Bangalore District Court
Aashritha Nidhi Limited vs Mr. Y.K Lokesh on 8 October, 2024
C.C.NO.835/2021
0
KABC030030532021
Presented on : 13-01-2021
Registered on : 13-01-2021
Decided on : 08-10-2024
Duration : 3 years, 8 months, 26 days
IN THE COURT OF THE XXVIII ADDL. CHIEF JUDICIAL
MAGISTRATE, BENGALURU CITY
Present:
Soubhagya.B.Bhusher,
B.A.,LL.B.,LL.M
XXVIII A.C.J.M, Bengaluru City.
DATED; THIS THE 08th DAY OF OCTOBER-2024
C.C.NO.835/2021
Complainant: Aashritha Nidhi Limited,
Registered O/at No.503, 3rd Floor,
C.J.Venkatesh Das Road,
Padmanabhanagar, Bengaluru-560070.
R/by it's Manager,
Smt.Nagaratna.S.Kundagolamath.
(By Sri.Shivayogi.B.Hallur & Anr.,Advs.,)
V/s
Accused: Mr.Y.K.Lokesh S/o.Y.M.Krishna Murthy,
No.513, Behind Government Hospital,
Muneshwara Nagar, Hegganahalli,
Bangalore-560091.
(By Sri.Roopesh.N.R.,Adv.,)
:JUDGMENT:
This case arises out of the private complaint filed by the complainant against the accused under section C.C.NO.835/2021 1 200 of Cr.P.C., for an offence punishable under section 138 of Negotiable Instruments Act.
2. The case of the complainant's in brief is as under:
It is the case of the complainant is that the complainant company is a incorporated under the companies Act. The accused and one Mr.Narayana Swamy.N filed an application for membership with the complainant on 14.08.2017 and 27.04.2017 respectively, after approval from the complainant issued share certificates to both on 21.08.2017 and 22.05.2017 respectively vide certificates No.63 and 36 respectively. Both have approached the complainant on 21.12.2017 seeking immovable property loan of Rs.7,50,000/- which belongs to the accused. The loan application was filed by Mr.Narayana Swamy.N and the accused became a first surety to him. Thereafter, the complainant approved the loan and sanction communication was made to them on 26.12.2017 intimating sanction of loan of Rs.7,50,000/- through loan A/c.No.ANL/APL/19 with 17% of interest per annum and penal interest at 3% per annum in case of default, for repayment in 84 months with monthly installment of Rs.15,327/ -. Further stated that on 28.12.2017 the accused executed memorandum of deposit of title deeds in favour of the complainant depositing original title deed of schedule "B" property C.C.NO.835/2021 2 mentioned in that deed and on the same day the said deed is registered in the office of Sub-registrar, Peenya, Bengaluru. The accused and borrower have agreed to statements made in paragraph 3 and 4 of DTD that, the complainant shall be at liberty to recover the entire sum due by way of cheque No.065945 issued by the accused drawn on SBI, Bharath Nagar Branch, Bengaluru in discharge of availed loan by them. Further stated that on the same day both have executed postal confirmation of Equitable Mortgage, on demand promissory note, take delivery letter to DPN, DP Note Delivery letter, DP Note Delivery letter of Guarantor, Bond of agreement on 29.12.2017.
3. Further stated that when both have failed to pay the due amount, the complainant sent a demand notice-1 on 17.05.2018 to repay the due amount of Rs.38,674/- but both have failed to repay the demanded due inspite of receiving the said notice. The complainant once again sent a demand notice-2 on 27.08.2018 to repay the due amount of Rs.96,795/- again both have failed to repay the demanded due inspite of receiving the said notice. When both became the chronic defaulter, the complainant sent a final notice on 28.05.2019 to recall the entire loan plus interest of Rs.9,64,442/-. The above said notice was sent to both of them and also to one more surety. Inspite of service of the said notices they never made C.C.NO.835/2021 3 the repayment. The complainant again on 02.07.2019 issued a final notice calling upon them to repay the entire loan or will be enforce of the entire sum due as per the clause 4 of the above said DTD. The complainant also notified them by the said notice that it shall be at liberty to recover the entire sum due by way of above said cheque issued by the accused which was been deposited with the complainant along with mortgage deed. In the said notice the complainant demanded total due of Rs.9,64,442/- as a legal debt. As per the final notice the complainant had given them ample opportunity to repay the entire loan amount but they failed to utilize the same. The complainant after completion of final notice period, has presented the said cheque for realization through its banker Kotak Mahindra Bank, Banashankari branch, Bangalore. But the said cheque was dishonored on 31.07.2019 as "Funds Insufficient". Thereafter, on 14.08.2019 the complainant got issued a statutory notice to the accused through its counsel, calling upon him to make payment of cheque within 15 days from the date of receipt of the said notice. The said notice was received by the accused on 19.08.2019. After receipt of the legal notice the accused neither reply to the notice nor paid the cheque amount. As such, the accused have committed an offence punishable under section 138 of N.I.Act. Hence, the present complaint came to be filed before this court on 13.09.2019.
C.C.NO.835/2021 4
4. After the complaint was filed, the cognizance of the offence cited therein was taken and it was registered as P.C.R No.14901/2019. Sworn statement of the complainant was recorded. Since there were sufficient materials to proceed against the accused, an order was passed on 12.01.2021 to register the case in Register No.III.
5. Thereafter, summons was issued to the accused and he appeared before the court through advocate and secured bail. He was furnished its necessary papers as complied under section 208 of Cr.P.C. Thereafter, the plea of the accused was recorded by the court. He has pleaded not guilty and claimed to be tried.
6. The complainant in support of its case, have examined its Manager as PW.1 and got marked 22 documents at Ex.P.1 to 22 and the complainant have examined one more witness as PW.2, who is none other-then Mr.N.Naraynana Swamy and got marked 03 documents at Ex.P.25 to 27 closed its side. During the course of cross examination of D.W.1 02 documents were marked at Ex.P.23 and 24 by way of confrontation.
