Bangalore District Court
B.M. Dilip vs Bhuvana Comforts Pvt Ltd on 5 July, 2025
KABC0C0021412023
IN THE COURT OF XIV ADDL.CHIEF JUDICIAL
MAGISTRATE, MAYOHALL UNIT, BENGALURU
Dated this the 5th day of July, 2025
Present: Sri.SANTHOSH S.KUNDER., B.A.,LL.M.,
XIV Addl. C.J.M., Bengaluru.
JUDGMENT UNDER SECTION 355 of Cr.P.C
C.C.No. 50566/2023
Complainant Mr.B.M.Dilip,
S/o. Mr.B.T.Mohan,
Office at No.5, 2nd Floor,
Gajendra Towers, 11th Main Road,
4th Block Jayanagar, Bengaluru-11.
Represented by GPA holder-,
Mr.Sandeep M.S.,
S/o M.M. Srinivasa.
(By Sri. S.K.Mithun, Sumana.K.,
& Ashutosh K.L., Advocates)
V/s
Accused 1. M/s. Bhuvana Comforts Pvt.Ltd.,
Having its registered office at
Flat No.503, Coral Block,
Sai Ram Apartments,
Pragathi Nagar, Yousfguda,
Hyderabad.
Also at:
Regional Office at No.40,
J.C Industrial Layout,
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Kanakpura Road,
Bengaluru.
Represented by its Director,
Mr.M.V. Rayudu.
2. Mr.M.V.Rayudu,
Major,
Father's name not know to Complainant,
R/at Flat No.503, Coral Block,
Sai Ram Apartments,
Pragathi Nagar, Yousufguda,
Hyderabad.
(By Sri.F.Mir Parveez Ahmed,
Advocate)
Offence U/s 138 of Negotiable Instruments Act
Plea of the Pleaded not guilty
accused
Final Order Accused is held guilty & convicted
This complaint is filed under Section 200 of Cr.P.C,
for the offence punishable under Section 138 of the
Negotiable Instruments Act.
2. Complaint averments in brief:
2.1. Accused No.2 is the Director of accused No.1.
He is person in-charge of and responsible for the conduct
and business of accused No.1. In August 2018, accused
No.2 on behalf of accused No.1, approached the
complainant expressing his need for funds for
development of properties of accused No.1 in B.M.Kaval
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and Rachnamadu Villages, Kengeri Hobli, Benglauru
District. He has represented the complainant that he
intends to develop the land by constructing a residential
apartment/complex. He had assured that accused No.1
would pay interest for the money lent without any single
default. Believing the representation of accused No.2
made on behalf of accused No.1, the complainant lent
sum of ₹5,60,00,000/- on several occasions. In order to
secure the payment of money, accused No.2 has executed
a registered mortgage deed dated 10.09.2020 bearing
document No.JAY-1-02632/2020-21 in favour of the
complainant, handing over the title deeds pertaining to
the properties described in the schedule. Accused have
agreed to pay interest @ 24% p.a., on ₹5,60,00,000/-.
2.2. It is averred that as on 15.11.2022, the
accused are liable to pay a sum of ₹10,97,60,000/-
including interest @ 24% per annum from November 2018
to October 2022. It is averred that the complainant had
met accused No.2 during first week of October 2022
insisting him to make payment of aforesaid amount. Upon
constant followup and continuous persistence by the
complainant, accused No.2 on behalf of the accused No.1
agreed to pay a portion of the debt of ₹5,09,00,000/- to
the complainant and voluntarily issued two signed
cheques, viz., cheque bearing No.638632 ₹9,00,000/-
drawn on IndusInd Bank, J.P.Nagar Branch, Bengaluru
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and cheque bearing No.234610 for ₹5,00,00,000/- drawn
on Union Bank of India, J.P.Nagar Branch, both dated
15.10.2022. He has assured that the cheques will be
honoured. Believing the words of accused No.2, the
complainant presented the cheques for encashment
through his banker, viz., IDFC Bank, Residency Road
Branch. But, the said cheques were dishonored for the
reason 'account closed' and 'funds insufficient',
respectively. Thereafter, the complainant issued a legal
notice dated 15.11.2022 to the accused through registered
post calling upon them to pay the amount covered under
the dishonored cheques. The said notice served on
29.11.2022. Instead of making the payment as demanded
in the notice, the accused have sent an untenable reply
dated 30.11.2022. As the accused have failed to comply
with the demand made in the notice, the complainant has
filed the instant complaint through his GPA holder
Mr.Sandeep M.S.
3. This court took cognizance of the offence
punishable under Section 138 of N.I.Act and examined the
power of attorney of the complainant on oath. As prima
facie case made out, the court ordered for registering case
against both accused and they were summoned.
4. Pursuant to the summons, accused No.2 has
appeared before the court and got enlarged on bail. After
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compliance of Section 207 of Cr.P.C, this court recorded
his plea. He has pleaded not guilty and claimed to be tried
and on the same day, his statement under Section 313 of
Cr.P.C., recorded. He has denied the incriminating
evidence.
