International Fiber Glass ... vs Mr. Lalith Kanunga
2023 Latest Caselaw 7243 Kant

                             1




    IN THE HIGH COURT OF KARNATAKA AT BENGALURU

         DATED THIS THE 12TH DAY OF OCTOBER, 2023

                        BEFORE

             THE HON'BLE MRS.JUSTICE M.G. UMA

       CRIMINAL REVISION PETITION NO.128/2020
                           C/W
       CRIMINAL REVISION PETITION NO.175/2020


CRL.RP.NO.128/2020

BETWEEN:
INTERNATIONAL FIBER GLASS
PRODUCTS PVT. LTD.,
REPRESENTED BY ITS
MANAGING DIRECTOR
S. BALAKRISHNA NAIDU,
S/O. LATE. R. SRINIVASULU
AGED ABOUT 39 YEARS,
R/AT NO.118-B,
BOMMASANDRA INDUSTRIAL AREA,
ANEKAL TALUK,
BENGALURU - 560 099.
                                                ... PETITIONER
(BY SRI: HARISH H.V., ADVOCATE)
AND:
MR. LALITH KANUNGA
AGED ABOUT 48 YEARS,
R/AT NO.23, A.M. ROAD,
4TH FLOOR, ARIHANTH COMPLEX,
KALASIPALYAM NEW EXTENSION,
J.C. ROAD CROSS,
BENGALURU - 560 002.
                                            ... RESPONDENT

(BY SRI: ABHINAY Y.T., ADVOCATE)

THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 READ WITH SECTION 401 OF CR.P.C. PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED 27.10.2017 PASSED BY THE XXI ADDL. C.M.M., BENGALURU IN

C.C.NO.23110/2016, CONVICTING THE ACCUSED/APPELLANT UNDER SECTION 138 OF N.I. ACT AND DIRECTING TO PAY A FINE OF RS.7,55,000/- I.E., SHALL BE PAID TO THE COMPLAINANT AND SET ASIDE THE JUDGMENT AND ORDER DATED 04.10.2019 PASSED BY THE LXIV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU IN CRL.A.NO.1657/2017 AND CONSEQUENTLY ACQUIT THE ACCUSED/PETITIONER.

CRL.RP.NO.175/2020

BETWEEN:

INTERNATIONAL FIBER GLASS PRODUCTS PVT. LTD., REPRESENTED BY ITS MANAGING DIRECTOR S. BALAKRISHNA NAIDU, S/O. LATE. R. SRINIVASULU AGED ABOUT 39 YEARS, R/AT NO.118-B, BOMMASANDRA INDUSTRIAL AREA, ANEKAL TALUK, BENGALURU - 560 099.

... PETITIONER (BY SRI: HARISH H.V., ADVOCATE) AND:

MR. LALITH KANUNGA AGED ABOUT 48 YEARS, R/AT NO.23, A.M. ROAD, 4TH FLOOR, ARIHANTH COMPLEX, KALASIPALYAM NEW EXTENSION, J.C. ROAD CROSS, BENGALURU - 560 002.

... RESPONDENT (BY SRI: HEMANTH KUMAR G.M., ADVOCATE)

THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 READ WITH SECTION 401 OF CR.P.C. PRAYING TO (A) SET ASIDE THE JUDGMENT AND ORDER DATED 27.10.2017 IN C.C.NO.23109/2016 PASSED BY THE XXI ADDL. CHIEF METROPOLITAN MAGISTRATE CONVICTING THE ACCUSED/APPELLANT UNDER SECTION 138 OF N.I. ACT AND DIRECTING TO PAY A FINE OF RS.7,50,000/- THAT IS SHALL BE PAID TO THE COMPLAINANT. (B) SET ASIDE THE JUDGMENT AND ORDER DATED 04.10.2019 PASSED BY THE LXIV ADDITIONAL CITY

CIVIL AND SESSIONS JUDGE, BENGALURU IN CRL.A.NO.1657/2017, (C) CONSEQUENTLY ACQUIT THE ACCUSED/PETITIONER.

THESE CRIMINAL REVISION PETITIONS HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 10.10.2023 COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT PASSED THE FOLLOWING:

COMMON ORDER

The accused in CC Nos.23109 and 23110 of 2016 on the

file of the learned XXI Additional Chief Metropolitan

Magistrate, at Bangalore City (hereinafter referred to as 'the

Trial Court' for brevity), is impugning the common judgment

of conviction and order of sentence dated 27.10.2017

convicting him for the offence punishable under Section 138

of Negotiable Instruments Act (for short 'NI Act') and

sentencing to pay fine of Rs.7,55,000/- in default, to undergo

simple imprisonment for a period of four months, which was

confirmed vide judgment dated 04.10.2019 passed in Criminal

Appeal Nos.1657 and 1658 of 2017 on the file of the learned

LXIV Additional City Civil and Sessions Judge(CCH-65)

(hereinafter referred to as 'the First Appellate Court' for

brevity).

