Bangalore District Court
Avanti Finance Private Limited vs Yogesh Babasaheb Burate on 3 October, 2025
KABC030397122024
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL
MAGISTRATE, AT BANGALORE CITY
Dated this the 3rd day of October 2025
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.No.23005/2024
Complainant : Avanti Finance Private Limited
(CIN No.U65929KA2016PTC38355)
Registered office at No.2727,
2nd floor, 1st main road
HAL 3rd stage, Ward No.58 (Old No.83)
New Thippasandra
Bengaluru 560 075.
Rep by its Authorized Signatory
Ms.Raksha.
(By Sri.M.S.M- Advocate )
V/s
Accused : Yogesh Babasaheb Burate
Plot No.466, R K Nagar
Society NO.6, Pachgaon Road
Kolhapur, Maharashtra 416 013.
(By RP - Advocate )
Plea of accused: Pleaded not guilty
Final Order: Accused is Convicted
Date of judgment : 03.10.2025
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C.C.No.23005/2024
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 Non Banking Financial Company incorporated under the Companies Act providing credit facility to the borrowers involved in agricultural and agricultural allied activities. That vide loan agreement dated 28.02.2023 a term loan of INR 2,00,00,000/- with interest @ 18% has been availed by White Globe, a Partnership Firm, set up with primary objective of purchasing farm inputs and procuring agri related commodities. As per the terms of loan agreement, accused stood as Guarantor towards said credit facility and executed a Deed of Guarantee on 28.02.2023 in terms of which the accused agreed to repay the amount covered under the terms of loan agreement to the complainant. Following default in loan repayments the complainant initiated guarantee invocation process by issuing the notice dated 14.02.2024 to the accused through e-mail on 14.02.2024. The accused agreed the repayment of said loan and issued a cheque bearing No.125610 dated 22.02.2024 drawn on ICICI Bank, Mumbai, Maharashtra for a sum of Rs.1,60,00,000/- in favour of the complainant. 3
C.C.No.23005/2024 The complainant presented said cheque through its banker i.e. The Federal Bank Ltd, Wipro Park, Koramangala, Bangalore for encashment and said cheque returned dishonored for the reason "Funds Insufficient" in the account of the accused. Therefore the complainant has got issued legal notice dated 12.03.2024 calling upon the accused to pay the amount covered in the cheque. The notice was sent to through RPAD on the address mentioned in the cause title and the same returned as "unclaimed". Pursuant to issuance of legal notice, as there is error in mentioning the name of the principal borrower, the complinant has issued a rectification notice dated 16.03.2024 rectifying the errors in the legal notice to the accused. The said rectification notice sent to the accused also returned as "unclaimed". Inspite of issuance 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. On the basis of Private complaint filed by the complainant, this court taken cognizance of offence and registered the case in PCR No.7098/2024 and recorded sworn statement of authorised officer of complainant as PW 1 and got marked 16 documents as Ex.P 1 to P 16. This court upon 4 C.C.No.23005/2024 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 released on bail. The copy of the complaint is served to the 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 plea is recorded. The accused 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 2014SCW3463, 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 is on record the incriminating circumstances in the evidence of the complainant read over to the accused and the statement of the accused under Section 313 of Cr.P.C recorded. The accused has denied the incriminating circumstances as false. The accused has filed application to recall PW1 for cross examination and PW 1 is fully cross examined The complainant has got marked additional documents in her further evidence as EX.P 17 to Ex.P 5 C.C.No.23005/2024
21. Inspite of sufficient opportunities on the said documents the accused has not opted to cross examine PW 1 and 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 all reasonable doubt that the accused has issued a cheque bearing No.125610 dated 22.02.2024 for a sum of Rs.1,60,00,000/-
drawn on ICICI Bank, Mumbai Maharashtra towards legal liability and said cheque has been dishonoured on its presentation on 26.02.2024 for for the reason "Funds Insufficient" and inspite of issuance of demand notice dated 12.03.2024 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?
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C.C.No.23005/2024
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 is examined as PW-1. The PW1 in her evidence has reiterated the averments made in the complaint. The PW 1 has deposed that the complainant is a Non Banking Financial corporation engaged in the business of providing credit facility to eligible borrowers involved in agricultural and allied activities. To prove incorporation of the company, PW 1 has produced the web copies of the Incorporation Certificate and the Certificate for change of Place as Ex.P.1 and Ex.P2. These documents prove the legal status of the complainant company. The PW 1 has produced the Letter of Authority issued by the company in her favour authorizing to represent the company before court of law as Ex.P.3. As per Ex.P3 PW1 is authorized to file the complaint and to represent the complainant company. The accused in the cross examination has not disputed the legal status of the complainant company. The accused has denied the authority of PW 1 to depose on behalf of complainant. But she has denied the suggestions of 7 C.C.No.23005/2024 the accused. Nothing has been elicited to disprove the authority of PW 1 to represent and depose on behalf of the complainant.
