Bangalore District Court
Prakash H K Rep By Its Spa Holder Abhishek … vs Coast Liners Pvt. Ltd on 5 December, 2024
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CC No.30578 / 2020
KABC030810342021
Presented on : 09-11-2021
Registered on : 09-11-2021
Decided on : 05-12-2024
Duration : 3 years, 0 months, 26 days
IN THE COURT OF XX ADDL.CHIEF JUDICIAL MAGISTRATE AT
BENGALURU CITY
PRESENT: SRI. SHRISHAIL BHIMASHEN BAGADI,
B.Com.,L.L.B.,
XX ADDL. C.J.M., Bengaluru.
Dated this the 5th day of December 2024
C.C.No. 30578 / 2021
Complainant : Pakash H K Huf,
Represented by Kartha :
Prakash H K
Age 70 years,
S/o. Late Harilal N K
No.98, S.P. Road,
Bangalore - 560 002
Represented by SPA Holder
Sri. Abhishek V.
S/o. Late Sri. Vijay Kumar
Age 32 years,
(By Sri.Vijay Kumar - Advocate)
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CC No.30578 / 2020
Accused : 1. Coast Liners Private Limited,
Unit No.415, 4th Floor, Shree Complex,
No.73, St. Johns Road,
Bangalore - 560 042
Represented by Director
2. Piyus Todi
Director Of Coast Liners Private Limited,
Unit No.415, 4th Floor,
Shree Complex No.73 St Johns Road,
Bengaluru
Offence complained : U/S. 138 of N.I. Act.,
Plea of accused : Pleaded not guilty
Final Order : Accused is convicted.
Date of Judgment : 05.12.2024
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CC No.30578 / 2020
JUDGMENT
The complainant has filed this complaint under Section
200 of the Code of Criminal Procedure against the accused,
alleging that the accused has committed an offense punishable
under Section 138 of the Negotiable Instruments Act.
02. The brief facts of the Complainant’s case are as under;
The accused No.2 is the Director of accused No.1 and being
well known to the Complainant from past three years had
approached the Complainant in the month of January 2020 and
had sought for the loan of Rs.24,00,000/- from the Complainant
for urgent business purposes. Accordingly the Complainant paid
a sum of Rs.24,00,000/- as loan by way of cheque bearing
No.000787 dated 24.01.2020. Accused No.1 and 2 executed
executed on demand promissory note and consideration receipt
on 24.01.2020 in favor of complainant and acknowledged to have
received a sum of Rs.24,00,000/- from the complainant. The
accused No.2 representing accused No.1 has already paid a
sum of Rs.3,74,400/- to the complainant by way of RTGS on
27.01.2020 towards interest. On repeated demand and personal
approaches made by the Complainant for repayment of the
above said amount, the accused No.2 representing accused No.1
had issued 6 following cheques
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CC No.30578 / 2020
Sl.No. Cheque No. Cheque Amount (Rs) Drawn on
date
1 118859 24.09.2020 2,00,000/-
2 118860 24.10.2020 2,00,000/- Yes Bank Ltd.,
Bangalore
3 003306 02.11.2020 2,00,000/-
4 003307 03.11.2020 2,00,000/-
5 471592 05.11.2020 8,00,000/- Axis Bank
Ltd.,
Banaglore
6 422844 7.11.2020 8,00,000/- Yes Bank Ltd.,
Bangalore
Reposing confidence in the accused , the complainant presented
the all the above said cheques for encashment through Lakshmi
Vilas Bank, City Market Branch, Bangalore, but the aforesaid
cheques at Sl. No. 1 to 4 and 6 were returned with endorsement
as “Account Closed” and cheque at Sl. No. 5 was returned with
endorsement “Funds insufficient” as per the cheque return
memos dated 11.11.2020. The factam of dishonour of a cheque
duly communicated to the accused through legal notice dated
20.11.2020. The notice issued by the complainant to the
accused No.1 and accused No.2 were returned “Refused as per
the endorsement of the postman dated 23.11.2020. As per
Section 27 of the General Clauses Act, the notice issued to the
accused to the last known address returned with an
endorsement ‘Refused’ presumed to be deemed service of notice.
Despite the issuance of notice and lapse of the statutory period of
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15 days, the accused did not come forward to pay the cheque
amount nor issued a reply notice. Therefore, the accused has
committed an offence punishable under Section 138 of the
Negotiable Instruments Act.
