Bangalore District Court
M/S Vaishnavi Souharda Credit ... vs Vijay D.N on 25 November, 2025
Digitally signed by
KABC030455522023 ANANDAPPA ANANDAPPA M
M Date: 2025.11.25
17:28:17 +0530
IN THE COURT OF THE XL ADDL., CHIEF JUDICIAL
MAGISTRATE, BENGALURU.
PRESENT: SHRI. ANANDAPPA M.
B.A.,LL.B.
XL ADDL. C.J.M., BENGALURU.
C.C.NO.25798/20243
DATED THIS THE 25th NOVEMBER, 2025
BETWEEN:
M/s. Vaishnavi Souharda
Credit Co-Operative Ltd.,
Head Office at No.12/84,
2nd Main Road, RBI Colony,
3rd Block East, Jayanagar,
Bengaluru - 560 011.
Reptd. by its CEO
Sri. K.R.Ravi.
...Complainant
(By Sri. C.S.P., Advocate)
AND:
Sri. Vijay D.N. S/o Nageshwara Rao.D
Aged about 35 years,
No.37, 3rd Cross, Haridasanagar,
BEML Layout, 3rd Stage,
Rajarajeshwarinagar,
Bengaluru- 560 098.
....Accused
(By Sri. S.D.P., Advocate)
Offence complained of Section 138 of N.I.Act.
Date of complaint 25.03.2023
Date of closing of evidence 28.06.2025
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KABC030455522023
Opinion of the Judge Accused is found guilty.
JUDGEMENT
This case is registered against the accused for the offence punishable under Section 138 of Negotiable Instruments Act (in brief N.I.Act for brevity).
2. The substance of the case of complainant :
It is the case of the complainant that the accused borrowed home loan of Rs.5,00,000/- by executing relevant documents. But the accused became defaulter. After several demands, the accused issued a post-dated cheque of State Bank of India, Nagarabhavi 2 nd Stage, Bengaluru, bearing No.835607 dated 21.02.2023 for Rs.6,30,352/- to discharge his liability.
3. The complainant presented the said cheque through his banker Vaishnavi Souharda Credit Co-Operative Ltd., Bengaluru for realization. It was dishonored for the reason funds insufficient on 22.02.2023. Thereafter, he issued legal notice to the accused through registered post on 01.03.2023 by calling upon him to make payment within 15 days. The said notice was served. The accused neither replied nor made payment of said amount. The accused knowingly issued a cheque with an intention to cause loss to complainant. The said amount is legally recoverable debt. Hence, complainant prays to punish the accused for the offence under Section 138 of N.I. Act.
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4. After receiving the complaint this Court scrutinized the documents and took cognizance for an offence under Section 138 of N.I. Act. Sworn statement of the complainant was recorded. He filed his sworn statement by way of affidavit. There were sufficient materials to constitute the offence. Hence, this Court issued process against the accused.
5. Secured the presence of accused. He was enlarged on bail. The substance of accusation was read over to accused in the language known to him, for which he pleaded not guilty.
6. As per the guidelines issued by the Hon'ble Apex Court in the case of Indian Bank Association Vs. Union of India & others reported in 2014(5) SCC 590 this Court treated the sworn statement of complainant as evidence. This Court also recorded the statement of accused under Section 313 of Cr.P.C. The accused denied the incriminating evidence of complainant and chose to lead defence evidence. The accused cross-examined the PW-1. Further, the accused examined himself as DW-1.
7. Heard both side. Perused the materials placed on record.
8. The following points arise for my consideration.
1. Whether complainant proves beyond all reasonable doubt that the accused towards discharge of his liability issued post-dated cheque bearing No.835607 dated 21.02.2023 for Rs.6,30,352/-
4 CC NO.25798/2023KABC030455522023 drawn on State Bank of India, Nagarabhavi 2nd Stage, Bengaluru in his favour and when he presented the said cheque for realization, it was dishonored for the reason funds insufficient in the account maintained by the accused?
2. Whether the complainant proves beyond all reasonable doubt that he issued demand notice to the accused, the accused did not repay the cheque amount within statutory period and thereby he has committed an offence punishable U/Sec.138 of N.I.Act?