10. The PW 1 has deposed that a partnership firm by name White Globe, engaged in the business of purchasing the farm inputs and procuring agri related commodities, has availed credit facility by way of term loan of Rs.2,00,00,000/- by executing loan agreement dated 28.02.2023 with interest @ 18%. The complainant has produced the e-signed copy of the loan agreement as Ex.P 4. The complainant has also produced the Audit Trial substantiating the process of execution of loan agreement by affixing e-signatures by the parties with Hash value and it is marked as Ex.P 5. As per the terms of loan agreement, accused, who is also the partner of the White Globe, stood as Guarantor in his personal capacity, towards said credit facility and executed a Deed of Guarantee on 28.02.2023, in terms of which the accused agreed to repay the amount covered under the terms of loan agreement to the complainant. The complainant has produced the e-signed copy of the Guarantee agreement as Ex.P 6. In the schedule 1 of the Guarantee agreement the details of Guarantors is given and the name of accused found place in Guarantor 3 in the schedule 1 of Guarantee agreement and the accused has also affixed his digital signature to the Guarantee agreement. The complainant 8 C.C.No.23005/2024 has also produced the Audit Trial substantiating the process of execution of loan agreement by affixing e-signatures by the parties with Hash value and it is marked as Ex.P 7. As per the terms of loan agreement the partners shall give personal guarantee to the loan of the firm. It is the case of the complainant that White Globe has failed to repay the loan in terms of the loan agreement and committed default. As per the Deed of Guarantee the the guarantors are jointly, severally liable to pay the due amount on demand by the complainant. As per the terms of Guarantee agreement 2.1 the Guarantors shall pay the due amount within 7 days of demand notice. It is stated that following default in loan repayments the complainant initiated guarantee invocation process by issuing the notice via email dated 14.02.2024 to the accused. The complainant has produced the same as Ex.P 8. The PW 1 has deposed that the accused agreed the repayment of said loan and issued a cheque bearing No.125610 dated 22.02.2024 drawn on ICICI Bank, Mumbai, Maharashtra for a sum of INR 1,60,00,000/- in favour of the complainant.
11. Now it is proper to consider whether the complainant has complied statutory requirements under Section 138 and 142 of Negotiable Instruments Act. The essential ingredients of section 138 and 142 of Negotiable Instruments Act to be complied are i) 9 C.C.No.23005/2024 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 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.
12. The PW 1 has deposed that the accused has issued a issued a cheque bearing No.125610 dated 22.02.2024 drawn on ICICI Bank, Mumbai, Maharashtra for a sum of INR 1,60,00,000/- in favour of the complainant in discharge of legal liability of the loan amount of White Globe. The complainant has produced said cheque as EX.P 9. The PW1 has deposed that they have presented said cheque for collection through their banker i.e. Federal Bank Ltd, Wipro Park, Koramangala and said cheque returned dishonored on 26.02.2024 for the reason "Funds Insufficient" in the account of the accused. The complainant has produced said endorsement for dishonour of cheque and the endorsement is marked as EX.P.10. EX.P 10 does not bear the seal and signature of the Banker authenticating the document. Therefore the complainant has 10 C.C.No.23005/2024 produced the letter of the Fedaral bank and another memo of dishonour as per EX.P 19 and 20. The EX.P 20 is memo of dishonour authenticating the information in Ex.P 10 memo of dishonour. As provided 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 has been dishonored, presume the fact of dishonor of such said cheque, unless and until same is disproved. The accused has not brought on record any material evidence to rebut this presumption of law.
