Bangalore District Court
M/S. Swikruti Ventures Pvt Ltd vs M Mahesh Reddy on 24 November, 2025
KABC0C0136572021
IN THE COURT OF XXXIV ADDL. CHIEF JUDICIAL MAGISTRATE,
MAYO HALL UNIT, BENGALURU. (ACJM-34)
PRESENT: Smt. PARVEEN A BANKAPUR,B.Com.LLB.
XXXIV ADDL. CHIEF JUDICIAL MAGISTRATE,
Dated : This the 24th day of November, 2025
C.C.No.54154 of 2021
COMPLAINANT : M/s. Swikruti Ventures Pvt Ltd
Office at No.349, 15th A Cross,
6th Main, 6th Sector, HSR Layout,
Bengaluru.
Rep by its Managing Director
Mr. Girish Shiva Prakash
(By M/s. Prince ISAC - Advocates)
V/s
ACCUSED : Mr. M. Mahesh Reddy
S/o. Muniyappa Reddy,
Aged about 42 years,
No.53, 5th A Cross, 21st Main,
MCHS Colony, BTM 2nd Stage,
Bengaluru - 76.
(By M/s. M.K.Venkatramana -
Advocate)
1 Date of Commencement 16.02.2021
of offence
2 Date of report of offence 02.07.2021
3 Presence of accused
3a. Before the Court 14.12.2021
3b. Released on bail 14.12.2021
4 Name of the Complainant M/s. Swikruti Ventures Pvt. Ltd.
5 Date of recording of 16.08.2021
evidence
6 Date of closure of evidence 19.07.2025
7 Offences alleged U/s 138 of the Negotiable
Instruments Act.
8 Opinion of Judge Accused is found guilty.
2 C.C.No.54154 of 2021
JUDGEMENT
The Private Complaint filed by the Complainant under Section 200 of Cr.P.C against the accused alleging that he has committed the offence punishable under Section 138 of Negotiable Instruments Act.
2. The brief facts of the complaint are as follows:
The complainant submits that, the Accused during the month of January, 2018 was seeking investment for the construction of a school project. After due deliberation the Complainant from made an investment of Rs.3 crores in the school project namely National Public School, located near Electronic City, Hosur Road, Bengaluru. The investment was made by way of RTGS from the amount of the Complainant firm and the Accused agreed to refund the said amount within 6 months from 21.12.2019.
It is further submitted that as per the demand made by the Complainant to provide security for their investment till the amount is refunded, the Accused agreed and issued 4 post dated Cheques No. 903472, 904374, 904375 and 904376 Rs.75 lakhs each dtd.21.4.2020, 21.5.2020, 21.6.2020 and 21.7.2020 respectively. The Complainant agreed to return the 3 C.C.No.54154 of 2021 post dated Cheques as soon as the investment amount is returned by the Accused.
It is further submitted that on 29.3.2020 Accused through e-mail made a request to the Complainant to postpone the repayment schedule by another three months from the schedule dates due to the reason that the business of the Accused has been affected due to pandemic Covid-19 outbreak and consequential lock down nationwide.
It is further submitted that thereupon the Accused provided fresh post dated Cheques of TGMC Bank, HSR Layout branch, Bengaluru bearing No.904391, 904392, 904393 and 904394 dtd.16.1.2021, 16.2.2021, 16.3.2021 and 16.4.2021 respectively for Rs.75 lakhs each towards repayment of the said investment and assured that sufficient funds would be maintained in the account on presentation and it will be honored.
It is further submitted that as per the request of the Accused, the Complainant presented the Cheque bearing No.904392 dtd.16.2.2021 for encashment through his banker Kotak Mahindra Bank, HSR Layout branch, Bengaluru for encashment, but the said cheque was returned unpaid for the reason "payment stopped by drawer" with an endorsement 4 C.C.No.54154 of 2021 dtd.30.3.2021. Further on 17.2.2021 he received the letter from Accused referring to some suits filed by one of his uncle by making Accused as a party and stating that he agreed to settle the matter within two months and once the matter is cleared, the Accused will be able to repay the said amount. But the Complainant never took responsibility of settling the said suits matter between Accused and Complainant's uncle and his wife and the Accused is not entitled to link the transaction to the said transaction and put an embargo that only on settling the said matter, the Accused would be able to return the amount to him.
Thereafter, the Complainant got issued demand notice through RPAD on 12.6.2021 through his counsel. The notice sent to the Accused was duly served upon him. After receipt of legal notice, the Accused has not paid the Cheque amount but, he sent his reply on 24.6.2021 through his counsel. Accordingly, the Complainant has filed present complaint against the Accused for the offence punishable u/Sec.138 of N.I. Act.
3. Based on the complaint, the sworn statement affidavit, and documents etc., took cognizance of an offence punishable Under Section 138 of N.I. Act by following the guidelines of Apex Court issued in Indian Bank Association case and ordered 5 C.C.No.54154 of 2021 to be registered a criminal case against the accused for the offence punishable Under Section 138 of N.I. Act.
4. After issuance of summons, accused appeared before the court and enlarged himself on bail. Plea was recorded, read over and explained to the accused, who pleads not guilty and claims to be tried. Hence, the case is posted for complainant's evidence.
