Bangalore District Court
Requested The Accused To Return Sum Of ... vs Requested And Convinced Her That She ... on 7 January, 2022
1 CC.12153/2019 (J)
IN THE COURT OF THE XV ADDL CHIEF METROPOLITAN
MAGISTRATE AT BANGALORE CITY.
Dated this the 07th Day of January2022
Present: Lokesh Dhanapal Havale. B.A.L.L.B.,
XV Addl.C.M.M., Bangalore.
Judgment U/s.355 of the Cr.P.C. 1973.
1.Sl.No.of the case CC.No.12153/2019
2.Name of the Complainant: Mrs.Shanthi K.,
Wife of Mr.G.Kumar,
Aged Major, 55 years,
Residing at No.261,
Maruthinagar, 1st Main Road,
RMV Post, Badrappa Layout,
Nagashettyhalli,
Bangalore560 094.
3.Name of the accused: Mrs.A Nalini
Wife of Late Mr.Venkatagiri,
Aged Major,
Resident of No.431/1,
Near Government First Grade
College, M.G.Road,
Chikkaballapura562101.
4.The offence complained of : U/s.138 of Negotiable Instruments
Act.
5.Plea of the accused: Pleaded not guilty.
6.Final Order: Acting U/s.255(1) Cr.P.C., accused is
Acquitted.
7.Date of final Order 07.01.2022.
***
2 CC.12153/2019 (J)
This complaint is filed U/Sec.200 of Cr.P.C. against the accused
for the offence punishable U/Sec.138 of the Negotiable Instruments
Act, 1881.
2. The facts of the complaint in brief are as under:
The complainant and the accused were residents of Bengaluru.
The accused along with her husband Mr.G.Kumar, her sister Bhagya @
Bhagyalakshmi and brother Nagabhushan Reddy were residing near the
house of the complainant. The complainant and accused became
friends. During the year 2012, the accused and her family members
requested the complainant to start a chit business including herself and
several others in the locality. She agreed to start chit fund business at
the request of the accused, her family members and others in the
locality. Accordingly during the year 2012, complainant introduced
several chits worth Rs.5 lakhs to Rs.10 lakhs. The accused, her family
members and several others in the locality became the members of the
chit. The chit worth Rs.5 lakhs had its members and on designated
date, the member in need of money would make a bid for lesser
amount out of the consolidated amount. Such a bidder would be given
the bid amount, and the successful bidder and other members had to
pay monthly chit amount till the end of the chit tenure. The accused
and her family members became members of 8 chits of Rs.5 lakh for
the tenure of 40 months. The accused being the successful bidder of 8
chits (5 chits in her name and 3 chits in the name of her family
members) collected consolidated amount of Rs.21,85,000/ during
March 2012 to May 2013 and for having collected the bid amount, the
accused was required to pay a sum of Rs.12,500/ towards 8 chits for
period of 40 months. The accused paid 14 installments in respect of 8
3 CC.12153/2019 (J)
chits and thereafter expressed her problems and financial difficulty to
pay the remaining installments. The accused requested the complainant
to pay the installments on her behalf till the end of the tenure of the
chit and assured her to pay the entire amount in a single installment.
The complainant paid the chit installments of all 8 chits till the end of
tenure amounting to Rs.21 lakhs (21 installments of Rs.12,500/
towards 8 chits). The chit tenure ends in January 2015. The
complainant requested the accused to return sum of Rs.21 lakhs. The
accused requested and convinced her that she would pay the amount
along with the interest. The accused mortgaged her immovable
property i.e., land in Sy.No.25/2 measuring 3 acres 38 guntas situated
at Dibbuhalli village, Sadali Hobli, Shidlaghatta Taluk, Chikkaballapura
District as security by depositing the original partition deed dated
15.09.2011. The accused postponed the payment assuring her that she
would clear the liability by executing sale deed in her favour. The
complainant came to know during the last week of January 2019 that
the accused sold the property to escape from her liability. Upon
questioning about the same, the accused assured her to pay a sum of
Rs.32 lakhs towards the chit liability including the interest for not
paying the amount for a period of 4 years. The accused issued a cheque
bearing No.852370 dated 18.03.2019 for a sum of Rs.32,00,000/
drawn on Indian Bank, Rajamahal Vilas Extension Branch, Bengaluru in
her favour. The complainant presented the cheque for encashment
through her account and it was dishonored with a shara "Funds
Insufficient" on 26.04.2019. She contacted the accused but it was of no
use. She issued the legal notice to the accused on 06.05.2019 through
RPAD and it was duly served on the accused on 14.05.2019. The
accused issued cheque for discharge of legal debt/liability, which was
4 CC.12153/2019 (J)
dishonored and failed to pay the amount even after 15 days from the
date of service of notice. Hence prayed to punish the accused and
compensate the complainant.
