Bangalore District Court
Navi Finserv Ltd vs Satish Nanjaraj on 5 January, 2026
KABC030043772025
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL
MAGISTRATE, AT BANGALORE CITY
Dated this the 5th day of January, 2026
day of August 2025
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.No.2452/2025
Complainant : Navi Finserv Ltd,
Formerly known as Chaitanya Rural
Intermediation Development Services
Pvt.Ltd.,
Navi Finserv Ltd,
2nd floor, Vaishnavi Tech Square
Iballur village, Begur Hobli
Bengaluru
Karnataka 560 102.
Rep.by Manaswini Malladi
Authorized Signatory.
(By AS - Advocate )
V/s
Accused : Satish Nanjaraj
S/ B R Nanjaraj
15/525, Brightway School Road
Doddagowdanapalya, 10th cross,
Old 2nd cross
Bangalore South
Karnataka 560 061.
(By NS - Advocate )
2
C.C.No.2452/2025
Plea of accused: Pleaded not guilty
Final Order: Accused is convicted
Date of judgment : 05.01.2026
JUDGMENT
The complainant has filed the complaint under Section 223 of Bharathiya Nagarika Suraksha Sanhitha 2023 against the accused for the offences punishable under Section 25 of The Payment and Settlement Systems Act 2007 r/w Section 138 of Negotiable Instruments Act.
2. The brief case of the complainant is as under:
That the complainant is a non banking organization doing business of lending finance to its customers and accused has availed E NACH loan facility from the complainant agreeing to abide all terms and conditions to repay the same with interest and executed E NACH Loan Agreement No.14520400 in favour of the complainant. The complainant sanctioned loan of Rs.1,50,000/- and said loan is to be repaid with interest at ROI in 36 monthly installments of INR 5,423/-. It is pleaded that towards repayment of liability, the accused executed E NACH Mandate in favour of the complainant to the extent of due payable assuring to honour the same when it is presented / processed for realization. The accused has assured that he will maintain sufficient amount in his account to honour the E - 3
C.C.No.2452/2025 NACH Mandate when it is presented. It is pleaded that the complainant has processed E-NACH mandate through his banker HDFC Bank Koramangala for a sum of INR 30,885.21/- and on processing said E NACH Mandate bearing UMRN No.HDFC7011601220010033 is returned dishonored with remarks "Balance Insufficient" on 10.10.2024. It is pleaded that on receipt of said intimation, the complainant got issued legal notice on 06.11.2024 through registered post and demanded to pay the amount dishoured under E-NACH Mandate. The notice is duly served on the accused on 08.11.2024. Inspite of issuance of notice, the accused failed to pay the claim amount to the complainant with in the statutory time. Therefore, the accused has committed the offence under Section 25 of the Payment and Settlement Act 2007 R/w Section 138 of Negotiable Instruments Act. Therefore the complainant has filed the complaint.
3. On the basis of Private complaint filed by the complainant, this court has taken cognizance of offence and registered the case in PCR No.826/2025 and recorded sworn statement of the complainant and got marked 8 documents as Ex.P1 to Ex.P.8. This court by considering the material on record issued process under Section 227 of Bharathiya Nagarika Suraksha Sanhita by registering the criminal case. In response to the process issued by this court, the accused 4 C.C.No.2452/2025 appeared before this court and he is released on bail. The copy of the complaint is served to the accused along with the summons as contemplated under Section 230 of Bharathiya Nagarika Suraksha Sanhita.
4. The substance of the acquisition as provided Section 274 of Bharathiya Nagarika Suraksha Sanhita is read over to the accused and his plea is recorded. The accused has pleaded not guilty and claimed to be tried. As per the directions of Hon'ble Supreme Court in Sanjabij Vs Kishore S Borcar and another reported in 2025 SCC Online SC 2069, questions are put to the accused and his response is recorded and considering the response of the accused and submissions of both parties trial is converted to summons trial.
5. In view of the law laid down by Hon'ble Supreme Court of India in Indian Bank Association V/s Union of India and others reported in AIR 2014 SCW 3463, the affidavit filed by the complainant at the stage of taking cognizance and documents marked is treated as evidence under section 145 of Negotiable Instruments Act. The evidence of the complainant is on record. Hence, the incriminating circumstances in the evidence of the complainant is read over to the accused and he has denied the same as false. The statement of the accused as required U/s.351 of BNSS is recorded. The accused has filed application 5 C.C.No.2452/2025 for recall PW 1 for cross examination and said application is allowed and PW 1 is recalled for cross examination. At this stage, the accused deposited the E-NACH processed amount of Rs.30,885/- through Demand draft bearing No.329917 dt.16.12.2025 drawn on Karnataka Bank, Padmanabhanagar Branch, Bangalore and it is kept in deposit in Cr.C.D. Thus the accused has submitted that he has admitted the liability and deposited entire claim amount in the complaint and claimed for acquittal. During the trial the complainant has substituted the representative of the complainant as the earlier representative has left the employment with the complainant company. The learned counsel for the complainant submitted that the accused shall repay entire loan amount and then only the complainant will withdraw the case.
