IN THE COURT OF XV ADDL.JUDGE-CUM-XIX ADDL.CHIEF
METROPOLITAN MAGISTRATE, AT SECUNDERABAD.
MONDAY, THE 8th DAY OF APRIL, 2024
Present : Sri Sk Meera Khasim Saheb, XV Addl.Judge-cum-XIX ACMM, Secunderabad.
C.C.NO.21 OF 2024
OLD STC-NI 1782 OF 2022
Between:
M/s.Gupta Steels Rep. by its Proprietor Ganesh Gupta S/o.Late Madanlal Gupta, Age: 53 yrs, Occ: Business, Office at 2nd Floor, G&G Business Centre Kanta Reddy Nagar, Attapur Village, Rajendranagar Mandal, Ranga Reddy Dist. …. Complainant
And
A1: M/s.VNG Developers, Rep. by its partner Smt.Mukka Vinitha, W/o.Mukka Vinod Kumar, Age: 48 yrs, Occ: Business having office at Antaliea Homes, Thirumenahalli Village, Yelahanka Kogili, Bangalore, Karnataka State. A2: MukkaVinodKumar,S/o.Late Hanumandlu, Age: 52 yrs, Occ: Business Partner of M/s.VNG Developers R/o.Villa No.09, Ambience Fort, Attapur, Hyderabad. A3: Smt.Mukka Vinitha W/o.Mukka Vinod Kumar, Age: 48 yrs, Occ: Business, Partner of M/s.VNG Developers R/o.Villa No.09, Ambience Fort Attapur, Hyderabad. A4: Mukka Charan S/o.Mukka Vinod Kumar, Age: 24 yrs, Occ: Business, Partner of M/s.VNG Developers R/o.Villa No.09, Ambience Fort Attapur, Hyderabad. …. Accused 2 C.C.NO.21 OF 2024
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This case is coming up for final disposal before me on 03.04.2024 in the presence of Sri M/s.Shyam S.Agarwal and others, Counselfor the Complainant and Sri M.Shiva Shekar and others, Counsel for the A1 to A4 and having been heard on both sides, and having stood over for consideration till this day, this court delivered the following:
J U D G M E N T
1.This is a private complaint filed by the Complainant against the A1 to A4 for the offence punishable Under Section 138 of
Negotiable Instruments Act.
2.The brief averments of the complaint are as follows:-
The Complainant is doing a business of trading in iron and steel and in the course of business, the accused came into contact with him request to sell goods to the accused on credit basis, as per the orders placed by the accused with the complainant for supply of material on credit, the complainant sold to the accused TMT bars and sheets from time to time under different credit invoices and further stated that the accused were constructing a big project in Bengaluru also needed material for the same and as per confirmations given by the accused from time to time, the accused were due to the complainant a sum of
Rs.28,67,156/- (Twenty eight lakhs, sixty seven thousand, one
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hundred and fifty six rupees only.) and as per the terms of the business, the accused have to make payment for goods purchased on credit within a period of one month from the date of purchase on their failure to make payment in time, the accused are liable to pay interest @ 36% per annum on due amount for delayed period or Rs.250/- per ton per week as agreed and the complainant also further submits that
there have been other transactions also between the accused and
the complainant and in view of the differences between both parties
in respect of other issues, the accused have not been making
payment of said amount due to the Complainant and after repeated demands made by the Complainant, A2 had issued a cheque
Br.No.060154, dated 08.06.2020 for Rs.28,67,156/- drawn on
M/s.Corporatiohn Bank, Kogili Branch, Bangalore towards payment of due amount, then the Complainant presented the said cheque in his banker M/s.City Union Bank Ltd., Himayathnagar Branch, Hyderabad and it was returned unpaid with a cheque return memo dated 12.06.2020 with a reason “ Account Blocked” which means that the payment was stopped and the complainant has intimated to the accused and got issued a legal notice dated 26.06.2020 addressed to the
A1 to A4 and they were returned unserved with the postal endorsement 4 C.C.NO.21 OF 2024
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of “Unclaimed” dated 03.07.2020 and as the accused did not pay any amount of cheque nor issued any reply, hence the Complaint.
3.Initially this Private Complaint is filed on the file of IX Addl.Chief
Metropolitan Magistrate, Hyderabad and assigned as SR No.1310 of 2020 and later on 25.11.2021, it was returned by that court on the memo filed by the counsel for the Complainant stating that this court has no power to take cognizance of the offence, in view of the establishment of new court, hence returned to the complainant. Later on, this complaint filed on the file of the Hon’ble XI Addl.Chief
Metropolitan Magistrate, Secunderabad and subsequently on 25.02.2022 the XI Addl.Chief Metropolitan Magistrate, Secunderabad taken on file this case against the accused for the offence U/Sec.138 of
Negotiable Instruments Act and assigned as a STC-NI No.1782 of 2022.
Subsequently this case was transferred from the Hon’ble XI Addl.Chief
Metropolitan Magistrate to this court as per the proceedings of the
Hon’ble Metropolitan Sessions Judge, Hyderabad, this case was
transferred and received the same by this court on 21.08.2023.