3. What order?
9. My answers to the above points as under.
Point No.1 & 2 : In the Affirmative.
Point No.3 : As per final order, for the following:
REASONS
10. POINT NO.1 and 2 : These points are inter-linked with each other, to avoid repetition of facts and circumstances they are taken together for common discussion.
11. To substantiate the case against accused, the complainant relied on documents which were marked as Ex.P1 to
29. The PW-1 who is authorized person of complainant society reiterated the averments of complaint in his evidence. The Ex.P1 is cheque. Ex.P2 is memo issued by the banker. It shows that when complainant presented the Ex.P1 cheque for realization, it was dishonored on 22.02.2023 for the reason funds insufficient. Ex.P3 5 CC NO.25798/2023 KABC030455522023 is office copy of the legal notice. Ex.P4 is postal receipt. Ex.P5 is postal acknowledgment. Ex.P6 is postal track consignment. These documents show that complainant issued notice to the accused on 03.03.2023 i.e., within 30 days from the date of dishonor of cheque by calling upon him to pay cheque amount within 15 days. Despite service of notice, the accused had not paid the amount of cheque to the complainant within 15 days and also not issued reply notice. Ex.P7 is office copy of the legal notice. Ex.P8 to 10 are postal receipts. Ex.P11 and 12 are postal acknowledgments. Ex.P13 is office copy of the legal notice. Ex.P14 to 16 are postal receipts. Ex.P17 and 18 are postal acknowledgments. Ex.P19 is loan application. Ex.P20 is loan agreement. Ex.P21 is salary deduction authorization. Ex.P22 is on demand pro-note. Ex.P23 is authorization letter. Ex.P24 is Resolution. Ex.P25 is letter issued by the accused. Ex.P26 is statement of account. Ex.P27 and 28 are loan notices and Ex.P29 is Certificate U/Sec.65-B of Indian Evidence Act. The evidence and documents clearly indicate that the complainant complied the ingredients to constitute an offence punishable under Section 138 of N.I.Act.
12. The N.I. Act provides some presumptions in favour of complainant under Section 118 and 139 of N.I. Act. Under Section 118 of N.I. Act, there is a presumption that until the contrary is proved, every negotiable instrument was drawn for consideration. Even under Section 139 of N.I. Act, it is specifically stated that it shall be presumed, unless the contrary is proved, that the holder of 6 CC NO.25798/2023 KABC030455522023 a cheque received the cheque for discharge, in whole or in part, of any debt or other liability. However, it is well settled principle of law that the said presumption can be rebutted by accused by raising probable defence.
13. In order to rebut the presumption the accused has to cross-examine the complainant and also adduce his defence evidence. In the present case, the accused cross-examined the PW-
1. The complainant examined two witnesses by their names S.Ravi Kumar and Rajeev Rao as PW-2 and 3. The accused cross- examined them. The accused examined himself as DW-1. The accused admitted the issuance of cheque and signature in cheque. The main defence of accused is, he applied for loan to the complainant. He executed loan application, agreement and other documents. But the complainant had not disbursed the loan amount. Hence, question of repayment of loan does not arise. Further defence of accused is there is irregularity in loan proceedings. Hence, it is not legally enforceable debt.
14. In other to establish the same the counsel for accused cross-examined the PW-1. The PW-1 deposed in his cross- examination that he had not received relevant documents from the accused to give house construction loan. He further deposed that they disbursed loan amount to the saving bank account of accused. The accused borrowed loan to repair his house. The counsel for accused had put suggestion that at the time of execution of loan 7 CC NO.25798/2023 KABC030455522023 documents the complainant received empty cheque of accused for security to loan. The PW-1 denied the same as false.
15. In order to establish the loan transaction the complainant examined two witnesses by their names S.Ravi Kumar and Rajeev Rao as PW-2 and 3 who are sureties to the loan of accused. The PW-2 S.Ravi Kumar deposed that the accused brought him to the office of complainant along with Rajeev Rao to become sureties to his loan. When he went to the office of complainant the accused had put his signatures on loan documents. Thereafter, he and PW- 3 signed as sureties. The accused gave 4 empty cheques to the complainant. Thereafter, complainant received 2 cheques from him and another cheque from Sri. Rajeev Rao.