3. After the institution of the complaint, cognizance was
taken and the case was registered as PCR No.7107/2019. The sworn
statement of the complainant was recorded and on the basis of sworn
statement and other materials on hand, the criminal case was
registered against the accused and summons was issued to her. The
accused appeared before the court and she got enlarged on bail. The
prosecution papers supplied to the accused and the substance of
accusation for the offence punishable U/s.138 of Negotiable
Instruments Act was read over to the accused. She pleaded not guilty
and claimed to be tried.
4. During the trial complainant examined herself as PW1
and got marked Ex.P.1 to P.8. The statement of the accused U/s. 313
of Cr.P.C. was recorded. The accused submitted during the recording of
Statement U/s.313 of Cr.P.C that she had no defence evidence to lead.
Therefore the case was posted for arguments.
5. I have heard the argument of both learned counsels and
perused the entire materials. The following points would arise for my
consideration.
1. Whether the complainant proves that the accused
issued cheque bearing No.852370 dated 18.03.2019
for a sum of Rs.32,00,000/ drawn on Indian Bank,
Rajamahal Vilas Extension Branch, Bengaluru in her
favour towards the discharge of legally enforceable
5 CC.12153/2019 (J)
debt/liability and on its presentation for
encashment, it was dishonored with an
endorsement of "Funds Insufficient" in the account
maintained by the accused and the accused has not
paid the amount even after 15 days from the date of
service of notice and thereby accused committed an
offence punishable U/Sec.138 of N.I. Act, 1881 ?
2. Whether the accused rebuts the presumption
U/s.139 of N.I.Act?
3. What order?
6. My answers to the above points are as under.
Point No.1 : In the Negative
Point No.2 : In the Affirmative
Point No.3 : As per final order for the following;
REASONS
7. Point No.1 & 2: The points are taken together for discussion
to avoid repetition of facts and evidence. At this juncture, it is necessary
to go through the provisions of N.I.Act before proceeding further. The
provisions under Section 118(a) and 139 of the Act., 1881 are
extracted and they reads thus;
"118. Presumptions as to negotiable
instruments. - Until the contrary is proved,
the following presumptions shall be made:
(a) of consideration - that every
negotiable instrument was made or drawn
for consideration, and that every such
6 CC.12153/2019 (J)
instrument, when it has been accepted,
indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or
transferred for consideration.
(b) as to date: that every Negotiable
Instrument bearing date was made or drawn
on such date;
"139. Presumption in favour of holder.
It shall be presumed, unless the
contrary is proved, that the holder of a
cheque received the cheque of the nature
referred to in section 138 for the discharge,
in whole or in part, of any debt or other
liability."
8. On plain perusal of the provisions under Section 118(a)
and 139 of the N.I.Act., as extracted herein above, it can be seen that
initially the presumptions constituted under these two provisions
favour the complainant. However, it is open to an accused to raise a
defence to rebut the statutory presumptions. An accused can raise a
defence, wherein the existence of legally enforceable debt or liability
can be contested.
9. It is also well established that an accused for discharging
the burden of proof placed upon him under a statute need not examine
himself. He may discharge his burden on the basis of the materials
already brought on record. An accused has constitutional rights to
maintain silence. Standard of proof on part of the accused and that of
7 CC.12153/2019 (J)
the prosecution in a Criminal case is different. The prosecution must
prove the guilt of an accused beyond all reasonable doubts, the
standard of proof so as to prove a defence on the part of an accused is
"Preponderance of probabilities".
10. Under the light of above extracted provisions of the Act, I
have perused the oral and documentary evidence on record. In order to
prove her case the complainant examined herself as PW.1 and got
marked Ex.P.1 to P.8. Ex.P.1 is the original partition deed dated
15.09.2011 entered into between the accused and her family members,
wherein the accused was allotted share i.e., the landed property
bearing Sy.No.25/2 measuring 3 acres 38 guntas situated at Dibbuhalli
village, Sadali Hobli, Shidlaghatta Taluk, Chikkaballapura District.
Ex.P.2 is the cheque bearing No.852370 dated 18.03.2019 for a sum of
Rs.32,00,000/ drawn on Indian Bank, Rajamahal Vilas Extension
Branch, Bengaluru and Ex.P.2(a) is the signature of the accused on the
cheque. Ex.P.3 is the Bank endorsement dated 26.04.2019, which was
issued with a Shara "Funds Insufficient". Ex.P 4 is the another Bank
endorsement dated 30.04.2019, which was issued with a Shara "Funds
Insufficient". Ex.P.5 is the office copy of the statutory notice dated
06.05.2019. Ex.P.6 are the Postal receipt for having sent the statutory
notice to the accused through registered post. Ex.P.7 is the postal
acknowledgement for having served the notice on the accused. Ex.P.8
is the chit book/register maintained by the complainant in Tamil and
English language. Ex.P.8(a) is the English translation of the chit
book/register and Ex.P.8(b) is the affidavit of translator.
