RASHMI GEMS STOCKS Vs. H. NAGARAJ,

JUDGEMENT

(1.) This is the first defendant's appeal. The respondent No.1 herein had instituted a suit in O.S.No.223/2004 against the present appellant and present respondent No.2 arraigning them as defendant Nos.1 and 2 respectively in the Court of the learned XXXI Additional City Civil Judge, Bengaluru (CCH-14) (henceforth for brevity referred to as the 'trial Court') for recovery of a sum of Rs. 2,96,000/- from the defendants together with interest thereupon at the rate of 16% per annum.

(2.) The summary of the case of the plaintiff in the trial Court was that the plaintiff had accumulated 200 shares of certain companies. Those shares were handed over by him to the defendant No.2 for its sale in the share market. The plaintiff had also paid a sum of Rs. 1,57,020/- through different cheques drawn on different dates and he had also paid an additional sum of Rs. 27,365/- through another cheque on 28.08.2000 and cash of Rs. 30,000/- in the month of June 2000. The said amount was paid to defendant No.2 to enable him to purchase few shares for the plaintiff. All those cheques were drawn on Malleshwaram Co-operative Bank, Malleshwaram Branch, Bengaluru from the account of plaintiff's sister after availing hand loan from her. The defendant No.2 failed to purchase the shares and went on giving one or the other reasons for not purchasing the same. The plaintiff demanded back for payment towards shares. In discharge of the said liability, defendant No.2 agreed and issued a sum of Rs. 2,00,000/- to the plaintiff in the form of a cheque. The plaintiff had handed over the shares to defendant No.2 on the assurance that defendant No.2 was acting as a representative i.e., he is the Sub-broker for defendant No.1 and was collecting all the documents and making transactions in the name of defendant No.1. Defendant No.2 used to hand over the documents including all the transactions to defendant No.1, who in turn, used to trade the shares on the floor of Stock Exchange and return back to defendant No.2 for any repayments. As such, defendant No.1 was a principal agent and the main broker in the Bengaluru Stock Exchange and defendant No.2 was sub-broker under defendant No.1. Defendant No.1 used to make payments to defendant No.2, who in turn, used to make payments to the parties.

(3.) It is the further plaint averment that the cheque for a sum of Rs. 2,00,000/- issued by defendant No.2 to the plaintiff drawn on Canara Bank, Bengaluru Stock Exchange Branch, Bengaluru dated 21.12.2000 was in order to discharge the joint and several liability of defendant Nos.1 and 2. When the plaintiff presented the said cheque on 11.01.2001 to the Malleshwaram Co-operative Bank, Malleshwaram for realisation, the same was dishonoured with the reason of 'Insufficiency of Funds' on 11.01.2001. At the request of defendants, the plaintiff once again re-presented the cheque for its realisation, however, on 14.02.2001, it was again returned with banker's endorsement 'Funds Insufficient'. The plaintiff issued notice dated 28.02.2001 to the defendants informing them about dishonour of the cheque and demanded for payment of cheque amount. Defendant No.1 replied to the said notice denying any liability on his part and denying any relationship with defendant No.2, whereas, defendant No.2 refused to receive the notice sent to him by the registered post, as such, it was returned to the sender with shara 'Not Claimed', but, the notice sent through Certificate of Posting was served upon him. The defendants despite service of notice, did not choose to pay the amount demanded in the notice. Hence, the plaintiff filed a private complaint against the defendants in the Court of Additional Chief Judicial Magistrate, Bengaluru, in C.C.No.123/2002.