Bangalore District Court
Madana Mohan G vs Sheethal Engineering Pvt Ltd ... on 19 April, 2024
KABC030459542019
Presented on : 28-06-2019
Registered on : 28-06-2019
Decided on : 19-04-2024
Duration : 4 years, 9 months, 21 days
IN THE COURT OF THE XVIII ADDL.CHIEF
METROPOLITAN MAGISTRATE, BENGALURU CITY
PRESENT : MANJUNATHA.M.S. B.A., LL.B.
XVIII ADDL.C.M.M., Bengaluru.
Dated this the 19 th day of April-2024
C.C.No.14478 of 2019
Complainant : Mr.G.Madana Mohan,
S/o.late G.Raghavaiah,
Aged about 63 years,
R/at No.L-505, Purva Venezia,
Yelahanka New Town,
Bengaluru-64.
(Rep. by Sri.A.C, Adv.)
V/s
Accused : 1. Shethal Engineers Pvt. Ltd.
No.112/29, 1st 'G' Main Road,
J.S.Nagar, Saraswathipura,
Nandini Layout,
Bengaluru-96.
Rep. by its Managing Director
Sri.A.Keerthi Jain.
2. Sri.A.Keerthi Jain,
Managing Director,
Sheethal Engineers Pvt. Ltd.
No.112/29, 1st 'G' Main Road,
2 Judgment in C.C.No.14478/2019
J.S.Nagar, Saraswathipura,
Nandini Layout,
Bengaluru-96.
3. Smt.Lavanya.K.Jain,
Director,
Sheethal Engineers Pvt. Ltd.
No.112/29, 1st 'G' Main Road,
J.S.Nagar, Saraswathipura,
Nandini Layout,
Bengaluru-96.
(Rep.by Sri.V.D.R, Adv.)
Offence complained : U/Sec.138 of Negotiable
Instrument Act.
Name of the complaint : Sri.G.Madana Mohan
Date of commencement of 09.09.2019
evidence
Date of closing evidence 28.02.2024
Opinion of the Judge Accused Nos.1 to 3 are found
guilty
(MANJUNATHA.M.S)
XVIII A.C.M.M., Bengaluru.
JUDGMENT
The complainant has filed this complaint under Section 200 of Code of Criminal Procedure Read with Section 138 of the Negotiable Instruments Act ( in short referred as "N.I. Act") alleging 3 Judgment in C.C.No.14478/2019 that the accused Nos.1 to 3 have committed the offence punishable under section 138 of NI Act.
2. The sum and substance of the complaint is as follows:
The accused No.1 is a private company, the accused Nos.2 and
3 are the Managing Director and Director of accused No.1 concern and they are running the business in the accused No.1 concern. During the year 2012, the accused No.1 concern was in need of huge financial assistance for implementation of Kadapa Airport Project, Moodigere Kalasa Road Package and Datta Peeta Main Road Package, hence, the accused Nos.2 and 3 have sought the complainant for financial assistance by way of investments in the accused No.1 concern and the accused have offered the complainant that he would be inducted as a Director. Accordingly, by the end of March 2012, he advanced huge money to the accused No.1 concern and in the meantime, the share certificates of accused No.1 concern with the face value of Rs.80 lakhs were deposited and transferred to him. Thereafter, during the month of December 2013, the accused Nos.2 and 3 have approached and requested him for urgent financial assistance of Rs.25 lakhs. Considering the request of accused Nos.2 and 3, he lent a sum of Rs.22 lakhs by way of cheque and another 4 Judgment in C.C.No.14478/2019 sum of Rs.3 lakhs by way of cash and the same was acknowledged by the accused by executing receipt dated 21.12.2013 and 22.12.2013. While borrowing the said loan amount, the accused have promised to repay the said amount within 15 days. On the very same dates, the accused have issued two cheques bearing No.965057 and 965058 for sum of Rs.22 lakhs and Rs.3 lakhs respectively, in all Rs.25 lakhs, both the cheques are drawn on State Bank of India, Sheshadripuram, Kumara Park West, Bengaluru in his favour and requesting him to present the said cheques for encashment after confirming. Again and again the accused have extended their request until the end of 2018 and finally they requested him to present the said cheques for encashment on 24.12.2018. Believing the words of accused, he presented the said cheques for encashment through his banker viz., IDBI Bank on 07.02.2019, the same came to be dishonoured with endorsements dated 08.02.2019 stating "Funds Insufficient" . Hence, he got issued legal notice to the accused through his counsel on 07.03.2019 by way of Speed Post and Ordinary Post calling upon them to repay the cheques amount within 15 days from the date of receipt of legal notice and the same was duly served upon accused on 08.03.2019. After service of notice, 5 Judgment in C.C.No.14478/2019 the accused have issued untenable reply and not repaid the cheques amount to him. Thus, the accused Nos.1 to 3 have committed an offence punishable under Section 138 of Negotiable Instruments Act. Hence, filed the present complaint.