4.After appearance of the A3 representing A1, A2, A4 copies of the documents furnished to them as contemplated U/Sec.207 Cr.PC. Later 5 C.C.NO.21 OF 2024
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they were examined U/Sec.251 CrPC by explaining the substance of accusation for the offence punishable U/Sec.138 of N.I.Act, for which they pleaded not guilty and claimed to be tried.
During the trial on 16.02.2024, the STC-NI 1782/2022 was
converted into summons trial of calendar case, reasons were
recorded and assigned as CC-NI 21/2024.
5. During the trial the Complainant ie., the Proprietor of
M/s.Gupta Steels namely Sri Ganesh Gupta examined as PW1 and also examined the Chief Manager of City Union Bank, Secunderabad namely Enoch Philip George and one Pradeep Dasari the Manager of
Kogili Branch, Bangalore examined as PWs 2 & 3 and got marked
Exs.P1 to P31. Ex.P1 is the certificate of Registration, Ex.P2 are the seven numbers of tax invoices Br.No.152, 153, 169, 354,359,360 & 182, Ex.P3 are the delivery challanas(4 Nos.) Br Nos.152, 153, 169 & 182, Ex.P4 are the way bills (3Nos.) in different dates, Ex.P5 are the
E-Sugam Forms (6 Nos) with different dates, Ex.P6 are the goods consignment notes (3 Nos), Ex.P7 are the Original cheque
Br.No.448043 for an amount of Rs.5,60,146/-, Ex.P8 is the Balance
Confirmation Letter dated 31.03.2019, Ex.P9 is the Balance 6 C.C.NO.21 OF 2024
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Confirmation Letter dated 31.08.2017, Ex.P10 is the Confirmation of accounts dated 01.04.2016 to 31.08.2017,Ex.P11is the
Confirmation of accounts dated 01.04.2018 to 31.03.2019, Ex.P12 is the Confirmation of accounts dated 01.04.2016 to 31.03.2017,
Ex.P13 is the original cheque Br.No.060154 for an amount of
Rs.28,67,156/-, Ex.P14 is cheque return memo dated 12.06.2020,
Ex.P15 is the office copy of legal notice dated 26.06.2020, Ex.P16 is the postal receipts No. in 4, Ex.P17 is the return postal cover of A1,
Ex.P18 is the unclaimed postal covers of A2 to A4, Ex.P19 is the statement of account (City Union Bank, Secunderabad) for the period of 01.06.2020 to 30.06.2020, Ex.P20 is the letter dated 29.02.2024 along with the statement of account opening balance as on 12.06.2020 along with photo copy of ID proof of PW1/firm, Ex.P21 is the letter of authority dated 25.03.2024, Ex.P22 is the attested copy of the account opening form of A1 firm dated NIL, Ex.P23 is the attested copy of the Partnership Resolution dated NIL of A1 firm,
Ex.P24 is the attested copy of the VAT registration certificate and
CST of A1 firm dated 08.12.2014, Ex.P25 is the attested copy of
Deed of reconstitution of partnership firm of A1 dated 22.05.2015,
Ex.P26 is the attested copy of the Specimen Signatures of the partners dated 16.03.2016, Ex.P27 is the attested of the Resolution 7 C.C.NO.21 OF 2024
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dated 11.04.2016, Ex.P28 is the attested copy of the letter dated
13.04.2016 issued by A1 firm for the updation of the signatures,
Ex.P29 is the attested copy of the Retirement and Reconstitution of
A1 firm dated 02.02.2017 consisting of 11 pages, Ex.P30 is the attested copy of the statement of Accounts of the A1 firm from 29.05.2015 to 14.12.2023 consisting of 29 pages and Ex.P31 is the attested copy of the letter of A1 firm addressed to Corporation Bank.
6.After closer of the complainant evidence A3 representing
A1/firm, A2, A4 were examined U/Sec.313 Cr.PC by explaining the incriminating material found against them in the evidence of PW1 to
P.W.3, for which they denied the evidence of prosecution and no defence evidence adduced.
7. I have heard the learned counsels appearing for the complainant and the accused (A1 to A4) and both the counsels after completion of their arguments, subsequently, on 06.04.2024 the counsel for the complainant filed his written arguments along with the legal decisions and the counsel for the accused also filed his legal decisions along with his memo. Upon hearing and on perusal of the 8 C.C.NO.21 OF 2024
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record I have framed the following points for determination in order to arrive at a definite finding as regards the dispute in this case:-
1. Whether the Ex.P13 original cheque returned vide
Ex.P14 cheque return memo dated 12.06.2020 with an
endorsement as “Account Blocked situation covered in 21.”
would attracts the offence punishable U/Sec.138 of
Negotiable Instrument Act or not ?
2. Whether there existence of legally enforceable debt or
liability on the part of accused, if so whether the accused
issued Ex.P13 cheque in discharge of said debt covered
under the Exs.P8 to P12 Balance Confirmation letter and
accounts, whether the all accused rebuts the statutory
presumptions under sections 118, 139 of Negotiable
Instrument Act?
3. Whether the complainant proved that A3 representing
A1, A2, A4 has committed an offence Punishable Under
Section 138 of NI Act?
