Karnataka High Court
M/S Confident Projects India Pvt Ltd vs Sri Tirumalai on 18 December, 2023
Author: Rajendra Badamikar
Bench: Rajendra Badamikar
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR. JUSTICE RAJENDRA BADAMIKAR
CRIMINAL APPEAL No.1680/2019
BETWEEN:
M/S. CONFIDENT PROJECTS INDIA PVT. LTD.,
CONFIDENT PROPUS, #6, LANGFORD TOWN,
HOSUR MAIN ROAD, BENGALURU-560 025,
REPRESENTED BY ITS:
MANAGER & AUTHRIZED REPRESENTATIVE
MR. JOJU KOCHAPPEN.
....APPELLANT
(BY SRI. K. SHASHIKIRAN SHETTY, SR. COUNSEL FOR
SRI. A. MAHESH CHOWDHARY, ADVOCATE)
AND:
SRI. TIRUMALAI,
S/O SRI. B.K. RAMACHANDRA,
R/AT. NO.9, 3RD SHOP LANE,
TATA SILK FARM, BASAVANAGUDI,
BENGALURU-560 001.
.... RESPONDENT
(BY SRI. T.N. VISHWANATH, ADVOCATE)
THIS APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C.
PRAYING TO SET ASIDE THE ORDER DATED 09.08.2019
PASSED BY THE XXV A.C.M.M., AT BENGALURU IN
C.C.NO.18318/2016, ACQUITTING THE RESPONDENTS/ACCUSED
FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF
N.I.ACT.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 12.12.2023, COMING ON FOR 'PRONOUNCEMENT
2
OF JUDGMENT' THIS DAY, THE COURT DELIVERED THE
FOLLOWING:
JUDGMENT
This appeal is filed by the appellant/complainant
under Section 378(4) of Cr.P.C. challenging the judgment of
acquittal dated 09.08.2019 passed by the XXV Additional
Chief Metropolitan Magistrate, Bengaluru, in CC
No.18318/2016.
2. For the sake of convenience, the parties herein
are referred with the original ranks occupied by them before
the trial Court.
3. The brief factual matrix leading to the case are
as under:-
The complainant is a registered company under the
Companies Act dealing with the land business and
construction activities. The accused-Mr.Thirumalai is a Land
Developer and he entered into a Memorandum of
Understanding with the complainant to hand over 60 acres
of land situated in Adigarkalahalli Village by undertaking
that he is authorized to get the sale deed being a nominee.
The Memorandum of Understanding was entered and
Rs.1,48,02,000/- is required to be paid as consideration per
acre and on the date of Memorandum of Understanding the
complainant has paid Rs.1,50,00,000/- as an advance
amount and after receiving advance amount accused did
not enter into an agreement with the land owners and later
on the complainant got information that the accused has
played fraud on the complainant and though the
complainant has paid advance amount, accused has failed
to perform his part of contract as per Memorandum of
Understanding. Thereafter, the complainant demanded for
repayment of Rs.1,50,00,000/- from accused and then
accused towards discharge of this liability, issued Cheque
bearing No.913199 for Rs.1,00,00,000/- dated 11.06.2016
and cheque bearing No. 913200 for Rs.48,00,000/- dated
13.06.2016 drawn on Axis Bank When the said cheques
were presented for encashment, they were dishonoured
with an endorsement 'Insufficient Funds'. Then the
complainant got issued a legal notice to the accused and the
said notice was served on the accused. But, the accused
did not make any payment, but he gave an untenable reply.
Hence, the complainant filed a complaint against the
accused before the learned Magistrate under Section 200 of
Cr.P.C. alleging that accused has committed an offence
under Section 138 of the Negotiable Instruments Act, 1881
(for short, 'N.I. Act').
4. The learned Magistrate after recording sworn
statement of Power of Attorney Holder, who is the
complainant has taken cognizance of the offence under
Section 138 of the N.I. Act and issued process against
accused. The accused appeared through his counsel in
pursuance of summons and was enlarged on bail. The plea
under Section 138 of the N.I. Act is framed against the
accused and accused denied the same.