6. Heard arguments and perused the material on record.
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 reasonable doubt that the accused issued E-
NACH mandate for a sum of Rs.1,50,000/-
drawn on HDFC Bank infavour of complainant and it is returned dishonoured on processing for collection to the outstanding amount of Rs.30,885.21/-
through HDFC Bank Koramangala with remarks on 10.10.2024 and inspite of service 6 C.C.No.2452/2025 of demand notice dated 06.11.2024 on 11.11.2024 the accused has not paid the amount with in the statutory time and thus the accused committed an offence punishable under Section 25 of The Payment and Settlement Systems Act 2007 r/w Section 138 of Negotiable Instruments Act.?
2. Whether the complainant is entitled for compensation and how much ?
3. What Order or sentence ?
8. The findings of this court to the above points are as follows:
Point No.1&2 In the Affirmative.
Point No.3 As per final order
for the following :
REASONS
9. POINT NO.1: To prove the case the authorized representative of the complainant examined as PW-1 and in his evidence affidavit he has reiterated the averments made in the complaint. To prove the incorporation of the company the PW 1 has produced the web copy of the Certificate of Incorporation as Ex.P 1. As per Ex.P 1 the complainant is a Public Limited company registered under Companies Act. The PW 1 has produced the web copy of Authorization letter as Ex.P.2. As per Ex.P 2 the PW1 is authorized to represent the complainant company and prosecute the accused. These documents prove 7 C.C.No.2452/2025 the legal status of the complainant as a Company and authority of PW 1 to represent the complainant company.
10. The offence alleged is primarily under Section 25 of The Payment and Settlement Systems Act 2007, which reads as under.
Section 25. Dishonour of electronic funds transfer for insufficiency, etc., of funds in the account.
(1) Where an electronic funds transfer initiated by a person from an account maintained by him cannot be executed on the ground that the amount of money standing to the credit of that account is insufficient to honour the transfer instruction or that it exceeds the amount arranged to be paid from that account by an agreement made with a bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the electronic funds transfer, or with both:
Provided that nothing contained in this section shall apply unless--
(a) the electronic funds transfer was initiated for payment of any amount of money to another person for the discharge, in whole or in part, of any debt or other liability;
(b) the electronic funds transfer was initiated in accordance with the relevant procedural guidelines issued by the system provider;
(c) the beneficiary makes a demand for the payment of the said amount of money by giving a notice in writing to the person initiating the electronic funds transfer within thirty days of the receipt of information by him from the bank concerned regarding the dishonour of the electronic funds transfer; and
(d) the person initiating the electronic funds transfer fails to make the payment of the said money to the beneficiary within fifteen days of the receipt of the said notice.8
C.C.No.2452/2025 (2) It shall be presumed, unless the contrary is proved, that the electronic funds transfer was initiated for the discharge, in whole or in part, of any debt or other liability.
(3) It shall not be a defence in a prosecution for an offence under sub-section (1) that the person, who initiated the electronic funds transfer through an instruction, authorisation, order or agreement, did not have reason to believe at the time of such instruction, authorisation, order or agreement that the credit of his account is insufficient to effect the electronic funds transfer. (4) The Court shall, in respect of every proceeding under this section, on production of a communication from the bank denoting the dishonour of electronic funds transfer, presume the fact of dishonour of such electronic funds transfer, unless and until such fact is disproved.
(5) The provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of electronic funds transfer to the extent the circumstances admit. Explanation.--For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability, as the case may be.
This provision also specify that the provisions of chapter XVII of the Negotiable Instruments Act to the extent the circumstances admit is applicable. The essential ingredients of section 25 of The Payment and Settlement Systems Act 2007 to be complied are i) An electronic fund transfer initiated by the person from his account ii) Processing of the NACH Mandate by the beneficiary, iii) it returning unexecuted for the reason insufficiency of funds to honour transfer instructions. iv) electronic fund transfer was initiated in discharge of any debt or liability v) it is initiated in accordance with the relevant procedural guidelines issued by the service provider vi) 9 C.C.No.2452/2025 Beneficiary making demand with in 30 days of receipt of information of dishonour by giving notice in writing, vii) failure of the person initiating electronic fund transfer to make payment within the period of 15 days after receipt of the demand notice. The Payment and Settlement Systems Act 2007 does not prescribe any time limit to file the complaint. Therefore it is necessary to apply provisions of Section 142 of The Negotiable Instruments Act. Therefore the complainant shall present the complaint within a month 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 25 of he Payment and Settlement Systems Act 2007 r/w Section 138 of Negotiable Instruments Act is complied by the complainant.
