Bangalore District Court
Ms. A. Jareena vs M/S. Meadows Knowledge Services on 27 January, 2023
IN THE COURT OF THE XVII ADDL. JUDGE, COURT OF
SMALL CAUSES &
ADDL. CHIEF METROPOLITAN MAGISTRATE,
MAYO HALL UNIT, BENGALURU (SCCH-21).
Dated: This the 27th Day of January 2023
PRESENT: Sri. RAJESH M. KAMATE,
B.com., L.L.B(Spl.),
XVII ADDL. JUDGE, Court of Small
Causes & ACMM, Bengaluru.
C.C. No. 51567/2018
Complainant : MS. A. Jareena,
Aged 44 years,
D/o. Mr.S.Anthony,
R/at No.1700/2, Robin Nivas,
Ground Floor, Ramdev Gardens,
Hennur Main Road,
Kacharkanahalli,
Bengaluru - 560 084.
(By Sri. T.C.G., Advocate)
V/s.
Accused : 1. M/s. Meadows Knowledge Services
Pvt., Ltd.,(Amego),
A Private Limited Company,
Incorporated under the Indian
Companies Act.,
Having its place of Business at
No.16 & 16/1, Reliable Phonix Towers,
Museum Road, Bengaluru - 560 001.
Represented by its Managing Director
Mr.Yathindra Banappa.
2. Mrs. Smitha Yathindra,
Aged major, Director,
(By Sri. N.S., Advocate)
SCCH-21 2 C.C. No.:51567/18
JUDGEMENT
The present Complaint is lodged against the Accused for the offence punishable under Section 138 of Negotiable Instrument Act 1881.
2. Brief facts in nutshell as under:
It is the case of complainant that she was the employee in the accused Company from 03.04.2017 to 04.08.2017 and in discharge of due salary of Rs.49,620/- for the month of July 2017, the accused issued a cheque bearing No.150855 dated 14.08.2017 for Rs.49,620/- drawn on Sri. Bhanashankari Mahila Co-operative Bank Ltd., Cubbonpet branch, Bengaluru, assuring that the cheque would be honoured after presentation for payment. Thereafter the complainant presented the said cheque for encashment in HDFC Bank Ltd., Kammanahalli branch on 16.08.2017. But the said cheque came to be dishonoured on the ground of 'Funds Insufficient' on 17.08.017. Thereafter on 11.09.2017 complainant got issued legal notice by RPAD demanding for repayment of the cheque amount within 15 days from the date of receipt of the notice. The notice sent through RPAD was delivered to the accused on 13.09.2017 in spite of which accused have not paid the amount. Being constrained by the same this complaint is filed on 23.10.2017.
3. On filing of the complaint cognizance was taken for the offence punishable under section 138 of N.I. Act and sworn SCCH-21 3 C.C. No.:51567/18 statement was recorded. As there was sufficient ground to proceed further, a criminal case has been registered against the accused and they were summoned. The accused has appeared through M. Suresha, Advocate and got enlarged on bail. The substance of accusation is orally stated to the accused and their plea was recorded. Accused has pleaded not guilty and submitted that they have defence to make.
4. In support of the complainant's case, the sworn statement of the complainant filed by her during the pre-summoning stage is considered as evidence of the complainant and Ex.P1 to Ex.P9 document is marked. The statements of the accused are recorded under Section 313 of Cr.P.C and her answers were recorded.
5. In spite of sufficient opportunity the accused has not cross-examined PW.1 ad also not lead any defence evidence.
6. Heard the argument, whereas Accused has not advanced the argument.
7. The points that arise for my consideration are:
1.1. Whether the complainant proves that he has complied the ingredients of Section 138 of N.I. Act in order to constitute an offence?
2. Whether the complainant further proves that accused has SCCH-21 4 C.C. No.:51567/18 committed an offence punishable under Section 138 of N.I. Act 1881?
