Bangalore District Court
Mr. C. Mahesh vs Isiri Propertes Pvt. Ltd on 28 February, 2020
IN THE COURT OF XXI ADDL.CHIEF METROPOLITON
MAGISTRATE, BENGALURU CITY
Present: Sri. V. NAGARAJA, LL.B., LL.M.,
XXI Addl. Chief Metropolitan Magistrate,
Bengaluru.
Dated this the 28th day of February, 2020
C.C. No.17050/2011 & C.C.17051/2011
COMPLAINANT: Mr. C. MAHESH
(In both cases) S/o. H. Chandmal,
Aged about 39 years,
Proprietor Maxcom Maxtel
C/o. Situated at No.701/48-1,
11th Main Road, 33rd Cross,
Opp: Pai Vijay Hall,
4th Block, Jayanagara,
Bengaluru - 560 011.
(Reptd. By; HMD., Advocate)
V/s.
ACCUSED: 1. ISIRI PROPERTES PVT. LTD.,
(In both cases) Builders, Developers & Promoters,
No.456, 1st Floor, 9th Cross,
17th Main, J.P. Nagara 2nd Phase,
Bengaluru - 560 078.
Represented by its Directors
2. Mr. GOPI KRISHNA G
S/o. Gundu Rao Sreekantaiah,
Aged about 37 years,
Director and Authorized Signatory,
ISIRI Properties Pvt. Ltd.,
No.175, 1st 'B' Cross,
2nd Phase, 2nd Block,
BSK III Stage,
Near Sudha Apartments,
Bengaluru - 560 085.
(Reptd. By: VLK., Advocate)
2 C.C.No.17050 & 17051/2011
: COMMON JUDGMENT:
As parties and subject matter involved in the both
cases are similar, in order to avoid repetition of facts and
evidence, both cases have been clubbed for common
disposal. Hence, for common judgment.
2. Complainant has filed both complaints under
Section 200 of Cr.P.C. r/w Section 138 of N.I. Act, seeking
for penalizing the both accused for the offence punishable
under Section 138 of N.I. Act and also for awarding
compensation to him in both cases.
3. Case of the complainant in a nutshell is that:
Accused No.1 is private limited company,
represented by its Director accused No.2 who are Builders,
Developers and Promoters of the immovable property and
in their business transaction they are well acquainted with
complainant. So, in that acquaintance, in the month of
January 2009, accused No.2 (along with other Directors
i.e., accused No.3 and 4, whose names are subsequently
deleted) approached him for financial assistance of
Rs.9,00,000/- for the urgent business needs of accused
No.1 company. So, on considering his request, he
advanced Rs.9,00,000/- and after receiving the said
3 C.C.No.17050 & 17051/2011
amount, the accused No.2 had promised him to repay the
above said amount within short period. So, in the month
of January 2010, complainant approached the accused for
repayment of above said loan amount. So, in order to
discharge above said loan liability, accused No.2 who is
authorized signatory of accused No1, for and on behalf of
accused No.1 company, towards part payment, he has
issued him two cheques bearing No.584727 dated
05.12.2010 for Rs.3,25,000/- (this cheque is pertaining to
C.C.17050/2011) and another cheque bearing No.584728
dated 05.08.2010 for Rs.3,25,000/- (this cheque is
pertaining to C.C.17051/2011) both are drawn on
Karnataka Bank Ltd., Jayanagara 9th Block Branch,
Bengaluru and assured to honour the said cheques. So,
believing the words of accused, the complainant presented
the above said cheques through his banker i.e., Union
Bank of India, Jayanagara Branch, Bengaluru, but said
cheques were dishonoured for the reason of "Funds
Insufficient" in the account of accused. So, the banking
authorities issued endorsements on 19.01.2011. So, he
got legal notices issued dated 08.02.2011 pertaining to
both cheques through RPAD by demanding above cheques
amount, whereas, accused intentionally evaded to receive
4 C.C.No.17050 & 17051/2011
the notices. So, they are returned with a postal sharas.
So, they are construed as deemed service and accused has
failed to pay the cheques amount. Hence, accused have
committed offence punishable U/s.138 of NI Act. Hence,
he is constrained to file these complaints seeking for
penalizing both accused for the offence punishable under
Section 138 of N.I. Act., and also seeking for awarding of
compensation to him in both cases.
4. In pursuance of summons issued by this court,
both accused No.1 and 2 made appearance through their
counsels and obtained bail in both cases and now they are
on bail in both cases.
5. As these proceedings are summary in nature,
substance of accusation read over and explained to
accused in both cases in language known to him whereas,
accused No.2 pleaded not guilty and claimed for trial in
both cases.
6. In order to prove the case of the complainant, he
has been examined as PW-1 (in both cases) and got
documents marked Ex.P-1 to Ex.P-19 in C.C.17050/2011
and Ex.P-1 to Ex.P-19 in C.C.17051/2011 respectively.
After completion of evidence of the complainant, statement
5 C.C.No.17050 & 17051/2011
of accused No.2 as specified U/s.313 of Cr.P.C., has been
recorded in both cases and on his behalf and on behalf of
accused No.1, he has been examined as DW-1 and got
documents marked Ex.D-1 and Ex.D-2. In support of his
defence, he has examined Bank Manager as DW-2.
7. I have heard arguments of both learned counsels
and they also field their written arguments, whereas
learned counsel for complainant also filed his memo of
citations.