8 CC.12153/2019 (J)
11. I have perused the exhibits on which the complainant has
placed his reliance. On perusal of the exhibits, it is clear that the
cheque at Ex.P.2 bearing No.852370 dated 18.03.2019 for a sum of
Rs.32,00,000/ drawn on Indian Bank, Rajamahal Vilas Extension
Branch, Bengaluru was presented through the Bank within its validity
for encashment and the Bank issued endorsement as per Ex.P.3 on
26.04.2019 with shara "Funds Insufficient". The complainant issued
statutory notice dated 06.05.2019 as per Ex.P.5 within time from the
date of receipt of Bank Memo.
12. The case was contested by the accused and the service of
notice was disputed. The notice was served on the accused as per
Ex.P.7. However the counsel for the accused suggested PW.1 that the
accused never resided at Bengaluru and she has been residing at
Chikkaballapura. The cross examination of PW.1 shows that the
accused has been residing at the address of the Chikkaballapura, which
is the address mentioned in the notice and the complaint. Therefore as
per Ex.P.7 the notice was served on the accused at her correct address.
The complaint was filed on 01.06.2019. Therefore, the documents on
record clearly show that the complainant has prima facie complied the
ingredients of Section 138(a) to (c) of the N.I.Act. Therefore the
presumptions U/s.118 and 139 of the N.I.Act arise in favour of the
complainant. The presumptions are rebuttable and the burden is on the
accused to rebut the presumptions. Once the issuance of cheque is
proved, the presumption arises in respect of the fact that the cheque
was issued for legally enforceable debt/ liability. The accused can rebut
the presumption by raising probable defence and proving it relying on
the evidence of the complainant or by leading his direct evidence.
9 CC.12153/2019 (J)
13. The accused did not lead the defence evidence. The
counsel for the accused cross examined PW.1 in length in respect of the
her relationship with the accused. It was elicited in the cross
examination of PW.1 that accused used to come to the house of her
neighbour by name Dakshayini and she become conversant with her.
She stated that the husband of the accused by name Venkatagiri was
known to her from past 4 years. She admitted that she filed civil case
against Lakshamamma through her counsel Venkatagiri in the year
2008. She denied that the accused and her husband Venkatagiri were
known to her since 2008. The accused was earlier residing in
Devasandra and now residing at Chikkaballapura. Devasandra is at a
distance of 4 - 5 kilometers from her house. She could not say the
address of the accused at Devasandra. She did not know when the
accused started residing at Chikkaballapura. She denied that the
accused never resided at Bengaluru and she was residing at
Chikkaballapura.
14. The counsel for the accused cross examined PW.1 in length
in respect of the chit business. It was further elicited that she started
one chit worth Rs.5 lakhs on 15.03.2012. There were 40 members and
out of which accused took 5 chits, her family members Venkatagiri,
Shaila and Gouri took 1 chit each. The accused used to pay
Rs.1,25,000/ per month. Each member had to pay Rs.12,500/. She
admitted that the accused had to pay Rs.62,500/ for her 5 chits. She
stated that the accused paid 14 installments and she admitted that the
accused had to pay 26 installments. The chit tenure completed in
January, 2015. She denied that the accused was liable to pay
Rs.13,12,500/ in respect of the chits as alleged in the complaint. She
10 CC.12153/2019 (J)
admitted that the page No.1 to 14, 23 to 36, 61 to 64, 69 to 74, 87, 88
and 101 to 110 are not available in original register of ExP.8. The
original was marked in C.C.No.12154//2019. She denied that the page
No.128 onwards in the register were over written. She could not say
the names of others, who requested her to start the chit. She could not
say exactly how much bid amount was taken by the accused. She used
to do double chit. She could not say how much double chit have been
made. She was asked with respect to the original chit register marked
in CC.No.12154/2019. But it can not be considered as the same was
not marked in this case. Only few pages of the register were marked in
this case as ExP.8 and its translation copy at ExP.8 (a) to 9 (c) with
affidavit of translator.
15. The counsel for the accused cross examined PW.1 in length
in respect of the financial capacity of the complainant to pay the
amount of 8 chits on behalf of the accused and that the debt is time
barred debt. It was further elicited in the cross examination of PW.1
that she is house wife and she had no independent income of herself.
Her husband is auto driver and he earns Rs.500/ per day. He used to
earn Rs.15,000/ and it was sufficient for their monthly expenditures of
her house. She had her own house. Her son was working and he was
earning rs.30,000/ per month. He is aged about 37 years and married.