3. What order?
8. My answer to the above points is as follows:
Point No.1 : In the Affirmative, Point No.2 : In the Affirmative, Point No.3 : As per final order for the following:
REASONS
9. POINT No.1: Before I start my discussions I would like to throw light on some material facts. Initially after filing the complaint and closure of trial the accused was committed for the offence under Sec.138 of NI Act. Being aggrieved by the judgment accused has preferred an appeal before Hon'ble XIII Addl. City Civil Sessions Judge, Mayo Hall unit, Bangalore in Crl. Appeal No. 25293/2019 dated 30.11.2021 and the same came to be allowed. Therefore obeying the order of Hon'ble XIII Addl. City Civil Sessions Judge, Mayo Hall unit, Bangalore the notice was issued to both parties, but again the accused has remained absent and also not cross-examined PW.1 nor lead any defence evidence and the same is taken as Nil.
10. In order to constitute an offence under Section 138 of N.I. Act, the cheque shall be presented to the bank within a period of 3 months from its date. On its dishonor, the drawer or holder of the cheque as the case may be shall cause demand notice within 30 days from the date of dishonor, demanding to SCCH-21 5 C.C. No.:51567/18 repay within 15 days from the date of service of the notice. If the drawer of the cheque fails to repay the amount mentioned in the cheque within 15 days from the date of service of notice, cause of action arises for filing complaint.
11. The sworn statement of the complainant filed by her during the pre-summoning stage is considered as her evidence. In her affidavit, she has testified regarding the due salary amount from the accused, issuance of cheque, issuance of demand notice and also failure of the accused to pay the cheque amount. The complainant has produced cheque bearing No.150855 dated 14.08.2017 alleged to be issued by the accused as per Ex.P1. Ex.P1 stands in the name of complainant for Rs.49,620/-. Ex.P2 is the endorsement issued by the bank stating dishonor of Ex.P2 cheque. Ex.P2 shows that Ex.P1 was dishonoured for 'Funds Insufficient'. Ex.P3 is the office copy of legal notice dated 11.09.2017. Ex.P4 is the postal receipt for having sent legal notice to the accused. Ex.P6 is the postal track consignment evidencing the service of notice to the accused.
12. In the present case, cheque is dated 14.08.2017. The complainant has presented the said cheque on 17.08.2017 i.e. within three months from the date of cheques as it could be seen from Ex.P1. Ex.P2 shows that cheque in question was dishonoured on 17.08.2017. The notice was issued within the statutory period of time on 11.09.2017. The notice issued to the accused served on them on 13.09.2017 as per Ex.P6 postal SCCH-21 6 C.C. No.:51567/18 track consignment. The cause of action for filing the complaint arose on 29.09.2017. The complainant has filed this complaint on 23.10.2017 i.e. within 30 days from the date of arisal of cause of action. In this way, the complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act.
Therefore, I am of the opinion that the complainant has complied all the mandatory requirements of Section 138 and 142 of N.I. Act. Accordingly, I answer Point No.1 in the Affirmative.
13. Point No.2:
In this point the burden is on the complainant to prove that the accused have committed an offence under Section 138 of N.I. Act by issuing cheque.
14. she was the employee in the accused Company from 03.04.2017 to 04.08.2017 and in discharge of due salary of Rs.49,620/- for the month of July 2017, the accused issued a cheque bearing No.150855 dated 14.08.2017 for Rs.49,620/- drawn on Sri. Bhanashankari Mahila Co-operative Bank Ltd., Cubbonpet branch, Bengaluru, assuring that the cheque would be honoured after presentation for payment. Thereafter the complainant presented the said cheque for encashment in HDFC Bank Ltd., Kammanahalli branch on 16.08.2017. But the said cheque came to be dishonoured on the ground of 'Funds Insufficient' on 17.08.017 and also she had issued demand notice on 11.09.2017 and the same was served to the accused SCCH-21 7 C.C. No.:51567/18 on 13.09.2017 as per Ex.P.6 & 7 and inspite of which the accused has not paid any amount and hence they have lodged the complaint. In order to prove the same, the complainant herself examined as PW.1 and got marked the documents at Ex.P1 to Ex.P7. Whereas in spite of sufficient opportunity the accused and the counsel has remained absent and also there was no representation by the counsel for accused. Hence, cross of PW.1 is taken as Nil. Per contra, there is also no rebuttal evidence by the accused in his defence.