5. Sworn statement affidavit of power of attorney
of the complainant treated as evidence. Documents at
Ex.P-1 to 16 marked for the complainant.
6. Accused has sought permission to cross-
examine PW-1. Accordingly, this court accorded
permission to accused and they have cross-examined
PW-1.
7. By way of defence, accused No.2 has examined
himself as DW-1 and got marked documents at Ex.D-1
to 3.
8. Heard argument on both side.
9. Points for consideration:-
1. Whether the complainant has proved
that the accused have issued two
cheques bearing Nos.638632
dtd.15.10.2022 for ₹9,00,000/- drawn
on IndusInd Bank, J.P Nagar Branch,
Bengaluru and No.234610
dtd.15.10.2022 for ₹5,00,00,000/-,
drawn on Union Bank of India, J.P Nagar,
Bengaluru in favour of the complainant
towards discharge of legally recoverable
debt/liability and the said cheques were
dishonored for the reason 'account
closed' and 'funds insufficient'
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respectively and in spite of service of
statutory notice dated 15.11.2022, they
have failed pay the amount covered under
the cheques and thereby committed the
offence punishable under Section 138 of
N.I.Act?
2. What order?
10. The above points are answered as under:-
Point No.1 : In the Affirmative.
Point No.2 : As per final order for the following:
REASONS
11. Point No.1:- The complainant is contending
that, accused No.2 is the Director of accused No.1 and he
is the person in-charge of and responsible for the conduct
of its business. The complainant is further contending
that as per the request made by accused No.2 on behalf of
accused No.1, he has lent a sum of ₹5,60,00,000/- on
several occasions upon execution of registered mortgage
deed dated 10.09.2020 on behalf of accused No.1 in
favour of the complainant in order to secure the payment
of debt and agreed to repay the debt with interest @ 24%
p.a. The complainant is contending that as on
15.11.2022, outstanding debt payable by the accused was
₹10,97,60,000/- and towards part payment of the said
liability, the accused have drawn two cheques which are
dishonored for the reason 'funds insufficient/account
closed' and that in spite of service of statutory demand
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notice, the accused have failed to make the payment of
the amount covered under the dishonored cheques.
12. In order to substantiate the complaint
allegations, the complainant has offered the evidence of
his power of attorney holder-Mr.Sandeep M.S., who has
filed affidavit reiterating the complaint averments. Of
documents marked for the complainant, Ex.P-1 is cheque
bearing No.638632 dated 15.10.2022 drawn on IndusInd
Bank, J.P Nagar Branch for ₹9,00,000/-; Ex.P2 is cheque
bearing No.234610 dated 15.10.2022 drawn on Union
Bank of India, J.P Nagar Branch for ₹5,00,00,000/- ;
Ex.P-3 and 4 are the bank endorsements dated
17.10.2022 evidencing dishonour of Ex.P1 and 2 for the
reason 'funds insufficient'/'account closed'; Ex.P-5 is copy
of legal notice dated 15.11.2022; Ex.P-6 to 8 are postal
receipts; Ex.P-9 & 10 are postal acknowledgment cards;
Ex.P-11 is reply notice dated 30.11.2022; Ex.P12 is
registered mortgage deed dated 10.09.2020; Ex.P13 is
power of attorney and Ex.P14 to 16 are bank statements
of complainant.
13. In order to rebut the evidence of PW-1,
accused have cross-examined PW-1. During cross-
examination dated 18.12.2023, it is elicited that the
complainant has disbursed money to the accused before
the execution of mortgage deed. It is elicited that the loan
was disbursed during the year 2018 and mortgage deed at
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Ex.P12 is dated 10.09.2020. It was questioned as to why
the security cheques were not returned to the accused
after the execution of Ex.P12, PW-1 has replied that the
complainant has not taken security cheques from the
accused. It was suggested that the accused has issued
cheques as a security during disbursement of loan. It was
also suggested that loan was disbursed to the accused
after receiving the security cheques. These suggestions are
given by PW-1. Relevant of portion of deposition of PW-1
dated 15.12.2023 is extracted as under:-
"In this case money was disbursed earlier to
the mortgage. The loan was disbursed
during the year -2018. I do not know the
exact date of disbursement. The mortgage
documents at Ex.P.12 is dated.10.09.2020. I
am not signatory to the said document even
as a witness. For a question why you have
not returned the security cheques to the
accused after execution of Ex.P.12, witness
replies stating that they have not taken any
security cheques. It is false to suggest that
the accused has issued cheques as a
security during disbursement of loan. For a
question will you lend loan without any
security, witness answers in negative. It is
false to suggest that only after receiving the
security cheques from the accused, loan was
disbursed."
