Bangalore District Court
M/S Tax Pro Business vs Bank Of India on 5 September, 2019
IN THE COURT OF LXV ADDL CITY CIVIL AND SESSIONS
JUDGE; BANGALORE CITY
PRESENT
SRI. SUBHASH SANKAD
B.A., LL.M.
LXV Addl. City Civil & Sessions Judge,
Bengaluru.
Dated this the 5th day of September, 2019
CRL.A. No.41/2016
APPELLANT/S:- 1. M/S TAX PRO BUSINESS
Solutions Pvt. Ltd.,
142-143, G.R. Plaza,
2nd Floor, DVG Road,
Basavanagudi,
Bengaluru - 560 004.
Rep. by its Managing Director,
Sri. Rakesh Shetty.
2. SRI. RAKESH SHETTY,
Managing Director,
M/s. Tax Pro Business
Solutions Pvt. Ltd.,
142-143, G.R. Plaza,
2nd Floor, DVG Road,
Basavanagudi,
Bengaluru - 560 004.
(By Sri. TNR/RP, Advocate)
V/s.
RESPONDENT/S:- BANK OF INDIA
A body constituted under the
Banking (Acquisition & Transfer of
Undertakings) Act, 1970 and
Having its office at
'Star House', Plot No.C-5,
2 Crl.A.No.41/2016
'G' Block, Bkandra - Kurla
Complex, Bandra (East),
Mumbai - 400 051 and a
Branch known as
Bengaluru Large Corporate
Branch No.15, Veena House,
3rd Floor, 1st Main Road,
6th Cross, Gandhinagar,
Bengaluru - 560 009.
Rep. by its Asst. General Manager,
Sri. S.T. Sridhar.
(By Sri. AGV, Advocate)
* * * *
JUDGMENT
The present appeal is filed by the appellant/accused under section 374(3) of Cr.P.C., seeking to set aside the judgment and order dated 18.12.2015 passed by the learned XXVI Additional Chief Metropolitan Magistrate, Bengaluru, in C.C.No.17554/2013.
2. The appellant is the accused and the respondent is the complainant before the trial Court, for the sake of convenience parties are referred by their ranks before the trial Court.
3. The brief facts of the case are as follows:-
The case of the complainant is that the complainant is a body corporate constituted under the Banking Companies Act, 1970, and represented by its Assistant General Manager. The 1st 3 Crl.A.No.41/2016 accused is a private limited company and 2nd accused is its Managing Director. The complainant company had granted term loan of Rs.85 crores to the company by name M/s. Blue Harizon Pvt. Ltd., and the said company owes to the complainant a sum of Rs.84,42,99,133/- as on 31.03.2013. At the instance of the said company and its directors the 1st accused requested the complainant to grant time to the said company to regularize its loan account and in consideration the complainant agreeing to its request and the 1st accused agreed to repay the dues of the said company to the complainant. In consideration of the complainant agreeing to the said request of the 1st accused issued cheque bearing No.717974 dated 16.01.2013 for a sum of Rs.1 crore drawn on HDFC Bank Ltd., 119 Gandhi Bazar Main Road, Basavanagudi, Bengaluru in favour of the complainant and at the time of issuing the cheque the 2nd accused signed on the said cheque on behalf of the 1st accused. The complainant presented the said cheque for encashment in bank and on 14.03.2013 the same was returned with an endorsement 'Funds Insufficient'. Hence, the complainant bank having left with no other option got issued the legal notice to the accused on 20.03.2013 through RPAD calling upon both the accused to repay the cheque amount 4 Crl.A.No.41/2016 jointly and severally within 15 days from the date of receipt of the notice and the same was duly served on the accused on 21.03.2013. Inspite of receiving the said notice, the accused neither paid the cheque amount nor replied the notice. It is further alleged in the complaint that the accused with dishonest intention and to cheat the complainant issued the cheque in question having knowledge about insufficient funds in their account and thereby committed an offence punishable under section 138 of Negotiable Instrument Act. Hence, the complainant filed the complaint before the trial court.
4. The trial court took cognizance of offence and ordered for issuance of summons to accused. The accused appeared through his counsel and defended the case. The trial court recorded the plea of accusation. The accused pleaded not guilty of the accusation levelled against them and claimed to be tried. Hence, the case was posted for trial.