8. Perused the records.
9. After perusal of records, the points arise for my
consideration are:
1) Whether complainant proves beyond all
reasonable doubt that accused No.2 being
Director/Authorized Signatory of accused
No.1 company, in order to discharge legally
enforceable debt/liability of accused No.1,
towards part payment, accused No.2 on
behalf of accused No.1, has issued two
cheques bearing No.584727 dated
05.12.2010 for Rs.3,25,000/- (pertaining to
C.C.17050/2011) and another cheque
bearing No.584728 dated 05.08.2010 for
Rs.3,25,000/- (pertaining to C.C.17051/2011)
both are drawn on Karnataka Bank Ltd.,
Jayanagara 9th Block Branch, Bengaluru?
2) Whether complainant further proves that he
has complied with mandatory requirements
as specified under Section 138 r/w Section
141 of N.I. Act?
3) What Order?
6 C.C.No.17050 & 17051/2011
10. My findings on the above points are:
Point No.1 : In the Affirmative
Point No.2 : In the Affirmative
Point No.3 : As per final order,
for the following:
REASONS
11. Point No.1: As I have already stated, in order to
prove the case of the complainant, he has been examined
as PW-1 (in both cases) and he filed his examination-in-
chief by way of affidavits by reiterating entire complaint
averments as stated above. In support of his oral
testimony, he relied upon Ex.P-1 to Ex.P-19 in
C.C.17050/2011 and Ex.P-1 to Ex.P-19 in
C.C.17051/2011 respectively.
12. On the other hand, accused No.2 on his behalf as
well as on behalf of accused No.1, he has been examined
as DW-1 and got document marked Ex.D-1 and Ex.D-2.
13. Before appreciation of evidence and
contentions of the parties regarding their respective
contentions, I am of the opinion, it is worth to note
presumptions envisaged in N.I. Act as well as ratio laid
down by the Hon'ble Apex Court in Three Judges Bench
Judgment reported in (2010) 11 SCC 441 (Rangappa V/s.
Sri Mohan) wherein it is held:
7 C.C.No.17050 & 17051/2011
"The presumption mandated by Section 139
includes a presumption that there exists a
legally enforceable debt or liability. This is of
course in the nature of a rebuttable
presumption and it is open to the accused to
raise a defence wherein the existence of a
legally enforceable debt or liability can be
contested. However, herein, there can be no
doubt that there is an initial presumption
which favours the respondent /complainant."
It is further held:
Once the cheque relates to the account of the
accused and he accepts and admits the
signatures on the said cheque, then initial
presumption as contemplated under Section
139 of the Negotiable Instruments Act has to
be raised by the court in favour of the
complainant. The presumption referred to
Section 139 of the NI Act is a mandatory
presumption and not a general presumption,
but the accused is entitled to rebut the said
presumption.
14. So in the light of above presumptions and ratio
decidendi laid down by Hon'ble Apex Court, if the present
facts and situations are analyzed, it is obvious that
according to complainant, accused No.2 being
Director/Authorized Signatory of accused No.1, has issued
cheques in both cases for discharging of their liability. On
the other hand, on considering the stand taken by
accused No.2, it is obvious that though he dispute his
liability as claimed by complainant, but he is not disputing
the facts that cheques in both cases are belonged to
account of accused No.1 i.e., ISIRI Properties Pvt. Ltd., and
8 C.C.No.17050 & 17051/2011
they bear his signatures. So, as I have already stated in
view of ratio laid down by Hon'ble Apex court in the
Judgments stated supra, that as soon as the accused
admit his signatures on cheques, the mandatory
presumption u/S 139 of N.I. Act comes to the aid of
complainant and he can rest upon said presumption.
15. Whereas, learned counsel for defence argued
that in order to raise presumption U/s.138 of NI Act, the
condition precedent is that complainant must prove the
existence of legally recoverable debt or liability, if he is
able to prove the same, then only presumption can be
raised otherwise not.
16. Having regard to the arguments of learned
counsel for accused, it is important to note as I have
already pointed out Hon'ble Three-Judges Bench
Judgment of Hon'ble Supreme Court in Rangappa's case
stated supra, it is clearly held:
"The presumption mandated by Section
139 includes a presumption that there
exists a legally recoverable debt or
liability"
17. So when above ratio clearly states that
presumption includes existence of legally enforceable debt
9 C.C.No.17050 & 17051/2011
or liability then further proof of that fact is not required
that too in summary proceedings. Because Hon'ble Apex
Court in the judgment reported in (2009)2 SCC 513 (Kumar
Exports V/s. Sharma Carpets) has clearly observed that:
Presumption literally means "taking as
true without examination or proof"
18. At this juncture, it is also worth to note ratio laid
down by Hon'ble Apex Court in the judgment reported in
(2014)5 SCC 590 (Indian Bank Association and others V/s.
Union of India and others) wherein it is held by reiterating
Section 143 of Negotiable Instruments Act and Section 264
of Cr.P.C., that:
"Section 264, Judgments in cases tried
summarily - In every case tried summarily in
which the accused does not plead guilty, the
Magistrate shall record the substance of the
evidence and a judgment containing a brief
statement of the reasons for the finding"
"Thus, the Magistrate is not expected to
record full evidence which he would have
been, otherwise required to record in a regular
trial and his judgment should also contain a
brief statement of the reasons for the finding
and not elaborate reasons which otherwise he
would have been required to record in regular
trials"
10 C.C.No.17050 & 17051/2011
19. So, in the light of above ratio decidendi and in
view of Section 143 of Negotiable Instruments Act and
Section 264 of Cr.P.C., as this case is summary case, I am
of the opinion it is not necessary to discuss elaborately
with respect to legally enforceable debt when presumption
includes existence of legally recoverable debt as held in the
above said judgment of Hon'ble Apex Court. So, the
mandatory presumptions will live, exist and survive and
shall end only when the contrary is proved by the accused,
that is to say the cheque was not issued for consideration
and in discharge of any debt or liability, in other words,
onus shifts on the accused to rebut the said mandatory
presumption raised in favour of complainant as observed
by Hon'ble Apex Court in the Judgment reported in (2009)2
SCC 513 (Kumar Exports V/s. Sharma Carpets).
