IN THE COURT OF XIV ADDITIONAL JUDGE-CUM- XVIII
ADDITIONAL CHIEF METROPOLITAN MAGISTRATE:
SECUNDERABAD
Present : Sri. G.Venu XIV Addl. Judge – Cum – XVIII ACMM City Civil Court, Secunderabad
WEDNESDAY, THE 8 th DAY OF NOVEMBER, 2023
C alendar C ase No. 270 of 2016
(Old CC.No.2536 of 2015)
BETWEEN :
Bhagyanagar India Limited 5th Floor, Surya Towers, Sardar Patel Road, Secunderabad – 500 003. Represented by its Manager Mr.J.V.Ganesh Kumar.
.... Complainant
AND
1. M/s. Navmee Securities Pvt Ltd, 3-6-227, Himaythnagar, Street No.15, Hyderabad. Represented by its Director, Mr. Ashok Kumar Gilada
2. Mr.Ashok Kumar Gilada, Director, M/s Navmee Securities Pvt Ltd, 3-6-227,
Himaythnagar, Street No.15, Hyderabad. .... Accused
This case is coming for final disposal before me on 30.10.2023 in the presence of Sri.D.R.Hari Prasad, counsel for the complainant and Sri.S.K.Bang & Co., counsel for the accused, having been heard and having stood over for consideration till this day, this court delivered the following:
JUDGMENT
1.This is a case filed by complainant company through its authorized Representative-cum-Manager against the accused under section 200 Cr.P.C & 142 of Negotiable
Instrument Act for the offence punishable under section 138 of Negotiable Instruments Act to punish the accused 2 C.C.No.270 of 2016 and also award twice the cheque amount as compensation by directing the accused to pay the same to it.
The case of complainant is that; accused No.2 is the 2.
Director and in-charge / responsible person for the day to day affairs of Accused No.1 – company and more particularly, actively participating in all the commercial and financial affairs of the company. During the course of its business, accused No.2 on behalf of accused No.1, approached the complainant company and requested to lend an amount of
Rs.3-00 crores as part of the running account maintained by accused No.1 with it against the pledging of the Shares and accordingly, both entered into Ex.P-9 / Agreement dated 15.12.2006. Having considered his request, complainant lent an amount of Rs.3-00 crores through cheque bearing
No.972286 dated 16.12.2006 for an amount of
Rs.97,25,872/-, cheque bearing No.972319 dated 22.12.2006 for an amount of Rs.1 Crore, cheque bearing No.972491
dated 10.01.2007 for an amount of Rs.25,00,000/-, cheque
bearing No.972732 dated 05.02.2007 for an amount of 3 C.C.No.270 of 2016
Rs.50,00,000/-, cheque bearing No.972774 dated 12.02.2007 for an amount of Rs.33,00,000/- and another cheque bearing
No.973049 dated 12.03.2007 for an amount of
Rs.95,00,000/- drawn on HDFC Bank, Lakdikapool Branch,
Hyderabad and the said cheques were encashed by accused
No.2 on behalf of accused No.1. Accordingly, said Agreement i.e., Ex.P-9 is valid up to one year from the date of its execution and thereafter, both the parties mutually & verbally / orally extended the same for further period from time to time on the same terms and conditions till the year 2014. Thereafter, when the complainant requested the accused for the repayment of outstanding running loan account amount of Rs.1,19,73,863/- along with interest, accused No.2 on behalf of accused No.1 towards the discharge of partial liability for the above outstanding due amount, issued Ex.P-3 / Cheque bearing No. 000050 dated 13.07.2015 for an amount of Rs.1-00 crore drawn on M/s.
HDFC bank, Lakdikapool Branch, Hyderabad in favour of the complainant - company as per the agreed terms. Thereafter, when the complainant company presented it in State Bank of 4 C.C.No.270 of 2016
India, Commercial Branch, Secunderabad for its encashment, it was returned unpaid by issuing Ex.P-4 / Cheque Return
Memo dated 15.07.2015 with endorsement of “Account
Closed”. When the complainant intimated the same to the accused and also requested him to pay the Ex.P-3 / cheque amount for several times, he did not heed to the same and avoided to clear the said cheque amount. As such, having no other option, Complainant company - issued Ex.P-5 /
Statutory Notice dated 18.07.2015 to the accused through
Registered Post with Acknowledgment Due with a demand to pay the cheque amount along with the incidental charges within 15 days from the date of receiving the said Notice and the same was received by accused, but the accused instead of paying the cheque amount, gave Ex.P-8 / Reply Notice
dated 25.07.2015 admitting the issue of above said cheque.
Even then, accused No.2 did not bother to arrange and repay the cheque amount. Thus, as the accused cheated to cause wrongful loss to it, complainant - company was constrained to file the present complaint against the accused.
5 C.C.No.270 of 2016
After taking cognizance of this case for the offence 3.
punishable U/sec.138 of Negotiable Instrument Act, and also secure the presence of accused before the court, copies of this case documents as required U/sec. 207 Cr.P.C. were furnished to Accused No.1 & 2. Later, Accused No.2 in person as well as, as the representative accused No.1 company were examined U/sec.251 Cr.P.C. by explaining the substance of accusation leveled against him for the offence punishable
U/sec. 138 of N.I.Act in his vernacular language for which after understanding the same, he denied the accusation and pleaded not guilty and claimed to be tried.
In support of it’s case, complainant got examination of 4.
its Representative-cum-authorized Signatory-cum-Manager as PW-1 and also got marked Ex.P-1 to P-22 on its behalf. It also got examined Bank Manager of IDBI Bank, Kachiguda
Branch as PW-2. After the closure of evidence from complainant’s side, accused was examined U/sec. 313 Cr.P.C, for which, he denied all the incriminating evidence appearing in the evidence on record against him and reported no 6 C.C.No.270 of 2016 defense evidence from his side.
The learned counsel for complainant would contend 5.
that evidence of PW.1 & PW-2 coupled with the Ex.P-1 to P-22 proves the guilt of the accused, as such, accused No1 & 2 are liable for punishment. On the other hand, counsel for accused would contend that Ex.P-3 / Cheque was not issued towards the discharge of any subsisting legally enforceable debt or liability, as such, present complaint against the accused is not maintainable against him. He would also contend that blank signed cheque given a a security to the complainant is misused as Ex.P-3 for the purpose of filing this case though there is no alleged outstanding due payable, hence, he is entitled for acquittal.
Heard the argument from both sides. Perused the 6.
material available on record and Written arguments filed by complainant and accused under section 314 Cr.P.C.
On the strength of above arguments, following points would arise for determination:
7 C.C.No.270 of 2016
1.Whether any subsisting legally enforceable debt or liability was existed against the accused as on the date of issue of cheque in dispute as alleged by the complainant ? If so, whether the accused issued the cheque in dispute towards the discharge of said legally enforceable debt or liability and the same was dishonoured for the insufficient of funds in the bank account maintained by accused on which it was drawn?
2.Whether the statutory Notice required under Section 138(b) of Negotiable Instrument Act was served on the Accused ?
3.Whether the complainant proved all the essential requirements to be complied under the other provisions including Section 142 of Negotiable Instrument Act to prove the guilt of the accused for the offence punishable U/sec.138 of Negotiable Instrument Act ?
4.What Order ?
POINT No.1:
7. Admittedly, to prove this point, initial burden lies on the complainant company and if it discharges the same, burden shifts to the accused that he did not issue the cheque in question towards the discharge of legally enforceable debt or liability. As stated supra, in order to prove this point, complainant - company got examination of PW-1 and got marked Ex.P-1 to Ex.P-22. PW-1 is the
Representative-cum-Authorized Signatory / Manager of complainant company. Ex.P-2 is the Resolution of Board of
Directors of Complainant Company dated 06.08.2015 and it establishes that it is authorizing the PW-1 to initiate legal proceedings and depose for and on behalf of complainant 8 C.C.No.270 of 2016 company in the competent court. Ex.P-1 establishes that complainant - company is incorporated under the
Companies Act and it commenced its business as per
Memorandum of Association and Articles of Association.
