Bangalore District Court
Natarajan B vs The Nilgiri Dairy Farm Pvt Ltd on 1 April, 2026
KABC010092502023
IN THE COURT OF LXVII ADDL CITY CIVIL AND
SESSIONS JUDGE; BENGALURU CITY (CCH.No.68)
PRESENT
SMT.RASHMI.M.
BA.LL.B., LL.M.
LXVII ADDL CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Dated this the 1st day of April 2026.
Crl. Appeal No.431/2023
APPELLANT : Sri.Natarajan.B.
S/o.S.Balasubramaniam,
Aged about 49 years,
R/at.No.61, Karpaga Nagar,
6th Street, K.Pudur,
Madhurai-625 007,
Tamil Nadu.
Also at :
No.402, Satya Building,
R.S.Royal Garden Layout,
Vidyanagar, 7th Cross,
Bommasandra,
Bengaluru South,
Bengaluru.
(By Sri.L.H.P., Advocate)
.Vs.
RESPONDENT : The Nilgiri Dairy Farm Pvt. Ltd.,
A Company incorporated under
Crl.Appeal No.431/2023
2
the provisions of the Companies
Act, 1956, having its Registered
Office at : Knowledge House,
Shyam Nagar,
Opp. Jogeshwari Vikhroli Link
Road, Jogeshwari (East),.
Mumbai-400 060. (MH)
Also Corporate Office at :
6th Floor,
V.K.Kalyani Commercial
Complex, No.22, Sankey Road,
Bengaluru.
(By Sri.R.R.K., Advocate)
JUDGMENT
This appeal is preferred by the appellant challenging the conviction judgment and order of sentence passed by the learned XXIV Addl. Jduge, Court of Small Causes & Addl. C.M.M., & Member-MACT, Bengaluru in C.C.No.1230/2020, dated:28.03.2023 as to the alleged offence under Section 138 of N.I.Act and prays to set aside the impugned judgment & order of sentence and to acquit the accused by allowing the appeal.
2. The appellant herein was the accused and respondent was the complainant before the trial court. For the sake of convenience, parties would be referred to by the ranks they were assigned before the trial court.
Crl.Appeal No.431/2023 3
3. Brief facts of the case are as under:
The complainant company is engaged in the business of manufacturing and marketing of various food products under the brad of "Nilgiris". The accused is an Ex-employee of the complainant and was working in the capacity of the Commercial Manager - Manufacturing and was also responsible for procurement of milk from various vendors and farmers. The complainant company conducted audit in the laptop of the accused, which was furnished to him by the company. During audit, it was found that the accused by misusing his position indulged in fraudulent activities detrimental to the interest of the company and caused financial loss to the company. In this regard, the FIR came to be registered against the accused for misappropriation of amount. Thereafter the accused had requested the complainant company to drop the charges levelled against him as he would pay the misappropriated amount to the company. Accordingly on 10.05.2019 a Memorandum of Understanding was entered between the accused and the complainant company. As per the said Memorandum of Understanding, the accused had agreed to pay Rs.50,00,000/-, but thereafter upon mutual agreement it was settled for Rs.46,00,000/-.
Crl.Appeal No.431/2023 4 As per the mutual agreement, the accused had paid a sum of Rs.6,00,000/- by way of RTGS on 10.05.2019 and agreed to pay the remaining balance amount of Rs.40,00,000/- in favour equal instalments of Rs.10,00,000/- each and issued post dated cheques in favour of the complainant company. But thereafter the accused had issued another cheque bearing No.000143 dated:30.08.2019 for Rs.10,00,000/- drawn on Karur Vysya Bank Ltd., Chandapur Branch, Bengaluru in lieu of cheque bearing No.19639 for the reasons best known to him. Upon presentation of the said cheque for collection, it was returned unpaid with an endorsement "Payment Stopped by the Drawer) vide Banker's Memo dated:6.11.2019. Thereafter the authorised signatory of the complainant company got issued the legal notice dated:2.12.2019 calling upon the accused to pay the cheque amount. Despite service of the legal notice, the accused had failed to make payment of the cheque amount, however issued an untenable reply on 17.12.2019. Hence, the authorised signatory of the complainant company was constrained to file the complaint under Section 200 of Cr.P.C., against the accused for the offence punishable under Section 138 of N.I.Act.