Now the crucial question arises as to whether
accused are able to rebut the said presumption or not?
20. It is significant to note on considering the stand
taken by the accused No.2 in his defence evidence, he
contended that he has not borrowed any loan from
complainant and he has not issued present cheques to
complainant. In fact, complainant used to visit his office
11 C.C.No.17050 & 17051/2011
and he was well acquainted with his other Directors
namely Rajashekar and Somashekar. (Who were earlier
arrayed as accused No.3 and 4 and deleted subsequently)
He further contended that whenever he was supposed to
away from his office, he used to give his signed blank
cheques to accused No.3 and 4 for office use. Accordingly,
he handed over present cheques to accused No.3 and 4 as
signed blank cheques, whereas accused No.4 Somashekar
colluded with complainant and misused his cheques and
filed these false complaints. He further contended that
legal notice not at all served on him. Hence, both
complaints are liable to be dismissed and he may be
acquitted.
21. In support of above defence, learned counsel for
accused in his written arguments as well as oral
arguments, he argued that presumption envisaged under
Section 139 of N.I. Act is rebuttable presumption. So,
initially court can raise such presumption, whereas
accused can rebut the said presumption by raising
probable and acceptable defence by contesting on the fact
of existence of legally enforceable debt. Moreover,
standard of proof to rebut the presumption is only
preponderance of probabilities.
12 C.C.No.17050 & 17051/2011
22. He further argued that herein this case accused
No.2 not at all borrowed any loan from the complainant
and he has not issued cheques to complainant. Moreover,
the complainant has no financial capacity to lend such a
huge amount of Rs.9,00,000/-. So, the complainant has
not given particulars regarding his source of income and
particular date of advance of alleged loan. In fact, initially
complainant has filed these complaints against all
accused No.1 to 4 by alleging that accused No.2 to 4
borrowed loan on behalf of accused No.1, but
subsequently with ulterior motive, he got deleted names of
accused No.3 and 4, which shows the conduct of the
complainant that he colluded with accused No.3 and 4
and misused signed blank cheques of the accused No.2,
which were handed over to accused No.3 and 4 for office
use. He further argued that in fact as per Board of
Directors resolution, in order to operate bank transaction
pertaining to accused No.1 company, atleast two of the
Directors among three Directors should sign on cheque to
validate the transaction and this fact is substantiated by
DW-2, who is his Bank Manager. Such being so, present
cheques bear the signature of accused No.2 alone. So,
this fact clearly shows that complainant and accused No.3
13 C.C.No.17050 & 17051/2011
and 4 colluded together and misused signed blank cheque
of accused No.2.
23. He further argued that complainant created
Ex.P-17 for the purpose of this case. Moreover, he has not
proved the execution of Ex.P-17 and even he has not
chosen to examine Nithish, whose name appears in
Ex.P-17. So, all these facts create reasonable doubt
regarding alleged loan transaction. So, from these
doubtful circumstances, accused is able to rebut the
mandatory presumption. He further argued that statutory
notice not at all served on accused. On this ground alone,
complaints are liable to be dismissed and accused No.2 is
to be acquitted.
24. Per contra, learned counsel for complainant
argued that when accused No.2 is not disputing the facts
that the cheques are belonged to accused No.1 company
and they bear his signatures, then mandatory
presumption shall be drawn in favour of complainant that
complainant has received said cheques for legally
enforceable debt. On the other hand, accused No.2 has
utterly failed to rebut the mandatory presumption. He
further argued that as other Directors i.e., Rajesh and
14 C.C.No.17050 & 17051/2011
Somashekar who were deleted arrayed as accused No.3
and 4, were not signatories to the present cheques. So,
their names have been deleted as per order dated
25.02.2013 and accused No.2 has not challenged said
order. So, under such circumstances, now he cannot
challenge the said fact. He further argued that though
accused No.2, who is sole in-charge and liable for day to
day affairs of accused No.1 company, has borrowed loan
from complainant and issued present cheques, but now in
order to escape from his liability, he created false story of
alleged misuse of cheques by complainant and accused
No.3 and 4. If really complainant and accused No.3 and 4
had colluded together and misused the cheques as alleged
by accused No.2, definitely he would have initiated legal
proceedings like lodging police compliant etc., but he did
not do so. So, it shows that accused No.2 has issued
present cheques to complainant for discharging of his
liability. He further argued that though cheques bear
signature of accused No.2 alone, but it does not invalidate
the cheques, because cheques are not dishonoured for
want of signature of other Directors. Moreover, admittedly
accused No.2 is authorized signatory of accused No.1. So,
it is sufficient to bind other Directors.
15 C.C.No.17050 & 17051/2011
25. Even otherwise, non-affixing of signatures of
minimum two Directors among the three Directors is
internal understanding and administration of accused
No.1 company, whereas complainant is third party to the
said company administration. So, he had no occasion to
know about internal administration of the accused No.1
company. Hence, technical defence raised by the accused
cannot be sustainable to defeat the genuine claim of the
complainant. So, under such circumstances, contention of
the accused No.2 cannot be believable and acceptable. So,
accused No.2 failed to rebut the mandatory presumption.
So, accused No.1 and 2 are to be convicted and maximum
sentence has to be imposed.
