Bangalore District Court
Sri. Mohammed Ismail vs Sri. Shakthi Mookambika on 23 August, 2019
IN THE COURT OF XXI ADDL.CHIEF METROPOLITON
MAGISTRATE, BENGALURU CITY
Present: Sri. V. NAGARAJA, LL.B., LL.M.,
XXI Addl. Chief Metropolitan Magistrate,
Bengaluru.
Dated this the 23rd day of August, 2019
C.C. No.24706/2018
COMPLAINANT: Sri. MOHAMMED ISMAIL
S/o. Mohammed Abdulla,
Aged about 58 years,
R/at. No.62,
Nawab Hyderali Khan Road,
Kalasipalayam Main Road,
Bengaluru - 560 002.
(Reptd. By: SAS., Advocate)
V/s.
ACCUSED: 1. Sri. SHAKTHI MOOKAMBIKA
CHITS (P) LTD.,
No.7, 2nd Floor, Sree Devi Complex,
Bull Temple Road,
Basavanagudi,
Bengaluru - 560 004.
A Company Registered under the
Indian Companies Act.
2. Sri. G.H. RAJANNA
S/o. Gali Hanumaiah,
Aged about 48 years,
Managing Director,
Sri Shakthi Mookambika Chits (P) Ltd.,
No.7, 2nd Floor, Sree Devi Complex,
Bull Temple Road,
Basavanagudi,
Bengaluru - 560 004.
3. Smt. B.N. SAMPUTHA
W/o. G.H. Rajanna,
Aged about 45 years,
Director,
2 C.C.No.24706/2018
Sri Shakthi Mookambika Chits (P) Ltd.,
No.7, 2nd Floor, Sree Devi Complex,
Bull Temple Road,
Basavanagudi,
Bengaluru - 560 004.
(Reptd. By: RN., Advocate)
:JUDGMENT:
Complainant has filed this complaint under Section 200 of Cr.P.C. r/w Section 138 of N.I. Act, seeking for penalizing the accused for the offence punishable under Section 138 of N.I. Act and also for awarding compensation to him.
2. Case of the complainant in a nutshell is that:
Accused No.1 is company, registered under Companies Act, whereas accused No.2 is Managing Director and accused No.3 is Director of accused No.1 company, carrying business with respect to chit funds and finance.
2. It is further averred that during the course of business of the accused, complainant became one of the member for chit fund by filing application on 23.05.2016 and said chit was for Rs.15,00,000/- on monthly installment of Rs.62,500/- for a period of 24 months.
However, EMI would be reduced depending upon the bid 3 C.C.No.24706/2018 made by members. It is further averred that after becoming member, he was continuously paying regular EMI's from 21.06.2016. Thereafter, on 21.08.2017, the complainant bided the chit amount in auction. So, the accused No.2 and 3 after deducting 20% in the said bid amount, they issued cheque for a sum of Rs.12,00,000/- for payment of said bid amount. However, on the request of accused No.2 and 3, the complainant had not presented the said cheque. However, the complainant had been demanding the both accused No.2 and 3 to pay the bid amount. So, the complainant and the accused entered into an agreement dated 23.09.2017 by agreeing that accused No.2 and 3 would pay Rs.6,69,350/- in three installments. So, in order to discharge part liability, accused No.2 and 3 on behalf of accused No.1, issued a cheque bearing No.352831 dated 14.06.2018 for Rs.4,00,000/- drawn on Syndicate Bank, RPC Layout Branch, Bengaluru and assured to honour the said cheque and further assured to pay remaining balance of Rs.2,69,350/-. So, believing the words of accused, he presented above said cheque through his banker i.e., Canara Bank, Kalasipalya Branch, Bengaluru. But said cheque was dishonoured for the reason "Funds 4 C.C.No.24706/2018 Insufficient" in the account of accused. So, the bank authorities issued endorsement dated 18.06.2018. So, he got issued legal notice dated 28.06.2018 through RPAD to all accused regarding dishonour of cheque and calling upon them to pay cheque amount, whereas said notices have been duly served on accused. But, the accused have failed to pay the cheque amount. Hence, accused have committed offence punishable U/s.138 of NI Act. Hence, he is constrained to file this complaint seeking for penalizing the all accused for the offence punishable under Section 138 of N.I. Act., and also seeking for awarding of compensation to him.
3. In pursuance of summons issued by this court, accused No.2 and 3 made appearance on their behalf as well as accused No.1 through their counsel and obtained bail and now they are on bail.