5. The Managing Director of the Complainant got examined himself as PW1 and got marked documents Ex.P.1 to Ex.P11.
6. Accused was examined U/S 313 of Cr.P.C.
Incriminating evidence appearing in the complainant's evidence was read over and explained to the accused who denies the same. The Accused got examined himself as DW1 and got marked documents Ex.D1 to Ex.D6.
7. Heard arguments of Complainant at full length. The learned Counsel for Complainant has placed the following citations;
1. Misc. App.No.21/222
2.Cri. Petn. No.101018/2022 {482} 6 C.C.No.54154 of 2021
3. Cri. App.No.2653/2008 The learned Counsel for Accused has placed the following citations;
1. 2014 {II} Banking Cases Kar H C in the case of Canara Workshops Ltd. V/s. Mantesh
2. 2020 {5} KCCR Karnataka High Court in the case of Gopal Reddy V/s. Suresh Mahendrakar & Others
3. 2022 {III} Banking Cases Supreme Court of India in the case of Rajco Steel Enterprises V/s. Kavita Saraff and Another
4. 2024 {1} KCCR Karnataka High Court in the case of Puttaraju V/s. Y. Rajagopala Naidu
8. Upon hearing the arguments and on perusal of the materials placed on record, the following points arise for my consideration.
1) Whether complainant proves beyond all reasonable doubts that accused in discharge of legally recoverable debt has issued a Cheque cheque No.904392 dated 16.2.2021 for Rs.75,00,000/- drawn on Tumkur Grain Merchants Co-op. Bank Ltd, H S R Layout branch, Bengaluru. in favour in favour of the complainant which came to be dishonoured with an endorsement "payment stopped by drawer" and in spite of service of notice accused has not paid the Cheque amount and thereby committed an offence under Section 138 of N.I.Act?
2) What Order?
7 C.C.No.54154 of 2021
9. My findings on the above points is:
Point No.1: In the Affirmative Point No.2: As per final order for the following:
REASONS Point No.1:-
10. Existence of legally recoverable debt is a sine qua non for prosecuting the case under Section 138 of Negotiable Instruments Act. For convenient purpose the essential ingredients to constitute offence under section 138 of N.I.Act is summarized as below:
(i) That there must be a legally enforceable debt.
(ii) That the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes the legally enforceable debt.
(iii)That the cheque so issued had been returned due to "insufficient funds".
11. It is the core contention of the complainant that, the Accused during the month of January, 2018 was seeking investment for the construction of a school project. After due deliberation the Complainant from made an investment of Rs.3 crores in the school project namely National Public School. The investment was made by way of RTGS from the amount of the 8 C.C.No.54154 of 2021 Complainant firm and the Accused agreed to refund the said amount within 6 months from 21.12.2019. As per the demand made by the Complainant to provide security for their investment till the amount is refunded, the Accused agreed and issued 4 post dated Cheques No. 903472, 904374, 904375 and 904376 Rs.75 lakhs each dtd.21.4.2020, 21.5.2020, 21.6.2020 and 21.7.2020 respectively. The Complainant agreed to return the post dated Cheques as soon as the investment amount is returned by the Accused. Thereafter, the Accused postponed the repayment of amount and seeks another 3 months time from the Complainant due to pandemic Covid-19 outbreak and consequential lock down nationwide.
12. It is further submitted that thereupon the Accused provided fresh post dated Cheques of TGMC Bank, HSR Layout branch, Bengaluru bearing No.904391, 904392, 904393 and 904394 dtd.16.1.2021, 16.2.2021, 16.3.2021 and 16.4.2021 respectively for Rs.75 lakhs each towards repayment of the said investment and assured that sufficient funds would be maintained in the account on presentation and it will be honoured. As per the request of the Accused, the Complainant presented the Cheque bearing No.904392 dtd.16.2.2021 for 9 C.C.No.54154 of 2021 encashment through his banker Kotak Mahindra Bank, HSR Layout branch, Bengaluru for encashment, which was returned unpaid for the reason "payment stopped by drawer" with an endorsement dtd.30.3.2021. Further on 17.2.2021 he received the letter from Accused referring to some suits filed by one of his uncle by making Accused as a party and stating that he agreed to settle the matter within two months and once the matter is cleared, the Accused will be able to repay the said amount. But the Complainant never took responsibility of settling the said suits matter between Accused and Complainant's uncle and his wife and the Accused is not entitled to link the transaction to the said transaction and put an embargo that only on settling the said matter, the Accused would be able to return the amount to him.
13. Thereafter, the Complainant got issued demand notice through RPAD on 12.6.2021 through his counsel. The notice sent to the Accused was duly served upon him. After receipt of legal notice, the Accused has not paid the Cheque amount but, he sent his reply on 24.6.2021 through his counsel. Accordingly, the Complainant has filed present 10 C.C.No.54154 of 2021 complaint against the Accused for the offence punishable u/Sec.138 of N.I. Act.
14. In order to bring home the guilt of the accused, the Managing Director of the Complainant company got examined himself as PW1 and reiterated the contents of complaint in his examination-in-chief. He has also placed the original Cheque bearing No.904392 dtd.16.2.2021 at Ex.P1, bank endorsement at Ex.P2, office copy of legal notice issued by the Complainant to the Accused on 12.6.2021 at Ex.P3, postal receipt at Ex.P4, postal track at Ex.P5, Ex.P6 is the reply notice, Ex.P7 is the board resolution, Ex.P8 is the e-mail copy, Ex.P9 is the Kotak Mahindra Bank account statement, Ex.P10 is the copy of Audit Report and Ex.P11 is the Certificate u/Sec.65 (B) of Indian Evidence Act.