26. In support of his arguments, he placed reliance
upon judgments of Hon'ble Courts reported in:
1. 2017(1) AKR 527 6. AIR 2018 SC 3173
2. 2018(1) AKR 760 7. (2005)8 SCC 89
3. 2017(4) AKR 727 8. 2015(4) AKR 78
4. 2017(3) AKR 365 9. AIR 2017 SC 2854
5. AIR 2017 SC 1681
27. Having regard to the arguments of both learned
counsels, at this juncture, it is worth to note ratio laid
down by Hon'ble Apex Court in Larger Bench judgment in
16 C.C.No.17050 & 17051/2011
the very Rangappa V/s. Sri. Mohan's case, it is clearly
observed that:
"A mere plausible explanation is not expected
from the accused and it must be more than a
plausible explanation by way of rebuttal
evidence. In other words, the defence raised
by way of rebuttal evidence must be probable
and capable of being accepted by the court"
28. At this juncture, it is worth to note ratio
decidendi laid down by the Constitution Bench of Hon'ble
Apex Court in the judgment reported in AIR 1964 SC 575
(Dhanvantrai Balwantrai Desai V/s. State of Maharashtra)
which has been followed in the subsequent judgment
reported in (2001)6 SCC 16 (Hiten P.Dalal V/s.
Brathindranath Banerjee) wherein it is held that:
"That the distinction between the two kinds
of presumption lay not only in the mandate
to the court, but also in the nature of
evidence required to rebut the two. In the
case of a discretionary presumption the
presumption if drawn may be rebutted by an
explanation which "might reasonably be
true and which is consistent with the
innocence" of the accused.
"On the other hand in the case of a
mandatory presumption"
17 C.C.No.17050 & 17051/2011
"The burden resting on the accused
person in such a case would not be as
light as it is where a presumption is
raised under Section 114 of the
Evidence Act and cannot be held to be
discharged merely by reason of the
fact that the explanation is offered by
the accused is reasonable and
probable. It must further be shown
that the explanation is a true one.
The words unless the contrary is
proved' which occur in this provision
make it clear that the presumption
has to be rebutted by 'proof' and not
by a bare explanation which is merely
plausible"
29. At this juncture, it also worth to note in another
judgment of Hon'ble Apex Court reported in (2010)8 SCC
383 (Meghmala and others V/s. Narasimha Reddy and
others) wherein it is held that:
"It is not like any other criminal case where
the accused is presumed to be innocent
unless the guilt is proved. The presumption
of innocence is a human right, however,
subject to the statutory exceptions, the said
principle forms the basis of criminal
jurisprudence. For this purpose, the nature
of offence, its seriousness and gravity
thereof has to be taken into consideration.
Statutes like the Negotiable Instruments
18 C.C.No.17050 & 17051/2011
Act, 1881; the Prevention of Corruption Act,
1998; and the Terrorist and Disruptive
Activities (Prevention) Act, 1987, provide for
presumption of guilt if the circumstances
provided in those statutes are found to be
fulfilled and shift the burden of proof of
innocence on the accused. Thus, the
legislature has adopted a deviating course
from ordinary criminal law shifting the
burden on the accused to prove that he was
not guilt"
30. So from the above ratio, it is crystal clear that
proceedings U/s.138 of NI Act is not like any other
criminal case where the accused is presumed to be
innocent unless the guilt is proved. On the other hand the
legislature has adopted a deviating course from ordinary
criminal law by shifting the burden on the accused to
prove that he is not guilty. So, the accused must rebut the
mandatory presumption by raising probable and acceptable
defence to the satisfaction of the court, because the
presumption raised in favour of complainant is mandatory
presumption, but not general presumption.
31. So, in the light of above ratio, if the present facts
and situations are analyzed, it is significant to note,
accused No.2 contended that he never borrowed any
money from complainant and he has not issued present
19 C.C.No.17050 & 17051/2011
cheques to complainant. In fact, complainant used to visit
his office and he was well acquainted with his other
Directors namely Rajesh and Somashekar. (Who were
earlier arrayed as accused No.3 and 4 and deleted
subsequently) He further contended that whenever he
was supposed to away from his office, he used to give his
signed blank cheques to accused No.3 and 4 for office use.
Accordingly, he handed over present cheques to accused
No.3 and 4 as signed blank cheques, whereas accused
No.4 Somashekar colluded with complainant and misused
his cheques.
32. It is significant to note, though he raised such a
defence, but he has not placed any cogent and convincing
evidence to prove that complainant and his other Directors
i.e., deleted accused No.3 and 4 colluded together and
misused his signed blank cheques. It is further significant
to note, he has not properly explained under what
circumstances, he had handed over his signed blank
cheques pertaining to accused No.1 company to deleted
accused No.3 and 4. Even he has not chosen to summon
or examine above said co-directors i.e., Rajesh and
Somashekar (deleted accused No.3 and 4) to substantiate
his contention. So, in absence of cogent and convincing
20 C.C.No.17050 & 17051/2011
evidence regarding alleged misuse of cheques, his
contention cannot be believable and acceptable.
33. At this juncture, it is also worth to take note of
the conduct of the accused No.2 as specified U/s.114 of
Indian Evidence Act that as per his contention,
complainant and deleted accused No.3 and 4 have
colluded together and misused his signed blank cheques.
