Bangalore District Court
At No.3 vs R/At No.205 on 29 November, 2021
1
IN THE COURT OF XIV ADDL. CHIEF METROPOLITAN
MAGISTRATE, MAYO HALL, BENGALURU
DATED THIS THE 29th DAY OF NOVEMBER, 2021
PRESENT
Sri. K. GURUPRASAD, B.A., LL.B (Spl.)
XIV ADDL. C.M.M., BENGALURU
CASE NO C.C. NO.55659/2018
M/s. Jamnadas Moorajee Finance Pvt. Ltd.,
Having its Corporate Office
COMPLAINANT at No.300, 3rd Floor, Gold Towers, Residency Road,
Bengaluru - 560 025.
Reptd by its Director - Mr. Rakesh Tayal
Sri. Santosh Unikkat
Aged about 47 years,
S/o. Mr. Ponnath Shivashankaran
ACCUSED
R/at No.205, Salarpuria Symphony,
Chikkatogur, Hosur Main Road,
Electronic City Post, Bengaluru - 560 100.
OFFENCE U/s.138 of Negotiable Instruments Act
PLEA OF THE
ACCUSED Pleaded not guilty
FINAL ORDER Accused is convicted
(K. GURUPRASAD)
XIV ADDL. C.M.M., BENGALURU
2
JUDGMENT
The present complaint is filed under Sec.200 Cr.PC for the offence punishable under Section 138 r/w Sec.142 of Negotiable Instruments Act.
2. Brief facts of the complainant case are that, the complainant is Non-Banking Financial Company involved in the business of commercial lending and extending credit facility to the third parties as per the license and approval granted by Reserve Bank of India. The accused borrowed Rs.12 lakhs as personal loan from the complainant on 09.02.2016 and agreed to repay the said amount with interest at the rate of 5% per month. The accused also executed Loan Agreement, On Demand Promissory Note and Deed of Personal Guarantee in favour of the complainant on 09.02.2016. The accused had further borrowed Rs.50,000/- from complainant on 30.05.2017 on same terms and conditions of loan. Towards discharge of liability of principal amount of Rs.50,000, the accused issued a cheque bearing No.000139 dtd.19.12.2017 for Rs.50,000/- drawn on Kotak Mahindra Bank, Malleshwaram 18th Cross branch, Bengaluru in favour of the complainant. When the complainant presented said cheque for encashment to its banker i.e Syndicate Bank, Shoolay branch, Bengaluru on 19.12.2017, 3 the said cheque came to be dishonoured for the reason "funds insufficient" on 22.12.2017. When the complainant got issued legal notice dtd.19.01.2018 to the accused by RPAD., calling upon the accused to pay the cheque amount, said notice came to be served on the accused on 23.01.2018. The accused has failed to pay the cheque amount and as such the accused is guilty of the offence punishable under Section 138 of N.I. Act. Hence this complaint.
3. After filing of the complaint, cognizance was taken for the offence punishable U/s.138 of N.I. Act. Sworn statement of the complainant was recorded. This court was satisfied as to prima facie case made out by the complainant for issuance of the summons and accordingly Criminal Case was registered against the accused for the offence punishable U/s.138 of N.I. Act and summons was ordered to be issued.
4. In pursuance of the court process issued by this court, the accused has put up his appearance through his counsel and enlarged on bail. The accused has denied the substance of accusation and claimed for trial. The plea was recorded accordingly.
5. In order to prove its case, the Director and Authorized Representative of the complainant has examined himself as PW.1 (CW.1) and got marked Ex.P1 to P27. Thereafter, statement of the accused U/s.313 of Cr.PC was 4 recorded. Thereafter, the accused has examined himself as DW.1 and got marked Ex.D1 and D2. The counsel for the complainant has filed written arguments.
6. Heard both sides. Perused the complaint, evidence on record, written arguments and court records.
7. The following points arise for my consideration and determination;
1) Whether the complainant proves that
the accused has issued cheque in
question in discharge of legally
enforceable debt or liability as
contended by it?
2) Whether the complainant further proves
that the accused has committed the
offence punishable under Section 138 of
Negotiable Instruments Act?
3) Whether the complainant is entitled for
the relief's as prayed in the complaint?
4) What Order?
5
8. The above points are answered as under;
Point No.1 to 3 : In affirmative,
Point No.4 : As per the final order,
for the following.......