15. Having regard to the above oral and documentary evidence it can be seen that, as per the case of the complainant the accused has issued the cheque as per Ex.P1 for an amount of Rs.49,620/- and also the same has been dishonored and returned with an endorsement of funds insufficient at Ex.P2 for which they had issued notice to the accused which has been served to the accused and further has produced the document at Ex.P3 which is the account statement to show the liability of the accused for payment of chit amount which has been received by him from the complainant. Further, as per the legal requirement they had got issued legal notice through their counsel for which neither the accused has replied nor made any payment to disbelieve the case of the complainant that the accused has issued the said cheque at Ex.P1 for an amount of Rs.49,620/-.
16. Apart from it, goes to show that there is no cross examination to PW-1 and also even inspite of sufficient opportunity the accused has not led any defence evidence by SCCH-21 8 C.C. No.:51567/18 way of rebuttal evidence to disprove the case of the complainant and as per section 119 and 139 of N.I. Act it is crystal clear that the presumption always goes in favour of the complainant and unless the rebuttal evidence is led by the accused to disprove the case of the complainant, the said evidence of complainant led by way of oral and documentary evidence holds good as per the presumption in favour of the complainant.
17. Further, as per Section 118 of N.I. Act lays down that until the contrary is proved, it shall be presumed that every Negotiable Instrument was made or drawn for consideration. Section 139 of N.I. Act, contemplates that unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole of any debt or liability. In the decision reported in 2001 Crl.L.J. page 4647 (SC) (Hiten P.Dalal -Vs- Bratindranath Banerjee) and in various other decisions of the Hon'ble Supreme Court and our Hon'ble High Court has repeatedly observed that in the proceeding under Section 138 of N.I. Act the complainant is not required to establish either the legality or the enforceability of the debt or liability since he can avail the benefit of presumption under Section 118 and 139 of N.I. Act in his favour. It is also observed that by virtue of these presumptions, the accused has to establish that the cheque in question was not issued towards any legally enforceable debt or liability. Later in the year 2006, the Hon'ble Supreme Court in the decision of M.S. Narayan Menon @ Mani -vs- State of Kerala and another (2006 SAR Crl. 616) has held that the presumption SCCH-21 9 C.C. No.:51567/18 available under Section 118 and 139 of N.I. Act can be rebutted by raising a probable defence and the onus cast upon the accused is not as heavy as that of the prosecution. It was compared with that of a defendant in civil proceedings. Subsequently in the year 2008, in Krishna Janardhana Bhat - Vs- Dattatreya G. Hegde (2008 Vo.II SCC Crl.166), the Hon'ble Supreme Court has held that the existence of legally recoverable debt is not a presumption under Section 138 of N.I. Act and the accused has a constitutional right to maintain silence and therefore, the doctrine of reverse burden introduced by Section 139 of N.I. Act should be delicately balanced.
In the decision, Rangappa - Vs - Mohan (AIR 2010 SC 1898), the Hon'ble Supreme has considered this issue and clarified that the existence of legally recoverable debt or liability is a matter of presumption under section 139 of N.I. Act. In para 14 of the judgment, the Hon'ble Supreme Court has observed as here below:
"In light of these extracts, we are in agreement with the respondentclaimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that SCCH-21 10 C.C. No.:51567/18 has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. 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 prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. "
In view of the above decision, now it is clear that the presumption mandated by Section 139 of N.I. Act does indeed include the existence of legally enforceable debt or liability. It is a rebuttable presumption. It is open to the accused to raise the defence wherein the existence of legally enforceable debt or liability can be contested. For rebutting presumption, the accused do not adduce evidence with unduly high standard of SCCH-21 11 C.C. No.:51567/18 proof but, the standard of proof for doing so with that of preponderance of probabilities. If the accused is able to raise a probable defence, which creates doubt about the existence of legally enforceable debt or liability, the onus shifts back to the complainant. It is also clear for rebutting the presumption accused can rely on the materials submitted by the complainant or his cross-examination and he need not necessarily adduce his evidence in all the cases.
In so far as the payment of the amount by the accused in the cheque having been signed by him, the presumption for passing of the consideration would arise as provided u/s. 118(A) of N.I. Act as to presumption of Negotiable instrument until the contrary is proved and also that consideration of every negotiable instrument was made or drawn for consideration and that every such instrument, when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred to the effect that such presumption would remain until the contrary is proved. Hence, once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was issued for the discharge of the debt or other liability and the onus is on the accused to raise the probable defence and as such the standard of proof for rebutting the presumption is that of preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials brought on the record by the parties but also by reference to the circumstance upon which they rely.
