Bangalore District Court
M/S Manappuram Chits (K) Pvt. Ltd vs Mr. Manjunath on 5 October, 2024
C.C.NO.13030/2020
0
KABC030501532020
Presented on : 16-10-2020
Registered on : 16-10-2020
Decided on : 05-10-2024
Duration : 3 years, 11 months, 20 days
IN THE COURT OF THE XXVIII ADDL. CHIEF JUDICIAL
MAGISTRATE, BENGALURU CITY
Present:
Soubhagya.B.Bhusher,
BA.,LLB.,LL.M
XXVIII A.C.J.M, Bengaluru City.
DATED; THIS THE 05th DAY OF OCTOBER-2024
C.C.NO.13030/2020
Complainant: M/s. Manappuram Chits (K) Pvt.,Ltd.,
at No.34, 2nd Floor, 10th 'B' Main,
Opp: Cosmo Club, Jayanagar, 3rd Block,
Bangalore-560011.
R/by its Assistant Branch Manager,
Sri.L.Ramamurthy S/o Sri.Govindaiah.L
As per the order dated: 03.11.2022
Complainant company
R/by its Assistant Manager
Sri.M.R.Ramesh S/o Sri.Ramachandraiah.
As per the order dated: 21.12.2023
Complainant company
R/by its Assistant Manager
Mr.Subhani Shaik S/o Mr.Moulali
(By Smt.N.Raja Rajeshwari.,Adv.,)
C.C.NO.13030/2020
1
V/s
Accused: Mr.Manujunath S/o Chikkanarasimhaiah,
No.2759, Sri.Lakshmi Narasimha Nilaya,
9th Block, Further Extn.
Sir.M.Visveswaraiah Layout,
Bangalore-560091. Karnataka.
Also at: Mr.Manjunath,
S/o Chikkanarasimhaiah,
No.339, 12th Cross, Vigneshwara,
Nagar, Vishwaneedam,
Bangalore-560091.
(By Sri.Rakesh.M.,Adv.,)
:JUDGMENT:
This case arises out of the private complaint filed under section 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 is a company incorporated under the companies Act and they are in business of promoting and conducting chits as per the provisions of the Chit Funds Act. The accused is a subscriber for a chit No.BSK002LD with ticket No.33 for a chit value of Rs.25,00,000/- payable at Rs.50,000/- per month over a period of 50 months, after obtaining necessary permission from the competent authority. The accused became a successful bidder in an auction held on 10.07.2016 and on 10.08.2016 he has received the prize amount of Rs.17,50,000/- after deducting bid C.C.NO.13030/2020 2 amount and also after the accused along with other guarantors furnished the necessary documents. Further at the time of receiving the prized amount, the accused had undertaken to repay the future subscription amount regularly. But he became a defaulter and he has paid 30 installments. Thereafter he failed to make payment towards the installment No.31 to 50. The complainant was forced to issue a legal notice to the accused as well as to the guarantors. Thereafter, filed a dispute before the Deputy Registrar of Chits, Zone-3, Bangalore for recovery amount of Rs.11,86,027/- in dispute No.DRB/3rdzone/chits74/2018-19. The said Deputy Registrar issued a notice to the accused and guarantors. At that time, the accused had personally visited the complainant's office and issued a cheque No.477483 on 24.08.2019 for Rs.13,85,947/- drawn on Canara Bank, Nagarbhavi branch, Bangalore and requested not to proceed with filing of dispute.
3. It is further stated that as per the assurance of the accused, the complainant had presented the said cheque on 27.08.2019 for realization through its banker the Karur Vysya Bank Ltd., Jayanagar branch, Bangalore. But the said cheque was dishonored on 28.08.2019 for the reasons "Funds Insufficient" in the account of the accused. Thereafter on 25.09.2019 the complainant got issued a legal notice to the accused C.C.NO.13030/2020 3 through its counsel by RPAD calling upon him to pay the amount covered under the cheque within 15 days from the date of receipt of the notice as provided clause
(b) of 138 of N.I.Act. The said notice has been returned on 27.09.2019 as Insufficient Address and another notice has been returned on 07.10.2019 as Not claimed. After issuance of the legal notice the accused neither reply to the notice nor paid the cheque amount to the complainant. 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 07.11.2019.
