Bangalore District Court
Ms. Salora International Ltd vs Ms. Vaibhav Systems And Networks Ltd on 9 February, 2026
KABC030443292010
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL
MAGISTRATE, AT BANGALORE CITY
Dated this the 9th day of February 2026
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.No.43541/2010
Complainant : M/s Salora International Limited
D-13/4, Okhla Industrial Area
Phase II , New Delhi
Through
Mr.Mukesh Chandra Aggarwal,
Attorney.
(By PBA-Advocate )
V/s
Accused : Ms.Vaibhav Systems and Networks
No.1, Airport Road
416, 4th Floor, Carlton Towers
Bangalore 8.
(By JHK - Advocate )
Plea of accused: Pleaded not guilty
Final Order: Accused is Convicted.
Date of judgment : 09-02-2026
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C.C.No.43541/2010
JUDGMENT
The complainant has filed the complaint under Section 200 of Criminal Procedure Code against the accused for the offence punishable under Section 138 Negotiable Instruments Act.
2. The brief case of the complainant is as under:
That the complainant is a Pubic Limited Company engaged in the business inter alia of manufacturing and marketing Colour, Black and white Television sets, Computers, Colour Monitors, Fax Machines and other electrical and electronic items under their known trade mark Salora. The accused has been purchasing from the complainant and made payment from time to time. The complainant has been maintaining current and running account relating to the transactions with the accused and payments made by the accused were credited to the said account. That towards debt/liability relating to purchases made on credit, the accused issued one cheque bearing No.138832 dated 05.09.2008 for Rs.62,13,360/- drawn on Bank of India, Bangalore in favour of the complainant. The complainant presented the said cheque for collection through its banker i.e. HDFC Bank, Bangalore and said cheque returned dishonored with remarks "Payment Stopped by the Drawer" on 12.09.2008. Therefore the 3 C.C.No.43541/2010 complainant got issued legal notice dated 01.10.2008 calling upon the accused to pay the amount covered in the cheque.
Inspite of service of notice, the accused failed to pay the claim amount to the complainant within the statutory time. Therefore, the accused has committed the offence under Section 138 of Negotiable Instruments Act. Therefore the complainant has filed the complaint.
3. The complainant initially filed the complaint before the Metropolitan Magistrate at New Delhi. Later said court has returned the complaint for presentation before the jurisdictional court for want of territorial jurisdiction. The complainant has obtained return of the complaint from the said court and represented the complaint before this court. On the basis of Private complaint filed by the complainant, this court taken cognizance of offence and registered the case in PCR No.30662/2010 and recorded sworn statement of the representative of the complainant as PW 1 and got marked 8 documents as Ex.P 1 to P 8. This court upon considering the material on record issued process under Section 204 of Cr.P.C by registering the criminal case. In response to the process issued by this court, the accused appeared before this court and he is released on bail. The copy of the complaint is served to the 4 C.C.No.43541/2010 accused along with the summons as contemplated under Section 207 of Criminal Procedure Code.
4. The substance of the acquisition as provided Section 251 of Cr.PC is read over to the accused and his plea is recorded. The accused has pleaded not guilty and claimed to be tried.
5. To prove the case complainant examined its authorised officer as PW 1. But the PW 1 not appeared for cross examination and for prosecuting the case. Hence the case was dismissed for non prosecution by this court. This case is restored on board as per the orders passed by the Hon'ble High Court of Karnataka in Crl.A No.651/2015 dated 24-02-2025 and presence of the parties secured. But PW 1 has not appeared for cross examination even after its restoration. The complainant filed memo to discard evidence of PW 1. Hence, evidence of PW1 is discarded. Later the complainant has substituted the representative and examined a witness as PW 2 and got marked 36 documents as Ex.P.1 to Ex.P.36. The evidence of PW 2 is testified by cross examination by the accused. After the evidence of the complainant witnesses the incriminating circumstances in the evidence of the complainant read over to the accused and statement of the accused under 5 C.C.No.43541/2010 Section 313 of Cr.P.C recorded. The accused has denied the incriminating circumstances as false. The accused has not adduced his evidence and submitted no evidence from his behalf.
6. Heard arguments of learned counsel for the complainant and learned counsel for the accused and perused the material on record, written submissions and the precedents relied by both parties.
7. On the basis of the material on record the following points arise for the consideration of this court :
1. Whether the complainant proves beyond all reasonable doubt that the accused has issued the cheque bearing No.138832 dated 05.09.2008 for Rs.62,13,360/- drawn on Bank of India, Bangalore in favour of the complainant towards discharge of legal liability and it is dishonoured on its presentation on 08.09.2008 for the reason "Payment stopped by drawer" and inspite of service of demand notice dated 01.10.2008 the accused has failed to repay the amount within statutory period and thus the accused committed an offence punishable under Section 138 of Negotiable Instruments Act ?