13. The PW1 has deposed that they have got issued legal notice dated 12.03.2024, calling upon the accused to pay the amount covered in the cheque Ex.P9. The complainant has produced the office copy of demand notice as Ex.P 11. The notice sent through RPAD to the address mentioned in the cause title returned as "Unclaimed". It is stated that the notice is issued to the address of the accused as mentioned in the cause title. Therefore the issuance of notice to the last known address is deemed service of notice. The complainant has produced the postal receipt and the returned postal envelope as Ex.P.12 & Ex.P.13. The complainant has issued Rectification Notice on 16.03.2024 as Ex.P.14 rectifying the errors in the legal notice dated 12.03.2024. Said notice returned as "unclaimed". Said 11 C.C.No.23005/2024 notice is issued on the address as mentioned in the cause title. Hence, it is deemed to be served. The PW 1 has produced the postal receipt and postal envelope as Ex.P.15 and Ex.P.16. It is stated that in the demand notice the name of the partnership firm is wrongly mentioned as 'Golden Curve' instead of 'White Globe'. Therefore rectifying said mistake in Ex.P 11 notice, the complainant has issued the rectification notice as per Ex.P 14. The accused has denied service of demand notice. But he has not denied the address mentioned in the notice. In the Guarantee agreement Ex.P 6 also the accused has given same address mentioned in the legal notice. Therefore it is clear that the notice is issued to the last known address of the accused and it is returned unclaimed. Hence it is deemed service of notice. The PW1 has deposed that inspite of service of notice, the accused failed to pay the claim amount to the complainant with in the statutory time. The complaint is filed before this court on 29.04.2024. Thus the complainant has complied all the statutory requirements for constitution of offence under Section 138 of Negotiable Instruments Act. Therefore, the complainant is entitled for presumption under 118 and under Section 139 of Negotiable Instrument Act. 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 12 C.C.No.23005/2024 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 caused cannot be expected to discharge an unduly high slandered or proof.
15. Therefore, in view of the principles laid down in the decision the onus is on the accused to rebut the presumption under 139 of Negotiable Instruments Act. The accused has not issued any reply at the initial stage after service of the legal notice and not utilized the earliest opportunity to put forward his defence.
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C.C.No.23005/2024
16. The accused has cross examined PW 1 and he accused has taken his defence. In the cross examination of PW 1 the accused has denied availment of the loan by White Globe and he stood as guarantee to the said loan. He has taken the contention that without following provisions of section 35 of Information Technology Act the loan documents were executed. As discussed above the complainant has produced e-signed loan agreement and Guarantee agreement with Adit trial as per Ex.P 4 to 7. The complainant by producing Audit Trial providing details of process of execution of e-document with Hash value as per Ex.P 5 and P 7, has prima facie established due execution of the documents. The accused in the statement under Section 313 of CrPC has admitted availment of the loan by White Globe and he stood as Guarantee to the said loan. In the cross examination also he has also taken contradictory stand that he issued the cheques at the time of loan transactions for security. Thus he has indirectly admitted the loan transaction. Thus the accused at one stretch admitted the loan transaction and in another stretch denied execution of loan documents and avaliment of the loan and also existence of liability. But the PW 1 has denied all such suggestions of accused. Nothing has been elicited from the mouth of PW 1 to substantiate this contention of the accused.
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C.C.No.23005/2024
17. The accused further taken the contention that the complainant has misused the blank signed cheque issued by the accused towards security at the time of availment of the loan. It is the defence of the accused that as per clause 4.5 and 4.7 of the agreement the complainant has obtained 5 undated blank cheques from the accused. The PW 1 has also admitted the said fact. Now it is proper to examine the legal position about applicability of provisions of Section 138 of Negotiable Instruments Act to the Security cheques. In this aspect it is proper to place on record the reliance to the decision of Hon'ble Supreme court reported in (2022) 18 SCC 614 between Sripati Singh(since Dead) through his son Vs State of Jharkhand and another. Wherein it is held that -
21. A Cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. "security" is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfillment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified time frame and issues a cheque as security to secure such repayment; if 15 C.C.No.23005/2024 the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of the NI Act would flow.
Therefore in view of the principles laid down in this decision, the cheque issued for security may also mature for presentation and on dishonour of the same the consequences under NI Act will follow. Therefore only for the reason that the Ex.P 9 cheque is issued by the accused for security purpose itself does not disentitle the complainant to present it for securing legal liability.
18. In this case the accused is not the principal borrower. He is the Guarantor to the loan availed by partnership firm White Globe. The accused has also taken the contention that he is not the principal borrower and there is no legally recoverable debt from the accused. As per the clause 3(i) of Gurantee Agreement 16 C.C.No.23005/2024 Ex.P 6, liability of the Guarantor is to the extent of outstanding amount in the loan account. Therefore, the accused as a guarantor is liable to repay the out standing loan amount in the loan account of the principal borrower White Globe. In this regard the complainant has relied on the decision of Hon'ble Apex Court in ICDS Ltd. v. Beena Shabeer, (2002) 6 SCC 426 has held that -
11. The issue as regards the coextensive liability of the guarantor and the principal debtor, in our view, is totally out of the purview of Section 138 of the Act, neither the same calls for any discussion therein. The language of the statute depicts the intent of the law-makers to the effect that wherever there is a default on the part of one in favour of another and in the event a cheque is issued in discharge of any debt or other liability there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of the Act. "Any cheque" and "other liability" are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of 17 C.C.No.23005/2024 the statute. Any contra-interpretation would defeat the intent of the legislature.