7. After closer of the evidence of the complainant, the statement under section 313 of Cr.P.C., was recorded. The accused has denied the incriminating C.C.NO.835/2021 5 evidence appeared against him. In his defence, the accused examined himself as DW.1 and 02 documents were marked at Ex.D.1 and 2.
8. I have heard the arguments on the complainant side and also perused the written argument filed by the learned counsel for the accused and also perused the material placed on record.
9. Upon hearing the arguments and on perusal of the material placed on record, the following points arise for my consideration:
1.Whether the complainant proves the existence of legally enforceable debt/liability.?
2.Whether the complainant further proves that the accused had issued the cheque-
Ex.P.18, towards the discharge of the said legally enforceable debt/liability.?
3.Whether the complainant further proves that the cheque-Ex.P.18 was dishonored for the reasons "Funds Insufficient" and thereafter the accused had failed to repay the same within the statutory period, inspite of receipt of legal notice.?
4.Whether the accused have thus committed an offence punishable under section 138 of N.I.Act.?
5. What order?
10. My answers to the above points are as under:
Point No.1: In the Affirmative Point No.2: In the Affirmative C.C.NO.835/2021 6 Point No.3: In the Affirmative Point No.4: In the Affirmative Point No.5: As per final order, for the following:
:REASONS:
11. POINT NO.1 AND 2: These two points are inter-related to each other and finding given on any one point will bearing on the another. Hence, in order to avoid repetition of facts and evidence, I have taken these two points together for common discussion. The case of the complainant is that he was acquainted with the accused. Further the accused and one Mr.Narayana Swamy.N filed an application for membership with the complainant after approval from the complainant issued share certificates to them. Both have approached the complainant seeking immovable property loan of Rs.7,50,000/- which belongs to the accused. The loan application was filed by Mr.Narayana Swamy.N and the accused became a first surety. Thereafter, the complainant approved the loan and intimating sanction of loan of Rs.7,50,000/- with 17% of interest per annum and penal interest at 3% per annum in case of default, for repayment in 84 months with monthly installment of Rs.15,327/-. The accused executed memorandum of deposit of title deeds in favour of the complainant depositing original title deed of schedule "B" property. The said deed is registered in the office of Sub-registrar, Peenya, Bengaluru. The C.C.NO.835/2021 7 accused and borrower have agreed to statements made in paragraph 3 and 4 of DTD that the complainant shall be at liberty to recover the entire sum due by way of cheque No.065945 issued by the accused, which has been deposited by him along with the DTD in discharge of availed loan by them. Further both have executed postal confirmation of Equitable Mortgage, on demand promissory note, take delivery letter to DPN, DP Note Delivery letter, DP Note Delivery letter of Guarantor, Bond of agreement. When both failed to pay the due amount, the complainant sent a demand notices but both have failed to repay the demanded due inspite of receiving the said notices. Further the complainant again issued a final notices calling upon them to repay the entire loan with interest or will be enforce of the entire sum due as per the clause 4 of the above said DTD. The complainant also notified them by the said notice that it shall be at liberty to recover the entire sum due by way of above said cheque issued by the accused which was been deposited with the complainant along with mortgage deed. In the said notice the complainant demanded total due a sum of Rs.9,64,442/- as a legal debt. Further as per final notice the complainant had given them ample opportunity to repay the entire loan amount but they failed to utilize the same. The complainant after completion of period, presented the cheque for realization through its banker. But the said cheque was C.C.NO.835/2021 8 dishonored with an endorsement "Funds Insufficient". Thereafter, the complainant got issued a statutory notice to the accused through its counsel, calling upon him to make payment of cheque within 15 days from the date of receipt of the said notice. After service of legal notice the accused neither reply to the notice nor paid the cheque amount. As such, the accused have committed an offence punishable under section 138 of N.I.Act. Hence, the present complaint came to be filed before this court.
12. 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 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;
C.C.NO.835/2021 9 "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."
13. On plain perusal of the provisions under section 118(a) and 139 of the N.I.Act., as extracted hereinabove, 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.
14. 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 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".
C.C.NO.835/2021 10
15. Under the light of above extracted provisions of the Act, I have perused the oral and documentary evidence on record. In support of the case, the complainant have examined its Manager as P.W.1 and 22 documents were marked at Ex.P.1 to 22. In the chief examination P.W.1 has repeated the contents taken by the complainant in the complaint. The complainant's have also examined one more witness by name Mr.Narayana Swamy as PW.2 and 03 documents were marked at Ex.P.25 to 27. In the chief examination P.W.2 has deposed as per the case of the complainant. Ex.P.1 is the authorization letter. Ex.P.2 is the share certificate. Ex.P.3 is the loan application. Ex.P.4 is the surety details. Ex.P.5 is the second surety details. Ex.P.6 is the document of loan sanction. Ex.P.6(a) is the postal receipt. Ex.P.6(b) is the postal acknowledgment. Ex.P.7 is the deposit of title deeds. Ex.P.8 is the postal confirmation of Equitable Mortgage. Ex.P.9 is the promissory note. Ex.P.10 is the take deliver letter. Ex.P.11 is the D.P.Note delivery letter. Ex.P.12 is the D.P.Note delivery letter of guarantor. Ex.P.13 is the agreement bond. Ex.P.14 is the notice issued by the complainant to the borrower. Ex.P.14(a) to 14(c) are the postal receipts. Ex.P.14(d) is the postal acknowledgment. Ex.P.14(e) is the returned postal cover. Ex.P.15 is the 2nd notice issued by the complainant to the borrower. Ex.P.15(a) to 15(c) are the postal receipts. Ex.P.15(d) and 15(e) are the postal C.C.NO.835/2021 11 acknowledgments. Ex.P.15(f) is the returned postal cover. Ex.P.16 is the final notice issued by the complainant to the borrower and surety. Ex.P.16(a) to 16(c) are the postal receipts. Ex.P.16(d) is the postal acknowledgment. Ex.P.16(e) and Ex.P.16(f) are the track consignments. Ex.P.17 is the final notice issued by the complainant to the borrower and surety. Ex.P.17(a) and 17(b) are the postal receipts. Ex.P.17(c) and 17(d) are the postal acknowledgments. Ex.P.18 is the cheque issued by the accused in favour of the complainant for Rs.9,64,442/-. Ex.P.18(a) is the signature of the accused. Ex.P.19 the bank memo dated: 31.07.2019 informing of the dishonor of the cheque as "Funds Insufficient". Ex.P.20 is the office copy of the legal notice dated: 14.08.2019. Ex.P.20(a) is the postal receipt. Ex.P.21 is the postal acknowledgment. Ex.P.22 is the complaint. Ex.P.23 and 24 are the transfer debit slips. Ex.P.25 to 27 are the loan account and S.B.account statements.
