Bangalore District Court
Yelahanka Merchants Finance vs Sri.Narasimha Murthy on 10 January, 2023
SCCH-12 0 C.C.No.1641/2021
KABC020062102021
Before the Court of Addl.Chief Metropolitan
Magistrate at Bangalore
(SCCH-12)
Present: Smt. Poornima.N. PAI, B.Com LL.M.,
.,
SCJ and ACMM, Bangalore.
Dated this the 10th day of January, 2023
C.C.No.1641/2021
Complainant Yelahanka Merchants Finance
Company
Hemakumar Nagar, Bypass
B.B.Road, Yelahanka,
Bangalore-560064.
Represented by its Manager and GPA
Holder Smt.Anitha
Aged about 41 years
(Sri.N.M.A., Advocate)
V/s.
Accused Sri.Narasimha Murthy
S/o Poojappa
Choudanahalli, Devanahalli Taluk,
Bengaluru rural District-562110.
(Sri.C.M., Advocate)
SCCH-12 1 C.C.No.1641/2021
1. Date of commencement of offence : 09.11.2020
2. Name of the complainant : Yelahanka Merchants
Finance Company
3. Date of recording of the evidence : 16.02.2021
4. Date of closing of evidence : 22.09.2021
5. Offence complained of : 138 of N.I. Act
6. Opinion of the Judge : Accused found guilty
7. Complainant represented by : Sri.NMA advocate
8. Accused defence by : Sri. C.M, advocate
JUDGMENT
The complainant company has filed present private complaint case under Section 200 of Cr.P.C against the Accused for the offence punishable U/s 138 of Negotiable Instruments Act.
2. The brief facts of the complaint are as under:
It is the case of the complainant that, complainant is registered partnership firm and it carries business with all necessary licenses. Accused has registered his Membership dated 23.10.2013 vide Account No.1229 and accused has approached the complainant to avail loan for running the business and obtained loan vide loan application dated 25.04.2015 for a sum of Rs.40,000/-. The complainant sanctioned a loan of Rs.35,710/- by way of cheque and Rs.4,290/- by way of cash on a condition to repay the same along with interest. Accused made Rs.11,200/- part payment SCCH-12 2 C.C.No.1641/2021 towards the said loan amount and did not make repayment properly and became a defaulter in payment of principal amount as well as payment of interest. Hence after verifying the balance amount with interest, the accused has dues to pay a sum of Rs.60,415/- to the complainant. Further stated that the accused issued a cheque bearing No.134397 dated 17.02.2020 for Rs.60,415/- drawn on Karnataka Bank Ltd, Devanahalli branch in favour of complainant towards balance amount including interest, penal interest and other incidental charges.
3. It is further stated that, the complainant presented the above said cheque through his banker IDBI Bank, Yelahanka Branch, Bengaluru for collection but, the said cheque was dishonored due to 'Funds insufficient' on 19.02.2020. The complainant also got issued legal notice dated 09.03.2020 calling upon the accused to make the payment covered in the cheque along with interest within 15 days from the date of receipt of legal notice. The notice was served to the accused. Accused intentionally avoided service of summons and did not make any repayment. He has not complied the demand made by the complainant regarding the payment. These facts constrained the complainant to file the present complaint against the accused for the offence punishable under Section 138 of N.I.Act.
4. After filing of the complaint, sworn statement of the complainant was recorded and after hearing the SCCH-12 3 C.C.No.1641/2021 arguments and on considering the materials on record a criminal case was registered by my predecessor-in-office for the offence punishable under Section 138 of N.I. Act and summons has been issued to the accused for the said offence.
5. In pursuance of the process of the court, the accused appeared before this court through his counsel and got enlarged on bail. Thereafter, accusation was read over to the accused for the offence punishable under Section 138 of N.I.Act. The accused did not plead guilty and claimed to be tried.
6. The sworn statement of complainant is treated as examination in chief of complainant. Thereafter, case was posted for further chief of P.W.1. After chief of P.W.1 completed, complainant got marked 12 documents as Ex.P.1 to Ex.P12. Case was kept for cross of P.W.1 since accused and his counsel are absent. The cross of P.W.1 taken as nil. Statement under Section 313 already recorded. Accused kept himself absent and no representation of advocate for accused. Hence, defence evidece is taken as nil. Heard argument and case was posted for judgment.
7. Heard both side. I have perused materials available on record.
8. The points that arise for my consideration are as under:
SCCH-12 4 C.C.No.1641/20211. Whether the complainant has made out the ingredients of section 138 of N.I.Act against the accused?
2. What order?
9. My findings on the above points are as under:
Point No.1: Affirmative.