She did not produce any documents to show the income of her husband
and son. It was also elicited that the accused issued cheque in the
house of Bhagyalakshmi. She denied that the writings on the cheque at
ExP.1 and signature differ and written with different ink. She stated
that the accused written it and gave it to her.
11 CC.12153/2019 (J)
16. The counsel for the complainant filed the written
arguments reproducing the case of the complainant and mentioning the
exhibits marked on behalf of the complainant. It was argued that the
complainant proved the ingredients of the the provision U/s.138 of N.I.
Act. The facts that the complainant is known to the accused and her
family members; she was managing the chit business and accused was
participant in the chit were not disputed. The accused has not
specifically denied receipt the chit amount of 8 chits; issuance of
cheque and signature on it. The complainant paid chit installments
amount on behalf of the accused and she issued cheque for discharge of
her liability. The presumptions under sections 118 and 139 of N.I. Act
are in favour of the complainant and the burden is on the accused to
rebut the presumptions. The accused has not rebutted the presumptions
by taking the probable defences and proving the same by cogent
evidence.
17. The counsel for the accused argued that the accused and
her family members are not all the members of the chit. No documents
have been produced by the complainant in that regard. ExP.8 and
ExP.8 (a) and (b) show that the complainant was doing the chit
business but they do not disclose that the accused and her family
members are the members of the chit worth Rs.5,00,000/ and the
accused alone took 5 chits and her 3 family members by name
Venkatagiri, Shaila and Gouri took one chit each. The accused alleged
to have taken Rs.21,85,000/ as bid amount of 8 chits. The accused
alleged to have expressed her inability to pay the installments and the
complainant alleged to have paid the installments on behalf of accused
in respect of 8 chits. There are no documents on record in support the
12 CC.12153/2019 (J)
same. The amount alleged to have been paid by the complainant in
respect 8 chit on behalf of the accused is Rs.21 lakhs. But the cheque
amount is Rs.32 lakhs. It is alleged that the accused agreed to pay
interest, which is the difference amount as per the complaint but it is
not believable as no document is produced to support the said fact.
There is no split calculation. Therefore there is no legally enforceable
debt. It was also argued that the complainant has no financial capacity
to pay the alleged amount on behalf of the accused in respect of 8 chits
i.e. Rs.1,00,000/ per month ( Rs.12,500/ each chit).
18. It is alleged in the complaint that the accused along with
her husband Mr.G.Kumar, her sister Bhagya @ Bhagyalakshmi and
brother Nagabhushan Reddy were residing near the house of the
complainant. The complainant and accused became friends. During the
year 2012, the accused and her family members requested the
complainant to start a chit business including herself and several others
in the locality. She agreed to start chit fund business at their request.
However it was elicited in the cross examination of PW.1 that the
accused was residing at Devasandra, which is at a distance of 45 Km
from her house. She came to know about the accused as the accused
used to come to house of her neighbour by name Dakshayini. She did
not know the address of the accused in Devasandra. She did not know
when accused started residing in Chikkaballapura. She stated that she
knew the husband of the accused Venkatagiri from past 4 years but
admitted that she filed suit against the Lakshamamma through her
counsel by name Venkatagiri in the year 2008. When she was
questioned about the name of persons who requested her to start the
chit business, she was unable to tell. This shows that the complainant
13 CC.12153/2019 (J)
suppressed the facts in the complaint and the version in the complaint
and evidence differ with each other.
19. Further it was alleged in the complaint that the accused,
her family members and several others in the locality became the
members of the chit worth Rs.5 lakhs. It had members and on
designated date, the member in need of money would make a bid for
lesser amount out of the consolidated amount. Such a bidder would be
given the bid amount. The successful bidder and other members had to
pay monthly chit installment till the end of the chit tenure. The accused
and her family members became members of 8 chits of Rs.5 lakh for
the tenure of 40 months. The accused being the successful bidder of 8
chits (5 chits in her name and 3 chits in the name of her family
members) collected consolidated amount of Rs.21,85,000/ during
March 2012 to May 2013 and for having collected the bid amount, the
accused was required to pay a sum of Rs.12,500/ towards 8 chits for
period of 40 months. The accused paid 14 installments in respect of 8
chits and thereafter expressed her problems and financial difficulty to
pay the remaining installments. The accused requested the complainant
to pay the installments on her behalf till the end of the tenure of the
chit and assured her to pay the entire amount in a single installment.