2. Brief facts of the case are that, the complainant

has filed the private complaints against the accused alleging

commission of offence punishable under Section 138 of NI

Act. It is contended that the accused and complainant were

known to each other. During the last week of January 2016,

the accused requested for hand loan. The complainant lent

an amount of Rs.15,00,000/- on 05.02.2016. The accused

promised to repay the same within three months. Inspite of

that, the accused had not repaid the loan amount. When the

complainant insisted for returning the amount, the accused

issued two posted cheques bearing Nos.576940 and 576928

dated 29.06.2016 for Rs.7,50,000/- each drawn on State

Bank of India, Electronic City Branch, Bengaluru. When the

cheques were presented for encashment, the same was

dishonored as there was insufficient funds in the account of

the accused. The complainant got issued the legal notices,

informing the accused regarding dishonor of the cheques and

calling upon him to repay the cheque amount. Even though,

notice was served on the accused, he has not repaid the

cheques amount nor replied to the notice. Thereby, he has

committed the offence punishable under Section 138 of NI

Act. Accordingly, the complainant requested the Trial Court to

take cognizance of the offence and to initiate legal action

against the accused in both the cases.

3. The Trial Court took cognizance of the offence and

registered CC Nos.23109 and 23110 of 2016 and summoned

the accused to appear before the Court. The accused

appeared before the Trial Court in both the cases and pleaded

not guilty for the accusation made against him. The

complainant examined himself as PW1 and got marked Exs.P1

to P7 in support of his contention separately in both the

cases. The accused has denied all the incriminating materials

available on record in his statement recorded under Section

313 of Cr.P.C. and the Managing Director of the accused

examined himself as DW1. The Trial Court after taking into

consideration all these materials on record, came to the

conclusion that the complainant is successful in proving the

guilt of the accused beyond reasonable doubt. Accordingly,

passed the impugned judgment of conviction and order of

sentence, convicting the accused in both the cases and

sentencing him as stated above.

4. Being aggrieved by the same, the accused has

preferred Criminal Appeal Nos.1657 and 1658 of 2017. The

First Appellate Court on re-appreciation of the materials on

record, passed the common judgment, dismissing both the

appeals and confirming the impugned judgment of conviction

and order of sentence passed by the Trial Court.

5. Being aggrieved by the same, the accused is

before this Court.

6. Heard Sri H V Harish, learned counsel for the

revision petitioner in both the petitions and Sri Y T Abhinay,

learned counsel for the respondent in Criminal Revision

Petition No.128 of 2020. Sri G M Hemanth Kumar, learned

counsel for the respondent in Criminal Revision Petition

No.175 of 2020 is absent. No representation. He has not

addressed his arguments in spite of giving sufficient

opportunity. Hence, his arguments is taken as NIL. Perused

the materials including the Trial Court records.

7. Learned counsel for the revision petitioner

submitted that the accused is a Company. It is stated that

the Managing Director is representing the accused. There is

no compliance under Section 141 of NI Act. Therefore, the

complaint was liable to be dismissed. He has placed reliance

on the decision of Hon'ble Apex Court in Aneeta Hada Vs

M/s Godfather Travels and Tours Pvt. Ltd.1, in support of

his contention that, unless the requirement of Section 141 of

NI Act stands satisfied, the complaint against the Company is

not maintainable.

8. Learned counsel further submitted that the

accused had issued blank cheques in favour of one Vijay, who

misused the same and handed it over to the complainant, who

in turn, presented the cheques for encashment and initiated

criminal action. Even though, legal notice were issued, there

was no reference to Ex.P7, but the said document was

produced at a later stage to contend that the accused had

executed on-demand promissory note, which is an

afterthought and the same cannot be accepted. The legal

notices were never served on the accused. The complainant

in collusion with the postal authority, produced the postal

acknowledgement. PW1 admitted that the cheques in

question was issued as security. Therefore, Section 138 of NI

AIR 2012 SC 2795

Act is not at all applicable. The Trial Court and the First

Appellate Court committed an error in convicting the accused.

He also submitted that money lender license was not

produced by the complainant. Hence, he prays for allowing

the revision petition by setting aside the impugned judgment

of conviction and order of sentence passed by the Trial Court,

which was confirmed by the First Appellate Court, in the

interest of justice.