03. The complainant to prove the material allegations made in
the complaint examined himself as PW1 and got marked the
documents as per Ex.P1 to P18. The court took cognizance of the
offence under Section 138 of the Negotiable Instruments Act
based on the complaint averments, sworn statement and marked
documents and also registered the criminal case and issued
summons to the accused persons. On receipt of summons, the
accused No.2 appeared before the court through his counsel and
was enlarged on bail. The substance of the accusation read over
and explained to him; he did not plead guilty and claimed to be
tried. In compliance with section 145(1) of the Negotiable
Instruments Act, the sworn statement affidavit of the
Complainant treated as chief examination and posted the matter
for cross examination ow PW1, thereafter the accused No.2
remained absent before the court, despite issuing NBW the
presence of accused No.2 could not be secured before the court,
consequently the cross of PW1 was taken as Nil and also
dispensed recording of statement of accused under Section 313
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of Cr.P.C. as per ratio laid down by the Hon’ble High Court of
Karnataka in Crl.Rev. Pet.1333/2018 dated 02.02.2023 between
Sri.B.N. Ashwathnarayana V/s. Sri.Shankar, in this case, the
hon’ble High Court has held that, the offense under section 138
of NI Act, has to be tired summarily, and there is no need to
record the statement of the accused under section 138 of the
Negotiable Instruments Act, when the accused intentionally
absent before the court to cause delay in disposal of the case,
accordingly the statement of the accused dispensed with and
posted the matter for defense evidence, but the accused
remained absent before the court, hence the defense evidence of
the accused taken as nil.
04. On perusal of the complaint averments and documents
produced along with complaint, the following points that arise for
my consideration;
POINTS FOR CONSIDERATION
1. Whether the complainant proves beyond
all reasonable doubt against the accused
that, the accused had issued following
cheques
Sl.N Cheque No. Cheque Amount Drawn on
o. date (Rs)
1 118859 24.09.2020 2,00,000/-
Yes Bank Ltd.,
2 118860 24.10.2020 2,00,000/- Bangalore
3 003306 02.11.2020 2,00,000/-
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CC No.30578 / 2020
4 003307 03.11.2020 2,00,000/-
5 471592 05.11.2020 8,00,000/- Axis Bank Ltd.,
Banaglore
6 422844 7.11.2020 8,00,000/- Yes Bank Ltd.,
Bangalore
to discharge legally recoverable debt ?
2. Whether the court can dispense the
recording of the statement of the accused
under Section 313 of the Cr.P.C. in the
summary trial ?
3. What Order or sentence ?
05. Heard Arguments from the learned counsel for
Complainant.
06. The learned counsel for Complainant in support of his
arguments placed his reliance on the judgment of the Hon’ble
High Court of Karnataka decided in Crl.Rev. Pet.1333/2018
dated 02.02.2023 between Sri.B.N. Ashwathnarayana V/s.
Sri.Shankar .
07. Upon hearing arguments and on perusal of oral and
documentary evidences made available by the Complainant and
on going through the ratio laid down in the decision relied upon
by the learned counsel for Complainant, my answers to the above
points are as under.
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1. Point No.1: In the Affirmative
2. Point No.2: In the Affirmative
3. Point No.3: As per final order
for the following;
REASONS
POINT No.1 & 2 :
08. These points are inter connected with each other, hence to
avoid repetition of facts and appreciation of evidences, both
points are taken together for common discussion.
09. The complainant has filed this complaint against the
accused for the offense punishable under Section 138 of the
Negotiable Instruments Act. The brief facts of the complainant
The accused No.2 is the Director of accused No.1 and being well
known to the Complainant from past three years had
approached the Complainant in the month of January 2020 and
had sought for the loan of Rs.24,00,000/- from the Complainant
for urgent business purposes. Accordingly the Complainant paid
a sum of Rs.24,00,000/- as loan by way of cheque bearing
No.000787 dated 24.01.2020. Accused No.1 and 2 executed
executed on demand promissory note and consideration receipt
on 24.01.2020 in favor of complainant and acknowledged to have
received a sum of Rs.24,00,000/- from the complainant. The
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CC No.30578 / 2020accused No.2 representing accused No.1 has already paid a
sum of Rs.3,74,400/- to the complainant by way of RTGS on
27.01.2020 towards interest. On repeated demand and personal
approaches made by the Complainant for repayment of the
above said amount, the accused No.2 representing accused No.1
had issued 6 following cheques
Sl.No. Cheque No. Cheque Amount (Rs) Drawn on
date
1 118859 24.09.2020 2,00,000/-
2 118860 24.10.2020 2,00,000/- Yes Bank Ltd.,
Bangalore
3 003306 02.11.2020 2,00,000/-
4 003307 03.11.2020 2,00,000/-
5 471592 05.11.2020 8,00,000/- Axis Bank
Ltd.,
Banaglore
6 422844 7.11.2020 8,00,000/- Yes Bank Ltd.,
BangaloreReposing confidence in the accused , the complainant presented
the all the above said cheques for encashment through Lakshmi
Vilas Bank, City Market Branch, Bangalore, but the aforesaid
cheques at Sl. No. 1 to 4 and 6 were returned with endorsement
as “Account Closed” and cheque at Sl. No. 5 was returned with
endorsement “Funds insufficient” as per the cheque return
memos dated 11.11.2020. The factam of dishonour of a cheque
duly communicated to the accused through legal notice dated
20.11.2020. The notice issued by the complainant to the
10
CC No.30578 / 2020accused No.1 and accused No.2 were returned “Refused as per
the endorsement of the postman dated 23.11.2020. As per
Section 27 of the General Clauses Act, the notice issued to the
accused to the last known address returned with an
endorsement ‘Refused’ presumed to be deemed service of notice,
despite of issuing notice the accused failed to discharge his
liability.