If that is the case, a reasonable doubt arises in the mind
of the court as to why accused No.2 has kept quite for a
long time without taking any legal action like lodging of
police complaint against complainant or deleted accused
No.3 and 4 regarding alleged misuse of cheques and even
he has not issued stop payment instructions to his banker
for stop payment of present cheques. So, I am of the
opinion, if at all accused had not issued present cheques
for discharging of his legally enforceable debt, then
definitely accused No.2 would have lodged police complaint
regarding alleged misuse of cheques, because no prudent
man will keep quite, when his cheques are misused by
somebody else that too for huge amount. So, non-taking
of any of above actions by the accused No.2 at appropriate
time, it creates a reasonable doubt in the mind of the
court regarding acceptance of his version that
21 C.C.No.17050 & 17051/2011
complainant has and deleted accused No.3 and 4 have
misused his cheques. So, I come to clear conclusion that
the defence raised by the accused No.2 is not probable
and acceptable.
34. Coming to one more arguments of learned
counsel for accused No.2 that present cheques are not
valid, because they do not bear minimum two directors'
signatures among three directors as resolved under Board
of Directors of accused No.1 company and this fact is also
substantiated by evidence of DW-2, Bank Manager. So, it
shows that complainant and other directors Rajesh and
Somashekar (deleted accused No.3 and 4) colluded
together and misused his signed blank cheques etc.
35. Having regard to the arguments of learned
counsel for accused No.2, it is important to note, learned
counsel for complainant has rightly pointed out that
signing authority given to number of directors are purely
internal understanding or administration between
company and its directors, whereas complainant being
third party, who had no occasion to know about internal
affairs or administration of the company. It is further
significant to note, admittedly, accused No.2 is one of the
22 C.C.No.17050 & 17051/2011
authorized signatories of the accused No.1 company and
he admitted his signatures on cheques. So, under such
circumstances, merely on hyper technical ground that is
to say non-signing of other directors, which is exclusively
internal affairs of the accused's company, will not
invalidate the cheques. Furthermore, present cheques are
dishonoured not for the reason of "Required signatures of
minimum number of directors". On the other hand,
cheques are dishonoured for the reason of "Insufficient
Funds". It is further significant to note, if really accused
No.2 had not issued present cheques to complainant, then
he could have given instructions to his banker for stop
payment. Moreover, claim of the complainant cannot be
defeated merely on technical ground. Moreover, said
technical ground itself is not sufficient to rebut mandatory
presumption.
36. Coming to alleged collusion of complainant and
deleted accused No.3 and 4 etc.
37. It is significant to note, admittedly, Rajesh and
Somashekar (deleted accused No.3 and 4) are also
directors of accused No.1 company, having equal interest
in the company that off accused No.2. So, under such
23 C.C.No.17050 & 17051/2011
circumstances, accused No.2 has not properly explained
as to why the said Rajesh and Somashekar who were also
share holders in the accused No.1 company, has to act
against the interest of their own company and misuse
company's cheques by colluding with complainant as
alleged by accused No.2. So, in absence of proper
explanation by the accused No.2 regarding alleged misuse
of cheques, version of the accused No.2 cannot be
believable and acceptable. Hence, I don't find any force in
the arguments of learned counsel for accused.
38. Coming to another argument of learned counsel
for accused No.2 that complaint is not maintainable
against accused No.2 alone, because other Directors
namely Rajesh and Somashekar are also necessary
parties. Inspite of that, complainant got deleted their
names, though initially they have been arrayed as accused
No.3 and 4. So, it shows the conduct of the complainant
that he colluded with deleted accused No.3 and 4 and
misused the cheques etc.
39. It is important to note, admittedly, deleted
accused No.3 and 4 are not signatories to the present
cheques. So, at this juncture, it is worth to note, ratio laid
24 C.C.No.17050 & 17051/2011
down by Hon'ble Apex Court in the judgment reported in
(2013)8 SCC 71 (Mrs. Aparna A. Shah V/s. M/s. Sheth
Developers Pvt. Ltd.,) wherein Hon'ble Court held that:
"U/s.138 of NI Act, it is only the drawer of
the cheque who can be prosecuted. In the
case on hand, admittedly, the appellant is
not a drawer of the cheque and she has not
signed the same. So, this court reiterates
that it is only the drawer of the cheque, who
can be made as accused in any proceedings
under Section 138 of NI Act"
40. So, in the light of above ratio, admittedly, when
deleted accused No.3 and 4 are not signatories to the
cheques, they cannot be arrayed as accused and
prosecuted. Hence, complainant has rightly got deleted
their names. At this juncture, it is also worth to note, on
perusal of Ex.P-17, which is letter issued by accused No.2
in the name of accused No.1 company to the complainant
by admitting the loan liability and also issuance of
cheques and sought further time to make repayment of
loan. This fact is clearly admitted by accused No.2 in his
cross-examination that:
"¤¦-17 zÁR¯ÉAiÀÄ°ègÀĪÀ ¸À»AiÀÄÆ £À£ÀßzÉà JAzÀÄ
¸ÀÆa¹zÀgÉ ¸Àj. ¸ÀzÀj zÁR¯ÉAiÀÄ£ÀÄß £Á£Éà §gɹ
¤ÃrzÀ zÁR¯ÉAiÀiÁVgÀÄvÀÛzÉ"
25 C.C.No.17050 & 17051/2011
41. So, from the above evidence, it clearly
establishes that accused No.2 being in-charge and
responsible for day to day affairs of the accused No.1
company issued present cheques. Hence, he alone has to
be prosecuted. So, I do not find any force in the
arguments of learned counsel for accused No.2 that other
directors are to be made as parties.
42. Coming to arguments of learned counsel for
accused No.2 that complainant had no financial capacity
to lend such a huge amount to accused No.1 and 2 etc.