2. What Order or Sentence?6
C.C.No.43541/2010
8. The findings of this court to the above points are as follows:
Point No.1 In the Affirmative,
Point No.2 As per final order
for the following :
REASONS
9. POINT NO.1: To prove the case the authorized representative of the complainant company is examined as PW-2. The PW2 in his evidence has reiterated the averments made in the complaint. To prove the legal status of the complainant company the complainant has produced the true copy of the Certificate of Incorporation as Ex.P.1. The accused has not disputed the fact that the complainant is the public limited company. The complainant has produced the true copy of the Board Resolution in favour of PW 1- Ramesh Kumar as Ex.P2 and the copy of the Board Resolution in favour of PW 2 as Ex.P.3. The accused has disputed authority of PW 2 to represent the complainant company. The accused has not disputed passing of the board resolution by the Board of Directors authorizing PW 2 to represent the complainant company in legal matters. The accused has disputed the competency of PW 2 to depose on behalf of the complainant. 7
C.C.No.43541/2010
10. The PW 2 in his evidence affidavit deposed that he is personally aware of the transactions with the accused and also obtained information regarding the transactions from the records available with the complainant. In the cross examination of PW 2 he has deposed that he is not having personal knowledge about the transactions with the accused and he is deposing about the transactions based on the documents maintained in the complainant company. He has deposed that he has not made enquirers with the persons who are connected with the accused from the complainant company and its ex-employees working in bengaluru branch office. He has also deposed that at the time of alleged transactions with the accused, he was working in the main office of the complainant at New Delhi. The transactions are held with the accused from the branch office of the complainant at Bengaluru. The PW 2 also in is cross examination deposed that the materials are supplied to the customers from respective branches as per their instructions. He has also deposed that he is not having idea about the terms of supply of materials to the accused. Thus relying on these statements made by PW 2 in his cross examination, the accused has submitted that PW 2 is not having personal knowledge about the transaction with the accused. Therefore, the accused has contended that the PW 2 is 8 C.C.No.43541/2010 not competent to depose on behalf of the complainant company and his evidence is not credible.
11. In support of the arguments the accused has relied on the decision of Hon'ble Supreme Court of India reported in (2015) 12 SCC 203 between A.C.Narayanan Vs State of Maharashtra. In this decision Honble Supreme Court held that the General Power of Attorney holder can be the competent witness for the complainant but he should have personal knowledge about transactions between the complainant and accused. In the said case before the Honble Supreme Court, the Deputy General Manager of the company has given his evidence without having been authorized by the Managing Director or the Board of Directors and he not had personal knowledge about the transactions in the said case. In this case, the PW 2 is not the Power of Attorney holder. The PW 2 is the employee of the complainant company authorized by the Board of Directors. The Board of Directors is the authority to represent the company incorporated under the Companies Act. They can delegate their powers by passing the resolution in the board meeting. Therefore, the PW 2 being authorized person to represent the company by the Board of Directors, he is competent to depose on behalf of the complainant company. It 9 C.C.No.43541/2010 is also pertinent to note that in the cross examination of PW 2, it is elicited that they have closed their branch office at Bangalore and none of the employees working at the time of transactions with the accused are presently working in the complainant company and their presence cannot be secured by the complainant. Therefore, only on the fact that PW 2 has deposed that he is not involved in the business transaction with the accused and he is deposing only on the basis of the documents maintained in the office, itself is not a reason to hold that PW 2 is not competent to depose on behalf of the complainant and represent the complainant company. When non of the employees actually involved in the transactions with the accused are not available to examine before the court, the complainant can produce best evidence available with it. The complainant company being the public limited company every transactions should be documented. The PW 2 has deposed that he is deposing on the basis of documents he is deposing before the court. Therefore, the contention of the accused that the PW 2 is not competent to represent the complainant and prosecute the case cannot be accepted.
12. The PW 2 has deposed that the complainant is engaged in the business inter alia of manufacturing and marketing Colour 10 C.C.No.43541/2010 and Black and white Television sets, Computers, Colour Monitors, Fax Machines and other electrical and electronic items under their known trade mark Salora. The accused has been purchasing from the complainant and made payment from time to time. The PW2 has deposed that the complainant has been maintaining current and running account relating to the transaction with the accused and the payment made by the accused in respect of the goods supplied to the accused were credited to the said account of the accused.
13. The Pw 2 has deposed that towards discharge of the legal liability towards purchase of the goods the accused has issued cheque bearing No.138832 dated 05.09.2008 for Rs.62,13,360/- drawn on Bank of India, Bangalore in favour of the complainant. The complainant has presented said cheque for collection through its banker i.e HDFC Bank, Bangalore and said cheque returned dishonored with remarks "Payment Stopped by the Drawer" on 12.09.2008. The complainant has produced the statement of accounts maintained by them in respect of the transaction with the accused as Ex.P.12. The complainant has also produced the original cheque issued by the accused as Ex.P.4. The dishonor memos are produced as Ex.P.5 & 6 . The PW 1 has deposed that they have issued 11 C.C.No.43541/2010 demand notice dated 01.10.2008 to the accused through DTDC courier and cargo limited on 03.10.2008. The PW 2 has deposed that the complainant has not received the unserved envelope or proof of delivery from DTDC Courier. The notice is issued to the correct address of the accused. Therefore, he has deposed that the notice is deemed to be served on 06.10.2008. Evidencing the same, the complainant has produced the office copy of the legal notice as Ex.P.7 and the courier receipt as Ex.P.8. The complainant has contented that in view of the provision of Section 27 of the General Clauses Act, the notice is deemed to be served on the accused. The PW 2 has also deposed that inspite of service of notice, the accused failed to make payment and thus committed an offence.