Thus, these documents establishes that complainant company is competent to lend money as a Non-Banking
Financial Corporation and the PW-1 is competent to file complaint and also depose for & on behalf of the complainant company in the court.
8. PW.1 also deposed the contents of complaint. In his evidence, he also got marked Ex.P-3, Ex.P-4, Ex.P-9 to
Ex.P-22. Ex.P-9 is the Agreement entered into between the complainant - company and accused No.1 - company. Ex.P- 10 is the Power of Attorney given by accused No.2 on behalf of accused No.1 in favour of the complainant - company. Ex.P-11 is the loan account statement for the period from 01.12.2006 to 31.12.2015 which shows that outstanding due payable by accused No.1 – company as on date is Rs.1,19,73,863/- and other amount. Ex.P-12 to Ex.P- 9 C.C.No.270 of 2016 16 are the letter communications between the complainant - company and the accused No.1 - company regarding the periodical demand and payment of the due amount payable as per the terms and conditions entered into between them under Ex.P- 9 / Agreement. As per the evidence of PW-1, when the complainant demanded the outstanding due loan amount of Rs.1,19,73,863/- along with interest payable by accused No.1 to it, accused No.2 on behalf of accused No.1 – company, issued Ex.P-3 / cheque in favour of complainant company towards the discharge of partial liability, but when the complainant presented the said Ex.P-3 / cheque in the bank, it was returned unpaid by issuing Ex.P-4 / Cheque Return Memo
dated 15-7-2015 with endorsement of ‘Account Closed’.
Thus, oral evidence of PW.1 coupled with the Ex.P-1 to 22 is consistent and cogent to believe the issue of Ex.P-3 /
Cheque by accused in favour of complainant towards the discharge of legally enforceable debt. Moreover, accused also admitted his signature on Ex.P-3 / cheque and hand over of the same to the complainant. Further, it is also 10 C.C.No.270 of 2016 settled law that once the accused admits his signature on the cheques and handing over of the same to the complainant, it shall be presumed that it is given for the discharge of legally enforceable debt / liability only. In this regard, judgement of Hon’ble Supreme court in the case of
Kalamani Tex and Another vs. P.Balasubramanian1 becomes relevant, wherein, it was held that “Once the 2nd Appellant had admitted his signatures on the cheque and deed, the trial court ought to have presumed that the cheque was issued as a consideration for a legally enforceable debt. The trial court fell in error when it called upon the respondent complainant to explain the circumstances under which the appellants were liable to pay. Such approach of the trial court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law.
9. Accordingly, complainant discharged its initial burden to raise a presumption contemplated under section 139 of
Negotiable Instrument Act against the accused that accused issued the Ex.P-3 / cheque towards the discharge of its partial liability for the outstanding due loan amount and interest payable by it .
1(2021) 5 SCC 283 11 C.C.No.270 of 2016
10. Now, burden lies on the accused to rebut the above said presumption and thereby, prove that Ex.P-3 / cheque was not issued towards the discharge of subsisting debt. In order to establish the same, accused relied upon the admissions, omissions & contradictions and certain facts elicited by him in the evidence of PW-1. As such, it has to be seen that how far the same would outweigh the presumption raised under section 139 of Negotiable
Instrument Act against him. In this regard, it is worthwhile to see the standard of proof required to fasten the criminal liability on the accused in this nature of case proceedings.
11. The cardinal principle of criminal justice system in India is that accused must be presumed to be innocent until it is proved by prosecution with the evidence beyond all reasonable that he is guilty, hence, probable defense set up by him as well as any doubt created by him in the evidence adduced by complainant must be in such a nature that it would be probable to believe that no legally enforceable debt or liability is in existence to issue Ex.P-3 / 12 C.C.No.270 of 2016
Cheque in order to discharge the same. In this regard, judgment of Hon’ble Supreme court in the case of “Rangappa Vs. Sri Mohan 2”, becomes relevant, wherein, it was held that
Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of `preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.
12. In the case of ‘Basalingappa Vs. Mudibasappa 3 ’ also,
Hon’ble Supreme Court held that
2(2010) 11 SCC 441 = 2010(2) ALD (Crl.) 734(SC) 3(2019) 5 SCC 418 13 C.C.No.270 of 2016
This Court held that what is needed is to raise a probable defence, for which it is not necessary for the accused to disprove the existence of consideration by way of direct evidence and even the evidence adduced on behalf of the complainant can be relied upon. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:- (I). Once the execution of cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was issued for the discharge of any debt or other liability.
(ii) The presumption under Section 139 is are buttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by complainant in order to raise a probable defense. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the accused to come in the witness box to support his defence.
13. Now, it has to be seen that what is the probable defense of the accused to create doubt on the alleged subsisting legal debt or liability setup by the complainant company and that whether any material facts are elicited by accused in the evidence of PW-1 & 2 and the same casts doubt on the credibility of such evidence to believe that Ex.P-3 / Cheque 14 C.C.No.270 of 2016 was not issued towards the discharge of any subsisting debt or liability shown under the Ex.P-11 / Loan Account
Statement. In order to disbelieve and consequently, to disprove the case of the complainant, accused relied upon the omissions and contradictions elicited by him in the evidence of PW-1 & 2 during the cross examination apart from relying upon the facts elicited in the said evidence.
14. The defense of the accused is many folds. The initial legal defense of the accused is that PW-1 is not competent to depose for and on behalf of the complainant – company, hence, Court shall not relay upon it. In order to establish this contention, he relied upon the Ex.P-2 itself which is said to be a certified true extract of the alleged Board of
Directors’ resolution of the complainant - company. As per the contention of the accused, it is a secondary evidence, hence, in the absence of producing the primary evidence i.e., original Register in which the minutes of the Board
Resolution is recorded, it is unsafe to relay upon the Ex.P-
2. In order to convince the court in this regard, accused 15 C.C.No.270 of 2016 relied upon the evidence of PW-1. PW-1 in his evidence during the cross-examination, admitted that complainant - company maintains the Register to record the Minutes of meeting of its Board of Directors and Ex.P-2 is the extract from the said Register and further, said Register in the custody of Company Secretary and he can file the same in the court. Relying upon this much of evidence, accused would contend that when primary evidence is exist and available, it only be produced before the court because it is the best evidence. He would also contend that secondary evidence shall not be accepted unless sufficient reason is given for non production of original and sufficient satisfactory foundation is laid for producing such secondary evidence, as such, as the complainant has not laid any foundation as contemplated under section 65 of
Indian Evidence Act to file the Ex.P-2 when original
Register is available with it, it is not entitled to lead secondary evidence as per the said provision of law.
Accused would also contend that though the Ex.P-2 is marked, but is not proved as per law, court shall not take 16 C.C.No.270 of 2016 into consideration of the same to decide that PW-1 is competent to depose for and on behalf of the complainant – company. Accused would also contend that when he denies and disputes the very existence of the said Register and recording of the alleged minutes authorizing the PW-1 to file complaint and depose in the court of law in the said
Register, it is the complainant to produce the said original
Register to dispel the cloud casted by him, but as the complainant has not taken any such steps to produce the original Register, it is unsafe to rely upon the Ex.P-2 to establish that PW-1 is competent to depose for and on behalf of complainant – company. In this connection, he would contend that it is the settled principle that a document otherwise inadmissible in evidence cannot be taken in evidence only because no objection to the admissibility of the same was taken. Further, an adverse inference has to be drawn against the complainant that if the original Register is produced before the court, it will be unfavourable to it and it will not disclose the alleged resolution and, that is the reason why only, it has not 17 C.C.No.270 of 2016 produced the same. Besides it, there is no provision in the
Companies Act that a certified extracts of the minutes of the meetings of the Board of Directors is admissible in evidence without the proof of the original, as such, in the absence of producing the said original Register consisting the alleged Board of Directors minutes, it is unsafe to rely on the Ex.P-2 only.