10. The complainant to prove his case examined himself as
PW1, in his examination in chief affidavit, he has reiterated the
averments made in the complaint. In addition to the oral
evidence, the complainant has produced documents as per Ex.P1
to P18. Among these documents Ex.P1 is the Special Power of
Attorney, Ex.P2 to 7 are the cheques issued by accused in
favour of complainant for a sum of Rs. 24,00,000/- on different
dates, and the and the signatures of the accused is marked as
Ex.P2(a) to 7(a). Ex.P8 to P13 are the cheque return memos
wherein it is mentioned that the cheque sissued by the accused
came to be returned due to “Account closed” and “Funds
insufficient”. Ex.P14 is the office copy of the legal notice dated
20.11.2020 issued by the complainant in favour of accused
calling upon him to pay the cheque amount. Ex.P15 and P.16 are
the postal receipts, Ex.P17 and P18 are the closed postal
11
CC No.30578 / 2020envelops. The accused remained absent before the court after
recording his plea, thereafter, the court took coercive steps by
dispensing the statement of accused under Section 313 of
Cr.P.C. and also taking the defense evidence of accused as Nil.
Now the question that arises before the court is whether the
court can dispense the recording of a statement under Section
313 of Cr.P.C., In this regard, it is relevant to see the provisions
of law as contemplated under Section 143 of the Negotiable
Instruments Act, which starts with a non-obstante clause.
Section 143 of the Negotiable Instruments Act speaks that,
“notwithstanding anything contained in the
code of criminal procedure 1973, an
offenses under this chapter shall be tried
by the Judicial Magistrate of first class or
by Metropolitan Magistrate and the
provisions of section 262 to 265 (both
inclusive) of the said code shall, as far as
may be, apply to such trials, provided that
in the case any conviction in summary trial
under this section, it shall be lawful for the
Magistrate to pass sentence of
imprisonment for a term not exceeding one
year and amount of fine exceeding
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Rs.5,000/-“. Provided further that, at
the commencement of, or in the course of,
a summary trial under this section, it
appears to Magistrate that the nature of the
case is such that, a sentence of
imprisonment for term exceeding one year
may have to be passed or that it is, for any
other reason, UN-desirable to try the case
summarily, the Magistrate after hearing the
parties record the order to that effect and
thereafter recall any witnesses who made
have been examined and proceeded to hear
or rehear the case in the manner provided
by the said code.
11. The provision of Section 143 of the Negotiable Instruments
Act makes it very clear that the offenses under Section 138 of the
Negotiable Instruments Act shall be tried summarily as per
Sections 262 to 265 of the Cr.P.C. On going through sections 262
to 265 of the Cr.P.C., there is no stage for recording the
statement of the accused under section 313 of the Cr.P.C. If for
any other reason the Magistrate forms an opinion that it is
undesirable to try the case summarily and upon passing orders
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and converting the case into a summons trial, then only the
Magistrate can record the statement of the accused under
Section 313 of Cr.P.C. the same proposition of law has been
discussed in the decision of Hon’ble High Court of Karnataka
decided in Crl.Rev. Pet.1333/2018 dated 02.02.2023 between
Sri.B.N. Ashwathnarayana V/s. Sri.Shankar, wherein Hon’ble
High Court of Karnataka held that, if the accused remained
absent before the court at the time of recording the statement
under section 313 of Cr.P.C. and at the time of processing
judgment and in passing sentence, there is no requirement of
recording statement of the accused under section 313 of Cr.P.C.
as the matter of fact record of summary trail under section 263 of
Cr.P.C. does not provide for recording of statement under section
313 of Cr.P.C..