14. It was questioned as to on what basis loan was
advanced to the accused, PW-1 has answered that the
accused have assured to execute deed of mortgage by
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deposit of title deeds. It is elicited that accused No.2 is not
a relative of the complainant. It was suggested that the
transaction was a business transaction. It was
questioned, why mortgage deed was not executed from the
year 2018 to 2020, PW-1 has answered that the
complainant was demanding the accused for execution of
such document. PW-1 has stated that the complainant
does not have document such as, loan agreement etc.,
executed during disbursement of loan.
15. It is elicited that during the year 2018, there
was income-tax raid on the office and residence of the
complainant and that he had informed about the raid to
all his customers. PW-1 has stated that documents such
as, application, agreement, guarantors' form, security
documents, mortgage deeds pertaining to chit business,
were seized by income-tax authorities. It is elicited that in
the year 2018, the complainant was having around 100
customers in relation to his finance business. Those
customers borrowed loan ranging from ₹1,00,000/- to
₹50,00,000/-. PW-1 has admitted that even while lending
loan of ₹1,00,000/-, the same documents which has
stated above, will be taken from the borrowers. It is
elicited that at the time of lending ₹50,00,000/-, mortgage
deed will be taken from the borrowers. PW-1 has admitted
that without executing the mortgage deed, agreements
and other documents, loan will not be lent. It is elicited
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that the complainant runs chit business under the name-
Surabhi Chits Limited and the said company holds
separate current account for its transactions.
16. PW-1 was further cross-examined on
25.04.2024. It is elicited that Surabhi Finance has three
current accounts. There are five Directors in Surabhi
Financial Corporation. It is elicited that Surabhi Financial
Corporation will lent money for real estate business by
getting the property mortgaged. PW-1 has stated that loan
of ₹3,00,00,000/- to ₹4,00,00,000/- will be sanctioned for
the purpose of real estate business. When questioned why
money was not lent to accused from the said NBFC, PW-1
has answered that the money was personally lent by the
complainant. When questioned as to why the complainant
lent money personally, PW-1 has answered that so much
of money cannot be financed through company as there is
statutory bar. PW-1 has denied the suggestion that the
complainant has invested money in the real estate
business of accused No.1. It is elicited that loan was lent
to the accused for development of layout. It is elicited that
at the first instance, accused has approached in the office
of Surabhi Finance Corporation, Jayanagar Branch. But,
he has not submitted loan application. He had
approached about 2 to 3 times for the purpose of loan. It
is elicited that the complainant has not filed civil suit for
recovery of money from the accused. PW-1 has stated that
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the accused have not paid interest on the loan till October
2022. It is elicited that interest will be about ₹11,20,000/-
per month. It is elicited that the complainant would sent
notice to all its customers who borrowed loan of
₹20,00,000 to ₹30,00,000/-, if they do not pay interest
continuously for three months. PW-1 has stated that
accused No.2 is a friend of the complainant since 2018.
PW-1 has admitted that writings on the cheque in words
and numerals are in different handwriting. PW-1 has
denied the suggestion that there is no loan transaction
between the complainant and the accused and the said
transaction was in respect of investment made by the
complainant. PW-1 has denied the said suggestion.
17. Coming to the defence evidence, accused No.2
filed affidavit by way of defence evidence and examined
himself as DW-1. In his examination-in-chief, he has
deposed that he had business relationship with the
complainant. He has stated that the complainant has
invested the money in real estate business of accused. He
has agreed to advance a sum of ₹5,60,00,000/- before
mortgaging the property. Therefore, DW-1 has issued two
blank cheques in favour of the complainant as a security
for the investment that was supposed to be made by the
complainant. DW-1 has admitted that he has executed
registered memorandum of deposit of title deed in favour
of the complainant on 10.09.2020 in respect of lands
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situated at B.M.Kaval village. Accordingly, the
complainant was obligated to return the cheques that
were given as security and advance the amount for the
property that was mortgaged. DW-1 has stated that even
after the registration mortgage deed, the cheques
continued to remain in the custody of the complainant.
Whenever he had approached the complainant for return
of those cheques, the complainant told him that there was
income-tax raid in his office and the cheques were seized
by the IT department during the raid. DW-1 has further
deposed that, to his utter shock, a notice dated
15.11.2022 was sent by the complainant to which, he has
issued a reply. DW-1 has stated that the claim of the
complainant that as on 15.11.2022, he is liable to pay a
sum of ₹10,97,60,000/- including interest @24 % p.a
from November 2018 to October 2022 is false and prayed
for acquittal.
18. Advocate for the complainant cross-examined
DW-1. During the course of cross-examination, two bank
statements of the complainant were confronted and
elicited that DW-1 has borrowed loan of ₹2,00,00,000/-
and ₹3,00,00,000/-, respectively, from the complainant
on 21.01.2019 and 17.01.2019. Bank statement and
relevant entries are marked at Ex.P15, 15(a), 16 and 16(a).