4. As these proceedings are summary in nature, substance of accusation read over and explained to accused No.2 and 3 in language known to them whereas, they pleaded not guilty and claimed for trial. 5 C.C.No.24706/2018
5. In order to prove the case of the complainant, he has been examined as PW-1 and got documents marked Ex.P-1 to Ex.P-11. After completion of evidence of complainant, statement of accused No.2 and 3 as specified U/s.313 of Cr.P.C., have been recorded, whereas accused No.2 has been examined as DW-1.
6. I have heard arguments of both learned counsels, whereas learned counsel for complainant he also filed his written arguments.
7. Perused the records.
8. After perusal of records, the points arise for my consideration are:
1) Whether complainant proves beyond all reasonable doubt that accused No.1 being company represented through its Managing Director accused No.2 and Director accused No.3, in order to discharge their legally enforceable debt, issued a cheque bearing No.352831 dated 14.06.2018 for Rs.4,00,000/- drawn on Syndicate Bank, RPC Layout Branch, Bengaluru?
2) Whether complainant further proves that he has complied with mandatory requirements as specified under Section 138 of N.I. Act?
3) What Order?
9. My findings on the above points are:
Point No.1 : In the Affirmative
Point No.2 : In the Affirmative
6 C.C.No.24706/2018
Point No.3 : As per final order,
for the following:
REASONS
10. Point No.1: As I have already stated, in order to prove the case of the complainant, he has been examined as PW-1 and he filed his examination-in-chief by way of affidavit by reiterating entire complaint averments as stated above. In support of his oral testimony, he relied upon Ex.P-1 to Ex.P-11.
11. On the other hand, accused No.2 has been examined as DW-1.
12. Before appreciation of evidence of the both parties, I am of the opinion, it is worth to note presumptions envisaged in N.I. Act as well as ratio laid down by the Hon'ble Apex Court in Three Judges Bench Judgment reported in (2010) 11 SCC 441 (Rangappa V/s. Sri Mohan) wherein it is held:
"The presumption mandated by Section 139 includes a presumption that there exists a legally enforceable debt or liability. This is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, herein, there can be no doubt that there is an initial presumption which favours the respondent /complainant."7 C.C.No.24706/2018
It is further held:
Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the court in favour of the complainant. The presumption referred to Section 139 of the NI Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption.
13. So in the light of above presumptions and ratio decidendi laid down by Hon'ble Apex Court, if the present facts and situations are analyzed, it is obvious that according to complainant, both accused have jointly issued cheque for discharging of their liability. On the other hand, on considering the stand taken by the accused No.2 and 3, it is obvious that though they dispute their liability as claimed by complainant, but they have not disputed the facts that cheque is belonged to accused No.1 company and it bears their seal and signatures. So, as I have already stated in view of ratio laid down by Hon'ble Apex court in the Judgments stated supra, that as soon as accused admits his signature on cheque, the mandatory presumption u/S 139 of N.I. Act comes to the aid of complainant and he can rest upon said presumption. 8 C.C.No.24706/2018
14. Whereas, learned counsel for defence argued that in order to raise presumption U/s.138 of NI Act, the condition precedent is that complainant must prove the existence of legally recoverable debt or liability, if he is able to prove the same, then only presumption can be raised otherwise not.
15. Having regard to the arguments of learned counsel for accused, it is important to note as I have already pointed out Hon'ble Three-Judges Bench Judgment of Hon'ble Supreme Court in Rangappa's case stated supra, it is clearly held:
"The presumption mandated by Section 139 includes a presumption that there exists a legally recoverable debt or liability"
16. So when above ratio clearly states that presumption includes existence of legally enforceable debt or liability then further proof of that fact is not required that too in summary proceedings. Because Hon'ble Apex Court in the judgment reported in (2009)2 SCC 513 (Kumar Exports V/s. Sharma Carpets) has clearly observed that:
Presumption literally means "taking as true without examination or proof"9 C.C.No.24706/2018
17. At this juncture, it is also worth to note ratio laid down by Hon'ble Apex Court in the judgment reported in (2014)5 SCC 590 (Indian Bank Association and others V/s. Union of India and others) wherein it is held by reiterating Section 143 of Negotiable Instruments Act and Section 264 of Cr.P.C., that:
"The Magistrate is not expected to record full evidence which he would have been, otherwise required to record in a regular trial and his judgment should also contain a brief statement of the reasons for the finding and not elaborate reasons which otherwise he would have been required to record in regular trials"
18. So, in the light of above ratio decidendi and in view of Section 143 of Negotiable Instruments Act and Section 264 of Cr.P.C., as this case is summary case, I am of the opinion it is not necessary to discuss elaborately with respect to legally enforceable debt when presumption includes existence of legally recoverable debt as held in the above said judgment of Hon'ble Apex Court. So, the mandatory presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is to say the cheque was not issued for consideration and in discharge of any debt or liability, in other words, 10 C.C.No.24706/2018 onus shifts on the accused to rebut the said mandatory presumption raised in favour of complainant as observed by Hon'ble Apex Court in the Judgment reported in (2009)2 SCC 513 (Kumar Exports V/s. Sharma Carpets).