15. Admittedly, as per Section 118(1) of the Companies Act, 2013, every company shall cause minutes of the proceedings of every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned in books kept for that purpose with their pages consecutively numbered. Besides it, as per Section 118(7), minutes kept in accordance with the provisions of this section is the evidence of the proceedings recorded therein. Moreover, as per Section 118(8), where the minutes have been kept in accordance with sub-section 18 C.C.No.270 of 2016 (1), then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid. Thus, though there is no specific provision in the Companies Act, 2013 as to who is an appropriate authority to sign a certified copy of the
Board Resolution, a true copy of any Board Resolution or the extracts of the minutes is generally considered as acceptable if it is signed by Managing Director or by any
Two Directors jointly or by the company Secretary of the company.
16. In the present case, as the Ex.P.2 is issued by Managing
Director of the complainant company, it shall be deemed to be a true and authenticated document, hence, contention of the accused that in the absence of producing the original Registrar of Minutes of the Meeting of the 19 C.C.No.270 of 2016 complainant - company, court shall not rely upon the Ex.P- 2 to believe the correctness and authenticity of it does not stand good in the eye of law. Moreover, when the accused has taken the objection to mark the Ex.P-1 & 2, this court has decided the said objection then and there itself and knocked down the said objection by stating that as per
Section 21 of Companies Act, Company Secretary can give certified copies of Certificate of Incorporation & Board
Resolution of the company. Hence, this court has no hesitation to hold that PW-1 is competent to depose for and on behalf of complainant – company.
17. The other defense of the accused is that Ex.P-11 / Loan
Account statement ( marked subject to objection ) relying upon which, complainant has set up the claim for the amount covered under the Ex.P-3 / cheque is inadmissible in evidence as it is not the primary evidence i.e., Books of
Account maintained in the regular course of business contemplated under the provisions of Section 34 of Indian
Evidence Act, but is the loose sheets of papers which will 20 C.C.No.270 of 2016 not have same sanctity as Books of Accounts and got prepared as per the convenience of the complainant – company to suit to this case, as such, it is not safe to rely upon the same. He would also contend that the way, manner & method in which, complainant figured out the amount claimed under the Ex.P-11 / Ledger Account statement as outstanding due payable by accused is contrary to the terms and conditions agreed between the complainant & accused under Ex.:P-9 / Loan Agreement, hence, as there is no such alleged liability on his part, question of issue of Ex.P-3 / cheque does not arise towards the discharge of the same, as such, complaint is not maintainable against him. In order to establish the same, he relied upon the facts elicited by him in the evidence of
PW-1 & 2 as well as Ex.P-9 to 22.
18. In order to decide the above, it is opt to see what is
Primary evidence and Secondary evidence contemplated under the provisions of Indian Evidence Act. Chapter-5 of the Indian Evidence Act deals with the documentary 21 C.C.No.270 of 2016 evidence. Section 61 thereof lays down that contents of the documents may be proved either by primary evidence or secondary evidence. As per Section 62, Primary evidence means producing the document itself for inspection of the court. Section 63 categorizes five kinds of
Secondary evidence, whereas Section 65 provides the instances under which, secondary evidence can be adduced. As per Sec.65(c) of Evidence Act, Secondary evidence may be given of the existence, condition or contents of the document when the original of it is lost or destroyed or party offering evidence of its contents cannot for any other reason not arising from his own default or neglect, produce it in a reasonable time. As per Section 65(e) of Evidence Act, when the original is a Public document, Secondary evidence is admissible even though the original document is still in existence and available.
Besides the above, certain other provisions of law are also required to be referred here. They are Section 74 & 75 and 34 of Indian Evidence Act. Section 74 of Evidence Act defines what is a Public document. Moreover, Section 34 of 22 C.C.No.270 of 2016
Indian Evidence Act contemplates that entries in Books of
Accounts including those maintained in electronic form regularly kept in the course of business are relevant whenever they refer to a matter into which court the court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability.
19. On the apparent face of the records, it appears that Ex.P- 11 are the loose account sheets generated by using the computer system and thus, it is not the true extracts of the
Books of Accounts kept in the regular course of business of complainant - company. As per the evidence of PW-1, complainant company is maintaining separate Registers for entries of the accounts, but he has not produced the same. In these circumstances, accused would contend that in fact, sanctity is attached in law of evidence to the Books of Accounts if the books are indeed Account Books i.e., original and if they shown on their face, are kept in the regular course of business, hence, such sanctity cannot be attached to a private extracts of the loose sheets 23 C.C.No.270 of 2016 generated from the computer system unless such accounts statements are maintained in the electronic form only and the format in which they were originally generated is present accurately and remain complete and unaltered and thus, regularly maintained in the due course of its business only. He would further contend that sanctity as like as attached to physical Books of Accounts kept in the regular course of business will not be attached to private extracts of alleged Account Books where the original accounts are not filed into the court, because from the extracts, it can not be discovered that if there are any interpolations or whether the accounts are in the form of a book with continues pages etc.. It is only in the case of
Bankers Books Evidence Act, 1891 that certified copies are allowed or else the case must come under section 65(f) or
(g) of Evidence Act, as such, private extracts of the accounts in other cases can only be secondary evidence
U/sec.65 or other provisions of Evidence Act, hence, as the
Ex.P-11 is missing such foundation, it is inadmissible in evidence, and the court shall not rely upon it to believe 24 C.C.No.270 of 2016 that amount covered under the Ex.P-3 / cheque is the part of outstanding due payable by the accused.
20. Here, in the present case, in order to prove that Ex.P-11 are generated from the computer system of the complainant – company used for the regular course of business and that they are intact without being altered and it were generated by competent persons having the custody of such computer system and maintains the accounts by got entering the data into it in the regular course of business as per the provisions of Companies Act & Rules framed thereunder, complainant got marked Ex.P- 20 to 22.
21. As per section 65-B of Indian Evidence Act, any information contained in an electronic record which is printed on a paper is admissible in any proceedings, without further proof or production of the original, as evidence if the said computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process the 25 C.C.No.270 of 2016 information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer; and during the said period, such information was regularly fed into the computer in the ordinary course of the said activities and throughout the material part of the said period, the computer was operating properly. For this purpose, a certificate identifying the electronic record containing the statement and describing the manner in which it was produced; and giving such particulars of device involved in the production of that electronic record and signed by a person occupying a responsible official position in relation to the operation of the said relevant device shall be issued.
Besides it, as per Section 85-B of Indian Evidence Act, in any proceedings involving a secure electronic record, Court shall presume unless contrary is proved, that the secure electronic record has not been altered since the specific point of time to which the secure status relates.
26 C.C.No.270 of 2016
22. In the present case, as per the evidence of PW-1, Ex.P-20 is the Certificate issued by Chief Financial Officer of the complainant – company who is in lawful custody of the computer system from which, Ex.P-11 / Account statement is generated. As per his further evidence, Ex.P-21 & 22 establishes that one Surendra Bhutoria is the Chief
Financial Officer of the complainant – company and he is competent to issue Ex.P-20 under the provisions of Section 65-B(4) of Indian Evidence Act and certify that Ex.P-11 is the true & correct account statement maintained by complainant – company in electronic form in the regular course of its business. In these circumstances, it shall be presumed that Ex.P-11 is the loan account statement prepared & maintained by complainant – company for accused – company in the regular course of its business, as such, above legal contentions raised by accused does not stand good in the eye of law at threshold. Now, as the accused is disputing the truthfulness, correctness & authenticity of entries made in it, it has to be seen that how far the facts elicited by him in the evidence of PW-1 & 27 C.C.No.270 of 2016 2 during the cross examination coupled with the Ex.P-12 to 19 and Ex.D-1 & 2 rebuts the said presumption and that
Ex.P-11 is got fabricated by complainant to suit the claim set up by it only.
