/2018 2
9. Date of such order : 04.10.2021 JUDGMENT
1. The complainant has filed this private complaint u/s 200 of Cr.P.C against the accused for the offence punishable u/s 138 r/w 142 of N.I. Act.
2. The gist of the complainant's case is that :
The complainant is a company incorporated under the provisions of Companies Act 1956, which carrying on business of conducting conventional chits and advancing money to subscribers in terms of the Karnataka Chits Funds Act 1982 in the name of M.S.S.R Chits Private Limited. The accused is a subscriber for a chit group No.MSSR/552, Ticket No.4 is valued at Rs.5,00,000/ for 40 installments and he was successful bidder by bidding a sum of Rs.1,75,000/ and received prized amount of Rs.3,25,000/ on 12.06.2015 from complainant company and promise to pay the installments regularly CC.No. 5135/2018 3 without any delay or default. Shri. Lokesh B.G s/o Shri Gangappa and Smt. Lakshmamma.V are the guarantors for the same. The accused has not paid the installments regularly in terms of the chit norms after receipt of the aforesaid prized amount and he become defaulter in payment of installments as agreed upon and due and payable a sum of Rs.3,56,000/ together with penalty as on 16.10.2017. The complainant has requested and demanded the dues in several times to the accused/subscriber as well as the guarantors, but the accused and the guarantors have failed and neglected to discharge the aforesaid dues even after the aforesaid chit group has terminated. The complainant has presented the cheque bearing No.021240 dated 16.10.2017, drawn on Corporation Bank, Kengeri Satellite Town Branch, Bengaluru 560060 for Rs.3,56,000/ through complainant's banker i.e., City Union Bank Limited, Bengaluru for encashment as per instructions of the accused which CC.No. 5135/2018 4 was issued in order to discharge the entire liability. The same has been dishonoured on 17.10.2017 with an endorsement 'funds insufficient'. Therefore the dishonour of the aforesaid cheque constitutes an offence punishable under section 138 of the N.I Act. Immediately the complainant has informed the accused and approached and demanded the accused and guarantors for the value of cheque in several times, but the accused and guarantors have not paid the value of cheque and postponing the same by one or the other pretext. The complainant has issued Demand Notice on 07.11.2017 by registered post with acknowledgment due to the accused for demanding the value of cheuqe and also copy of the demand notices to the guarantors. The said demand notices have been served on 10.11.2017 to the accused and the guarantors for which the accused has replied untenably on 25.11.2017 by admitting the aforesaid cheque transaction. The accused has failed and CC.No. 5135/2018 5 neglected to pay the value of the cheque even after repeated requests made by the complainant company. The accused has deliberately not maintained sufficient funds in his account with an intention to cheat the complainant company. The cause of action for the complaint arose on 12.06.2014 the date of receipt of the prized amount, on 16.10.2017 the date of cheque, on 17.10.2017, the date of dishonoured of the cheque, on 17.10.2017 the date of demand notice and on 10.11.2017 the date of service of demand notice.
Hence, the complainant prays to punish the accused for an offence punishable under sections 138 & 142 of the N.I Act and also to impose penalty under sec.357 of the Cr.P.C in the interest of justice and equity.
3. In pursuance of the summons, the accused has appeared through his Counsel and got enlarged on bail by executing necessary documents. The copy of the complaint was furnished to the accused, as required CC.No. 5135/2018 6 under law. As there was sufficient material, plea was recorded against the accused on 28.08.2019 and explained to the accused in his vernacular, for which the accused pleaded not guilty and claims to be tried.
4. In order to prove the case, the Foreman in the complainant company Sri. Nagaraj K.N examined as PW1 and got marked Ex.P1 to 22. Then the statement u/s 313 Cr.P.C was recorded on 14.01.2020, wherein the incriminating evidence appeared against the accused was read over and explained which was denied by the accused. Accused has not examined himself but got marked Ex.D1 to D6 documents on his behalf.