SCCH-21 12 C.C. No.:51567/1818. Further, u/S.139 of N.I. Act, unless the contrary is proved, the holder of a cheque who has received the cheque of the nature referred to in section 138 of the Act for the discharge, in whole or in part, or of any debt or other liability. However, the said presumption of law is not absolute and is rebuttable. Hence, for an offence which is alleged to have been committed u/S.138 of N.I. Act the initial burden of proof is on the accused to prove the non-existence of consideration by bringing on record such facts and circumstances which would lead the court to believe the non-existence of legally enforceable debt or liability either by direct evidence or by preponderance of probabilities that the existence of legally enforceable debt or liability was improbable, doubtful or illegal.
19. Hence by considering all these aspect and materials place before this court, it goes to show that the accused has totally failed to prove or probabalise by way of defence and to rebut the statutory presumption in favour of the complainant and also it clearly appears there is no defence evidence. As already stated, unless the accused rebuts the statutory presumption with convincing and cogent evidence the burden cannot be shifted on the complainant. Hence, the complainant has placed sufficient materials to establish his contention as put by him and the evidence place before the court is sufficient to accept the case of complainant that the accused has issued cheque at Ex.P1 towards discharge of legally recoverable debt SCCH-21 13 C.C. No.:51567/18 and has proved the requirements of Section 138 of N.I. Act, so as to constitute the offence against the accused.
20. Therefore, in view of my discussion it clearly goes to show that the complainant has proved that the accused has issued cheque as per Ex.P1 dated 14.08.2017 for an amount of Rs.49,620/- towards the repayment of chit fund amount borrowed from complainant company and hence, I am of the opinion that in this point the complainant has proved the guilt of the accused for the offence punishable under Section 138 of N.I. Act. Accordingly, Point No.2 is answered in the Affirmative.
21. POINT No.3: Section 138 of N.I. Act empowers the Court to sentence the accused upto two years and also to impose fine which may extend to twice the amount of cheque or with both. This cheque in question was issued on 14.08.2017 for Rs.49,620/-(Rupees Forty nine thousand six hundred and twenty only). The complainant was deprived of money that was rightfully due to it for a period of more than one and half years. However, having regard to the facts of the case and the amount involved, there are no warranting circumstances to award the sentence of imprisonment as substantive sentence. Directing the accused to pay fine and also awarding compensation to the complainant would meet the ends of justice. But adequate default sentence shall have to be imposed to ensure the recovery of fine imposed to the accused. Therefore, the complainant is required to be suitably compensated as per Section 80 and 117 SCCH-21 14 C.C. No.:51567/18 of the Negotiable Instrument Act and also appropriate in default sentence. Accordingly, I pass the following:
ORDER The accused is found guilty for the offence punishable under Sec.138 of N.I. Act and he is sentenced to pay a fine of Rs.75,000/- (Rupees Seventy five thousand only). In default to pay fine, the accused shall undergo simple imprisonment for a period of six months.
Further, acting under Section 357(1)(b) of Cr.P.C., out of the fine amount, a sum of Rs.70,000/-(Rupees Five thousand only) on recovery shall be paid as compensation to the complainant.
The office is directed to supply a free copy of judgment to the accused.
(Dictated to the Stenographer directly on computer, computerised by her, same is corrected, signed and then pronounced by me in the open court on this the 27th day of January 2023) (RAJESH M. KAMATE) XVII ADDL. JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.
ANNEXURE List of witnesses examined on behalf of the complainant:
P.W 1: A.Jareena SCCH-21 15 C.C. No.:51567/18 List of documents exhibited on behalf of the complainant:
Ex.P.1 : Cheque Ex.P.2 : Bank endorsement Ex.P.3 : Copy of legal notice Ex.P.4 : Postal receipts Ex.P.5 : Courier receipts Ex.P.6 & 7 : Postal track consignments Ex.P.8 & 9 : Track shipment status
List of witnesses examined on behalf of the accused: -Nil- List of documents exhibited on behalf of the accused: -Nil-
(RAJESH M. KAMATE) XVII ADDL. JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.
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