3. After filing of complaint, this court has taken cognizance of the offence punishable under section 138 of Negotiable Instrument Act, sworn statement of the complainant was recorded. Being satisfied that there are prima-facie materials to proceed against accused Nos.1 to 3, summons were issued. After appearance, the accused were enlarged on bail and their plea was recorded under Section 251 of Cr.P.C. The accused have not pleaded guilty and submitted that they have defense to make.
4. As per the direction of Hon'ble supreme court in "Indian Bank Association V/s Union of India and others reported in (2014) 5 SCC 590, the sworn statement of the complainant has treated as complainant evidence. To prove his case, the complainant examined himself as PW1 and got marked documents at Exs.P1 to P18, P23 & P24. The accused have filed required application under Section 145(2) of Negotiable Instruments Act for recall of PW.1 for the purpose of cross-examination. The said application was allowed and 6 Judgment in C.C.No.14478/2019 the defence counsel has cross-examined PW1. After completion of complainant side evidence, the statement of accused Nos.1 to 3 as contemplated under Section 313 of Cr.P.C was recorded. The accused Nos.1 to 3 have denied all the incriminating materials appear against them in the complainant's evidence. Therefore, the case was posted for defence evidence. To prove their defence, the accused No.2 has stepped into witness box and examined himself as DW.1, however he has not produced any documents. DW.1 was subjected for cross-examination by the advocate for the complainant. In the cross-examination of DW.1, complainant counsel got confronted five documents and same were marked as Exs.P18 to P22.
5. Both side counsels have addressed their arguments.
In support of his arguments, the advocate for complainant has relied upon the decisions as under:
a) 2023 SCC OnLine SC 1128 in the matter of K.Hymavathi V/s. State of Andhra Pradesh and another.
b) (2002) 2 Supreme Court Cases 642 in the case of A.V.Murthy V/s. B.S.Nagabasavanna.
c) Crl.R.P.No.256 of 2022 in the matter of Sri.Sudhakar Reddy.C.B V/s. Smt.Pushpa.
7 Judgment in C.C.No.14478/2019
d) (2013 (2) Mh.I.J in the matter of Dinesh B.Chokshi V/s. Rahul Vasudeo Bhatta and another
e) Crl.A.No.1209/2022 (A) in the matter of Mr.Praveen.D.J V/s. Mr.Prabhakar.R.N.
f) Crl.A.No.2506/2009 in the matter of Shri.Sangameshwar Chits Pvt. Ltd., V/s.
Sri.G.R.Marigoudar.
g) 2002 (64) DRJ 267 in the matter of DCM Financial Services Ltd V/s. Sunil Kala & Co. & Another.
In support of his arguments, the advocate for accused has also relied upon the decisions as under:
a) LAWS(APH)-1997-1-45 in the matter of Girdhari Lal Rathi V/s. P.T.V.Ramanujachari.
b) LAWS(GJH)-2023-6-210 in the matter of Dilipkumar Manharlal Vyas V/s. Giridharlal Hirajibhai.
6. I have gone through the above decisions and perused the materials available on record.
7. On going through the rival contentions, based on the substantial evidence available on record, the following points would arise for determination:
1. Whether the complainant proves beyond all reasonable doubt that towards discharge of legally recoverable debt or liability, the accused Nos.1 to 2 have issued Exs.P1 and P2-cheques bearing No.965057 and 965058 both the cheques are dated 24.12.2018 for sum of
8 Judgment in C.C.No.14478/2019 Rs.22,00,000/- and Rs.3 lakhs respectively, in all Rs.25 lakhs, in his favour and the same were came to be dishonoured for the reasons''Funds Insufficient' and even after service of notice, the accused have failed to repay the cheques amount and thereby accused Nos.1 to 3 have committed an offence punishable under Section 138 of N.I.Act?
2. What Order?
8. On appreciation of materials available on record, my findings on the above points are as under:
Point No.1 : In the Affirmative Point No.2 : As per final order, for the following:
REASONS
9. POINT No.1: The Complainant has filed this complaint alleging that the accused Nos.1 to 3 have committed offence punishable under section 138 of N.I. Act. The complainant has pleads and asserts that he lent a sum of Rs.25,00,000/- to the accused and towards discharge of said debt, accused No.2 and 3 have issued cheques in question bearing No.965057 and 965058, both the cheques are dated 24.12.2018 for Rs.22,00,000/- and Rs.3,00,000/- respectively, in all Rs.25 lakhs, when he presented the 9 Judgment in C.C.No.14478/2019 said cheques for encashment through his banker, the same came to be returned unpaid with endorsements dated 08.02.2019 stating 'Funds Insufficient'. Thereafter, on 07.03.2019, he got issued demand notice to the accused by demanding the repayment of cheques amount. Despite service of notice, the accused have not repaid the cheque amount within 15 days, which gave raise cause of action to file this complaint.