The complainant paid the chit installments of all 8 chits till the end of
tenure amounting to Rs.21 lakhs (21 installments of Rs.12,500/
towards 8 chits). The chit tenure ends in January 2015. However there
is nothing on record to substantiate the said facts. The only document
available on record pertaining to the transaction in respect of chit is
ExP.8, which is the chit register written partially in Tamil and partially
in English and ExP.8 (a) is its translation. On perusal of ExP.8 (a), it
14 CC.12153/2019 (J)
discloses that the complainant was running unregistered chit. The said
Chit Register admittedly do not contain all the pages of original Chit
Register. It does not disclose anything about the chit group as alleged
in the complaint, the name of all 40 members and that the chit group
was worth Rs.5 lakhs. The name of the 40 members is mentioned by
the complainant for the first time in her cross examination. Further it
does not disclose when the chit commenced and other details of the
chit. The date of commencement of chit is 15.03.2012 and it is
mentioned by the complainant in her cross examination for the first
time. The name of the accused appears only once in the Chit Register.
It does not disclose the name of family members of the complainant. It
also does not disclose that the accused took 5 chits and her 3 family
members took 1 chit each. It also does not disclose the value of the chit
and value of installments. It does not disclose about the bid made by
the accused in respect of 8 chits and having taken the consolidated bid
amount of Rs.21,85,000/. It also does not disclose that the accused
paid 14 installments of in respect of 8 chits. It also does not disclose
about the remaining installments being paid by the complainant in
respect of 8 chits on behalf of the accused and her family. ExP.8 (a)
does not disclose anything about the alleged chit transaction except the
fact that the complainant was running unregistered chit. Therefore
there is nothing on record to substantiate the case of the complainant
in respect of chit transaction as alleged in the complaint.
20. Further it was alleged that the complainant requested the
accused to return sum of Rs.21 lakhs. The accused requested and
convinced her that she would pay the amount along with the interest.
The accused mortgaged her immovable property i.e., land in
15 CC.12153/2019 (J)
Sy.No.25/2 measuring 3 acres 38 guntas situated at Dibbuhalli village,
Sadali Hobli, Shidlaghatta Taluk, Chikkaballapura District as security
by depositing the original partition deed dated 15.09.2011. The
accused postponed the payment assuring her that she would clear the
liability by executing sale deed in her favour. The complainant came to
know during the last week of January 2019 that the accused sold the
property to escape from her liability. Upon questioning about the same,
the accused assured her to pay a sum of Rs.32 lakhs towards the chit
liability including the interest for not paying the amount for a period of
4 years. The accused issued a cheque bearing No.852370 dated
18.03.2019 for a sum of Rs.32,00,000/ drawn on Indian Bank,
Rajamahal Vilas Extension Branch, Bengaluru in her favour. The
complainant produced the original partition deed dated 15.09.2011 as
per Ex.P.1 to show that the accused mortgaged her immovable property
as security. To create a valid mortgage by deposit of title deeds, there
must be a delivery of the title deeds relating to the immovable property
by the debtor to a creditor or his agent with the intention of creating a
security thereon. Thus, if there is a debt and if title deeds are deposited
by the debtor with an intention that the title deeds shall be security for
the debt, then by the mere fact of deposit of those title deeds, a
mortgage comes into being. However it is not clarified as to when the
partition deed was handed over to the complainant by the accused.
There is no averment in the complaint about the date of delivery of
partition deed so as to create mortgage by deposit of title deeds. It is
also not mentioned in her evidence. It is for the first time mentioned in
the written arguments filed by the counsel for the complainant that the
accused delivered the title deed i.e., partition deed during the year
201516. The date of delivery is not mentioned. The failure of the
16 CC.12153/2019 (J)
complainant to explain about the same creates doubt that under what
circumstances the partition deed came into the possession of the
complainant and whether the accused had intention to create security
or not. This Court is dealing with the offences U/s.138 of NI Act and
therefore it can not decide whether the mortgage as alleged in the
complaint is valid or not. Even if it is assumed for the moment that the
mortgage alleged in the complaint is a valid mortgage, then it is made
for the past debt. The amount of chit of Rs.21 lakhs paid by the
complainant on behalf of the accused in respect of 8 chits was
converted as mortgaged debt the moment mortgage by deposit of title
deed took place as alleged in the complaint. However the cheque was
not issued for clearing the mortgaged debt with its interest. It is not at
all the case of the complainant that the cheque was issued in respect of
the mortgaged debt. According to the complaint, the cheque was issued
for chit liability of Rs.21 lakhs and interest for not paying chit amount
for 4 years. Therefore once the chit liability of Rs.21 lakhs converted to
mortgaged debt, there would be no existing chit liability. Therefore the
cheque being alleged to have been issued for chit liability, it is to be
considered as cheque issued for non existent debt. The only remedy
available to the complainant is to enforce the mortgage before a Civil
Court.