15. The documents produced by the complainant of course established that complainant meets out the procedural requirements of Section 138 of Negotiable Instrument Act, but it is to be considered whether all these documents establish the offence committed by the accused.
11 C.C.No.54154 of 2021
16. The Negotiable Instruments Act raises two presumptions. One contained in Section 118 and the other in Sec. 139 thereof. For the sake of convenience Sec 118(1) of the N.I. Act is extracted here below:
118. Presumptions as to negotiable Instruments--
Until the contrary is proved, the following presumptions shall be made ;--
(a) of consideration that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
1. To (g) . . . . . . . . . . . .
Provided that where the instrument has been obtained from its lawful owner, or from an person in lawful custody thereof, by means of an offence of fraud, or has been obtained from the maker or acceptor thereof by means of an offence of fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him".
17. Further Section 139 of the Negotiable Instruments Act reads as under:
"139, Presumption in favour of holder. It shall be presumed, unless the contrary is proved, that the 12 C.C.No.54154 of 2021 holder of a cheque received the cheque, of the nature referred to in section 138, for the discharge, in whole or in part, of any debt or other liability."
Scope and ambit and function of the presumption U/s 118(a) and Sec 139 of NI Act came to be considered by the Hon'ble Apex Court of Indian in Krishna Janardhan Bhat Vs Dattatraya G.Hegde (2008 AIAR (Criminal 151) The Supreme Court has laid down the law in the following phraseology.
" D Negotiable Instruments Act 1881, Secs 139, 138--Presumption under-same arises in regard to second aspect of the matter provided under Sec 138-- Existence of legally enforceable debt is not a matter of presumption under Sec 139- It merely raises presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability - Merely an application of presumption contemplated under Section 139 of N.I.Act should not lead to injustice or mistaken conviction."
18. Further, said decision was followed by Hon'ble High Court of Karnataka in Kempanarasimhaiah Vs P.Rangaraju & Others (2008 (5) KCCR 3371). Relevant paragraph of the said judgment reads as under: -
"12. As to the provisions of Sections 138 of N.I.Act, the following principles emerge from the above 13 C.C.No.54154 of 2021 observations of Hon'ble Supreme Court at para Nos 21, 23, 25, 26 and 34 of its Judgment in the above said case of Krishna Janardhan Bhat Vs Dattatraya G.Hegde, AIR 2008 SC 1325.
(i) Section 139 of the Act merely raises a presumption that the cheque was issued towards discharge in whole or in part in any debt or other liability, which presupposed legally enforceable debt. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability." (para 21)
(ii) The question as to whether the presumption stood rebutted or not, must be determined keeping in view the other evidences on record. Where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration. (para 26)
(iii) An accused, for discharging the burden of proof placed upon him under a statute, need not examine himself.
He may discharge his burden on the basis of the materials already brought on records (para 23)
(iv) Standard of proof on the part of an accused and that of the prosecution in a criminal case is different. Further more where as prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is " preponderance of probabilities'" ( para 23 & 25)
(v) Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies ( para 25)
(vi) Other important principles of legal jurisprudence, namely presumption of innocence as human rights 14 C.C.No.54154 of 2021 and the doctrine of reverse burden introduced by Section 139 should be deliberately balanced (para 34)
19. Thus from the observations extracted above, it is clear that presumption Under Section 139 of the N.I. Act is only to the extent that the cheque was drawn for discharge in full or in part of any debt or other liability and the said presumption do not relate to the existence of legally enforceable debt or liability. Therefore, before drawing the presumption under Section 139 of the N.I.Act, it is the duty of the Court to see whether or not the complainant has discharged his initial burden as to existence of legally enforceable debt. No doubt, as per Section 118(a) of the Act, there is a rebuttable presumption that every negotiable instrument, is accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration."
20. Factual matrix of the case is required to be tested on the anvil of principles emerging from the above-referred decisions.
21. The defence taken by the Accused is that, the Accused has issued cheques for the security purpose, not for repayment of the investment amount. It is further defence is 15 C.C.No.54154 of 2021 that, it is not a debt amount, it is investment amount. Hence, it is not come within the purview of offence punishable u/Sec.138 of the N.I Act.