10. To substantiate his case, the complainant has stepped into witness box and got examined himself as PW1 and got marked Exs.P1 to P24 documents. He has reiterated the contents of the complaint in his affidavit evidence about lending of hand loan Rs.25,00,000/- to the accused, issuance of cheques by the accused towards the repayment of said hand loan and their dishonour for 'Funds Insufficient', issuance of legal notice to the accused calling upon them to repay the amount covered under cheques and their failure to comply the same.
11. In this scenario, let me scrutinize the documents relied by complainant in order to examine the compliance of statutory requirements envisaged under Section 138 of Negotiable Instruments Act. Among them, cheques bearing No.965057 and 10 Judgment in C.C.No.14478/2019 965058 issued by the accused for sum of Rs.22,00,000/- and Rs.3,00,000/-, both the cheques are dated 24.12.2018, drawn on State Bank of India, No.179, S.C.Road, Seshadripuram, Kumara Park West, Bengaluru are marked as Exs.P1 and P2. Exs.P3 and P4 are the Bank Endorsements issued by IDBI Bank, the contents of Exs.P3 and P4 disclose that the cheques bearing No.965057 and 965058 drawn for Rs.22,00,000/- and Rs.3,00,000/- were dishonoured for the reasons 'Funds Insufficient'. Ex.P5 is the Legal Notice dated 07.03.2019, the recitals of Ex.P5 disclose that the complainant has issued this notice to the accused through his counsel thereby called upon the accused to repay the cheques amount of Rs.25,00,000/- within 15 days from the date of receipt of notice. Ex.P6 is the Postal receipts. Exs.P7 to P9 are the Track Consignments. Ex.P10 is the complaint dated 03.04.2019 lodged by the complainant's counsel before the Post Master regarding report of delivery of notice sent by Speed Post. Ex.P11 is the reply notice dated 08.04.2019 issued by accused through his counsel to the complainant's counsel by denying the claim of the complainant. Exs.P13 to P15 are the share certificates. Exs.P16 and P17 are the acknowledgments / Receipts dated 21.12.2013 and 22.12.2013 11 Judgment in C.C.No.14478/2019 issued by accused. Ex.P18 is the statement. Ex.P19 is the computer printed copy of gmail transaction. Ex.P20 is the certified copy of acknowledgment of Stamp Duty payment letter. Exs.P21 and P22 are the share transfer forms pertaining to accused No.1 concern. Ex.P23 is the computer generated copy of gmail and Ex.P24 is the certificate under Section 65(B) of Indian Evidence Act. This complaint came to be filed on 16.04.2019. A careful scrutiny of the documents relied by the complainant goes to show that, statutory requirements of Section 138 of Negotiable Instruments Act have been complied with and this complaint is filed within time. The complainant by examining himself as PW1 and by producing the documentary evidence has discharged his initial burden.
12. The accused Nos.2 and 3 have denied the issuance of cheques in question for discharge of legally enforceable debt or liability. They have put forth their defence that the accused No.1 Sheethal Engineers Pvt. Ltd. company was involved in the business of construction of various infrastructure projects on contract basis. In the year 2011-12, the company was carrying the construction of Kadapa Airport, Mudigere Ghat Roads and Datta Peeta Road. The company was in need of project partners for the said projects, at that 12 Judgment in C.C.No.14478/2019 time, the complainant expressed his willingness to invest money in the project, so that company shall share him with certain portion of profit based on the total investment. It was agreed that the complainant would invest 40% of the project cost for timely completion of the work. At the time of negotiation for investment in the projects, the complainant insisted for security/guarantee for such investment, accordingly, the accused Nos.2 and 3 have issued/pledged share certificates, documents pertaining to the immovable property owned by accused No.3, security cheques and appointed the complainant as director of the accused No.1 concern. But the complainant did not invest the said assured amount and made some amount here and then in piece meal. After making payment of some amount in the project, the complainant expressed his inability to invest further and started insisting for repayment of the amount invested before completion of the project. This caused monitory loss and hardship to them. Due to this all projects ran in to losses and forced to enter into legal battle with the clients. However accused No.1 concern repaid the invested amount to the complainant in spite of difficulties. The accused have further contended that later in the month of December 2013, the accused No.1 concern in need 13 Judgment in C.C.No.14478/2019 of funds for completion of projects and requested the complainant to give a hand loan of Rs.25 lakhs. After considering their request, the complainant gave sum of Rs.22 lakhs by way of cheque and sum of Rs.3 lakhs by way of cash. At the time of lending said hand loan, the complainant has demanded them for undated security cheques. Accordingly, they issued undated security cheques for Rs.22 lakhs and another for Rs.3 lakhs. Thereafter, on 23.01.2014, they have repaid the said entire loan amount with previous investment balance of Rs.40 lakhs to the complainant. After repayment of the loan amount, they demanded to return the security cheques, but the complainant stated that he would return all the documents including cheques after repayment of the balance investment amount. Thereafter, to extract money from their company, the complainant has misused the said security cheques by filling them for his convenience and presented the same for encashment. As on the date of cheques there was no outstanding loan as claimed by the complainant. As such, the cheques in question were not issued for discharge of legally enforceable debt. Hence, section 138 of NI Act is not attracted to the Exs.P1 and P2-cheques. As on the date of the cheques, the alleged outstanding amount claimed by the complainant 14 Judgment in C.C.No.14478/2019 was time barred debt and there is no legally recoverable debt as claimed by the complainant. On these grounds the accused Nos.2 and 3 have prayed to acquit them from the case.
