Bangalore District Court
Magadi Kempegowda Credit Co-Operative ... vs Sri Govinda K C on 27 November, 2025
KABC030075362025 Digitally signed by
ANANDAPPA ANANDAPPA M
M Date: 2025.11.28
10:10:21 +0530
IN THE COURT OF THE XL ADDL., CHIEF JUDICIAL
MAGISTRATE, BENGALURU.
PRESENT: SHRI. ANANDAPPA M.
B.A.,LL.B.
XL ADDL. C.J.M., BENGALURU.
C.C.NO.4474/2025
DATED THIS THE 27th NOVEMBER, 2025
BETWEEN:
Magadi Kempegowda Credit
Co-Operative Society Ltd.,
No.2, Shri Bharathi, 1st Floor,
Vinayaka Extension, 1st Stage,
KHB Colony, Magadi Main Road,
Basaveshwaranagara,
Bengaluru- 560 079.
Rep.by its C E O
K.Lokesh
...Complainant
(By Sri. T.S.C., Advocate)
AND:
Sri. Govinda. K.C. S/o Channaiah,
Aged about 49 years,
No.63, 6th Main Road,
Malagala Janatha Colony,
Nagarabhavi 2nd Stage,
Bengaluru.
....Accused
(By Sri. A.C.P., Advocate)
Offence complained of Section 138 of N.I.Act.
2 CC NO.4474/2025
KABC030075362025
Date of complaint 15.01.2025
Date of closing of evidence 11.07.2025
Opinion of the Judge Accused is found guilty.
JUDGEMENT
This case is registered against the accused for the offence punishable under Section 138 of Negotiable Instruments Act (in brief N.I.Act for brevity).
2. The substance of the case of complainant :
It is the case of the complainant that the accused borrowed vehicle loan of Rs.2,00,000/- from the complainant by executing relevant documents and he became defaulter. After several demands, the accused issued cheque of State Bank of India, Malagala road branch, Bengaluru bearing No.121782 dated 14.11.2024 for Rs.2,08,500/- to discharge his liability.
3. The complainant presented the said cheque through his banker Apex Co-Operative Bank Ltd., Basaveshwaranagar Branch, Bengaluru for realization. It was dishonored for the reason funds insufficient on 16.11.2024. Thereafter, he issued legal notice to the accused through registered post on 29.11.2024 by calling upon him to make payment within 15 days. The said notice was served. The accused neither replied nor made payment of said amount. The accused knowingly issued a cheque with an intention to cause loss to complainant. The said amount is legally recoverable debt. Hence, 3 CC NO.4474/2025 KABC030075362025 complainant prays to punish the accused for the offence under Section 138 of N.I. Act.
4. After receiving the complaint this Court scrutinized the documents. Sworn statement of the complainant was recorded. He filed his sworn statement by way of affidavit. There were sufficient materials to constitute the offence. Hence, this Court took cognizance for an offence under Section 138 of N.I. Act and issued process against the accused.
5. Secured the presence of accused. He was enlarged on bail. The substance of accusation was read over to accused in the language known to him, for which he pleaded not guilty.
6. As per the guidelines issued by the Hon'ble Apex Court in the case of Indian Bank Association Vs. Union of India & others reported in 2014(5) SCC 590 this Court treated the sworn statement of complainant as evidence. This Court also recorded the statement of accused under Section 351 of B.N.S.S. The accused denied the incriminating evidence of complainant and chose to lead defence evidence. The accused cross-examined the PW-1. Thereafter, the accused submitted that he has no defence evidence.
7. Heard both side. Perused the materials placed on record.
8. The following points arise for my consideration.
1. Whether complainant proves beyond all reasonable doubt that the accused towards discharge of his liability issued 4 CC NO.4474/2025 KABC030075362025 cheque bearing No.121782 dated 14.11.2024 for Rs.2,08,500/- drawn on State Bank of India, Malagala road branch, Bengaluru in his favour and when he presented the said cheque for realization, it was dishonored for the reason funds insufficient in the account maintained by the accused?