5. Heard the arguments and perused the material placed on record.
6. On the basis of the above facts, the following points arise for my consideration:
1. Whether the complainant proves CC.No. 5135/2018 7 that the accused towards discharge of legally recoverable debt issued cheque bearing No.021240 dt:16.10.2017 for Rs.3,56,000/ (Three Lakh Fifty Six Thousand only) drawn on Corporation Bank, Kengeri Satellite Town branch, Bengaluru, in favour of complainant, on presentation for encashment it was returned as 'Funds Insufficient' and in spite of receipt of legal notice, the accused failed to pay the cheque amount within the statutory period and thereby the accused has committed an offence punishable u/s 138 of N.I. Act?
2. What order?
7. My findings on the above points are as under :
Point No.1: In the Affirmative Point No.2: As per final order, for the following:
REASONS
8. Point No.1: The complainant in order to prove CC.No. 5135/2018 8 its case got examined the Foreman in the complainant company Sri. Nagaraj. K.N as PW1 and Ex.P1 to Ex.P22 documents are marked to prove the case of the complainant. PW1 Nagaraj. K.N deposed in his evidence that he is the Foreman in the complainant company and he is well acquainted with the facts and circumstances of the case. The complainant is a company incorporated under the provisions of Companies Act 1956, which carrying on business of conducting conventional chits and advancing money to subscribers in terms of the Karnataka Chits Funds Act 1982. The accused is a subscriber for a chit group No.MSSR/552 Ticket No.4 is valued at Rs.5,00,000/ for 40 installments and he was a successful bidder by bidding a sum of Rs.1,75,000/ and received prized amount of Rs.3,25,000/ on 12.06.2014 from the complainant company and promise to pay the installments regularly without any delay or default. The Sri. Lokesh B.G s/o Sri. Gangappa and Smt. CC.No. 5135/2018 9 Lakshmamma V. are the guarantors for the aforesaid chit transaction. The accused has not paid the installments regularly to the complainant company. In this regard the complainant company has requested and demanded the dues several times, the accused and the guarantors but the accused failed and neglected to discharge the aforesaid dues even after the chit group has been terminated. The complainant company has presented the cheque bearing No.021240, dated 16.10.2017 drawn on Corporation Bank, Kengeri Satellite Town Branch, Bengaluru for Rs.3,56,000/ through complainant banker i.e., City Union Bank Limited, Bengaluru for encashment as per the instructions of the accused which was issued in order to discharge the entire liability. The same has been dishonoured on 17.10.2017 with an endorsement 'Funds Insufficient'. The complainant company has issued demand notice on 07.11.2017 by registered post with acknowledgement due to the accused for CC.No. 5135/2018 10 demanding the value of cheuqe and also sent copy of the demand notice to the guarantors. The said notice have been served on 10.11.2017 to the accused and the guarantors. The accused has replied untenably on 25.11.217 by admitting the aforesaid chit transaction. The accused has failed to pay the value of the aforesaid cheque even after the repeated requests and demand made by the complainant company. The accused has intentionally failed and neglected to pay the value of cheque nor maintained sufficient funds in his account which resulted in dishonour of the aforesaid cheque on its presentation. Ex.P1 is the authorization letter issued in favour of PW1 by the complainant, Ex.P2 is the c/c of power of attorney holder, Ex.P3 is the cheque issued by the accused, Ex.P3(a) is the signature of the accused, Ex.P4 is the endorsement issued by the banker and Ex.P5 is the office copy of statutory notice addressed to the accused, the complainant has also produced postal CC.No. 5135/2018 11 receipts, track consignment, acknowledgment as well as reply notice issued by the accused which are marked as Ex.P6 to Ex.P9. It is clear from the Ex.P3 cheque issued by the accused and the signature of the accused marked as Ex.P3(a) that the accused has issued the cheque in favour of the complainant and the same has been admitted by issuing reply to legal notice dated 07.11.2017. However the accused took specific defence that the complainant has choosen to use blank cheques without dates to his advantage, with an intention to dishonestly and fraudulently enriching himself to cause himself wrongful gain and cause wrongful loss to the accused. According to the accused, the complainant is not at all running his chit business as per the provisions of Companies Act at registered place. If at all the complainant change his business address, it is the duty of the complainant to intimate all the subscribers, chit members as per the provisions of Companies Act, Chit Fund Act. The CC.No. 5135/2018 12 complainant has failed to comply the provisions of the Acts. There was no legally enforceable debt, the accused has already paid sufficient amount to the complainant. In fact the accused has subscribed 7 chits account in his name, 4 chits in his mother name, 3 accounts in his friends name. Accused has paid the monthly installments by way of cheques as well as cash as described in Ex.P9 reply notice. Out of the above chits accounts, only Ticket No.4 is bided. But the complainant failed to continue the business without intimation its other places of business for all subscribers. Therefore accused has not committed any offences as alleged.