Therefore, in view of the principles laid down in this decision, the accused once issued the cheque towards discharge of liability of principal borrower, and he has failed to honour the cheque, he is liable for prosecution under the provisions of Negotiable Instruments Act.
19. The complainant, to prove the existence of liability, independent from presumptions under Section 139 of Negotiable Instruments Act, has produced the loan agreement, Guarantee agreement as per Ex.P 4 and Ex.P 6. The complainant has also produced statement of accounts as on 22- 02-2024, i.e. as on the date of the cheque and it is marked as Ex.P 18. The complainant has also produced the statement of account as on the date of evidence as on 09-06-2025 and it is marked as Ex.P 17. As per Ex.P 18 the outstanding loan amount as on 22-02-2024 is Rs.1,63,65,908.02/-. The complainant has also submitted that as per the terms of Loan agreement clause 4.8 the Firm has lien marked a sum of Rs.20,00,000/- by depositing in FD account and said amount is adjusted to the loan account on 29-09-2023 and it is shown in Ex.P 17 and P18 statement of accounts. The accused has not cross examined PW1 after production of these documents and 18 C.C.No.23005/2024 not contradicted documentary evidence Ex.P 17 and 18 placed on record by the complainant.
20. Therefore for the above discussion, this court concludes that the accused has failed to rebut of the presumption of existence of legally recoverable debt by the accused and the defence taken by the accused is not probable defence and it will not rebut the presumption of existence of debt or liability. Therefore, from the above discussion, it is clear that the complainant is entitled for presumption under Section 118 and 139 of Negotiable Instruments Act. Thus the complainant, has proved existence of legally recoverable debt payable by the accused and the partnership firm.
21. Therefore, for the above discussion, this court concludes that the complainant has proved that the accused has committed the offence punishable under Section 138 of Negotiable Instruments Act. Therefore this court answers the above point No.1 in the Affirmative.
[
22. 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 19 C.C.No.23005/2024 cheque is INR 1,60,00,000/-. The cheque is dated 22-02-2024. The money involved in the case is used in commercial transactions. Therefore considering these aspects the fine amount is calculated for a sum of Rs.1,84,10,000/-. The Hon'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 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 20 C.C.No.23005/2024 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 -
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 he is sentenced to pay a fine of Rs. 1,84,10,000/- (Rupees One Crore Eighty Four Lakhs and Ten Thousand Only) payable with in a month and in default pay interest at the rate of 9% from this day till payment of fine amount, and In default to pay the fine with interest, the accused shall undergo simple imprisonment of six months.
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. 21
C.C.No.23005/2024 Further acting U/s 357(1)(b) of Cr.P.C. a sum of Rs. 1,84,00,000/- (Rupees One Crore Eighty Four Lakhs Only) and interest out of the fine amount on recovery shall be paid as compensation to the complainant and the complainant shall credit the compensation amount to the loan account of White Globe.
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 3rd day of October , 2025).
(GOKULA.K) XXV A.C.J.M., BANGALORE CITY.
ANNEXURE LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW.1 : Raksha LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P1 : Web copy of Certificate of Incorporation Ex.P2 : Web copy of the Registration Certificate Ex.P3 : Letter of Authority Ex.P4 : Web copy of Loan Agreement Ex.P5 : Web copy of Audit Trial document Ex.P6 : Web copy of Deed of Guarantee Ex.P7 : Web copy of Another Audit Trial document Ex.P8 : Web copy of Guarantee invocation notice Ex.P9 : Cheque 22 C.C.No.23005/2024 Ex.P10 : Bank Endorsement Ex.P11 : Legal Notice.
Ex.P12 : Postal receipt Ex.P13 : Postal envelope Ex.P14 : Office copy of Rectification Legal Notice Ex.P15 : Postal Receipt Ex.P16 : Postal envelope Ex.P17 : Statement of Account of Principal Borrower Ex.P18 : Statement of Account Ex.P19 : Letter issued by Federal Bank Ex.P20 : Dishonor Memo Ex.P21 : Certificate U/s.65B of Evidence Act.
LIST OF WITNESSES EXAMINED FOR THE ACCUSED:-
Nil Digitally LIST OF DOCUMENTS MARKED FOR THE ACCUSED:- signed by GOKULA K Nil GOKULA Date:
K 2025.10.04
13:08:48
+0530
(GOKULA.K.)
XXV A.C.J.M., BANGALORE CITY.