23. As stated supra, in order to prove that amount claimed under the Ex.P-3 / cheque is the part of outstanding due amount payable by accused, complainant relied upon Ex.P- 11 / Ledger Account statement only. Section 34 of Indian
Evidence Act contemplated that entries in the Books of
Accounts including those made in electronic form alone are not sufficient to charge a person with a liability except where the person accepts the correctness of such entries, as such, complainant has to show that entries made in
Ex.P-11 / Ledger Account statement represents the real and honest transaction and no independent evidence is required to believe the trustworthiness of such entries so as to fasten the liability on the accused. In these circumstances, it has to be seen that how far the oral evidence of PW-1 & 2 coupled with the Ex.P-11 is 28 C.C.No.270 of 2016 trustworthy & creditworthy in holding that presumption raised U/sec.139 of Negotiable Instrument Act against the accused subsists when it is attacked by accused through cross examination to rebut the same. In this connection, judgment of Hon’ble Supreme court of India in the case of ‘Rajesh Jain Vs. Ajay Singh 4’ guides this court to come to a right conclusion, wherein, it was held that ‘42. In other words, the accused is left with two options. The first option-of proving that the debt/liability does not exist-is to lead defence evidence and conclusively establish with certainty that 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 particular circumstances of the case. The preponderance of probability in favour of the accused's case may be even fifty one to forty nine and arising out of the entire circumstances of the case, which includes: the complainant's version in the original complaint, the case in the legal/demand notice, complainant's case at the trial, as also the plea of the accused in the reply notice, his 313 statement or at the trial as to the circumstances under which the promissory note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was ‘no debt/liability’. [Kumar Exports and Sharma Carpets, (2009) 2 SCC 513]
43. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact.
44. The accused may adduce direct evidence to prove that the instrument was not issued in discharge of a debt/liability 42023 SCC Online SC 1275 29 C.C.No.270 of 2016 and, if he adduces acceptable evidence, the burden again shifts to the complainant. At the same time, the accused may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling the burden may likewise shift to the complainant. It is open for him to also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of the Evidence Act. The burden of proof may shift by presumptions of law or fact. In Kundanlal's case- (supra) when the creditor had failed to produce his account books, this Court raised a presumption of fact under Section 114, that the evidence, if produced would have shown the non-existence of consideration. Though, in that case, this Court was dealing with the presumptive clause in Section 118 NI Act, since the nature of the presumptive clauses in Section 118 and 139 is the same, the analogy can be extended and applied in the context of Section 139 as well.
45. Therefore, in fine, it can be said that once the accused adduces evidence to the satisfaction of the Court that on a preponderance of probabilities there exists no debt/liability in the manner pleaded in the complaint or the demand notice or the affidavit-evidence, the burden shifts to the complainant and the presumption 'disappears' and does not haunt the accused any longer. The onus having now shifted to the complainant, he will be obliged to prove the existence of a debt/liability as a matter of fact and his failure to prove would result in dismissal of his complaint case. Thereafter, the presumption under Section 139 does not again come to the complainant's rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance. [Basalingappa vs. Mudibasappa, AIR 2019 SC 1983; See also, Rangappa vs. Sri Mohan (2010) 11 SCC 4]
24. PW-1 deposed & admitted that Ex.P-11 is the only
Statement of Account with respect to all the transactions taken place between the complainant and accused and 30 C.C.No.270 of 2016 that there is no other Statement of Account other than the
Ex.P-11 maintained by complainant with respect to all the transactions between the complainant and accused. He also admitted that complainant - company received
Cheque bearing No.9, dt: 11-4-2008 for an amount of
Rs.2,42,72,000/- drawn on HDFC bank, Lakdikapool branch from the accused and the same was honoured, but in the
Ex.P-11 / Ledger Account Statement, it is mentioned that
Rs.1,42,02,872/- is adjusted towards the principal amount, whereas Rs.38,34,079/- was adjusted towards the interest (
Total Rs.1,80,36,951/- ). Thus, there is no account for the difference amount of Rs.62,35,049/- in the said Ex.P-11. He also admitted that complainant - company received
Cheque bearing No.7271, dt: 1-10-2007 for an amount of
Rs.35,00,000/- and Cheque bearing No.7276, dt: 19-12- 2007 for an amount of Rs.40,00,000/- drawn on IDBI bank,
Kachiguda branch and also Cheque bearing No.16, dt: 20- 4-2009 for an amount of Rs.45,00,000/- drawn on Kotak
Mahendra bank, Somajiguda branch from the accused and the same were honoured and accordingly, admitted the 31 C.C.No.270 of 2016
Ex.D-1 & D-2 / Bank Account Statements of accused maintained in the said banks, but not shown the said received amount in the Ex.P-11 / Ledger Account
Statement. Thus, it casts doubt on the creditworthy of entries made in Ex.P-11.
25. On the other hand, in order to believe the correctness of entries made in Ex.P-11, PW-1 in further Examination-in- chief i.e., after the eliciting of above facts by accused, got marked Ex.P-19 / Bank Account statement of complainant – company maintained in HDFC bank, Lakdikapool branch as well as got examined PW-2 / Bank Manager of IDBI Bank,
Kachiguda branch, wherein, he deposed / stated that a separate transaction of Rs.2-00 crores was taken place between the complaint – company and accused - company, but he nowhere deposed that complainant – company gave the said amount of Rs.2-00 crores to the accused as a separate loan. Though in the written arguments submitted by complainant – company U/sec.314 Cr.P.C, it was demonstrated that separate loan of Rs.2-00 crore was 32 C.C.No.270 of 2016 given to the accused – company, no such loan account statement is filed and marked as Exhibit to believe the same. Moreover, PW-2 / Bank Manager deposed that basing on Ex.P-19 / Bank Account statement supplied by complainant – company, he can not say whether the amount of Rs.2-00 crores under 7 entries were transferred to the bank account of the accused only as the name of the accused – company is not reflected in the said Ex.P-19.
In these circumstances, contention of the accused that if the said amount of Rs.2-00 crores is credited to the bank account of the accused, either the same would have been shown by complainant – company in the Ex.P-11 / Ledger
Account statement or maintained a separate ledge account statement for the said transaction of Rs.2-00 crores shall be accepted as true and correct, as such, in the absence of the same, it casts serious doubt on the correctness and authenticity of entries made in Ex.P-11.
Thus, as the Ex.P-19 / Bank Account statement is not disclosing that whether the amount of Rs.2-00 crores under 7 entries is either the loan transaction or it has got 33 C.C.No.270 of 2016 any connection to the amount of Rs.1-20 crore paid by accused under different dates vide Ex.D-1 / Bank Account statement of accused company maintained in IDBI Bank,
Kachiguda branch and Ex.D-2 / Bank Account statement of accused company maintained in Kotak Mahendra bank,
Somajiguda branch, it shall be accepted that complainant – company by not adjusting the difference amount of
Rs.62,35,049/- ( 2,42,72,000 - (1,42,02,872 + 38,34,079) = 62,35,049 vide Cheque No.9 ) as well as amount covered under Ex.D-1 & D-2 to any head / component in the Ex.P- 11, has not maintained the true and correct ledger account statement. Thus, it infers that Ex.P-11 is not representing the real and honest transactions / entries and that there is no due payable by accused.