However, DW-1 has denied the suggestion that for
securing the repayment of said loan, he has executed
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mortgage deed in favour of the complainant. DW-1 has
volunteered that the said mortgage deed was executed in
respect of some other transaction. He has admitted that
he has received ₹5,00,00,000/- from the complainant. He
has denied the suggestion that after receiving
₹5,00,00,000/- from the complainant, he has handed over
original documents pertaining to Sy.No.99 of B.M.Kaval
Village, Kengeri Hobli, Bengaluru South Taluk, to the
complainant. He has admitted that the complainant is in
possession of original documents pertaining to the said
property. DW-1 has volunteered that he has handed over
original documents to the complainant on the date of
registration of mortgage deed.
19. DW-1 has stated that he has taken advance
from the complainant for development of 34-00 acres of
land situated in different survey numbers of B.M.Kaval
Village. But, he has not developed those lands. DW-1 has
claimed that there was oral agreement between the
complainant and accused No.1 relating to advance taken
from the complainant. It is elicited that accused have not
done any other business transaction with the
complainant.
20. DW-1 was further cross-examined on
29.10.2024, where it is elicited that he has agreed to pay
interest @ 24 % p.a. on ₹5,60,00,000/- after receipt of
money. It is further elicited that after the execution of
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mortgage deed, he has not entered into any agreement
with the complainant. DW-1 has stated that since
complainant has not fulfilled his obligation, he did not
return money to him. DW-1 has volunteered that the said
₹5,60,00,000/- is nothing to do with memorandum of
deposit of title deed. He has claimed that probably, he has
returned ₹50,00,000/- to ₹70,00,000/-. But, he has not
produced any document to that effect. He has denied the
suggestion that the complainant never invested money
with the accused company. It is elicited that notice has
not been sent to the complainant asking for return of
security cheques. When it was questioned as per terms of
Ex.P12, documents will be returned after payment of
entire debt, DW-1 has answered that since he has not
borrowed money, question of repayment does not arise.
He has denied the suggestion that as on November 2022,
he is liable to pay ₹10,97,60,000/- to the complainant.
21. After DW-1 further examined-in-chief on
03.12.2022, he was further cross-examined on
17.12.2024. It is elicited that O.S.No.26155/2024 filed by
the accused seeking a decree of permanent injunction
restraining the complainant from assigning the Sy.No.99
to third party. It is elicited that in the said suit, accused
have not mentioned about receipt of ₹5,00,00,000/- from
the complainant on 17.01.2019 and 21.01.2019. DW-1
has denied the suggestion that he has obtained order of
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ex parte temporary injunction by suppressing material
facts.
22. During the course of argument, learned
counsel for the complainant has submitted that by way of
suggestions to PW-1, accused have admitted the loan. The
accused have not disputed receipt of money from the
complainant. Learned counsel has drawn the attention of
court to entries at Ex.P15(a) and 16(a) reflecting of total
sum of ₹5,00,00,000/- by complainant to accused. It was
further submitted that the accused have admitted the
execution of mortgage. They have not challenged the said
document in any suit. Since, they have not disputed
mortgage deed, they cannot lead oral evidence to
contradict its contents. With these, learned counsel for
the complainant has prayed for convicting the accused.
23. On the other hand, learned defence counsel
has submitted that all the presumptions are based on
evidence. He has submitted that presumption against the
accused has been taken for granted by the complainant.
In Ex.P5-legal notice and in the complaint, the date of
lending of money has not been pleaded. There is
absolutely no details in the complaint and the notice
about the lending of money. The complainant has not
produced any voucher evidencing lending of money to the
accused. He has pointed out that mortgage deed is dated
10.09.2020 whereas, the money allegedly lent
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subsequent to the deed of mortgage. Therefore, he has
submitted that the contention of the complainant that the
mortgage was executed by the accused in favour of the
complainant to secure alleged loan, cannot be accepted. It
was submitted that the cheques at Ex.P1 and 2 were given
in blank. There is no legally recoverable debt from the
accused. He has further submitted that in the cross-
examination of PW-1, accused has elicited material
evidence to rebut the statutory presumption. Therefore, he
has prayed for acquittal.
24. Complainant has relied the following
judgments:-
Sl. Judgments
No.
1. Tandra Ray V/s Satyam Projects and
Ors; (MANU/WB/0801/2003)
2. Bhandari Construction Company V/s
Narayan Gopal Upadhye;
(MANU/SC/7140/2007)
25. Accused has relied the following judgments:-
Sl. Judgments
No.
1. Basalingappa V/s Mudibasappa;
[(2019) 6 SCR 555]
2. C.Antony V/s K.G Raghavan Nair;
[(2003) 1 SCC 1]
3. Rangappa V/s Sri.Mohan;
(2010) 11 SCC 441
4. Krishna Janardhan Bhat V/s
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Dattatraya.G.Hegde;
[(2008) 1 SCR 605]
5. Veera Exports V/s T.Kalavathy;
[(2002) 1 SCC 97]
6. Rakesh Bhaimagan Bhaibaro V/s
State Gujarat;
(Spl.Crl.Application.No.3367/2018,
DD: 29.01.2019)
7. Afzal Pasha.V V/s Mohamed
Ameerjan; (Crl.P.No.1684/2016,
DD: 09.08.2016)
(Hon'ble Karnataka High Court)
8. Indian Bank Association and others
V/s Union of India and others;
(2014) 5 SCC 590
26. I have gone through the judgments cited by
either side. After having analyzed the materials on record,
it is pertinent to note that accused No.2/DW-1 has
categorically admitted in his cross-examination that he
has received ₹5,00,00,000/- from the complainant. In this
regard, entries at Ex.P15 and 16 were confronted to him
and the same are marked at Ex.P15(a) and 16(a).