11. The PW 1 has deposed that the accused availed accused has availed E NACH loan facility from the complainant agreeing to abide all terms and conditions to repay the same with interest and executed E NACH Loan Agreement No.14520400 in favour of the complainant. The complainant sanctioned loan of Rs.1,50,000/- and said loan is to be repaid with interest at ROI in 36 monthly installments of INR.5,423/-. The PW 1 has deposed that towards repayment of liability, the accused executed E NACH Mandate bearing UMRN No. 10 C.C.No.2452/2025 HDFC7011601220010033 drawn on HDFC Bank in favour of the complainant. The web copy of NACH is marked as Ex.P4.
12. The PW 1 has deposed that the complainant has processed the Mandate for sum of Rs.30,885.21/- for realization through their banker i.e HDFC Bank, Koramangala Branch, Bengaluru and said NACH Mandate returned dishonored on 10.10.2024 for the reason "Balance Insufficient". The PW 1 has produced said debit transaction return memo as Ex. P5. As provided under Section 25(4) of The Payment and Settlement Systems Act and also under Section 146 of Negotiable Instruments Act law presumes that on production of banker slip or memo having thereon the official mark denoting that the cheque/ electronic fund transfer has been dishonored, presume the fact of dishonor of such said cheque, unless and until same is disproved. The accused has not disputed the dishonour of NACH mandate. The PW1 has deposed that they have got issued legal notice dated 06.11.2024 calling upon the accused to pay the due amount as per Ex.P6. The PW 1 has deposed that said notice issued through RPAD is duly served on the accused on 08.11.2024. Evidencing the same the complainant has produced the postal receipt and web copy of postal track consignment as Ex.P7 and Ex.P8. Inspite of issuance of notice, the accused failed to pay the claim amount to the complainant 11 C.C.No.2452/2025 with in the statutory time. Therefore cause of action arose for prosecution on 24-11-2024. The complaint is filed before this court on 20.12.2024 within the statutory period. Thus the complainant has complied all the statutory requirements for constitution of offence under Section 25 of The Payment and Settlement Systems Act 2007 r/w Section 138 of Negotiable Instruments Act. Therefore, the complainant is entitled for presumption under Section 25 (2) of The Payment and Settlement Systems Act 2007. Under Section 139 of Negotiable Instrument Act also there is similar presumption. 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.
13. 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 12 C.C.No.2452/2025 guide the construction and interpretation of reverse onus clauses and the defendant caused cannot be expected to discharge an unduly high slandered or proof.
Therefore the principles laid down in this decision can also be made applicable to the proceedings for the offence under Section 25 of The Payment and Settlement Systems Act 2007. In view of the principles laid down in these decisions the onus is on the accused to rebut the presumption. The accused has not issued any reply at the initial stage at the time of service of the legal notice. After plea of the accused is recorded, he has not contested the case to rebut the presumption. The accused appeared before the court and submitted no cross examination of PW 1 and no defence evidence and deposited the entire NACH dishonoured amount by admitting his liability. Therefore there is no defence from the accused to rebut the presumption under Section 25 (3) of The Payment and Settlement Systems Act 2007 r/w Section 139 of Negotiable Instruments Act. As discussed above all the statutory requirements are complied. The accused has failed to rebut the presumption under Section 25 (3) of The Payment and Settlement Systems Act 2007 r/w Section 139 of Negotiable Instruments Act. Therefore this court concludes that the complainant has successfully proved that the accused has committed the offence punishable under Section 25 of The Payment and Settlement Systems Act 2007 r/w. Section 138 of 13 C.C.No.2452/2025 Negotiable Instruments Act. Therefore this court answers the above point No.1 in the Affirmative.
14. POINT NO 2 : The accused appeared before the court and deposited Rs.30,885/- through Demand draft bearing No.329917 dated 16.12.2025 drawn on Karnataka Bank, Padnabhanagar, Bangalore and it is kept in deposit in Cr.C.D. In this scenario it is proper to rely on the decision of Hon'ble Supreme court in Sanjabij Vs Kishore S Borcar and another reported in 2025 SCC Online SC 2069, In this decision Hon'ble Supreme court in para 38 and 39 has laid down following guidelines -
(a) If the accused pays the cheque amount before recording of his evidence (namely defence evidence), then the trial court may allow compounding of the offence without imposing any cost or penalty on the accused.