2. Whether the complainant proves beyond all reasonable doubt that he issued demand notice to the accused, the accused did not repay the cheque amount within statutory period and thereby he has committed an offence punishable U/Sec.138 of N.I.Act?
3. What order?
9. My answers to the above points as under.
Point No.1 & 2 : In the Affirmative.
Point No.3 : As per final order, for the following:
REASONS
10. POINT NO.1 and 2 : These points are inter-linked with each other, to avoid repetition of facts and circumstances they are taken together for common discussion.
11. To substantiate the case against accused, the complainant relied on documents which were marked as Ex.P1 to
12. The PW-1 who is authorized person of complainant reiterated the averments of complaint in his evidence. The Ex.P1 is cheque. Ex.P2 is memo issued by the banker. It shows that when complainant presented the Ex.P1 cheque for realization, it was dishonored on 16.11.2024 for the reason funds insufficient. Ex.P3 5 CC NO.4474/2025 KABC030075362025 is office copy of the legal notice. Ex.P4 is postal receipt. Ex.P5 is returned postal cover. Ex.P6 is postal track consignment. These documents show that complainant issued notice to the accused on 29.11.2024 i.e., within 30 days from the date of dishonor of cheque by calling upon him to pay cheque amount within 15 days. The said notice was returned with an endorsement of No such person. The accused had not paid the amount of cheque to the complainant within 15 days. Ex.P7 resolution. Ex.P8 is membership application. Ex.P9 is loan application. Ex.P10 is loan agreement. Ex.P11 is on demand pro-note and Ex.P12 is statement of account. The evidence and documents clearly indicate that the complainant complied the ingredients to constitute an offence punishable under Section 138 of N.I.Act.
12. The N.I. Act provides some presumptions in favour of complainant under Section 118 and 139 of N.I. Act. Under Section 118 of N.I. Act, there is a presumption that until the contrary is proved, every negotiable instrument was drawn for consideration. Even under Section 139 of N.I. Act, it is specifically stated that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque for discharge, in whole or in part, of any debt or other liability. However, it is well settled principle of law that the said presumption can be rebutted by accused by raising probable defence.
13. In order to rebut the presumption the accused has to cross-examine the complainant and lead defence evidence. In the present case, the accused cross-examined the PW-1. Thereafter, he 6 CC NO.4474/2025 KABC030075362025 submitted that he has no defence evidence. The accused admitted the issuance of cheque. In the present case, he has not disputed the signature in cheque. But he disputed the loan transaction with the complainant. The accused contended in his written arguments that the complainant failed to prove legally enforceable debt, the complainant has no valid authorization to prosecute this case. Notice issued by the complainant was not served on accused. Hence, complaint is not maintainable. The accused further contended that he rebutted the presumption and complainant failed to establish these facts. Further the accused relied on decisions of Hon'ble Apex Court published in:
1. (2014) 11 SCC 790 A.C.Narayanan Vs State of Maharashtra.
2. (2008) 4 SCC 54 Krishna Janardhan Bhat Vs Dattatraya G. Hegde.
3. (2009) 2 SCC 513 Kumar Exports Vs Sharma Carpets.
4. (2019) 5 SCC 418 Basalingappa Vs Mudibasappa.
5. (2007) 6 SCC 555 C.C.Alavi Haji Vs Palapetty Muhammed.
14. The counsel for accused cross-examined the PW-1. The PW-1 deposed in his cross-examination that he has not produced registration certificate of his society. He himself put signature to Ex.P7 authorization letter. He has not produced resolution where he was authorized to prosecute the case. He has also not produced resolution to show that he was appointed as Chief Executive Officer of society. The counsel for accused had put suggestion that the 7 CC NO.4474/2025 KABC030075362025 complainant has not produced any resolution, hence the accused had not taken loan. But PW-1 denied the same as false. The counsel for accused further put suggestion that the complainant received a cheque from the accused at the time of he becoming a member of complainant society. The PW-1 denied the same as false. Further the accused suggested that hand writing and signature in cheque are in different handwriting. The Ex.P3 notice was not served on accused.