4. After the complaint was filed, the cognizance of the offence cited therein was taken and it was registered as P.C.R.No.15892/2019. Sworn statement of the complainant was recorded. Since there were sufficient materials to proceed against the accused, an order was passed on 15.10.2020 to register the case in Reg.No.III.
5. Thereafter, summons was issued to the accused and he has appeared before the court through counsel 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.
C.C.NO.13030/2020 4
6. The complainant's in support of its case, have examined its Assistant Branch Manager as PW.1 and got marked the documents at Ex.P.1 to 12(a) and closed its side.
7. During the pendency of the case, the learned counsel for the complainant has filed an application for the substitution of the representative of the complainant company contending that the complainant originally represented by its Assistant Branch Manager Sri.L.Ramamurthy, due to change of circumstances they would like to substitute another representative Sri.M.R.Ramesh during the course of trial. Accordingly on 03.11.2022 the said application was allowed and another representative Sri.M.R.Ramesh represented the complainant company. The complainant's have examined the said Assistant Branch Manager as PW.2 and got marked two documents at Ex.P.13 and 14 and closed its side.
8. During the pendency of the case, the learned counsel for the complainant has filed an application for the substitution of the representative of the complainant company contending that the complainant represented by its Assistant Branch Manager Sri.M.R.Ramesh, due to change of circumstances they would like to substitute another representative Mr.Subhani Shaik during the course of trial. Accordingly on 21.12.2023 C.C.NO.13030/2020 5 the said application was allowed and another representative Mr.Subhani Shaik represented the complainant. The complainant's have examined the said Assistant Branch Manager as PW.3 and got marked the documents at Ex.P.16 to 24 and closed its side. During the course of cross examination of D.W.1 one document was marked at Ex.P.15 by way of confrontation.
9. After closer of the evidence of the complainant, the statement under section 313 of Cr.P.C., was recorded. He has denied the incriminating evidence appearing against him. In his defence the accused has examined as DW.1 and no documents were marked on his behalf.
10. I have heard the arguments on both the side and perused the material placed on record.
11. Upon hearing the argument 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.7, towards the discharge of the legally enforceable debt/liability.?
3.Whether the complainant further proves that Ex.P.7 was dishonored for the reason "Funds C.C.NO.13030/2020 6 Insufficient" in the account of the accused 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?
12. My answers to the above points are as under:
Point No.1: In the Affirmative Point No.2: In the Affirmative Point No.3: In the Affirmative Point No.4: In the Affirmative Point No.5: As per final order, for the following:
:REASONS:
13. POINT NO.1 AND 2: These 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 both points together for common discussion. The case of the complainant is that they were acquainted with the accused. Further the accused is a subscriber for a chit bearing No.BSK002LD with ticket No.33 for a chit value of Rs.25,00,000/- payable at Rs.50,000/- per month over a period of 50 months. The accused became a successful bidder in an auction and he has received a prize amount of Rs.17,50,000/- after deducting bid amount and also after the accused along with other C.C.NO.13030/2020 7 guarantors furnished the requisite necessary documents. At the time of receiving the prized amount, the accused had undertaken to repay the future subscription amount to the complainant regularly. But he became a defaulter in making payment and he has paid 30 installments and thereafter he failed to make payment towards the installment No.31 to 50. The complainant was forced to issue a legal notice to the accused as well as to the guarantors. Thereafter, filed a dispute before the Deputy Registrar of Chits, Zone-3, Bangalore for recovery amount of Rs.11,86,027/-. The said Deputy Registrar issued a notice to the accused and guarantors. At that time, the accused had personally visited the complainant's office and issued the cheque in question in favour of the complainant. As per the assurance of the accused, the complainant had presented the said cheque for realization through its banker. But the said cheque was returned dishonored for the reasons "Funds Insufficient". Thereafter the complainant got issued a legal notice to the accused through its counsel calling upon him to pay the amount covered under the cheque within 15 days from the date of receipt of the notice. After issuance 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 C.C.NO.13030/2020 8 before this court.