14. Now it is proper to consider whether the complainant has complied statutory requirements for constitution of the offence. The essential ingredients of section 138 and 142 of Negotiable Instruments Act to be complied are i) drawing of the cheque by the accused ii) presentation of the cheque to the bank with in the period of three months, iii) returning of the cheque unpaid by the drawee bank iv) giving notice in writing to the drawer of the cheque demanding of the payment of cheque amount with in the period of 30 days, v) failure of the drawer to make 12 C.C.No.43541/2010 payment within the period of 15 days after receipt of the demand notice and v)Presentation of the complaint within a month by the complainant after expiry of 15 days of service of notice to the accused. Therefore it is proper to consider whether the statutory requirements for constituting the offence under Section 138 of Negotiable Instruments Act is complied by the complainant.
15. The cheque is dated 05.09.2008. It is dishonored on 12.09.2008 . The demand notice is issued on 03.10.2008 and it is deemed to be served on 06.10.2008. The complainant is filed before Metropolitan Magistrate at New Delhi on 06.11.2008. Thus all the statutory requirements under Section 138 and 142 of N I Act have been complied. The accused has not denied that the cheque is drawn from the account of the accused. He has also not denied the signature in the cheque. The accused has also not denied issuance of the cheque to the complainant. The accused has also not denied the fact that he has issued stop payment instructions to the banker and the cheque is dishonoured for the same reason.
16. It is now pertinent to consider the fact that this complaint is initially filed before the Metropolitan Magistrate at New Delhi. 13
C.C.No.43541/2010 The records shows that the Metropolitan Magistrate at New Delhi has ordered to be returned by the Metropolitan Magistrate, New Delhi vide order dated 17.02.2010. The order specifies that "Accordingly, complaint be returned for its re- presentation to the proper court with necessary endorsements. The complainant is granted one month time to receive the complaint by moving an appropriate application, failing which the file shall be consigned to record room after due compliance". The complainant has re-presented this complaint before this court on 12.08.2010 and this court has taken cognizance on the same day and proceeded with the case.
17. The accused has raised the objection that the complainant has not re-presented the complaint within the stipulated time, therefore the complaint is bad under law. In support of his arguments, the accused has relied on the decision of the Honble Supreme Court reported in (2014) 9 SCC 129 between Dashrath B Rathod Vs State of Gujarath and Ors. In this decision the Honble Supreme Court has laid down certain guidelines about the territorial jurisdiction of the courts to entertain the complaint. It is held that the complaint shall be filed before the court from which bank account the cheque was drawn. In Para No.22 of the said judgment the court has ordered for return of 14 C.C.No.43541/2010 the complaint for filing before proper court and if the complaints are filed / refiled within 30 days of their return, they shall be deemed to have filed within the time prescribed by law, unless the initial or prior filing was itself time barred. Thereafter the provisions of Sec.142 (b) of N I Act was amended by the Legislature and as per the amended provisions of Sec.142 (b) of N I Act, the complaint shall be fled within the jurisdiction of the court where the account is maintained by the complainant if the cheque is presented for collection though an account. In this case the cheque is drawn from Bank of India, at Bangalore. The cheque is also presented for collection through the account of the complainant at HDFC Bank, Bangalore. Therefore, this court is having territorial jurisdiction to entertain the complaint.
18. With regard to delay in re-filing of the complaint, the accused has vehemently contended that the complainant has not re-presented the complaint with the time allowed by the court in its order or with in the time stipulated by the Hon'ble Apex Court in Dashrath B Rathod case i.e. with in 30 days of return of the complaint. The accused has contended that the complaint is ordered to be returned on 17-02-20210, but it is re-presented on 12-08-2010. In the cross examination of PW 2 it 15 C.C.No.43541/2010 is elicited that the complainant applied for certified copy of order on 10-06-2010 and he obtained certified copy on 22-06- 2010. The PW 2 has also deposed that he do not know when they have received return of the complaint from Delhi court. Thus the accused has contended that there is delay of 6 months in representing the complaint by the complainant. The complainant has not filed any application for condonation of delay in refiling of the complaint. Therefore it is the contention of the accused that the complaint is filed with delay is barred by limitation. Now it is pertinent to take note that in the order for return of complaint the court has passed specific order that 'the complaint shall be returned with the necessary endorsements. ' The Original complaint returned from Delhi court itself re- presented before this court. In the said complaint there is no endorsement of the court is found as per the order passed by the court. Therefore in the absence of such endorsement in the complaint, by the Metropolitan Magistrate of New Delhi, about date of return of the complaint, it cannot be presumed that the complaint is filed with delay. The complaint shall be filed before this court with in 30 days of obtaining of return of the complaint. It cannot be interpreted that the complaint shall be re-presented with in 30 days of passing of orders for return of the complaint. The accused has also not produced any metrical 16 C.C.No.43541/2010 before this court, as to when the complainant has obtained return of the complaint from the court of Metropolitan Magistrate, New Delhi. Therefore without having any records or endorsement in the complaint as to when the complaint is returned to the complainant, for presentation before the jurisdictional court, it cannot be inferred that the complaint is filed with delay and the representation of the complaint is bared by time.