9. The learned counsel for the accused cross examined PW.1 and admitted that the accused was member of 7 complainant chits, Ex.D1 to Ex.D6 pass books pertaining to chits have been confronted to PW1 and PW1 further admits that the accused was member CC.No. 5135/2018 13 of different chits group business maintained by the complainant. It is pertinent to note that the complainant in this case has made the specific allegations that the accused was the subscriber for chit group No.MSSR/552 Ticket No.4 valued at Rs.5 lakh for 40 installments and the accused was successful bidder by bidding for a sum of Rs.1,75,000/ and received prized amount of Rs.3,25,000/ on 12.06.2014. The complainant has presented the cheque in question issued by the accused for Rs.3,56,000/ dated 16.10.2017 through complainant banker and the said cheque has been dishonoured on 17.10.2017 with an endorsement 'funds insufficient'. If at all the accused was the member of the complainants' chits groups as mentioned in Ex.D1 to D6 pass books and the complainant has committed irregularities, it is open for the accused to initiate legal action against the complainant. Though the accused alleged that the CC.No. 5135/2018 14 complainant failed to follow the procedures of the companies Act or Chit Fund Act. PW1 further deposed in his evidence that after 40 installments it was informed to the accused through Telephone as well as by personal visit to the house of the accused. The suggestions put to PW1 that cheuqe was obtained by the complainant in the year 2013, at the time of execution of Demand Promissory note has been denied by the PW1. It has been specifically suggested to PW1 in all 20 cheque leafes have been obtained by the complainant for security purposes. But PW1 denied the suggestion and further admitted that no notice was given to the accused with respect to adjustment of amount in respect of different chit groups The complainant has also produced certificate of incorporation Ex.P11, articles of association at Ex.P12, Chit agreement Ex.P13, On Demand Promissory note dated 10.07.2014 as per Ex.P14, Security proposal form, chit ledger, LIC bonds as per Ex.P15 to 22. The CC.No. 5135/2018 15 documentary as well as oral evidence available on records on behalf of the complainant reveals that the accused is a subscriber for a chit Group No.MSSR/552 Ticket No.4 and the accused has issued the cheque bearing No.021240 dated 16.10.2017 drawn on Corporation Bank, Kengeri Satellite Town branch, Bengaluru for Rs.3,56,000/ in order to discharge the liability and the same has been dishonoured on 17.10.2017 with endorsement 'Funds Insufficient'.