43. Having regard to the arguments of learned
counsel for accused, at this juncture, it is worth to note
ratio laid down by Hon'ble Apex Court in the recent
judgment reported in (2019) SCC Online SC 389 = Criminal
Appeal No.508 of 2019 (Rohitbhai Jivanlal Patel V/s. State
of Gujarat and another) wherein it is held:
"In the case at hand, even after purportedly
drawing the presumption under Section 139
of the NI Act, the Trial Court proceeded to
question the want of evidence on the part of
the complainant as regards the source of
funds for advancing loan to the accused and
want of examination of relevant witnesses
who allegedly extended him money for
26 C.C.No.17050 & 17051/2011
advancing it to the accused. This approach
of the Trial Court had been at variance with
the principles of presumption in law. After
such presumption, the onus shifted to the
accused and unless the accused had
discharged the onus by bringing on record
such facts and circumstances as to show the
preponderance of probabilities tilting in his
favour, any doubt on the complainant's case
could not have been raised for want of
evidence regarding the source of funds for
advancing loan to the accused-appellant"
"Presumption existing in favour of the
complainant by virtue of Sections 118 and
139 of the NI Act. Needless to reiterate that
the result of such presumption is that
existence of a legally enforceable debt is to
be presumed in favour of the complainant.
When such a presumption is drawn, the
factors relating to the want of documentary
evidence in the form of receipts or accounts
or want of evidence as regards source of
funds were not relevant"
44. So, from the above ratio decedendi, it is crystal
clear that when mandatory presumption has been raised
in favour of complainant, which includes existence of
legally enforceable debt, then court cannot expect evidence
regarding the source of funds of the complainant for
27 C.C.No.17050 & 17051/2011
advancing loan to the accused, whereas expecting such
evidence is contrary to presumption envisaged under
Section 138 of N.I. Act. So, source of funds of the
complainant is totally irrelevant. Hence, I do not find any
force in the arguments of learned counsel for accused.
45. Coming to one more argument of learned counsel
for accused No.2 that complainant and deleted accused
No.4 Somashekar colluded together and got filled up the
contents of the cheques by accused No.4 for their
convenience which amounts to material alteration etc.
46. Having regard to the arguments of learned
counsel for accused at this juncture, it is worth to note
ratio laid down by Hon'ble Apex Court in the recent
judgment reported in 2019 SCC On line SC 138 = Crl.
Appeal No.230-231/2019 2019 (@SLP(Crl) No.9334-
35/2018) dated 06.02.2019 (Bir Singh V/s. Mukesh Kumar)
wherein it is held that:
"A meaningful reading of the provisions of
the Negotiable Instruments Act, 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 not been
28 C.C.No.17050 & 17051/2011
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 the cheque is
otherwise valid, the penal provisions of
Section 138 would be attracted"
"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 be on the accused to prove that the
cheque was not in discharge of a debt or
liability by adducing evidence"
"It may reasonably be presumed that the
cheque was filled in by the appellant-
complainant being the payee in the presence
of the respondent-accused being the drawer,
at his request and/or with his acquiescence.
The subsequent filling in of an unfilled
signed cheque is not an alteration"
47. Having regard to the arguments of learned
counsel for accused at this juncture, it is worth to note
ratio laid down by Hon'ble Apex Court in the judgment
reported in (2002)7 SCC 150 (P.K. Manmadhan Kartha V/s.
Sanjeev Raj and another) wherein it is held that:
29 C.C.No.17050 & 17051/2011
"Difference of handwriting and ink on the
cheque did not rebut the statutory
presumption U/s.139 and 118 of NI Act"
48. At this juncture it is also worth to note that view
taken by Hon'ble High Court of Karnataka reported in ILR
2001 KAR 4127 (S.R. Muralidhar V/s. Ashok G.Y.) wherein
it is held that:
Section 20 of NI Act - Inchoate stamped
instruments "No law provides that in case of
any negotiable instrument entire body has to be
written by maker or drawer only. What is
material is signature of drawer or maker and
not the body writing hence question of body
writing has no significance"
"It is not objectionable or illegal in law to
receive a inchoate negotiate instrument duly
singed by the maker despite the material
particulars are kept blank if done with an
understanding and giving full authority to the
payee to fill up the material contents as agreed
upon. Such a course of action in law cannot
vitiate the transaction nor can invalidate the
negotiable instrument issued and such
transaction fully binds the maker of the
Negotiable Instrument"
49. So, in the light of above principle if the present
facts and situations are analyzed, as I have already
pointed out accused No.2 is not disputing facts that
30 C.C.No.17050 & 17051/2011
cheques are belonged to accused No.1 company and they
bear his signatures. Under such circumstances, filling up
body of the cheques by complainant or somebody else will
not invalidate the cheque and that itself will not rebut the
mandatory presumption raised in favour of complainant
when version of the accused No.2 itself is not probable
and acceptable. Hence, I don't find any force in the
arguments of learned counsel for accused.
50. Coming to another argument of learned counsel
for accused No.2 that according to complainant, he
advanced entire amount of Rs.9,00,000/- by way of cash
which cannot be believable, because a loan more than
Rs.20,000/- cannot be advanced in cash etc.
51. Having regard to the arguments of learned
counsel for accused, at this juncture, it is worth to note
principle laid down in the judgment of Hon'ble High Court
of Bombay reported in 2013 Crl.L.J. (NOC) 572 (BOM.)