14. 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;
"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."
15. On plain perusal of the provisions under Section 118(a) and 139 of the N.I.Act., as extracted herein above, it can be seen that initially the presumptions constituted under these two provisions favour the complainant. However, it is open to an C.C.NO.13030/2020 9 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.
16. 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 have 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".
17. 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's have examined its Assistant Branch Managers as P.W.1 to 3 and 24 documents were marked at Ex.P.1 to 24. In the chief examinations P.W.1 to 3 have repeated the contents taken by the complainant in the complaint. Ex.P.1 is the Minutes of Extract. Ex.P.2 is the authorization letter given to P.W.1. Ex.P.3 is the Chit Agreement executed by the accused in favour of the complainant. Ex.P.4 is the Promissory C.C.NO.13030/2020 10 Note executed by the accused in favour of the complainant. Ex.P.5 is the voucher. EX.P.6 is the computerized copy of the Account statement. Ex.P.7 is the cheque issued by the accused in favour of the complainant dated: 24.08.2019 for Rs.13,85,947/-. Ex.P.7(a) is the signature of the accused. Ex.P.8 is the bank memo dated:28.08.2019 informing the dishonor of the cheque as Funds Insufficient. Ex.P.9 is the office copy of legal notice dated:25.09.2019. Ex.P.9(a) and 9(b) are the postal receipts. Ex.P.10 and 11 are the returned postal covers. Ex.P.10(a) and 11(a) are the returned legal notices. Ex.P.12 is the amended complaint. Ex.P.12(a) is the original complaint. Ex.P.13 is the Minutes of Extract. Ex.P.14 is the authorization letter given to P.W.2. Ex.P.15 is the postal acknowledgment. Ex.P.16 is the certified copy of the Award in Dispute No.DRB-IIIZone/Chits/74/2018-19. Ex.P.17 is the certified copy of the recovery certificate. Ex.P.18 is the request letter given by the accused. Ex.P.19 is the account statement related to the one Manjunath. Ex.P.20 is the Account statement related to Smt.Gowramma. Ex.P.21 is the Accounts statement related to Gopalkrishna.B.S. Ex.P.22 is the Minutes of Extract. Ex.P.23 is the authorization letter given to P.W.3. Ex.P.24 is the amended complaint.
18. I have perused the exhibits on which the complainant have placed their reliance. On perusal of C.C.NO.13030/2020 11 the exhibits, it is clear that cheque in question was presented for encashment within its validity. The bank endorsement with a shara "Funds Insufficient". The complainant issued the legal notice within one month from the date of receipt of memo. The notices were returned as Insufficient address and Not claimed. The complaint was filed on 07.11.2019, 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.7 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.
19. The case was seriously contested by the accused and the service of notice was disputed. The notices were not served on the accused. Its were C.C.NO.13030/2020 12 returned with a sharas 'Insufficient address and Not claimed' as per Ex.P.10 and 11. The accused also denied the service of notice. The counsel for the accused cross-examined PW.2 in respect of non service of notice. But PW.2 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 not produce any documents to show that the accused was not residing at the said address and that the accused did not issue reply notice as he was not residing at the said address. The counsel for the accused has submitted 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 argued that as on the date of executing documents the accused has given the said address, hence, the complainant was given the notice to the said address and same has been duly served. But the accused has not taken the notice. In Ex.P.9, wherein the name of accused is appearing, was confronted.