21. Further the complainant did not produce any document to
show that the accused agreed to pay interest on the amount of Rs.21
lakhs. Admittedly the liability of the accused as alleged in the
complaint is only Rs.21 lakhs and the cheque was alleged to have been
issued for Rs.32 lakhs. As per the averment in the complaint Rs.11
lakhs is the interest. There is no averment as to the rate of interest
17 CC.12153/2019 (J)
agreed between the parties. As per the averment in the complaint the
said interest was calculated for the period of four years. But there are
no details of calculation to arrive at the interest amount of Rs.11 lakhs.
The entire cheque amount includes the alleged liability as well as the
interest. It is not clarified as to how the interest amount was arrived at.
There is no written document. Except the oral testimony of
complainant there is nothing on record to substantiate the same.
Moreover the chit transaction itself is not proved. On perusal of the
complaint and evidence, it is prima facie not believable that the
accused voluntarily agreed to pay such a huge amount i.e. 11 lakhs as
interest and issued the cheque at ExP.2. It is completely contrary to the
rationale of a prudent man. Therefore it could not be believable that
the accused issued the cheque for the value of Rs.32,00,000/ and the
same could not be considered as legally recoverable debt or liability as
contemplated in Explanation to the section 138 of the N.I. Act.
Therefore it creates doubt on the transaction as alleged by the
complainant in the complaint.
22. It is the case of the complainant that the accused took 8
chits in her name and in the name of her family members. She bid for 8
chits and took consolidated amount of Rs.21,85,000/. She paid 14
installments and expressed her inability to pay the remaining
installments and the complainant paid the installments of 8 chits on
behalf of the accused. The installment of each chit is Rs.12,500/ per
month and the amount of 8 chits is Rs.1 lakh per month. However it is
clearly elicited in the cross examination of PW.1 that she had no
independent income. The income of her husband was Rs.15,000/ per
month and it was sufficient for their monthly expenditures. The income
18 CC.12153/2019 (J)
of her son was Rs.30,000/ per month and he is married. No documents
were produced to show the income of her husband and son. Therefore
the total income of the family of the complainant was Rs.45,000/ per
month. She did not disclose about any other income earned by her
during the said period. There is no document to show that the family of
the complainant earns even Rs.45,000/ per month. Apart from that
out of the said family income, the expenditures of the family per month
have to be deducted. Therefore it is clear that she did not have
sufficient income to pay the installments of 8 chits of the accused ie..,
Rs.1 lakh per month. Therefore the case of the complainant is not at all
believable.
23. It was argued on behalf of the accused that the amount
alleged to have given by the complainant is time barred debt.
Admittedly the chit alleged to have commenced in the year 2012 and it
was closed in the month of January, 2015. The cheque was alleged to
have been issued by the accused on 18.03.2019. If it is considered that
the accused issued cheque in respect of the debt of January, 2015,
then cheque is issued for time barred debt and the provision U/s. 138
of NI Act is not applicable. Mere issuance of cheque would not revive
the debt as per provision U/s. 25 (3) of the Indian Contract Act, 1872.
There is no promise in writing as required U/s. 25 (3) of the Indian
Contract Act, 1872. Therefore it could not be considered as legally
enforceable debt.
The counsel for the accused relied upon the judgment of the
Hon'ble High Court of Kerala, in the case of Sasseriyil Joseph Vs.
Devassia reported on 2001 Cri.L.J. 24, wherein it was held that section
19 CC.12153/2019 (J)
138 of NI Act is attracted only if there is legally recoverable debt and it
can not be said that a time barred debt is legally enforceable debt.
The counsel for the accused also relied upon judgment dated
28.02.2014 of the Hon'ble High Court of Karnataka, Bengaluru in
Crl.Appeal No. 545/2010 in the case of K.V.Subba Reddy Vs. N.
Raghava Reddy, wherein the Hon'ble High Court of Karnataka referred
the judgment of the Hon'ble High Court of Kerala, in the case of
Sasseriyil Joseph Vs. Devassia reported on 2001 Cri.L.J. 24 confirmed
by the Hon'ble Supreme Court of India in Special Leave to Appeal (Crl.)
no.1785/2001 and held that the dishonoured cheque was issued for time
barred debt and it can not be held as legally recoverable debt.
The counsel for the accused also relied upon the judgment dated
17.12.2020 of the Hon'ble High Court of Karnataka, Kalburgi Bench in
Crl.Appeal No. 200057/2016 in the case of Bidar Urban Cooperative
bank Ltd Vs. Mr. Girish S/o Late Gundurao Kulkarni, wherein the
Hon'ble High Court of Karnataka referred the judgment of the Hon'ble
High Court of Kerala, in the case of Sasseriyil Joseph Vs. Devassia
reported on 2001 Cri.L.J. 24 confirmed by the Hon'ble Supreme Court
of India in Special Leave to Appeal (Crl.) no.1785/2001 and held that
the time barred debt is not the legally enforceable debt and issuance of
cheque can not be construed as promise to pay time barred debt.