26. Besides the above, the other contention of the accused is that alleged outstanding due shown in the Ex.P-11 / Ledger
Account Statement is time barred debt / liability, as such, as there is no legally enforceable debt / liability, question of issuing the Ex.P-3 / cheque towards the partial discharge 34 C.C.No.270 of 2016 of the same does not arise. Accused would also contend that blank signed cheque given as a security at the time of entering into the Ex.P-9 / Loan Agreement and sanction of loan is misused by complainant – company to claim the illegal amount, hence, present complaint is not maintainable against him. In these circumstances, it has to be seen that how far the said contention would sustain either on facts or in law.
27. Ex.P-9 is the Loan Agreement dated 15-12-2006 entered into the between the complainant - company and accused - company to sanction a loan of Rs.3-00 crores against the pledging of shares. As per the Term / Para No.3 of it, lender and borrower agreed to lend & borrow a sum up to a maximum of Rs.3-00 crores against the transfer of shares into the D-mat account maintained under the name and styled as Bhagyanagar India Ltd, A/C. Navmee Securities
Pvt. Ltd. maintained at P.C.S Securities Limited, Client
I.D.No. ___ as a Security, and the agreement is valid for a period of one year from the date of execution and can be 35 C.C.No.270 of 2016 extended for a further period at the option of the Lender on such terms and conditions as may be mutually agreed upon. Further, as per Term / Para No.5, loan shall carry interest @ 18% per annum calculated on a daily basis on the loan, whereas interest shall be payable on a monthly basis and interest amount not paid on the due date will get added back to the Principal and will carry interest at the same rate as on principal. As per Term / Para No.15,
Borrower agrees and understands that at all times, the amount previously drawn and outstanding together with amount proposed to be drawn shall not exceed the sanctioned loan and subject to this, whenever the borrower wishes to draw sum out of the sanctioned loan, borrower shall tender to the lender margin of the requisite value.
Further, as per Terms / Paras No.12 & 17, lender shall maintain an account in the nature of a current account in the name of borrower showing the sanctioned loan, amount utilized by borrower against the securities or shares to be acquired by lender from open market operations. The No. of shares to be acquired of the 36 C.C.No.270 of 2016 specified entity on each trading day will be governed by the written instruction from the Director or authorized representative of the borrower. A copy of the current account statement shall be submitted by lender to the borrower for borrower’s confirmation and discrepancies, if any shall be rectified.
28. While so, perusal of Ex.P-11 / Ledger Account statement goes to show that in pursuance of the terms and conditions agreed under Ex.P-9 / Agreement dt:15-12-2006, initially, an amount of Rs.97,25,872/- was released / transferred by complainant - company to the account of accused – company vide Cheque No.972286, dt:16.12.2006, whereas perusal of Ex.P-17 / Letter dt. 18.12.2006 goes to show that accused requested the complainant – company to release an amount of Rs.97,25,872/- as the accused - company purchased shares worth of Rs.97,25,872/- in the market at IN & FS Investments Securities Ltd., pending completion of other formalities, as such, complainant - company transferred the said amount to the accused - 37 C.C.No.270 of 2016 company prior to open the D-mat Account in the name of complainant - company as agreed under Ex.P-9. In this regard, Ex.P-18 establishes that one P.C.S Securities Ltd.
addressed a letter dt. 20.12.2006 to the accused - company that as per their request, it opened the D-mat account. Moreover, accused executed the Ex.P-10 / Power of Attorney on 18-12-2006 in favour of the complainant - company to authorize it to open & operate a bank account at HDFC bank, Lakdikapool Branch, Hyderabad so as to maintain the transaction covered under the D-mat account. Thereafter, complainant-company transferred an amount of Rs.1-00 crore to the accused company on 22.12.2006, Rs.25-00 lakhs on 10.1.2007, Rs.50-00 lakhs on 5.2.2007 and Rs.33-00 lakhs on 12.2.2007 and also
Rs.95-00 lakhs on 12.3.2007. Thus, complainant-company sanctioned loan of more than 4-00 crores than the agreed to sanction a loan maximum up to 3-00 crores as per
Term / Para No.3 of Ex.P-9 / Loan Agreement. Besides it, though it is specifically mentioned in Term / Para No.5 of the Ex.P-9 / Agreement, interest amount not paid on the 38 C.C.No.270 of 2016 due date will get added back to the principal and will carry interest at the same rates as on the principal, complainant - company has not followed & complied the said term and thus, did not add the interest amount to the principal amount when the complainant - company released Rs.25- 00 lakhs in the month of January, 2007 after releasing the amount of Rs.97,25,872/- on 16.12.2006 and Rs.1-00 crore on 22.12.2006 i.e., in the month of December, 2016, but added the accrued interest on the interest generated for the amount released in the month of December, 2006 and shown it as separate component. It is the same case when the complainant - company released Rs. 50-00 lakhs and
Rs. 33-00 lakhs in the month of February and so also released Rs. 95-00 lakhs in the month of March, 2007.
Thus, complainant company deviated from the agreed terms of Ex.P-9 / Agreement in reflecting the true and correct transactions / entries in the Ex.P-11 / Ledger
Account statement.
39 C.C.No.270 of 2016
29. On the other hand, complainant would contend that when accused being relied upon the Ex.P-11 / Ledger Account statement, denies his liability by stating that he discharged the entire debt/liability due to the complainant, it is the accused to discharge the burden from proving the same with strong probable circumstances which would infer the non existence of said liability. Complainant would also contend that by addressing Ex.P-15 / Letter dt: 16-4-2009, accused requested it to waive interest on the loan obtained by him and also by accepting to sell the shares, transferred the same to its account in partial discharge of his liability and thus, it establishes that it is a continuous running account and continued the running loan amount till 2014 whereat, accused remained Rs.1,19,73,863/- due & payable to it and that it is not the time barred debt / liability, as such, contention of the accused that Ex.P-11 is not representing the real and honest transactions / entries shall not be accepted. In these circumstances, it has to be seen that how far the other elicited facts in the evidence of 40 C.C.No.270 of 2016
PW-1 casts doubt on the correctness & authenticity of entries in Ex.P-11.
30. Admittedly, it is the rule that the borrower only shall pay the TDS to the Income Tax Department on the interest amount paid by him to the creditor, but in the present case, complainant company being the creditor has shown the TDS amount payable by accused on the interest as separate component in the Ex.P-11 and added the payable
TDS cumulatively for every month. Furthermore, as per
Ex.P-11, in the month of March, 2009, complainant had shown an amount of Rs.11,23,357/- as paid by accused towards the TDS, as such, when the accused posed questions in this regard to the PW-1 during the cross- examination, he deposed that complainant – company has not issued any TDS certificate for the said amount to the accused – company. He also deposed contrary to it that accused has not paid the said TDS amount, but the complaint – company has Write-off it as per the mutual understanding between them. He also deposed that 41 C.C.No.270 of 2016 though the accused has not paid an amount of
Rs.11,23,537/- towards the TDS, complainant company has shown it in the Ex.P-11 / Ledger Account as received from accused. He also deposed that above mutual understanding as to Write-off was taken place between the
M.D of complainant - company namely Narender Surani and accused, but he can not say when such mutual understanding was taken place. Thus, oral evidence of PW- 1 itself establishes that Ex.P-11 / Ledger Account statement does not represent the real, true and honest transactions / entries.
31. Besides it, as per Ex.P-13 / Letter dt. 2.3.2009 addressed by accused to the complainant, balance outstanding amount payable by accused to the complainant - company is Rs.2,46,91,811/-, but in the Ex.P-11 / Ledger Account statement, an amount of Rs. 2,51,91,811/- is shown as balance outstanding due payable by accused by the end of
February, 2009, whereas by deducting Rs.5,00,000/- on 26.3.2009, complainant has shown the outstanding due 42 C.C.No.270 of 2016 payable by the end of March, 2009 as Rs.2,46,91,811/-.
Thus, it infers that complainant - company has not maintained the true and correct ledger account statement.
As stated supra, when the accused paid an amount of Rs.
