Bangalore District Court
Sri. N. Nanjappa vs Sri. Gangappa @ Gangappa on 15 May, 2018
IN THE COURT OF XXI ADDL.CHIEF METROPOLITON
MAGISTRATE, BENGALURU CITY
Present: Sri. V. NAGARAJA, B.A., LL.B.,
XXI Addl. Chief Metropolitan Magistrate,
Bengaluru.
Dated this the 15th day of May, 2018
C.C. No.758/2014
COMPLAINANT: Sri. N. NANJAPPA
S/o. N. Narayanappa,
Aged about 56 years,
R/at. No.72, N.N. Farm,
Geddalahalli,
Bengaluru - 560 094.
(Reptd. By CP., Advocate)
V/s.
ACCUSED: Sri. GANGAPPA @ GANGAPPA
GANGADHARAPPA
S/o. Yakashappa,
R/at. Kuduvatthi Village,
Nandi Hobli,
Chikkaballapura Taluk & District.
(Reptd. By JPR., Advocate)
:JUDGMENT:
Complainant has filed this complaint under Section 200 of Cr.P.C. r/w Section 138 of N.I. Act, seeking for penalizing the accused for the offence punishable under Section 138 of N.I. Act and also for awarding compensation to him.
2 C.C.No.758/2014
2. Case of the complainant in a nutshell is that:
Accused is well acquainted with complainant. So, in that acquaintance, accused had approached him for hand loan on 25.05.2012 and on considering his request, he advanced Rs.5,00,000/- to him. After availing the loan, accused agreed to repay the said amount within a period of one year and in order to discharge said loan liability, he issued him postdated cheque bearing No.022451 dated 20.07.2013 for Rs.5,00,000/- drawn on State Bank of Mysore, Chikkaballapura Branch and assured to honour the said cheque. Accordingly, on 25.07.2013, complainant presented the said cheque through his banker i.e., Karnataka Bank, Sanjaynagara Branch, Bengaluru. But said cheque was dishonoured for the reason "Funds Insufficient" in the account of accused. So, the bank authorities issued endorsement dated 25.07.2013. So, he got issued legal notice dated 12.08.2013 by demanding above cheque amount. Whereas said notice was duly served upon accused on 17.08.2013. But, accused failed to comply with the notice. Hence, accused has committed offence punishable U/s.138 of NI Act. Hence, he is constrained to file this complaint seeking for penalizing the 3 C.C.No.758/2014 accused for the offence punishable under Section 138 of N.I. Act., and also seeking for awarding of compensation to him.
3. In pursuance of summons issued by this court, accused made appearance through his counsel and obtained bail and now he is on bail.
4. As these proceedings are summary in nature, substance of accusation read over and explained to accused in language known to him whereas, he pleaded not guilty and claimed for trial.
5. In order to prove the case of the complainant, he has been examined as PW-1 and got documents marked Ex.P-1 to Ex.P-5. After completion of evidence of the complainant, statement of accused as specified U/s.313 of Cr.P.C., has been recorded and he himself has been examined as DW-1 and got documents marked Ex.D-1 and Ex.D-2.
6. I have heard arguments of both learned counsels and they also filed their written arguments along with citations.
7. Perused the records.
4 C.C.No.758/2014
8. After perusal of records, the points arise for my consideration are:
1) Whether complainant proves beyond all reasonable doubt that accused in order to discharge his loan liability, he has issued him cheque bearing No.022451 dated 20.07.2013 for Rs.5,00,000/-
drawn on State Bank of Mysore, Chikkaballapura Branch, Chikkaballapura?
2) Whether complainant further proves that he has complied with mandatory requirements as specified under Section 138 of N.I. Act?
3) What Order?
9. 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
10. Point No.1: As I have already stated, in order to prove the case of the complainant, he has been examined as PW-1 and he filed his examination-in-chief by way of affidavit by reiterating entire complaint averments as stated above. In support of his oral testimony, he relied upon Ex.P-1 to Ex.P-5.
11. On the other hand, accused has been examined as DW-1 and got document marked Ex.D-1 and Ex.D-2. 5 C.C.No.758/2014
12. 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:
"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.
