Bangalore District Court
Indkal Technologies Pvt Ltd vs Kms International on 7 March, 2026
KABC030474562025
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL
MAGISTRATE, AT BANGALORE CITY
Dated this the 07th day of March 2026
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.No.27608/2025
Complainant : Indikal Technologies Pvt.Ltd.,
Through its aturhorised representative
Tanya Rani
having registered office at
C-102, Hinduja Lake Front Estate
Opp - Hulimavu Police Station ,
Hulimavu
Bengaluru
Karnataka 560 076.
Also at :
1018/A, V Plaza, 24th main road, Sector
1 , HSRLayout
Opp Assets 27 Park Avenue Apartment.
(By DG -Advocate )
V/s
Accused : 1. KMS International
Through its Proprietor Mrs.Sandhya
Chauhan
having office at
Ground Floor, Plot No.156
Sector 16, Rohini , Sector 10
Delhi 110085.
2.Mrs Sandhya Chauhan
Proprietor KMS International
Residing at
2
C.C.No.27608/2025
A-4/27, Sector -16, Rohini
North - West Delhi
Delhi 110085.
(By NK - Advocate )
Plea of accused: Pleaded not guilty
Final Order: Accused Nos.1 and 2 are acquitted
Date of judgment : 07-03-2026
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 138 of Negotiable Instruments Act.
2. The brief case of the complainant is as under:
That the complainant is engaged in the business of manufacturing, selling and distribution of small and large home appliances including but not limited to televisions, refrigerators, washing machines and air conditioners. The Accused No.2 is the proprietor of Accused. No.1 firm. The accused is retailer of electronic home appliances in Delhi. She has entered into Business Associate Application Form dated 24.12.2024 and she become a distributor for the complainant. It was mutually agreed between the parties that on acceptance of the purchase orders, the complainant will issue a proforma invoice against the products ordered by the accused following which the 3 C.C.No.27608/2025 accused had to make complete payments regarding the same within 2 days. The accused agreed to remit the payment on delivery of the products. Hence, the complainant has supplied Indoor and Outdoor Units of Acer 1.5 Ton Inverter 3 Star Split AC on 27.12.2024 under two invoices such as (i) Invoice No. IND0317/DC/24-25 worth Rs.16,19,940/- (ii) Invoice No. IND0318/DC/24-25 worth Rs.16,19,940/- totally for a value of Rs.32,39,880/-. On delivery of the products, the accused has made partial payment of Rs.8,96,920/- and the balance payable is Rs.23,42,960/-. It is pleaded that towards payment of said balance amount the accused issued a cheque bearing No.053429 dated 14.02.2025 drawn on IDBI Bank, GRK Road, Delhi for Rs.23,42,960/-. The complainant presented said cheque through its banker i.e. ICICI Bank Ltd, HSR Layout, Bangalore and said cheque returned dishonored for the reason "Drawers Signature to operate account not received". That pursuant to dishonor of the cheque, the accused remitted Rs.4,90,000/. The accused made only partial payment leaving a substantial balance of Rs.18,52,960/-. The complainant issued a legal notice on 06.03.2025 and called upon the accused to pay balance sum of Rs.18,52,960/- after deducting the amount already paid for Rs.4,90,000/-. Said notice is duly served on the accused on 08.03.2025. After service of notice the accused has made part payment of Rs.1,50,000/- on 31-03- 4 C.C.No.27608/2025 2025 as against outstanding amount of Rs.18,52,960/-. Thus the outstanding amount due by the accused is Rs.17,02,960/-. Inspite of service of notice, the accused failed to pay entire 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.5809/2025 and recorded sworn statement of the authorised officer of the complainant as PW 1 and got marked 14 documents as Ex.P1 to Ex.P14. 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 she 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 her plea is recorded. The accused has pleaded not guilty and claimed to be tried.