5. The Power of Attorney Holder/complainant-Sri.
Mohammed Hidayathulla Sharieff is examined as PW.1 and
the complainant has also produced 12 documents marked at
Exs.P1 to P12. After conclusion of the evidence of the
complainant, the statement of accused under Section 313 of
Cr.P.C. is recorded to enable the accused to explain the
incriminating evidence appearing against him in the case of
complainant. The case of accused is of total denial.
However, he has admitted the part of allegations that he is
the agreement holder, but asserts that agreement was only
to the extent of 25 acres. However, he did not disclose any
defence and simple assertion was made that, cheques were
given for security purpose.
6. Then the accused got examined himself as DW.1
and he is also placed reliance on 10 documents marked at
Exs. D1 to D10. After hearing arguments and after
appreciating oral and documentary evidence, the learned
Magistrate has acquitted the accused on the ground that by
Exs. D1 to D10, the accused has rebutted the presumption
available in favour of the complainant and thereby set him
at liberty. Being aggrieved by this judgment of acquittal,
the complainant is before this Court by way of this appeal.
7. Sri.K. Shashikiran Shetty, the learned Senior
Counsel appearing for the complainant would contend that
the defence raised by the accused is that the cheques and
blank stamp papers were given towards security, but the
same is not substantiated. He would contend that, though
the arguments have been advanced regarding the authority
of PW.1, since the complaint is filed by the Company, which
is a Legal Entity, the said ground is untenable. He would
contend that Ex.P2 (MOU) is an Assignment Agreement and
payments were made by way of cheques, which is
undisputed. He would also invite the attention of the Court
to Ex.P4 and Ex.P3, wherein the accused has admitted his
liability and by replacing two cheques issued under Ex.P4,
he has issued the present disputed cheques under Ex.P3
and Exs.P3 and P4 were never challenged. He would also
contend that accused has admitted the signature on the
cheques as well as at Exs.P3 and P4 and since the
complainant is an employee has given evidence as
authorised person and the transaction was held with the
Company, but not with PW.1. He would also contend that
legal notice was served and reply discloses that the
transaction has been admitted and defence was setup
regarding payment by way of cash, but to substantiate the
same, no documents have been produced. He would assert
that the trial Court relied on Exs.D5 and D6 and held that
amount was returned. But these documents disclose that
the amount was withdrawn by accused, but they will not
prove that the said amount was paid to the complainant
and only the basis of self-interested testimony of accused,
the learned Magistrate has drawn a presumption regarding
payment. It is further asserted by the learned Senior
Counsel that as per Exs.P4 and P3 subject to encashment of
the cheques, the Memorandum of Understanding was
cancelled. But, the records disclose that accused has
already sold the said property to different purchasers, but
the payment was not made to the complainant. He would
contend that the learned Magistrate, on assumptions
regarding re-payment, has proceeded to hold that the
presumption is rebutted. But, there is absolutely no
evidence regarding repayment and mere assertion does not
amount to rebuttal and no documents are placed to
substantiate the said contention of repayment. Hence, he
would contend that the judgment of acquittal passed by the
learned Magistrate suffers from perversity and calls for
interference and he would seek for allowing the appeal by
convicting the accused/respondent herein.
8. Per contra, learned counsel for the respondent
would contend that the payment of Rs.1,50,00,000/- under
Ex.P2- Memorandum of Understanding is not under serious
dispute. But, he would contend that the complainant
himself was not prepared to get the sale deeds executed
and he would contend that the person deposed on behalf of
the complainant was not having any knowledge and he is
not competent person to depose. He would contend that
the finding of the trial Court is based on documentary
evidence and Ex.D7-Cheque was for Rs.2,00,00,000/- and it
was returned to the complainant, which was referred in
Ex.P4. But for what purpose it was returned was never
disclosed by the complainant and it is only because of the
payment of the entire amount. He would also contend that
consideration amount received under Ex.D3 was paid under
Exs.D5 and D6 and in Ex.P2-MOU, there was no default
clause, but no explanation is offered by the complainant for
return of Ex.D7. He would also contend that conversion
order is to be obtained by the accused at the cost of
complainant and Exs.D8 to D10 are the Conversion Orders
and Ex.D7 discloses that in view of settlement of the
matter, cheque was returned and if there is any grievance
regarding the terms and conditions on Memorandum of
Understanding, it is a civil liability. He would also contend
that there is no reference of cheques and the cheques
issued as security were misutilised. Hence, he would assert
that the learned Magistrate has appreciated the oral and
documentary evidence in proper perspective and has rightly
acquitted the accused holding that the accused has rebutted
the presumption available in favour of the complainant
under Section 139 of the N.I. Act. Hence, he would seek for
dismissal of the appeal.