19. The accused has also disputed service of the demand notice. The PW 2 has deposed that he has sent the demand notice through DTDC courier service and he has not received unversed envelope or proof of delivery. Therefore PW 2 has deposed that the notice is deemed to be served on the accused. In this regard in the cross examination of PW 2, it is elicited that " In Ex.P.8 courier receipt the address of the accused Vybhav Systems and Network, #1, Airport road, 416, Bangalore. It is not true to suggest we have not given complete address of the accused to the courier company while sending notice to the accused, Witness volunteers that in the envelope we have mentioned full address of the accused. I have not produced proof of delivery of notice sent through courier. It is not true to suggest that Ex.P.7 notice is not served on the accused. It is not true to suggest 17 C.C.No.43541/2010 either we have not sent Ex.P.8 courier nor it is sent to the wrong address of the accused. It is true to suggest that we are not having any document of proof to show that notice is delivered to the accused through courier" . It is pertinent to note that the accused has not disputed the address mentioned in the Ex.P.7 demand notice. The address mentioned in Ex.P 7 is M/s Vaibhav Systems and Networks, No. 1, Airport Road, 416, 4 th Floor, Carlton Towers, Bangalore - 8. Ex.P.8, the courier notice shows that the demand notice is sent to the accused through DTDC courier service to the same address. The PW 2 has admitted that they have not sent the demand notice through registered post. They are also not having proof of delivery for service of demand notice.
20. The accused in support of his contention has relied on the decision of the Hon'ble Supreme Court reported in (2025)SCC Online SC 2906 (H.S.Oberio Buildtech Pvt.Ltd. Vs MSN Woodtech) in this decision Hon'ble Supreme Court has held that "Once the statute prescribes mandatory time for filing the complaint there cannot be any deviation from the same, except when an application accompanying the complaint is filed seeking condonation disclosing the reasons for delay and even then it is obligatory on the part of the court to take note of such filing beyond limitation and to consider the reasons disclosed 18 C.C.No.43541/2010 independently and to come to judicious conclusion that in that facts and circumstances of that case condonation is justified".
By relying on this decision the learned counsel for accused submitted that compliance of statutory requirements under Section138 of N I Act and the timeline fixed is mandatory and it is not merely directory. Therefore the learned counsel for the accused submitted that compliance of requirement of service of notice is mandatory for constitution of offence. In the absence of proof for service of demand notice, the statutory requirements not complied and no offence is constituted.
21. The accused has also relied on the decision of the Hon'ble Supreme Court in Assistant Commissioner, Assessment, Bangalore and Ors Vs Velliappa Textiles Ltd, and Anr. reported in 2003 (11) SCC 405. By relying on this decision learned counsel for the accused has submitted that mere issuance of notice under statutory provision may not be sufficient in all the cases. The delivery of notice to the accused is essential to fulfill the requirement of natural justice. It is necessary to note that this decision is rendered by the Honble Apex Court by interpreting the provisions of the Income Tax Act and 19 C.C.No.43541/2010 Prevention of Corruption Act. This is not in relation to the provisions under Sec.138 of N I Act.
22. Per contra, the learned counsel for the complainant has placed reliance on provision of Sec.27 of the General Clauses Act and Sec.114 of Indian Evidence Act. Section 27 of the General Clauses Act reads as under -
27. Meaning of service by post - Where any central Act or regulation made after the commencement of this Act, authorises or requires any document to be serve by post, whether the expression serve or either the expression give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post a letter containing the document and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.
23. Thus by relaying on these provisions of law the learned counsel for the complainant submitted that the accused has not denied the address mentioned in Ex.P.7, the notice. The address mentioned in Ex.P 7 legal notice is the correct address of the accused. The complainant has posted the notice through DTDC courier services to the correct address of the accused. This fact 20 C.C.No.43541/2010 is evidenced from the courier receipt produced as Ex.P8. He has submitted that the complainant has not received return of unserved consignment. Therefore, it is deemed that the demand notice is duly served on the accused.
24. To substantiate his contention, the complainant has relied on the decision of the Hon'ble Supreme Court reported in 2007 (6) SCC 555 (C.C.Alavi Haji Vs Palapetty Mohammed and Anr) In this decision, at para 14, it is held that -
"Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business."
In para 15, of the judgment it is held that -
"Insofar as the question of disclosure of necessary particulars with regard to the issue of notice in terms of proviso (b) of Section 138 of the Act, in order to enable the Court to draw presumption or inference either 21 C.C.No.43541/2010 under Section 27 of General Clauses Act or Section 114 of the Evidence Act, is concerned, there is no material difference between the two provisions. In our opinion, therefore, when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of Issue of notice in terms of clause b of Proviso to Section 138 of the Act stands complied with."
In para 17 of the judgment, the Hon'ble Apex Court has also held that -
"Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons. By receiving a copy of complaint with the summons and therefore the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from a court, along with copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of General Procedure Act and Section 114 of Evidence Act."