The learned Addl. C.M.M., Bengaluru after taking cognizance, recorded the sworn statement of the Crl.Appeal No.431/2023 5 authorised signatory of the complainant company and registered the case as C.C.No.1230/2020 and issued summons to the accused. On appearance of the accused through his advocate, he was enlarged on bail. The plea was recorded. The accused has pleaded not guilty and claimed to be tried. The sworn statement of the authorised signatory of the complainant company was treated as examination in chief of P.W.1 and one witness as P.W.2 and got marked 13 documents from Exs.P.1 to 13. After closure of the evidence of complainant, the statement of accused was recorded under Section 313 of Cr.P.C. The accused has denied the incriminating evidence against him. The accused has chosen not to adduce any defense evidence on his behalf. However in confrontation, Exs.D.1 to 6 were marked through P.W.2. After hearing the arguments, the learned Magistrate has convicted the accused for the offence punishable under Section 138 of N.I.Act and sentenced to pay a fine of Rs.10,10,000/-, in default he shall undergo simple imprisonment for six months. It is further ordered that out of the fine amount, a sum of Rs.10,05,000/- shall be paid to the complainant as compensation and the remaining amount of Rs.5,000/- shall be adjusted towards the State as fine.
4. The appellant/accused has preferred this Crl.Appeal No.431/2023 6 appeal on the following grounds :
It is contended that the entire case is solely depending upon the audit report alleged to have been checked in the laptop. But, there is no material on record to show that the laptop has been given to the accused and he has maintained the account. In the absence of the same, the question onf legally payable debt or any liability does not exists at all. When that being the case, Section 138 of N.I.Act is not applicable. The document in question upon which the complainant is relying upon Ex.P.4 is a piece of paper and is not in accordance with law, which cannot be looked into and it is an inadmissible document. The complainant who has already received email communication from the accused dated:30.06.2019 much earlier to presentation of the cheque for payment and it was presented on 4.11.2019. By that time, email communications (Exs.D.4 to 6) was already received by the complainant and he was having knowledge of the same. When that being the case, the presentation of the cheque to the bank does not arise at all. The accused has already informed the reason for 'stop payment'. The said material aspect has not been considered by the trial court. The alleged audit report is not an authenticated document to show about the existence of the liability. It is only the statement of accounts maintained by the Crl.Appeal No.431/2023 7 complainant company. But no such statement of accounts is produced. When that being the case, the complainant failed to prove the existence of legally recoverable debt or any liability backed by the cheque.
In view of Exs.D.4 to 6, email communication, it clearly states the 'stop payment, if the cheques were presented'. If that being the case, the complainant had full knowledge about the defense taken by the accused and he has to counter or rebut the initial burden on their part of placing material to show about there exists a legally recoverable debt or any liability. As the complainant was fully aware about the defense taken by the accused, the failure on the part of the complainant to place the required documents and non- production of the above said documents draws an adverse inference under Section 114(G) of the Indian Evidence Act. The said fact has not been considered by the trial court. Further the existence of the company itself is in doubt as it has been taken over by several other companies as on the date of the alleged incident. When that being the case, it is for the complainant to place before the court while transferring the assets and liabilities, the existence of the liability on the part of the accused has to be incorporated and should be placed. The complainant has fully admitted about the registration of the case and also about the arrival of the Crl.Appeal No.431/2023 8 accused to the Police Station. It is the specific case of the accused that in the Police Station, the Memorandum of Understanding (Ex.P.4) and the cheques including Ex.P.5 is obtained by force. If that being the case, undue influence and duress has been proved by the accused and it ha snot been rebutted by the complainant. As such, the alleged contract (Ex.P.4) entered into between the complainant and accused & also the issuance of cheques under Ex.P.5 is vitiated by fraud. The said fact has not been considered by the learned Magistrate. It is the settled principles of law that the initial burden on the complainant to show there exists a legally recoverable debt or liability and the complainant has failed to do so or place any material to that extent except inadmissible document (Ex.P.4). When the court comes to the conclusion that the accused is working as a Commercial Manager, the FIR has been registered against the accused and the cheque was obtained forcibly. If that being the case, the findings of the trial court is perverse, illegal and contrary to law. The trial court has failed to see that the accused has not taken any suitable action against the complainant company and the police as per law and also issuance of the cheque. Exs.D.4 to 6 is clear cut immediate action taken by the accused in the eventuality of the presentation of the cheque, the Crl.Appeal No.431/2023 9 payment will be stopped. That is the immediate action taken by the accused. The said material aspect has been overlooked by the trial court and failed to consider the same. Hence prayed to allow the appeal by setting aside the impugned judgment and order of sentence passed by the trial court and to acquit the appellant.