(Krishna P. Morajkar V/s. Joe Ferrao and another) wherein
it is held that:
"A plain reading of Section 269SS of the
Income-tax Act shows that no person can
accept any loan or deposit of sum of
Rs.20,000/- or more otherwise than by an
31 C.C.No.17050 & 17051/2011
account payee cheque or account payee
bank draft. It does not say that a person
cannot advance more than Rs.20,000/- in
cash to another person. It is clear that the
restriction on cash advances was in fact on
the taker and not the person who makes
the advance. The penalty for taking such
advance or deposit in contravention of
provisions of Section 269SS was to be
suffered by one who takes the advance.
Therefore, it was obviously impermissible
to invoke these provisions for preventing a
person from recovering the advance which
he has made"
52. So, from the above view taken by Hon'ble High
Court and on reading of Section 269SS of I.T. Act, it is
crystal clear that it does not say that a person cannot
advance more than Rs.20,000/- in cash to another person.
It is clear that the restriction on cash advances was in fact
on the taker/to accept said amount in cash and not the
person who makes the advance. So, under such
circumstances, I am of the opinion that this provision is
against to borrower but not to lender. So, this provision
will not helpful to the accused to rebut the presumption.
Hence, I do not find any force in the arguments of learned
counsel for accused.
32 C.C.No.17050 & 17051/2011
53. Coming to another argument of learned counsel
for accused No.2 that admittedly complainant has not
disclosed alleged loan transaction in his I.T. returns. So, it
indicates that there was no loan transaction of
Rs.9,00,000/- between accused No.2 and complainant etc.
54. Having regard to the arguments of learned
counsel for accused, at this juncture, it is worth to note
Hon'ble Apex Court in above said Rohitbhai Jivanlal Patel
V/s. State of Gujarat and another's case, it is clearly held
that:
"If the transaction in question was not
reflected in the accounts and income-tax
returns, that would at best hold the assessee
or lender liable for action under the income-
tax laws but, if the complainant succeeds in
showing the lending of amount, the existence
of legally enforceable debt cannot be denied"
55. So, from the above principle, it is crystal clear
that even non-filing of I.T. returns or non-disclosing of
loan transaction in the income tax returns will not rebut
the mandatory presumption, at the best, the assessee will
be liable for action under income tax laws before separate
forum. So, non-production of I.T. returns or non-
33 C.C.No.17050 & 17051/2011
disclosing of loan transaction in income tax returns that
itself will not rebut the mandatory presumption when
defence raised by the accused No.2 is not probable and
acceptable as observed by Hon'ble Apex Court. Hence, I
do not find any force in the arguments of learned counsel
for accused.
56. As I have already pointed that Hon'ble Apex
Court in the Constitution Bench and Larger Bench
Judgments stated supra, it is clearly held that
presumption envisaged U/s.138 of NI Act is not general
presumption but it is mandatory presumption, so the said
presumption has to be rebutted by 'proof' and it must be
more than a plausible explanation". So, I come to clear
conclusion that accused has utterly failed to rebut the
mandatory presumption raised in favour of complainant.
Hence, I hold this point in Affirmative.
57. Point No.2: As I have already discussed in
point No.1 that accused No.2 on his behalf as well as on
behalf of accused No.1 company, has issued cheques for
discharging of their legally recoverable debt. Whereas, on
perusal of bank endorsements given by bank authority
clearly reveal that complainant had presented the said
cheques within validity period, but said cheques were
34 C.C.No.17050 & 17051/2011
dishonoured with endorsement "Funds Insufficient". On
perusal of legal notice issued to both accused clearly
reveal that the complainant got issued said demand notice
to accused within specified time of 30 days from the date
of receiving of endorsement from bank. On perusal of
returned postal covers, they clearly reveal that the said
notices have been returned with a postal shara "Not
Claimed, Addressee Absent" etc.
58. At this juncture, it is worth to note on perusal of
address of the accused No.1 and 2 shown in notice as well
as cause title of the complaint, they are properly
addressed and sent through RPAD to the correct address
of the accused No.1 and 2. So in view of Sec 27 of General
Clauses Act 1897 as well as ratio laid down by Hon'ble
Apex Court in the Judgment reported in (1999)7 SCC 510
(K. Bhaskaran Vs. Sankaran Vaidhyan Balan), (2017)5 SCC
373 (N. Paramesharan Unni V/s. G. Kannan) and another
judgment (2004)8 SCC 774 (V. Raja Kumari V/s. P.
Subbarama Naidu and another) wherein it is held that:
"Giving of notice is distinguished from
receiving of the notice"
"On the part of the payee he has to make a
demand by "giving a notice" in writing. If that
35 C.C.No.17050 & 17051/2011
was the only requirement to complete the
offence on the failure of the drawer to pay the
cheque amount within 15 days from the date of
such "giving", the travails of the prosecution
would have been very much lessened. But the
legislature says that failure on the part of the
drawer to pay the amount should be within 15
days "of the receipt" of the said notice. It is,
therefore, clear that "giving notice" in the
context is not the same as receipt of notice.
Giving is a process of which receipt is the
accomplishment. It is for the payee to perform
the former process by sending the notice to the
drawer at the correct address"
"A payee can send the notice for doing his
part for giving the notice. Once it is dispatches
his part is over and the next depends on what
the sendee does"
It is also held that:
"It is clear from Section 27 of General Clauses
Act, 1897 and Section 114 of the Evidence
Act, 1872, that once notice is sent by
registered post by correctly addressing to the
drawer of the cheque, the service of notice is
deemed to have been effected. When a notice
is sent by registered post and is returned with
postal endorsement "refused" or "not available
in the house" or "house locked" or "shop
closed" or "addressee not in station", due
36 C.C.No.17050 & 17051/2011
service has to be presumed. Then
requirements under proviso (b) of
Section 138 stand complied with if notice is
sent in the prescribed manner. However, the
drawer is at liberty to rebut his presumption"
59. So, in the light of above ratio, if the present facts
and situations are analyzed, as I have already pointed out
that complainant has given notice in writing and same is
sent through RPAD to the proper address of the accused.