REASONS
9. Point Nos. 1 and 2: Since these two points are inter linked and to avoid repetition they are taken together for discussion.
10. As regard to limitation to file this complaint, it is clear from Ex.P6 to P11 that when the complainant presented the cheque in question to his banker within three months from the date of said cheque, said cheque came to be dishonoured with bank shara "funds insufficient" and that when the complainant got issued statutory notice U/s.138 of N.I. Act to the accused by registered post (within 30 days from the date of intimation of dishonour of said cheque) calling upon the accused to pay the cheque amount within 15 days from the date of receipt of said cheque, the said notice send by RPAD., came to be served on the accused. No doubt accused has disputed his signature on the postal acknowledgment and denied that the statutory notice got issued by him was served on him. However, DW.1 has admitted on page 7 of his cross-examination that the address 6 shown in Ex.P8-notice is his residential address and that any notice or letter generally sent to said address reaches him. There is statutory presumption under Sec.27 of General Clauses Act that when notice is issued by registered post at correct address, the said notice is presumed to have been served on the addressee. The burden of rebutting said presumption is on the person who disputes service of said notice. But in the present case on hand, the accused has utterly failed to adduce any evidence to disprove service of the said statutory notice on him. Mere self-serving denial of service of said notice on him is not sufficient. Hence, it can be concluded that Ex.P8-legal notice is duly served on the accused. Hence, the present complaint which is filed after expiry of 15 days from the service of notice and within one month thereafter is in time.
11. As regard to legally enforceable debt or liability, in 2010 (11) SCC 441 - (Rangappa Vs Sri. Mohan), it is held that;
" The presumption mandated by Sec.139 of the Act includes a presumption that there exists a legally enforceable debt or liability. This is of course in the nature of a rebutable 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 complainant"..............."when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'.7
Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the presumption can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own".
12. If the facts and circumstances of this case are considered in light of above said principle of law, it is clear that the accused has admitted that Ex.P6 cheque is drawn on his bank account and that it bears his signature. Therefore, statutory presumption arises U/s.139 of N.I. Act in favour of the complainant that the cheque is issued in discharge of debt or liability. The burden of rebutting the said presumption by probable defence is on the accused.
13. It is the case of the complainant that the accused borrowed personal loan of Rs.12 lakhs from the complainant on 9.2.2016 by executing Ex.P1-loan agreement, P3-demand promissory note, Ex.P4-deed of personal guarantee and Ex.P21- agreement of sale in favour of the complainant. It is further case of the complainant that the accused further borrowed additional loan of Rs.50,000/- on 30.05.2017 by submitting Ex.P5 loan request letter and executing Ex.P2 demand promissory note. It is further case of the complainant that the accused agreed to repay said loan with an interest @ 5% per month and that towards discharge of liability of 8 payment of principal amount of Rs.50,000/-, the accused issued cheque in question which came to be dishonoured. On the other hand, the accused has denied availment of loans of Rs.12 lakhs and Rs.50,000/- and issuance of cheque in question towards repayment of principal amount. It is specific defence of the accused that since he is in financial service, Lalith Tayal one of the Directors of complainant company requested the accused to help to get financial assistance of Rs.70 crores from DHFL in S & G Luxuria project in which complainant company had made investment. It is further defence of the accused that the said Lalith Tayal orally promised to pay service fee of Rs.25 lakhs out of which, Rs.10 lakhs will be paid in advance to the accused at the time of filing the loan application to DHFL while the balance amount of Rs.15 lakhs shall be paid at the time of release of loan amount by DHFL. It is further defence of the accused that since complainant company is non-banking financial institution, it is agreed that the said amount of Rs.10 lakhs will be shown as a loan amount instead of showing the said amount as service fee. It is further defence of the accused that it is orally agreed that after payment of service fee of Rs.25 lakhs, the said amount Rs.10 lakhs shall be repaid by the accused to the complainant company without any interest. It is further defence of the accused that the loan agreement and deed of personal guarantee were blank 9 documents at the time of signing by the accused while the demand promissory note was filled-up at the time of signing by the accused. It is further defence of the accused that since the certain documents such as auditor financier report and register share holding certificate were not submitted to DHFL and as the builder of S & G Luxuria project was not available to sign the documents, DHFL did not sanction loan of Rs.70 crores. It is further defence of the accused that when Lalith Tayal insisted to repay said amount of Rs.10 lakhs, the accused refused to repay the same as non-sanction of Rs.70 crores was not on account of mistake of the accused. It is further defence of the accused that after mutual discussion, it was agreed that Rs.5 lakhs out of Rs.10 lakhs shall be repaid in installments and accordingly, accused has already paid Rs.5,80,000/- to the complainant company in installments. It is further defence of the accused that complainant company obtained one cheque of Rs.10 lakhs and four blank signed cheques from the accused by way of security, at the time of execution of Ex.P1 to P4 and misused one of such cheques and filed this false complaint, though accused is not liable to pay any amount to the complainant.