9. Having heard the arguments and after
appreciating the oral and documentary evidence, now the
following point would arise for my consideration:-
"Whether the judgment of acquittal passed
by the learned Magistrate is perverse, arbitrary
and erroneous, so as to call for any interference
by this Court?"
10. It is an undisputed fact that the complainant is a
registered company and it entered with an agreement with
accused as per Ex.P2 (MOU). There is no serious dispute
regarding Ex.P2. Both the parties are placing reliance on
Ex.P2. Under Ex.P2, the accused has undertaken to get the
land to the extent of 60 acres sold in favour of the
complainant at the cost of Rs.1,48,02,000/- per acre. The
accused was admittedly nominated or assigned to secure
the sale deeds in favour of the complainant. The expenses
of conversion are required to be borne by the 2nd party ie.,
the complainant. It is also evident that Rs.1,00,00,000/-
was paid by the complainant to accused by three cheques of
Union Bank dated 06.04.2013, which is also undisputed.
Further, the accused has also acknowledged the receipt of
Rs.50,00,000/- under four cheques towards conversion
charges. This agreement was entered on 26.08.2013.
Under Ex.P2, a sum of Rs.1,50,00,000/- was received by
the accused. Further, the cheque-Exs.P5 & P6 are
pertaining to the Bank Account of accused and they bear
the signature of accused is also admitted. When the
cheques belongs to accused and it bears his signature, then
the presumption under Section 139 of N.I. Act is mandatory
to the effect that the cheques were issued towards legally
enforceable debt.
11. Section 139 of the N.I. Act is introduced as an
exception to the general rule as to the burden of proof and
it shifts onus on the accused. Further, the presumption
under Section 139 of the N.I. Act is a presumption of law.
Further, the presumptions under law are the rules of
evidence and they are not in conflict with the presumption
of innocence which requires the prosecution to prove the
case against the accused beyond all reasonable doubt.
However, the accused is required to rebut the presumption
on the basis of preponderance of probabilities. In the
instant case, admittedly both the cheques belong to the
accused and they bear his signature and hence drawing of
presumption is mandatory.
12. The first contention of the learned counsel for
the respondent/accused is regarding the authorized person
being examined as PW.1, but he was not a party to the
contract or Memorandum of Understanding or he has no
knowledge about this aspect. In this context, the senior
learned counsel for appellant/complainant has placed
reliance on a decision of the Apex Court reported in (2009)
1 SCC 407 (Bir Singh Vs. Mukesh Kumar) and invited
the attention of the court to Para Nos.14 to 16, wherein the
Apex Court has dealt with reference to the term 'complaint',
mandate of Sections 138 and 142 of the N.I. Act. It is
observed that Section 142 only requires complaint should
be filed in the name of Payee and it is further observed
that, where the complainant is company or any Corporeal
body, only an employee or a representative can be get
examined on his behalf and it is further observed that, in
such event the company becomes de jure complainant and
its employee or other representative representing it in
criminal proceedings becomes de facto complainant. The
said principles are directly applicable to the case in hand.
The authority of PW.1 is not challenged and since the
complainant is prosecuting the matter, PW.1 is de facto
complainant since the company is de jure complainant.
Further admittedly the transaction is based on
documentation and as such question of personal knowledge
of PW.1 in this regard does not arise at all, as terms and
conditions of Ex.P2 ie., Memorandum of Understanding are
undisputed. As such, the said arguments advanced by the
learned counsel for respondent does not have any
relevancy.
13. PW.1 asserts regarding due of Rs.1,48,00,000/-
and placed reliance on Ex.P2. On perusal of the recitals at
Ex.P2, it is evident that the accused has undertaken to get
sale deed executed to the extent of 60 acres in favour of
the complainant from the original owners and sale
consideration was fixed for Rs.1,42,02,000/- per acre.