10. The learned counsel for the complainant filed written argument and submitted that as per the oral instructions of the accused, the chit group No. MSSR/552, Ticket No.16 has con cancelled and adjusted a sum of Rs.21,250/ as per Ex.P17 towards installments NO.4, 5, 6 (part to accused account i.e., chit group No.MSSR/552 Ticket No.4 and dividend/discounts a sum of Rs.7,500/has also credited and adjusted for the same. As per the oral CC.No. 5135/2018 16 instructions of the accused the chit group No.204 Ticket No.24 and Chit Group MSSR/204 Ticket No.25 of accused are also cancelled and a sum of Rs.94,750/ has been adjusted for his dues on 27.07.2017 dividend/discount for a sum of Rs.32,500/ has also credited and adjusted towards dues/installments No.6 (part), 7 to 15, 16 (part) to accused as per Ex.P18,19 and 20. As on 20.07.2017 the accused is due a sum of Rs.3,06,500/ after adjusting the aforesaid 4 chits. On 16.10.2017 the accused had come over the complainant's place and settled the aforesaid dues along with penalty a sum of Rs.49,500 totally a sum of Rs.3,56,000/ and issued cheque bearing No.021240, drawn on Corporation Bank, Kengeri Satellite Town Branch, Bengaluru marked as Ex.P3. Particulars of the accounts maintained by the complainant in respect of the different chit groups of the accused has corresponding entry in Ex.P17to 20 has rightly submitted by the CC.No. 5135/2018 17 learned counsel for the complainant. The accused has not lead any evidence to disprove or contradict correctness of the entry maintained by the complainant, even though he submitted that he has oral evidence during the course of 313 statement. This court has given opportunity to the accused to lead defence evidence, but the accused has not availed the same and lead defence evidence except production of Ex.D1 to D6 documents during the cross examination of PW1. The complainant is able to prove that the accused being the member of chit group No.MSSR/552 Ticket No.4 valued for Rs.5 lakhs for 40 installments and he was a successful bidder by bidding for a sum of Rs.1,75,000/. PW1 deposed regarding disbursement of prized amount and also produced documents at Ex.P17 to 20 to show that the prized amount has been adjusted to other chit groups membership of the accused. Apart from that the accused has admitted that he was subscriber for the complainant chit group.
CC.No. 5135/2018 18 The accused has not established his contentions by confronting the pass books issued by the complainant company, the accused has admitted the chit transactions with the complainant company, but not paid the entire prized amount to the complainant.
11. The learned counsel for the complainant relied on the decision reported in :
2015(1) KCCR 235 Lale Patel V/s Sharanbasappa wherein Hon'ble High Court of Karnataka held that plea of accused that he has given a blank cheque signed as security for a transaction and complainant filled up the contents and denied existence of any debt or loan. The cheques which issued can not be considered as the one issued as a security. Defence plea is untenable. Because such a blank signed cheuqe would be an inchoate negotiable instrument. But it is still a valid negotiable instrument, because the drawer of cheque obviously delivers a duly signed CC.No. 5135/2018 19 inchoate cheque to the payee with a liberty to fill the blanks regarding the amount.
12. The complainant also relied on a decision reported: 2015 (3) AKR 513 Gurupadassamy v/s M Partha wherein it is held that :
Cheque issued by the petitioner to repay amount of loan given by respondent, was dishonored. Plea by petitioner/accused that respondent was a complete stranger to him and that he had never issued a cheque in his favour It was stated that the blank cheque duly signed by petitioner which may have been issued to another, was sought to be misused. Petitioner has also claimed that he was an illiterate man and the cheque had been filled in by respondent himself All contentions have been squarely and cogently dealt with by the appellate court Conviction and Sentence of petitioner - Proper.
CC.No. 5135/2018 20
13. The Hon'ble High Court of Karnataka in 2017 (2) AKR 12 - K.L Agarwal v/s M/s Paramount Solutions, Bangalore held that: accused admitting issuing of three cheques, by admitting his signature on cheques - No evidence on record to rebut presumption raised against accused conviction of accused, proper.
14. The accused in this case also admitted that the cheque has been issued as security to his chit subscriber ship. Admittedly the accused being member of chit group of the complainant company participated in the chit group business issued the cheque in order to discharge the liability and the same has been dishonoured with an endorsement 'funds insufficient'. Therefore the dishonour of cheque constitutes an offence punishable under sec.138 of N.I Act.
15. On appreciation of entire evidence, this court is of the opinion that the accused miserably failed to CC.No. 5135/2018 21 challenge the oral and documentary evidence produced by the complainant. Accused has utterly fails to prove the defence that he has not issued cheque for discharge of legally enforceable debt. On the contrary, the complainant has proved through overwhelming evidence that the accused has issued Ex.P3/cheque for a sum of Rs.3,56,000/ towards discharge of legally enforceable debt and on presentation of the cheque, the same was dishonored for the reasons 'Funds Insufficient' and even after service of legal notice, the accused has not paid the cheque amount. Hence, in the considered view of this court, the complainant has proved that the accused has committed an offence punishable u/s 138 of N.I. Act. Hence, I answer the above point No.1 in the affirmative.