4. What order?
8.POINTS 1 AND 2:
I have carefully gone through the case record and perused the entire evidence on record both oral and documentary. I have heard and perused the arguments advanced and the submissions made by the learned advocate counsels on behalf of the complainant and the accused.
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9. Before discussing the merits of the present case, it is relevant to discuss the relevant case law on the points in issue. In'Harman
Electronics(P) Ltd., V. National Panasonic India Ltd., (2008) 16
SCALE 317, Hon’ble Supreme Court opined that the offence under
Section 138 of the Act can be completed only with the concatenation of a number of acts, namely:-
1. Drawing of the cheque;
2. Presentation of the cheque to the bank;
3. Returning of the cheque unpaid by the drawee bank;
4. Giving of notice in writing to the drawer of the cheque demanding payment of the cheque amount;
5. Failure of the drawer to make payment within 15 days of the receipt of the demand notice.
10.Before proceeding further, let it be discuss Point No.1 as a preliminary issue.
i) Whether the Ex.P13 original cheque returned vide
Ex.P14 cheque return memo with an endorsement as
“Account Blocked situation covered in 21.” would attracts
the provision U/Sec.138 of Negotiable Instrument Act or
not?
11.It has been argued on behalf of the Complainant/PW1 that, there is a presumption in favour of the complainant that the cheque in question
Ex.P13 was issued by the A2 for consideration and against debt due under 10 C.C.NO.21 OF 2024
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the balance of confirmation letter and accounts vide Ex.P8 to P12 and as the A3 representing A1, A2, A4 are the partners of the A1 Firm and they are responsible for its daily business and as the accused did not adduce any evidence on his behalf to prove his defence and as the accused failed to adduce rebuttable evidence and the evidence of PW1 is coupled with the evidence of Bank officers ie., PW2 & PW3 and also the contents of Exs.P1 to 31 as such, the A3 representing A1, A2, A4 are liable for the punishment.
12. As per the version of the complainant/PW1 that A2 who is the partner of A1 Firm issued a Ex.P13 cheque for the due amount of
Rs.28,67,156/- in favour of the PW1 and the PW1 presented the Ex.P13 cheque and the same was returned vide Ex.P14 cheque return memo dated 12.06.2020 with an endorsement ”Account Blocked” and the complaint averred in his complaint that the account blocked which means that payment was stopped, as the contention of the PW1/complainant that, A2 admitted that Ex.P13 cheque and it belongs to his account and though the
A3 representing A1, and A4 are not put their signatures on Ex.P13 cheque, but they were equally liable for issuance of the Ex.P13 cheque, as the
Ex.P13 cheque return vide Ex.P14 cheque return memo with an endorsement as “ Account Blocked” as it means that the payment was stopped, so the presumption can be drawn in favour of the
PW1/Complainant, U/Secs.118 & 139 of Negotiable Instruments Act.
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13. The contention of the accused is that the cheque ( Ex.P13 ) was not issued for the discharge of the legally enforceable debt covered under the
Exs.P8 to P12 balance of confirmation letter and accounts, but the Ex.P13 blank cheque was given to the PW1 as a security in a loan transactions and in respect of that loan transactions though the A2 executed the registered the sale deed in favour of the PW1, but the PW1/complainant did not return the Ex.P13 Cheque and misused the same and got filed the false case against him and his family members ie., A3 who is no other than his wife and A4 who is his son of him and further contended that the cheque
Ex.P13 which was returned with an endorsement vide Ex.P14 cheque return memo as “Account Blocked situation covered in 21.” and as the
Ex.P14 cheque return memo contains the said endorsement would not attracts the offence under Sec.138 of Negotiable Instrument Act As per
Sec.138 of Negotiable Instrument Act which the cheque returned unpaid with an endorsement “Insufficient Funds” or “Exceeds arrangement to be paid” only would attracts the provision under Sec.138 of Negotiable
Instrument Act and further contended that as per the Apex Court if the cheque dishonored with a reasons “Account Closed” or “Payment
Stopped by the drawer” are liable under Sec,138 of Negotiable
Instrument Act , but “Account Blocked situation covered in 21,” not attracted the Sec.138 of Negotiable Instrument Act and he submitted a 12 C.C.NO.21 OF 2024
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decision reported in the case of D.S.Shridhar Vs P.John and another , reported in the year 2023(2) ALD (Crl) 436 (TS).