Much cross-examination was done to PW.1 regarding
entering into construction activities by complainant with
M/s. Siri Groups. But, it is nothing to do with the present
transaction pertaining to 60 acres of land. Ex.P4 is an
agreement executed by accused in favour of the
complainant wherein he has specifically referred three
cheques for Rs.2,00,00,000/- dated 25.01.2015,
Rs.1,00,00,000/- dated 28.02.2015 and Rs.48,00,000/-
dated 31.03.2015. This letter also specifies that, once the
cheques are cleared by the banks, the Memorandum of
Understanding under Ex.P2 stands cancelled. Interestingly,
Ex.P4 was executed on 19.01.2015 and later on Ex.P3 was
executed on 27.05.2015, wherein the two cheques for
Rs.1,00,00,000/- and Rs.48,00,000/- were replaced by
Exs.P5 and P6. In the present case, the cheques number
under Ex.P5 and P6 were specifically mentioned Ex.P3 and
under Ex.P4 the accused has admitted the liability to the
total extent of Rs.3,48,00,000/-. But however, it is
admitted by both the parties that the liability of
Rs.2,00,00,000/- is already settled and the complainant
has restricted its claim to Rs.1,48,00,000/- and the cheque
for Rs.2,00,00,000/- was already in possession of the
accused, which is produced at Ex.D7.
14. The main contention of the accused is that, in
view settlement, Ex.D7-Cheque for Rs.2,00,00,000/- as
referred in Ex.P4 is returned and there is no due. If this
version is accepted, then the accused is required to explain
as to why he has issued three cheques for a total claim of
Rs.3,48,00,000/-. Under Ex.P4, he has admitted his liability
of Rs.3,48,00,000/- and later under Ex.P3, two cheques for
Rs.1,48,00,000/- were replaced. The signature on Exs.P3
and P4 were not disputed and Exs.P3 & P4 were never
challenged by the accused. It is simply asserted by the
accused that Exs.P5 and P6 were issued as security. But,
for what type of security Exs. P5 and P6 were issued and
when they were issued is not at all disclosed by the
accused.
15. The accused himself has got examined as DW.1
and he admits that he is required to acquire 60 acres of
land under Memorandum of Understanding-Ex.P2. The
accused has placed reliance on Ex.D1 & D2 asserting that
they are confirmation deeds. But the complainant and
accused are not parties to any of these deeds and as to why
and for what purpose the accused has placed reliance on
these documents is not at all forthcoming. As regards sale
deeds at Ex.D3 and D4 also there is nothing on the record
to show that the complainant and accused are parties in any
capacity and hence, Ex.D3 and D4 also do not assist the
accused in any way. Interestingly, the learned Magistrate
has observed that Exs.D1 to D4 along with other documents
are sufficient to rebut the presumption. But, in what way
these documents would rebut the presumption is not at all
forthcoming.
16. The accused in his examination chief in Para
No.3 has set-up the payment of 45% in installment at the
time of registration etc. and asserts that the complainant
was not ready to get the sale deed executed and the
accused used to pressurize the complainant and they do not
have money to execute the sale deed. Hence, he asserts
that in 2014 they came to a joint conclusion that it is better
to sell the land to some other persons in order to raise
money to repay the liabilities and he asserts that at the
time, he was made to sign 8 to 10 cheques and two blank
stamp papers. This was never pleaded and suggested in
cross-examination of PW.1. Further, if at all there was a
conclusion to conclude the contract to clear the liability
under Ex.D1 to D4, the complainant and accused should
have been consenting parties, but they are not consenting
parties. Though he asserts that he was made to sign 8 to
10 cheques and 2 blank stamp papers, the same cannot be
accepted, as he admits that he is a Science Graduate and
his father is an Advocate. Considering the qualification of
accused and his father being an advocate, it is hard to
accept that the accused was made to sign the blank
cheques and stamp papers.