Now the crucial question arises as to whether accused are able to rebut the said presumption or not?
19. It is significant to note on considering the defence of the accused, they admitted the fact that complainant is one of chit members in their chit business and issued membership agreement as per Ex.P-6, but they specifically contended that though complainant became one of the members in their chit fund, but he did not pay any chit amount from the beginning itself. But, he used to visit their office and while he was visiting so, he had stolen their signed blank cheque which was kept in the office and now in order to grab money from them, he has misused said cheque and filed this false compliant. Hence, same is liable to be dismissed and they may be acquitted.
20. Whereas learned counsel for accused in support of above defence, he vehemently argued that though the complainant became one of the members in the chit, but as he had no financial capacity to pay monthly 11 C.C.No.24706/2018 installments of Rs.62,500/-, he did not pay any amount from the beginning itself. So, his membership was seized from the beginning itself. So, under such circumstances, contention of the complainant that he has paid some installments and bid the chit for Rs.12,00,000/- cannot be believable, whereas complainant has created Ex.P-8 and Ex.P-9 only for the purpose of this case. In fact, the complainant used to visit office of accused. So, while he was visiting to office, he had stolen signed cheque of accused and now in order to grab money from accused, he filled up the contents of the cheque for his convenience and filed this false complaint. Hence, complaint is liable to be dismissed and accused are to be acquitted.
21. Having regard to the defence of the accused and arguments of their learned counsel, it is worth to note ratio decidendi laid down Hon'ble Apex Court in very Rangappa V/s. Sri. Mohan's case, it is clearly observed that:
"A mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words, the defence raised by way of rebuttal evidence 12 C.C.No.24706/2018 must be probable and capable of being accepted by the court"
22. At this juncture, it is worth to note ratio decidendi laid down by the Constitution Bench of Hon'ble Apex Court in the judgment reported in AIR 1964 SC 575 (Dhanvantrai Balwantrai Desai V/s. State of Maharashtra) which has been followed in the subsequent judgment reported in (2001)6 SCC 16 (Hiten P.Dalal V/s. Brathindranath Banerjee) wherein it is held that:
"That the distinction between the two kinds of presumption lay not only in the mandate to the court, but also in the nature of evidence required to rebut the two. In the case of a discretionary presumption the presumption if drawn may be rebutted by an explanation which "might reasonably be true and which is consistent with the innocence" of the accused. On the other hand in the case of a mandatory presumption "The burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under Section 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation is offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words unless the contrary is proved' which occur in this provision 13 C.C.No.24706/2018 make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible"
23. At this juncture, it also worth to note in another judgment of Hon'ble Apex Court reported in (2010)8 SCC 383 (Meghmala and others V/s. Narasimha Reddy and others) wherein it is held that:
"It is not like any other criminal case where the accused is presumed to be innocent unless the guilt is proved. The presumption of innocence is a human right, however, subject to the statutory exceptions, the said principle forms the basis of criminal jurisprudence. For this purpose, the nature of offence, its seriousness and gravity thereof has to be taken into consideration. Statutes like the Negotiable Instruments Act, 1881; the Prevention of Corruption Act, 1998; and the Terrorist and Disruptive Activities (Prevention) Act, 1987, provide for presumption of guilt if the circumstances provided in those statutes are found to be fulfilled and shift the burden of proof of innocence on the accused. Thus, the legislature has adopted a deviating course from ordinary criminal law shifting the burden on the accused to prove that he was not guilt"14 C.C.No.24706/2018
24. So from the above ratio, it is crystal clear that proceedings U/s.138 of NI Act is not like any other criminal case where the accused is presumed to be innocent unless the guilt is proved. On the other hand the legislature has adopted a deviating course from ordinary criminal law by shifting the burden on the accused to prove that he is not guilty. So, the accused must rebut the mandatory presumption by raising probable and acceptable defence to the satisfaction of the court, because the presumption raised in favour of complainant is mandatory presumption, but not general presumption.
25. In the light of above ratio decedendi, if the present facts and situations are analyzed, though the accused has contended that complainant has stolen their signed blank cheque from their office and misused the same, but they have not produced any cogent and convincing evidence to prove the same. So, in absence of such cogent and convincing evidence, mere contention of the accused cannot be believable and acceptable.