22. To substantiate the claim, the Managing Director of the Complainant got examined himself as PW1. In the evidence he deposed that, the Accused in the month of January, 2018 was seeking investment for the construction of a school project, after due deliberations, the Complainant firm made investment of Rs.3 crores in the school project by name National Public School located near Electronic City, Bengaluru through RTGS from the account of Complainant's firm and Accused agreed to refund the said amount within six months from 21.12.2019. It is further deposed that as per the demand by the Complainant to provide security of the investment, the Accused agreed to issue 4 post dated Cheques for Rs.75 lakhs each on respective dates. It is further submitted that the Complainant also agreed to return the said post dated Cheques as soon as the investment amount is returned by the Accused. It is furhte deposed that on 29.3.2020 the Accused sent an e-mail and requested that postpone the repayment of amount by another three months from the dates of due to the reason that business 16 C.C.No.54154 of 2021 of the Accused has affected due to Covid 19 pandemic. It is further deposed that there upon the Accused provided fresh post dated Cheques bearing No.904391, 904392, 904393 and 904394 for Rs.75 lakhs each towards repayment of the said investment and assured that sufficient funds would be maintained in the account on presentation. It is further deposed that on the trust and belief, the Complainant has presented the Cheque bearing No.904392 dtd.16.2.2021 which was unpaid and returned with endorsement as "payment stopped by drawer". It is further deposed that when the Cheque was dishonoured, the Complainant was intimated to the Accused and Accused assured that to defer the deposit of the first Cheque and in this regard, the Complainant had written a letter dtd.1.2.2021 and called upon the Accused to inform the date on which the Cheque was to be presented and if there were instruction he will be presented the first Cheque within a period of one month. It is further deposed that first Cheque was returned unpaid on the reason that "payment stopped by drawer". It is further deposed that on 17.2.2021 he received a letter from the Accused referring to some suits filed by one of uncle of the Complainant by making Accused as a 17 C.C.No.54154 of 2021 party and stating that the Accused agreed to settle the matter within two months. Once the matter is closed, the Accused will be able to repay the said amount. It is further deposed that the Complainant never took responsibility of settling the said suits between the Accused and his uncle and his wife and Accused is not entitle to link the transaction of Complainant and Accused. It is further deposed that the money was transferred by the Complainant's firm as per the request of the Accused and Accused agreed to return the amount and furnished the post dated Cheques for payment. It is further deposed that the Accused admitted to link transaction with with that civil litigation of his uncle, this say is only tactics adopted by the Accused in delay of returning of the amount. It is further deposed that when the Complainant contacted the Accused and requested to return the amount but, the Accused did not reply properly and no other option, Complainant got issued legal notice to the Accused on 12.6.2021 which was duly served upon the Accused and after receipt of the legal notice, the Accused replied through his counsel. It is further deposed that the Accused has issued the said Cheque as a part payment in discharge of the outstanding liability without managing 18 C.C.No.54154 of 2021 sufficient balance in his account. It is further deposed that inspite of receipt of notice, the Accused has not paid the Cheque amount to him. Therefore, the Accused committed an offence punishabe u/Sec.138 of N.I.Act.
23, Considering the oral and documentary evidence, prima facie it presumed that, Ex.P1 cheque was issued by the Accused towards discharge of legally enforceable liability. To rebut the presumption the learned counsel for Accused cross- examined the PW1 in full length. In the cross-examination it is stated that with respect of investment of Rs.3 crores amount by the Complainant to the Accused, there is no written agreement between them. He further stated that in the income tax returns for the year 2018-19 he has not mentioned about Rs.3 crores invested by his company to the Accused. It is further stated that the Accused agreed to return the said amount within six months. He further stated that the Accused agreed to pay the profit share about Rs.50 lakhs to Rs.1 crore. He further stated that in the month of November or December 2019, he requested the Accused to repayment of the said amount. He further stated that in the year 2018 he was transferred Rs.3 crores amount to the account of Accused through RTGS. He further stated that 19 C.C.No.54154 of 2021 since the Accused has wrote a letter to the Complainant by stating that due to Covid-19 schools are closed hence, he asked for returning of the earlier Cheques for issuance of fresh Cheques. He further stated that in the month of December, 2019 the Accused has issued 4 Cheques for the security purpose. In the cross-examination he admits that after dishonour of Cheque after lapse of 72 days, he issued notice to the Accused as per Ex.P3. He further admits that, as per Ex.P6 he received reply notice from the Accused. He further stated that he is the Managing Director of company and his wife is one of the Director. He further stated that Ex.P1 was dishonoured with reason "stop payment". He further stated that as per Ex.P7, there is no specific resolution to file complaint against the Accused for the offence punishable u/Sec.138 of the N.I.Act. He denied that he has no power to file this complaint against the Accused. He further denied that Ex.P7 is not board resolution of the Complainant company. He denied Ex.D1 and also denied his signature on Ex.D.1. He admits Ex.D2 letter wrote by the Accused to him. He also admits that in the said Ex.D2 subject is mentioned as security PDC Cheques for investment amount of Rs.3 crores. He further admits Ex.D3 20 C.C.No.54154 of 2021 letter issued by him from his office and also he admits his seal and signature on Ex.D3. He further admits in Ex.D3 it is mentioned that sub-receipt of fresh security Cheques against investment amount of Rs.3 crores. He further admits that, Ex.D4 letter also admits that signature and seal belongs to him and also admits subject that letter i.e., deposit of Cheque (904391) provided by you investment amount of Rs.3 crores. He further admits that for letter as per Ex.D4, Accused was replied to that letter as Ex.D5 letter. He further admits that in Ex.D5 the subject mentioned as, "reply to your letter dtd.1.2.2021 regarding payment of your investment amount of Rs.3 crores". He further admits that in Ex.D5 it is mentioned that since Cheques are security Cheques, therefore, they will not present. He denied that as per Ex.D1 it is mentioned that the Complainant company investing Rs.3 crores amount for resort project at Kodagu district. He further stated that in balance sheet the invested amount is shown as Rs.2,77,49,500/-, which shown for the purpose of auditing adjustment. He further denied that after dishonour of Ex.P1 Cheque and another Cheque which is the subject matter of the another case, the Accused stated in his reply notice that not present the other 21 C.C.No.54154 of 2021 Cheques for encashment. He further admits that, before presentation of the Cheque, he issued Ex.D4 letter to the Accused. He further admits that, the seals appeared on Ex.D.1 to 3 are one and same. PW1 has denied his signature on Ex.D1. He further denied hat Cheques were issued by the Accused for the security purpose only not for presenting for encashment.