20. On perusal of Ex.P.9, 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 C.C.NO.13030/2020 13 accused was residing at some other address other than the address mentioned in the notice at Ex.P.9. 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 the accused and the same notice was sent to him through RPAD, an inference can be drawn that the notice was also served on the accused. Further the address mentioned in the notice being the correct address of the accused, 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 returned with a postal shara 'Not claimed', it is to be considered as deemed service of notice. Even otherwise as per the judgment of the Hon'ble Supreme Court of India in Crl Appeal No.767 of 2007 (Arising out of SLP (Crl) No.3910 of 2006 between C.C Alavi Haji V/s Palapetty Muhammed and another decided on 18.05.2007, wherein it has been held para No.17 as under;
17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under section 138 of the C.C.NO.13030/2020 14 Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint u/s.138 of the Act, cannot obviously contend that there was no proper service of notice as required u/s.138, by ignoring statutory presumption to the contrary under section 27 of the G.C.Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran's case (supra), if the 'giving of notice' in the context of Clause (b) of the proviso was the same as the 'receipt of notice' a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act.
21. 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 138 of N.I.Act. In the case on hand, the summons was duly served to the accused and he has 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 07.11.2019, which is within limitation. The accused admitted the issuance of cheque and signature in the cheque. It is her defence that there is no due to the complainant and he C.C.NO.13030/2020 15 has not issued the cheque for repayment of the due. Further he has issued the cheque for the purpose of security. 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 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 the 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.
22. The accused in order to prove his defence has examined himself as DW.1 and no documents were marked on his behalf. In his evidence he has deposed that he has already paid entire amount to the complainant. Further deposed that there is no due to the complainant. Further deposed that he has issued the subject cheque at the time of bidding the chit for the purpose of security. The complainant have misused the security cheque and filed false case against him. Further deposed that dismissed the case of the complainant and acquit him.
C.C.NO.13030/2020 16
23. 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 is a chit subscriber for a chit value of Rs.25,00,000/- payable at Rs.50,000/- per month over a period of 50 months. The accused became a successful bidder in an auction and he has received a prize amount of Rs.17,50,000/- after deducting bid amount. Further argued that at the time of receiving the prized amount, the accused had undertaken to repay the future subscription amount to the complainant regularly. But he became a defaulter in making towards the chit installment and he has paid only 30 installments and thereafter the accused failed to make payments towards the installment No.31 to 50. Further argued that after repeated request made by the complainant, the accused has not paid any amount to the complainant. Thereafter the complainant was forced to issue a legal notice to the accused as well as his guarantors, and thereafter filed dispute before the Deputy Registrar of Chits, Zone-3, Bangalore for recovery of balance amount of Rs.11,86,027/-. The Deputy Registrar of chits issued the notice to the accused and guarantors, at that time the accused C.C.NO.13030/2020 17 visited the complainant office and towards discharge of the said payment, had issued the cheque-Ex.P.7 in favour of the complainant. She further argued that the accused has not denied Ex.P.7 being his cheque drawn on his account. 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.2 and 3 to disbelieve the said evidence. The defence have failed to rebut the presumption under section 139 N.I.Act. She further argued that the accused has failed to produce any believable evidence that he had issued a blank cheque in favour of the complainant for the purpose of security at the time of bidding the chit and why he has not returned back the same is not clear. She further argued that 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 has not disputed Ex.P.7 being his cheque drawn on his account. The said presumption is available to the complainant.
24. Further she has argued that the accused has failed to prove the very fact that Ex.P.7 was given to the complainant's company for the purpose of security at the time bidding the chit and it was blank when it was given to him. Moreover, under section 118 of N.I.Act, C.C.NO.13030/2020 18 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. It was also argued by her that as per the defence by the accused that he had given a blank cheque at the time of bidding the chit for the purpose of security. As such, very defence of the accused is not believable. She further argued that the accused has taken the defence that the complainant not paid entire chit prized amount. But the accused has not taken any legal action against the complainant for non payment of entire prized chit amount. It is further argued that as per the assurance of the accused the complainant had presented the said cheque for encashment, but same was dishonor for the reasons Funds Insufficient, thereafter the complainant got issued a legal notice to the accused through RPAD. After issuance of the legal notice the accused neither reply to the notice nor paid the cheque amount, the complainant having no alternative have filed a complaint before this court. The defence of the accused is that he had issued a blank cheque to the complainant for the purpose of security and further taken up the defence that the complainant company misused the said blank cheque to harass the accused and to make a wrongful gain. The accused has not C.C.NO.13030/2020 19 produced any materials in support of the presumption under section 138 of N.I.Act. Further argued that the accused has taken another defence that he has paid entire amount to the complainant, but in support of that he has not produced any piece of evidence. Even though the issuance of cheque for security/guarantee, an offence under section 138 of N.I.Act is attracted. Further argued that the amount mentioned in the cheque is the amount payable by the accused. Hence, she prays to convict the accused.