It is further significant to note, on perusal of his address
given in his examination-in-chief, it clearly tallies with the
address shown notice as well as cause title of the
complaint. So, it is construed as deemed service.
Moreover, accused No.2 has not placed any contrary
evidence to prove that above said notice was sent to wrong
address and he is not liable for non-service of legal notice.
60. So on considering the oral coupled with the
documentary evidence of the complainant, they clearly
proved that complainant has complied with mandatory
requirements as specified U/s.138(a) and (b) of N.I. Act.
Whereas, accused has not paid the cheques amount
within specified time, inspite of service of demand notices.
It is significant to note, admittedly, accused No.2 is
Director as well as authorized signatory of accused No.1
37 C.C.No.17050 & 17051/2011
company and represented said company and issued
cheques on behalf of accused No.1 company. Hence,
accused No.1 ISIRI Properties Pvt. Ltd., being principal
offender and accused No.2 Gopi Krishna being Director as
well as authorized signatory, who is responsible for
issuance of said cheques have committed offence within
the purview of Section 141 of N.I. Act. Hence, accused
have committed offence punishable U/s.138 r/w 141 of NI
Act. Hence, I hold point No.2 in Affirmative.
61. Point No.3: For the foregoing reasons
discussed on points No.1 and 2, I proceed to pass the
following:-
ORDER
Acting under Section 255(2) r/w 264 of Cr.P.C., accused No.1 and 2 are hereby convicted for the offence punishable u/S.138 of Negotiable Instruments Act in both C.C.17050/2011 and in C.C.17051/2011.
(V. NAGARAJA) XXI ADDL. C.M.M., BENGALURU.
On considering the facts and circumstances of the case, in C.C.17050/2011, accused No.1 company being principal offender, represented by its Director/Authorized Signatory i.e., accused No.2 is hereby 38 C.C.No.17050 & 17051/2011 sentenced to pay fine of Rs.3,30,000/- (Three Lakhs and Thirty Thousand only). In default he shall undergo simple imprisonment for a period of 3 (Three) months.
In view of Section 357 of Cr.P.C., complainant is entitled for compensation of Rs.3,25,000/- (Three Lakh and Twenty Fifty Thousand only) out of above said fine amount in C.C.17050/2011 as compensation and defray remaining fine amount of Rs.5,000/- (Five Thousand) to state, after appeal period is over.
Whereas in C.C.17051/2011, accused No.1 company being principal offender, represented by its Director/Authorized Signatory i.e., accused No.2 is hereby sentenced to pay fine of Rs.3,30,000/- (Three Lakhs and Thirty Thousand only). In default he shall undergo simple imprisonment for a period of 3 (Three) month.
In view of Section 357 of Cr.P.C., complainant is entitled for compensation of Rs.3,25,000/- (Three Lakh and Twenty Fifty Thousand only) out of above said fine amount in C.C.17051/2011 as compensation and defray remaining fine amount of Rs.5,000/- (Five Thousand) to state, after appeal period is over.
Accused shall execute personal bonds of Rs.3,30,000/- in C.C.17050/2011 and Rs.3,30,000/- in C.C.17051/2011 respectively in view of Sec.437(A) of Cr.P.C.
The office is hereby directed to supply the copy of this Judgment to both accused on free of cost.
39 C.C.No.17050 & 17051/2011Note: As these cases are clubbed for common judgment, original judgment shall be kept in C.C.17050/2011 and copy thereof shall be kept in C.C.17051/2011.
(Directly dictated to Stenographer on computer, computerized by him, corrected and then pronounced by me in the open court on this the 28th day of February, 2020) (V. NAGARAJA) XXI ADDL. C.M.M., BENGALURU.
ANNEXURES IN C.C. No.17050/2011 LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW-1 : C. Mahesh LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P-1 : Cheque
Ex.P-2 : Bank Endorsement
Ex.P-3 : Copy of Legal Notice
Ex.P-4 to 10: Postal Receipts
Ex.P-11 to 15: Returned Postal Covers
Ex.P-16 : Complaint
Ex.P-17 : Letter
Ex.P-18 : I.T. Returns Verification Form
Ex.P-19 : Balance Sheet
LIST OF WITNESSES EXAMINED FOR THE DEFENCE:
DW-1 : Gopi Krishna
DW-2 : Varadarajan
LIST OF DOCUMENTS MARKED FOR THE DEFENCE:
Ex.D-1 : Board Resolution
Ex.D-2 : Letter
IN C.C. No.17051/2011
LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW-1 : C. Mahesh 40 C.C.No.17050 & 17051/2011 LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P-1 : Cheque
Ex.P-2 : Bank Endorsement
Ex.P-3 : Copy of Legal Notice
Ex.P-4 to 10: Postal Receipts
Ex.P-11 to 15: Returned Postal Cover Ex.P-16 : Complaint Ex.P-17 : Letter Ex.P-18 : I.T. Returns Verification Form Ex.P-19 : Balance Sheet LIST OF WITNESSES EXAMINED FOR THE DEFENCE:
DW-1 : Gopi Krishna
DW-2 : Varadarajan
LIST OF DOCUMENTS MARKED FOR THE DEFENCE:
Ex.D-1 : Board of Resolution Ex.D-2 : Letter (V. NAGARAJA) XXI ADDL. C.M.M., BENGALURU.