15. The main defence of accused is, the accused had not taken loan from the complainant. He contended that at the time of becoming membership, complainant received a cheque for the purpose of security and misused the same. In order to prove the loan transaction the complainant produced Ex.P8 to 12. Ex.P8 is membership application of accused. Ex.P9 is loan application of accused. Ex.P10 is loan agreement. Ex.P11 is on demand promissory note executed by the accused. Ex.P12 is statement of loan of accused. These documents clearly show that the accused borrowed loan from the complainant. In the present case, the accused has not disputed his membership in complainant society as per Ex.P8. The Ex.P9 is loan application of accused. In this application the photo of accused and his wife was affixed and the accused and his wife signed to said loan application. The accused and his wife were also signed to Ex.P10 loan agreement and Ex.P11 on demand promissory note. The accused has not denied the signatures in Ex.P9 to 11. If he had not taken loan from the complainant, the accused has to establish that how his photo and the signatures were came on these documents. But the accused 8 CC NO.4474/2025 KABC030075362025 has not explained anything in this regard. Moreover, Ex.P12 statement of account shows the balance of principle amount.
16. If accused had not taken loan and complainant filed false case, definitely the accused would have initiated criminal case against the complainant. But the accused has not taken any civil or criminal action against the complainant and also not produced any documents in this regard. It is not the conduct of prudent man. The Ex.P9 to 11 clearly show the loan transaction of accused with complainant.
17. The accused further contended that the complainant has not produced board resolution, loan register or minutes of meeting. Hence, there is no legally enforceable debt. Though the complainant has not produced these documents before this court, he produced Ex.P9 to 12 to show the loan transaction. These documents clearly show the loan transaction. It is the duty of the accused to rebut the presumption by establishing the facts that how his signatures came on loan application, loan agreement, on demand promissory note and other documents. In the present case, the accused has not explained anything in this regard and he failed to establish these facts. Though he cross-examined the PW- 1, nothing worth has been elicited from the mouth of PW-1 to prove these facts.
18. Further defence of accused is, the PW-1 has no valid authorization to prosecute the case. The accused contended that Ex.P7 authorization letter was signed by PW-1 himself. There is no 9 CC NO.4474/2025 KABC030075362025 signature of President. Hence, it is not valid authorization. In the absence of valid authorization complaint is liable to be dismissed. Further, he relied on decision of Hon'ble Apex Court published in (2014) 11 SCC 790 between A.C.Narayanan Vs State of Maharashtra. The complainant clearly mentioned in his complaint and chief-examination that he is working as Chief Executive Officer of complainant society. The Chief Executive Officer is Chief Officer of entire society. He has ample power in that society. There is no need to CEO to produce authorization letter to prosecute the case on behalf of society since he is Chief Officer of society. If he delegated the said powers to other staff, then he has to issue authorization letter in favour of that staff. It is not the defence of accused that the PW-1 is nowhere concerned to complainant society. If any dispute in respect of authorization, the society has to dispute the same.
19. The accused clearly admitted his membership in complainant society through Ex.P7 membership application. The President of complainant society and PW-1 being secretary had put their signatures in said document. It clearly shows the position of PW-1 as Secretary or Chief Officer of society. It clearly shows that the PW-1 is Chief Officer of society. The Chief Officer has every power to represent his society and filed any complaint on behalf of society. There is no required the authorization letter to the Chief Officer of society.