16. Point No.2: From the material on record, and considering the age, avocation of accused and quantum of the cheque, if the accused is sent to jail, it CC.No. 5135/2018 22 would cause problem to the accused as well as to her family members. Having regard to the facts and circumstances, prevailing rate of interest in the nationalized Bank and litigation expenses, I proceed to pass the following:
ORDER The accused is found guilty of the offence punishable u/s 138 of N.I. Act.
Acting u/s 255(2) of Cr.P.C. the accused is hereby convicted and sentenced to pay fine of Rs.3,65,000/, in default he shall undergo simple imprisonment for six months.
Out of fine amount of Rs.3,65,000/ a sum of Rs.3,60,000/ is ordered to be paid to the complainant towards compensation u/s 357(3) of Cr.P.C. and the balance amount of Rs.5,000/ shall be remitted to the State.
CC.No. 5135/2018 23 The bail bond executed by the accused stand canceled.
Supply free copy of the judgment to the accused. (Dictated to Stenographer directly on the Computer, taken print out corrected, signed by me and then pronounced in the open court this the 4 th day of October, 2021) (MANJUNATHA) XXVIII Addl. Chief Metropolitan Magistrate, Bengaluru.
ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF THE COMPLAINANT :
PW1 : Sri. Nagaraj. K.N LIST OF WITNESSES EXAMINED ON BEHALF OF THE DEFENCE:
Nil LIST OF DOCUMENTS MARKED ON BEHALF OF THE COMPLAINANT:
Ex.P1 : C/c of authorisation letter
Ex.P2 : C/c of power of attorney,
Ex.P3 : Cheque
Ex.P3(a) : Signature of the accused
CC.No. 5135/2018
24
Ex.P4 : Bank Memo
Ex.P5 : Legal Notice
Ex.P5(a)to(c) : Postal receipts
Ex.P6 & 7 : Track consignments
Ex.P8 : Postal acknowledgement
Ex.P9 : Reply notice
Ex.P10 : Complaint
Ex.P11 : Incorporation certificate
Ex.P12 : C/c of Memorandum of association a
and article of association
Ex.P13 : Chit Agreement
Ex.P14 : On Demand Promissory note
Ex.P15 : Surety proposal form
Ex.P16 to 20 : C/copies of computarised
chit ledger
Ex.P21 : LIC bond
Ex.P21(a)&(b) : LIC Assignment forms
Ex.P22 : B.G Lokesh Original LIC bond
Ex.P22(a) : Assignment form
Ex.P22(b) : Change of Nomination form.
LIST OF DOCUMENTS MARKED ON BEHALF OF THE DEFENCE:
Ex.D1 : Chit No.204/24 pass book
Ex.D2 : Chit No.52/4 Pass book
Ex.D3 : Information regarding payment
Rs.66,250/
Ex.D4 : Information regarding payment
of Rs.56,000/
Ex.D5 : Chit No.25 pass book
Ex.P6 : Pass book
XXVIII Addl. Chief Metropolitan
Magistrate, Bengaluru.
CC.No. 5135/2018
25
CC.No. 5135/2018
26
CC.No. 5135/2018
27
04.10.2021
Accused is present.
Judgment pronounced in the
open court vide separate order.
ORDER
The accused is found guilty of the
offence punishable u/s 138 of N.I. Act.
Acting u/s 255(2) of Cr.P.C. the accused is hereby convicted and sentenced to pay fine of Rs.3,65,000/, in default he shall undergo simple imprisonment for six months. Out of fine amount of Rs.3,65,000/ a sum of Rs.3,60,000/ is ordered to be paid to the complainant towards compensation u/s 357(3) of Cr.P.C. and the balance amount of Rs.5,000/ shall be remitted to the State.
The bail bond executed by the accused stand canceled.
Supply free copy of the judgment to the accused.
XXVIII A.C.M.M, Bangaluru.