16. PW-3 Rajeev Rao deposed that PW-2 informed him that the accused is his relative and borrowing loan and requested to stand as surety. He agreed to become surety. When he went to the complainant bank the accused and PW-2 were present.
17. The accused examined himself as DW-1. He deposed that at the time of Covid Pandemic he need of money and met the Director of complainant by name Murali to borrow loan. He informed the accused to execute loan documents. He executed relevant documents and issued 4 empty cheques as security to loan. His relative and friends had put signatures as sureties. But complainant had not disbursed the amount up to 3 to 4 months.
8 CC NO.25798/2023KABC030455522023 When he asked about the same, Murali said that the meeting was not held, hence loan was not sanctioned. Thereafter, he got job at Bengaluru. He shifted his house from Uttarahalli to R.R.Nagar. Before few days his relative received a notice about loan payment. He asked to Murali about the same. Murali said that mistakenly it came to your relative and he will enquired about the same. He believed the words of Murali. Few days back police came to his house. Then he came to know about this case.
18. The counsel for complainant had cross-examined him. The DW-1 deposed that he completed his education of Diploma. He applied to the complainant to issue his account statement as per Ex.P25. His account number is 7158. The DW-1 further admitted that the complainant had account at IDBI bank. He paid Rs.1,50,000/- to the said account. The DW-1 further deposed that his brother borrowed loan from the complainant. Hence, he paid said amount. He further deposed that he had deposited said amount to the loan account of his brother. The DW-1 further deposed that the notice issued by the complainant was served on him. Then also he had not lodged complaint against the complainant. Earlier also he received notices from the complainant's relative which were served on him. He had not given any letter to the complainant by stating that he had not taken loan.
19. The complainant produced Ex.P19 loan application. Ex.P20 is agreement of loan. Ex.P21 is salary deduction 9 CC NO.25798/2023 KABC030455522023 authorization letter. Ex.P22 is on demand promissory note to show the loan transaction. The accused admitted these documents. But he contended that he executed these documents with intend to borrow loan. Ex.P26 is account statement of complainant's account. Ex.P27 is copy of notice issued to accused. Ex.P28 is copy of notice issued to brother of accused.
20. The complainant examined the sureties of loan of accused by their names as S.Ravi Kumar and Rajeev Rao as PW-2 and 3. They also admitted that they executed documents by standing as sureties to the loan of accused. The counsel for accused argued that the PW-2 and 3 had not seen the disbursement of loan amount to the accused. The complainant deposed in his cross-examination that he disbursed loan amount to the saving bank account of accused. The Ex.P25 which is letter issued by the accused shows that the accused applied for his statement of account to the complainant.
21. The counsel for complainant contended that in Ex.P19 loan application at 3rd page he mentioned about deposit of loan amount to the account of accused. In the present case the complainant or accused have not produced statement of account of said saving bank account. The Ex.P3 is office copy of legal notice. Ex.P4 to 6 are postal receipt, acknowledgment and track consignment. These documents clearly show that the notice issued by the complainant was served on accused. But the accused 10 CC NO.25798/2023 KABC030455522023 neither paid the amount of cheque nor issued reply notice by denying the facts.
22. The complainant contended that earlier also another cheque issued by the accused was dishonored and he issued notice in that regard and the said notice was served on accused. Ex.P7 is copy of notice issued by the complainant on 17.03.2022. Ex.P8 to 10 are postal receipts. Ex.P11 and 12 are postal acknowledgments. These documents show that the notice issued by the complainant were served on accused and PW-2. But the accused had not issued any reply notice by denying the facts. Even SBI has SMS service. Before considering the cheque for honour, SMS will be served on mobile number of account holder. Even he will get SMS about dishonor of cheque also. It shows that the accused has knowledge about these facts in the year 2022.
23. Ex.P13 is copy of notice issued by the complainant through his counsel dated 11.10.2021 for payment of balance of loan amount. Ex.P14 to 16 are postal receipts. Ex.P17 and 18 are postal acknowledgments. These documents show that those notices were also served on accused and sureties. But the accused has not paid loan amount. The accused had knowledge about the demand of loan amount.