20. In the decision of A.C.Narayanan's case the Hon'ble Apex Court has not stated that the Secretary or Chief Executive Officer of 10 CC NO.4474/2025 KABC030075362025 society shall produce authorization letter. The Hon'ble Apex Court held that the power of attorney holder cannot file a complaint in his own name as if he was the complainant, but he can initiate criminal proceedings on behalf of his principal. In the present case the complainant being chief officer filed this complaint on behalf of society. If power of sub-delegate was mentioned in power-of- attorney, then only holder can sub-delegate his powers to another person. Without mentioning the same in power-of-attorney if he sub-delegated the powers, it become invalid in law. The ratio of the said decision is not applicable to the case on hand. Because, the complainant is a society. The PW-1 is CEO of society. It means he is chief officer of society. He has to represent his society and he has to prosecute any case on behalf of society. If complainant was a company, then matter would be the different. The CEO of society has every power to prosecute the case on behalf of his society. There is no need the authorization letter to him.
21. Further defence of accused is, notice issued by the complainant was not served on accused. The accused contended that the said notice was returned with an endorsement of No Such Person. The mandatory service of notice is not complied. Hence, complaint is not maintainable. The accused relied on decision of Hon'ble Apex Court published in (2007) 6 SCC 555 between C.C.Alavi Haji Vs Palapetty Muhammed. The Ex.P3 is office copy of legal notice. Ex.P4 is postal receipt. Ex.P5 is returned postal cover. Endorsement on Ex.P5 clearly shows that it was returned as No Such Person.
11 CC NO.4474/2025KABC030075362025
22. The complainant produced Ex.P8 membership application which is admitted by the accused and also produced Ex.P9 loan application. In these documents the accused himself provided his address to the complainant. The Ex.P3 office copy of legal notice and Ex.P5 returned postal cover clearly show that the complainant issued notice to the address provided by the accused himself in his membership application and loan application. As per the decision of Hon'ble Apex Court in C.C.Alavi Haji Vs Palapetty Muhammed case, it is the duty of complainant to send notice to the correct address of accused, which was clearly complied in this case. The address mentioned in notice and address mentioned by the accused in Ex.P7 and 8 membership application and loan application are same. It clearly shows that the complainant issued notice to the correct address of the accused. It is clear compliance of section 138(b) of N.I.Act.
23. If accused is not residing in said address and residing in different address, it is the duty of accused to provide changed address to the complainant. Whenever the accused took the defence of non-service of notice and contended that he is not residing in the said address, it is the duty of accused to establish his correct address. But in the present case the accused has not produced any document to show that he is not residing in the said address. The Hon'ble Apex Court clearly held in decision of C.C.Alavi Haji Vs Palapetty Muhammed case, if the accused had taken the defence of non-service of notice he has to pay amount of cheque within 15 days from the date of service of summons issued by the court. Then only he can take said defence. If he failed to 12 CC NO.4474/2025 KABC030075362025 pay said amount within 15 days from the date of service of summons, the said defence is not available to the accused. This ratio has been laid down in the decision furnished by the accused himself. The complainant issued notice to the correct address provided by the accused in Ex.P8 and 9. It clearly shows that the complainant issued notice to the correct address of accused. At this situation, the court shall draw presumption about the service of notice. The accused evaded the service of said notice. But it is deemed service of notice.
24. The accused further contended that as per the decision of Basalingappa Vs Mudibasappa there is no need to the accused to come to the witness box to prove his defence and he can rely on evidence of complainant. The accused further contended that the accused successfully rebutted the presumption. The burden shifted on complainant as per decision of Kumar Exports case. The accused further contended that complainant failed to prove loan transaction. Hence, complaint is liable to dismiss. But in the present case the accused failed to rebut the presumption. He failed to prove that he had not taken loan from the complainant. The accused also failed to prove that notice was not served on him. In the present case the complainant clearly established the facts by oral evidence as well as documentary evidence. The accused further contended that he issued said cheque for the purpose security at the time becoming member of complainant society and the complainant misused the said cheque and filed false case against him. If it is true, definitely accused would have initiated legal action against the complainant after service of notice or after 13 CC NO.4474/2025 KABC030075362025 service of summons or after appearing in this case. But accused had not initiated any action against the complainant till today. In the present case the accused failed to rebut the presumption.