However, he has denied the suggestion that for securing
the said loan(s), he has executed mortgage deed in favour
of the complainant. Though, he has admitted execution of
mortgage deed in favour of complainant, as per his
version, it was executed in respect of some other
transaction. Relevant portion of deposition of DW-1 dated
24.09.2024 is extracted as under:-
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"It is true that in the statements of account
now shown to me show that on 21.01.2019, I
have received Rs.2 crores from the
complainant and on 17.01.2019, I have
received Rs.3 crores from the complainant.
Bank statements confronted to the witness
are marked as Ex.P15 and 16. Relevant
portions are marked as Ex.P15(a) and 16(a). It
is not true to suggest that for securing loan as
shown in Ex.P15 and 16, I have executed
mortgage in favour of complainant. Witness
volunteers that the said mortgage deed was
executed in respect of some other transaction.
XXXX"
27. Further, during cross-examination dated
29.10.2024, DW-1 has categorically admitted that he has
agreed to pay interest @ 24% p.a. on ₹5,60,00,000/-. The
said piece of evidence is extracted as under:-
"XXXX It is true that, I have agreed to pay
interest @24% per annum on Rs.5 crore 60
lakhs after the receipt of money. It is true
that, subsequent execution of Memorandum of
deposit of title deed, I have not entered any
agreement with the complainant. Since, the
complainant has not fulfilled his obligation, I
did not return the money to him. XXXXX"
28. Thus, above extracted portions of evidence, it
is clearly forthcoming that the accused have borrowed
₹5,60,00,000/- from the complainant and agreed to repay
the same with interest @ 24% p.a.
29. Though, the accused have admitted the
execution of mortgage deed at Ex.P12, according to DW-1,
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the said mortgage deed was executed in respect of some
other transaction. It is elicited in the cross-examination of
DW-1 dated 29.10.2024 (supra) that apart from the
mortgage deed, he has not entered into any other
agreement with the complainant. Therefore, in the
absence of evidence to the contrary, version of DW-1 that
mortgage deed was executed in respect of some other
transaction, cannot be believed. It is relevant to note that
the accused does not dispute execution of memorandum
of deposit of title deed. On the other hand, in
examination-in-chief at para No.6, accused/DW-1 has
categorically admitted that he has executed Ex.P12.
However, according to him, he has acted according to the
oral agreement that allegedly existed between him and the
complainant and executed Ex.P12.
30. It is pertinent to note that when the terms of
transaction are reduced into writing, oral evidence to
contradict its terms cannot be permitted in view of Section
91 of the Evidence Act unless a case is made out that
provisos to Section 92 of the Evidence Act are attracted. In
the present case, the accused have not made out a case
under any of the provisos to Section 92 to permit them to
lead evidence to contradict the terms of Ex.P12. Therefore,
they cannot be permitted to contradict the terms of
Ex.P12.
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31. In Bhandari Construction Company (supra)
Hon'ble Supreme Court held that:-
"15. When the terms of the transaction are
reduced to writing, it is impossible to lead
evidence to contradict its terms in view of
Section 91 of the Evidence Act. There is no case
that any of the provisos to Section 92 of the Act
are attracted in this case. Why the case that
was sought to be spoken to by the respondent
was not set up by him in the complaint was not
explained. The case set up in evidence was
completely at variance with the case in the
complaint. There was no evidence to show that
the consideration was to be Rs.9,00,000/-,
especially, in the light of the recitals in the
registered agreement. There was also no
document to show the payment of
Rs.4,00,000/- by way of cash. Hence, this was
no evidence to show that the balance amount
due under the agreement after the admitted
payment of Rs.5,00,000/- was paid. The
affidavit produced before the State Forum and
the evidence of the colleague of the respondent
is clearly inadmissible and insufficient to prove
any such payment. Thus, the case set up by
the respondent in his evidence was not
established. XXXX"
32. At the cost of repetition, it is to be noted that
the accused have admitted execution of Ex.P12 in favour
of the complainant. There are recitals in Ex.P12 which
indicate that the complainant has advanced
₹5,60,00,000/- to the accused which they have agreed to
repay with interest @ 24% per annum. Since the accused
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are not disputing mortgage deed and its contents, they
cannot contend contrary to the terms of the document. It
is true that money was lent on 17.01.2019 and
21.01.2019 whereas, Ex.P12 was executed and registered
on 10.09.2020. Therefore, it is clear that money was lent
by the complainant much before the execution of
mortgage deed. It is equally important to note that
whether money was lent before the mortgage deed or after
the execution of mortgage deed, is immaterial for the
reason that the present proceeding is arising out of
dishonor of the cheques where the complainant is
expected to prove the following:-
(i) A cheque drawn for the payment of any
amount of money to another person;
(ii) The cheque is drawn for the discharge of
the "whole or part" of any debt or other
liability. "Debt or other liability" means legally
enforceable debt or other liability; and
(iii) The cheque is returned by the bank unpaid
because of insufficient funds.