14.The counsel for the accused as per the above decision he contended that U/Sec.138 of Negotiable Instrument Act, prosecution can be launched if the cheque is returned unpaid for the reason of “Insufficient Funds” or “it exceeds arrangement to be paid”. The Hon’ble Supreme Court held that apart from two reasons, if the reasons are “account closed” and “payment stopped by the drawer” are also liable under Section 138 of Negotiable
Instruments Act. And in this case on hand the cheque Ex.P13 returned unpaid vide Ex.P14 cheque return memo with an endorsement “Account
Blocked situation covered in 21,” but not the payment stopped by the drawer and it is also not returned with an endorsement “Account Blocked “ only for the reason of the insufficient of funds and the said fact was admitted by the PW3/Bank Manager in his cross-examination and the said above decision is rightly applicable to the present facts of this case and further contended that the account of the A2 is not alive and it is inoperative and the said fact also admitted by the Bank officer in his Chief- examination and the complainant failed to adduce the evidence that on date of presentation of the Ex.P13 cheque that the accused has no balance and also no evidence adduced that the account blocked only for the reason of the insufficient funds but both PW2, PW3 bank officials stated that 13 C.C.NO.21 OF 2024
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Ex.P14 cheque return memo endorsed as “Account Blocked situation covered in 21 hence, request the court on this ground the case is not maintainable against the accused and as admitted by the PW1 in his cross- examination that A3 representing A1, A4 are not the signed on the Ex.P13 cheque hence, request the courtt acquit the accused on this ground and in view of the law laid down by the Hon’ble High Court of State of Telangana in the above case in D.S.Shridhar Vs P.John and another.
15. A perusal of the evidence of PW1 in respect of the Ex.P13 cheque is concerned no doubt admittedly by the A2 that Ex.P13 blank cheque was given to the PW1/Complainant in respect of the business and loan transactions and when the A2 executed registered sale deed in respect of the PW1 he has not handed over the Ex.P13 cheque to him and due to differences in between them, the PW1/complainant got filed the false case by misusing the Ex.P13 blank cheque and the evidence adduced by the
PW1 in respect of the Ex.P13 cheque, he stated in his evidence that in para - 4 in the Chief-affidavit of the PW1 that the Ex.P14 cheque returned with an endorsement as “Account Blocked” but in the complaint in 4th Para the
PW1/Complaint averred that the cheque was returned vide Ex.P14 return memo that “Account Blocked” which means that the payment was stopped though the PW1 adduced the evidence of PW2 who is the Chief Manager of City Union Bank, Secunderabad and also examined the Manager of the 14 C.C.NO.21 OF 2024
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Erstwhile Corporation Bank, Kogili Branch, Bangalore as a PW3 but there is no whisper in the evidence of Pws 1 to 3 that the cheque was returned with an endorsement as “Account Blocked” with a reason of insufficient
Funds, PW2 & 3 did not state that the account of the accused was blocked due to at the request of the Account holder so in the absence of the same as per the Pws. 2, 3 evidence the Ex.P13 original cheque was returned with an endorsement Ex.P14 as “Account Blocked situation covered in 21.” And moreover in the chief-examination PW3 who is the then Manager of Kogili
Branch ,Erstwhile Corporation Bank is now merged into the Union Bank of
India w.e.f 2019 he categorically stated that A1/firm opened the account in their branch in the year 2015 and the A1 account is inactive since 4 years, so admittedly by the PW3/Branch Manager, account of the accused (A2) is inoperative and not alive.
16. The Counsel for the accused further argued in respect of the account of the A2 of A1/firm that as the account of A2 not alive and inactive since 4 years and the reason for dishonour of the Ex.P13 cheque endorsed vide Ex.P14 memo “Account Blocked situation covered in 21” that means as per the RBI guidelines the reasons of return of instruments or electronic images are got mentioned in the Annexure-D with a 92 remarks with their code numbers and as per this Ex.P14 cheque memo “Account Blocked situation covered in 21) that means the 21- it was got 15 C.C.NO.21 OF 2024
OLD STC - NI 1782 OF 2022
mentioned in the said Annexure -D that 21 is the payment stopped by the attachment order, so as per the Ex.P14 cheque return memo the reason for the dishonor of the Ex.P13 cheque is by the 3rd person ie., statutory authority but not own request of the accused that his account is blocked and by the endorsement on the date of the presentation of the cheque in their bank that already blocked his account by the 3rd party i.e., Statutory authority, so account blocked situation covered in 21 not attracted under
Sec.138 of Negotiable Instrument Act.
17.There is force on arguments advanced by the defence counsel, as seen from the evidence of Pws 2 & 3 in respect of the Ex.P13 original cheque is concerned PW2 stated in his evidence that original cheque
Br.No.060154 an amount of Rs.28,67,156/- dishonored with an endorsement “Account Blocked” and PW1 have an account
No.512020010003507 in a City Union Bank Ltd., Secunderabad and the
PW3 who is another Manager of Erstwhile Corporation Bank had categorically stated in his evidence that A1/firm opened the bank account in their branch in the year 2015 now the A1 account is inactive since 4 years and through him Exs.P21 to P31 ie., in respect of the letter authority and the account opening forms with KYC documents, partnership deed, resolution copy, are marked and further he has stated in his evidence that, as per Ex.P30 last page No.29 it shows that on 12.06.2020 the cheque 16 C.C.NO.21 OF 2024
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amount of Rs.28,67,156/- vide cheque No.60154 dishonoured and though the PW3 stated that the cheque was dishonoured but the reason got mentioned in the Ex.P14 cheque return memo admittedly by the cross- examination of PW3 /Bank Manager stated that Ex.P13 cheque was returned with an endorsement “Account Blocked situation covered in 21,”and further admitted that Ex.P13 cheque returned vide Ex.P14 cheque return memo does not reveal the endorsement of reason of Insufficient of funds so the reason for account blocked not only for the reason of insufficient of funds and as the PW14 cheque return memo itself discloses that the Account blocked situation covered in 21, so I have gone through the decisions by the defence counsel in the case of D.S.Shridhar Vs P.John and another and in para 3 of the Hon’ ble High Court of the state of
Telangana held that U/Sec.138 of Negotiable Instrument Act, prosecution can be launched if the cheque is returned unpaid for the reason of “Insufficient Funds” or “it exceeds arrangement to be paid”. The Hon’ble
Supreme Court held that apart from two reasons, if the reasons are “account closed” and “payment stopped by the drawer” are also liable under Section 138 of Negotiable Instruments Act.