26. At this juncture, it is also worth to take note of the conduct of the accused as specified U/s.114 of Indian Evidence Act that as per their contention, complainant has stolen their signed blank cheque and misused the same. If 15 C.C.No.24706/2018 that is the case, a reasonable doubt arises in the mind of the court as to why accused have kept quite for along time without lodging any police complaint or taking any legal action against complainant regarding alleged stolen and misuse of their cheque. So, I am of the opinion, if at all accused have not issued present cheque for discharging of their legally enforceable debt, then definitely accused would have lodged police complaint or initiated legal proceedings against the complainant, even they could have immediately given instructions to their banker for stop payment regarding the present cheque, because no prudent man will keep quite, when his cheque is misused by somebody else that too for huge amount. So, non-taking any of these actions by the accused at appropriate time, it creates a reasonable doubt in the mind of the court regarding acceptance of their version that complainant has stolen and misused their cheque. So, I come to clear conclusion that the defence raised by the accused is not probable and acceptable.
27. Coming to argument of learned counsel for accused that complainant has no financial capacity to pay monthly chit installment of Rs.62,500/- etc. 16 C.C.No.24706/2018
28. Having regard to the arguments of learned counsel for accused, at this juncture, it is worth to note ratio laid down by Hon'ble Apex Court in the recent judgment reported in (2019) SCC Online SC 389 = Criminal Appeal No.508 of 2019 (Rohitbhai Jivanlal Patel V/s. State of Gujarat and another) wherein it is held:
"In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the Trial Court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-appellant"17 C.C.No.24706/2018
"Presumption existing in favour of the complainant by virtue of Sections 118 and 139 of the NI Act. Needless to reiterate that the result of such presumption is that existence of a legally enforceable debt is to be presumed in favour of the complainant. When such a presumption is drawn, the factors relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not relevant"
29. So, from the above ratio decedendi, it is crystal clear that when mandatory presumption has been raised in favour of complainant, which includes existence of legally enforceable debt, then court cannot expect evidence regarding the source of funds of the complainant, whereas expecting such evidence is contrary to presumption envisaged under Section 138 of N.I. Act. So, source of funds of the complainant is totally immaterial. Even otherwise, it is significant to note, on perusal of Ex.P-10 chit passbook, clearly reveals that complainant was daily crediting the minimum Rs.1,400/- to Rs.3,000/- to the accused. Moreover, the accused themselves admitted that complainant became one of the members in their chit business as per Ex.P-6. So, when they admitted the 18 C.C.No.24706/2018 membership of the complainant under the said agreement, now they cannot challenge the financial capacity of the complainant. Moreover, the fact of financial capacity of the complainant, alone is not sufficient to rebut the mandatory presumption when version of the accused itself is not probable and acceptable. Hence, I do not find any force in the arguments of learned counsel for accused.
30. Coming to another argument of learned counsel for accused that the complainant has filled up the contents of the cheque for his convenience in a different ink and handwriting etc. So, said cheque is not valid.
31. Having regard to the arguments of learned counsel for accused at this juncture, it is worth to note ratio laid down by Hon'ble Apex Court in the recent judgment reported in 2019 SCC On line SC 138 = Crl. Appeal No.230-231/2019 (@SLP(Crl) No.9334-35/2018) dated 06.02.2019 (Bir Singh V/s. Mukesh Kumar) wherein it is held that:
"A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable 19 C.C.No.24706/2018 unless he adduces evidence to rebut the presumption that the cheque had not been issued for payment of a debt or in discharge of a 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. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted"
"If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence"
"It may reasonably be presumed that the cheque was filled in by the appellant- complainant being the payee in the presence of the respondent-accused being the drawer, at his request and/or with his acquiescence. The subsequent filling in of an unfilled signed cheque is not an alteration"
32. It is also worth to note ratio laid down by Hon'ble Apex Court in the judgment reported in (2002)7 SCC 150 (P.K. Manmadhan Kartha V/s. Sanjeev Raj and another) wherein it is held that:
20 C.C.No.24706/2018
"Difference of handwriting and ink on the cheque did not rebut the statutory presumption U/s.139 and 118 of NI Act"
33. At this juncture it is also worth to note that view taken by Hon'ble High Court of Karnataka reported in ILR 2001 KAR 4127 (S.R. Muralidhar V/s. Ashok G.Y.) wherein it is held that:
Section 20 of NI Act - Inchoate stamped instruments "No law provides that in case of any negotiable instrument entire body has to be written by maker or drawer only. What is material is signature of drawer or maker and not the body writing hence question of body writing has no significance"
"It is not objectionable or illegal in law to receive a inchoate negotiate instrument duly singed by the maker despite the material particulars are kept blank if done with an understanding and giving full authority to the payee to fill up the material contents as agreed upon. Such a course of action in law cannot vitiate the transaction nor can invalidate the negotiable instrument issued and such transaction fully binds the maker of the Negotiable Instrument"
34. So, in the light of above principle if the present facts and situations are analyzed, as I have already pointed 21 C.C.No.24706/2018 out accused are not disputing the fact that cheque belonged to account of accused No.1 company and their signatures thereon. So, under such circumstances, filling up body of the cheque by complainant or somebody else will not invalidate the cheque and that itself will not rebut the mandatory presumption raised in favour of complainant when version of the accused is not probable and acceptable as observed by Hon'ble Apex Court in the judgment stated supra. Hence, I don't find any force in the arguments of learned counsel for accused.