25. 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.7 was issued. Further argued that the accused had issued the blank cheque to the complainant for the purpose of security. It is further argued that the accused has paid entire amount to the complainant. Further argued that the accused never issued the cheque for repayment of the amount. Further the accused never agreed to repayment of the alleged remaining balance amount of Rs.13,85,947/- to the complainant. Further argued that the accused not agreed and liable to pay any amount as claimed by the complainant and the cheque was not issued towards alleged outstanding balance claimed by the complainant. Further argued that the complainant C.C.NO.13030/2020 20 instead of returning the alleged cheque they have misused the same and initiated recovery proceedings against the accused. The amount mentioned in the cheque is not a legally recoverable debt and the complainant is not entitled any amount as mentioned in the cheque. Further argued that in order to attract the offence punishable under section 138 of N.I.Act, the complainant is firstly required to proves the existence of a legally enforceable debt/liability, for which the cheque came to be issued. The complainant created all the documents and make a unlawful gain against the accused. The complainant have not produced any believable documents before this court. Further argued that from the evidence placed on record, the very due amount mentioned in the cheque from the accused 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. The complainant have filed this false case against the accused by filling the contents of the cheque.
26. Further he has argued that there is no existing legally enforceable debt/liability on the date of presentation of alleged cheque. He further argued that the accused has given the subject cheque to the complainant as security measure and the complainant C.C.NO.13030/2020 21 have misused the same. The complainant have deliberately with held the cheque issued by the accused, whereas the subject cheque by filling up the date and amount in order to make wrongful gain by adopting arm twisting tactics. The accused has successfully rebutted the presumption under section 139 of the Act by leading defence evidence to show that there is no legally enforceable debt/liability between the complainant and the accused. The complainant have failed to prove its case on any grounds. In fact there is no cause of action to file the complaint against the present accused. It is further argued that the accused at the time of bidding the chit had issued the blank signed cheque for the purpose of security. The accused making the payments regularly towards installments to the complainant. The complainant claiming a sum of Rs.13,85,947/- towards due amount is totally mischievous. Further argued that as per the statement of account the accused is not liable to make payments towards cheque. Further argued that the complainant with an intention of making wrongful gain had presented the cheque by filling up the contents of the cheque with an intention to make wrongful gain. Further argued that the accused is not issued the subject cheque towards repayment of the said debt. Further argued that on looking it Ex.P.7 the signature of the accused is admitted. Whereas, the C.C.NO.13030/2020 22 writing part of the cheque amount in words is a different handwriting. Therefore, the entire cheque was filled up by the complainant's as there whims. 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 said cheque in favour of the complainant. It is not disputed that the complainant is a Private Limited chit company and the accused was a subscriber of the complainant. Whereas, the accused has contended that he had given a chaque to the complainant company for the purpose of security at the time of bidding the chit. When he had given the cheque, which was blank. The accused has specifically denied having debt/liability had issued the cheque-Ex.P.7 on 24.08.2019 towards the discharge of any debt/liability. He contends that the blank cheque given by him to the complainant's 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 C.C.NO.13030/2020 23 complainant's in order to prove its case, have examined its Assistant Branch Mangers as PW.1 to 3 and 24 documents are marked at Ex.P.1 to 24. In chief examinations, they have repeated the averments made by the complainant's in the complaint. In the present case, the accused has not disputed Ex.P.7 being his cheque drawn on his account. The said presumption is available to the complainant. In order to attract the offence punishable under section 138 of N.I.Act, the complainant's is firstly required to prove the existence of a legally enforceable debt/liability, for which the cheque came to be issued.