13. In the back drop of aforesaid rival contentions, this court has given anxious consideration to the materials on record and submission made by both side. At the outset, it is pertinent to state that the accused have not disputed the cheques in question and signatures appear thereon. The main contention of accused is that they have issued signed undated cheques for Rs.22 lakhs and Rs.3 lakhs as security for the loan and despite of repayment of the said loan amount, the complainant has misused the said security cheques for his convenience to extract money. By contending so, the accused have admitted that the cheques in question and signatures appear thereon as belong to them. When the drawers have admitted the issuance of cheques as well as the signatures appear thereon as belong to them, then the presumption envisaged under Section 118 and read with Section 139 of Negotiable Instruments Act, would operate in favour of complainant. In this regards it is worthy to cite the decision reported in (2021) 5 SCC 283 in the matter of M/S Kalamani Tex and another V/s P. Balasubramanian, wherein, 15 Judgment in C.C.No.14478/2019 the Hon'ble Apex was pleased to held that the Statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these 'reverse onus' clauses become operative, such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon them. Therefore, once the drawers have admitted the cheques as well as signatures present therein or it is established that signatures in cheques belongs to accused, then the presumption envisaged under Sections 118 and 139 of Negotiable Instruments Act, would operate in favour of the complainant. The said provision lays down a special rule of evidence applicable to negotiable instrument. The presumption is one of law and thereunder court shall presume that the Negotiable instrument was endorsed for consideration. So, also in the absence of contrary evidence on behalf of the accused, the presumption under Sections 118 and 139 of Negotiable Instruments Act goes in favour of the complainant. In the present case on hand, the accused have admitted the disputed cheques and signatures appear thereon as belong to them. As such, the presumption under Sections 118 and 139 of Negotiable Instruments Act has to be drawn in favour of the complainant. Section 118 reads as here:- "That every negotiable 16 Judgment in C.C.No.14478/2019 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 for consideration". Further Section 139 of the Negotiable Instruments Act provides for presumption in favour of a holder. It reads as here:
- "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, or any debt or other liability." A combined reading of above said sections raises a presumption in favour of the holder of the cheque that he has received the same for discharge in whole or in part of any debt or other liability.
14. No doubt, the said statutory presumptions are rebuttable in nature. It is for the accused to place cogent and probable defence to rebut presumption raised in favour of the complainant. As discussed above when the complainant has relied upon the statutory presumption enshrined under Section 118 read with section 139 of NI Act. It is for the accused to rebut the said presumption with cogent and convincing evidence. To put it other way, the burden lies upon the accused to prove that Exs.P1 and P2-cheques were not
17 Judgment in C.C.No.14478/2019 issued for discharge of any debt but the complainant has misused the security cheques. It is worth to note that section 106 of Indian Evidence Act postulates that, the burden is on the accused to establish the fact which is especially within his special knowledge. This provision is exception to the General Rule that, the burden of proof is always on the prosecution to establish their case beyond all reasonable doubt. In view of the above matter, the burden is on the accused to prove the repayment of the entire loan amount by them and misusing of the security cheques by the complainant to extract the money from the accused No.1 company.
15. To rebut the aforesaid statutory presumption and to prove their defence, the accused No.2 has stepped into witness box and examined himself as DW.1. However, he has not produced any documents on their behalf. The defence counsel has cross-examined the PW.1 to extract admission in support of the defence and testify the veracity of the complainant's version. During the course of chief-examination, the accused No.2 has reiterated their entire defence by deposing that they have repaid the entire loan amount in the month of January 2014 itself. Despite of the same, the complainant has misused the security cheques to extract money and 18 Judgment in C.C.No.14478/2019 as on the date of cheques the alleged outstanding amount claimed by the complainant was a time barred debt. Hence, Section 138 of Negotiable Instruments Act is not attracted to the Exs.P1 and P2- cheques.