16. I have perused the exhibits on which the complainant have placed their reliance. On perusal of the exhibits, it is clear that cheque in question was presented for encashment within its validity. The bank endorsement with a shara "Fund Insufficient". The complainant issued a legal notice within one month from the date of receipt of memo. The notice was duly served to the accused on 19.08.2019. The complaint C.C.NO.835/2021 12 was filed on 13.09.2019, which is within limitation. The transaction with the complainant is not seriously disputed. The issuance of the cheque and the signature on the cheque-Ex.P.18 is admitted. Therefore, the documents on record clearly show that the complainant have complied the ingredients of section 138(a) to (c) of the N.I.Act. Therefore, the presumptions under section 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. The presumption is that the cheque was issued for legally enforceable debt/liability. However, actual existence debt/liability can be contested. The accused can rebut the presumptions by raising probable defences and proving it relying on the evidence of the complainant or by leading his direct evidence.
17. The case was seriously contested by the accused and the service of notice was disputed. The notice was duly served to the accused on 19.08.2019 as per Ex.P.21. The counsel for the accused cross- examined PW.1 in respect of non service of notice. But PW.1 denied the same. Further contended that the notice sent to the accused not served'; that the accused has no knowledge of the notice as it was not served on him; that the accused did not give reply notice as the notice was not served on him; that he did C.C.NO.835/2021 13 not produce any documents to show that the accused was not residing at the said address, the notice was not served on him and that the accused did not issue reply notice as he was not residing at the said address. The counsel for the accused argued that no legal presumption can be raised as the notice was sent to the wrong address and the accused was not residing at the said address. On the other hand, the counsel for the complainant cross examined DW.1 in length in respect of address of the accused, service of notice. He admitted that the address. He further admitted that the notice was received by him and not given the reply notice. When the notice at Ex.P.20, wherein the name of the accused is appearing, was confronted.
18. On perusal of Ex.P.20, it is clear that the name of the accused is appearing in the notice. The same notice was sent to the accused. The accused not given reply. There is no evidence on record to show that the accused was residing at some other address other than the address mentioned in the notice at Ex.P.20. On the other hand, it is clear from the cross-examination of DW.1 that the accused was residing at the said address. The above discussion clearly shows that the address mentioned in the notice is the correct address of the accused. As the notice was given to accused and the same notice was sent to him through RPAD, an inference can be drawn that the notice was served on C.C.NO.835/2021 14 the accused. Further the address mentioned in the notice being the correct address of the accused as admitted by him in the cross-examination, the presumption as per Section 27 of General Clauses Act can be drawn. It states that the notice sent through post shall be deemed to be served, if it is properly addressed to a person to whom it is sent. Therefore, even though the notice sent to the accused through RPAD duly served.
19. In a nutshell it can be said that the statutory notice is an opportunity given to the accused to make payment and avoid the consequences of section 138 of N.I.Act. In the case on hand, the summons was duly served on accused and he appeared through his counsel. The accused also admitted the service of summons. He appeared before the court and contested the case by taking all probable defences. Therefore he cannot take the shelter of statutory requirement of service of notice to avoid the consequences of section 138 of N.I.Act. The complaint was filed on 13.09.2019, which is within limitation. The accused admitted the issuance of cheque in favour of the complainant and signature in the cheque. It is his defence that the cheque was issued to the complainant for the purpose of security of his personal loan. Therefore, the documents on record clearly show that the complainant have complied the ingredients of section 138(a) to (c) C.C.NO.835/2021 15 of the N.I.Act. Therefore, the presumptions under 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 and signature are 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.
20. The accused is examined himself as DW.1 by way of affidavit and 02 documents were marked at Ex.D.1 and 2. In his chief examination affidavit he has repeated the defence taken by him. Ex.D.1 is the certified copy of the plaint in Commercial O.S.No.355/2020. Ex.D.2 is the SBI bank account statement.
21. In order to attract the offence punishable under section 138 of N.I.Act, the complainant is firstly required to prove the existence of legally enforceable debt/liability, for which the cheque came to be issued. The learned counsel for the complainant has argued that from the evidence placed on record, the fact that the accused and one Mr.Narayana Swamy.N filed an application for membership with the complainant after approval from the complainant issued share certificates C.C.NO.835/2021 16 to both of them. The accused and Mr.Narayana Swamy.N have approached the complainant seeking immovable property loan of Rs.7,50,000/- which belongs to the accused. The loan application was filed by Mr.Narayana Swamy.N and the accused became a first surety. Thereafter, the complainant approved the loan of Rs.7,50,000/- with 17% of interest per annum and penal interest at 3% per annum in case of default, for repayment in 84 months with monthly installment of Rs.15,327/-. Further argued that on 28.12.2017 the accused an executed memorandum of deposit of title deeds in favour of the complainant depositing original title deed of schedule "B" property. The said deed is registered in the office of Sub-registrar, Peenya, Bengaluru. The accused and borrower have agreed to statements made in paragraph 3 and 4 of DTD that the complainant shall be at liberty to recover the entire sum due by way of cheque No.065945, which has been deposited by him in discharge of availed loan by them.