5. To prove the case of the complainant, on behalf of the complainant bank Sri. S.T. Sridhar, Assistant General Manager examined as PW1 and got marked the documents as Exs.P1 to
8. After completion of the evidence, the trial court examined the 5 Crl.A.No.41/2016 accused as required by Section 313 of Cr.P.C. The accused denied the incriminating evidence and he has not chosen to adduce defense evidence. The trial court passed the judgment convicting the accused and sentenced him to pay a fine of Rs.1,01,00,000/-.
6. Being aggrieved by the judgment passed by the learned Magistrate, the appellant/accused has filed the present appeal by challenging the impugned judgment on various grounds.
7. After presentation of the appeal, this court ordered for issuance of notice to the complainant. The complainant appeared through his counsel. The lower court records were secured. After receipt of the LCR, the appeal was posted for arguments. I have heard the argument of both the sides.
8. I have gone through the lower court records, the impugned judgment of conviction and the grounds urged in the appeal memo.
9. The following points arise for my consideration:- 6 Crl.A.No.41/2016
1. Whether the impugned judgment of conviction is opposed to the settled principles of law, facts and probabilities of the case?
2. Whether the appellant has made out any grounds to interfere with the impugned judgment of conviction and sentence?
3. What Order?
10. My findings on the above points are:-
Point No.1 :- In the Negative
Point No.2 :- In the Negative
Point No.3 : As per the final order
for the following :-
REASONS
11. Points No.1 & 2:- The complainant has filed private complaint against the accused praying the court to take cognizance of the offence and punish the accused for the offence punishable under Section 138 of the Negotiable Instrument Act, for the alleged dishonor of cheque issued by the accused towards repayment of loan amount of Rs.1,00,00,000/- obtained by them from the complainant bank. The trial court took cognizance of the offence, recorded the sworn statement of the complainant, and issued summons to the accused. After securing the accused the case was posted for trial. On behalf of the complainant bank Sri. S.T. Sridhar, Assistant General 7 Crl.A.No.41/2016 manager examined as PW1 and got marked the documents at Exs.P1 to 8. Thereafter, the accused was examined as required under Section 313 of Cr.P.C. The accused denied the incriminating evidence and they have not chosen to adduce defense evidence. The trial court convicted the accused for the offence punishable under Section 138 of the Negotiable Instrument Act, sentencing the accused to pay a fine of Rs.1,01,00,000/- in default of payment of fine amount directed the accused to undergo simple imprisonment for three months. The present appeal is filed challenging the said judgment and order.
12. After careful perusal of the lower court records, the impugned judgment of conviction and the contention raised and the grounds urged by the appellant in the appeal memo, I proceed to answer the points in controversy.
13. The burden is on the complainant to prove that the cheque in question was issued towards the discharge of legally recoverable debt or liability. In this regard, the complainant bank Sri. S.T. Sridhar was examined as PW1. In his evidence, PW1 has reiterated the facts narrated in the complaint and got marked 8 Crl.A.No.41/2016 the documents as Exs.P1 to 8. Ex.P1 is the authorization letter, Ex.P2 is the statement of loan account, Ex.P3 is the cheque, Ex.3(a) is the signature of the accused, Ex.P4 is the bank endorsement, Ex.P5 is the office copy of legal notice, Ex.P6 is the postal acknowledgment, Ex.P7 is the postal acknowledgment and Ex.P8 is the complaint. I have gone through the evidence and all the documents produced by the complainant. All the documents show that the accused had issued the cheque in question towards discharge of their legally recoverable debt.
14. Now coming to the provisions of law, Sec.138 of N.I.Act has been enacted to provide stability and credibility to the financial transactions. The Main ingredients of the Sec.138 of N.I.Act are as follows:
(1) Drawing up of cheque by the accused towards payment of an amount of money for the discharge, in whole or in part or any debt or any other liability.
(2) Return of the cheque by the bank as unpaid. (3) The drawer of cheque fails to make the payment of the said amount of money within 15 days of the receipt of the notice under the proviso(b) to Sec.138 of N.I.Act.9 Crl.A.No.41/2016
The explanation appended to the section provides that, the 'debt or other liability' for the purpose of this Section means a legally enforceable debt or other liability.
15. Apart from this, Sec.139 of N.I.Act lays down a presumption in favour of the holder of cheque in the following terms.