25. Thus, upon considering the principles laid down in the above-referred decisions and upon considering the argument addressed by both the parties, it is clear that the complainant 22 C.C.No.43541/2010 has issued the demand notice within the statutory period of 30 days of receipt of the information about dishonour of the cheque to the accused by DTDC Courier to the correct address of the accused. The accused has not disputed the address mentioned in the legal notice Exhibit P7 or in the courier receipt as Exhibit P8. Therefore it is deemed that the notice issued to the correct address of the accused and it is served on the accused. The accused without proving the contrary that the notice is actually not delivered to him, cannot contend that the complainant has not produced proof of delivery and hence service of notice is not proved by the complainant. As held in the above referred decision, the Hon'ble Supreme Court has also held that for any reason if the accused is contented that notice is not served on him, he is having option to make the payment of the cheque amount within 15 days of service of the summons along with the copy of the complaint and later he is not having right to contend that notice is not served on him. Therefore Upon considering material record, the notice is issued by the complainant to the correct address of the accused, and hence it is deemed that the notice is duly served on the accused. Disprove the statutory presumption under Section 27 of General Clauses Act, the accused has not produced any contrary evidence before this court. Therefore, the complaint is having 23 C.C.No.43541/2010 aid of the statutory presumption. Therefore the contention of the accused that the demand notice is not served on him and there is no compliance of requirements of Section 138 of Negotiable Instruments Act cannot be accepted.
26. Therefore, for the above discussion, this court holds that the complainant has complied all the statutory requirements for constitution of offence under Section 138 of Negotiable Instruments Act. The accused has not denied that the cheque is drawn from the account of the accused firm and not denied signature in the cheque. The accused has also not disputed issuance of cheque to the complainant. Therefore, the complainant is entitled for presumption under 118 and under Section 139 of Negotiable Instrument Act. The provisions of Section 118 provides for presumption as to negotiable Instruments which reads as follows -
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, was accepted, indorsed, negotiated or transferred for consideration; (b) as to date - that 24 C.C.No.43541/2010 every negotiable instrument bearing a date was made or drawn on such date; (c) .................. The provisions of Section 139 of Negotiable Instrument Act reads as under:-
139- Presumption in favour of holder - It should be presumed, unless the contrary is 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.
27. Hon'ble Supreme court in a decision reported in (2010) 11 SCC 411 between Rangappa V/s Sri Mohan has held that -
The presumption mandated by Section 139 of the act does indeed include the existence of a legally enforceable debt or liability.
It is also observed that Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instrument. It is also held that in such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant caused cannot be expected to discharge an unduly high slandered or proof.
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28. The complaint has also relied on the decision of Hon'ble Supreme Court reported in 2022 SCC Online SC 1131 between P. Razia v. Abdul Nazir and another. In this decision, Hon'ble Supreme Court has held that -
"As per Section 139 of the NI Act, it shall be presumed, unless the contrary is proved, that the holder of the cheque received the cheque of the nature referred to In Section 138 for discharge, in whole or in part, of any debt or other liability. Therefore once the initial burden is discharged by the complainant that the cheque was issued by the accused and the signature and the issuance of the cheque is not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that cheque was not for any debt or other liability. The presumption under Section 139 of the NI Act is a statutory presumption and therefore once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the complainant / holder of the cheque, in that case, it is for the accused to prove the contrary."
29. The learned counsel for the accused has relied on the decision of Hon'ble Gujarath High Court in Dilipbhaichimanbhai Patel Vs Haji Shabbirabhai Hasanbhai Hasanbhai Vora, wherein it is held that -
"Under Section 139 of the Act, presumption is in favour of the holder of cheque that the cheque was issued for 26 C.C.No.43541/2010 discharge in whole or in part of any debt or other liability unless contrary is proved. Therefore, presumption is rebuttable presumption. It is settled proposition that standard of proof to rebut the presumption is that of preponderance of probabilities. To disprove the presumption the accused has to bring on record such facts and circumstances upon consideration of which the Court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would under the circumstances of the case act upon belief that it did not exist. The accused is required to bring on record something which is probable for getting the benefit of shifting the onus of proving to the complainant. If the accused is able to raise probable defence which creates doubts about existence of legally recoverable debt, prosecution can fail. It is also settled proposition that in order to raise probable defence the accused is not required to enter into witness box or lead evidence, it can rely on the evidence produced by the complainant."
30. The Learned counsel for the accused has also relied on the decision of Hon'ble Supreme Court of India reported in 2023 LiveLaw (SC) 46 between Rajaram through Lrs Vs Maruthachalam through LRS , where in The Hon'ble Supreme Court, by relying on the decision in Basalingappa versus Mudibasappa , has held that -
27
C.C.No.43541/2010 "It can thus be seen that this Court has held that once the execution of cheque is admitted, Section 139 of the NI Act mandates a presumption that the cheque was for the discharge of any debt or other liability. It has however been held that the presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. It has further been held that to rebut the presumption, it is open for the accused to rely on the evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. It has been held that inference of Preponderance of probabilities can be drawn not only from the material brought on record by the parties but also by reference to the circumstances upon which they rely."
31. Therefore, in view of the principles laid down in these decisions, once the complainant has discharged his initial burden, the onus is on the accused to rebut the presumption under 118 and 139 of Negotiable Instruments Act. The accused shall with probable evidence rebut the presumption. Till the accused rebut the presumption, the complainant need not prove existence of debt with cogent evidence. Only if the accused able to rebut the presumption, the complainant shall prove the case with cogent evidence.