33. For constituting offence under Section 138 of
NI Act, the stipulations in the proviso are to be fulfilled.
The conditions in the proviso are as follows:
(i) The cheque must be presented in the bank
within six months from the date on which it
was drawn or within the period of its validity;
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(ii) The holder of the cheque must make a
demand for the payment of the "said amount of
money" by giving a notice in writing to the
drawer of the cheque within thirty days from
the receipt of the notice from the bank that the
cheque was returned dishonoured; and
(iii) The holder of the cheque fails to make the
payment of the "said amount of money" within
fifteen days from the receipt of the notice.
34. It is not in dispute that the subject cheques
belong to the accused. It is also not in dispute that the
cheques were presented well within its validity period.
Indisputably, both cheques were dishonored and after the
dishonor of cheques, complainant issued a statutory
demand notice within the stipulated period, calling upon
the accused to pay the amount covered under the
dishonored cheques. The accused have not complied with
the demand made in the notice. Therefore, by statutory
fiction, offence under Section 138 of NI Act is deemed to
have been committed.
35. In the case on hand, as noted above, the
accused have admitted borrowing of money from the
complainant. Apart from the admissions elicited in the
cross-examination of DW-1, suggestions were given to PW-
1 admitting borrowing of money and execution of
mortgage deed. Relevant portions of deposition of PW-1
dated 18.12.2023 are extracted as under:-
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KABC0C0021412023
"XXXX For a question why you have not
returned the security cheques to the
accused after execution of Ex.P.12,
witness replies stating that they have not
taken any security cheques. It is false to
suggest that the accused has issued
cheques as a security during
disbursement of loan. For a question will
you lend loan without any security,
witness answers in negative. It is false to
suggest that only after receiving the
security cheques from the accused, loan
was disbursed. XXXXX"
"XXXX It is false to suggest that only after
receiving security cheques from the
accused loan was disbursed. For a
suggestion that security cheques was to
be returned after mortgaging the property,
witness states that no such security
cheques were collected by them. XXXX"
36. Relevant portion of cross-examination of PW-1
dated 25.04.2024 are extracted hereunder:-
"XXXX It is false to suggest Dilip has invested
in real estate business along with the 1 st
accused. XXXX"
"XXXX It is true of suggest that money has
been lent on the accused approaching the
complainant. For a question whether
background of the accused checked before
lending money, witness answers in
affirmative. XXXX"
"XXXX It is false to suggest that there is no
loan transaction with the accused but the
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KABC0C0021412023
transaction was investment made by the
complainant."
37. Thus, by way of suggestions given to PW-1, the
accused have admitted the loan transaction with the
complainant. Nevertheless, they are trying contend that
the money that was lent by the complainant is not a loan;
but, it is an investment in the property. However, to
substantiate the contention, no documents produced by
the accused. It is true that money was lent before the
execution of mortgage deed. But, on this count alone the
case of the complainant cannot be disbelieved more so, in
the light of the fact that the accused have admitted
borrowing of loan from the complainant.
38. Though, during cross-examination DW-1 has
asserted that he has repaid ₹50,00,000/- to
₹70,00,000/-, admittedly he has not produced any
document. Therefore, there is no basis for him to contend
that out of the loan of ₹5,60,00,000/-, he has repaid
₹50,00,000/- to ₹70,00,000/- to the complainant.
39. In response to the legal notice (Ex.P5) issued
by the complainant, accused have issued reply at Ex.P11
where they have contended that the subject cheques were
given as security which were suppose to be returned on
the execution of Ex.P12. In this context, it is pertinent to
note that there is no recital in Ex.P12 to support the
contention of the accused.
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KABC0C0021412023
40. It is reiterated that the accused have not
disputed signatures of accused No.2 on the cheques. Once
signature of an accused on the cheque is proved or
established, then 'reverse onus' clauses become operative.
In such a situation, the obligation shifts upon the accused
to discharge the presumption imposed upon him. This
observation is made by Hon'ble Supreme Court in
Kalamani Tex and Anr. V/s Balasubramanian, 2021
SCC Online SC 75. Thus, burden is on the accused to
discharge the mandatory presumption under Section
118(a) and 139 of NI Act. A negotiable instrument
including a cheque carries following presumptions in
terms of Section 118(a) and Section 139 of the N.I.Act.
(i) Section 118 of the N.I.Act provides;
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:"
(ii) Section 139 of the N.I.Act provides
as follows:
'Presumption in favour of holder it shall
be presumed, unless the contrary is
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KABC0C0021412023
proved, that the 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".