Point No.2: As per final order for the following:
REASONS
10. POINT NO.1 : It is well settled that in order to maintain a complaint U/Sec.138 of NI Act, five main facts to be established by the complainant before the court -
(i) The cheque in question should have been issued in discharge of whole or in part of a debt or liability.
(ii) The cheque in question should be presented for payment within six months or its specific validity period, whichever is earlier.
(iii) The Payee or holder should given notice of demand within 30 days of receiving the information of dishonor which may be due to insufficient of funds or amount payable exceeds the arrangement.
(iv) The drawer gets 15 days time after receipt of notice to make the SCCH-12 5 C.C.No.1641/2021 payment and if he fails to pay he is liable to be prosecuted.
(v) Complaint can be made only by
payee or the holder in due course
within one month of arising of the
cause of action.
Unless these five factors have been cumulatively
established before the court by the complainant, no complaint U/Sec.138 will be maintainable. If any one of the factors is lacking such complaint is not maintainable.
11. In order to prove the case of the complainant, The authorized representative of complainant got herself examined as P.W.1 and got marked 11 documents in her favour. Ex.P.1 original cheque, Ex.P.1(a) Signature of accused, Ex.P.2 Bank memo, Ex.P.3 office copy of legal notice, Ex.P.4 Postal receipt, Ex.P.5 Undelivered Postal cover, Ex.P.6 Membership Form, Ex.P.7 Loan application, Ex.P.8 cash received receipt, Ex.P.9 cash paid receipt, Ex.P.10 letter issued for giving cheque, Ex.P.11 Statement of account and Ex.P.12 Ledger extract. Based on these documents complainant has argued that, he has proved the necessary ingredients of section 138 of N.I.Act and prays for conviction of accused.
SCCH-12 6 C.C.No.1641/202112. On perusal of Exs. P.1 to P.12, it is clear that the complainant has made out all the ingredients of section 138 of N.I. Act except legally recoverable debt.
13. Under Sec. 138 of N.I.Act, regarding burden of proof sec. 118 of N.I.Act lays down that until the contrary is proved, it shall be presumed that every Negotiable Instrument was made of drawn for consideration. Sec. 139 of N.I.Act contemplates that unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque of the nature referred to in Sec. 138 for the discharge, in whole of any debt or liability. In a decision reported in 2001 Crl. Law Journal, page 4647 (SC) (Hiten P. Dalal V/S. Bratindranath Banerjee) it is observed that in the proceeding under Sec. 138 of N.I.Act, the complainant is not required to establish either the legality or the enforceability of the debt or liability since he can avail the benefit or presumption under Sec. 118 of 139 of N.I.Act in his favour. By virtue of these presumptions, accused has to establish that the cheque in question was not issued towards any legally enforceable debt or liability. In the year 2008, In Krishna Janardhan Bhat V/s Dattatreya G Hegde (2008 Vol. 2 SCC Crl. 166) the Hon`ble Supreme Court has held that existence of legally recoverable debt is not a presumption under SCCH-12 7 C.C.No.1641/2021 Sec 138 of N.I.Act and the accused has a constitutional right to maintain silence and therefore it was argued later that the presumption u/s 139 of N.I.Act should be delicately balanced.
14. In a decision of Hon`ble Supreme court in the case of Rangappa V/s Mohan reported in A.I.R. 2010 SC page 1898, the Hon`ble Supreme Court has reconsidered this issue and clarified that the existence of legally recoverable debt or liability is a matter of presumption under Sec. 139 of N.I.Act. In para 14 of the judgment, the Hon`ble Supreme Court has observed that:
" Sec. 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act, specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Sec. 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Sec. 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to SCCH-12 8 C.C.No.1641/2021 discharge an unduly high standard or proof. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Sec. 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence, which creates doubt about the existence of a legally enforceable debt or liability, the presumption can fail. As clarified in the citation, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence on his/her own."
Relying upon the citation referred above wherein the Hon'ble Supreme Court has clarified regarding legally enforceable debt and the presumptions. Now it is clear that the presumption mandated by Sec. 139 of N.I.Act does not include existence of legally enforceable debt or liability. It is a rebuttable presumption. It is for the accused to prove his defence wherein he has to raise a probable defence which creates doubt about existence of legally enforceable debt or liability. Once he creates such doubt, then the burden shifts back to the complainant.
15. The objectives of the proceedings of Section 138 of the Act are that the cheques should not be used by persons as a tool of dishonesty and when cheque is issued by a person, it must be honoured and if it is not honoured, the person is given an opportunity to pay the cheque amount by issuance SCCH-12 9 C.C.No.1641/2021 of a notice and if he still does not pay, he must face the criminal trial and consequences.