14. On careful perusal of evidence on record, it is clear that the defence of the accused is not probable nor does it inspire confidence of this court. It is because, this court has already discussed and concluded in para 10 of this judgment 10 that Ex.P8-notice got issued by the complainant to the accused is served on the accused. If really the accused was not liable to pay the cheque amount, the accused would have promptly replied to the said notice denying his liability to pay the cheque amount and putting forth his defence in his reply notice at the earliest. Any prudent person under similar circumstances would have promptly done so. The accused is well educated and is in financial service since many years. Hence, it is but natural that if his defence had been true and genuine, he would have promptly got issued suitable reply to the notice of the complainant. However, the accused has failed to do so. This inaction on the part of the accused to issue reply notice to Ex.P8 notice raises serious doubt regarding the defence of the accused.
15. Further, it is clear from Ex.P1 loan agreement, Ex.P2 & P3 demand promissory notes and Ex.P4 deed of personal guarantee that the accused availed loans of Rs.12 lakhs and Rs.50,000/- from the complainant and agreed to repay the same within six months with interest @ 5% per month. No doubt, DW.1 has deposed that he has signed on blank documents of loan agreement, promissory notes and deed of personal guarantee. However DW.1 has admitted during cross-examination that he is B.Sc graduate and he is not in habit of signing on blank documents. DW.1 has also admitted that he has not lodged police complaint nor filed any case in 11 any court against complainant alleging production of forged documents on the basis of blank signed documents. In view of above said admissions of DW.1 and keeping in view the educational qualification and occupation of accused, it is highly improbable that accused signed on blank documents and that subsequently the said blank signed documents were used to forge and create Ex.P1 to P4. If complainant had really forged Ex.P1 to P4, the accused who is well educated and man of worldly affairs, would have definitely lodged police complaint or initiated criminal proceedings against the Directors and officials of the complainant on the ground of forgery and cheating etc,. Furthermore, DW.1 has admitted during cross-examination that Ex.P13 loan request letter is in his handwriting and bears his signature. DW.1 has also not disputed his signature and handwriting in Ex.P5 loan request letter seeking loan of Rs.50,000/-. These facts further falsify defence of the accused.
16. Moreover, it is suggested by counsel for the accused to PW.1 during cross-examination that complainant company deposited Rs.10 lakhs only in bank account of the accused, after deducting Rs.2 lakhs, towards three months interest of Rs.1,80,000/- and process fee of Rs.20,000/-. This suggestion has been admitted by PW.1 during cross- examination. By making the suggestion on behalf of accused during cross-examination, the accused admitted the fact that 12 he has taken loan of Rs.12 lakhs out of which, Rs.1,80,000/- was deducted towards three months interest and Rs.20,000/- was deducted processing fee and balance amount of Rs.10 lakhs was deposited in the bank account of the accused. This fact is further corroborated and substantiated by recitals of Ex.P1 loan agreement which show that from the sanctioned loan amount of Rs.12 lakhs, amount of Rs.10 lakhs is released to the borrower i.e., accused, after deducting three months upfront interest of Rs.1,80,000/- and other charges of Rs.20,000/-. This fact of deduction of Rs.1,80,000/- towards interest is also reflected in Ex.P18 account statement. In view of this suggestion by counsel for the accused to PW.1 during cross-examination coupled with documentary evidence of Ex.P1 and Ex.P18, it can be concluded that the defence of the accused that Rs.10 lakhs was deposited in the bank account of the accused not as loan amount but as service fee cannot be accepted. Ex.D1 e-mail communications are devoid of necessary details and attached documents to those e-mails are not produced. Hence, Ex.D1 e-mail communications are not helpful in proof of the defense.