41. Thus, the combined effect of Section 118(a)
and Section 139 of N.I.Act raises a presumption in favour
of the holder of the cheque that he has received the same
for discharge, in whole or in part of any debt or other
liability.
42. Hon'ble Supreme Court in Hiten P.Dalal
V.Bratindranath Banerjee: (2001) 6 SCC 16, it was held
that:
"22. Because both Sections 138 and
139 require that the Court "shall
presume" the liability of the drawer of
the cheques for the amounts for which
the cheques are drawn, as noted in
State of Madras vs.A.Vaidyanatha Iyer
AIR 1958 SC 61, it is obligatory on the
Court to raise this presumption in every
case where the factual basis for the
raising of the presumption had been
established. "It introduces an exception
to the general rule as to the burden of
proof in criminal cases and shifts the
onus on to the accused" (ibid). Such a
presumption is a presumption of law,
as distinguished from a presumption of
fact which describes provisions by
which the court 'may presume" a
certain state of affairs. Presumptions
are rules of evidence and do not conflict
with the presumption of innocence,
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KABC0C0021412023
because by the latter all that is meant
is that the prosecution is obliged to
prove the case against the accused
beyond reasonable doubt. The
obligation on the prosecution may be
discharged with the help of
presumptions of law or fact unless the
accused adduces evidence showing the
reasonable possibility of the
nonexistence of the presumed fact."
43. In Krishna Janadhan Bhat V/s Dattatraya
G.Hegde; (2008) 4 SCC 54, Hon'ble Supreme Court held
that:-
"The presumption mandated by Section 139
includes a presumption that there exists a
legally enforceable debt or liability. This is of
course in the nature of a rebuttable
presumption and it is open to the accused to
raise a defence wherein the existence of a
legally enforceable debt or liability can be
contested."
44. It is pertinent to refer to the judgment of the
Hon'ble Apex Court in M/s Kumar Exports Vs. Sharma
Carpets, (2009) 2 SCC 513, wherein it was held:-
"20. The accused in a trial under
Section 138 of the Act has two options.
He can either show that consideration
and debt did not exist or that under
the particular circumstances of the
case the non existence of
consideration and debt is so probable
that a prudent man ought to suppose
that no consideration and debt
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KABC0C0021412023
existed. To rebut the statutory
presumptions an accused is not
expected to prove his defence beyond
reasonable doubt as is expected of the
complainant in a criminal trial. The
accused may adduce direct evidence
to prove that the note in question was
not supported by consideration and
that there was no debt or liability to be
discharged by him. However, the
Court need not insist in every case
that the accused should disprove the
nonexistence of consideration and
debt by leading direct evidence
because the existence of negative
evidence is neither possible nor
contemplated. At the same time, it is
clear that bare denial of the passing of
the consideration and existence of
debt, apparently would not serve the
purpose of the accused. Something
which is probable has to be brought on
record for getting the burden of proof
shifted to the complainant. To disprove
the presumptions, the accused should
bring on record such facts and
circumstances, upon consideration of
which, the Court may either believe
that the consideration and debt did
not exist or their nonexistence was so
probable that a prudent man would
under the circumstances of the case,
act upon the plea that they did not
exist. Apart from adducing direct
evidence to prove that the note in
question was not supported by
consideration or that he had not
incurred any debt or liability, the
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accused may also rely upon
circumstantial evidence and if the
circumstances so relied upon are
compelling, the burden may likewise
shift again on the complainant. The
accused may also rely upon
presumptions of fact, for instance,
those mentioned in Section 114 of the
Evidence Act to rebut the
presumptions arising under Sections
118 and 139 of the Act."
45. In Rangappa V/s Sri.Mohan; (2010) 11 SCC
441, Hon'ble Supreme Court held that, ordinarily in
cheque bouncing cases, what the courts have to consider
is whether the ingredients of the offence enumerated in
Section 138 of the Act have been met and if so, whether
the accused was able to rebut the statutory presumption
contemplated by Section 139 of the Act.
46. Hon'ble Apex Court in the case titled as Bir
Singh vs Mukesh Kumar, (2019) 4 SCC 197 where it
was held as follows:
"33. A meaningful reading of the
provisions of the Negotiable
Instruments Act including, in
particular,, Sections 20, 87 and 139,
makes it amply clear that a person who
signs a cheque and makes it over to the
payee remains liable unless he
adduces evidence to rebut the
presumption that the cheque had been
issued for payment of a debt or in
discharge of a liability. It is immaterial
that the cheque may have been filled in
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by any person other than the drawer, if
the cheque is duly signed by the
drawer. If the cheque is otherwise
valid, the penal provisions of Section
138 would be attracted.
34. If a signed blank cheque is
voluntarily presented to a payee,
towards some payment, the payee may
fill up the amount and other
particulars. This in itself would not
invalidate the cheque. The onus would
still be on the accused to prove that the
cheque was not in discharge of a debt
or liability by adducing evidence."