35. As I have already pointed that Hon'ble Apex Court in the Constitution Bench and Larger Bench Judgments stated supra, it is clearly held that presumption envisaged U/s.138 of NI Act is not general presumption but it is mandatory presumption, so the said presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible". So, I come to clear conclusion that accused have utterly failed to rebut the mandatory presumption raised in favour of complainant. Hence, I hold this point in Affirmative. 22 C.C.No.24706/2018
36. Point No.2: As I have already discussed in point No.1 that accused have issued cheque for discharging of their legally recoverable debt. Whereas, on perusal of bank endorsement given by bank authority clearly reveal that complainant had presented the said cheque within validity period, but said cheque was dishonoured with endorsement "Funds Insufficient" in the account of accused. On perusal of Ex.P-3 which is legal notice issued to accused clearly reveal that the complainant got issued said demand notice to accused within specified time of 30 days from the date of receiving of endorsement from bank. On perusal of Ex.P-5 postal acknowledgement, clearly reveals that the demand notice has been duly served on accused.
37. So on considering the oral coupled with the documentary evidence of the complainant, they clearly proved that complainant has complied with mandatory requirements as specified U/s.138(a) and (b) of N.I. Act. Whereas, accused have not paid the cheque amount within specified time, inspite of service of demand notice. Hence, accused have committed offence punishable U/s.138 of NI Act. Hence, I hold point No.2 in Affirmative. 23 C.C.No.24706/2018
38. Point No.3: For the foregoing reasons discussed on points No.1 and 2, I proceed to pass the following:-
ORDER Acting under Section 255(2) r/w 264 of Cr.P.C., the accused No.1 to 3 are hereby convicted for the offence punishable u/S.138 of Negotiable Instruments Act.
(V. NAGARAJA) XXI ADDL. C.M.M., BENGALURU.
On considering the facts and circumstances of the case, accused No.1 being principal accused represented by its Managing Director accused No.2 and Director accused No.3 are hereby sentenced to pay fine of Rs.4,10,000/- (Four Lakhs and Ten Thousand only) jointly. In default they shall jointly undergo simple imprisonment for a period of 4 (Four) months.
In view of Section 357 of Cr.P.C., complainant is entitled for compensation of Rs.4,00,000/- (Four Lakhs only) out of above said fine amount.
After collecting the above fine amount, office is directed to pay Rs.4,00,000/- (Four Lakhs only) to complainant as compensation and defray remaining fine amount of Rs.10,000/- (Ten Thousand only) to state, after appeal period is over.
However, accused No.2 and 3 shall execute personal bond of Rs.4,10,000/- each in view of Sec.437(A) of Cr.P.C.
24 C.C.No.24706/2018The office is hereby directed to supply the copy of this Judgment to the accused on free of cost.
(Directly dictated to Stenographer on computer, computerized by him, corrected and then pronounced by me in the open court on this the 23rd day of August, 2019) (V. NAGARAJA) XXI ADDL. C.M.M., BENGALURU.
ANNEXURE LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW-1 : Mohammed Ismail LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P-1 : Cheque
Ex.P-2 : Bank Endorsement
Ex.P-3 : Copy of Legal Notice
Ex.P-4 : Postal Receipt
Ex.P-5 : Postal Acknowledgement
Ex.P-6 : Copy of Agreement
Ex.P-7 : Statement
Ex.P-8 & 9 : Letters
Ex.P-10 : Chit Passbook
Ex.P-11 : Cheque
LIST OF WITNESSES EXAMINED FOR THE DEFENCE:
DW-1 : Rajanna LIST OF DOCUMENTS MARKED FOR THE DEFENCE:
- Nil -
(V. NAGARAJA) XXI ADDL. C.M.M., BENGALURU.