2,42,72,000/- vide cheque No.9, dt.11.4.2008, complainant adjusted an amount of Rs. 38,34,079/- towards the interest in the month of March, 2008, whereas adjusted an amount of Rs. 1,42,02,872/- to the principle in the month of April, 2008. When the Cheque No.9 is pertaining to the date of 11.4.2008, adjusting an amount of Rs.38,34,079/- towards the interest in the month of March, 2008 as received in the month of March, 2009 creates doubt in the mind of the court as to the correctness and authenticity of entries made in the Ex.P-11 / Ledger Account statement. Further, though Rs. 2,42,72,000/- was received from accused vide
Cheque No.9, dt.11.4.2008, complainant has shown the account for Rs. 1,80,36,951/- only and thus, complainant has not shown any account for the remaining amount in the Ex.P-11. Thus, it also casts doubt on the correctness and authenticity of entries made in Ex.P-11. Further, as per 43 C.C.No.270 of 2016
Ex.P-13, accused requested the complainant - company to waive the interest on the sanctioned loan as on the date of addressing the said letter, but under the Ex.P-14, complainant - company informed the accused to pay Rs.
36-00 lakhs to meet the shortfall in value of the security and then only, it would consider the request of such waiver of interest, as such, after paying the said amount, accused vide Ex.P-15 / letter, dt. 16.4.2009, again requested the complainant – company to waive the interest amount, but the complainant - company has not given any reply to it and maintained silence. Hence, it infers that complainant – company accepted the said request, and for the said reason why only, did not demand for the same, as such, while addressing Ex.P-16 / Letter, dt. 7.6.2012 to the accused, complainant requested the accused to transfer 1,15,198 shares of First Winner company to the account maintained in this regard so as to sell the same in the open market, but maintained silence as to the waiver of the interest as promised by it. Further, as per the endorsement of ‘accepted’ made by accused on the Ex.P-16, 44 C.C.No.270 of 2016 complainant was authorized to sell the above transferred shares. In this regard, whether such transferred shares were sold or not in the open market and how much amount was encashed is nowhere reflected in Ex.P-11 / Ledger
Account statement nor explained by complainant anywhere in the complaint & Ex.P-5 / statutory Notice.
Thus, it gives credence to the above inference that interest amount might have been waived.
32. While so, as per Ex.P-11 / Ledger Account statement, as on 27.12.2010, balance of principle amount payable by accused is Rs.42,18,395/- only. Moreover, PW-1 admitted that after December, 2010, there are no transactions of sale & purchase between the complainant and accused, however, deposed that on 9-6-2012, in pursuance of Ex.P- 16, accused transferred 1,15,198 shares of First Winner company to the complainant – company account. On the other hand, though he deposed that complainant - company obtained margins as per the market conditions, admitted that there is no written agreement with respect 45 C.C.No.270 of 2016 to the said margin amount to be taken and if at all, any margin amount is required to be taken, complainant would take consent of the accused prior to the selling of the shares secured, but no document showing the consent of the accused is obtained so as to sell the same in the open market is filed. As he deposed that he does not know what were the securities available with the complainant - company as on 27.12.2010 when the accused paid Rs.1-00 crore vide cheque No.035657, dt. 27.12.2010 drawn IDBI
Bank, Kachiguda branch and the answer to it would be given after verifying the records available in the complainant company, it casts doubt on the correctness of entries made in the Ex.P-11 / Ledger Account statement.
Besides it, PW-1 deposed that complaint – company sent the Ex.P-16 / Letter dt: 7-6-2012 to the accused so as to obtain the confirmation from accused for selling the shares secured with it, but also deposed that no confirmation like in the above manner is obtained from the accused to show that accused – company is liable to pay an amount of
Rs.1,19,73,863/- towards the interest and Rs.22,87,408/- 46 C.C.No.270 of 2016 towards the TDS. On the other hand, as per Terms / Paras
No.12 to 18 of Ex.P-9/Loan Agreement, absolute discretion is also vested with the lender / complainant to realize the due amount payable by accused by way of sell all the securities given by accused and even then, if any shortfall arises, it can require the borrower / accused to pay the money, but there is nothing on record to establish that complainant requested the accused to pay any such shortfall amount when it is noticed that accused is required to pay alleged interest amount as outstanding due payable to it. In these circumstances, PW-1 also deposed that he does not know whether any TDS amount shown in the
Ex.P-11 is paid by complainant – company, and also deposed that he does not know whether the liability of the accused is shown in the relevant period Income Tax returns, Balance sheets, any other records required to be shown to the government authorities, but deposed that competent person in Account department of their company would only give answer to it, this court is of the view that in the absence of examination of any such competent 47 C.C.No.270 of 2016 person, it is unsafe to come to a conclusion that Ex.P-11 is the correct and authenticated Ledger Account statement maintained by the complainant company in the regular course of its business. Thus, these circumstances gives rise to draw an inference as contended by accused that there is no due payable to the complainant and, that is the reason why only, complainant has not produced any such documents and if produced, it would be unfavourable to it, hence, to avoid the same only, it has not produced the same before the court. Moreover, as per terms of Ex.P-9 /
Loan Agreement, if any dispute arises, it shall be referred to Arbitrator to be appointed by lender / complainant, but
PW-1 deposed that no such Arbitration proceedings are initiated nor any civil suit is filed. This also gives credence to the contention of accused that as per the terms of
Ex.P-9 / Loan Agreement, entire debt/liability is discharged, hence, question of issuing the Ex.P-3 / cheque does not arise for him.
48 C.C.No.270 of 2016
33. Besides it, regarding the rate of interest charged, as the
PW-1 deposed that it was charged as per the mutual understanding taken place between the Managing Director of the complainant - company and the accused and he does not know how much interest was charged and also deposed that said interest is fluctuated and in this regard,
Managing Director only is the competent person to depose so as to prove the correctness of the same, this court is of the view that in the absence of adducing the evidence of said Managing Director, Ex.P-11 would not represent the true and correct entries made in it. Further, as the PW-1 deposed that Ex.P-11 is not reflecting the rate of interest and at what rate of interest, interest was calculated for the outstanding due payable by accused, it casts doubt on the correctness of alleged outstanding due of Rs.1,19,73,863/- shown in the interest component of Ex.P-11 as payable by accused.
34. In the above circumstances, in order to negate the above contention of the accused, complainant relied upon the 49 C.C.No.270 of 2016
Term / Para No.10 of Ex.P-9 / Loan Agreement which contemplates that Borrower agrees and confirms that
Lender may at its absolute discretion, appropriate any payment made by the Borrower under this agreement towards the indebtedness of the Borrower and such appropriation shall be final and binding upon the Borrower who shall continue to remained indebted to the Lender for payment of dues under this agreement in respect of which sums of money were so paid but were appropriated towards another indebtedness of the Borrower. Further,
Term / Para No.11 contemplates that Borrower acknowledges that the rates of interest, default interest are reasonable and the rates of default interest represent pre-estimates of loss expected to be incurred by the
Lender due to the non payment of dues by the Borrower.
The Borrower acknowledges that the facility is a commercial transaction and specifically waives any defense under usury or other laws relating to or restricting interest. As such, complainant contends that whatever the entries made in the Ex.P-11 / Ledger Account statement 50 C.C.No.270 of 2016 prevails over all the omissions & discrepancies elicited by accused in it when the accused relied upon Ex.P-11 and admits it as the running account and also when admitted his signature on the Ex.P-3 / cheque and handing over the same to it. In order to substantiate this contention, complainant also relied upon the judgement of Hon’ble
Supreme court of India in the case of ‘K.S. Ranganatha
Vs. Vittal Shetty5’ wherein ,it was held that
The fact that the appellant has admitted about an earlier transaction where according to him, he had borrowed the amount and repaid the same in the year 1995, would indicate that the appellant and the respondent had entered into financial transactions earlier as well and another transaction was probable between the parties who were known to each other. In the light of the other circumstances established by the respondent, it would indicate that the respondent had discharged the burden of proving that the transaction had actually taken place.