24. To rebut the presumption, the Accused got examined himself as DW1. It is deposed that, he know the Complainant and his wife as the Complainant and his wife are directors of the company by name M/s. Excelsior United Hospitality Pvt.Ltd. It is further deposed that in the year 2018 the Complainant and his wife have given a sum of Rs.3 crores for construction and development of resorts at Kodadu district as investment purpose. It is further deposed that at that time they have made demand for issue of post dated Cheques for security purpose as per the letter issued by the Complainant dtd.21.12.2019 and accordingly, he had issued Cheques for security purpose and not for repayment of the alleged loan. He further deposed that thereafter the Complainant insisted the Accused to issue fresh security Cheques and accordingly, the Accused has issued 4 post dated Cheques as security purpose 22 C.C.No.54154 of 2021 for that the Complainant has duly acknowledged as per his letter dtd.11.8.2020. It is further deposed that the Complainant threatened him by stating that he will present the Cheques as per his letter dtd.1.2.2021 for which, he replied by sending reply notice on 17.2.2021. It is further deposed that one Mr. Legory D'mello, who is uncle's wife of the Complainant has filed Commercial Suit against M/s. Excelsior United Hospitality Pvt.Ltd., the Complainant and partnership firm by name Purlieu Resorts LLP and Moonglade Resorts LLP and obtained an order of attachment of house property and school property of the Accused. It is further deposed that thereafter the said attachment order was recalled. It is further deposed that the Complainant having no locus standi to file the private complaint against him and also not having any proper authorization to lead evidence as the board resolution does not having any seal of the Complainant company. It is further deposed that the Complainant company is not money lender and they have not authorized persons to give loan to public. It is further deposed that the Cheque was dishonoured with reason stop payment, hence the same is not attracted in criminal law. It is further deposed that the complaint barred by limitation and 23 C.C.No.54154 of 2021 Complainant is not made any application for condonation of delay. It is further deposed that as there is no due amount at any point of time and no loan transaction with the Complainant company at any point of time. Hence, he never issued any Cheque for repayment of due.
25. In support of his evidence, Accused produced certified copies of letter dtd.21.12.2019 at Ex.D1, also letter dtd.1.12.2019 at Ex.D2, also letter dtd.11.8.2020 at Ex.D3, further letter dtd.1.2.2021 at Ex.D4 and reply letter by the Accused dtd.17.2.2021 at Ex.D5.
26. In the cross-examination he stated that he is running real estate business and school. It is further stated that he know the Complainant since from 18 years. He admits that the Complainant is his close friend. He further admits that there is no relation/nexus with M/s. Excelsior United Hospitality Pvt.Ltd., which run by the Complainant. It is further stated that Complainant is a partner of M/s. Excelsior United Hospitality Pvt.Ltd. and Moonglade Resorts LLP. He further admits that there is no nexus with Swikruti Ventures and Moonglade Resort LLP. He further admits that in the year 2020 he issued 4 post dated Cheques with respect of 3 crores. He further stated that 4 24 C.C.No.54154 of 2021 Cheques are issued for the purpose of security. He further admits that, he take back the 4 Cheques in the year 2021 and issued fresh 4 Cheques for Rs.75 lakhs each. He further admits that, with respect of Rs.75 lakhs Cheque he was convicted. He further stated that after taking Rs.3 crores from the Complainant for the purpose of construction of resort at Kodagu he has not constructed any resort. He further stated that he was not utilized Rs.3 crores amount in anywhere. It is further stated that since from 2018 he kept Rs.3 crores with himself. He further stated that he have no document to show that he received Rs.3 crores amount for the purpose of resort at Kodagu. He further admits that he received Rs.3 crores amount from the Complainant with agreed to return the same to the Complainant. He further admits that as per Ex.D2 he agreed to return the said amount within six months. He further admits that in civil suit he is a defendant No.5. He further admits that in that suit Mr. Mallareddy, Suresh Reddy and Complainant, his wife and Moonglade an Perliru are defendants. He further admits that M/s. Excelsior United Hospitality Pvt.Ltd., also defendant in that suit. He denied that there is no nexus between civil suit and Kodagu Resort.
25 C.C.No.54154 of 2021
27. In the cross-examination he admits that Ex.P1 Cheque belongs to him and also admits that signature and handwriting on Ex.P1 also belongs to him. He further state that in the year 2018 he constructed school building and for that construction he availed loan from the bank. He further admits that, in the year 2018 he was not had so much amount for construction of the school therefore, he availed loan from the bank. He denied that since he has deficit of amount for construction of the school, therefore, he borrowed Rs.3 crores loan from the Complainant. He admits that the signature in Ex.D1 and signature in Ex.D2 are different.
28. Considering the oral and documentary evidence placed by both the parties it is clear that the Accused received Rs.3 crores amount from the Complainant. Further, it is clear that Ex.P1 Cheque is belongs to the Accused's account and also clear that signature and handwriting on the Ex.P1 belongs to the Accused.