(b) ....
39. This court is of the view that if the accused is willing to pay in accordance with the aforesaid guidelines, the court may suggest to the parties to go for compounding. If for any reason, the financial institutions/ complainant asks for payment other than the cheque amount or settlement of entire loan or other outstanding dues, then the Magistrate may suggest to the accused to plead guilty and exercise the powers under Section 255(2) and /or 255(3) of CrPC or 278 of BNSS, 2023 and /or give the benefit 14 C.C.No.2452/2025 under the Probation of Offenders Act 1958 to the accused.
15. In this case, after the accused appeared, he is released on bail and on the same day plea of the accused recorded. As the affidavit is considered as evidence under Section 145 of NI Act, the statement of the accused have been recorded. The PW 1 also recalled for cross examination. At this stage the accused has proposed for payment of NACH dishonoured amount. But The complainant has submitted that in their company there is no policy to compound the case without closer of loan account and the amount shall be paid through company online application. Thereafter the accused has deposited the NACH dishonured amount before this court. In this case evidence of the accused not recorded. Therefore in view of the guidelines in the above referred case the accused is not liable for any further cost or penalty. As the complainant has not agreed for compounding, as per the guidelines of Hon'ble Supreme Court, the accused can be released on Probation.
16. As provided under Section 3 of Probation of Offenders Act the court can release the accused on probation if the offence punishable with imprisonment for not more than two years, or with fine, or with both, court can release the accused on probation. For release of the accused under Section 3 of 15 C.C.No.2452/2025 Probation of Offenders Act it is not necessary to obtain the report of Probation officer as required under Section 4 of Probation of Offenders Act. The offence under Section 25 of PASS Act or under Section 138 of NI Act is punishable with imprisonment which may extend to two years. Therefore, by applying the guidelines of Hon'ble Supreme Court, provisions of Section 3 of Probation of offenders Act can be invoked to the case on hand.
17. As provided under Section 5 of Probation of offenders Act court directing the release of an offender under section 3 or section 4, may, if it thinks fit, make at the same time a further order directing him to pay such compensation as the court thinks reasonable for loss or injury caused to any person by the commission of the offence. Therefore, in view of such provision of law, the NACH dishoured amount deposited by the accused for a sum of Rs.30,885/- can be paid to the complainant as compensation for the offence committed by the accused. Therefore this court answers the Point No. 2 in the Affirmative.
18. Point No.3 : In view of the findings on Point Nos.1 and 2 , this court proceeds to pass the following :
ORDER By exercising powers conferred under Section 278(2) of Bharathiya Nagarika Suraksha Sanhita the accused is convicted 16 C.C.No.2452/2025 for the offence punishable under Section 25 of The Payment and Settlement Systems Act 2007 R/w Section 138 of Negotiable Instrument Act.
By exercising powers under Section 3 of Probation of Offenders Act 1958, the accused is released on admonition.
By exercising powers under Section 5 of Probation of Offenders Act 1958, the deposited NACH dishonored amount by the accused for Rs.30,885/- (Rupees Thirty Thousand Eight Hundred and Eighty Five Only) is ordered to be paid as compensation to the complainant. The complainant shall credit the compensation amount to the outstanding loan dues in the loan account of the accused.
Supply free copy of the judgment to the accused. The accused is set at liberty.
Office to release entire compensation amount to the complainant by following due procedure. The bail bond and surety of the accused stands canceled.
[[ (Dictated to the Stenographer directly on the computer, typed by her, corrected and signed then pronounced by me in the open court on this the 5th day of January, 2026).
(GOKULA.K) XXV A.C.J.M., BANGALORE CITY.17
C.C.No.2452/2025 ANNEXURE LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW1 : Joseph Moses Parambi LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P1 : Web copy of Incorporation Certificate Ex.P2 : Web copy of Authorization letter Ex.P3 : Bank Certificate Ex.P4 : NACH Ex.P5 : Return Memo Ex.P6 : Office copy of legal notice Ex.P7 : Postal receipt Ex.P8 : Web copy of Postal track consignment LIST OF WITNESSES EXAMINED FOR THE ACCUSED:-
Nil LIST OF DOCUMENTS MARKED FOR THE ACCUSED:- Digitally signed by Nil GOKULA GOKULA K Date:
K 2026.01.05
15:42:16
+0530
(GOKULA.K.)
XXV A.C.J.M., BANGALORE CITY.