9. Per contra, learned counsel for the respondent

opposing the revision petition submitted that Ex.P6 is the

Bank passbook, which discloses that the complainant had lent

the amount to the accused. The execution of cheques as per

Ex.P1 and on-demand promissory note as per Ex.P7 is

virtually admitted by the accused. The legal notice as per

Ex.P3 was issued and Ex.P5 is the postal acknowledgement.

There is presumption with regard to the official act of the

employee of the postal department, which has not been

rebutted. Considering all these facts and circumstances, the

Trial Court and the First Appellate Court convicted and

sentenced the accused as stated above. There no reasons to

interfere with the same. Hence, he prays for dismissal of the

revision petition.

10. In view of the rival contentions urged by the

learned counsel for both the parties, the point that would

arise for my consideration is:

"Whether the impugned judgment of conviction and order of sentence passed by the Trial Court, which was confirmed by the First Appellate Court suffers from infirmities and calls for interference by this Court?"

My answer to the above point is in the 'Negative' for the

following:

REASONS

11. It is the specific contention of the complainant

that the accused had approached him during January 2016

and requested for hand loan. Accordingly, he had lent an

amount of Rs.15,00,000/- on 05.02.2016 and towards

repayment of the said amount, the accused has issued two

cheques for Rs.7,50,000/- each and the same came to be

dishonored as there was insufficient funds. In spite of service

of legal notice, the accused has not repaid the cheques

amount and thereby, committed the offence punishable under

Section 138 of NI Act. The complainant has presented two

private complaints against the accused in respect of each of

the cheques and CC Nos.23109 and 23110 of 2016 came to

be registered by the learned Magistrate after taking

cognizance of the offence.

12. To prove his contention, the complainant

examined himself as PW1 and re-iterated his contention as

taken in the complaint by filing the affidavit in lieu of

examination-in-chief. During cross examination, it is

suggested to PW1 that during 2015, he had lent an amount

Rs.12,00,000/- to the accused through his friend Vijay, and in

turn, Vijay had given money to the accused. Witness also

stated that he was carrying money lending business. He

pleaded ignorance as to whether he has referred Ex.P7 in the

legal notice or not. He denied the suggestion that he had not

paid Rs.15,00,000/- to the accused as contended by him and

also denied the suggestion that Exs.P4 and P5 were created in

collusion with the postal authority. Witness stated that he

had not taken any documents from Vijay.

13. Ex.P1 - cheques in question were admittedly

issued by the accused in both the cases. Ex.P2 are the

endorsements of the Bank to the effect that the cheques in

question was dishonored as there was insufficient fund. Ex.P3

are the copies of legal notices issued by the complainant to

the accused. Ex.P4 are the postal receipts and Ex.P5 are the

postal acknowledgements for having served notice on the

accused. Ex.P6 is the copy of passbook pertaining to the

complainant to show his financial capacity to lend the amount.

Ex.P7 are the on-demand promissory notes issued by the

accused in favour of the complainant.

14. The accused has denied all the incriminating

materials available on record and examined himself as DW1.

He has filed his affidavit in lieu of examination-in-chief stating

that the complainant has filed a false case against him. He

admitted that he is the Director of the International Fiberglass

Products Pvt. Ltd., He denied that he had obtained any loan

from the complainant. It is stated that one Vijay was

supplying the materials to the Company during 2014 and

2015 and he had issued two cheques in favour of the said

Vijay as security. Even though, the transaction between the

accused and the said Vijay has already been settled, he had

not returned the cheques and promissory notes issued by

him. The said cheques and promissory notes were misused

by the complainant in collusion with Vijay. There was nothing

due by the accused in favour of the complainant and therefore

he prayed for dismissal of the complaint.

15. During cross examination, he admits that he is

looking after the day-to-day affairs of the accused - Company.

He denied all other suggestions regarding availing of loan,

issuance of cheques, execution of on-demand promissory

note, service of legal notice and commission of the offence.

He has stated that, he had not taken any legal action either

against the complainant or against Vijay for misusing the

cheques and promissory note. Witness categorically admitted

that, Exs.P1 and 7 bears his signatures and even admits that

Ex.P7 contains the seal of the Company.

16. The accused is described as International

Fiberglass Products Pvt. Ltd., The Company is represented by

its Managing Director Balakrishna Naidu. Ex.P1 - cheques

were issued by Balakrishna Naidu as Managing Director. The

signature on Ex.P1 is admitted. It is not disputed that Ex.P1

- cheques belongs to the accused - Company. Ex.P7 is the on-

demand promissory note. The signatures and the seal of the

accused is categorically admitted during cross-examination.

An attempt was made to contend that the blank cheques and

on-demand promissory note as per Exs.P1 and 7 were issued

by the accused in favour of Vijay and the same were misused

by the complainant. The said suggestions were denied by the

complainant.