35. Here, in the present case, as stated supra, though PW-1 also deposed that complainant company maintains the concerned records to substantiate the entries made in the
Ex.P-11 / Ledger Account statement as true and correct, and the same are in the custody of it, no steps are being taken by it to produce the same as on today to believe that 5(2021) 9 SCR 652 51 C.C.No.270 of 2016 entries in the Ex.P-11 is true and correct. In these circumstances, as the accused disputing the very correctness of the Ex.P-11, it is the complainant to establish with the satisfactory evidence as to the existence of the alleged due amount payable by accused. Moreover, as stated supra, when P.W-1 also deposed that complainant - company is an Income Tax Assessee and it will file Balance sheets to the Income Tax Department for every year and thus, complainant company is in possession of said balance sheets, it is the complainant company to produce the same. Admittedly, said Balance sheets consists the list of debtors and creditors of the complainant – company, but complainant - company failed to file the said balance sheet showing the name of the accused as the debtor and the amount covered under the
Ex.P-3 / cheque is the part of due payable by him. As such, when the complainant has not chosen to file the same, an adverse inference has to be drawn against it if the said balance sheets are produced, it will be unfavourable to it.
Thus, accused could establish certain circumstances which 52 C.C.No.270 of 2016 creates doubt on the correctness of the entries made in
Ex.P-11 to claim the outstanding due shown in it as payable by accused and that towards the partial discharge of the same only, Ex.P-3 / cheque was issued by accused.
36. While so, complainant would also contend that Ex.P-11 /
Ledger Account statement recorded the opening balance and the payments made by accused including the TDS and interest components thereon and undisputed payments of
Rs.1-00 crore on 27-12-2010 and Rs.1,03,821 on 28-6- 2012 and also Rs.60,157/- on 20-5-2014 made by accused followed by carrying forward of the balance both in the form of principal and interest, as such, it clearly demonstrates that Ex.P-11 is a running account and the
Rs.1,19,73,863/- is the outstanding due payable by accused to it, hence, towards the partial discharge of the said legal liability only, accused issued the Ex.P-3 / cheque.
37. In order to negate the above contention also and so also to establish that alleged outstanding due of Rs.1,19,73,863/- 53 C.C.No.270 of 2016 is the time barred debt/liability, and by using the blank signed cheque given by accused, this case was set up by complainant though there is no such alleged debt/liability, accused relied upon the evidence of PW-1. Accordingly, perusal of it goes to show that PW-1 deposed that amount covered under the Ex.P-3 / cheque is the interest amount for the period commencing from April, 2008 to August, 2014 and the cheques through which, amount received for the months of June to August, 2012, February & March, 2013, May, July & August, 2014 as shown in Ex.P-11 /
Ledger Accounts statement were issued by a Stock Broker and thus, after 27.12.2010, there are no transaction of sale and purchase between the complainant and accused. As stated supra, he also admitted that complainant - company has not taken any confirmation from the accused to show that accused is due and payable a sum of Rs.1,19,73,863/- towards the interest and Rs.22,87,408/- is the deduction towards the TDS. In these circumstances, as per Term /
Para No. 5 of Ex.P-9 / Agreement, as the interest is payable on a monthly basis and if the same is not paid every 54 C.C.No.270 of 2016 month, cause of action for recovering the same shall be within a period of 3 years from the date of default of the payment of the interest, but in the present case, as the complainant is claiming the amount covered under Ex.P3 / cheque as the part of interest for the period from April, 2008 to August, 2014 ie., more than 6 years, it infers the contention of the accused that it is a time barred debt.
However, it is no doubt true that accused paid Rs.1-00 crore on 27.12.2010, Rs.1,03,821/- on 28.06.2012 and
Rs.60,157/- on 20.05.2014. In this connection, it is noteworthy that as per Ex.P-10 / General Power of
Attorney, accused authorized the complainant - company to operate the D-mat Account and also bank account opened in the HDFC bank, Lakdipool branch of the accused, as such, the cheques given by stock broker towards the money payable to the accused can be in turn, used towards the partial discharge of the outstanding dues payable by accused to the complainant only, hence, entries made in Ex.P-11 as to amount received through cheques in the months of June to August, 2012, February & 55 C.C.No.270 of 2016
March, 2013, May, July & August, 2014 represents that it were paid by accused only. Thus, as the accused impliedly maintained the running account, question of time barred debt/ liability does not arise. Further, when the accused himself admitted the signature on Ex.P-3 / cheque as belongs to him and handing over of the same to the complainant, he can not take shelter that without his knowledge and consent, complainant misused one of the blank signed cheque as Ex.P-3 for the purpose of filing this case. In this regard, judgement of Hon’ble Supreme court of India in the case of Bir Singh Vs Mukesh Kumar 6 guides this court, wherein, it was held that
A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by 6(2019) 4 SCC 197 56 C.C.No.270 of 2016 adducing evidence. It is not the case of the respondent-accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative. 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. The fact that the appellant-complainant might have been an Income Tax practitioner conversant with knowledge of law does not make any difference to the law relating to the dishonour of a cheque. The fact that the loan may not have been advanced by a cheque or demand draft or a receipt might not have been obtained would make no difference. In this context, it would, perhaps, not be out of context to note that the fact that the respondent-accused should have given or signed blank cheque to the appellant- complainant, as claimed by the respondent-accused, shows that initially there was mutual trust and faith between them. In the absence of any finding that the cheque in question was not signed by the respondent-accused or not voluntarily made over to the payee and in the absence of any evidence with regard to the circumstances in which a blank signed cheque had been given to the appellant-complainant, it may reasonably be presumed that the cheque was filled in by the appellant-complainant being the payee in the presence of the respondent-accused being the drawer, at his request and/or with his acquiescence. The subsequent filling in of an unfilled signed cheque is not an alteration. There was no change in the amount of the cheque, its date or the name of the payee. The High Court ought not to have acquitted the respondent- accused of the charge under Section 138 of the Negotiable 57 C.C.No.270 of 2016
Instruments Act.