"It shall be presumed, unless the contrary is proved, that:-
The holder of a cheque received the cheque, of the nature referred to in Sec.138 for the discharge in whole or in part, of any debt or other liability."
16. Also, Sec.118 N.I.Act states:- "Until the contrary is proved, the following presumptions shall be made:-
(a) That every negotiable instruments was made or drawn for consideration and that every such instrument, when it has been accepted indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration".
17. On careful perusal of the oral and documentary evidence adduced by the complainant and keeping in view Section 139 of N.I.Act r/w Sec.118 N.I.Act, I hold that there is a 10 Crl.A.No.41/2016 presumption in favour of the complainant that the cheque was issued towards discharge of legally enforceable liability, the complainant bank has discharged its initial burden. Hence, the presumption goes in favour of the complainant.
18. Now, the burden is upon the accused to rebut the presumption available to the complainant. In order to rebut the presumption available to the complainant, the counsel for accused has cross-examined PW1. It is in the cross-examination PW1 has stated that he has worked as Assistant General Manager in complainant bank from September 2015 to July 2015, and he has deposed before the court on the basis of the records available, and he has produced statement of account for disbursing of loan. The loan was disbursed through State Bank of India and no document is produced to show that the disbursement of the loan and the person who has obtained the loan has not been made by the party to the proceedings, and he has admitted that there was no monetary transaction between accused and the complainant bank. However, he has stated that the accused had come forward to clear the debt of the Blue Horizon Hotel Ltd., He has denied the suggestion that the legal notice was not served on the accused and he has admitted that te 11 Crl.A.No.41/2016 complainant bank does not have any transaction with the accused other than the present case and he has denied further suggestion that the accused has not issued the cheque in question to the complainant bank. It is in his further cross- examination, PW1 has admitted that the loan was a long term secured loan and the bank has taken equitable mortgage of upcoming property. The project name is Blue Horizon Hotel Pvt. Ltd., at J.P. Nagar, and it is further denied that the accused person was intended to get Gala in the upcoming project. It is further denied that the bank by colluding with the original borrower has misused the cheque issued by the accused, and it is further admitted that the borrower has repaid the loan to certain extent i.e., Rs.60,041/-. He has stated that he does not know as to who has written Ex.P3. Further he has denied the suggestion that he is not authorized to depose before the court and he deposed falsely before the court.
19. This is cross-examination of PW1. By cross- examining PW1 the accused set up a defense that there was no transaction between himself and the complainant bank, and he had intended to get Gala in the upcoming project which remain incomplete, and the complainant bank by colluding with the 12 Crl.A.No.41/2016 borrower has misused the cheque issued by him. And it is his further defense that there is difference in the ink in the hand writing and signature in Ex.P3.
20. I have carefully gone through the evidence and materials on record. The defense set up by the accused is not a probable one because, the complainant bank itself has admitted that the accused has come forward to clear the debt owed by the Blue Horizon Ltd., towards payment of debt owed by the Blue Horizon Ltd., to that effect the accused has issued the cheque, and it is not the case of the accused that he has not at all issued the cheque and the signature on the cheque is not of his. He has admitted the issuance and signature on the cheque by putting a suggestion that the complainant bank by colluding with the original borrower has misused the cheque. Further, the defense of the accused that there was no transaction between the complainant bank and the accused, and the accused has not borrowed the loan from the complainant bank and it has been admitted by the complainant himself in his complaint and the evidence. However, one of the essential ingredient of Section 138 of the Negotiable Instrument Act, is drawing up of cheque by the accused towards payment of an amount of money for the 13 Crl.A.No.41/2016 discharge, in whole or in part or any debt or any other liability. Here in the present case the accused has come forward to clear the debt owed by the Blue Horizon Ltd., and it is in discharge of the liability which comes under the title 'other liability' which mentioned under Section 138 of the Negotiable Instrument Act. So in conclusion I hold that the cheque in question issued by the accused towards discharge of legally recoverable debt. As I have stated herein above the defense set up by the accused is not a probable one in order to rebut the presumption available to the complainant. Hence, I decline to accept this defense, the trial court has rightly passed the judgment of conviction.
21. Now coming to the point that the appellant has filed an application under Section 391(1) Cr.P.C., praying to permit the appellant/accused to adduce their evidence by allowing the application.