16. The Hon'ble Supreme Court in Electronics Trade & Technology Development Corporation Ltd., Secunderabad v/s. Indian Technologists & Engineers (Electronics) (P) Ltd. and Another (1996) 2 SCC 739 has also held as follows:
The object of bringing Section 138 on statute appears to be to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Despite civil remedy, Section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a book and induce the payee or holder in due course to act upon it. Section 138 draws presumption that one commits the offence if he issues the cheque dishonestly. It is seen that once the cheque has been drawn and issued to the payee and the payee has presented the cheque and thereafter, if any instructions are issued to the bank for non-payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of Section 138...."
The Hon'ble Supreme Court had already observed earlier in Goa Plast (P) Ltd. V/s Chico Ursula D'Souza (2004) 2 SCC 235, this Court, while dealing with the objects and ingredients of Sections 138 and 139 of the Act, observed as follows :-SCCH-12 10 C.C.No.1641/2021
"The object and the ingredients under the provisions, in particular, Sections 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a civil court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee."
17. The Hon'ble Supreme Court has given directions to all the courts in India dealing with cases under Section 138 of N.I. Act to follow mandatory directions in order to bring uniformity in procedure and disposal of huge pendency of negotiable instrument cases in decision reported in Indian Bank Association & Ors vs Union Of India & others by Hon'ble Justice K.S. Radhakrishnan, and Vikramajit Sen in WRIT PETITION (CIVIL) NO.18 OF 2013 as under;
SCCH-12 11 C.C.No.1641/2021Many of the directions given by the various High Courts, in our view, are worthy of emulation by the Criminal Courts all over the country dealing with cases under Section 138 of the Negotiable Instruments Act, for which the following directions are being given :-
DIRECTIONS:
1) Metropolitan Magistrate/Judicial Magistrate (MM/JM), on the day when the complaint under Section 138 of the Act is presented, shall scrutinize the complaint and, if the complaint is accompanied by the affidavit, and the affidavit and the documents, if any, are found to be in order, take cognizance and direct issuance of summons.
2) MM/JM should adopt a pragmatic and realistic approach while issuing summons. Summons must be properly addressed and sent by post as well as by e-
mail address got from the complainant. Court, in appropriate cases, may take the assistance of the police or the nearby Court to serve notice to the accused. For notice of appearance, a short date be fixed. If the summons is received back un-served, immediate follow up action be taken.
3) Court may indicate in the summon that if the accused makes an application for compounding of offences at the first hearing of the case and, if such an application is made, Court may pass appropriate orders at the earliest.
4) Court should direct the accused, when he appears to furnish a bail bond, to ensure his appearance during trial and ask him to take notice under Section 251 Cr.P.C. to enable him to enter his plea of defence and fix the case for defence evidence, unless an application is made by the accused under Section 145(2) for re- calling a witness for cross-examination.
SCCH-12 12 C.C.No.1641/2021(5) The Court concerned must ensure that examination- in-chief, cross-examination and re-examination of the complainant must be conducted within three months of assigning the case. The Court has option of accepting affidavits of the witnesses, instead of examining them in Court. Witnesses to the complaint and accused must be available for cross-examination as and when there is direction to this effect by the Court.
We, therefore, direct all the Criminal Courts in the country dealing with Section 138 cases to follow the above-mentioned procedures for speedy and expeditious disposal of cases falling under Section 138 of the Negotiable Instruments Act. Hence, when direction is given by the Hon'ble Supreme Court it is mandatory to follow the procedure as laid down in the aforesaid case in trial of N.I.Act cases. Hence, this court has followed the procedures and directions issued from time to time by the Hon'ble Supreme Court and also the directions issued in the case of Indian Bank Association & Ors vs Union Of India & others.
18. In the present case the advocate for complainant has argued that, based on Ex.P.1 to P.12 as already explained the complainant has proved existence of legally recoverable debt based on sufficient documents and also proved that, the accused issued cheque for Rs.60,415/- having admitted the balance due from the accused and towards repayment of the same and when same was presented to his Bank for collection, it was returned for the reason "funds insufficient". Hence, he got issued a legal notice dated 09.03.2020 which was returned unserved with a postal shara as 'Intimation SCCH-12 13 C.C.No.1641/2021 delivered, Party unclaimed'. Hence, sufficient opportunities were given to the accused to repay the amount, but he failed to repay the same. Hence, he has prayed that he has proved the ingredients of section 138 of N.I.Act. So prays for conviction of accused.
19. As stated above, the complainant has established the fact that, the accused has issued cheque for repayment of loan in favour of the complainant and same has been bounced for above said reason. The complainant also established all required ingredients to constitute an offence punishable under section 138 of N.I.Act.
