Bangalore District Court
M/S. Ninjacart Services Pvt. Ltd vs Hb Enterprises on 4 September, 2025
KABC030656812024
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL
MAGISTRATE, AT BANGALORE CITY
Dated this the 4th day of September 2025
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.No.39075/2024
Complainant : M/s.Ninjacart Services Private Limited
R/of at Sy No.16/1 & 17/2
Bellandur Gate, Sarjapura Main Road
Ambalipura, Bengaluru 560 102.
Rep by its Manager
Mr.Kiran Kashinathan.
(By CHD Advocate )
V/s
Accused : HB Enterprises
R/at.827, 4th cross, 6th main road
Shivana Kannu bidge
Kamalanagara, Bangalore North
Basaveshwaranagar
Bangalore.
Rep. By its Proprietor
Shivashankar.J
(By CMK - Advocate )
Plea of accused: Pleaded not guilty
Final Order: Accused is Convicted
Date of judgment : 04.09.2025.
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C.C.No.39075/2024
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 involved in the business of wholesale trading of agricultural products and fresh produce supply and tied up with Non Banking Financial Institutions to enable the service of credit facility to borrowers as per the guidelines of Reserve Bank of India. The accused is engaged in the business of wholesale trade of agricultural products and commission agency. The accused approached the complainant for loan through M/s Trillion Loans Fintech Private Limited in loan ID No.361313. After considering the same, the complainant extended credit facility of a sum of Rs.12,20,000/- on 10.07.2024. The accused during the process of loan transaction, issued signed NACH mandate bearing No. UMRN No.KKBK7012702245003037 on 27.02.2024 drawn on Kotak Mahindra Bank Ltd, for a sum of Rs.12,19,999/- Initially, the accused assured to make regular payments and later the accused failed to make payment as per the agreement. The accused on repeated demands of the complainant, instructed 3 C.C.No.39075/2024 to present the NACH mandate which is given for outstanding amount. As per the instructions of the accused, the complainant has processed E-NACH mandate through his banker IndusInd Bank, Koramangala for a outstanding sum of Rs.11,91,624/- and on processing said E NACH Mandate, it is returned dishonored with remarks "Balance Insufficient" in the account of the accused to honour the same on 17-09-2024. On receipt of said intimation, the complainant got issued legal notice on 18.09.2024 through registered post and demanded to pay the amount dishonoured under E-NACH Mandate. The notice issued to the accused returned unserved with an endorsement "no such person" on 20.09.2024. The notice is issued to the last known address of the accused provided by him. Therefore the issuance of notice to the last known address is deemed service of notice. 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 punishable Section 25 of the Payment and Settlement Systems 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 taken cognizance of offence and registered the case in PCR No.13503/2024 and recorded sworn statement of the complainant and got marked 10 documents as Ex.P1 to 4 C.C.No.39075/2024 Ex.P.10. 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 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.
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. As the evidence of the complainant on record the incriminating circumstances in the complainant evidence read over to the accused and his statement under Section 351of BNSS is recorded. The accused has denied the incriminating circumstances as false. On the application of accused the PW 1 is recalled. Inspite of grant of opportunity, the accused has not cross examined PW 1. Hence, cross examination of PW 1 taken 5 C.C.No.39075/2024 as Nil. Inpsite of grant of sufficient opportunities, the accused has not lead defence evidence.
6. Heard arguments of learned counsel for the complainant and Arguments of learned counsel for the accused is taken as heard 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 has issued NACH Mandate UMRN No. KKBK7012702245003037 on 27.02.2024 drawn on Kotak Mahindra Bank Ltd, for a sum of Rs.12,19,999/- and it is dishonoured on processing for collection of balance amount of Rs.11,91,624/- for the reason Balance Insufficient and inspite of issuance of demand notice dated 18.09.2024 he has failed to repay the amount with in the statutory period and thus committed an offence punishable under Section 25 of The Payment and Settlement Systems Act r/w Section 138 of Negotiable Instruments Act ?
2. What Order or Sentence?
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 :
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C.C.No.39075/2024
REASONS
9. POINT NO.1: To prove the case the authorized representative of the complainant is 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 certified copy of certificate of incorporation as Ex.P 1. The PW 1 has produced the Certified Copy of Resolution of Board of Directors of the company 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 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:7
C.C.No.39075/2024 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. (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.
11. This provision also specify that the provisions of chapter XVII of the Negotiable Instruments Act to the extent the 8 C.C.No.39075/2024 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) 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 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.
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C.C.No.39075/2024
12. The PW 1 has deposed that the complainant a company which is tied up with Non Banking Financial Institution which enables the service of credit facility to borrowers. He has deposed that the the accused approached the complainant for loan facility through M/s Trillion Loans Fintech Pvt Ltd and on the application of the accused they have sanctioned the Loan of Rs.12,20,000/-. The accused has agreed to repay the loan as per the terms and conditions of the loan agreement. The accused approached for loan on online platform, he has digitally signed the loan documents. He has produced said loan documents as Ex.P 3 to ExP5.