12. The statement of the accused under Section 313 of the
Cr.P.C. in the negotiable instrument act is nothing but verbatim
reproduction of the plea of the accused; if the accused contests
the matter by cross-examining the complainant and raises a new
defence, then only the court can explain the incriminating
circumstances to the accused other than the verbatim
reproduction of his plea. But in this case, the learned counsel for
the accused did not come forward to cross-examine the PW.1,
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and the accused has not established his defence. Under such
circumstances, postponing the matter for recording of his
statement under Section 313 of the Cr.P.C. is nothing but
wasting the precious time of the court and prolonging the
litigation. If the accused has any valid defense, then he could
have appeared before the court and cross-examined the
complainant; therefore, recording the statement of the accused
under Section 313 of the Cr.P.C. is not mandatory when the
accused is intentionally absent before the court.
13. The complainant, to fulfill the requirements of Section 138
of the Negotiable Instruments Act, has produced the documents
as per Ex.P1 to P18. On perusal of Ex.P2 to 7 discloses that the
accused had issued the cheques to discharge a legally
recoverable debt of Rs. 24,00,000/- in favour of the complainant.
On perusal of Ex.P8 to P13, they discloses that the cheque in
question issued by the accused came to be returned with the
endorsement “Account closed” and “Funds insufficient”. Further,
on perusal of Ex.P14, it is disclosed that the complainant has
demanded the cheque amount by issuing a legal notice to the
accused personally, calling upon him to pay the cheque amount,
failing which they will be liable to face criminal prosecution
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under Section 138 of the Negotiable Instruments Act. On perusal
of Ex.P17 and P.18, it discloses that the demand notice issued by
the complainant in favour of the accused persons was returned
with an endorsement ‘refused’, despite of issuing of legal notice,
the accused did not come forward to pay the cheque amount.
Therefore, on perusal of documentary evidence, it is clear that,
the complainant has complied with the mandatory requirements
of Section 138 of the Negotiable Instruments Act. In order to
bring the accused persons into the purview of Section 138 of the
Negotiable Instruments Act, the complainant is required to prove
the issuance of a cheque by the accused to discharge legally
recoverable debt and also the issuance of demand notice and
failure on the part of the accused to pay the cheque amount after
the lapse of 15 days from the date of receipt of legal notice.
Section 139 of the Negotiable Instruments Act speaks that, until
the contrary is proved, the court has to presume that the cheque
in question was issued by the accused to pay the legally
recoverable debt. Further, the accused has not challenged the
issuance of a cheque and signature appearing on the cheque ,
which itself is sufficient to prove the guilt of the accused beyond
all reasonable doubt. Further, the accused remained absent
before the court after recording his plea, and his counsel did not
come forward to cross-examine PW1 to challenge the validity of
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CC No.30578 / 2020
the documents marked in favour of complainant, therefore, the
accused persons have not adduced rebuttal evidence.
14. The Hon’ble Supreme Court of India in the latest decision
reported in 2023 SCC Online SC 1275 between Rajesh Jain Vs
Ajay Singh, in this case the Hon’ble Supreme Court of India has
held that, the legal burden is the burden of proof which remains
constant throughout a trial. On the other hand, the evidential
burden may shift from one party to another as the trial
progresses, according to the balance of evidence given at any
particular stage. In all trials concerning dishonour of cheque, the
court are called upon to consider whether the ingredients of the
offence enumerated in section 138 of the Act have been met and
if so, whether the accused was able to rebut the statutory
presumption contemplated by section 139 of the Act, further, it
said that section 139 is a reverse onus clause and requires the
accused to prove the non-existence of the presumed fact, I,e that
cheque was not issued in discharge of a debt/ liability. Further
held that, the NI Act provides for two presumptions, one under
section 118 of the Act, which directs that it shall be presumed,
until the contrary is proved, that every negotiable instrument was
made or drawn for consideration. Further, under section 139,
which stipulates that unless the contrary is proved, it shall be
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CC No.30578 / 2020
presumed that the holder of the cheque received the cheque for
the discharge of, whole or part of any debt or liability. The
‘presumed fact’ directly relates to one of the crucial ingredients
necessary to sustain a conviction under section 138 of the NI Act.
Further held that, section 139 of the NI Act, which takes the form
of a ‘shall presume’ clause is illustrative of a presumption of law.