24. On the other hand, it was argued on behalf of the
complainant that the only defence of the accused is that the debt is
time barred. The complainant paid installments on behalf of the
20 CC.12153/2019 (J)
accused for 8 chits till the end of the tenure of the chit and when she
demanded for repayment of the amount during the year 201516, the
accused sought time and as security mortgaged her property in favour
of the complainant. Therefore the limitation for recovery of secured
debt is 12 years as per Article 62 of the Limitation Act and not 3 years.
It was also argued that the issuance of cheque itself is the
acknowledgment of debt in writing as per Section 18 of the Limitation
Act and fresh period of limitation shall be calculated.
The counsel for the complainant relied upon the judgment of the
Hon'ble High Court of Madhya Pradesh, in the case of Govind Prasad
Patel Vs. Dhani Ram Patel reported on 2001 (4) MPHT 64, wherein it
was observed that acknowledgment of liability not made within
prescribed time is not covered U/s 18 of the Limitation Act but if it is not
merely an acknowledgment but an express promise to pay, it brings the
case within section 25(3) of the Contract Act and it was held that a
"promise to pay" a time barred debt is a good consideration U/s.25(3) of
the Contract Act.
The counsel for the complainant also relied upon the judgment
of the Hon'ble High Court of Madras, in the case of R.Madesh
Vs.R.Rathinam reported on 2015 SCC online Mad 3094, wherein it was
held that to constitute a valid acknowledgment of liability, it must be
made in writing signed by the party and made before the expiry of the
prescribed period of limitation and if it is made, a fresh period of
limitation starts from time of acknowledgement of liability.
21 CC.12153/2019 (J)
25. On perusal of the evidence, it is clear that the chit
commenced on 15.03.2012 and the tenure of the chit ended in the
month of January 2015. The cheque was issued on 18.3.2019.
Section 18 of the Limitation Act, 1963 deals with
acknowledgement and explanation of limitation and it reads as under:
"Section 18 Effect of acknowledgment in writing
(1) Where, before the expiration of the prescribed period for
a suit or application in respect of any property or right, an
acknowledgment of liability in respect of such property or
right has been made in writing signed by the party against
whom such property or right is claimed, or by any person
through whom he derives his title or liability, a fresh period
of limitation shall be computed from the time when the
acknowledgment was so signed.
(2) Where the writing containing the acknowledgment is
undated, oral evidence may be given of the time when it was
signed; but subject to the provisions of the Indian Evidence
Act, 1872 (1 of 1872), oral evidence of its contents shall not
be received.
Explanation For the purposes of this section
(a) an acknowledgment may be sufficient though it omits to
specify the exact nature of the property or right, or avers
that the time for payment, delivery, performance or
enjoyment has not yet come or is accompanied by a refusal
to pay, deliver, perform or permit to enjoy, or is coupled
22 CC.12153/2019 (J)
with a claim to set off, or is addressed to a person other
than a person entitled to the property or right;
(b) the word "signed" means signed either personally or by
an agent duly authorized in this behalf; and
(c) an application for the execution of a decree or order
shall not be deemed to be an application in respect of any
property or right.
On going through the citations relied upon by both the parties, it
is clear that the cheque could not be considered as the promise to pay
in writing as contemplated U/s.25(3) of the Contract Act. Moreover the
cheque was issued after expiry of 3 years and therefore fresh limitation
would not start. Therefore the limitation for the recovery of the amount
was lapsed and it became the time barred debt. The cheque not being
issued for the mortgaged debt, the limitation of mortgage by deposit of
title deed can not be taken into consideration. Hence the amount paid
by the complainant could not be considered as legally recoverable debt
or liability.
26. It is clear from the complaint that the chit run by the
complainant is unregistered chit. Therefore it is important to discuss
issue as to whether the cheque in question, which is said to have been
issued towards chit liability can be said to have been issued in
discharge of a legal debt or liability. At this juncture it is necessary to
discuss the law governing Chit funds. The Chit Funds Act, 1982
(hereinafter referred to as the Chit Funds Act). It provides for
mandatory registration of chit fund companies, in addition to sanction
with respect to each chit scheme individually. It also mandated a
23 CC.12153/2019 (J)
provision for minimum capital requirements for a company intending
to organize a chit fund, written chit agreements between the foreman
and the subscribers detailing their respective contractual obligations,
and other similar regulations to protect investor's interest. As per the
rules, a Chit fund company, in order to run business is required to first
obtain a certificate of incorporation from the Registrar of Companies.
Then the same needs to be registered with the Chit fund department of
the government after compliance with the elaborate formalities
including drawing up of bye laws and spot inspection by the registrar.