16. On perusal of the materials available on record and depositions of PW.1 and DW.1, it appears that there is no dispute regarding investment made by the complainant in the projects of the accused No.1 company and borrowing loan amount Rs.25 lakhs by the accused No.2 and 3 on behalf of accused No.1 concern from the complainant. The accused No.2 in his chief-examination affidavit at para No.3 has clearly admitted the receipt of loan amount of Rs.25 lakhs from the complainant in the month of December 2013 by way of cheque and as well as cash and also issuing receipts at Exs.P16 and Ex.P17 regarding receipt of the loan of Rs.25 lakhs.
17. The complainant claims that the cheques in question were issued at the time of lending loan and later on at the end of 2018, the accused Nos.2 and 3 instructed him to put the date in the cheques and present the same for encashment. Therefore, investment of the amount by the complainant in the projects of the accused No.1 company and issuance of share certificates as per Exs.P12 to P14 are 19 Judgment in C.C.No.14478/2019 not in real question of dispute in this case. The real question in dispute in this case is that whether the cheques in question were issued by the accused for discharge of debt of Rs.25 lakhs or not. In the said background, I have gone through the materials available on record. As stated above, the accused have admitted the receipt of hand loan of Rs.25 lakhs from the complainant and also admitted the issuance of Exs.P16 and P17 receipts for acknowledging the loan of Rs.25 lakhs by way of cheque and cash from the complainant. The accused have admitted the issuance of undated cheques for Rs.22 lakhs and Rs.3 lakhs respectively on the date of loan, however, they claimed that they issued said cheques for security of the loan amount. On the other hand, the complainant claimed that as per the instructions of accused, he has put the date in the cheques and presented the same for encashment. The accused Nos.2 and 3 have taken defence that they have cleared the entire loan amount except the balance investment amount of Rs.10,80,000/-. They reads to pay the said balance investment amount of Rs.10,80,000/-. During the course of cross-examination, the DW.1 has deposed that:
"ದದರರದರರರ ಚಕ ಮತರತ ಅಕಕಟ ಟಟನನ ಫರ ಮದಲಕ ರದರ 1,08,90,000/- ಗಳನರ ನ ನಮಮ ಬಬಕಕ ಖತಗ ವರರವಣ ಮಡರರತತರ
20 Judgment in C.C.No.14478/2019 ಎಕದರ ಸರ. ಅಕಕಟ ಟಟನನ ಫರ ಮತರತ ಚಕ ಮದಲಕ ದದರರದರರಗ ರದರ 83,50,000/- ಹದಹಗರರತತದ ಎಕದರ ಸರ. ರದರ 28 ಲಕಗಳನರ ನ ದದರರದರರಗ ನಗದಗ ಕದಟಟರರತತಹವ. ದದರರದರರಗ ನಗದಗ ಪವತ ಮಡದ ಬಗಗ ದಖಲ ಇರರವದಲಲ." The accused have claimed that they have repaid loan amount of Rs.25 lakhs by way of cash to the complainant. The complainant has categorically denied the receipt of any amount by way of cash from the accused. The accused have not produced any receipt or acknowledgment for repayment of the said loan amount.
18. The accused contended that after receipt of demand notice from the complainant, they have issued reply notice as per Ex.P11 along with account statement. In the said statement they have shown the payment made by them to the complainant. In the said reply notice they stated that as per statement they are liable to pay sum of Rs.10,80,000/- only. The complainant contended that during the course of regular business, the accused have issued Ex.P18 account statement. Thereafter, on 17.03.2018, they have sent Ex.P19 account statement through e-Mail by showing certain payments by way of cash, but he has not received the said cash payment, so on the same day he replied the said e-mail by disputing the said cash 21 Judgment in C.C.No.14478/2019 payment. During the course of cross-examination, DW.1 has admitted the issuance of Exs.P18 and P19 account statements. The accused No.2 has also admitted that Ex.P18 was issued during the regular course of business at an undisputed point of time. On comparison of Exs.P18 and P19, it appears that in the Ex.P18 last payment was made on 11.07.2013. But in the Ex.P19, the accused shown certain cash payment of Rs.10 lakhs on 04.11.2012, Rs.4 lakhs on 08.02.2013, Rs.6 lakhs on 12.02.213, Rs.3 lakhs on 23.01.2014, Rs.60,000/- on 25.01.2014 and Rs.3,40,000/- on 18.03.2014. The said cash payments were not shown in the Ex.P18- account statement, which creates serious doubt about the genuiness of the said account statement. The complainant contended that on receipt of Ex.P19 statement through e-mail, he had replied immediately on the very same date by disputing the said cash payment as per Ex.P23. During the course of cross-examination, DW.1 has not denied the receipt of said e-mail, but he deposed that he has to verify the same. However, the accused have not produced balance sheet or any other documents to corroborate the disputed cash payment entries made in Ex.P19 statement. In the absence of the balance sheet or receipt, Ex.P19 had no evidentiary value at all.