24. These documents clearly show that the complainant was demanding to pay loan amount since 2021. The accused has 11 CC NO.25798/2023 KABC030455522023 knowledge about his loan since 2021. Though the complainant issued many notices to the accused he had not issued any reply notices or he had not issued any letters to the complainant by stating that he had not taken loan or he had not lodged complaint against the complainant for illegal demand. It shows that though the complainant had issued many notices by demanding payment of loan since 2021, though these notices were served on accused, the accused keep quite without taking any action. Even after long time also he had not lodged any complaint against the complainant. Even after service of summons in this case or after appearance in this case also he had not lodged any complaint against the complainant. Normal prudent man will not keep quiet if he had not taken loan and received notices of demand for payment of loan amount. Even after dishonor of cheque twice also he received notices, then also the accused had not taken any action against the accused. At this situation a prudent man will not keep quiet if he had not taken loan.
25. The accused contended that at the time of execution of loan documents the complainant received 4 empty cheques from him and misused a cheque by presentation for encashment. As per the case of the accused he applied loan application on 07.07.2020. But the complainant had not disbursed loan amount. But since 2020 till today the accused has not asked to the complainant to return his empty cheques. The DW-1 himself deposed that he completed his education of Diploma. Though become an educated 12 CC NO.25798/2023 KABC030455522023 person he had not asked to return his empty cheques. If accused had not borrowed loan, definitely he would have not left these cheques in the possession of complainant. After issuance of so many notices and even after dishonor of cheques also he had not taken any steps to take back his cheques and not issued any letter to the bank for stop payment. It is not a conduct of prudent man. It creates doubt about the version of accused.
26. The counsel for accused contended that the complainant had not produced any documents to show the disbursement of loan amount. Hence, accused is not liable to pay the amount mentioned in Ex.P1. The Ex.P26 is statement of account of complainant's bank. The said document clearly shows that on 27.08.2024 the accused paid Rs.10,000/- to the complainant. On 25.08.2024 the accused paid Rs.40,000/-. On the same day again he paid Rs.50,000/-. On 17.08.2024 the accused paid Rs.100/- and on the same day he paid Rs.50,000/- to the complainant.
27. The complainant contended that if accused had not borrowed loan from the complainant, question of payment of these amounts would not arise. He further contended that the accused admitted the loan transaction by repaying the said amount to the complainant. The accused contended that he paid said amount to the loan account of his brother. The DW-1 further deposed that his brother stated to pay said amount to the complainant and hence he paid. If it is true, the accused definitely obtained loan account 13 CC NO.25798/2023 KABC030455522023 details of his brother before paying said amount. But this account is not the loan account of his brother. This account belongs to the complainant. If the accused wanted to pay the said amount towards loan of his brother, definitely he would have deposited said amount to the loan account of his brother. Moreover, the complainant issued many notices to the accused since 2021. The accused had complete knowledge about the demand for repayment of loan. At this stage, the accused paid the said amount in the month of August 2024. At the time of said payment this case was already registered and accused appeared in this case through his counsel. The accused appeared in this case through his counsel on 15.07.2024. After appearance in this case the accused made these payments. It clearly shows that the accused paid said amount towards repayment his loan.
28. Before appearance in this case and before receiving any notices from the complainant, if the accused paid said amount to the account of complainant, then matter would be the different. But in the present case, the accused having knowledge about demand of repayment of his loan. At the time of said payment the accused had complete knowledge about dishonor of his cheque and also knowledge about filing criminal case against him. Then he paid the said amount to the account of complainant. It shows that the accused paid said amount with intend to repay his loan amount. As I already said that if he had intention to repay the loan 14 CC NO.25798/2023 KABC030455522023 of his brother, he would have paid said amount directly to the loan account of his brother.
29. The order sheet dated 10.12.2024 shows that on that day the counsel for accused submitted the intention of accused to settle the case. On 20.12.2024 both counsels submitted that both parties compromised the case and accused took time to pay amount till 06.01.2025. But thereafter, case was not settled. This conduct also shows the liability of accused towards payment. Moreover, after appearance in this case the accused made some payments to the complainant. If accused had not taken loan from the complainant, he will not pay said amount.