5
C.C.No.27608/2025
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 her statement under Section 351 of Bharathiya Nagarika Suraksha Sanhitha is recorded. The accused has denied the incriminating circumstances as false. On the application of the accused the PW 1 is recalled for cross examination. But the PW 1 has not tendered for cross examination and the evidence of PW 1 is discarded. The complainant has got substituted the representative of the complainant and examined another authorized representative as PW 2 and got marked 15 documents as Ex.P.1 to E.x.15. The PW 2 is subjected to cross examination by the accused. The accused has submitted no evidence on her behalf.
6. Heard arguments of learned counsel for the complainant and arguments of learned counsel for the accused and perused the material on record.
6
C.C.No.27608/2025
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.053429 dated 14.02.2025 drawn on IDBI Bank, GRK Road, Delhi for Rs.23,42,960/- towards discharge of legal liability and said cheque has been dishonoured on its presentation on 17.02.2025 for the reason "Drawers signature to operate the account not received" and inspite of service of demand notice dated 06.03.2025 on 08.03.2025 the accused has failed to repay said amount within statutory period and thus the accused has committed an offence punishable under 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 Negative,
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 examined as PW- 2 and in her evidence affidavit she has reiterated the averments made in the complaint. The complainant is engaged in the business of manufacturing, selling and distribution of small and large home 7 C.C.No.27608/2025 appliances including televisions, refrigerators, washing machines and air conditioners. The complainant company is registered under the statutory provisions of Companies Act. To prove the incorporation of the company, complainant has produced the E- copy of the Incorporation Certificate as Ex.P 1. Said document proves the legal status of the complainant company. The accused has not disputed the legal status of the complainant company.
10. The complainant has presented this complaint through its authorized representative B. V. Singh. Later the complainant has changed its representative by substituting Tanya Rani. The complainant has produced the resolution passed by the Board of Directors authorizing B.V. Singh as Exhibit P 15 and also produced the Resolution passed by the Board of Directors authorising Tanya Rani PW2 as Exhibit P 2. The accused has not disputed the authority of PW1 and PW2 to represent the complainant company. But the accused has questioned the competency of PW2 to depose on behalf of the complainant about the facts of the case. The accused has contended that PW2 is not having personal knowledge about the transactions between the complainant and accused and she is not having personal knowledge about issues of cheque and execution of the cheque. Therefore she is not competent to depose on behalf of 8 C.C.No.27608/2025 the complainant. In this regard in the cross examination of PW2 she has deposed that she came to know about the transactions with the accused in February 2025 when the matter was refered to legal team of the complainant. She has also deposed that the sales team is having knowledge about the transactions and entitlement of the accused from the sale of the products of the complainant. She has also stated that Regional Sales Manager is having knowledge about the transactions and the agreement entered with the accused and conditions of payment of the amount. Thus, it is clear that the PW2 is not having personal knowledge about the transactions with the accused and issuance of cheque by the accused, when it is issued, how it is issued, where it is issued. She has also deposed her ignorance about the communication between the complainant and accused about payment of invoice amount and the demands by the complainant. Thus from the evidence of PW2 it is clear that the PW2 is only deposing before this court on the basis of the documents available in the office and she is not having personal knowledge about the transactions with the Accused. The learned counsel for accused has also submitted that in the complaint or in the resolution passed by the Board of Directors, there is no averment to the effect that the authorized representative appointed by the complainant is having personal knowledge about the transactions with the accused. 9
C.C.No.27608/2025
11. To substantiate the contention that PW2 is not competent to depose on behalf of the complainant and she is not having knowledge about the transactions with the accused, the learned counsel for the accused has relied on the decision of Hon'ble High Court of Kerala between Pattasseril v. State of Kerala and Another in Criminal Revision Petition No. 541 of 2017 dated 28.01.2026. In this decision, at para 10, it is held that-
"Even though, a power of attorney holder, being an authorized representative of the company, can file a complaint and give evidence, he must have either witnessed the transaction or must possess direct knowledge of the transaction. A person, who only become associated with the company after the transaction and who relies purely on records, cannot prove the execution of the cheque or the transaction. It is to be kept in mind that merely because the complainant is a juristic entity, it will not dilute the rigor of proof required for proving the execution of the cheque, and execution cannot be presumed merely on the production of the cheque. It must be proved either by the admission of the accused or the evidence of the complainant witnesses who had seen the execution."