47. Further, the above said principles are
crystallized by Hon'ble Supreme Court in the case of
Basalingappa vs Mudibasappa, (2019) 5 SCC 418, where
it is held that:-
"25. We having noticed the ratio laid
down by this Court in above cases on
Sections 118(a) and 139, we now
summarise the principles enumerated
by this Court in following manner:
(i) Once the execution of cheque is
admitted Section 139 of the Act
mandates a presumption that the
cheque was for the discharge of any
debt or other liability.
(ii) The presumption under Section 139
is a rebuttable presumption and the
onus is on the accused to raise the
probable defence. The standard of
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proof for rebutting the presumption is
that of preponderance of probablities.
(iii) To rebut the presumption, it is open
for the accused to rely on evidence led
by him or accused can also rely on the
materials submitted by the
complainant in order to raise a
probable defence. Inference of
preponderance of probabilities can be
drawn not only from the materials
brought on record by the parties but
also by reference to the circumstances
upon which they rely.
(iv) That it is not necessary for the
accused to come in the witness box in
support of his defence, Section 139
imposed an evidentiary burden and not
a persuasive burden.
(v) It is not necessary for the accused to
come in the witness box to support his
defence."
48. From the ratio laid down in the aforesaid
judgments, it is clear that for the offence under Section
138 of the Act, the mandatory presumptions under
Section 118 (a) and Section 139 of N.I.Act have to be
raised as soon as execution of cheque by the accused is
admitted or proved by the complainant and thereafter,
burden shifts on the accused to prove otherwise.
However, presumptions, both under Sections 118 and
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139 of N.I.Act are rebuttable in nature. In the case on
hand, the accused have failed to make out a probable
defence. Therefore, this court has no option but to accept
the case of the complainant. Therefore, this court holds
that the complainant has proved that the accused have
committed the offence punishable under Section 138 of
N.I.Act. Accordingly, I answer Point No.1 in the
Affirmative.
49. Point No.2:-Punishment prescribed for the
offence under Section 138 of Negotiable Instruments Act
is imprisonment for a period which may extend to two
years or with fine which may extend to twice the amount
of the cheque or with both. Section 79 of Negotiable
Instruments Act provides that when interest at a specified
rate is expressly made payable on a promissory note are
bill of exchange, interest shall be calculated at the rate
specified, on the amount of the principal money due
thereon, from the date of the instrument, until tender or
realization of such amount. In the present case, under
Ex.P12 accused have agreed to repay the debt with
interest @ 24% per annum. Considering the rate of
interest specified under Ex.P12 and the date of subject
cheques, this court is of the considered opinion that it is a
fit case to impose fine of ₹9,00,00,000/- (Rupees Nine
Crore Only). Further, out of the said fine, it is just and
proper to award a sum of ₹8,99,90,000/- (Rupees Eight
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Crore Ninety Nine Lakhs Ninety Thousand Only) as
compensation to the complainant as provided under
Section 357(1) (b) of Cr.P.C and the remaining sum of
₹10,000/- shall go to State. In view of the findings
recorded above, I proceed to pass the following:
ORDER
Acting under Section 255(2) of Cr.P.C., both accused are held guilty and convicted for the offence punishable under Section 138 of Negotiable Instruments Act.
They are sentenced to pay a fine of ₹9,00,00,000/-. In default to pay fine, accused No.2 shall undergo simple imprisonment for a period of 18 months. Out of the realized fine amount, a sum of ₹8,99,90,000/- is ordered to be paid to the complainant as compensation and the remaining sum of ₹10,000/- shall be remitted to State.
Bail bonds executed by accused No.2 shall stand cancelled.
Office to supply a free copy of this judgment to accused.
(Dictated to the Stenographer, transcript computerized by her, revised corrected and then pronounced by me in the open Court on this the 5th day of July, 2025) ( SANTHOSH S.KUNDER ) XIV Addl. C.J.M., Bengaluru.
34C.C.No.50566/2023 KABC0C0021412023 ANNEXURES List of witnesses examined for the Complainant:
PW.1 Sandeep M.S List of documents marked for the Complainant:
Ex.P.1 & 2 Cheques Ex.P.1(a) & Signatures of the accused No.2 2(a) Ex.P.3 & 4 Bank endorsements Ex.P.5 Copy of legal notice dated 15.11.2022 Ex.P.6 to 8 Postal receipts-3 Ex.P.9 & Postal acknowledgment cards-2 10 Ex.P.11 Reply notice dated 30.11.2022 Ex.P.12 Registered Mortgage deed dated 10.09.2020 Ex.P.13 Power of attorney Ex.P.14 to Bank statements of complainant 16 Ex.P.15(a) Marked portions of Ex.P15 and 16 and 16(a) List of witness examined for the defence:
DW.1 M.V.Rayudu List of documents marked for the defence:
Ex.D.1 & 2 Bank statements of accused No.1 Ex.D3 Certified copy of order sheet in O.S.No.26155/2024 XIV Addl.C.J.M., Bengaluru.