22. Further argued that the accused and Mr.Narayana Swamy.N have executed postal confirmation of Equitable Mortgage, on demand promissory note, take delivery letter to DPN, DP Note Delivery letter, DP Note Delivery letter of Guarantor, Bond of agreement. Thereafter both have failed to pay the due amount, the complainant sent a demand notices and final notices to the accused, borrower and C.C.NO.835/2021 17 another one surety. Inspite of service of the notices they have failed to pay the loan amount. Thereafter the complainant deposited the cheque to the bank. It is further argued that the accused has not denied Ex.P.18 being his cheque drawn on the account of the accused and signature appearing on the said cheque. When the signature is not disputed, the presumption under section 139 N.I.Act is to be drawn in favour of the complainant. The accused has failed to elicit anything in the cross examination of P.W.1 to disbelieve the case of the complainant. The defence have failed to rebut the presumption under section 139 N.I.Act. He further argued that the accused has failed to produce any believable evidence that he had issued two blank undated signed cheques and some documents for the purpose of security at the time of availing the loan of Rs.5,00,000/- and also why he has not returned back the same is not clear. Further argued that to prove under section 139 of N.I.Act, there is a presumption that the cheque has been issued for discharge of legally enforceable debt/liability. In the present case, the accused have not disputed Ex.P.18 being his cheque drawn on the account of the accused. The said presumption is available to the complainant. He further argued that the accused had failed to prove the very fact that the complainant was collected two blank undated signed cheques and signatures on the memorandum title deeds and several other papers.
C.C.NO.835/2021 18 Moreover, under section 118 of N.I.Act, there is a presumption that the Negotiable Instruments is drawn on the date, for the amount and in favour of the person as shown in it. It is for the accused to rebut the said presumption. But, in the case on hand no such evidence forthcoming.
23. It was also argued by him that as per the defence by the accused that he had given two blank undated cheques and some documents as security measure. As such, very defence of the accused is not believable. He further argued that the accused has not produced any documentary evidence except Ex.D.1 and 2 to prove his defence. Upon careful perusal of the entire evidence of records both oral as well as documentary evidence the complainant have proved their case. However, the accused has miserable failed to prove the said fact. He further argued that it is specific case of the accused that there is no any transaction with the complainant and there is no due to the complainant. The complainant have misused the cheque and documents. Further the materials available on record clearly established that the accused has admitted the issuance of cheque. The initial burden is on the complainant to prove that the cheque was issued in favour of the complainant towards payment of amount, then onus shifts upon the accused to prove his defence and it is for the accused to rebut the legal C.C.NO.835/2021 19 presumption enumerated under section 138 of Negotiable Instruments Act. But the accused has not produced any documents. As per presumption the cheque was issued for discharge of legal liability and it is for the accused to rebut the said presumption by adducing the cogent and convincing evidence. On perusal of the documents, it clearly reveals that the cheque in question was issued in favour of the complainant towards discharge of liability/debt not as a security, under the facts and circumstances the complainant have proved that the accused had issued the cheque for repayment of due amount. On the contrary, the accused utterly failed to prove his probable defence. Under these circumstances the complainant have established their case in compliance of 138 of the N.I.Act. Hence, he prays to convict the accused.
24. The learned counsel for the accused has argued that there was no legally enforceable debt/liability to the complainant from the accused for which the cheque-Ex.P.18 was issued. Further argued that the accused had issued two blank undated cheques and some documents for the purpose of security of loan of Rs.5,00,000/-. In order to attract the offence punishable under section 138 of N.I.Act, the complainant is firstly required to prove the existence of a legally enforceable debt/liability, for which the cheque C.C.NO.835/2021 20 came to be issued. It is further argued that P.W.1 is not having any personal knowledge about the transaction. Hence, without having the personal knowledge about the transaction she is not having any right to prosecute the case against the accused. Further argued that PW.1 is only in order give trouble to the accused and with an intention to make illegal money from the accused filed false case. This is not permissible under the law. Further argued that Ex.P.18-cheque was collected from the accused, as security measure of loan of Rs.5,00,000/-. On looking it Ex.P.18 the signature of the accused is admitted. Whereas, the writing part of the cheque amount in words and in figure are different handwriting and different ink. Therefore, the entire cheque was filled up by the complainant as their whims. The complainant created all the documents and filed this false case. Therefore, from the evidence placed on record, the very loan availed by the accused from the complainant is not clearly made out whereas the accused is succeeded in rebutting the presumption available under section 139 of N.I.Act., regarding existence of legally enforceable debt.
25. The learned counsel for the accused further argued that the accused was in need of Rs.5,00,000/- and he approached the complainant for seeking personal loan for the same. But it was communicated the accused by the complainant's that they would C.C.NO.835/2021 21 provide the accused an immovable property loan and for that the accused will have to mortgage his property and surrender two cheques leaves as security. Further argued that the accused is an uneducated and a fabricator by profession and not well versed with these procedures and with very negligible banking knowledge. The accused had to believed the complainant company, hence, the accused trusted the complainant who took care of all the procedures like filling the necessary forms, taking his signatures as and when and where required, collecting the cheques drafting the agreement etc. Further argued that the complainant sanctioned a loan of Rs.5,00,000/-, for this loan the complainant collected two blank undated signed cheques leaves and took his signatures on memorandum of title deeds and several other papers. The complainant was sanctioned loan of Rs.5,00,000/-, but the accused did not receive the whole amount from the complainant, yet the accused asked to pay interest for the sanctioned loan amount, that the complainant has taken undue advantage of the accused requirement of urgent financial need. Further argued that Mr.Narayanaswamy is a stranger to the accused and hence there is possibility that the accused will be a guarantor for his loan and also that the accused has no knowledge about the transaction between the Mr.Narayanaswamy and the complainant. Further the accused not aware and no knowledge that he has been C.C.NO.835/2021 22 shown as a guarantor/surety to the loan sanctioned between to the Narayanaswamy. Further the accused not aware of how much loan the complainant had sanctioned to the Mr.Narayanasway and what are the terms and conditions arising to that loan sanction. Further the accused not aware what security Mr.Narayanasway has deposited in the complainant company to avail the loan nor the accused aware about what procedures have the complainant taken in recovery of loan amount from Mr.Narayanaswamy. Further argued that the complainant and Mr.Narayanaswamy have colluded together to make illegal gain for themselves and cause illegal loss to the accused filed this false case. Further the accused is innocent of the offence has claimed by the complainant.