18.I have gone through the Uniform Regulation and rules for Bankers
Clearance Houses issued by the Reserve Bank of India, Department of
payment and settlements system, Central Bombay in the month of
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April 2011 and it Annexures, the Annexure -D of the said regulation
and rules containing the 92 reasons for return of the cheque with code
number and reason for return pertaining to the both for instruement
and image based the said cheques clearing and a perusal of the said code
Annexure D the code No.55 refers that the Ex.P14 cheque was returned with the reason “Account Blocked situation covered in 21.but this Ex.P14 cheque was returned due to Account Blocked situation covered in 21 that it was also admitted by the PW3/ Bank Manager in his cross-examination that Account blocked situation covered in 21. As per the model list of the
objections the 21 reason for return of the cheque is “payment stopped
by attachment order”, so here in the case on hand the cheque was return due to “Account Blocked” by the other statutory authority, not by the account holder.
19. The provision contained in Sec.138 of Negotiable Instrument Act makes it clear that, it is not every to return of the cheque unpaid which leads to prosecution of an offence under the said provision of law. For such purposes, the cheque must have been return “unpaid” either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from the account by an agreement made with the bank.
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20.The bank which returned the cheque (Ex.P13) unpaid vide Ex.P14 had made it clear that “account had been blocked”. It is clear that the complainant itself was aware that the “Payment stopped by attachment order” in terms of direction by some statutory authority. In these circumstances reason for return of the cheque unpaid been not what is envisaged in Sec.138 of N I Act.
21.The cheque was dishonored on the ground of “Account Blocked” but not for the reason of insufficient of funds and such a blocking of account is the action of the bank and may be for various reasons, so the complainant could not proved that the cheque was returned by the bank with an endorsement “ Account Blocked” only for the reason of insufficient of funds …. in this aspect is concerned PW3 categorically admitted in his cross-examination that the Ex.P14 cheque return memo does not reveal the endorsement of reason of “insufficient of funds.”
22.The counsel for the accused vehemently argued that as per sec.138 of Negotiable Instrument Act the drawer of the bank account is only alive and operative, but in the case on hand as stated by the PW3 in his chief examination that the accused (A2) account is inoperative since 4 years so as per sec.138 of N.I Act “account maintained by him” is a continuous process, but in this case the same is absence, therefore on this aspect also 19 C.C.NO.21 OF 2024
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the accused entitled for acquittal, as the complainant failed to prove the same.
23. A careful analysis of Sec.138 of N.I Act reveals that the first and foremost requirement to maintain the complaint U/Sec.138 of N.I Act is that the cheque issued by the account holder must be from the account maintained by account holder with the drawer-bank for discharge in whole or in part of any debt or other liability.
24. The expression “Account Maintained by him” as appearing in
Sec.138 of N.I Act carries great significance and meaning.” The dictionary meaning of “Maintain” ( as contained in Oxford Dictionary ) is defined as:- the act of making the state or the situation continue. Therefore, the said expression “account maintained by him” cannot be construed narrowly to mean that if the account belongs to the accused, necessary ingredient would be complete. This expression “account maintained by him” must necessarily include that the said account is not only alive and operative, but the account holder is capable of executing command to govern the financial transactions which includes the clearance of the cheques etc. The authority and control of the account holder upon the account must exist on the effective date i.e., when the cheque becomes valid for presentation in the bank. It is a settled law that mere issuance of the cheque is not an 20 C.C.NO.21 OF 2024
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offence, but it becomes punishable when the said cheque is dishonoured.
Mere fact that the record of the drawer bank shows a particular name as account holder would not be sufficient to establish that account is being maintained by the account holder, unless the said account holder holds the authority and control over the said account. In other words, if an account holder is deprived off his authority, control and dominion over the bank account, it cannot be said that account is being maintained by the said account holder.
25. Now while adverting to the facts of this case, it is evident that as per the Ex.P14 cheque return memo that the Ex.P13 cheque was returned with a reason for “Account Blocked situation covered in 21” and as discussed supra the 21 reason is “Payment stopped by the attachment order” that means accused bank account blocked by some orders of the statutory authority, so prior to the effective date i.e., 8.06.2020 on the
Ex.P13 original cheque the said account of the A1/firm account was blocked, which cannot at all be attributed to the account holder, as it was the result of the order passed by the attachment order by some other statutory, therefore by virtue of the said order, the authority and the control of the account holder over the account ceased to exist.