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32. In this case, the accused has not issued any reply to the demand notice. The accused has also not stepped into the witness box to lead his evidence. The accused need not step into the witness box to prove his defence. He is having right to remain silent. The accused can elicit the materials in the cross- examination of the complainant witnesses and prove his defence with probable evidence. The standard of proof required to rebut the presumption, is governed by Preponderance of probabilities. Therefore if the accused is able to establish that the case pleaded by the complainant about existence of legally recoverable debt is not true or it is doubtful, it is sufficient evidence by the accused to rebut the presumption.
33. It is pertinent to note that in the entire cross-examination directed by the accused to the PW 2 he has not denied the the business transactions with the complainant and also not denied the contention of the complainant that the accused has purchased various materials from the complainant. The accused has also not denied that he has placed the purchase orders with the complainant and the complainant has supplied the material under various invoices to the accused. The accused in the statement under Section 313 of CrPC has stated that they have not purchased any goods from the complainant and brand 'Salora. They have purchased Assur computers and laptos from 29 C.C.No.43541/2010 C&F of the complainant. But no such succession is made to PW 2 about the statement of the accused under Section 313 of Cr.P.C. The complainant has produced the statement of accounts as Exhibit P12. With regard to Exhibit P 12, in the cross-examination, the accused has elicited that the complainant has not produced balance confirmation letter from the accused, confirming the balance amount in the statement of accounts as per Exhibit P 12. The PW1 has denied the suggestion that the statement of accounts produced as Exhibit P 12 is false document. It is also suggested that the complainant has not proved supply of goods to the accused, but no suggestion is made that complainant has not supplied the products under the invoices refereed in Ex.P 12. The accused has not brought on record any material evidence to show any discrepancy in the statement of accounts produced by the complainant as Exhibit P12. The complainant has produced certified copy of the invoices before this court along with memo dated 10.09.2025. But some of the invoices are not legible. This Court has only marked some of the invoices which are legible as Exhibit P16 to Exhibit P36. The other invoices are not marked in evidence. In the cross-examination, the accused has elicited that there is no signature of the accused in Exhibit P16 to Exhibit P36 invoices. But PW2 has deposed that the official of 30 C.C.No.43541/2010 the accused has put his signature with the seal of the company on the invoices. He has also deposed that he is not having document to show that the official who signed the invoice is the employee of the accused. But it is pertinent to note that the accused has not made any suggestion that no goods are supplied by the complainant inrespect of Ex.P 16 to P 36 invoices or inrespect of other invoices refered in Ex.P 12 statement of accounts. In the cross-examination of PW1, it is also elicited that the total value of Exhibit P16 to Exhibit P36 invoices is ₹ 30,28,766/-. The PW1 has deposed that the total value of all the invoices due from the accused is ₹ 1,18,26,000/-. But the other invoices are not legible and he cannot say the value of such invoices and details of the goods supplied in the said invoices. But on crucial reading of the cross-examination directed to PW2, it is pertinent to note that the accused has not put any suggestion to PW2 that no goods are supplied to the accused by the complainant under Exhibit P16 to Exhibit P36 invoices or other invoices produced by the complainant which are not marked as Exhibits and the invoices referred in ExP 12 statement of accounts. The accused has also not put any suggestion to PW2 to the effect that the various invoices referred in Exhibit P12, statement of accounts are not raised against the accused or no material is supplied to the 31 C.C.No.43541/2010 accused under the invoices referred in Exhibit P12, statement of accounts. Therefore, in view of absence of denial by the accused, about the correctness of Exhibit P12 statement of accounts or eliciting any discrepancies in the entries made in Exhibit P12 statement of accounts by way of cross-examination, there is no reason to doubt the correctness of Exhibit P 12 statement of accounts. The mere suggestion of the accused that the Exhibit P 12 statement of accounts is false document is not sufficient in view of the fact that the complainant has not disputed the transactions held with the complainant.
34. It is also pertinent to note that the accused has not denied the transactions with the complainant. It is the contention of the accused that Accused was not due to pay any amount to the complainant and there is not liability towards complainant. There is no proof produced by the complainant to show that accused has agreed to pay the due amount. It is also contention of the accused that as there is no liability, therefore he has given stop payment instructions to the banker.
35. As discussed above, in the above-referred decisions, the Hon'ble Apex Court has very clearly held that the complainant cannot be called upon to prove existence of legally recoverable debt with cogent evidence unless the accused is able to rebut 32 C.C.No.43541/2010 the presumption under Section 118 and 139 of NI Act and it is statutory presumption. But on going to the cross-examination directed to PW 2 by the accused, entire focus of the accused to establish before this court that the complainant has not proved that goods are supplied under the invoices raised by them and the complainant has not proved that the accused has acknowledged the debt or issued any confirmation letter admitting the outstanding due amount under Exhibit P 12 statement of accounts. In view of the presumptions under Sections 118 and 139 of NI Act, till the accused is able to rebut the presumption under Section 139 of the Act, the complaint cannot be called upon to prove the transactions and existence of debt by adducing cogent evidence. It is also settled principle of law that mere denial of the liability itself is not sufficient to rebut the presumption. The accused should bring on record some probable evidence. Therefore, as the accused has not brought on record any material denying the supply of the goods under the invoices referred in Exhibit P12, and not bringing on record any discrepancy in the statement of accounts produced by the complainant as Exhibit P12, only for the reason that the complainant has not produced all the invoices or proof for delivery of goods or acknowledgment and confirmation of the 33 C.C.No.43541/2010 outstanding amount by the accused, this itself will not create a reasonable doubt about the existence of the debt.