17. It is pertinent to note that the accused has not

taken any action either against the complainant or Vijay

referred to by him. According to the accused, he had settled

his difference with Vijay, but the cheques and on-demand

promissory note were not returned to him. Nothing prevented

the accused from taking action against the said Vijay for

misusing the cheques and on-demand promissory note. It is

also pertinent to note that the accused has never issued stop

payment instructions to his banker in respect of the cheques,

which according to him were issued in favour of Vijay. The

accused has not chosen to examine the said Vijay in support

of his defence.

18. When the cheques and the signatures found

thereon are admitted by the accused, the presumption under

Sections 118 and 139 of NI Act operates in favour of the

complainant and against the accused. The burden shifts on

the accused to rebut the said presumptions. Even though, the

complainant was cross examined and the accused examined

himself as DW1, the legal presumptions are not rebutted.

19. In this regard, it is relevant to record the decision

of the Hon'ble Apex Court in M/s Kalamani Tex and

another Vs P Balasubramanian , wherein, the Hon'ble

Apex Court recorded its various decisions and held in

paragraphs 15 and 17 as under:

"15. No doubt, and as correctly argued by Senior Counsel for the appellants, the presumptions raised under Sections 118 and Section 139 are rebuttable in nature. As held in M.S. Narayana Menon v. State of Kerala, which was relied upon in Basalingappa, a probable defence needs to be raised, which must meet the standard of "preponderance of probability", and not mere possibility. These principles were also affirmed in Kumar Exports,

(2021) 5 SCC 283

wherein it was further held that a bare denial of passing of consideration would not aid the case of accused.

17. Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. It is useful to cite Bir Singh v. Mukesh Kumar, where this court held that:

"36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."

(emphasis supplied)

20. In view of the above, position of law is very well

settled and the burden is on the accused to rebut the

presumption under Section 139 of NI Act. Even though the

standard of proof required is only a preponderance of

probability, the accused is not successful in probablising his

defence. Under such circumstances, is to be held that the

complainant is successful in proving the guilt of the accused

beyond reasonable doubt and therefore the accused is liable

for conviction.

21. The other contention raised by the learned

counsel for the revision petitioner is that, there is non-

compliance of Section 141 of NI Act. Section 141 of NI Act

refers to offences by companies. The requirement of law is

that, if the person committing an offence under Section 138

of NI Act is a company, every person who, at the time the

offence was committed, was in charge of or responsible to the

Company for the conduct of its business, as well as the

Company, shall be deemed to be guilty of the offence.

Therefore, the person who at the time of commission of

offence was in charge and responsible to the Company for the

conduct of its business as well as the Company are required

to be arrived as accused. If the Company is not arrayed as

the accused, the person who is in-charge of the Company will

not be held liable.

22. But in the present case, it is stated that the

accused - International Fiberglass Products Pvt. Ltd., is

represented by its Managing Director - Balakrishna Naidu.

The said Balakrishna Naidu issued Ex.P1 - cheques in his

capacity as Managing Director. It is not in dispute that the

cheques in question belongs to the Company and the same

was issued by the accused in his capacity as Managing

Director. Under such circumstances, there is compliance of

Section 141 of NI Act. The decision relied on by the learned

counsel for the accused in Aneeta Hada (supra) is not

applicable to the facts of the case.

23. Learned counsel for the revision petitioner

contended that since the complainant is a money lender, the

complaint filed under Section 138 of NI Act is not

maintainable in the absence of any licence. Commission of

the offence under Section 138 of NI Act is a criminal offence

and the Negotiable Instruments Act does not make any

difference between a person who is lending the money

occasionally or as a professional money lender. Initiation of

legal action under Section 138 of NI Act do not require the

licence under Money Lender Act, to be produced before the

Court. If the complainant initiates civil suit against the

accused for recovery of money lent by him as money lender,

the accused could take such defence before the Civil Court.

Therefore, I do not find any substance in the contention

raised by the accused. When the complainant is successful in

proving the guilt of the accused for the offence punishable

under Section 138 of NI Act in both the cases and the accused

failed to rebut the legal presumption, he is liable for

conviction.

24. I have gone through the impugned judgment of

conviction and order of sentence passed by the Trial Court,

which was confirmed by the First Appellate Court. Both the

Courts have considered the materials on record in a proper

perspective and arrived at a right conclusion in convicting and

sentencing the accused for the above said offence. I do not

find any reason to interfere with the same. Hence, I answer

the above point in the 'Negative' and proceed to pass the

following:

ORDER

(i) The revision petitions are dismissed.

(ii) The amounts in deposits, if any, be transmitted to

the Trial Court to appropriate the same towards fine and

compensation.

Registry is directed to send back the Trial Court records

along with copy of the order.

Sd/-

JUDGE

RAK