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26. So therefore the prosecution of the accused is inevitable, so in the given facts and as per the above stated supra Hon’ble Judgment of our
Hon’ble High Court of State of Telangana and in the given facts, this Court
has no hesitation in holding that on the date when the cheque was presented by the PW1/complainant to the drawee-bank, the account holder (A2) was not maintaining the said account. Resultantly, in the absence of this material condition it cannot be said that the offence punishable U/Sec.138 of N.I Act would be made out. Therefore, this point was answered infavour the accused and against the PW1/complainant.
The counsel for the complainant submitted the following decisions:-
1. Sumeti Vs. Paramount Tech Fab Industries, decided on 9.03.2021 (Hon’ble Supreme Court of India.).
2. Kalamani Tex and Ors. Vs. P. Balasubramanian. (MANU/ SC/0066/2021.
3. Rohitbhai Jivanlal Patel Vs. State of Gujarat and Ors. ( MANU/ SC/0393/2019.).
4. Bir Singh Vs. Mukesh Kumar. (MANU/SC/0154/2019.). and etc.
27.Though the counsel for complainant subitted the 1 to 4 etc., decisions, in view of the findings in Point No.1, as the Complainant failed prove the main ingredient of Sec.138 of NIACt, the above said decisions were not applicable to the present facts and circumstances of this case.
Since it is a trial court, the duty casts upon the trial court to answer all the points which was framed for determination of the points.
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POINTS 2 AND 3:
28.The another contention of the accused is that he never raised any purchase orders towards the purchasing of the TMT Bars and steels and the complainant never stated in his complaint or in his chief-affidavit that as on which date the accused raised the purchase orders and as on which date the accused has to be due to the said invoices amount not stated by the complainant and there is no whisper in the evidence of the
PW1/complainant and the averments in the complaint about the invoices, delivery challans and the confirmation of the balance and accounts of the accused. The Exs.P8 to P12 were the confirmation of the balance and accounts of the accused, that were prepared by the PW1/complainant and the complainant/PW1 did not produce any original ledger of accounts
before this court and the A2 never signed on the Exs.P9 to P12 balance
confirmation letters and when the accused asked the PW1 in his cross examination that about the invoices and the challans and the partnership deed pertaining to the A1 firm, then subsequently brought the said documents and that were marked through PW2, PW3 and those documents were no way connected to this case and even the
PW1/complainant also not got mention that on which date the accused has due an amount of Rs.28,67,156/- and the complainant himself admitted that there are differences in between the complainant and the accused in their business transactions and in the said transactions he had given 23 C.C.NO.21 OF 2024
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Ex.P13 Blank signed cheque to the PW1/complainant as a security purpose but the complainant did not return the said Ex.P13 cheque and due to the differences between them PW1/complainant misused the same and got filed a false case against him and he never issued the Ex.13 towards the debt covered under the Exs.P8 to P12 and there is no legally enforceable in between the PW1 and the accused, as such the cheque given towards the discharge of the legally enforceable debt does not arise hence, request the court to acquit the accused on this grounds also.
29.On the other hand the complainant vehemently argued that, the complainant/PW1 deals with the business of iron and steel and the accused purchased the material from him on credit for his project in
Bangalore and as per the statements of account the accused was due to pay an amount of Rs.28,67,156/- and accordingly the accused gave a balance confirmation letter dated 31.03.2019 after repeated demands for the payment of the due amount the A2 of A1/firm got issued Ex.P13 cheque on 08.06.2020 for an amount of Rs.28,67,156/ - drawn on M/s.
Corporation Bank, Kogili Branch, Bangalore and the said cheque was dishonored vide Ex.P14 cheque return memo and the complainant/PW1 got issued a legal notice vide Ex.P15 and that Ex.P15 notice was sent to the A1 to A4 vide Ex.P16 postal receipts and the same was returned vide
Ex.P17 and P18 that they are “unclaimed” and the PW1 also examined the 24 C.C.NO.21 OF 2024
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PW2,PW3 who are the Bank officials and the evidence of PW1 is coupled with the evidence of PW2 and PW3 and also the contents of Exs.P1 to P31 hence, request the court to punish the accused as per law and the initial burden of the complainant is proved through Exs.P1 to P31 and by adducing the evidence of Pws 2 & 3 and the accused also not disputed in respect of the issuance of the Ex.P13 cheque and when the accused admitted the Ex.P13 cheque therefore, the presumption U/Sec.139 would be operative and the burden shifts upon the accused to adduce the rebuttal evidence, in the case on hand the accused failed to adduce the rebuttal evidence as such the accused is liable for prosecution U/Sec.138 of Negotiable Instrument Act.
30.To substantiate the case of the complainant/PW1 filed his Chief- affidavit and reiterated the averments in the complaint and he was also examined the Pws 2 & 3 and Pws 2 & 3 also categorically stated that Ex.P13 cheque was returned vide Ex.P14 cheque return memo and the evidence of
PW1 coupled with the evidence of PW2 and 3, and also the contents of
Exs.P1 to 31, hence requested the court punish the accused as per law.