22 Judgment in C.C.No.14478/2019 When the complainant has specifically disputed the receipt of cash payment from the accused, then it is the burden on the accused to prove the same, but the accused have failed to prove cash payment made by them to the complainant by producing cogent and convincing materials before the court, thereby, the accused have failed to prove the repayment of loan amount of Rs.25 lakhs to the complainant as claimed by them.
19. The accused have contended that the cheques in question were issued at the time of borrowing of loan as security and the complainant has filled the said cheques for his convenience and misused the same for extract money from the accused No.1 company. In the complaint at para No.6, the complainant has stated that at the time lending loan, the accused Nos.2 and 3 have issued two undated cheques for Rs.22 lakhs and Rs.3 lakhs respectively by requesting to present the same after confirming with the accused persons. In the month of December 2018, the accused Nos.2 and 3 have requested the complainant to present the said cheques on 24.12.2018, therefore, as per instructions of accused No.2 and 3, he has presented the said cheques for encashment on 07.02.2019. Even during the course of cross-examination, PW.1 has admitted that he 23 Judgment in C.C.No.14478/2019 has filled the date in the cheques and the said cheques were issued at the time of lending of loan. Even if it is considered as security cheques, then also Section 138 of Negotiable Instruments Act attracts to the dishonour of said cheques due to subsequent failure of the accused persons to repay the loan amount as per law laid down by the Hon'ble Supreme Court in the case of Sripati Singh V/s State of Jharkhand 2021 SCC Online SC 1002. Further, Section 20 of Negotiable Instruments Act, authorized the complainant to complete the incomplete Negotiable Instruments by filling the date in the cheques. The accused persons have admitted the issuance of signed undated cheques at the time of receipt of loan, which authorized the complainant being the holder of the incomplete Negotiable Instruments to fill the date in the said cheques. Therefore, mere filling the dates in the cheques by the complainant does not absolve the liability of the accused persons under Section 138 of Negotiable Instruments Act. Hence, on these grounds the contention raised by the accused persons is not tenable one.
20. The further contention of the accused is that as on the date of cheques the alleged debt was a time barred debt. Therefore, dishonour of cheques issued for discharge of time barred debt does 24 Judgment in C.C.No.14478/2019 not attract Section 138 of Negotiable Instruments Act. The defence counsel has argued that, the date of loan is 21.12.2013 and 22.12.2013. It was lent for 15 days period as per the complaint averments. As per Section 9 of Limitation Act, the limitation period starts after expiring 15 days i.e., on 06.01.2014. The three years limitation was expired on 06.01.2017 as per Article 19 of Limitation Act. There was no acknowledgment of debt under Section 18 of Limitation Act and there was no part payment made under Section 19 of Limitation Act to save the limitation. In order to attract the Section 25(3) of Contract Act, there must be acknowledgment of debt in writing. But in the present case on hand, from the date of loan till the date of presentation of cheques no payment was made, no acknowledgment was executed. Therefore, as per Article 19 of Limitation Act, the debt is a time barred debt and cheques issued for a time barred debt would not attract Section 138 of Negotiable Instruments Act.
21. On the other hand, the learned counsel for complainant by referring various judgments has argued that issuance of cheques for a time barred debt is itself is an acknowledgment of debt in writing and dishonour of such cheques would certainly attracts Section 138 25 Judgment in C.C.No.14478/2019 of Negotiable Instruments Act. In support of his submission the learned counsel for the complainant has referred decisions reported in 2023 SCC OnLine SC 1128 in the matter of K.Hymavathi V/s. State of Andhra Pradesh and another, (2002) 2 Supreme Court Cases 642 in the case of A.V.Murthy V/s.
B.S.Nagabasavanna, Crl.R.P.No.256 of 2022 in the matter of Sri.Sudhakar Reddy.C.B V/s. Smt.Pushpa, (2013 (2) Mh.I.J in the matter of Dinesh B.Chokshi V/s. Rahul Vasudeo Bhatta and another, Crl.A.No.1209/2022 (A) in the matter of Mr.Praveen.D.J V/s. Mr.Prabhakar.R.N, Crl.A.No.2506/2009 in the matter of Shri.Sangameshwar Chits Pvt. Ltd., V/s. Sri.G.R.Marigoudar, 2002 (64) DRJ 267 in the matter of DCM Financial Services Ltd V/s. Sunil Kala & Co. & Another.