5. The respondent put his appearance though his counsel.
6. The trial court records were secured.
7. Heard.
8. The points raised for consideration are as under:
1. Whether the appellant/accused has made out sufficient grounds to interfere with the impugned judgment and order of sentence passed by the trial court ?
2. What Order?
9. My findings to the above points are:
POINT No.1 : Negative, POINT No.2 : As per final order, for the following:
REASONS
10. POINT No.1:- I have considered the Crl.Appeal No.431/2023 10 complaint averments, oral and documentary evidence placed before the trial court along with appeal averments and the decisions relied by the learned advocate for respondent reported in AIR 1951 sc 280 and AIR 1996 1967 SC 678.
11. It is the specific contention of the appellant that in the Police Station, the Memorandum of Understanding (Ex.P.4) and cheque (Ex.P.5) was obtained by force. It is specifically contended that the accused has proved undue influence and duress and it has not been rebutted by the complainant.
12. In this regard, it is pertinent to note that the complainant has furnished the Memorandum of Understanding (Ex.P.4) and the cheque (Ex.P.5) dated:30.08.2010. In the cross examination of P.W.1, it is elicited that the Memorandum of Understanding is not properly stamped and as such, it does not have legal sanctity. He has denied the suggestion that the accused was kept in illegal detention in the Police Station due to influence on his family members he got the accused signed Ex.P.3. Further in the reply notice (Ex.P.10), it is stated in para No.6 as under :
"Your client, who portrays himself as a reputed company, instructed my client to maintain some Crl.Appeal No.431/2023 11 false account with respect to the loan account relating to the farmers. My client refused to do the same and rendered proper advice that maintaining such fabricated accounts will lead to illegal. Getting annoyed by his deeds, your client orally terminated him and lodged a false complaint against him at Hebbagudi Police Station, Bengaluru, where my client was unlawfully secured and in sequel your client has forcibly obtained an undertaking as if he admitted the crime and agreed to pay a sum of Rs.46,00,000/- which is alleged by your client as a partial loss. At this context, it is false to state that on 10.05.2019, a MOU was executed by my client to pay an amount of Rs.50,00,000/- (Rupees Fifty Lakhs Only)) to your client and thereafter upon mutual agreement my client decided to settle the dispute for Rs.46,00,000/- (Rupees Forty Six Lakhs only)".
13. Further, it is stated in the reply notice that "The said MOU dated:10.05.2019 is not signed by my client under free will and consent. The signature from my client in the undertaking and the cheques bearing its numbers 19636, 19637, 19640, 19639 for the sum of each Rs.10,00,000/-
Crl.Appeal No.431/2023 12 drawn on TMB Bank, Madurai, dated:14.05.2019, 30.06.2019, 30.07.2019 and 30.08.2019 respectively were obtained under the police custody, under coercion and under threat that my client and his family members will be put behind the bars".
14. Also from Ex.P.13, it is evident that the charge sheet came to be filed against the accused on 2.01.2020. In column No.12 of the charge sheet, it is shown that the accused herein who is one of the 3 accused is on anticipatory bail. When the accused had obtained anticipatory bail, then question of police arresting him and keeping him in custody does not arise. If really there was illegal detention of the accused and if he was made to sign Memorandum of Understanding and cheque under threat, then no explanation is forthcoming as to why the accused did not complain about the said illegal detention and making him to sign Memorandum of Understanding and cheque under threat to the Commissioner of Police or to the jurisdictional Magistrate. Also nothing has been elicited in the cross examination of P.W.1 to corroborate the same. The accused has chosen not to furnish any document to show that he was in illegal detention.
Crl.Appeal No.431/2023 13
15. The learned Magistrate has rightly observed that "Further PW.1 in his cross examination has admitted that he did not produce any document to show the liability of the accused to the tune of Rs.50 lakhs. He has denied the suggestion that he misused the documents and cheque obtained from the accused forcibly and filed this false case against him. Further he has denied the suggestion that after getting mail as per Ex.D.4 he intentionally presented the cheque for collection at his banker. Further he has denied the suggestion that the accused raised his voice against the officers of the complainant company for their illegal activities as such, he was removed from his job and filed this false case against him. Further he has admitted that he did not produce any document before this court to show the actual misappropriation amount. Further he has denied the suggestion that he created the memorandum of understanding only for the purpose of this case. He has admitted that as per Ex.P.13 it is not possible to ascertain who misappropriated the funds. Further he has denied the rest of the bare suggestions".