12. The learned counsel for the accused has also relied on the decision of Hon'ble Supreme Court in A. C. Narayanan v. State 10 C.C.No.27608/2025 of Maharashtra reported in (2014) 11 SCC 970. In this decision also, the Hon'ble Supreme Court has held that -
"The power of attorney holder can depose and verify on oath before the court in order to prove the contents of the complaint. However, the power of attorney holder must have witnessed the transaction as an agent of the payee or holder in due course or possess due knowledge regarding the said transactions".
13. Therefore, in view of the law laid down in these decisions, the witness who deposing on behalf of the company should have personal knowledge about the transaction and he should possess personal knowledge about issuance of the cheque and execution of the cheque. As discussed above, the PW2 in her cross-examination very clearly deposed that she came to know about the transactions only in February 2025 when the file was transferred to the legal team of the complainant company. She has also deposed that she do not know whether the accused personally came to Bangalore to hand over the cheque or the person of the accused came or it is collected the cheque from the place of the accused etc. She has also deposed that the Regional Sales Manager and the Sales Team of the complainant is having personal knowledge about the transactions. The PW2 is the Legal Assistant Manager in the complainant company and 11 C.C.No.27608/2025 she is not involved with the sales team. Therefore it can be safely concluded that PW2 is not having personal knowledge about the transactions and she cannot depose about the transactions held between the complaint and accused. Any evidence given by PW2 is based on the records maintained in the office.
14. Now it is proper to consider the case on its merits. The case of the complainant is that the accused under the Business Associate Application Form dated 24.12.2024 has entered into business transactions with the complainant and she become the distributor of the Complainant. The complainant has produced the Business Associate Application Form as Ex.P.3. The PW 2 has deposed that it was mutually agreed between the parties that on acceptance of the purchase orders, the complainant will issue a proforma invoice against the products ordered by the accused following which the accused had to make complete payments regarding the same within 2 days. The complainant has supplied Indoor and Outdoor Units of Acer 1.5 Ton Inverter 3 Star Split AC on 27.12.2024 through invoices such as (i) Invoice No. IND0317/DC/24-25 worth Rs.16,19,940/- (ii) Invoice No. IND0318/DC/24-25 worth Rs.16,19,940/- totally for a value of Rs.32,39,880/-. The complainant has produced said invoices as Exhibit P 12 and P 13. The accused has not 12 C.C.No.27608/2025 denied entering into business associate application form with the complainant and also not denied placing of purchase orders and supply of Indoor and outdoor AC units by the complainant for a value of Rs. 32,39,880/-. The complainant has also stated that out of the total invoice amount of Rs.32,39,880/-, the accused has made partial payment of Rs.8,96,960/- as on 28.01.2025. Therefore outstanding balance amount is Rs.23,42,960/-. The accused has also not disputed the facts deposed by PW2.
15. The PW 2 has deposed that the complainant repeatedly requested the accused persons to pay the outstanding balance amount of Rs.23,42,960/-. Then the accused issued a cheque bearing No.053429 dated 14.02.2025 drawn on IDBI Bank, GRK Road, Delhi for Rs..23,42,960/. The complainant has produced said cheque as Ex.P.4. The PW 2 has further deposed that the complainant presented said cheque through its banker ie ICICI Bank Ltd, HSR Layout, Bangalore and said cheque returned dishonored for the reason "Drawers Signature to operate account not received" on 17.02.2025. The complainant has produced the dishonour memo as Ex.P 5. The PW 2 has depose in the meanwhile the accused has paid a sum of Rs.. 4,90,000/- as on 24-02-20025. The PW2 has deposed that they have got issued legal notice dated 06.03.2025 calling upon the 13 C.C.No.27608/2025 accused to pay the balance amount of Rs..18,52,960/- after deducting the amount paid of Rs.4,90,000/- out of the cheque amount of Rs..23,42,960/- as per Ex. P 6. The notice duly served on the accused on 08.03.2025. Evidencing the same the complainant has produced the postal receipts and postal track consignments as Ex.P.7 to Ex.P.10. It is stated that after service of demand notice the accused has paid a sum of Rs..1,50,000/- on 31-03-2025 and the balance payable out of the cheque amount is Rs..17,02,960/-. It is stated that inspite of service of demand notice the accused has failed to make the entire payment demanded in the notice and committed the offence.