22. As per the complaint averments, the date of loan is 21.12.2013 and 22.12.2013. The period of loan was 15 days. Therefore, after expiry of 15 days, period of limitation starts from 06.01.2014. Admittedly, there is no acknowledgment of debt or part payment from the date of loan till presenting cheques. As such, the period of limitation of three years as per Article 19 of Limitation Act expired on 06.01.2017. The date of Exs.P1 and P2-cheques is 24.12.2018.
26 Judgment in C.C.No.14478/2019 That means as on the date of cheques the debt is a time barred debt. Now the question before the court is that mere issuing cheques for discharge of time barred debt amount is acknowledge debt under Section 25(3) of Contract Act and fresh limitation starts from the date of cheque. In this connection, it is appropriate to refer the judgments referred by both counsels. The defence counsel in support of his submission has referred judgment of Hon'ble Andhra Pradesh High Court in the case of Girdhari Lal Rathi V/s. P.T.V.Ramanujachari in LAWS(APH)-1997-1-45, wherein it was pleased to held that:
'In case a cheque is issued for a time barred debt and it is dishonoured, the accused cannot be convicted under Section 138 of the Negotiable Instruments Act simply on the ground that the debt was not legally recoverable.' In another Judgment referred by the defence counsel reported in LAWS(GJH)-2023-6-210 in the matter of Dilipkumar Manharlal Vyas V/s. Giridharlal Hirajibhai, wherein the Hon'ble Gujarath High Court was pleased to held that:
27 Judgment in C.C.No.14478/2019 'Sec. 138 is attracted only if the cheque is issued for the discharge of a legally enforceable debt or other liability. It cannot be said that a time barred debt is a legally enforceable debt.'
23. To the contrary, the Hon'ble Apex Court in K.Hymavathi V/s. State of Andhra Pradesh and another 2023 SCC OnLine SC 1128 has observed that "From a perusal of the legal position enunciated, it is crystal clear that this court keeping in perspective the nature of the proceedings arising under the NI Act and also keeping in view that the cheque itself is a promise to pay even if the debt is barred by time has in that circumstance kept in view the provision contained in Section 25(3) of the Contract Act". In the judgment of Hon'ble High Court in Crl.R.P.No.256/2022 in the case of Sri.Sudhakar Reddy.C.B V/s. Smt.Pushpa decided on 12 th October 2023, the Hon'ble High Court of Karnataka after referring several judgments has observed that issuance of cheque for discharge of a time barred debt amounts to written promise to pay the said debt as provided under Section 25(3) of the Contract Act and it creates legally enforceable debt. Hence, it squarely attracts Section 138 of Negotiable Instruments Act. Even in the other judgments referred by the advocate for complainant also observed 28 Judgment in C.C.No.14478/2019 similar view. Therefore, in view of the law laid down by the Hon'ble Apex Court in K.Hymavathi's case and Hon'ble High Court of Karnataka in recent judgment in the case of Crl.R.P.No.256/2022, the issuance of Exs.P1 and P2-cheques would attracts Section 138 of NI Act even though the debt was a time barred debt as on the date of cheques because mere issuance of cheques itself amounts acknowledge of debt in written as per Section 25(3) of the Contract Act. Therefore, for the aforesaid reasons, I am of the considered opinion that the defence raised by the accused is not a probable one. Thereby, the accused have failed to rebut the presumption envisaged under Sections 118 and 139 of Negotiable Instruments Act.
24. From the discussion made supra, it is clear that the accused neither taken probable defence nor taken steps to prove the same. To put it other way, the accused have not taken and proved probable defence to rebut the presumption of law available in favour of the complainant, envisaged under Section 118 read with Section 139 of Negotiable Instruments Act. Accordingly, the case of the complainant is acceptable one. The complainant has proved that towards discharge of their debt, the accused have issued Exs.P1 and P2-cheques and they have intentionally not maintained sufficient 29 Judgment in C.C.No.14478/2019 funds in their account to honour the said cheques. Hence, this point No.1 under consideration is answered in the Affirmative.