13. The PW 1 further deposed that during the process of loan transaction the accused issued signed NACH mandate bearing No. UMRN No.KKBK7012702245003037 on 27.02.2024 drawn on Kotak Mahindra Bank Ltd, for a sum of Rs.12,19,999/- in favour of the complainant towards due discharge of debt/liability. The complainant has produced the E copy of the NACH Mandate as Ex.P 6. He has deposed that initially the accused made regular payments and later the accused failed to make payment as per the agreement. He has deposed that the accused on repeated demands of the complainant, instructed to present the NACH mandate which is given for outstanding amount. He has deposed that as per the instructions of the 10 C.C.No.39075/2024 accused, the complainant has processed E-NACH mandate through their banker IndusInd Bank, Koramangala for a outstanding sum of Rs.11,91,624/-and on processing said E NACH Mandate, it is returned dishonored with remarks "Balance Insufficient" in the account of the accused to honour the same on 17-09-2024. The debit Transaction return memo is produced as Ex.P 7. 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 cross examined PW 1 nor adduced evidence to rebut the presumption. The PW1 has deposed that they have got issued legal notice dated 18.09.2024 calling upon the accused to pay the due amount as per Ex.P8. The PW 1 has deposed that said notice returned unserved with an endorsement "No such person" on 20.09.2024. The notice is issued to the last known address of the accused provided in the loan documents. Hence, it is deemed to be served on the accused. The PW 1 has also produced the postal receipt and the envelope as Ex.P 9 and Ex.P
10. Inspite of issuance of notice, the accused failed to pay the claim amount to the complainant with in the statutory time. The 11 C.C.No.39075/2024 complaint is filed before this court on 30.10.2024. 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.
14. 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 12 C.C.No.39075/2024 caused cannot be expected to discharge an unduly high slandered or proof.
15. 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 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. The accused has also not cross examined PW 1 inspite of grant for sufficient opportunity and not lead his evidence. Therefore there is no defence by the accused to rebut the presumption. After availing the bail the accused regularly remained absent and not utilized the opportunity to defend the case.
16. The complainant by producing the loan documents Ex.P 3 to P 5 established availment of loan by the accused by executing loan documents in digital form. These documents bears digital signature of the accused and also photograph of accused with his aadhar card and pan card. The accused has also not chosen to cross examine PW 1 or to lead defence evidence to rebut the case put forward by the complainant and to contradict the evidence placed on record. Therefore this court concludes that accused has failed to rebut the presumption under Section 25 (2) of The Payment and Settlement Systems Act 2007 r/w 13 C.C.No.39075/2024 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 Negotiable Instruments Act. Therefore this court answers the above point No.1 in the Affirmative.
17. 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 25 of The Payment and Settlement Systems Act r/w Section 138 of Negotiable Instruments Act. The Amount covered under the NACH is Rs.11,91,624/-. The NACH mandate is processed for collection on 17-09-2024. The money involved in the case is used in commercial transactions. Therefore considering all these aspects the amount of fine calculated for a sum of Rs.13,03,870/-. 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 14 C.C.No.39075/2024 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 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.
Therefore considering directions issued by the Hon'ble High Court 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 -
ORDER By exercising powers conferred under Section 278(2) of Bharathiya Nagarika Suraksha Sanhitha the accused is 15 C.C.No.39075/2024 convicted for the offence punishable under Section 25 of The Payment and Settlement Systems Act 2007 R/w Section 138 of Negotiable Instrument Act and he is sentenced to pay a fine of Rs.13,03,870/- (Rupees Thirteen Lakh Three Thousand Eight Hundred and Seventy only), which shall be deposited with in a month and in default pay interest at the rate of 9% from this day till payment of fine amount, In default to pay the fine with interest, the accused shall undergo simple imprisonment of 6 months.
Further acting Section 395(1)(a) of Bharathiya Nagarika Suraksha Sanhitha out of the fine amount a sum of Rs.5,000/- (Rupees Five Thousand only) shall be defrayed as prosecution expenses to the state.
Further acting Section 395(1)(a) of Bharathiya Nagarika Suraksha Sanhitha a sum of Rs.12,98,870/- (Rupees Twelve Lakh Ninety Eight Thousand Eight Hundred and Seventy only) with interest out of the fine amount on recovery shall be paid as compensation to the complainant.
Supply free copy of the judgment to the accused. (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 4th day of September 2025).
(GOKULA.K) XXV A.C.J.M., BANGALORE CITY.
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C.C.No.39075/2024 ANNEXURE LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW1 : Kiran Kashinathan.
LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P1 : Certified Copy copy of Incorporation Certificate Ex.P2 : Certified Copy of the Board Resolution Ex.P3 : Loan Application Ex.P4 : Sanction Letter Ex.P5 : Loan Agreement Ex.P6 : NACH Mandate Ex.P7 : Return Dishonour Memo Ex.P8 : Office copy of Legal Notice Ex.P9 : Postal Receipt Ex.P10 : Postal envelope.
LIST OF WITNESSES EXAMINED FOR THE ACCUSED:-
Nil LIST OF DOCUMENTS MARKED FOR THE ACCUSED:-
Nil (GOKULA.K.) XXV A.C.J.M., BANGALORE CITY.