29. Under Section 139 of N.I.Act, there is a presumption regarding the existence of legally enforceable debt/liability. Such presumption is 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 was issued. In order to prove his defence, the accused has adduced his evidence as DW.1. But he has failed to produce any documents regarding issuance of blank cheque for the purpose of security at the time bidding the chit. PW.2 during his cross-examination has specifically denied the suggestions made to him that C.C.NO.13030/2020 24 Ex.P.7 was issued in favour of the complainant for the purpose of security in the year 2016 and same was blank at the time of issuing the same.
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 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 the accused had given a blank cheque to the complainant at the time of bidding the chit in the year 2016. Except, the said defence, he has not produced any materials to prove such defence. If he had given a blank cheque to the complainant in the year 2016 for the purpose of security, 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 the said 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.
C.C.NO.13030/2020 25 Admittedly the accused is having knowledge of the financial transaction, why he has given blank cheque 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 cheque. Moreover, immediately after the alleged blank cheque misused by the complainant he has not lodge complaint before concerned police station. No steps have been taken to receive back the blank cheque, 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 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, C.C.NO.13030/2020 26 since the complainant is in possession of cheque- Ex.P.7 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 learned counsel for the accused has taken contention that the cheque was given to the complainant for the purpose of security at the time of bidding the chit in the year 2016. Further the complainant have misused the said security cheque. Hence, offence under section 138 of N.I.Act is not attracted. In this regard once issuance of the 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 or 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 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 C.C.NO.13030/2020 27 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 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 Kalamani Tex and another V/s. P.Balasubramanian, reported in (2021) 5 SCC 283, the Hon'ble Supreme Court has observed that even a blank cheque leaf, voluntarily signed and handed over by the C.C.NO.13030/2020 28 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. 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.
36. 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 reasons stated in the dishonor memo. To consider whether the accused succeeded to rebut the presumption and established the defence to the extent of probabilities, the accused in this regard has not produced any documents. It was also contended by the accused that he had given blank cheque to the complainant for the purpose of security at the time of bidding the chit. The said the blank cheque was misused by the complainant. In order to prove his C.C.NO.13030/2020 29 defence the accused has failed to produce any believable evidence before this court.
37. In the defence there is no ill-will between the complainant and the accused. Hence, misuse of cheque and filing of a false case is not possible. The accused admittedly is having knowledge of business. It is implies, he is conversant with financial transaction and consequences. If the complainant misused the said cheque and had not return the same, inspite of collecting cheque leaves from him, as a prudent man, the accused should have inquired with the complainant and demanded to return that cheque. 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.7. Further he could have issued a notice to his banker to stop payment or legal notice to the complainant or he could have given complaint to the concerned police station immediately. No such steps were taken by the accused. He simply makes a bald allegation of misuse of the cheque against the complainant. It appears, just to escape from his legal liability, he has taken such contentions without any valid basis.
38. Moreover, the complainant's have got issued C.C.NO.13030/2020 30 a legal notice to the accused by registered through its counsel calling upon the accused to make repayment of said amount to the complainant. Before a person is held to be guilty of the offence punishable under 138 of N.I.Act, the complainant's have to prove the compliance of the requirement under section 138 of N.I.Act. It is not in dispute that Ex.P.7 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 to 3 and also cheque return memo-Ex.P.8 it is established that the cheque was dishonored as "Funds Insufficient'' in the account of the accused. A notice being issued as per Ex.P.9 within one month from the date of dishonour of the cheque is also not in dispute. In the case on hand the accused has not seriously disputed the issuance of the legal notice. The said notice was returned as not claimed and insufficient address. But, the accused failed to reply the notice, immediately after he received the demand notice. Thereby, he could have asserted him defence at an earliest available opportunity. In the case on hand the notice is sent to 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 C.C.NO.13030/2020 31 notice.