What is required to be established by the accused in order to rebut the presumption is different from each case under the given circumstances. But the fact remains that a mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal 6 C.C.No.758/2014 evidence. In other words, the defence raised by way of rebuttal evidence must be probable and capable of being accepted by the court."
13. 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 has issued Ex.P-1, cheque for discharging his loan liability. On the other hand, on considering the stand taken by accused in the cross-examination of PW-1 and also his answers given in his statement recorded u/S.313 of Cr.P.C., and in his defence evidence, it is obvious that though he disputes his liability of Rs.5,00,000/- as claimed by complainant, but he is not disputing the facts that Ex.P-1 cheque is belonged to his account and his signature thereon. 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 accused admits his signature on cheque, the mandatory presumption u/S 139 of N.I. Act comes to the aid of complainant and he can rest upon said presumption, whereas the onus of proof shifts on accused to rebut the said presumption.
7 C.C.No.758/2014
14. 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.
15. 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".
16. So when above ratio clearly states that presumption includes existence of legally enforceable debt 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"8 C.C.No.758/2014
17. Moreover, it is well settled law that the prime object of presumptions are to minimize or to avoid the leading of unnecessary evidence. 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 is able to rebut the said presumption or not?
18. It is significant to note on considering the stand taken by the accused in his defence evidence, he contended that during the month of May 2012, the complainant introduced himself to him by expressing his interest that he intended to purchase agricultural land in or around his village and he also assured to pay commission for him for showing any land sellers. So, he searched one K.M. Poojappa, who had intended to sell his land and introduced him to complainant. After sale 9 C.C.No.758/2014 negotiations, the complainant has agreed to purchase land from said K.M. Poojappa, so both entered into agreement to sell dated 06.06.2012 as per Ex.D-2 and complainant gave Rs.2,00,000/- as earnest money to said K.M. Poojappa. So, he affixed his signature to said sale agreement as consenting witness to the said transaction. So, complainant paid him Rs.20,000/- as his commission. He further contended that at the time of agreement as he participated in sale negotiation as a mediator and also consenting witness, the complainant insisted him to issue one blank cheque to him for the purpose of security to the amount paid by complainant to said K.M. Poojappa as the said K.M. Poojappa was stranger to complainant. It is further contended as dispute arose between complainant and said K.M. Poojappa regarding above said sale agreement, the said K.M. Poojappa has not executed registered sale deed as per sale agreement. So, the complainant insisted him to get registered sale deed executed by K.M. Poojappa, so when K.M. Poojappa refused to execute sale deed, the complainant misused his signed blank cheque which was given for the purpose of security and filed this false complaint. Hence, same is liable to be dismissed and he may be acquitted. 10 C.C.No.758/2014
19. In support of above defence, learned counsel for accused, in his oral as well as written arguments, he argued that there is no loan transaction between complainant and accused as claimed by complainant. So, there was no legally enforceable debt as on the date of issuance of alleged cheque by the accused. Moreover, complainant was not having financial capacity to advance such a huge amount of Rs.5,00,000/- to accused that too when complainant had already paid Rs.2,00,000/- (in the same month of alleged loan transaction) to one K.M. Poojappa, who is his vendor. He further argued that the complainant has not produced any I.T. returns showing alleged loan transaction. Further more alleged loan transaction contravenes the income tax provisions that loan cannot be advanced in cash more than Rs.20,000/-, so these circumstances go to show that there was no alleged loan transaction. Hence, there was no existence of any loan liability between accused and complainant. So, when complainant himself has failed to prove existence of loan liability, his complaint has to be dismissed on this ground alone. He further argued, in fact accused has issued his signed blank cheque only for the purpose of security as deposed by him in his deposition and his 11 C.C.No.758/2014 version has been substantiated by Ex.D-1 and Ex.D-2. He further argued that the oral and documentary evidence of the accused probabalize his defence. Hence, complaint has to be dismissed and accused may be acquitted.