16. Further the learned Magistrate has rightly Crl.Appeal No.431/2023 14 observed that "I have perused the Ex.P.4 the Memorandum of Understanding entered between the complainant company and the accused. As per this document it appears that in order to refund the misappropriated amount, the accused entered into compromise with the complainant company and agreed to settle the dispute for Rs.50 lakhs. Further it appears that the accused had issued 4 post dated cheques in favour of complainant company for payment of agreed amount. From the cross examination of PW.1 it is clear that the relatives of the accused had paid sum of Rs.6 lakhs in favour of complainant company on the very same day of execution of MOU. Though the accused has taken up a defense that the complainant company compelled him to enter into MOU forcibly in the police station but he has failed to bring any evidence in this regard. Even for the sake of arguments if it presumed that the complainant company forcibly obtained MOU and cheques from the accused in the police station, then what prevented him to take suitable action against the complainant company or against the police as per the law ?. Absolutely, there is no explanation from the accused in this regard. Therefore, in the absence of any evidence Crl.Appeal No.431/2023 15 to that effect this court is not inclined to accept the version of the accused".
17. Further it is the contention of the appellant/accused that the present case is solely depending upon audit report alleged to have been checked in the laptop, but there is no materials on record to show that the laptop was given to the accused and that he maintained the account. As such the legally payable debt or any liability does not exist at all. In this regard, it is pertinent to note that in the cross examination of P.W.1, nothing has been elicited in the cross examination of P.W.1 to establish that the laptop was not given to the accused and he had not maintained the account. Also the accused has not placed any evidence to corroborate the same.
18. In this regard the learned Magistrate has rightly observed that "I have perused the entire cross examination of PW.2. In his cross examination he has deposed that in the year 2014 the company of the complainant was acquired by Future Group Company. He has deposed that he do not know whether there was any differences in the audit report with respect to financial transaction of the Crl.Appeal No.431/2023 16 complainant company at the time of taking over by the Future Group Company. Further he has deposed that the accused was working at Bommasandra Branch as a Manufacturing Commercial and purchase. He has also deposed that the Human Resources Manager, Chief Control Officer and purchase department were higher Officers of the accused. Further he has deposed that he does not have any problem to produce the quarterly audit report of the complainant company on 2017 to 2019. He has also deposed that he did not have personal knowledge about the nature of work at Bommasandra Branch. He has also deposed that as per the directions of his higher officers he submitted his affidavit for his sworn statement before this Court".
19. Further the learned Magistrate has rightly observed that "It is relevant to note that the accused has not denied his signature in Ex.P.5 cheque in question. Hence, once the signature is admitted by the accused it raises a presumption under Section 118 and 119 of N I Act in favour of complainant that he received the cheque from the accused in discharge of legally enforceable debt or other liability. It is also relevant to note Crl.Appeal No.431/2023 17 that the accused at the time of recording of his statement under Section 313 of Cr.P.C he has stated that he was working as a Commercial Manager in the compl114ainant company. Further he has stated that the complainant company lodged false FIR against him and obtained his cheques forcibly in the police station. He has also stated that he instructed his banker to make stop payment with respect to cheques issued by him. Further he has stated that soon after receipt of demand notice he sent formal communication to his boss and requested him not to present the cheques for collection".
20. It is further contended that the complainant had already received email communication from the accused dated:30.06.2019 much earlier to the presentation of the cheque for payment on 4.11.2019. The complainant having full knowledge of email communications (Exs.D.4 to 6) has presented the cheques when the accused had already informed the reason for "Stop Payment". Exs.D.4 to 6-Email communications states about the 'Stop Payment, if the cheques were presented'. The complainant having full knowledge about the said defense of the accused has to counter or rebut the initial burden that there exists a Crl.Appeal No.431/2023 18 legally enforceable debt or liability. The failure on the part of the complainant to furnish any documents goes to draw an adverse inference under Section 114(G) of The Indian Evidence Act. In the cross examination of P.W.1, he has admitted that as per Ex.D.4, the email ID [email protected] and [email protected] are his company email addresses. But also it is elicited that as to whether there were talks with the accused regarding presentation of the cheque. Further Exs.D.1 to 3, 5 and 6 are marked in confrontation during the cross examination of P.W.1.