29. The defence taken by the Accused is that Cheques issued by him are only security purpose, not for the payment of any debt or law. Further, it is another defence that Rs.3 crores amount was paid by the Complainant as an investment for 26 C.C.No.54154 of 2021 construction of resort at Kodagu and Ex.P1 Cheque is post dated Cheque issued for security purpose for investment. The learned Counsel for Accused vehemently argued that Ex.D1 letter was issued by the Complainant to the Accused for receipt of security Cheques against the investment amount of Rs.3 crores. On perusal of Ex.D1, it is mentioned that the Complainant company had invested Rs.3 crores amount in the month of January, 2018 for a resort project at Kodagu district and the project was not started due to various reasons and due to the reason, he requested some more time to refund the amount invested with him for which he had agreed. It is further mentioned that the Accused agreed to refund the amount within six months from the date of the letter. However, the Complainant required to provide security for the their investment till amount is refunded and the Complainant confirmed the receipt of post dated Cheques, each Cheque for Rs.75 lakhs. The numbers of Cheques are 904372, 904374, 904375 and 904376. It is also mentioned that all the post dated Cheques will be returning as soon as the investment amount is returned by the Accused. The Complainant has strongly denied the issuance of the Ex.D1 letter to the Accused. On the other 27 C.C.No.54154 of 2021 hand, the Complainant has admitted the issuance of Ex.D2. On the other hand, on 21.12.2019 which issued by the Accused wherein it is mentioned that as per the request of the Complainant, he issued 4 post dated Cheques, each Cheque for Rs.75,00,000/- by stating that all 4 Cheques handed over back to him once total investment amount has been remitted to the account of the Swikruti Ventures and he agreed to refund the said amount within six months from 21.12.2019. Ex.D3 letter dtd.11.8.2020 issued by the Complainant to the Accused in which the Complainant acknowledged receipt of fresh security post dated Cheques i.e., Cheque baring No.904391 to 904394 each for Rs.75,00,000/-. It is further mentioned that the security Cheques will be returned upon repayment of the amount. From Ex.D1 to Ex.D3 it is clear that earlier post dated Cheques were issued by the Accused for the security purpose and thereafter by taking back the said security Cheques, again Accused has issued 4 post dated security Cheques to the Complainant and also agreed that he will repay the invested amount of Rs.3 crores to the Complainant and soon after repayment of the loan amount, the security cheques have to be handed over to him the agreed period by the Accused in six 28 C.C.No.54154 of 2021 months. During the course of arguments, the learned Counsel for the Accused vehemently argued that Cheques are issued for the purpose of security, not for the repayment of any loan amount. Further, the received amount was not a loan amount, it is an invested amount. Hence, the said Cheque amount is not legally enforceable debt. In this regard, the learned Counsel for Accused relied on 2020 (5) KCCR 570 in the case of Gopala Reddy V/s Suresh Mahendrakar and others wherein the Hon'ble High Court held that;
"The Complainant to prove that the Cheque was not issued for the purpose of legally enforceable debt and no proper materials put forth. The Accused is entitled to acquittal."
It is further held that;
"The petitioner is the Complainant before Trial Court apart from having produced the dishonoured Cheque at Ex.P1 petitioner bankers memo of dishonour of Ex.P2, respondent bankers memo of dishonour at Ex.P3, the legal notice Ex.P4, the reply notice Ex.P5 to 8 rejoinder of the notice Ex.P9 and the complaint in PCR No.124/05 at Ex.P10 has not produced any other documents to establish that there is any debt due or liable to be paid. In that Ex.P1 being Cheque Ex.P4 being a demand notice 29 C.C.No.54154 of 2021 or contended to be sufficient by the petitioner to establish the debt due and liable to be paid by the respondent."
30. Further the learned Counsel for Accused relied on the decision of Hon'ble Supreme Court of India reported in the case of Rajco Steel Enterprises V/s. Kavita Saraff & Another in 2024 BC 146 SC wherein, the Hon'ble Apex Court held that;
"Dishonour of Cheque and acquittal both courts have examined witness/evidence threadbare and findings goes against thee Complainant - On question as to whether sum involved in the Cheques was advanced in discharge of legally enforceable debt or not. Petitioner has failed to show that if any sum was advanced towards the financial assistance. Further the learned Counsel for Accused relied on the decision of Hon'ble High Court of Karnataka in 2024 (1) KCCR 621 in the case of Puttarjau Vs Y. Rajgopala Naidu wherein it is held that;
"The Cheque given as a security - No offence is attracted on dishonour of Cheque - No evidence was placed to indicate that the Cheque was issued as against the balance struck - Accused acquitted "
31. In the case on hand, the Accused clearly admits that he was received Rs.3 cores amount for the purpose of 30 C.C.No.54154 of 2021 construction and development of resort at Kodagu district and he further admits that till today he has not returned Rs.3 cores amount to the Complainant. He further admits that, he was issued 4 post dated security Cheques to the Complainant for the said invested amount. He further admits that Rs.3 crores amount was not utilized by him for any purpose, which was kept with him since from 2018. Further out of Rs.3 corers amount, not single paisa was repaid by the Accused to the Complainant and also not paid any profit share to the Complainant. Therefore, it is clear that the Complainant had paid Rs.3 crores amount as a financial assistance to the Accused, which was not returned by him and for the security purpose, the Accused has issued 4 post dated Cheques. When Accused failed to return the amount as agreed by him in Ex.D1 to 3 within six months, the Complainant has liberty to present the Cheque for encashment. With this regard, it useful to refer the decision reported in 2014 (9) SCC 129 in the case of Dashrath Rathod V/s. State of Maharashtra and also 2019 (4) SCC 197 in the case of Bir Singh V/s. Mukesh Kumar, wherein it is held that;
31 C.C.No.54154 of 2021
"A blank undated Cheque i.e., voluntarily issued by the Accused, would not invalidate the Cheque but, would be subject to evidence adduced by the Accused. In the present case, the defence would also not be available to the Accused as the Accused as per its own submission during the course of cross- examination he stated that, the Cheque was handed over to the Complainant company by him towards security purpose."