26. Further argued that the accused if informed by the complainant about being the surety for Mr.Narayanaswamy, the accused would not have consented and signed as surety. The complainant has be fraud made the accused as the surety. Further argued that the complainant sent a first notice to the accused without any based and calculation of amount. The notice is not in accordance with the section 138 of N.I.Act, then the succeeding notice based on the calculation of the first notice or again wrong and not just as a result void in the eye of law. Further the 2 nd C.C.NO.835/2021 23 notice again does not disclose the information regarding the total defaulted months and how the total has been calculated making the notice improper and void in the eye of law. Further argued that the final notice marked as Ex.P.16 does not disclose any information regarding the how the total interest amount was calculated, what interest rate is charged, total defaulted months, other charges, penal charged etc. In such situation how can one check and scrutinize on whether the complainant has exposed the correct legally enforceable debt/liability which is the most vital information in a cheque bounce case as provided in the statue vide section 138 of N.I.Act. All the notices sent by the complainant does not discloses the correct legally enforceable debt or liability and hence they are incomplete and improper. The learned counsel for the accused has filed detail written arguments. In his written argument he has reiterated the facts and evidence in detail. Further in his written argument reiterated the sections 138, 142 of N.I.Act, section 133, 135 of Indian Contract Act. In his written argument he has relied upon the citation in Sri.Dattatraya V/s. Sharanappa. Hence, he prays to acquit the accused.
27. In the case on hand the complainant and the accused having some transaction has not been seriously disputed by the accused. Further the accused has not seriously disputed he had issued the cheque-
C.C.NO.835/2021 24 Ex.P.18 in favour of the complainant. It is not disputed that the complainant is a limited company and the accused is a surety and he had issued the cheque- Ex.P.18. Whereas, the accused has contended that he is not a surety to the Mr.Narayanaswamy.N and he has issued the cheque to the complainant for repayment of the due amount to the complainant. Further he has contended that at the time of sanctioning the loan of Rs.5,00,000/- the complainant collected two blank undated signed cheques leaves and took his signatures on memorandum of title deeds and several other papers for the purpose of security. When he had given the cheques which were blank. The accused has specifically denied having debt/liability had issued the cheque-Ex.P.18 dated: 30.07.2019 towards the discharge of any debt/liability. He contends that one of the blank cheque as was misused by the complainant and a false complaint was filed.
28. In order to attract the offence of the section 138 of N.I.Act, the main ingredients of the existence of the legally enforceable debt/liability, for which the cheque drawn on the account of the accused was given for discharge of the same, are to be proved. The complainant in order to prove its case, have examined its Manager as PW.1 and 22 documents were marked at Ex.P.1 to 22. In chief examination P.W.1 has repeated the averments made by the complainant in C.C.NO.835/2021 25 the complaint. Further the complainant have examined one more witness as PW.2. He also deposed same line of the complainant. In the present case, the accused has not disputed Ex.P.18 being his cheque drawn on the account of the accused. The said presumption is available to the complainant.
29. As per the section 139 of N.I.Act, there is a presumption regarding the existence of legally enforceable debt/liability. Such presumption is a rebuttable presumption and it is opinion to the accused to raise defence discharging the existence of a legally enforceable debt/liability. In the case on hand also the accused has disputed the existence of legally enforceable debt/liability, for which cheque-Ex.P.18 was issued. In order to prove his defence, the accused has failed to produce any documentary evidence before this court for issuing two undated blank cheques for the purpose of security of his loan except Ex.D.1 and 2. PW.1 during his cross-examination has specifically denied the suggestions made to her that Ex.P.18- cheque was issued in favour of the complainant for the purpose of security at the time of availing the personal loan of Rs.5,00,000/-. Further she has denied the suggestions there is no dues from the accused.
30. Since, the presumption under section 139 of N.I.Act is a rebuttable presumption the accused is firstly required to produce some probable evidence to rebut C.C.NO.835/2021 26 the same. Though in the criminal cases, the standard of the proof required for the accused is not so strict as required for the complainant to prove the case. Further the accused has to produce some probable evidence, which creates doubt about the existence of legally enforceable debt/liability. In the present case, as per the defence taken by the accused is that he had given two undated blank cheques to the complainant for the purpose of security of his loan. Except, the said defence, he has not produced any materials to prove such defence. If he had given two undated blank cheques to the complainant for the purpose of security of his personal loan, what prevented the accused to file the complaint immediately after the alleged illegal act made by the complainant. Further what prevented the accused to file the complaint against the complainant for misusing of alleged cheque. On which date the accused came to knew about the alleged illegal act of the complainant, he did not whisper about on what date he came to know the alleged cheque illegally misused by the complainant. Admittedly the accused is having knowledge of the financial transaction, why he has given blank cheques to the complainant without anticipating the consequence is not explained by him. So also, he has not stated anything as to what steps he took to receive back the blank cheques. Moreover, immediately after the alleged blank cheque misused by the complainant he has not lodge complaint before C.C.NO.835/2021 27 concerned police station. No steps have been taken to receive back the blank cheques, after he came to know about the same.