36. It is also pertinent to note that in the entire cross- examination directed to PW2, the accused has not denied issuance of cheque towards discharge of the liability. The only aspect elicited in the cross-examination of PW2 is that the handwriting of the name of the payee and the handwriting of the amount written is of different persons. The accused has not suggested anything about the circumstances in which cheque is issued to the complainant. In the course of arguments, Learned counsel for the accused has submitted that it is not disputed by the accused that he had no business transactions with the complainant and in the course of transactions, the accused has issued blank cheque. But the accused has disputed the existence of debt as claimed by the complainant. The learned counsel for accused has submitted that the accused has discharged the burden when the complainant has admitted that the handwriting in the cheque is written by different persons.
37. In this regard, the lender counsel for the complaint has relied on the decision of Hon'ble Supreme Court of India reported in 2019 4 SCC 197 between Beer Singh versus Mukesh Kumar. In this decision Hon'ble Supreme Court has held that - 34
C.C.No.43541/2010 "A meaningful reading of the provisions of the Negotiable Instruments Act, including, in particular, Sections 20, 87 and 139, makes it ample clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to reverse 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 filed in 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."
38. The PW2 in his evidence very clearly deposed that the accused, towards discharge of his legally liable debt, towards purchase of the goods from the complainant, has issued the cheque in question. This statement of PW2 has not been denied by the accused. No suggestion is put to PW2 to the effect that the accused has issued blank signed cheque to the complainant. The accused has also not suggested when he has issued the cheque in question to the complainant, is it prior to commencement of the transactions with the complainant, or towards repayment of the existing debt in such circumstances. The contention of the accused that the PW2 has admitted that the handwriting in the cheque is of the different persons itself will not sufficient to deny the issuance of cheque towards payment of existing debt. Therefore in the absence of any material is placed on record why cheque is issued to the 35 C.C.No.43541/2010 complainant, if it is not issued for discharge of liability, mere deference in the handwriting itself will not absolve criminal liability under Section 138 of NI Act. Therefore, it can be safely concluded that the accused has admitted that the cheque in question is issued towards discharge of the liability towards payment of the purchase value.
39. The accused in the cross-examination of PW2 has taken contention that the goods allegedly supplied to the accused are taken by one of the employees of the complainant and the complainant is making false claim against the accused. In the statement of the accused under Section 313 of CrPC also he has stated that there is fraud in the Bangalore Office of the complainant. Therefore, they have created the story of fire accident and making the false claim. The PW2 has denied the suggestion of the learned counsel for the accused. But to probabilise this situation, the accused has not brought on record any probable evidence except the suggestion. Therefore, this defence of the accused cannot be treated as a probable defence for the rebutal of the presumption under Section 139 of NI Act.
40. The complainant has also stated that there is fire accident in their office as noida and the documents are destroyed. 36
C.C.No.43541/2010 Therefore he is not having any purchase orders placed by the accused, original invoices and the account books. The accused has also not denied the fire accident. But he has contended that in the said fire accident, no documents or account books were lost. The complainant is falsely making the claim to avoid production of the documents. But these facts are not having much relevance in deciding this case. As the accused has failed to rebut the presumption under Section 118 and 139 of NI Act and the complaint is backed with statutory presumption, he is not required to prove the existence of legally recoverable debt by producing cogent evidence. Therefore whether the documents are available with the complainant or the documents relating to the transactions are lost in the fire accident is not having much relevance in this case.
41. Therefore, for the aforesaid discussion this court concludes that the accused has failed to rebut the statutory presumption about existence of legally recoverable debt. As the accused is failed to rebut the presumptions under Section 118 and 139 of NI Act, the complainant need not prove the case with cogent evidence by producing all the invoices, proving delivery of goods, placing orders by the accused, acknowledgment of the accused for delivery of goods and balance confirmation by the accused. The existence of legal debt and issuance of cheque towards 37 C.C.No.43541/2010 discharge of said debt is to be presumed and it is statutory presumption. Therefore this court concludes that the complainant has successfully proved that the accused has committed an offence punishable under Section 138 of Negotiable Instruments Act. Therefore this court answers the above point No.1 in the Affirmative.