It is obligatory for the court to raise this presumption has been
established. But this does not preclude the person against whom
the presumption has been established. But this does not
preclude the person against whom the presumption is drawn
from rebutting it and proving the contrary, as is clear from the
use of the phrase ‘ unless the contrary is proved’, after taking
note of Bir Singh Vs Mukesh Kumar (2019)4 SCC 197, wherein it
was held that presumption takes effect even in a situation where
the accused contends that ‘ a blank cheque leaf was voluntarily
signed and handed over by him to the complainant, without
admitting the execution of the entire contents in the cheque, is
not sufficient to trigger the presumption. Further held that, as
soon as the complainant discharges the burden to prove that, the
instrument was issued by the accused for discharge of debt, the
presumptive device under section 139 of the Act, that helps to
shift the burden on the accused of proving that the cheque was
not received by the bank towards the discharge of any liability.
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Until this evidential burden is discharged by the accused, the
presumed fact will have to be taken to be true, without expecting
the complainant to do anything further. In the case of
Basalingappa Vs Mudibasappa (2019) 5 SCC 418 held that, to
rebut the presumption and prove to the contrary, it is open to the
accused to raise a probable defence, wherein the existence of a
liability enforceable debt or liability can be contested. The words ‘
until the contrary is proved’ occurring in Section 139 do not
mean that accused must necessarily prove the negative that the
instrument is not issued in discharge of any debt/liability, but
the accused has two options. The first option is to prove that the
debt/liability does not exist and conclusively establish the
cheque was not issued in discharge of a debt / liability. The
second option is to prove the non existence of debt / liability by a
preponderance of probabilities by referring to the circumstances
of the case. The nature of evidence required to shift the evidential
burden need not necessarily be direct I,e oral or documentary
evidence or admissions made by the opposite party ; it may
comprise circumstantial evidence or presumption of law or fact.
15. Therefore, keeping in mind the ratio laid down in the above-
mentioned decision, it is clear that the complainant has proved
the initial burden as contemplated under Section 139 of the
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Negotiable Instruments Act regarding the issuance of cheque by
the accused to discharge legally recoverable debt and also proved
the statutory presumption as provided under Section 118(a) of
the Negotiable Instruments Act that he is the holder in due
course of the cheque issued by the accused to discharge legally
recoverable debt. On perusal of complaint averments, it is
disclosed that, the accused has borrowed a sum of Rs.
24,00,000/- on different dates since that date, the accused has
failed to pay the amount; therefore, the accused is liable to pay
the additional compensation amount of Rs.2,00,000/- and
litigation expense of Rs. 10,000/-. Therefore, the complainant
has proved his case beyond all reasonable doubt. Further more,
the accused has not contested the matter by cross examining the
PW1, therefore it is a fit case to convict the accused. Accordingly,
I answer point No.1 and 2 in the Affirmative.
16. POINT NO.2: In view of the above findings, this court
proceed to pass the following;
ORDER
Acting under Section 255(2) of code of
criminal procedure, the accused No.1 and 2 are
hereby convicted for the offense punishable
under Section 138 of Negotiable Instruments Act.
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As per section 357(1)(b) of code of
criminal procedure, the accused No.2 shall pay
a fine of Rs.26,15,000/-(Rupees Twenty Six
lakhs Fifteen thousand only) (compensation
amount and litigation expenses ) out of that
Rs.26,10,000/-(Rupees Twenty Six lakhs Ten
thousand only) payable to the Complainant as
compensation and of Rs.5,000/- (Rupees Five
Thousand only) is remitted to the state of
government, in default of payment of fine the
accused No.2 shall under go simple
imprisonment for a period of 4 months.
The bail bond and surety bond executed by
the accused No.2 stands canceled.
The office is directed to supply free copy of
the judgment to the accused No.2.
{Dictated to the stenographer, transcribed and computerized by her, revised corrected and
then pronounced in the open court on this 5th day of December 2024}.
(SHRISHAIL BHIMASHEN BAGADI)
XX A.C.J.M., Bengaluru.
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ANNEXURE
List of witnesses examined on behalf of complainant:
P.W.1 Abhishek V
List of documents produced on behalf of complainant:
Ex.P.1 Special Power of Attorney Ex.P.2 to 7 Cheques Ex.P. 2(a) to 7(a) Signatures of the accused Ex.P. 8 to 13 Bankers Return Memos Ex.P.14 Copy of the legal notice Ex.P.15 and 16 Postal Receipts -2 Ex.P17 & 18 Closed postal covers
List of witnesses examined on behalf of accused:
Nil
List of documents produced on behalf of accused:
Nil
XX A.C.J.M.,
Bengaluru.