31. Once issuance of cheque and signature are admitted, the statutory presumptions would arise under sections 118 and 139 of the N.I.Act that the cheque was issued by the drawer for legally payable debt/liability and for valid consideration. The Hon'ble Supreme Court has held in Rangappa V/s Mohan, reported in 2010 AIR SCW 296, the presumption that the cheque was drawn in discharge of legally recoverable debt is a presumption of law that ought to be raised in every case, though, it is a rebuttable presumption. Of course, the presumption under section 139 and 118 of the N.I.Act are rebuttal presumption. Further it is also held that mere plausible explanation by the drawer is not sufficient and proof of that explanation is necessary. The principle of law laid down in the above decision is applicable to the facts of this case. In the instant case, since the complainant is in possession of the cheque-Ex.P.18 the court has to draw the initial presumption that he is the payee of that cheque. Once the initial burden is discharged by the complainant, the onus shifts on the accused to rebut the complainant's case.
32. Further the accused has taken the contention that he had issued two undated blank cheques for the C.C.NO.835/2021 28 purpose of security of his personal loan. The complainant have misused the one of the cheque. Hence, an offence punishable under section 138 of N.I.Act is not attracted. In this regard once issuance of cheque and signature are admitted, the statutory presumptions would arise under sections 138 of N.I.Act that cheque was issued by the drawer for legally payable debt/liability and for valid consideration. In the case of Sripati Singh (Since deceased) through his son Gaurav Singh V/s State of Jarkhand and another, reported in 2021 SCC Online SC 1002, the Hon'ble Supreme court categorically held that; once the cheque is issued as security for the loan and if the loan is not paid back then if the cheque is dishonored which attract 138 of N.I.Act. The principle of law laid-down in the above decision is applicable to the facts of this case. Therefore, the contention of the accused cannot be acceptable that the cheque was given only for security purpose, but without producing any documents, then the accused has to pay the cheque amount when it is presented for encashment which is legally recoverable debt.
33. In the case of K.S.Ranganatha V/s Vittal Shetty, reported in 2021 SCC Online SC 1191, the Hon'ble Supreme Court held that once the cheque is admitted to be that of the accused, the presumption envisaged in section 118 of the Act can legally be C.C.NO.835/2021 29 inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability. It is further held that the position of law makes it crystal clear that when a cheque is drawn out and is relied upon by drawee, it will raise a presumption that it is drawn towards a consideration which is a legally recoverable amount; such presumption of course, is rebuttable by proving to the contrary. The onus is on the accused to raise a probable defence and the standard of proof for rebutting the presumption is on preponderance of probabilities.
`34. In the case of M/s Kalemani Tex V/s P. Balansubramanian, reported in (2021) 5 SCC 283, the Hon'ble Apex Court has observed that even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under section 139 of the Negotiable instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.
35. In the present case also, as the accused never disputed his signature appeared in the cheque and did not deny issuing cheque from the account of the accused. The accused did not dispute cheque C.C.NO.835/2021 30 return memo also. The cheque was returned for the reasons funds insufficient in the account of the accused. Thus, the act clearly lays down presumptions in favour of the complainant with regard to the issuance of the cheque by the accused towards the discharge of the liability in favour of the complainant. Further under scheme of the Act, the onus is upon the accused to rebut the presumption in favour of the complainant by raising a probable defence. Such being the legal position, it would be pertinent to refer to the defences raised by the accused to rebut the presumptions in favour of the complainant in this case.
36. Applying the above said principles to the present case and before considering the point whether the accused succeeded to rebut the presumptions and to establish his defence to the extent of probabilities, it is just and necessary to accumulate undisputed facts in this case.
37. It is not in dispute that bounced cheque belongs to the bank account of the accused. It is also not in dispute that signature appearing on the bounced cheque is the signature of the accused. It is also not in dispute that the cheque presented by the complainant came to be dishonored by the banker of the accused for the reason stated in the dishonor memo. To consider whether the accused succeeded to rebut the presumption and established the defence to the extent C.C.NO.835/2021 31 of probabilities, the accused has not produced any documents in this regard. It was also contended by the accused that he had given two undated blank cheques to the complainant for the purpose of security of his personal loan. The said one of the blank cheque was misused by the complainant. In this regard the accused has failed to produce any believable evidence before this court. Hence, the defence of the accused cannot be accepted that the cheque-Ex.P18 was issued only for the purpose of security of his personal loan.
38. In the defence there is no ill-will between the complainant and the accused. Hence, question of misuse of cheque and filing the false case is not possible. The accused admittedly having knowledge of business. It is implies, he is conversant with financial transaction. If the complainant misused the said cheque and had not returned the same, inspite of collecting cheques leaves from him, as a prudent man, the accused should have inquired with the complainant and demanded to return those cheques. No ordinary prudent man would keep quite in such circumstances, without taking any steps. The conduct of the accused is very unusual, because he did not take any legal action against the complainant, even after filing of the complaint based on Ex.P.18. Further he could have issued a notice to his banker to stop payment or legal notice to the complainant or he could have given C.C.NO.835/2021 32 complaint to the police station immediately. No such steps were taken by the accused. He simply makes a bald allegation of misuse of security cheque against the complainant. It appears, just to escape from his legal liability, he has taken such contentions without any valid basis.
39. Moreover, the complainant have got issued a legal notice to the accused through its counsel by RPAD calling upon him to make repayment of amount to the complainant. Before a person is held to be guilty of an offence punishable under section 138 of N.I.Act, the complainant have to prove the compliance of the requirement under section 138 of N.I.Act. It is not in dispute that Ex.P.18 being his cheque drawn on account of the accused. In view of the above discussions, it is also held to be proved that it was drawn for discharge of legally enforceable debt/liability. From the evidence of P.W.1 and also cheque return memo-Ex.P.19 it is established that the cheque was dishonored for the reasons "Insufficient Funds'' in the account of the accused. A legal notice being issued as per Ex.P.20 within one month from the date of dishonor of the cheque is also not in dispute. But, the accused failed to give reply to the notice, immediately after he received the demand notice. Thereby, he could have asserted his defence at an earliest available opportunity. In the case on hand the notice is sent to C.C.NO.835/2021 33 the accused at his address. When the accused has not seriously disputed, the notice sent to the correct address is sufficient compliance under section 138 of N.I.Act. Therefore, there is sufficient proof of due service of the legal notice.