Further, it useful to refer the decision reported in 2021 SCC Online SC 1002 in the case of Sripathi Singh V/s. State of Jharkhand, wherein it is held that;
"Merely issuing of Cheque towards security purpose would not absolve the Accused of the liability as the same would render the Cheque as nothing more than an on demand promissory Note. Thus the position of law on aspect of Cheques issued towards security is un-ambigious and the said defence also fails to safeguard the malafide intention of the Accused."
32. The contention taken by the Accused is that he has issued security cheques for the investment amount of Rs.3 crores paid by the Complainant. It is pertaining to note that admittedly, the Rs.3 lakhs amount was not returned by the 32 C.C.No.54154 of 2021 Accused within six months. Further, the said security cheques were issued by the Accused, it presumed that in case of non- returning of Rs.3 crores amount security cheques will be utilized.
33. Another contention taken by the Accused is that, without any power and without Power of Attorney of another director, the complaint is not maintainable. It is submitted by the learned counsel for Accused that, Rs.3 crores amount was paid by the Complainant through its company, not on individual capacity. The complaint is filed by the Complainant in the name of M/s.Swikruti Ventures Pvt. Ltd. and it is represented by the Managing Director. In the evidence PW1 stated that another Director is his wife. Further, he has produced Ex.P7 Board Resolution. On the Board Resolution both the Directors are signed and PW1 is an authorized to file claims before courts or any authorities in connection with the case by M/s. Swikruti Ventures Pvt. Ltd. The learned counsel for Accused relied on II 2014 DC 357 Kar in the case of Canara Workshop Ltd., V/s. Mantesh wherein the Hon'ble High Court held that;
33 C.C.No.54154 of 2021
"Dishonour of cheque - Offence by company - Authorization to file complaint - Power of Attorney executed in favour of PW1 was in respect of civil litigation - No specific authority to file complaint u/Sec.138 of N.I. Act - No proof of fact that alleged Executive Director of executive director of the company and had authority to file complaint or execute Power of Attorney in favour of PW1."
34. On the other hand, the learned counsel for Complainant relied on above same decision wherein thee Hon'ble High Court relied the case Shakti Concrete Industries Ltd. And others V/s. Valuable Steels (Idia) Ltd., 2000 (100) Company Cases 429 the Madras High Court held that:
24- There is no dispute in the concept that, the company being by itself a legal person as a payee or a holder in due course, alone could file the complaint u/Sec.142 of N.I Act. It is also not in dispute that a director or a Manager in his individual capacity cannot be sai to be a payee or holder in due course in terms of Sec.142(a) of N.I. Act 25 - But in the instant case, as per the cause-title and the averments, the Complainant company has approached the court through some human agency, namely, a director of the company, in preferring the 34 C.C.No.54154 of 2021 complaints, as the company has no soul, mind, body and limbs. If the company approaches the court through some other person, who is not connected with the affairs fo the company, then necessarily it has to authorized that, person to file the complaint on its behalf. Therefore, in this case, the company being the Complainant through its director is competent to file the complaints even without any authorization
26. This concept could be inferred by looking from some other angle also. The Act does not provide any mode as to how a complaint can be filed by and on behalf of the company. However, u/Sec.141(1) of the Act, if the offence is committed, the company u/Sec.138 of the Act, it is provided that, every person who, at the time of the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall liable to be proceed against and punished accordingly.
35. In the case on hand, it is not denied that PW1 is the Managing Director of the company, admittedly, wife of PW1 is another Director of the company. Ex.P7 disclosed that as a Managing Director, he is authorized to sign and submit 35 C.C.No.54154 of 2021 applications, plaints, affidavits, petitions, counter claims and any other papers/documents as may be required to be filed in the court or with any other authorities in connection with the said case by M/s. Swikruti Ventures Pvt. Ltd. against Sri Mahesha Reddy. In the present case Mr.Mahesha Reddy is the Accused. Therefore, the PW1 is competent and authorized person to file present complaint against the Accused. Hence, the contention by the Accused is not sustained.
36. Another contention of the Accused is that, the complaint is not maintainable as it is filed after expiry of limitation and no delay condonation application was filed. It is submitted by the Accused that as per the records, cheque presented on 29.3.2021 for encashment, which was returned unpaid on 30.3.2021. The notice issued on 12.6.2021, which was served upon the Accused and Accused replied on 24.6.2021. There is a delay in issuance of notice to the Accused. In the complaint averments it is mentioned that due to Covid-19 pandemic the Hon'ble Supreme Court on 27.3.2021 restored the order dtd.8.3.2020 and extended the limitation till further order. It is submission of the learned counsel for Complainant that due to lock down period, they have not sent 36 C.C.No.54154 of 2021 legal notice to the Accused within statutory period. The learned counsel for Complainant relied on order of Hon'ble Supreme Court of India in Suo-moto Writ Petn. No.3 /2020.