31.As seen from the evidence of PW1, PW1 admitted in his cross- examination that he did not file any documents to show that A1 firm is a partnership firm and A2 to A4 are the partners of the A1/firm and further 25 C.C.NO.21 OF 2024
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admitted that in his cross-examination that no purchase orders of the A2 not filed in this case and further PW1 admitted that invoice No.152,153 under Ex.P2 not supported with E-sugam and lorry receipt and invoice
No.169 under Ex.P2 not supported with Way bill, lorry receipt and delivery challan and the invoice No.354 under Ex.P2 not supported with delivery challan and further admitted by the PW1 in his cross- examination that invoice No.359 under Ex.P2, not supported with Way bill, lorry receipt and delivery challan and further admitted the invoice No.360 under Ex.P2, not supported with Way bill and delivery challan so also invoice 182 under
Ex.P2 not supported with Way bill and lorry receipt and further the PW1 got marked one Ex.P7cheque as admitted by the PW1 that Ex.P7 cheque he has not averred either in his complaint or in his chief-affidavit and in respect of Ex.P7 cheque no claim is made against the accused in this case and further admitted that Ex.P8 and P11 balance confirmation letters does not containing the signature of the A2 and his firm seal and Ex.P9 and P10 is not containing the signature of the A2 and also admitted that Exs.P8 to
P12 were prepared by him and further admitted that in his cross- examination that Ex.P14 does not reveals the bank authorities endorsement as “stop payment”, but it was endorsed as “Account blocked”. So in the cross-examination of the PW1 it shows that in respect of Ex.P2 invoice is concerned admittedly that invoices are not containing the Way bills and delivery challans and admittedly by the PW1 that he did 26 C.C.NO.21 OF 2024
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not file any purchase orders raised by the accused and though the complainant/PW1 averred in the complaint that the accused raised supply orders to him for purchasing the material, but the complainant/PW1 not filed any purchase orders before this court and admittedly by the
PW1/complainant himself that there are a disputes in between the complainant and the accused and there have been in other transactions and in view of the differences in between the both the parties in respect of other issues the accused not given a payment but the contention of the accused is that so as admitted by the PW1 in the complaint itself that there are a transactions in between them and so also there are a differences in respect of the other issues in the business transactions. but the contention of the accused is that in the business loan transactions he had gvien Ex.P 13 cheque as a security.
32. A perusal of the evidence of the PW1, Ex.P1 to 6, 8 to 12 are the attested photo copies filed by the PW1 and the invoices, delivery challans and Ex.P8, 11 not containing the signatures of A2, and the PW1 not filed any ledger accounts of the A1/firm except Ex.P10,11 confirmation of accounts of the accused prepared by the PW1 and the said fact was admitted by the PW1 in his cross-examination. So in the absence of ledger account book of A1/firm and inview of the admissions made in the cross 27 C.C.NO.21 OF 2024
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examination by the PW1, the claim of the complainant can be doubted and the evidence of PW1 did not inspires the confidence of the court.
33.The defence counsel vehemently argued that as the PW1 failed to disclosed the borrowal amount of Rs.28,67,156/- in the income tax returns and it is itself sufficient to rebut the presumption U/Sec.139 of Negotiable
Instrument Act and the counsel for the accused, submitted the decision of our Hon’ble High Court for the State of Telangana in the case of B.Sunder
vs The State of Andhra Pradesh Rep By Its PP Hyd., decided on
28.01.2022.
34.I have gone through the above cited decision in the above said decision the Hon’ble High Court held that the conviction recorded by the trial court in C.C No.1886 of 2005 dated 27.02.2006 on the file of XI
Metropolitan Magistrate, Hyderabad Kukatpally, Myapur was confirmed by the appellant court in Crl A.No.25 of 2006 dated 13.09.2007 and both the
Judgments were set a side by the Hon’ble High Court in the above Criminal
Revision case and acquitted the accused on the ground that
35.“It is true that merely because the amount advanced is not
shown failure in the income tax returns, in every case, one can not
jump to the conclusion that the presumption U/Sec.139 of Negotiable
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Instrument Act stands rebutted. There may be cases where a small
amount less than sum of Rs.20000/- is advanced in cash by way of loan
which may be repayable within few days or within few months and that
the complainant may not show the said amount in the Income tax
Returns as it is repayable within few days or few months in the same
financial year. In such a case, the failure to show the amount in the
Income Tax return may not by itself amount to rebuttal of presumption
under Section 139 of N.I.Act. But, in the instant case, the amount
advanced by the 2 nd respodent/Complainant to the revision
petitioner/accused is a large amount and is not repayable within few
months and hence the failure to disclose the said amount in Income Tax
Returns or books of accounts of second respondent/complainant can
be sufficient to rebut the presumption U/Sec.139 of Negotiable
Instruments Act.”
36.In the instant case on hand the PW1 stated in his cross-examination that he is an income tax assessee and not shown the borrowal of amount of Rs.28,67,156/- in his income tax returns and the said income tax return were not filed into the court, so as per the above said decision when the said alleged huge amount of Rs.28,67,156/- not shown in the income tax returns and as enunciated in the above Judgment of the Hon’ble High
Court for the State of Telangana the complainant gave a hand loan amount 29 C.C.NO.21 OF 2024
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as large amount ie., Rs.28,67,156/- and it is not repayable within a few months or few days, as such failure to disclose the said amount in the complainant income tax returns can be sufficient to rebut the presumption
U/Sec.139 of Negotiable Instrument act and the advance amount is not less than a sum of Rs.20,000/- and it is large amount ie., Rs.28,67,156/-. So the above said decision is squarely applicable to the present facts and circumstances of the case and as such the accused is entitled for the acquittal.