25. Once the execution of Negotiable Instrument is either proved or admitted, then the Court shall draw a presumption to the effect that Negotiable Instrument has been drawn for valid consideration and legally recoverable debt was in existence. Hence, this court considered that there is legally recoverable debt and the accused issued Ex.P1 cheque in favour of complainant to discharge his liability. The accused failed to prove his burden. In the present case, the complainant proved that the accused has committed an offence punishable under section 138 of N.I. Act. Hence, I answer the point No.1 and 2 in the Affirmative.
26. Point No.3: Once the accused is found guilty for the offence punishable under section 138 of N.I.Act, he may be punished with imprisonment for a term which may be extended to two years or with fine which may be extended to twice of the amount of the cheque or with both. At this stage I would like to refer the decision published in 2011 Cr.L.J. 2593 between Koushalya Devi Massand Vs. Roopkishore Khore, wherein the Hon'ble Apex Court held that since offence under N.I.Act is civil wrong, the gravity of complaint can not be equated with the offence of Indian Penal Code and instead of jail sentence, impose of fine payable as compensation is found sufficient to metes ends of justice. Hence, it is just and proper to impose sentence of fine on the accused instead of sentence to send him to jail.
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27. As per Sec.395 of B.N.S.S, when Court imposes sentence of fine on the accused, may order the whole or any part of fine to be applied in the payment to any person of compensation for any loss or injury caused by the offence.
28. In the present case the complainant is society. The amount involved in this case is public money. The complainant suffered loss by the reason of the act of the accused. The accused issued cheque in the month of November, 2024. If the accused paid said amount on that time, certainly the complainant would have get some benefits by this time. Hence, it is proper to impose reasonable fine against the accused. Cheque amount is Rs.2,08,500/-. Imposing fine of Rs.2,60,000/- become reasonable fine. Hence, I proceed to pass the following:
ORDER Acting under Section 278(2) of B.N.S.S. the accused is convicted for the offence punishable under Section 138 of N.I.Act and sentenced to pay fine of Rs.2,60,000/- (Two lakh sixty thousand only).
The accused is directed to pay the said fine amount on or before 30 days from today.
If fine is realized, Rs.2,55,000/- shall be paid to the complainant as compensation as per Section 395 of B.N.S.S. and remaining Rs.5,000/- shall be paid towards the State as fine for incurring prosecution expenses.
In default of payment of fine amount, the accused shall under go simple imprisonment for six months.15 CC NO.4474/2025
KABC030075362025 Bail bonds executed by the accused and surety are stand canceled.
The accused is entitled for free copy of this judgment U/Sec.404 of B.N.S.S. But today accused is not present before the court. Hence free copy of judgment is not supplied to accused. If accused voluntarily appears before the court, free copy will be served on accused. (Dictated to the stenographer, transcribed and typed by her, corrected by me and then pronounced in the open court on this 27th November 2025).
(Anandappa.M) XL Addl. C.J.M, Bengaluru.
: ANNEXURE:
WITNESS EXAMINED ON BEHALF OF PROSECUTION:
P.W.1 : K.Lokesh.
WITNESS EXAMINED ON BEHALF OF ACCUSED:
-Nil-
DOCUMENTS MARKED ON BEHALF OF PROSECUTION:
Ex.P1 : Cheque
Ex.P1(a) : Signature
Ex.P2 : Memo
Ex.P3 : Office copy of the legal notice
Ex.P4 : Postal receipt
Ex.P5 : Returned postal cover
Ex.P6 : Postal track consignment
Ex.P7 : Board resolution
Ex.P8 : Membership application
Ex.P9 : Loan application
Ex.P10 : Loan agreement
Ex.P11 : On demand pro-note
Ex.P11(a) : Signature of accused
Ex.P12 : Statement of account.
DOCUMENTS MARKED ON BEHALF OF ACCUSED :
-Nil-
(Anandappa.M)
XL Addl. C.J.M, Bengaluru.