30. The notice issued by the complainant after dishonor of cheque was also served on accused. Then also the accused had not taken any action against the complainant and also not issued reply to the complainant. Without disbursing the loan, if complainant presented the cheque of accused, definitely accused would have initiated criminal proceedings against the complainant for misusing his cheque. But there is no evidence in this regard. The accused has not initiated any criminal proceedings against the complainant.
31. The accused further contended that the complainant issued home loan to the accused, but he had not received any documents from the accused in this regard. It is irregularity in loan proceedings. Hence, loan was not granted to the accused. The 15 CC NO.25798/2023 KABC030455522023 complainant contended that the accused borrowed loan to repair his house. When accused applied for loan there was Covid Pandemic in the society. At that time, due to threat of Covid Pandemic they had not received documents from the accused. If complainant failed to receive documents of property from the accused it will not affect on the case of complainant. Because, it is his risk to take action against the property. If he had no documents, he will not able to take action against the property of accused. In the present case, the issuance of cheque, signature in cheque and service of notices were admitted. Once the issuance of cheque and signature in cheque is admitted, the court shall draw presumption under section 118 and 139 of N.I.Act.
32. As per Section 118 of N.I. Act, the court shall presume that cheque was issued for consideration and as per section 139 of N.I.Act, the court shall presume that the accused issued said cheque for discharge of his liability unless the contrary is proved. In the present case the accused denied the disbursement of loan. But, he failed to prove the said fact. The Hon'ble Apex Court in decision published in (2019) 4 SCC 197 between Bir Singh v. Mukesh Kumar, clearly held by relying on another decision that mere denials are not enough to rebut the presumption. The accused has to prove by cogent evidence that there was no debt or liability. In the present case, the accused failed rebut the presumption.
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33. In another decision published in (2002) 1 SCC 234 between MMTC Ltd. and Another vs. Medchl Chemicals & Pharma (P) Ltd. and Another, the Hon'ble Apex Court held that when a statutory notice is not replied, it has to be presumed that the cheque was issued towards the discharge of liability. The Hon'ble Apex Court recently reiterated the same in a decision published in 2025 LiveLaw (SC) 952 (Crl. Appeal No.1755 of 2010) between Sanjabij Tari Vs Kishore S Borcar and another. In the present case, the demand notices issued by the complainant were served on accused since 2021. The notices of dishonor of cheques were also served on accused. The accused had not issued any reply notice to these notices. At this situation the court shall presume that the cheque was issued towards the discharge of liability. Moreover, the accused failed rebut the presumption.
34. The accused relied on decisions published in
a) (2002) 4 SCC 54 between Krishna Janardhan Bhat Vs Dattatraya G Hegde.
b) (2019) 5 SCC 418 between Basalingappa Vs Mudibasappa
c) (2006) 6 SCC 39 between M.S.Narayana Menon Vs State of Kerala and another
d) (2014) 12 SCC 539 between Indus Airways Pvt Ltd., Vs Magnum Aviation Pvt Ltd., and another
e) (2016) 10 SCC 458 between Sampelly Satyanaraya Rao Vs Indian Renewable Energy Development Agency Ltd.,
f) Decision of Hon'ble High Court of Karnataka, Bengaluru in Crl.R.P. No.932/2021 between D.B.Jatti Vs Naraidas Bodaram.
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35. I have gone through these decisions. But the ratio of these decisions are not applicable to the case on hand. Because the defence of accused is, he had not received loan amount. The accused failed establish the said fact. The complainant established the said fact and the accused failed to rebut the presumption.
36. Once the execution of Negotiable Instrument is either proved or admitted, then the Court shall draw a presumption to the effect that Negotiable Instrument has been drawn for valid consideration and legally recoverable debt was in existence. Hence, this court considered that there is legally recoverable debt and the accused issued Ex.P1 cheque in favour of complainant to discharge his liability. The accused failed to prove his burden. In the present case, the complainant proved that the accused has committed an offence punishable under section 138 of N.I. Act. Hence, I answer the point No.1 and 2 in the Affirmative.