17. He further asserts that M/s. Adarsha Group has
purchased the property and sale consideration of
Rs.50,00,000/- was directly paid to the complainant. He
claims that he has issued a cheque for Rs.2,00,00,000/- to
the complainant in order to clear the entire liability. But,
Ex.P4 discloses that the total liability is Rs.3,48,00,000/-
and a cheque of Rs.2,00,00,000/- was returned by the
complainant. Even payment made by M/s.Adarsha Group
to the complainant is not established.
18. Interestingly, DW.1/Accused admits in further
cross-examination that since M/s. Adarsha group has paid
Rs.50,00,000/- directly to the complainant, then his liability
was only to the extent of Rs.1,50,00,000/- and since he has
given a conversion order, the liability was only to the extent
of Rs.1,00,00,000/- and the said amount was paid by him
by cash to the complainant. He asserts that entire amount
of Rs.1,00,00,000/- was paid by way of cash. In his cross-
examination, he claims that the complainant has returned
cheque-Ex.D7 asserting that the entire amount of
Rs.1,00,00,000/- is paid. But regarding payment of
Rs.1,00,00,000/- by cash, no evidence is placed by the
accused. The accused has placed reliance on Exs.D5 and
D6 in this regard, but the entries in Exs.D5 and D6 do not
prove that the amount was paid to the complainant. But it
was either withdrawn by himself or payment was made to
some other third person. On what basis the learned
Magistrate has held that Exs.D5 and D6 would prove the
payment of Rs.1,00,00,000/- is not at all forthcoming, as in
Exs. D5 and D6 the name of the complainant is no where
referred and payments were never made to the
complainant.
19. Much arguments have been made regarding
return of Ex.D7 and no explanation is being offered by the
complainant. But, Ex.P4 is pertaining to Rs.3,48,00,000/-
and Ex.D7 is part of Ex.P4 and it is referred at Sl. No.1.
The cheques were at Sl. Nos. 2 & 3 under Ex.P4 were
replaced under Ex.P3 and the accused has admitted his
signature on Exs.P3 and P4, though he has taken vague
defence that blank cheques were obtained with two stamp
papers and the same is not substantiated, as admittedly he
is a Science Graduate and his father being an Advocate.
Apart from that, DW.1 in his further cross-examination
asserts that Exs.P5 & P6 were given for the purpose of
security in respect of previous transaction. But, he did not
explain anything in this regard, though he asserts that he
made payment to the extent of Rs.1,00,00,000/-, but the
same is also not substantiated. He admits that he did not
receive receipt for repayment of Rs.1,00,00,000/- and
further admitted that he did not initiate any action against
the complainant regarding retaining the cheques with them
and misutilising them.
20. The other contention raised by the accused is
that, Rs.50,00,000/- is pertaining to conversion charges of
the land and that is required to be borne by the complainant
and since he had attended that work, question of he
repaying the said amount does not arise at all. In this
regard, he placed reliance on Exs. D8 to D10.
21. Exs.D9 and D10 disclose that Sy. Nos.108 and
110 were converted into non-agricultural land in 2014.
However, Sy. No.109 was got converted into non-
agricultural land in 2009 itself. No documents have been
produced to show that, other lands were converted into
non-agricultural lands by the accused. The records reveal
that, he has got converted hardly 11 acres of land and
hence question of he adjusting Rs.50,00,000/- towards
conversion of 11 acres instead of 60 acres does not arise at
all. Further, when he has not acted in terms of Ex.P2, by
getting sale deed in favour of complainant, he cannot take
advantage of said amount of complainant to have otherwise
benefit. Hence, the said contention also holds no water and
an inconsistent defence is set-up by the accused regarding
repayment and issuance of cheques as security and no
explanation is forthcoming regarding Exs.P3 and P4 and as
such, it is evident that he has failed to rebut the
presumption in favour of the complainant.
22. Learned counsel for the appellant has placed
reliance on a decision of the Apex Court reported in (2019)
4 SCC 197 (Bir Singh Vs. Mukesh Kumar) and invited
the attention of the Court to Para Nos.18, 20, 24, & 34. In
the said decision, the Apex Court has considered that
drawing of presumption under Section 139 of N.I Act is
mandatory, unless contrary is proved. It is further
observed in Para-34 of the said decision that, if a sighed
blank cheque is voluntarily presented to a payee towards
some payment, the payee may fill-up the amount and other
particulars and the same would not invalidate the cheque.