38. Be that as it so, admittedly, when the complainant – company issued the Ex.P-5 / Statutory Notice to the accused informing that Ex.P-3 / cheque was dishonoured and thus, demanded to pay the money covered under it, it has not mentioned that outstanding due payable by accused is Rs.1,19,73,863/- and Ex.P-3 was issued against the part payment of said outstanding amount. Even, it has not disclosed as to when and on what date, accused issued the said Ex.P-3, but PW-1 in his affidavit evidence, deposed that on his request for the repayment of outstanding running loan amount of Rs.1,19,73,863/- along with interest, accused issued the Ex.P-3 / cheque for an amount of Rs.1-00 crore towards the partial discharge of the said outstanding due, but he nowhere deposed that when and where, accused issued the Ex.P-3. As per Ex.P-11, last payment was shown to be made by accused in the month of August, 2014, as such, it infers that it might have been issued after the August, 2014, but in fact, it appears that accused handed over the blank signed cheque book 58 C.C.No.270 of 2016 consisting of 50 cheque leaves bearing No.000001 to 000050 to the complainant – company at the time of sanctioning the loan and the cheque No.49 was presented in the bank on 16-12-2010, as such, it infers that for claiming the alleged outstanding due amount shown in the interest component of Ex.P-11, complainant misused the
Cheque No.000050. In order to strengthen this defense contention, accused also relied upon the facts elicited by him in the evidence of PW-1. Accordingly, perusal of it goes to show that he deposed that he has not received the Ex.P- 3 / from accused, but it was received by their company and he does not know when & who received the same. He also admitted that except the signature, he filled the remaining contents of Ex.P-3 / cheque. Relying upon this admitted facts, though the accused would contend that as the complainant company unilaterally filled the date and amount columns in Ex.P-3 / cheque without his knowledge and authority, it amounts to material alteration, hence, it dis-entitles the complainant from using the same, it would not rescue him on this aspect as even assuming that blank 59 C.C.No.270 of 2016 signed cheques of accused – company were taken by complainant company at the time of sanctioning the loan, terms of Ex.P-9 / Loan Agreement, and Ex.P-10 / General
Power of Attorney executed by him authorizes the complainant company to fill the columns of Ex.P-3 / cheque, and thus, accused is also aware of consequences of dishonour of cheque even a blank signed cheque is given as a security. However, it is here noteworthy to mention that if the same is used for the purpose of legally enforciable debt/liability of accused, it would certainly fasten the criminal liability on him. In the present case, as stated supra, complainant-company has not produced any connected record maintained by it to substantiate that whatever the amount shown in the Ex.P-11 / Ledger
Account statement as outstanding liability of accused in the interest component is true and correct. Moreover,
Section 34 of Indian Evidence Act contemplates that entries in Books of Account regularly kept in the course of business, are relevant, but can not alone be sufficient evidence to charge any person with liability whenever the 60 C.C.No.270 of 2016 party relied upon the statement of account and requires the court to inquire into it. Here, in the present case, in order to prove that Ex.P-3 / cheque was issued towards the partial discharge of outstanding liability shown in Ex.P-11 /
Ledger Account statement at interest component, complainant relied upon the said Ex.P-11 only and not any other connected record relying upon which, entries are made and the figure was arrived in it. In these circumstances, when the accused denying the very correctness and authenticity of such entries made and figure of outstanding arrived in it and thus, disputing the genuineness of Ex.P-11 which is the loose sheets of
Account and the same will not have the same probative force as Books of Accounts regularly kept in the course of business, burden lies on the complainant to prove the same beyond all reasonable doubt that outstanding due shown in the Ex.P-11 is true & correct and that even accused is also liable for the amount covered under the
Ex.P-3/cheque. As stated supra, as the PW-1 admitted that after 27.12.2010, there are no transactions of sale and 61 C.C.No.270 of 2016 purchase between complainant and accused, and the
Managing Director of complainant – company as well as competent person in the Accounts department in the complainant – company only can depose as to the correctness of entries made in Ex.P-11 / Ledger Account statement and further, as he also admitted that though connected records including the copies of relevant period
Income Tax Returns showing the alleged debt / liability of accused are available with the complainant – company to believe that relying upon which only, entries are made in
Ex.P-11, but it have not been produced, and thereby, it casts doubt on the correctness of such entries in the Ex.P- 11 and thus, it appears that complainant-company shown the entries in Ex.P-11 / Ledger Account statement by showing an amount of Rs. 1,19,73,863/- as the outstanding due amount payable by accused so as to set up the claim that Ex.P-3 / cheque was issued towards the partial discharge of the said out standing liability only, this court agrees with the defense that blank signed cheque given as a security is misused for the illusionary claim. Thus, 62 C.C.No.270 of 2016 accused could successfully establish that amount covered under Ex.P-3 / cheque is not a legally recoverable debt / liability. Accordingly, accused successfully rebutted the presumption raised against him U/sec.139 of Negotiable
Instrument Act. Thus, complainant failed to prove this fact in its favour.
POINT Nos.2 & 3:
39. As per the evidence of PW-1, Ex.P-3 / cheque was dishonoured for the reason of Account was closed, as such, banker issued the Ex.P-4 / cheque return memo dt:15-7- 2015 accordingly. Having received the same, complainant- company issued Ex.P-5 / Statutory Notice dt: 18-07-2015 to the accused through Registered Post with Acknowledgment
Due vide Ex.P-6 / Postal Receipt dt: 20-07-2017 i.e., within 30 days from the date of receiving the said Ex.P-4, demanding him to repay the cheque amount within 15 days from the date of receiving the said Ex.P-5 / Notice as per the mandate contemplated under section 138(b) of
Negotiable Instrument Act, but having received the same 63 C.C.No.270 of 2016 vide Ex.P-7 / Postal Acknowledgment card, accused issued
Ex.P-8 / Reply Notice dt: 25-7-2015 by claiming that he is not liable to pay the amount covered under the Ex.P-3 / cheque. After receiving the same, complainant filed complaint in the court on 4-9-2015 i.e., within the period of limitation of 30 days after the expiry of 15 days from the date of the receiving the Ex.P-5 / Statutory Notice. Thus, all the requirements as required under section 142 of
Negotiable Instrument Act to initiate the prosecution against the accused are complied with. Accordingly, these points are decided in favour of the complainant and against the accused.
POINT No.4:
40. Though the Points No.2 & 3 are decided in favour of the complainant, as the Point No.1 is decided against the accused, accused is not liable for the punishment under
Section 138 of Negotiable Instruments Act.
In the result: Accused is found not guilty, hence, he is acquitted U/sec.255(1) Cr.P.C for the offence punishable 64 C.C.No.270 of 2016
U/s.138 of Negotiable Instruments Act. His bail bonds shall stand cancel after Appeal time is over if no Appeal is preferred against this Judgment.
Typed by Personal Assistant directly on the dictation given, corrected and pronounced by me in the open court on this the 8th day of November 2023
XIV Addl. Judge–Cum-XVIII ACMM, Secunderabad.
65 C.C.No.270 of 2016
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
FOR COMPLAINANT : FOR DEFENCE:
PW1 : J.V.Ganesh Kumar – None – PW2 : G. Uday Kiran
DOCUMENTS MARKED
FOR COMPLAINANT :
Ex. P1 : Certificate of Incorporation along with Memorandum and Articles of Association, dated 12.03.1991. Ex. P2 : Board Resolution dated 06.08.2015. Ex. P3 : Cheque bearing No.000050 dated 13.07.2015. Ex. P4 : Cheque return memo dated 15.07.2015. Ex. P5 : Legal Notice dated 18.07.2015. Ex. P6 : Two Postal Receipt dated 20.07.2015. Ex. P7 : Postal acknowledgment (2 Cards) dated 24.07.2015. Ex. P8 : Reply notice dated 18.07.2015. Ex. P9 : Agreement dated 15.12.2006. Ex. P10 : Power of Attorney dated 18.12.2006. EX. P11 : Running account (Statement) dated 01.12.2006 to 31.03.2015. Ex. P12 : Letter issued by the complainant to accused, dated 25.02.2009. Ex. P13 : Letter issued by the accused to the complainant, dated 02.03.2009. Ex. P14 : Letter issued by the complainant to accused, dated 25.03.2009. Ex.P15 : Letter issued by the complainant to accused, dated 16.04.2009. Ex.P16 : Letter issued by the complainant to accused dated 07.06.2012. Ex. P17 : Letter issued by accused to the complainant dated 18.12.2006. Ex. P18 : Copy of the letter dated 20.12.2006 issued by PCS Securities Ltd., to accused. Ex.P19 : HDFC Bank account statement of the complainant for the 66 C.C.No.270 of 2016 period from 01.07.2007 to 30.09.2007 and from 01.01.2008 to 30.04.2008 Ex.P-20 : Certificate U/sec. 65-B of Indian Evidence Act pertaining to E Ex.P-21 : Webcopy showing the details of Surendra Bhutoria Ex.P-22 : Certificate U/sec. 65-B of Indian Evidence Act pertaining to Ex.P-21
FOR DEFENCE: Ex. D1 : Statement of account of accused issued by IDBI Bank, Kachiguda Branch, dated 17.08.2018. Ex. D2 : Statement of account of accused issued by Kotak Mahendra Bank, Somajiguda Branch, dated 18.08.2018.
XIV Addl.Judge-cum-XVIII ACMM, Secunderabad.