22. This is a second application filed by the appellant. Earlier the appellant had filed an application under Section 91 Cr.P.C. praying to produce the document i.e., statement of loan account from 31.03.2013 and the loan account bearing 14 Crl.A.No.41/2016 No.849765410000034. The said application was rejected by this court by order dated 12.08.2018 which remained unchallenged.
23. The specific reasons assigned by the appellant can be extracted from para - 8 of the application.
'That the appellants submitted that dersious of correcting certain inadvertent errors that may have crept are extremely relevant and germane to the defense of the accused and denial of an opportunity would amount to a denial of the right to a fair trial. Assurance of a fair trial is the first imperative of the dispensation of justice and the central criterion for the court to consider when a motion is made.
Fundamentally, a fair and impartial trial has a sacrosanct purpose. It has a demonstrable object that the accused should not be prejudiced. A fair trial is required to be conducted in such a manner which would totally ostracize injustice, prejudice, dishonestly and favoritisms.
24. The said application was objected by the advocate for respondent/complainant.
25. In support of his contention raised in the application, the advocate for appellant has relied on the following judgment, Rajeshwar Prosad Misra vs. State of West Bengal and 15 Crl.A.No.41/2016 another reported in 1965 AIR SC 1887 wherein the Hon'ble Supreme Court has held that 'Additional evidence - Receipt of - The power of appellate court is not subject to any restriction in receiving additional evidence in an appeal against acquittal, though such power must be exercised sparingly and only in suitable cases. The Code contemplates that a retrial may be ordered after setting aside the conviction or acquittal (as the case may be) if the trial already held is found to be unsatisfactory or leads to a failure of justice. In the same way, the Code gives a power to the appellate Court to take additional evidence, which, for reasons to be recorded, it considers necessary. The Code thus gives power to the appellate Court to order one or the other as the circumstances may require leaving a wide discretion to it to deal appropriately with different cases.
Since a wide discretion is conferred on appellate Courts, the limits of that Court's jurisdiction must+ obviously be dictated by the exigency of the situation and fair play and good sense appear to be the only safe guides. There is, no doubt some analogy between the power to order a retrial and the power to take additional evidence. The former is an extreme step approximately taken 16 Crl.A.No.41/2016 if additional evidence will not suffice. Both actions subsume failure of justice as a condition precedent. There the resemblance ends and it is hardly proper to construe one section with the aid of observations made by this Court in the interpretation of the other section.
Additional evidence may be necessary for a variety of reasons which it is hardly necessary (even if it was possible) to list here. We do not propose to do what the Legislature has refrained from doing, namely, to control discretion of the appellate Court to certain stated circumstances. It may, however, be 'said that additional evidence must be necessary not because it would be impossible to pronounce judgment but because there would be failure of justice without it. The power must be exercised sparingly and only in suitable cases. It may be formal or substantial. It must, of course, not be received in such a way as to cause prejudice to the accused as for example it should not be received as a disguise for a retrial or to change the nature of the case against him. The order must not ordinarily be made if the prosecution has had a fair opportunity and has not availed of it unless the requirements of justice dictate otherwise.
Judgment of Hon'ble Supreme Court in BRIG. Sukhjeet Singh (Retd.) MVC v/s. State of Uttar Pradesh, reported in 17 Crl.A.No.41/2016 (2019) 2 Scale 104 wherein the Hon'ble Supreme Court has held that 'it is clear that there are no fetters on the power under Section 391 Cr.P.C. of the Appellate Court. All powers are conferred on the Court to secure ends of justice. The ultimate object of judicial administration is to secure ends of justice. Court exists for rendering justice to the people.
26. The said application was objected by the respondent. The respondent has relied on the following judgments, in order to substantiate his ground that additional evidences are not necessary. The first judgment relied upon by the respondent is T. Velnadar vs. P. Ayyanathan reported in 2014 SCC Online MAD 4682 wherein the Hon'ble court has observed thus;
20.In short, the exercise of power by the Appellate Court under Section 391 Cr.P.C. is one of discretion. It is true that the power of an Appellate Court to take additional evidence in Appeal is vested based on the view that the 'Concept of Justice' does not suffer and to rectify an irregularity, in the considered opinion of this Court.