39. 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 of section 138 N.I.Act, have been complied with. As the accused has not repaid the cheque amount within stipulated period, the accused have committed an offence punishable under section 138 of Negotiable Instruments Act. The present complaint is filed within the period of 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. Except he has issued the cheque for the purpose of security at the time receiving the chit amount. In the judgment of Hon'ble Supreme Court, in Indian Bank Association V/s Union of India and others, (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 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 him. If he is not willing to plead guilty, he must explain what are the defences he C.C.NO.13030/2020 32 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.
40. 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.
41. The accused has taken defence that except signature other writings on Ex.P.7-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 the complainant C.C.NO.13030/2020 33 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."
42. 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.13030/2020 34 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 laid- down 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.
43. As per the version of the accused he has nowhere denied transaction. The accused himself has admitted that he is the holder of alleged cheque. It is sufficient hold that he had issued the cheque-Ex.P.7 in favour of the complainant and even after the accused has not repaid the cheque amount the getting of receipt of notice. However, in any manner as the complainant's have complied all the terms of ingredients of the provisions of 138 of N.I.Act. In case of dishonor of cheque, once the execution of cheque is admitted by the accused, then it for him to first rebut presumption arising out of section 139 of N.I.Act. Hence, the accused is liable for dishonor of cheque. Accordingly, PW.1 to 3 have established the case of the complainant that the accused had issued the cheque-Ex.P.7 in order to repay the legally recoverable amount. Therefore, the accused has failed to probables the defence taken by C.C.NO.13030/2020 35 him that Ex.P.7 was a blank cheque and given to the complainant at the time of bidding the chit in the year 2016. Therefore, the accused has 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 financial transaction between the complainant and the accused, since the initial presumption is still available, when there is no rebuttal evidence.
44. PW.1 to 3 in their evidence have specifically deposed that the accused is a subscriber for chit No.BSK002LD with ticket No.33 for chit value of Rs.25,00,000/- payable at Rs.50,000/- per month over a period of 50 months. Further deposed that the accused became a successful bidder and he has received a prize amount of Rs.17,50,000/- after deducting bid amount. At the time of receiving the prized amount, the accused had undertaken to repay the future subscription amount to the complainant regularly. But he became a defaulter in making payment towards the chit installments and the accused has paid 30 installments, thereafter he has failed to make a payment towards the installment No.31 to 50. The complainant's was forced to issue a legal notice to the accused as well as to the guarantors. Thereafter the complainant filed a dispute before the Deputy C.C.NO.13030/2020 36 Registrar of Chits, Zone-3, Bangalore for recovery of balance amount of Rs.11,86,027/-. The Deputy Registrar of Chits issued the notice to the accused and other guarantors. Thereafter the accused had personally visited the complainant's office and towards discharge of outstanding balance had issued the cheque-Ex.P.7 in favour of the complainant. So also it is not in disputed that the complainant and the accused are known to each other, some point of period, no documents could have been existence the evidencing financial transaction. This factor will not affect case of the complainant to disbelieve the financial transaction. When the accused has failed to rebut the presumption under section 139 of N.I.Act, non furnishing of details of financial transaction no consequences to disbelieve the case of the complainant. The accused has failed to probables his defence. With the above reasons, I answer point No.1 and 2 in the Affirmative.
45.POINT NO.3 AND 4: In order to avoid repetition of facts, these points are taken together for common discussion. Before a person is held to have committed an offence punishable under section 138 of N.I.Act, the complainant's have to prove all the requirements of section 138 of N.I.Act. Ex.P.7 being his cheque drawn on the account of the accused is not in dispute. The said cheque having been dishonored, C.C.NO.13030/2020 37 when it was presented by the complainant before the bank for encashment is also not seriously disputed by the accused. Thereafter, the notice-Ex.P.9 is issued by the complainant and the said notice was returned not claimed and insufficient address, he has not given reply to the said notice and failed to repay the cheque amount to the complainant's is further admitted. 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 from perusal of documents, the essential requirements of section 138 of N.I.Act, have been complied with. When the accused immediately after given the notice, he has not paid the cheque amount. Hence, the present the complaint came to be filed before the court on 07.11.2019 within the period of one month from the date of cause of action. On perusal of the documents it reveals that the accused has executed the documents in favour of the complainant for agreeing the conditions of chit agreement. Further on perusal of the documents it reveals that on 10.08.2016 the accused and his guarantors have executed the documents in favour of the complainant. Further the accused had received a sum of Rs.17,50,000/- from the complainant on this regard he had signed the cash/bank voucher.