37. Point No.3: Once the accused is found guilty for the offence punishable under section 138 of N.I.Act, he may be punished with imprisonment for a term which may be extended to two years or with fine which may be extended to twice of the amount of the cheque or with both. At this stage I would like to refer the decision published in 2011 Cr.L.J. 2593 between Koushalya Devi Massand Vs. Roopkishore Khore, wherein the Hon'ble Apex Court held that since offence under N.I.Act is civil wrong, the gravity of complaint can not be equated with the offence 18 CC NO.25798/2023 KABC030455522023 of Indian Penal Code and instead of jail sentence, impose of fine payable as compensation is found sufficient to metes ends of justice. Hence, it is just and proper to impose sentence of fine on the accused instead of sentence to send him to jail.
38. As per Sec.357(1)(b) of Code of Criminal Procedure, when Court imposes sentence of fine on the accused, may order the whole or any part of fine to be applied in the payment to any person of compensation for any loss or injury caused by the offence.
39. In the present case the complainant is society. The amount involved in this case is public money. The complainant suffered loss by the reason of the act of the accused. The accused issued cheque in the month of February, 2023. If the accused paid said amount on that time, certainly the complainant would have get some benefits by this time. Hence, it is proper to impose reasonable fine against the accused. Cheque amount is Rs.6,30,352/-. Imposing fine of Rs.9,00,000/- become reasonable fine. Hence, I proceed to pass the following:
ORDER Acting under Section 255(2) of Cr.P.C. the accused is convicted for the offence punishable under Section 138 of N.I.Act and sentenced to pay fine of Rs.9,00,000/- (Nine Lakhs only).
The accused is directed to pay the said fine amount on or before 30 days from today.19 CC NO.25798/2023
KABC030455522023 If fine is realized, Rs.8,90,000/- shall be paid to the complainant as compensation as per Section 357 of Cr.P.C. and remaining Rs.10,000/- shall be paid towards the State as fine for incurring prosecution expenses.
In default of payment of fine amount, the accused shall under go simple imprisonment for one year.
Bail bonds executed by the accused and surety are stand canceled.
The accused is entitled for free copy of this judgment U/Sec.363 of Cr.P.C. But today accused is not present before the court. Hence free copy of judgment is not supplied to accused. If accused voluntarily appears before the court, free copy will be served on accused. (Dictated to the stenographer, transcribed and typed by her, corrected by me and then pronounced in the open court on this 25th November, 2025).
(Anandappa.M) XL Addl. C.J.M, Bengaluru.
: ANNEXURE:
WITNESS EXAMINED ON BEHALF OF PROSECUTION:
P.W.1 : K.R.Ravi P.W.2 : S.Ravi Kumar P.W.3 : Rajeev Rao. WITNESS EXAMINED ON BEHALF OF ACCUSED: D.W.1 : Vijay D.N.
DOCUMENTS MARKED ON BEHALF OF COMPLAINANT:
Ex.P1 : Cheque Ex.P1(a) : Signature 20 CC NO.25798/2023 KABC030455522023 Ex.P2 : Memo Ex.P3 : Office copy of the legal notice Ex.P4 : Postal receipt Ex.P5 : Postal acknowledgment Ex.P6 : Postal track consignment Ex.P7 : Office copy of the legal notice Ex.P8 to 10 : Postal receipts Ex.P11 & 12 : Postal acknowledgment Ex.P13 : Copy of the legal notice Ex.P14 to 16 : Postal receipts Ex.P17 & 18 : Postal acknowledgments Ex.P19 : Loan application Ex.P20 : Loan agreement Ex.P21 : Salary deduction authorization Ex.P22 : On demand pro-note Ex.P23 : Authorization letter Ex.P24 : Copy of resolution Ex.P25 : Letter of accused Ex.P26 : Statement of account Ex.P27 & 28 : Loan notices Ex.P29 : Certificate U/Sec.65-B of Indian Evidence Act. DOCUMENTS MARKED ON BEHALF OF ACCUSED: -Nil- (Anandappa.M) XL Addl. C.J.M, Bengaluru.