Undoubtedly, Section 391 Cr.P.C. is to be exercised with great care and circumspection so that the 18 Crl.A.No.41/2016 respond of additional evidence for prosecution may not operate in any manner detrimental to the interest of an accused, as opined by this Court.
21. Furthermore, if in a given case where a party had the opportunity to file the documents before the trial Court, then, before the Appellate Court, the same would not be admitted as additional evidence. To put it differently, the purpose of Section 391 Cr.P.C. is not to enable a prosecution to produce evidence at a later stage which could have been produced at the first trial and plug the gaps left by it. Viewed in that perspective, this Court is of the considered view that it cannot permit the Appellant/ Complainant to produce documents as evidence at an appellate stage, because of the simple reason that the documents in question were very much available before the trial Court at the time of conducting trial of the three cases in issue. Consequently, the plea taken on behalf of the Appellant/Complainant in this regard is not acceded to by this Court.
The second judgment relied upon by the respondent is I.C.D.S. Ltd vs. Beena Shabeer and another reported in 2002 (6) SCC 426 wherein the Hon'ble court has observed thus; 19 Crl.A.No.41/2016
10. The language, however, has been rather specific as regards the intent of the legislature. The commencement of the Section stands with the words "Where any cheque". The above noted three words are of extreme significance, in particular, by reason of the user of the word "any" the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well. This aspect of the matter has not been appreciated by the High Court, neither been dealt with or even referred to in the impugned judgment.
The third judgment that has been produced by the respondent is in Crl.A.No.945/2003 between Ashok Tshering Bhutia vs. State of Sikkim, wherein the Hon'ble Supreme Court has observed thus;
20 Crl.A.No.41/2016
18. In view of the above, the law on the point can be summarised to the effect that additional evidence can be taken at the appellate stage in exceptional circumstances, to remove an irregularity, where the circumstances so warrant in public interest. Generally, such power is exercised to have formal proof of the documents etc. just to meet the ends of justice. However, the provisions of Section 391 Cr.P.C. cannot be pressed into service in order to fill up lacunae in the prosecution's case.
27. In the light of the above cited observation, I will now consider whether the appellant has made the ground to allow the application. In this regard, I would like to refer the order sheet of the Hon'ble trial court after recording the statement of accused under Section 313 Cr.P.C., the case was posted for defense evidence. Though sufficient time was given to lead the defense evidence the accused has not led any defense evidence, and he had every opportunity to lead defense evidence and produce the document which he has intended to produce. Inspite of providing sufficient opportunities the accused has not led defense evidence, and he has not made an endeavour to file an application to adduce evidence.
21 Crl.A.No.41/2016
28. That the accused has failed to take shelter of the observation made by the Hon'ble Supreme Court in the judgment which has been relied by him which are explained above. Further even if the application is allowed, the defense taken by him that he was not original borrower was not available to him as an ingredient of Section 138 i.e., issuance of cheque towards discharge of liability has fulfilled. In my view the application filed by the appellant it amounts to fill up lacuna in the case of the accused. As it is settled principle of law as it is observed by the Hon'ble Supreme Court the application under Section 311 Cr.P.C., cannot be allowed to fill up the lacuna in the case of the accused. Under such circumstances, I decline to allow this application.
29. Now coming to the sentence part. The trial court has imposed sentence of Rs.1,01,00,000/- out of which Rs.1,00,90,000/- is ordered to be paid as compensation to the complainant and Rs.10,000/- is remitted to the state exchequer. Hence, I am of the opinion that, judgment of conviction and sentence passed by the trial court does not suffer from any irregularity and it does not call for any interference by this court. Accordingly, I answer points No.1 and 2 in the 'Negative.' 22 Crl.A.No.41/2016
30. Point No.3:- In view of my findings on point No.1 to 3, I proceed to pass the following:-
ORDER The appeal filed by appellant U/sec.374(3) of Code of Criminal Procedure is hereby dismissed.
The impugned judgment of conviction
passed by the XXVI Additional Chief
Metropolitan Magistrate, Bangalore, in
CC.No.17554/2013 dated 18.12.2015 is
hereby confirmed.
Send a copy of this judgment to the
lower Court along with LCR forthwith.
(Dictated to the stenographer, transcribed by her, corrected and then pronounced by me in the Open Court on this 5th day of September, 2019) (SUBHASH SANKAD) LXV Addl. City Civil & Sessions Judge, Bengaluru.