40. It is not the contention of the accused that thereafter he has repaid the cheque amount within stipulated time of 15 days on receiving the notice. Therefore, in the case on hand on perusal of the evidence placed on record, all the essential ingredients under section 138 N.I.Act, have been complied with. As the accused has not paid the cheque amount within stipulated period, as such the accused have committed an offence punishable under section 138 of Negotiable Instruments Act. The present complaint is filed before this court within one month after the accused failed to repay the cheque amount. Even he did not whisper anything about the defence while his plea was recorded under section 251 of Cr.P.C. In view of judgment of Hon'ble Supreme Court in Indian Bank Association V/s Union of India and others, reported in 2010(5) SCC 590, it is clear that while recording the plea under section 251 of Cr.P.C., it becomes the duty of the accused to state whether he has any defence to make or he pleads guilty. Thus, unlike under section 240 of Cr.P.C., the accused has no option under section 251 of Cr.P.C., just to deny the allegations made against C.C.NO.835/2021 34 him. If he is not willing to plead guilty, he must explain what are the defences he wants to take. As such, it has to be considered, whatever defence raised by the accused during the trial are all after thought, just to get ride of statutory burden cast on him.
41. In addition to this in the case of T.P.Murugan (Dead) through legal representatives V/s Bojan, reported in 2018 (8) SCC 469, the Hon'ble Apex Court held that once the cheque has been signed and issued in favour of the holder of the cheque, there is statutory presumption that the cheque is issued in respect of legally enforceable debt or liability: rebuttal of such presumption must be by adducing credible evidence. Mere raising a doubt without cogent evidence with respect to the circumstances, presumption under section 139 of N.I.Act cannot be discharged. The principle of law laid down in the above decisions are applicable to the facts of this case. Except some bald contentions, the accused has not been able to make out a probable case on his behalf.
42. The learned counsel for the accused argued except signature other writings on Ex.P.18-cheque is not in his handwriting, which was filled up by the complainant and it amounts to material alterations, so, the complaint is liable to be dismissed. When the accused admits his signature, he cannot take up a defence that other contents of cheque was filled up by C.C.NO.835/2021 35 the complainant and it amounts to material alteration. In this respect, ruling reported in 2019 SCC On-line (SC)
138), between Bir Singh V/s Mukesh Kumar, the Hon'ble Apex Court held as under:
"37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer, if cheque is otherwise valid, the penal provision of Section 138 would be attracted.
38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still the on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.
40. Even a blank cheque leaf, voluntarily signed and handed over by the accused which is towards some payment. Would attract presumption Under section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
43. The principles emerging from the above referred decision make it clear that, it is not mandatory and no law prescribes that the contents of cheque C.C.NO.835/2021 36 should be written by the signatory to the cheque. A cheque can be written by anybody and if the account holder of the cheque signs it, the presumption under section 139 of N.I.Act arises. The principle of law laiddown in above decision is aptly applicable to the facts of this case. In view of section 20 of N.I.Act, cheque being an inchoate instrument, if the drawer signs and delivers to the drawee, thereby he gives authority to the drawee thereof to make or complete the instrument.
44. As per the version of the accused he has nowhere denied transaction. Further on perusal of the documents it reveals that the accused is one of the surety to the Mr.Narayanaswamy.N and on this regard he has executed necessary documents in favour of the complainant. Further the accused himself has admitted that he is the holder of alleged cheque. It is sufficient hold that he has issued the cheque and even after he has not repaid the cheque amount the getting of receipt of notice. However, in any manner as the complainant have complied all the terms of ingredients of the provisions of 138 of N.I.Act. The accused is liable for dishonor of cheque. In case of dishonor of the cheque, once the execution of the cheque is admitted by the accused, then it for him to first rebut presumption arising out of section 139 of N.I.Act. Accordingly, P.W.1 has established the case of the complainant that the C.C.NO.835/2021 37 accused had issued the cheque-Ex.P.18 in order to repay the legally recoverable amount. Therefore, the accused has failed to probables the defence taken by him that Ex.P.18 was the blank cheque given to the complainant for the purpose of security of his loan. Therefore, the accused have failed to rebut the presumption under section 139 of N.I.Act. In the said circumstances, the complainant is not at all required to produce any material as to the transaction between the complainant and the accused, since the initial presumption is still available, when there is no rebuttal evidence.
45. PW.1 in her evidence has specifically deposed that the accused in order to repayment of the due/debt had issued the cheque-Ex.P.18. So also it is not in disputed that the complainant and the accused are known to each other, some point of period. But the accused has failed to rebut the presumption under section 139 of N.I.Act. Hence, non furnishing the details of transaction no consequences to disbelieve the case of the complainant. The accused has failed to probables his defence. With these reasons, I answer point No.1 and 2 in the Affirmative.
46. POINT NO.3 AND 4: These two points are inter-related to each other and finding given on any one point will bearing on the another. Hence, in order to avoid repetition of facts and evidence, I have taken C.C.NO.835/2021 38 these two points together for common discussion Before a person is held to have committed an offence punishable under section 138 of N.I.Act, the complainant have to prove all the requirements of section 138 of N.I.Act. Ex.P.18 being his cheque drawn on the account of the accused is not in dispute. The said cheque having been dishonored for the reasons funds insufficient in the account of the accused, when it was presented by the complainant before the bank for encashment is also not seriously disputed by the accused. The accused has not taken up any contention that thereafter he had paid the cheque amount within stipulated time of 15 days, after given of the notice. As such, in the present case on perusal of the documents, the essential requirements of section 138 of N.I.Act, have been complied with. In this case if the accused has issued two undated blank cheques in favour of the complainant for the purpose of security of his personal loan and why he has not produced any documents. After service of notice the accused not give any reply to the notice. Hence, the present complaint came to be filed before the court on 13.09.2019 before this court. While discussing the point No.1 and 2, this court has already observed that the complainant have proved that the cheque-Ex.P.18 was issued for discharge of legally enforceable liability/debt and in view of the mandatory requirements under section 138 of N.I.Act, being complied with. The accused is found to have C.C.NO.835/2021 39 committed an offence punishable under section 138 of N.I.Act. With these reasons, I answer point No.3 and 4 in the Affirmative.