It is further held that the onus would still be on the accused
to prove by adducing evidence that, the cheque was not
issued towards discharge of a debt or liability. But, in the
instant case, no such evidence is forthcoming. Hence, the
said principles are directly applicable to the case in hand
and the learned Magistrate has failed to appreciate any of
these aspects and in a mechanical way he went on to hold
that, in view of Ex.D1 to D10 the presumption stands
rebutted, without giving proper reasons as to how it is
rebutted.
23. The learned Senior Counsel appearing for the
appellant has also placed reliance on a decision of the Apex
Court reported in (2019)18 SCC 106 (Rohitbhai Jivanlal
Patel Vs. State of Gujarat and Another) and invited the
attention of the Court to Para Nos. 16 and 18 of the said
judgment. The Apex Court in the said decision has referred
to a decision in Rangappa Vs. Mohan ((2010) 11 SCC
441) and considered the reverse onus incorporated under
Section 139 of N.I. Act and it is only with an intention of
improving the credibility of Negotiable Instruments.
24. The learned Senior Counsel further places
reliance on a decision of the Apex Court reported in
(2021) SCC Online SC 1002 (Sripati Singh (Since
Deceased) Through his Son Gaurav Singh Vs. State of
Jharkhand and Another). In the said case, the Apex
Court has dealt with regarding cheque issued towards
security and observed that, when a cheque is issued is
treated as 'security' towards repayment of an amount with
a time period being stipulated for repayment, all that it
ensures is that if such cheque which is issued as 'security'
can be presented after stipulated time period, it attracts the
offence under Section 138 of the N.I. Act and such cheque
cannot be presented before the installment being due. In
the instant case, the accused has asserted that the cheque
was issued towards security and even on that ground, he is
bound to fail.
25. The learned Magistrate only on assumptions and
presumptions has gone to the extent of holding that the
presumption under Section 139 of the N.I. Act is rebutted,
which has resulted in miscarriage of justice. The entire
approach of the learned Magistrate is perverse and arbitrary
and he has failed to appreciate the oral and documentary
evidence in proper perspective. Hence, the judgment
passed by the learned Magistrate suffers from perversity
and calls for interference by this Court. Hence, evidence on
records clearly establish that accused has committed an
offence under Section 138 of N.I. Act. Hence, he is required
to be convicted for the said offence.
26. The offence under Section 138 of N.I. Act is
punishable with imprisonment which may extend to two
years or with fine which may extend to double the cheque
amount or both. Considering that the transaction between
the parties is commercial in nature, this is not a fit case,
wherein the sentence of imprisonment is warranted.
However, the cheque amount is Rs.1,48,00,000/- and the
transaction is of 10 years old. Hence, considering the facts
and circumstances of the case, in my considered opinion, it
is just and appropriate to impose fine of Rs.2,50,00,000/-
to the accused with default sentence, which would serve the
purpose. Hence, the point under consideration is answered
in the affirmative and accordingly I proceed to pass the
following:
ORDER
i) The appeal is allowed.
ii) The impugned judgment of acquittal dated
09.08.2019 passed by the XXV Chief
Metropolitan Magistrate, Bengaluru, in CC
No.18318/2016, is set aside.
iii) The accused is convicted for the offence under
Section 138 of N.I.Act.
iv) Accused is sentenced to pay fine of
Rs.2,50,00,000/-(Rupees Two Crores and
Fifty Lakhs only) and in default he shall
undergo Simple Imprisonment for a period of
One year.
v) Out of fine amount, Rs.2,49,50,000/- (Rupees
Two Crores Forty Nine Lakhs and Fifty
Thousand only) shall be paid to the
complainant by way of compensation and
Rs.50,000/- (Rupees Fifty Thousand only)
shall be credited to the State towards the cost
of litigation incurred by the State.
The Registry is directed to send back the records of
trial Court along with a copy of this judgment with a
direction to the learned Magistrate to secure the
presence of accused and recover the fine amount
imposed against him.
Sd/-
JUDGE
KGR*
