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2018 DIGILAW 357 (KAR)

Nithyanand Mahadev Bhat v. Manoj Vinayak Pandit

2018-03-13

JOHN MICHAEL CUNHA

body2018
ORDER : This revision petition is directed against the concurrent findings of the Courts below, holding the petitioner guilty of the offence punishable under Section 138 of the Negotiable Instruments Act (hereinafter called as N.I. Act). 2. The complainant is the proprietor of V.S.P. Capital and Finance, a registered proprietary concern involved in money lending business. The case of the complainant is that the accused availed a loan of Rs.1,50,000/- on 10.01.2000 and in repayment thereof, issued a cheque bearing No.007489 drawn on Syndicate Bank for Rs.1,40,606/-. The said cheque when presented for encashment came to be dishonoured for the reason “funds insufficient”. The complainant caused a notice to the accused demanding payment of the cheque amount. The accused received the notice without demur, but failed to comply with the demand and hence, the complainant initiated action under Section 138 of the N.I. Act. 3. Before the Trial Court, the complainant examined himself as P.W.1 and produced the original cheque – Ex.P-1, Bank endorsement – Ex.P-2, copy of the legal notice – Ex.P-3, postal acknowledgment – Ex.P-4 as well as the documents executed by the accused at the time of availing the loan namely the pro note, Form No.VI, Form No.V, loan ledger extract, money lending licence as Ex.P-5 to Ex.P-10. The accused examined himself as D.W.1 and took up a plea that he had borrowed a sum of Rs.1,50,000/- from the V.S.P. Capital and Finance and the same was repaid on 10.01.2000 and therefore, there was absolutely no necessity for the accused to avail Rs.1,50,000/- loan on 10.01.2000 as contended by the complainant. Further, the accused set up a plea that the cheque which was issued by him to the complainant at the time of availing the loan on 07.12.1999 was retained by the said V.S.P. Capital and Finance and the same is made use of to lay a false claim against the accused. 4. The Trial Court disbelieved the defence set up by the accused and came to the conclusion that the cheque in question was issued by the accused in discharge of the loan availed by him from the complainant and consequently found the accused guilty of the offence punishable under Section 138 of the N.I. Act and sentenced him to six months of imprisonment and a fine of Rs.5,000/- and in default thereof to undergo simple imprisonment for a period of three months. Further, the accused was directed to pay a compensation of Rs.2,75,000/- to the complainant. 5. The accused carried the matter in appeal before the Presiding Officer, Fast Track Court, Sirsi and by the impugned order dated 17.06.2010, the learned Sessions Judge dismissed the appeal affirming the order passed by the learned Magistrate in C.C. No.1822/2005. 6. Feeling aggrieved by the impugned orders, the accused has preferred this revision petition. 7. I have heard the learned counsel appearing for the petitioner Sri. J.S. Shetty and the learned counsel appearing for the respondent Sri. Vishwanath Hegde. 8. Learned counsel for the petitioner has raised threefold contentions. (i) Firstly it is contended that the cheque in question was drawn in the name of V.S.P. Capital and Finance. The complaint is lodged by one Manoj Vinayak Pandit. Though the complainant has claimed that he was the proprietor of V.S.P. Capital and Finance, no documents are produced to substantiate that he was the proprietor of the said Finance at the relevant point of time. Therefore, the complaint was not maintainable before the Court below. (ii) Secondly, the very document produced by the complainant namely Ex.P-8 – the form No.V maintained by V.S.P. Capital and Finance indicate that the accused had borrowed a sum of Rs.1,50,000/- from V.S.P. Capital and Finance on 07.12.1999. The said amount was repaid on 10.01.2000 and the account was closed as reflected in Ex.P-8. That being the fact, the contention of the complainant that on the same day, the accused borrowed a sum of Rs.1,50,000/- by executing the loan documents appears to be highly improbable and unbelievable. (iii) Thirdly, the accused has taken up a specific plea that the cheque in question was not issued by him in discharge of the loan alleged by the complainant. On the other hand, the circumstances stated above clearly indicate that at the time of availing the loan on 07.12.1999, the complainant has retained the cheque with him which has been misused to lay a false claim against the accused. Hence, the learned counsel submits that both the Courts below have failed to consider these aspects of the case which has resulted in gross failure of justice and hence, he prays to set aside the impugned judgment and to acquit the accused of the alleged charge. Hence, the learned counsel submits that both the Courts below have failed to consider these aspects of the case which has resulted in gross failure of justice and hence, he prays to set aside the impugned judgment and to acquit the accused of the alleged charge. (iv) With regard to the sentence, the learned counsel for the petitioner has placed reliance on the decisions of the Hon’ble Supreme Court in the case of R. Vijayan vs. Baby and another in Criminal Appeal No.1902/2011 and would contend that the sentence imposed by the Trial Court is wholly without jurisdiction. Section 138 of N.I. Act empowers the Magistrate to sentence the accused twice the amount of cheque or to fine. The said provision does not authorize the Magistrate to impose compensation and hence, on this score also the impugned judgment is liable to be set aside. 