47. POINT NO.5: The accused is held to have committed an offence punishable under section 138 of N.I.Act. The complainant have proved its case. The accused has failed to prove his rebuttal for the reasons mentioned above and in view of the mandatory requirements of section 138 of N.I.Act, being complied with. The accused is found to have committed an offence punishable under section 138 of N.I.Act. Since, the said offence is an economic crime, the accused is not entitled for the beneficial provisions of probation of offenders Act. In view of the above discussions and the findings on point No.1 to 4, I proceed to pass the following;
:ORDER:
Acting under section 255(2) of Cr.P.C. the accused is convicted for an offence under section 138 of N.I.Act.
The bail bond of the accused hereby stands canceled.
The accused is sentence to pay fine of Rs.9,74,000/- (Rupees nine lakhs seventy four thousand only) to the complainant company.
It is further ordered that out of the said C.C.NO.835/2021 40 fine amount an amount of Rs.9,64,000/- (Rupees nine lakhs sixty four thousand only) shall be paid to the complainant company as compensation as per section 357(1)(b) of Cr.P.C., and remaining amount of Rs.10,000/- (Rupees ten thousand only) shall be remitted to the State.
In default of the payment of fine amount, the accused shall undergo simple imprisonment of six months.
(Dictated to the stenographer directly on computer typed by her, corrected by me and then judgment pronounced in the open court on 08 th day of October-2024) Digitally signed by SOUBHAGYA SOUBHAGYA B BHUSHER B BHUSHER Date:
2024.10.10 17:47:49 +0530 (Soubhagya.B.Bhusher) XXVIII Addl. Chief Judicial Magistrate, Bengaluru City.
ANNEXURE List of witness examined on behalf of the complainant:
PW.1 : Smt.Nagaratna.S.Kundagolamath.
PW.2 : Mr.Narayanaswamy.
List of documents marked on behalf of the complainant:
Ex.P.1 : Authorization letter.
Ex.P.2 : Share certificate.
Ex.P.3 : Loan application
Ex.P.4 : Surety details.
Ex.P.5 : Second surety details.
Ex.P.6 : Document of loan sanction.
C.C.NO.835/2021
41
Ex.P.6(a) : Postal receipt.
Ex.P.6(b) : Postal acknowledgment.
Ex.P.7 : Deposit of title deeds.
Ex.P.8 : Postal confirmation of Equitable Mortgage.
Ex.P.9 : Promissory note.
Ex.P.10 : Take deliver letter.
Ex.P.11 : D.P.Note delivery letter.
Ex.P.12 : D.P.Note delivery letter of guarantor.
Ex.P.13 : Agreement bond.
Ex.P.14 : Notice.
Ex.P.14(a) to 14(c) : Postal receipts.
Ex.P.14(d) : Postal acknowledgment.
Ex.P.14(e) : Returned postal cover.
Ex.P.15 : 2nd notice.
Ex.P.15(a) to 15(c) : Postal receipts.
Ex.P.15(d) & 15(e) : Postal acknowledgments.
Ex.P.15(f) : Returned postal cover.
Ex.P.16 : Notice.
Ex.P.16(a) to 16(c) : Postal receipts.
Ex.P.16(d) : Postal acknowledgment.
Ex.P.16(e) & P.16(f) : Track consignments.
Ex.P.17 : Final notice. Ex.P.17(a) & 17(b) : Postal receipts. Ex.P.17(c) & 17(d) : Postal postal acknowledgments. Ex.P.18 : Cheque. Ex.P.18(a) : Signature of the accused. Ex.P.19 : Bank endorsement. Ex.P.20 : Office copy of the legal notice. Ex.P.20(a) : Postal receipt. Ex.P.21 : Postal acknowledgment. Ex.P.22 : Complaint. Ex.P.23 & 24 : Debit slips. Ex.P.25 to 27 : Loan account & SB statements of PW.2.
List of witnesses examined on behalf of the accused:
DW.1 : Mr.Y.K.Lokesh.
List of documents marked on behalf of the accused: Ex.D.1 : Certified copy of the plaint in Commercial O.S.No.355/2020.
Ex.D.2 : SBI Bank account statement.
C.C.NO.835/2021
42
Digitally
signed by
SOUBHAGYA
SOUBHAGYA B BHUSHER
B BHUSHER Date:
2024.10.10
17:47:57
+0530
XXVIII Addl. Chief Judicial
Magistrate, Bengaluru City.
C.C.NO.835/2021
43
08.10.2024 (Judgment pronounced in the Open
Court Vide Separate Sheet)
:ORDER:
Acting under section 255(2) of
Cr.P.C. the accused is convicted for an offence under section 138 of N.I.Act.
The bail bond of the accused hereby stands canceled.
The accused is sentence to pay fine of Rs.9,74,000/- (Rupees nine lakhs seventy four thousand only) to the complainant company.
It is further ordered that out of the said fine amount an amount of Rs.9,64,000/- (Rupees nine lakhs sixty four thousand only) shall be paid to the complainant company as compensation as per section 357(1)(b) of Cr.P.C., and remaining amount of Rs.10,000/- (Rupees ten thousand only) shall be remitted to the State.
In default of the payment of fine amount, the accused shall undergo simple imprisonment of six months.
XXVIII Addl. Chief Judicial Magistrate, Bengaluru City.