20. The accused has not led any evidence to create a doubt in the mind of the Court that there was no such transaction taken place. The materials brought on record are not sufficient to shift the burden of proof upon the complainant and the accused has not discharged his primary onus. It is observed that, the accused has taken more than sufficient time to drag the case with the reason of settlement and once paid Rs.10,000/- in part settlement. There was sufficient opportunity given to the accused to produce any documents before the Court or to lead evidence on his behalf. The accused has not led any evidence to prove his defense. In the directions given by the Hon'ble Supreme Court in the case of Indian Bank Association & Ors vs Union Of India & others (supra) one of the direction is that the accused must lead evidence or cross examine the complainant when the SCCH-12 14 C.C.No.1641/2021 date was fixed for the same and the case must be decided within three months from the date of filing, but the accused has kept himself absent and repeatedly adjournments are sought for cross examination by keeping the accused absent. Hence, the accused has failed to putforth any defense to rebut the presumption available in favour of complainant under Section 118 and 139 of N.I.Act. The defense taken by the accused is not plausible defense to create a doubt in the mind of court that there are no such transactions between the complainant and accused. In such case, the presumption always lies in favour of complainant and the complainant has proved the legally recoverable debt. With these observations I am of the opinion that the complainant has succeeded to prove the ingredients of section 138 of N.I.Act against the accused. Hence I have answered Point No.1 in the "Affirmative".
21. POINT NO.2 : The very purpose of enactment of N.I.Act is to promote the use of Negotiable Instrument while to discard the issuance of cheque without having sufficient funds in their account. Such being the case, the intention of the legislature is that the complainant be suitably compensated by accused be punished for his act. There is no provision in the Code of Criminal Procedure for imposing default sentence for enforcement of payment of compensation. In this regard, the Hon'ble Supreme Court in a decision reported in 1988(4) SCC 551 in the case of Hari Singh vs. Sukhbir Singh and others at para No.11 of the SCCH-12 15 C.C.No.1641/2021 judgment was pleased to hold that, the court may enforce an order by imposing sentence by default. This view of Hon'ble High Court was again re-affirmed in a decision reported in 2002(2) SCC 420 in the case of Suganthi Suresh Kumar Vs. Jagadheeshan at para No.11 of the judgment and it is pleased to hold that:
When this court pronounced in the case of Hari Singh vs. Sukhbir Singh that a court may enforce an order to pay compensation by imposing the sentence in default it is open to all courts in India to follow the said course. The said legal position would continue to hold good until it is overruled by a Bench of this court.
Therefore, it is deemed fit to provide a default sentence in order to enforce the payment of compensation. Upon the discussion made above, I proceed to pass the following:
ORDER Acting U/Sec.255 (2) of Cr.P.C. accused is found guilty for having committed the offence punishable under section 138 of Negotiable Instruments Act.
The accused is hereby convicted and sentenced to pay a fine of Rs.55,415/- and in SCCH-12 16 C.C.No.1641/2021 default to pay the fine, he shall undergo a simple imprisonment for a period of one year.
Out of the fine amount recovered, an amount of Rs.50,415/- shall be paid to the complainant as compensation under section 357(3) of Cr.P.C. and the remaining Rs.5,000/- shall be confiscated to the State towards expenses of the court proceedings.
Office is directed to issue copy of this judgment to the accused free of cost.
Issue conviction warrant against the accused.
The Bail bond and surety bond executed by the accused stands cancelled. (Dictated to the stenographer, transcript thereof, corrected by me and then pronounced in the open court this the 10th day of January, 2023).
(Poornima.N.Pai), XI Addl. Small Causes Judge and ACMM, Bangalore.
ANNEXURE List of the witnesses examined on behalf of Complainant:
PW.1 Smt. Anitha
SCCH-12 17 C.C.No.1641/2021
List of the documents exhibited on behalf of
Complainant:
Ex.P.1 Original cheque
Ex.P.1(a) Signature of accused on Ex.P.1
Ex.P.2 Bank memo
Ex.P.3 Office copy of legal notice
Ex.P.4 Postal receipt
Ex.P.5 Undelivered postal cover
Ex.P.6 Membership Form
Ex.P.7 Loan application
Ex.P.8 Cash received receipt
Ex.P.9 Cash paid receipt
Ex.P.10 Letter issued for giving cheque
Ex.P.11 Statement of account
Ex.P.12 Ledger extract
List of the witnesses examined on behalf of Accused:
NIL List of the documents marked on behalf of Accused: NIL (Poornima.N.Pai), XI Addl. Small Causes Judge and ACMM, Bangalore.
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