9. Per contra, learned counsel appearing for the complainant would submit that the complainant has produced cogent and convincing material to show that the accused borrowed a loan of Rs.1,50,000/- on 10.01.2000. The documents executed by the accused at the time of availing the said loan are duly proved in evidence. These documents are sufficient to prove the transaction as well as the debt due by the accused. The cheque in question was issued by the accused in the name of V.S.P. Capital and Finance. The complainant is the proprietor of the said concern which is evidenced in Ex.P-10 – the money lending licence obtained by the complainant. That apart, the averments made by the complainant in the complaint as well as in his statement before the Court that he is the proprietor of the said concern has not been controverted by the accused and therefore, the accused is estopped from disputing the capacity of the complainant to present the cheque for encashment. 10. The learned counsel would submit that both the Courts below have considered all the facts and circumstances of the case in proper perspective and on satisfying that the complainant has complied with the requirements laid down under Section 138 of the N.I. Act have rightly convicted the accused. The impugned orders do not call for any interference by this Court in exercise of the powers under Section 397 of Cr.P.C. Hence, he seeks for dismissal of the revision petition. 11. The impugned orders do not call for any interference by this Court in exercise of the powers under Section 397 of Cr.P.C. Hence, he seeks for dismissal of the revision petition. 11. I have given my anxious thought to the submissions made by the learned counsel and have carefully perused the records. 12. Insofar as the first contention urged by the petitioner relating to the presentation of the complaint is concerned, it is relevant to note that the complaint is filed by Manoj Vinayak Pandit. In the complaint, it is specifically averred that he is the proprietor of V.S.P. Capital and Finance. Even during his evidence, the complainant has asserted that the complaint is presented by him in his capacity as the Proprietor of the said Finance. The accused has not controverted the said assertion. Even the documents produced by the complainant establish that the loan transaction was carried on between the accused and V.S.P. Capital and Finance. The specific case of the complainant is that the loan documents were executed by the accused in favour of the said concern. This is evidenced in Ex.P-5 to Ex.P-10 which are not disputed by the accused. It is not the case of the accused that he had transaction with any other person other than the complainant. No doubt, in form No.VI – Ex.P-7, the complainant has subscribed his signature as the managing partner, but solely on that basis, it cannot be concluded that the complainant is a partnership firm as contended by the learned counsel for petitioner. On considering the overall facts and circumstances brought out in the evidence and the documents produced by the complainant, I do not find any substance in the contention urged by the revision petitioner in this regard. Hence, the contention is rejected. 13. Coming to the next contention with regard to the cheque – Ex.P-1, it is not in dispute that the said cheque is drawn in the name of V.S.P. Capital and Finance. As already held above, the complainant is the proprietor of the said concern. The same was presented by him to the account maintained by him and it is dishonoured for the reasons of “funds insufficient”. The complainant therefore, answers the description of a “payee” defined in Section 7 of the N.I. Act. As already held above, the complainant is the proprietor of the said concern. The same was presented by him to the account maintained by him and it is dishonoured for the reasons of “funds insufficient”. The complainant therefore, answers the description of a “payee” defined in Section 7 of the N.I. Act. Hence, the competence of the complainant to present the cheque for encashment and to initiate the proceedings under Section 138 of the N.I. Act on dishonour of the said cheque is beyond challenge. Hence, the second contention urged by the learned counsel for the revision petitioner also fails. 