21. Here itself it is pertinent to refer to Ex.D.4-Email dated:30.06.2019 wherein the accused has stated as under :
"Based upon the false complaint I was unlawfully arrested by the police and under the said police custody you forcibly obtained signature in an undertaking dated on 10th Mayh 2019, along with few unfilled signed cheques (Cheque No.01019636 to 01919646 Tamil Nadu Mercantile Bank and cheque No.000143 of Karur Vysya Bank.
I state that there is no legally recoverable debt existing between the company and myself. So I have stopped the payment to the above said cheques with my banker. So Crl.Appeal No.431/2023 19 you are hereby informed that not to deposit the above mentioned cheques for collectioin any date hereafter. Regardless of the above said the company deposited the cheques then it will be dishonoured for the reason "stop payment".
In such circumstances I will not liable for any action either under the Negotiable Instruments Act or under any other Penal Law".
22. From Ex.D.4 and discussion made supra, it is observed that even though the accused claims that he was unlawfully arrested and when he was in police custody his signature was obtained on 10.09.2019 along with few unsigned cheques i.e., cheque No.01019636 to 01019646, Tamil Nadu Mercantile Bank and cheque No.000143 of Karur Vysya Bank. But the accused has failed to prove that the cheque was obtained under threat or he was in illegal custody. When the very contention and allegation made in Ex.D.4 is not proved, then on such a ground he cannot contend that he is not liable to pay under N.I.Act as the cheques will be dishonoured for the reason "Stop Payment".
23. Further the learned Magistrate has rightly observed that "The accused has also not produced any materials to show that the complainant Crl.Appeal No.431/2023 20 company has created certain documents only for the purpose of this case. Though he has produced Ex.D.1 to D.5 in support of his defense but these documents are not helpful to probable his defense so as to rebut the statutory presumptions available to the complainant. It is relevant to note that the police have already filed charge sheet in Crime No.24/2019 against the accused and others for the offences punishable under Section 418, 406, 420, 417 of IPC which is pending on the file of Hon'ble 2nd Addl. Civil Judge and JMFC, Anekal as it could be seen from Ex.P.13. Further it is relevant to note that the complainant company has stated that the accused issued the cheque in question in lieu of the cheque bearing No.19639. In this regard the accused has not posed any question or suggested P.W.1. Therefore, in my opinion the accused has utterly failed to probable his defense so as to rebut the presumptions available to the complainant. On the other hand the complainant company has successfully proved that the accused has issued cheque as per Ex.P.5 in order to discharge his liability".
24. Further the learned Magistrate has rightly observed that "P.W.1 has admitted that on behalf Crl.Appeal No.431/2023 21 of the complainant company FIR came to be registered against the accused in Crime No.24/2019. Further he has admitted that the said FIR came to be registered for the reason that from 01.03.2018 to 31.05.2018 misappropriation of funds was taken place in the company. Further he has admitted that sum of Rs.38,90,000/ was misappropriated during the said time. He has also admitted that after registration of FIR, the representative of the complainant company and the accused came to the police station. However, he has denied the suggestion that in the police station they illegally detained the accused and compelled him to enter into memorandum of understanding as per Ex.P.4. He has further denied the suggestion that the signature of the accused was forcibly obtained in the police station. He has admitted that on the very same day the relatives of the accused i.e, M/s. Satya Sai Milk Traders transferred sum of Rs.6 lakhs to the complainant company".
Hence the contention taken by the appellant/accused that there exists legally enforceable debt in view of the emails sent by him to the complainant cannot be accepted.
Crl.Appeal No.431/2023 22
25. In view of the discussion made supra, it is held that the learned Magistrate has rightly convicted the accused for the offence punishable under Section 138 of N.I.Act. Hence this court is of the considered view that the appellant/accused has not made out grounds to interfere with the impugned judgment passed by the trial court. Accordingly, I answer the Point No.1 in the Negative.
26. POINT No.2 : My finding on this point is as per following :
ORDER The Crl. Appeal filed by the appellant is hereby dismissed. Consequently, the impugned judgment passed by the learned XXIV Addl. Jduge, Court of Small Causes & Addl. C.M.M., & Member-MACT, Bengaluru in C.C.No.1230/2020, dated:28.03.2023 stands confirmed.
Send back the records to the trial
court along with the copy of this
judgment.
(Dictated to then Stenographer Grade-II directly on computer, corrected, signed and then pronounced by me in the open court on this the 1 st day of April 2026) (RASHMI.M) LXVII Addl.City Civil & Sessions Judge, BENGALURU.
Digitally signed
RASHMI by RASHMI M
M Date: 2026.04.01
17:40:58 +0530