25. POINT NO.2: In view of the reasons stated and discussed above, the complainant has proved the guilt of the accused punishable under Section 138 of N.I. Act. The Hon'ble Supreme Court of India in a decision reported in, (2015) 17 SCC 368, in a case of H.Pukhraj Vs. D.Parasmal, observed that, having regard to the length of trial and date of issuance of the cheque, it is necessary to award reasonable interest on the cheque amount along with cost of litigation. Further the Hon'ble Apex Court in its recent decision in M/s. Meters & instrument Pvt Ltd. Vs. Kanchana Mehta reported in (2018)1 SCC-560 held at para 18 that "The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the court." The Hon'ble Supreme Court in the judgment of Mainuddin Abdul Sattar Shaikh Vs Vijay.D Salvi reported in (2015) 9 SCC 622 held that as the provision of chapter XVII of the Act strongly lean 30 Judgment in C.C.No.14478/2019 towards grant of reimbursement of the loss by way of compensation, the courts should unless there are special circumstance, in all cases of conviction, uniformly exercise the power to levy fine upto to twice the cheque amount (keeping in view the cheque amount and the simple interest thereon at 9% per annum as the reasonable quantum of loss) and direct payment of such amount as compensation. Therefore, keeping in mind the time when the transaction has taken place and primary object of the provision, this court is of the opinion that, rather than imposing punitive sentence, if sentence of fine is imposed with a direction to compensate the complainant for its monitory loss, by awarding compensation U/Sec.357 of Cr.P.C, would meet the ends of justice. The date of cheques is 24.12.2018 and amount covered under said cheques is Rs.25,00,000/- and loan transaction had taken place since 21.12.2013 and 22.12.2013. As rightly pointed out by the complainant counsel, if the complainant has kept the said amount in any nationalized bank for FD, he would have earned good amount of interest on the said amount. The complainant has spent considerable time and money to prosecute the case. By considering all these aspects, this court is of the opinion that, it is just and proper to 31 Judgment in C.C.No.14478/2019 imposed fine amount of Rs. 28,00,000/-, which includes interest and cost of litigation, out of which compensation of Rs.27,95,000/- has to be awarded to the complainant U/s 357 Cr.P.C. Accordingly, this court proceeds to pass the following:
ORDER Acting under Section 255(2) of Criminal Procedure Code, accused Nos.1 to 3 are hereby convicted for the offence punishable under section 138 of Negotiable Instrument Act and accused Nos.1 to 3 have been sentenced to pay fine of Rs.28,00,000/- (Rupees Twenty eighty Lakhs only). In default thereof accused Nos.2 and 3 shall undergo simple imprisonment for the term of One (01) year.
Acting under section 357(1)(b) of code of criminal procedure, it is ordered that, sum of Rs.27,95,000/- (Rupees Twenty Seven Lakhs and ninety five thousand only), therefrom shall be paid to the complainant as a compensation, remaining fine amount of Rs.5,000/- (Rupees Five Thousand only) is defrayed to the state for the expenses incurred in the prosecution.
Office is directed to supply free copy of the judgment to the accused.
32 Judgment in C.C.No.14478/2019 (Directly dictated to the Stenographer on computer, typed by him, corrected by me and then Judgment signed and pronounced in the open court on this the 19 th day of April - 2024).
(MANJUNATHA.M.S) XVIII Addl. Chief Metropolitan Magistrate, Bengaluru.
ANNEXURE List of Witnesses examined on behalf of Complainant:
PW-1 : G.Madana Mohan List of Exhibits marked on behalf of Complainant:
Exs.P1 & P2 : Original Cheques (2 Nos.)
Exs.P3 & P4 : Bank endorsements
Ex.P5 : Office copy of legal notice
Ex.P6 : Postal receipts
Exs.P7 to P9 : Track consignments
Ex.P10 : Complaint
Ex.P11 : Reply notice
Exs.P12 to P15 : CC of share certificates
Ex.P16 & P17 : Acknowledgment / Receipts
Ex.P18 : Statement
Ex.P19 : Computer generated copy of gmail
message
Ex.P20 : CC of acknowledgment of Stamp Duty
payment for certified true copy
Exs.P21 & P22 : Share Transfer Forms
Ex.P23 : Computer generated copy of gmail
message
Ex.P24 : Certificate under Section 65(b) of Indian
Evidence Act.
33 Judgment in C.C.No.14478/2019
List of Witnesses examined on behalf of the defence:
DW.1 : A.Keerthi Jain
List of Exhibits marked on behalf of defence:
- Nil -
XVIII Addl. Chief Metropolitan
Magistrate, Bengaluru.
34 Judgment in C.C.No.14478/2019
Judgment pronounced in the open court vide
separate order.
*****
ORDER
Acting under Section 255(2) of Criminal
Procedure Code, accused Nos.1 to 3 are hereby
convicted for the offence punishable under section 138 of Negotiable Instrument Act and accused Nos.1 to 3 have been sentenced to pay fine of Rs.28,00,000/- (Rupees Twenty eighty Lakhs only). In default thereof accused Nos.2 and 3 shall undergo simple imprisonment for the term of One (01) year.
Acting under section 357(1)(b) of code of criminal procedure, it is ordered that, sum of Rs.27,95,000/- (Rupees Twenty Seven Lakhs and ninety five thousand only), therefrom shall be paid to the complainant as a compensation, remaining fine amount of Rs.5,000/- (Rupees Five Thousand only) is defrayed to the state for the expenses incurred in the prosecution.
Office is directed to supply free copy of the judgment to the accused.
XVIII Addl. Chief Metropolitan Magistrate, Bengaluru.