14. Lastly, with regard to the contention that the cheque in question was retained by the complainant and the same has been misused by him to lay a false claim also does not merit any acceptance. Though the learned counsel for the petitioner appears to have taken up this plea, based on the entries contained in Ex.P-8, but there is no material whatsoever to show that the accused had in fact borrowed a sum of Rs.1,50,000/- on 07.12.1999 and same has been repaid by him on 10.01.2000 as contended by the accused. In the absence of any material to show that at the time of availing the said loan, the accused had left the cheque in question with the complainant, this contention has no legs to stand. The said plea appears to have been taken up only during the trial without any supporting evidence. At the earliest instance, when the complainant caused a notice to the accused, informing him that the cheque has been dishonoured, the accused did not choose to reply to the said notice. If in fact, the cheque in question was issued by him in respect of the earlier transaction and the same was unlawfully retained by the complainant and has been misused to lay a false claim against the accused, nothing prevented the accused to at the earliest instance to bring to the notice of the complainant these facts by issuing a reply thereto. That having not been done, even on this score, I do not find any justifiable reason to accept the contention urged on behalf of the petitioner – accused in this regard. 15. That having not been done, even on this score, I do not find any justifiable reason to accept the contention urged on behalf of the petitioner – accused in this regard. 15. On perusal of the impugned judgment, it is seen that both the Courts below have considered the entire material on record and on proper appreciation of the evidence have recorded the factual findings which are based on evidence. These findings do not suffer from any error or infirmities. Both the Courts have held that the cheque in question was issued by the accused in discharge of the legal debt due and payable by him to the complainant. The complainant has complied with all the requirements prescribed under Section 138 of the N.I. Act. The complainant has established enforceable legal debt. The issuance of cheque as well as the consequent dishonour of the cheque have been duly proved thereby rendering him liable for conviction under Section 138 of the N.I. Act. For the above reasons, the conviction of the accused for the said offence is confirmed. 16. Insofar as the sentence awarded by the Court below is concerned, having regard to the nature of the offence proved against the accused, the award of compensation over and above the imprisonment and the fine is unjustifiable and cannot be sustained. Section 138 of the N.I. Act prescribes the punishment of imprisonment for a term which may extend to two years or with fine which may extend to twice the amount of the cheque or with both. The Hon’ble Supreme Court has clarified the legal position in Somnath Sarkar vs. Utpal Basu Mallick and another, 2014 (1) AKR 86 that “fine serves a compensatory purpose”… power to award compensation is not available under Section 138 of Negotiable Instruments Act. It is only when the Court has determined the amount of fine that the question of paying compensation out of the same would arise. In view of this legal proposition the compensation awarded by the Court below is liable to be set aside. 17. The facts proved in evidence indicate that the complainant is a money lender. The case of the complainant is that the accused availed the loan undertaking to repay the same with interest at 23% per annum. In view of this legal proposition the compensation awarded by the Court below is liable to be set aside. 17. The facts proved in evidence indicate that the complainant is a money lender. The case of the complainant is that the accused availed the loan undertaking to repay the same with interest at 23% per annum. Learned counsel for the complainant submits that due to the change of law, the rate of interest is now reduced to 16% per annum. Taking into consideration all these facts and circumstances, in my opinion it would be just and appropriate to sentence the accused to pay a fine of Rs.2,50,000/- and in default to pay the said fine amount, to undergo imprisonment for a period of one year. Hence, the following:- ORDER The criminal revision petition is dismissed. The conviction of the petitioner – accused for the offence punishable under Section 138 of Negotiable Instruments Act is confirmed. The compensation of Rs.2,75,000/- awarded by the Court below is set aside. In modification of the order of sentence passed by the Court below, the accused Sri. Nithyanand Mahadev Bhat is hereby sentenced to pay a fine of Rs.2,50,000/- and in default to pay the said fine amount of Rs.2,50,000/-, he shall undergo imprisonment for a period of one year for the offence punishable under Section 138 of Negotiable Instruments Act. Out of the above fine amount, a sum of Rs.2,40,000/- (Rupees Two Lakh Forty Thousand only) shall be paid to the complainant by way of compensation and the remaining amount of Rs.10,000/- (Rupees Ten Thousand only) shall be credited to the Government by way of fine. It is submitted that substantial amount of fine ordered by the Court below is already deposited by the accused and a sum of Rs.25,000/- is paid in cash to the complainant. The amount in deposit including the cash payment of Rs.25,000/- made by the accused shall be applied as ordered above. Office shall remit the records to the Court below forthwith. The original documents submitted by the respondent – complainant vide memo dated 21.02.2018 shall be returned to the complainant on proper acknowledgment.