It is pertaining to note that, Covid-19 started from March 2020 till the end of Covid about 2 years. As per the SOP issued Hon'ble High Court of Karnataka and guidelines issued by Hon'ble Apex Court in Suo moto Writ Petn.(C) No.3/2020 by the Hon'ble Supreme Court of India wherein the directions issued by the Hon'ble Supreme Court of India that, "The order dtd.23.3.2020 is restored and in continuation of the subsequent orders dtd.8.3.2021, 27.4.2021 and 23.9.2021, it is directed that the period from 15.3.2020 till 28.2.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings."
It is further direction that;
"It is further clarified that the period from 15.3.2020 till 28.2.2022 shall also stand excluded in computing the period prescribed u/Sec.23 (4) & 29
(a) of the Arbitration and Conciliation Act, 1996, Sec.12 (a) of the Commercial Courts Act, 2015 and proviso (b) and (c) of Sec.138 of N.I. Act and any other laws, which prescribed periods of limitation for instituting proceedings, outer limits (within which 37 C.C.No.54154 of 2021 the court or tribunal can condone delay) and termination of proceedings."
37. Therefore, during the Covid-19 pandemic period the limitation period was extended and Complainant unable to send the notice within statutory period and as per the SOP the delay was condoned. Hence, the limitation contention taken by the Accused also not sustained.
38. As discussed above, it has to be presumed that the cheque in question was issued by the accused to discharge the legally recoverable debt or liability. The accused can place rebuttal evidence so as to show that the cheque was not issued for consideration. As appreciated supra, accused has failed to put acceptable and satisfactory evidence to probabilise the defence. Therefore, there is no question of saying that the cheque was not issued for liability. Therefore, complainant has discharged his initial onus laid on him. When he has discharged his initial onus, it raises presumption U/s 118(a) and 139 of Negotiable Instruments Act. Accused has failed to rebut the presumption either in cross-examining PW-1 or in his evidence.
38 C.C.No.54154 of 2021
39. So, far as sentence and compensation is concern, an offence punishable under Section 138 of N.I. Act, is a civil wrong and compensatory in nature, punitive is secondary, considering, the above settled principle of law with facts and circumstances of the case, which clearly reveals that, towards discharge of liability, the cheque in question of issued by the accused to the complainant. Therefore, considering the nature of transaction, duration of pendency, litigation expenses, I am opinion that, if sentence of fine of Rs.94,35,000/- (Rupees Ninety-four Lakhs and Thirty-five Thousand only) is imposed that would meet the ends of justice, accordingly, the accused is hereby sentenced to pay a fine of Rs.94,35,000/- (Rupees Ninety-four Lakhs and Thirty-five Thousand only) out of that, the complainant is entitled for a sum of Rs.94,30,000/- (Rupees Ninety-four Lakhs and Thirty Thousand only) as a compensation as per Sec.357(1) of Cr.P.C., remaining amount of Rs.5,000/-, is to be appropriated to the state, in case of default the accused shall undergo simple imprisonment for a period of 6 months. Accordingly, the Point No.1 is answered in Affirmative.
39 C.C.No.54154 of 2021
40. POINT No.2 : In view of discussion held in Point No.1, I proceed to pass the following:
ORDER Acting U/S 255(2) of Cr.P.C., the accused is convicted for the offence punishable Under Section 138 of Negotiable Instrument Act.
Accused is sentenced to pay fine of Rs.94,35,000/- (Rupees Ninety-four Lakhs and Thirty-five Thousand only) in default to undergo simple imprisonment for 6 months. Further, it is made clear that out of fine amount, Rs.94,30,000/-
(Rupees Ninety-four Lakhs and Thirty Thousand only) is to be paid to the complainant as compensation and Rs.5,000/- is ordered to be remitted to the State.
Bail bond stands cancelled.
Supply the free copy of this judgement to the Accused forthwith.
(Dictated to the stenographer, transcribed by her, corrected by me and then pronounced in the open court on this 24th November, 2025) Digitally signed by PARVEEN A PARVEEN A BANKAPUR BANKAPUR Date: 2025.11.26 13:47:23 +0530 (PARVEEN A BANKAPUR) XXXIV ACJM, BENGALURU.
ANNEXURE
1. Witnesses examined on behalf of Complainant:
P.W.1 Mr. Girish Shiva Prakash
2. Documents marked on behalf of complainant: 40 C.C.No.54154 of 2021
Ex.P.1 Cheque Ex.P.2 Bank endorsement Ex.P.3 Office copy of Legal Notice Ex.P.4 Postal receipt Ex.P.5 Postal track Ex.P.6 Reply Ex.P.7 Board Resolution Ex.P.8 Copy of e-mail Ex.P.9 Bank statement Ex.P.10 Auditor report Ex.P.11 Certificate u/Sec.65 (B) of Indian Evidence Act
3. Witnesses examined on behalf of Accused:
DW1 Mr. M. Mahesh Reddy
4. Documents marked on behalf of Accused:
Ex.D.1 to 5 Certified copies of Letters
Ex.D.6 Certified copy of postal acknowledgement.
Digitally signed by
PARVEEN PARVEEN A
A BANKAPUR
Date: 2025.11.26
BANKAPUR 13:47:16 +0530
(PARVEEN A BANKAPUR)
XXXIV ACJM, BENGALURU.