46. While discussing the point No.1 and 2, this C.C.NO.13030/2020 38 court has already observed that the complainant's have proved that the cheque was issued for discharge of legally enforceable liability/debt 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. Accordingly, 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's have proved it's 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 punishable under section 138 of N.I.Act.
The bail bond and surety bond of the C.C.NO.13030/2020 39 accused is hereby stands canceled.
The accused is sentence to pay
Rs.13,95,000/- (Rupees thirteen lakhs
ninety five thousand only) to the
complainant company.
It is further ordered that out of the said fine amount an amount of Rs.13,85,000/- (Rupees thirteen lakhs eighty five 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 (06) months.
(Dictated to the stenographer directly on computer typed by her, corrected by me and then judgment pronounced in the open court on 05 th day of October 2024) Digitally signed by SOUBHAGYA B SOUBHAGYA BHUSHER B BHUSHER Date:
2024.10.08 11:53:02 +0530 (Soubhagya.B.Bhusher) XXVIII Addl. Chief Judicial Magistrate, Bengaluru City.
ANNEXURE List of witness examined on behalf of the complainant:
PW.1 : Mr.L.Ramamurthy.
PW.2 : Mr.M.R.Ramesh.
C.C.NO.13030/2020
40
PW.3 : Mr.Subhani Shaik.
List of documents marked on behalf of the complainant:
Ex.P.1 : Minutes Extract Ex.P.2 : Authorization letter given to PW.1. Ex.P.3 : Chit agreement. Ex.P.4 : Promissory Note. Ex.P.5 : Voucher. Ex.P.6 : Account statement. Ex.P.7 : Cheque. Ex.P.7(a) : Signature of the accused. Ex.P.8 : Bank endorsement. Ex.P.9 : Office copy of legal notice. Ex.P.9(a) & 9(b) : Postal receipts. Ex.P.10 & 11 : Returned postal covers.
Ex.P.10(a) & 11(a):Returned legal notices.
Ex.P.12 : Amended Complaint.
Ex.12(a) : Original Complaint.
Ex.P.13 : Minutes of meeting.
Ex.P.14 : Authorization letter given to PW.2.
Ex.P.15 : Postal acknowledgment.
Ex.P.16 : Certified copy of Award.
Ex.P.17 : Certified copy of recovery certificate.
Ex.P.18 : Request letter given by the accused.
Ex.P.19 : Account statement related to the Manjunath.
Ex.P.20 : Account statement related to the Gowramma.
Ex.P.21 : Account statement related to the
Gopalakrishna.B.S
Ex.P.22 : Minutes of meeting.
Ex.P.23 : Authorization letter given to PW.3.
Ex.P.24 : Amended complaint.
List of witnesses examined on behalf of the accused:
DW.1 : Mr.Manjunath List of documents marked on behalf of the accused:
-Nil- Digitally signed
by SOUBHAGYA
SOUBHAGYA B BHUSHER
B BHUSHER Date:
2024.10.08
11:53:11 +0530
XXVIII Addl. Chief Judicial
Magistrate, Bengaluru City.
C.C.NO.13030/2020
41
05.10.2024 (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 punishable under section 138 of N.I.Act.
The bail bond and surety bond of the accused is hereby stands canceled.
The accused is sentence to pay Rs.13,95,000/- (Rupees thirteen lakhs ninety five thousand only) to the complainant company.
It is further ordered that out of the said fine amount an amount of Rs.13,85,000/- (Rupees thirteen lakhs eighty five 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 (06) months.
XXVIII Addl. Chief Judicial Magistrate, Bengaluru City.