As per the Act, a prior registration is mandatory. In addition to the
above, every new chit group organized needs to be approved from the
Registrar. Moreover as per provisions laid down in Sections 4 and 5 of
the Chit Funds Act, no person shall commence or conduct any chit or
publish any notice, circular, prospectus, proposal or other document
inviting the public to subscribe for tickets in any chit unless previous
sanction of the State Government is obtained and unless the chit is
registered in that State. A written chit agreement is mandated as per
Section 6 of the Chit Funds Act which must include the details
regarding the subscribers, the amount of subscription and various other
particulars. Moreover, the said chit fund agreement is required to be
filed with the Registrar, as per provisions of Section 7. It is also
mandated, that the foreman has to provide copy of the chit fund
agreement to all the subscribers, as per provisions of Section 10 of Chit
Funds Act. Most importantly, the subscribers to the chit fund are
entitled to receive a receipt for the payment made by them in lieu of
installments, as per provisions of Section 27 of the Chit Funds Act. The
act also requires the foreman to give security of an amount equal to the
chit amount, before applying for sanction. This has been done with
24 CC.12153/2019 (J)
object of protecting the interest of the investor. As per Section 13 of the
Chit Funds Act, no foreman, other than a firm or other association of
individuals or a company or cooperative society, shall commence or
conduct chits, the aggregate chit amount of which at any time exceeds
twentyfive thousand rupees. However in present case the amount of
chit is Rs. 5,00,000/, which is in gross violation of the Act.
27. Therefore the question to be considered is whether such an
agreement between the parties, which is forbidden by law can give rise
to legally enforceable contract. The prosecution U/s 138 of the Act can
be sustained, if the debt or liability is legally enforceable. The
agreement to contribute made by a subscriber to an unregistered chit
fund being run in violation of the statute is legally unenforceable. Such
an agreement, the object of which is forbidden by law, if given effect to
would defeat the provisions of statute i.e. Chit Funds Act. Section 4 & 5
of the Chit Funds Act, 1982 prohibit running of a chit fund or
proposing subscriptions in a chit fund without sanction. Also there is
clear violation of Section 13 of the Chit Funds Act. The complainant
and accused knew that running chit without compliance of the Act is
illegal. Even though they did not know, ignorance of law is no excuse.
The Courts can not enforce an illegal agreement at the instance of a
person, who is himself a party to an illegality or fraud. It is clear that
the inherent infirmities in the case of the complainant are sufficient to
rebut the presumption of legal liability. Thus the complainant has failed
to establish one of the fundamental ingredients of Section 138 of the
Act, i.e. that the dishonoured cheque was issued in discharge of a
legally recoverable debt or liability.
25 CC.12153/2019 (J)
28. The aforesaid reasons are sufficient to hold that the
complainant failed to prove the issuance of cheque by the accused in
his favour in discharge of the legally enforceable debt as alleged. It is
well settled that the accused needs to prove his defence by
preponderance of probabilities. It is sufficient if the doubt is created on
the alleged transaction. The accused has created the doubt on the
alleged issuance of cheque in favour of complainant as alleged in the
complaint. Therefore this Court is of the opinion that the accused
rebutted the statutory presumption U/s.139 and 118(a) of the Act.
Accordingly, the accused is found not guilty for the offence punishable
U/s.138 of the N.I.Act. Hence, the Point No.1 is answered in the
Negative and Point No.2 is answered in the Affirmative.
29. Point No.3 : In view of the reasons assigned on Point No.1
and 2, I proceed to pass the following:
ORDER
As per the provisions of Sec.255(1) Cr.P.C. the accused is hereby acquitted of the offence punishable u/s.138 of NI Act, 1881.
The personal bond executed by the accused is hereby stands cancelled and office is directed to refund cash surety of Rs.3,000/ to the accused after appeal period is over.
(Dictated to the Stenographer, transcript thereof is computerized and printout taken by him, is verified and then pronounced by me in Open Court on this the 7th day of January2022.) (Lokesh Dhanapal Havale) XV Addl. CMM., Bangalore.
26 CC.12153/2019 (J) ANNEXURE Witnesses examined for the Complainant: PW.1 Mrs.Shanthi.K. Documents marked for the Complainant: Ex.P.1. Partition Deed.
Ex.P.2 Cheque.
Ex.P.2a Signature of the accused.
Ex.P.3 & P.4 Two Bank endorsements.
Ex.P.5 Legal Notice.
Ex.P.6 Postal receipt.
Ex.P.7 Postal Acknowledgement.
Ex.P.8 Certified copy of Tamil Language
document.
Ex.P.8a Certified copy of English Translation.
Ex.P.8b Certified copy of Affidavit.
Witnesses examined For Defence: Nil [ Documents marked for Defence: Nil.
(Lokesh Dhanapal Havale) XV Addl. CMM., Bangalore.