17. Counsel for the accused has contended that interest rate of 60% per annum i.e., 5% per month is exorbitant and is not permissible under law and RBI guidelines. It is further contended that there is no seal of the 13 complainant company on the complaint or resolution or loan documents and as such there is no legal sanctity to the said complaint or resolution. It is further argued that in view of Clause 28 of Articles of Association, complaint should be accompanied by power of attorney of authorized representative and since CW.1 has submitted complaint without such power of attorney, he is not competent to file the complaint. It is also contended that the complainant company is not authorized to carry on business of non- banking financial institution and that memorandum of association and articles of association are not accordance with RBI guidelines. It is further argued that the complainant has presented another cheque bearing No.000141 for Rs.1,93,89,518/- without prior intimation to the accused and without giving statement of account to the accused before presenting the said cheque. It is further argued that there is no special approval of RBI., for operation as non-banking financial corporation. It is further argued that the alleged loan transaction and the loan documents are not in terms of guidelines of RBI and fair practices code for NBFCs, regarding application for loans and their process, loan appraisal and terms & conditions, disbursement of loans including changes in terms & conditions and regulation of excessive interest charged by NBFCs. In this regard, the counsel for the accused has relied upon decision in Crl. Appeal No.1145/2011 - (M/s.
14National Agricultural Co-op., Marketing Federation of India Ltd., Vs. M/s.Disha Impex Pvt., Ltd.).
18. However, above said contentions and arguments taken by accused cannot be accepted. It is because, it is clear from the loan documents executed by accused in favour of the complainant that the accused agreed to repay the loan amount with interest @ 5% per month or 60% per annum. Therefore, when the accused himself has agreed and consented to pay such rate of interest, now he cannot turn around and contend that rate of interest is exorbitant. Moreover, Sec.79 of N.I. Act provides that when interest at the specified rate is expressly made payable on promissory notes i.e., Ex.P2 & P3 in the present case, interest shall be calculated at the rate specified, on the principal money, until tender or realization of such amount etc,. Moreover, as per Sec.21(A) of Banking Regulations Act, transaction between a banking company and its debtor shall not be re-opened by any court on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive. Further in view of Sec.21 of Companies Act, 2013, merely because the present complaint, loan documents or resolution of the complainant company do not bear, common seal of the complainant company, the same will not loose their legal sanctity particularly when complainant company has duly authorized to execute such loan documents or to file 15 the present complaint. On this ground alone, it cannot be said that CW.1 is not competent to present this complaint, particularly when resolution as per Ex.P12 is passed by Board of Directors of complainant company. Mere non-production of books of minutes will not make CW.1 incompetent to file this complaint. Furthermore, Clause-28 of Articles of Association does not provide that any person acting on behalf of complainant company cannot do so without execution of power of attorney. On the other hand, Clause-28 of Articles of Association only provides that Board of Directors may at any time by power of attorney appoint any person to be attorney or attorneys of the company for such purposes. In other words, Clause - 28 is only enabling provision and does not compel the Board of Directors to execute power of attorney under all circumstances. In the present case on hand, Board of Directors have passed Ex.P12 resolution authorizing CW.1 to file complaint before this court and as such non-execution of power of attorney in favour of CW.1 is not fatal and it cannot be said that CW.1 is not competent act on behalf of complainant company only because of non- execution of any power of attorney. It is clear from Ex.P22 Registration Certificate issued by RBI that complainant company is granted certificate of registration to carry on business of non-banking financial institution. Therefore, the accused cannot try to avoid his liability to pay the loan 16 amount on the contention that complainant has not produced a special approval of R.B.I or that loan transaction and loan documents are not in terms of guidelines of R.B.I., particularly when the accused has not made any representation before R.B.I or any other authority complaining violation of any guidelines of R.B.I regarding loan transaction. Furthermore, presentation of cheque bearing No.000141 is not subject matter of the present complaint and as such this court will not give finding on the said fact. Even the decision relied upon learned counsel for the accused is not helpful to the accused as the facts of those case are entirely different from the present case and because the accused in the present case has failed to prove his defence.