20. In support of his arguments, he placed reliance upon the judgments of Hon'ble Courts reported in:
1. (2014)2 SCC 236
2. 2015(5) KCCR 990
21. Per contra, learned counsel for complainant in his oral as well as written arguments, he contended that the defence raised by accused is not probable and acceptable. Hence, the accused has failed to rebut the mandatory presumption. He further argued that accused cannot escape from the liability by taking shelter under Income Tax Provisions. Even otherwise if any violation of Income Tax provisions by the complainant, it is between complainant and Income Tax Department. So, merely taking of such defence will not rebut the mandatory presumption raised in favour of complainant. In support of his arguments, he placed reliance upon the judgments of Hon'ble courts reported in:
1. 2013 Crl.L.J. (NOC) 572 (BOM) 12 C.C.No.758/2014
2. 2003 Crl.L.J. 967
22. Having regard to the arguments of both learned counsels, at this juncture, it is worth to note that, it is no doubt true that in order to rebut mandatory presumption raised in favour of complainant, the standard of proof required by accused is only preponderance of probabilities and he need not prove his case beyond all reasonable doubt as required by complainant. But at the same time, the Hon'ble Apex Court in Larger Bench judgment in 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"
23. At this juncture, it is worth to note ratio decidendi laid down by the Constitutional 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 13 C.C.No.758/2014 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"
"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"14 C.C.No.758/2014
24. 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 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"
25. Keeping in view of above ratio, if the preset facts and situations are analyzed, though the accused took above said contention, but he has not placed any cogent 15 C.C.No.758/2014 and convincing evidence to prove his contention to the satisfaction of the court. Whereas mere production of Ex.D-1 which is notice issued by complainant to accused and others and Ex.D-2 which is registered sale agreement entered between complainant and K.M. Poojappa, are not sufficient to prove his contention, because on perusal of Ex.D-2 sale agreement, there is no recital or reference regarding issuance of present cheque by accused in favour of complainant, only for the purpose of security as contended by accused. So, under such circumstances, it is hard to accept his contention. At this juncture, it is also worth to note the conduct of the accused that he has deposed in his cross-examination that he has not lodged any police complaint or initiated any court proceedings against complainant regarding alleged misuse of cheque by the complainant. So, under such circumstances, I am of the opinion, if at all accused had not issued above said cheque for discharging of his liability as contended by him, then definitely he would have lodged police complaint regarding alleged misuse of the cheque, because no prudent man will keep quite, when his cheque is misused by somebody else that too for huge amount. It is further significant to note, if at all the accused had issued said 16 C.C.No.758/2014 cheque only for the purpose of security as contended by him, then he could have given instructions to his banker for stop payment regarding the present cheque, but he did not do so. It is further significant to note as I have already pointed out, the accused in his defence evidence, he contended that he issued present cheque to the complainant for the purpose of security while above said sale agreement, but interestingly in his plea recorded by this court on 18.04.2017, he contended that he has not issued any cheque in favour of complainant and complainant has taken the cheque from his wife and has misused the same. So, on considering his different versions, it can be easily stated that he is changing his versions conveniently from stage to stage. Hence, the defence raised by the accused is not probable and acceptable, because as I have already pointed that Hon'ble Apex Court in the Constitutional Bench and Larger Bench Judgments stated supra, it is clearly held that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible, because the presumption envisaged U/s.138 of NI Act is not general presumption but it is mandatory presumption". So, I come to clear conclusion that accused has utterly failed to rebut 17 C.C.No.758/2014 the mandatory presumption raised in favour of complainant.
26. Coming to the arguments of learned counsel for accused that the complainant has misused the signed blank cheque of the accused by filling up the same for his convenience, cannot be accepted in view of ratio laid down 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"18 C.C.No.758/2014
27. At this juncture it is also worth to note that view taken 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:
"Difference of handwriting and ink on the cheque did not rebut the statutory presumption U/s.139 and 118 of NI Act"
28. So, in view of above settled principle, I am of the opinion that the above defence raised by the accused will not rebut the mandatory presumption raised in favour of the complainant. Hence, I do not find any force in the arguments of learned counsel for accused.
29. Coming to another arguments of learned counsel for accused that complainant has not disclosed alleged loan transaction in his I.T. returns and he also not produced his income tax documents, hence adverse inference can be drawn. Moreover alleged loan violates the Income Tax Provisions that loan cannot advanced in cash more than Rs.20,000/-.