37. So in view of the my above foregoing discussion and the findings in the point no.1 and also in view of the Hon’ble High court of the state of Telangana decision that hand loan amount of
Rs.28,67,156 /- was not shown in the income tax returns of the complainant can be sufficient to rebut the presumption U/Sec.139 of Negotiable Instrument Act, as per the B.Sunder vs The State of
Andhra Pradesh decided on 28.01.2022 failure to disclose the
above said hand loan transactions in the income tax returns of
the complainant he is sufficient to rebut the
presumption/Sec.139 of Negotiable Instrument Act.
38.So in view of the my above foregoing discussion the accused has successfully rebutted the presumption as contemplated 30 C.C.NO.21 OF 2024
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U/Sec.118 and 139 of Negotiable Instrument Act. So the accused made a defence through cross examination of PW1, he is successfully rebutted the presumptions by way of preponderance of probabilities, so the accused is entitled for acquittal.
So in view of my above foregoing discussion the points No.2 and 3 are answered in favour of the accused and against the complainant.
In the result, the A3 representing A1/firm, A2, A4 were found not guilty for the offence punishable U/s.138 of Negotiable Instruments Act and accordingly they were acquitted U/s.255(1) Cr.P.C. The bail-bonds of the accused shall remain in force for a period of six(6) months.
Dictated to Personal Assistant, transcribed by her, corrected and
pronounced by me in the open Court on this the 08thday of April, 2024.
XV Addl.Judge-cum-XIX ACMM, Secunderabad.
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
FOR PROSECUTION FOR DEFENCE
PW1 :Ganesh Gupta dt: 05.02.2024. NIL PW2 : Enoch Phillip George dt: 05.03.2024.
PW3 : Pradeep Dasari, dt: 26.03.2024.
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EXHIBITS MARKED
FOR PROSECUTION : Ex.P1 : The certificate of Registration.
Ex.P2 : The seven numbers of tax invoices Br.No.152, 153, 169, 354,359,360 & 182.
Ex.P3 : The delivery challanas(4 Nos.) Br Nos.152, 153, 169 & 182.
Ex.P4 : The way bills (3Nos.) in different dates.
Ex.P5 : The E-Sugam Forms (6 Nos) with different dates.
Ex.P6 : The goods consignment notes (3 Nos).
Ex.P7 : The Original cheque Br.No.448043 for an amount of Rs.5,60,146/-.
Ex.P8 : The Balance Confirmation Letter dated 31.03.2019.
Ex.P9 : The Balance Confirmation Letter dated 31.08.2017.
Ex.P10 : The Confirmation of accounts dated 01.04.2016 to 31.08.2017.
Ex.P11 : The Confirmation of accounts dated 01.04.2018 to 31.03.2019.
Ex.P12 : The Confirmation of accounts dated 01.04.2016 to 31.03.2017.
Ex.P13 : The original cheque Br.No.060154 for an amount of Rs.28,67,156/-.
Ex.P14 : The Cheque return memo dated 12.06.2020.
Ex.P15 : The office copy of legal notice dated 26.06.2020.
Ex.P16 : The postal receipts No. in 4.
Ex.P17 : The return postal cover of A1.
Ex.P18 : The unclaimed postal covers of A2 to A4.
Ex.P19 : The statement of account (City Union Bank, Secunderabad)for the period of 01.06.2020 to 30.06.2020.
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Ex.P20 : The letter dated 29.02.2024 along with the statement of account opening balance as on 12.06.2020 along with photo copy of ID proof of PW1/firm.
Ex.P21 : The letter of authority dated 25.03.2024.
Ex.P22 : The attested copy of the account opening form of A1 firm dated NIL.
Ex.P23 : The attested copy of the Partnership Resolution dated NIL of A1 firm.
Ex.P24 : The attested copy of the VAT registration certificate and CST of A1 firm dated 08.12.2014.
Ex.P25 : The attested copy of Deed of reconstitution of partnership firm of A1 dated 22.05.2015.
Ex.P26 : The attested copy of the Specimen Signatures of the partners dated 16.03.2016.
Ex.P27 : The attested of the Resolution dated 11.04.2016.
Ex.P28 : The attested copy of the letter dated 13.04.2016 issued by A1 firm for the updation of the signatures,
Ex.P29 : The attested copy of the Retirement and Reconstitution of A1 firm dated 02.02.2017 consisting of 11 pages.
Ex.P30 : The attested copy of the statement of Accounts of the A1 firm from 29.05.2015 to 14.12.2023 consisting of 29 pages.
Ex.P31 : The attested copy of the letter of A1 firm addressed to Corporation Bank.
FOR DEFENCE: NIL
XV Addl.Judge-cum-XIX ACMM, Secunderabad.