19. In view of my above discussion, I am of considered opinion that the accused has utterly failed to prove or probabalize his defence and thereby to rebut statutory presumption in favour of the complainant. It clearly appears from the evidence on record that defence of the accused is only an afterthought without any basis. Unless and until the accused rebuts the statutory presumption with convincing and cogent evidence, burden cannot be shifted on the complainant. As discussed above, the complainant has placed sufficient materials on record to establish its contention as put by the complainant. The evidence on record is sufficient to accept the case of the complainant that accused has 17 issued cheque in question towards discharge of legally enforceable debt or liability and the complainant has proved all the requirements of Sec.138 of N.I. Act, so as to constitute the offence against the accused. Therefore, Point Nos.1 & 2 are in affirmative and answered accordingly.
20. Point No.3: As discussed in connection with Point Nos.1 & 2, the complainant has proved its case as to commission of the offence punishable U/s.138 of N.I. Act by the accused. The punishment prescribed for the said offence is imprisonment for a period which may extend to two years or with fine. Considering the facts and circumstances of this case, nature, year of the transaction, nature of the instrument involved, provisions of Sec.117 of N.I. Act, cost of litigation and the rate of interest proposed by Hon'ble Supreme Court in 2012 (1) SCC 260 (R.Vijayan Vs Baby), etc., this court is of the considered view that it is just and desirable to impose fine of Rs.70,000/- and out of the said amount a sum of Rs.1,000/- has to be remitted to the State and the remaining amount of Rs.69,000/- is to be given to the complainant as compensation as provided U/s.357(1) of Cr.PC and accordingly Point No.3 is answered in Affirmative.
21. Point No.4: For the reasons discussed in connection with Point Nos.1 to 3 this court proceed to pass the following......
18ORDER Acting under Section 255(2) of Cr.PC accused is hereby convicted for the offence punishable under Section 138 of Negotiable Instruments Act. The accused shall pay a fine of Rs.70,000/- for the offence punishable U/s.138 of N.I. Act. In default of payment of fine amount, the accused shall under go simple imprisonment for a period of two months.
By exercising the power conferred U/s.357(1) of Cr.PC., out of total fine amount of Rs.70,000/-, a sum of Rs.69,000/- is ordered to be paid to the complainant as compensation and Rs.1,000/- is ordered to be remitted to the State.
The bail bond of the accused stands cancelled. The cash security deposited by the accused is ordered to be continued till expiry of the appeal period.
Supply the free copy of this judgment to the accused forth with.
(Dictated to the stenographer, transcript thereof, computerized and print out taken by him is verified, corrected and then pronounced by me in open court on this the 29th Day of November, 2021) (K. GURUPRASAD) XIV A.C.M.M., Bengaluru 19 ANNEXURE Witnesses examined for the complainant:
PW.1 : Mr. Rakesh Tayal Witnesses examined for the defence: DW.1 : Mr. Santosh Unikkat Documents marked for the complainant: Ex.P1 : Notarized copy of Loan agreement
Ex.P2 & 3 : Notarized copies of on demand promissory notes Ex.P4 : Notarized copy of Deed of personal guarantee Ex.P5 : Request letter dtd.30.05.2017 Ex.P6 : Cheque Ex.P7 : Bank endorsement Ex.P8 : Legal Notice Ex.P9 : Postal receipt Ex.P10 : Postal acknowledgment Ex.P11 : Postal track consignment Ex.P12 : Resolution Ex.P13 : Certifed copy of Loan request letter dtd.1.2.2016 Ex.P14 : Certifed copy of Certificate of Incorporation Ex.P15 : Certifed copy of Articles of Association Ex.P16 : Certifed copy of Memorandum of Association Ex.P17 : Certifed copy of Board resolution dtd.2.7.2015 Ex.P18 : Certifed copy of Statement of account Ex.P19 : List of Directors of the complainant company Ex.P20 : Certifed copy of Sanction letter dtd.5.2.2016 Ex.P21 : Certifed copy of Sale agreement dtd.9.2.2016 Ex.P22 : Certifed copy of Copy of Registration Certificate Ex.P23 : Certifed copy of Form No. MGT 14 Ex.P24 : Alteration of Memorandum of Association Ex.P25 : Certifed copy of Certificate of Special resolution Ex.P26 : Certified copy of Sale deed dtd.29.9.2016 Ex.P27 : Certified copy of Resolution dtd.1.12.2017 20 Documents marked for the defence:
Ex.D1 : Copy of e-mail dtd.21.3.2017
Ex.D2 : Certification U/s.65-B of Indian Evidence Act
(K. GURUPRASAD)
XIV A.C.M.M., BENGALURU