30. 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 19 C.C.No.758/2014 of Bombay reported in 2013 Crl.L.J. (NOC) 572 (BOM.) (Krishna P. Morajkar V/s. Joe Ferrao and another) (relied by learned counsel for accused) 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 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"
31. So, in the light of above principle and on combined reading of Section 271D and 273D of Income Tax Act, it is clear that there is a separate forum for taking action against a person who contravenes Section 269SS of Income Tax Act and if said person gives proper explanation for contravention of the said section, then he is not liable for any punishment. So, under such circumstances, mere 20 C.C.No.758/2014 violation of above said Section 269SS of Income Tax Act itself will not rebut the mandatory presumption raised in favour of complainant. Hence, I do not find any force in the arguments of learned counsel for accused.
32. Coming to yet another arguments of learned counsel for accused that complainant has no financial capacity to lend such huge amount of Rs.5,00,000/- to accused that too when he had advance Rs.2,00,000/- to his vendor in the same month.
33. It is significant to note admittedly complainant paid Rs.2,00,000/- as earnest money to his vendor at the relevant point of time. It is further significant to note accused in his cross-examination, he clearly admitted that complainant has agricultural land in his village and also lands in Chikkaballapura, whereas the complainant in his evidence, he deposed that he has 12 acres of land in Kuruvatti and he had also purchased 20 guntas of land from the father of the accused and he further deposed that in addition to his agricultural work, he has been doing business and getting 7-8 lakhs income per annum. So, under such circumstances it is not difficult to complainant to advance Rs.5,00,000/-. On the other hand, as I have 21 C.C.No.758/2014 already pointed out when version of the accused itself is not probable and acceptable, then the contention of the accused that the complainant has no financial capacity cannot be accepted. Moreover, mere such defence will not rebut the mandatory presumption raised in favour of complainant. Hence, I do not find any force in the arguments of learned counsel for accused, whereas the judgments of Hon'ble Courts relied by learned counsel for accused will not helpful to his contention. Hence, I hold this point in Affirmative.
34. Point No.2: As I have already discussed in point No.1 that accused has issued Ex.P-1 cheque for discharging of his legally recoverable debt. Whereas, on perusal of Ex.P-2 which is bank endorsement given by bank authority clearly reveal that complainant had presented the said cheque within validity period, but said cheque was dishonoured due to "Funds Insufficient" in the account of accused. On perusal of Ex.P-3 which is legal notice issued to 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 Ex.P-5 which is 22 C.C.No.758/2014 postal acknowledgement clearly reveal that the said notice has been duly served on accused. But accused has failed to pay the cheque amount.
35. 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 cheque amount within specified time, inspite of service of demand notice. Hence, accused has committed offence punishable U/s.138 of NI Act. Hence, I hold point No.2 in Affirmative.
36. 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., the accused is hereby convicted for the offence punishable u/S.138 of Negotiable Instruments Act.
(V. NAGARAJA) XXI ADDL. C.M.M., BENGALURU.
On considering the facts and circumstances of the case, accused is hereby sentenced to pay fine of Rs.5,05,000/- (Five Lakh and Five Thousand only). In default he shall undergo simple imprisonment for a period of 5 (Five) months.23 C.C.No.758/2014
In view of Section 357 of Cr.P.C., complainant is entitled for compensation of Rs.5,00,000/- (Five Lakh only) out of above said fine amount.
After collecting the above fine amount, office is directed to pay Rs.5,00,000/- (Five Lakh only) to complainant as compensation and defray remaining fine amount of Rs.5,000/-
(Five Thousand only) to state, after appeal period is over.
However, accused shall execute personal bond of Rs.5,05,000/- in view of Sec.437(A) of Cr.P.C.
The office is hereby directed to supply the copy of this Judgment to the accused on free of cost.
(Dictated to Stenographer, transcribed and computerized by him, corrected and then pronounced by me in the open court on this the 15th day of May, 2018) (V. NAGARAJA) XXI ADDL. C.M.M., BENGALURU.
ANNEXURE LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW-1 : N. Nanjappa 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 : Postal Receipt
Ex.P-5 : Postal Acknowledgement Card
LIST OF WITNESSES EXAMINED FOR THE DEFENCE:
DW-1 : Gangappa @ Gangadharappa 24 C.C.No.758/2014 LIST OF DOCUMENTS MARKED FOR THE DEFENCE:
Ex.D-1 : Notice
Ex.D-2 : C.C. of Sale Agreement
(V. NAGARAJA)
XXI ADDL. C.M.M., BENGALURU.