42. POINT NO. 2 : While answering the point no. 1 this court concluded that the complainant proved that the accused committed the offence punishable under Section 138 of Negotiable Instruments Act. The Amount covered under the cheque is Rs.62,13,360/- The cheque is dated 05-09-2008. The money involved in the case is used in commercial transactions. With regard to the quantum of compensation payable, the Learned Counsel for Complainant has relied on the decision of Bir Singh v. Mukesh Kumar. AIR 2019 SC 2446, relied herein above. In the said decision, it is observed that -
"In R. Vijayan v. Baby and Anr AIR 2012 SC 528 , this Court observed that unless there were special circumstances, in all cases of conviction, the Court should uniformly exercise the power to levy fine upto twice the cheque amount and keeping in view the cheque amount and the simple interest thereon at 9%. Per annum as a reasonable quantum of loss, direct payment of such amount as compensation."38
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43. It is also necessary to consider that the complaint was once dismissed for non prosecution and it is restored by the Hon'ble High Court of Karnataka as per the orders in Crl. A. No.651/2015. On perusal of the order sheet it is clear that the proceedings are not delayed due to the accused. It is delayed only due to non appearance of the complainant. These factors are also required to be taken into consideration while quantifying the fine amount and the compensation. Therefore considering all these aspects the amount of fine calculated for a sum of Rs.73,40,000/-.
44. The Ho'ble High Court of Karnataka in the reportable decision in CRL.RP No. 996 of 2016 dated 09-07-2025 between M/s Banavathy and Company VS Mahaveer Electro Mech (P) Ltd at para 21 has held that -
21. In case lesser interest is awarded and only default sentence is imposed, the rigor of offence under Section 138 will be diluted and thereby the object of the Statute will be defeated. If recovery and compensatory part is not taken care of while determining the quantum of sentence and appropriate interest is not awarded, until the date of recovery of the entire amount, the complainant will be forced to file civil suit on the same subject matter. In view of Section 143(3) the trial for offence under Section 138 of N.I.Act has to be completed within six months. If the said provision is not adhered to 39 C.C.No.43541/2010 and the trial for the offence under Section 138 of N.I.Act takes 4 to 5 years, in the mean time, the claim of the complainant for recovery of the cheque amount by filing civil suit becomes barred by limitation. Not only that the accused who is convicted for offence under Section 138 of N.I.Act challenges the same before the Sessions Court wherein the matter takes 2 to 3 years. The accused unsuccessful in the said appeal prefers revision petition before the High Court and it is seen that the disposal of revision takes more than 5 years. After all this if the complainant has to receive the fine/compensation as awarded by the trial Court, if it is cheque amount or little higher than the cheque amount, he will be at loss and put to injustice. Therefore, while passing the order of sentence after determining the fine/compensation, the Court shall also pass an order to pay future interest @ 9% p.a. on the compensation amount payable to the complainant by fixing time of one/two months to deposit compensation amount so that even if the matter is challenged before the Sessions Court in appeal and High Court in revision the interest of the complainant will be protected.
In view of the directions issued in the above refereed judgment, it is also proper to direct the accused to pay future interest on the fine amount at the rate of 9 % P.A. till payment. Therefore considering all these aspects this court proceed to pass the following -
40
C.C.No.43541/2010 ORDER By exercising powers conferred U/sec.255(2) of Cr.P.C., the accused is convicted for the offence punishable under Section 138 of Negotiable Instrument Act and sentenced to pay a fine of Rs.73,40,000/- (Rupees Seventy Three Lakhs Forty Thousand Only) with in a month and in default the accused shall pay interest at the rate of 9% on the fine amount and in default to pay the fine, the accused shall undergo simple imprisonment of one year.
Further acting U/s 357(1)(a) of Cr.P.C. out of the fine amount a sum of Rs.10,000/-(Rupees Ten Thousand Only) shall be defrayed as prosecution expenses to the state.
Further acting U/s 357(1)(b) of Cr.P.C. a sum of Rs.73,30,000/- (Rupees Seventy Three Lakhs Thirty Thousand Only) and interest on recovery shall be paid as compensation to the complainant.
Supply free copy of the judgment to the accused. (Partly dictated to the Stenographer directly on the computer, typed by her, partly dictated to Adalath ai, computer application, transcribed by it, revised, corrected and signed then pronounced by me in the open court on this the 9th day of February 2026).
(GOKULA.K) XXV A.C.J.M., BANGALORE CITY.
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C.C.No.43541/2010 ANNEXURE LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW.1 : Ramesh Kumar.U. (Discarded) PW.2 : T.D.Joshi
LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P1 : Copy of the Incorporation Certificate Ex.P2 : True copy of the Board Resolution Ex.P3 : True copy of the Board Resolution Ex.P4 : Cheque Ex.P5 : Bank Endorsement Ex.P6 : Endorsement Ex.P7 : Office copy of legal notice Ex.P8 : Courier receipt Ex.P9 : Certified Copy of the Judgment in C.C.No.13745/2011 Ex.P10 : Certified Copy of the complaint in C.C.No.13745/2011 Ex.P11 : Certified Copy of the evidence in C.C.No.13745/2011 Ex.P12 : Certified copy of Ledger statement Ex.P13 : Request letter Ex.P14 : Certificate issued by the bank Ex.P15 : Certificate U/s.63 of BSA Ex.P16-36 : Certified Copies of the Tax Invoices.
LIST OF WITNESSES EXAMINED FOR THE ACCUSED:- Digitally
signed by
Nil GOKULA K
GOKULA
Date:
LIST OF DOCUMENTS MARKED FOR THE ACCUSED:- K 2026.02.10
Nil 13:24:09
+0530
(GOKULA.K.)
XXV A.C.J.M., BANGALORE CITY.
42
C.C.No.43541/2010