16. It is now necessary to consider whether the complainant has complied statutory requirements for commission of the offence under Section 138 of Negotiable Instruments Act. The essential ingredients of section 138 and 142 of Negotiable Instruments Act to be complied are i) drawing of the cheque by the accused ii) presentation of the cheque to the bank with in the period of three months, iii) returning of the cheque unpaid by the drawee bank iv) giving notice in writing to the drawer of the cheque demanding of the payment of said 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 14 C.C.No.27608/2025 and v) Presentation of the complaint within a month by the complainant after expiry of 15 days of service of notice to the accused.
17. The cheque is dated 14.02.2025. It is dishonored on 17.02.2025 for the reason "Drawers signature to operate account not received". The legal notice is dated 06.03.2025. The notice duly served on the accused on 08.03.2025. The PW 2 has deposed that inspite of service of notice, the accused failed to pay the claim amount to the complainant with in the statutory time of 15 days. The accused has also not disputed service of demand notice. The cause of action for prosecution arose on expiry of 15 days of service of notice on 22-03-2025. The complaint is filed before this court on 16.04.2025, within a month of cause of action. The cheque is presented through the account of the complainant with ICICI Bank, HSR Layout Branch, which is situated with in the jurisdiction of this court. The accused has not disputed that cheque is drawn from its account and also not disputed the signature on the cheque and not disputed issuance of cheque to the complainant. The accused has also not disputed the dishonour of the cheque. The cheque was dishonoured for the reason 'drawers signature to operate account not received'. In the cross-examination of PW1, it is elicited that -'It is true to suggest that when the cheque is 15 C.C.No.27608/2025 presented for collection, as per the guidelines of RBI under positive pay scheme, the banker has not received the consent from the accused to honour the cheque. Hence, the cheque was dishonoured for the reason, drawers signature to operate account not received.' Therefore, it is clear that the cheque is dishonoured due to the default of the accused in giving consent to honour the cheque to the banker. Therefore this also attracts the provisions of Section 138 of Negotiable Instruments Act. 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 118 provides for presumption as to negotiable Instruments which reads as follows -
118- Presumptions as to negotiable Instruments - Until the contrary is proved, the following presumptions shall be made -
(a) of consideration - that every negotiable Instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date - that every negotiable instrument bearing a date was made or drawn on such date; (c) .................. 16
C.C.No.27608/2025 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.
18. 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.
19. Therefore, in view of the principles laid down in this decision, once the complainant has complied the statutory 17 C.C.No.27608/2025 requirements under Sections 138 and 142 of Negotiable Instruments Act, onus shifts on the accused to prove his defence and rebut the presumption about existence of legally recoverable debt with probable evidence. Therefore, it is proper to consider the defence of the accused.
20. The primary defence raised by the accused is that the demand notice issued by the accused is not in compliance with the requirements of Section 138 proviso (b) of Negotiable Instruments Act. In this case the amount mentioned in the cheque is Rs. 23,42,960/-. But the demand made by the complainant in the demand notice is for a sum of Rs. 18,52,960/-, after deducting the part payment made by the accused, for a sum of Rs. 4,90,000/-. Therefore the contention of the accused is that the Demand notice should be issued to the cheque amount as per the mandate of law. But the complainant has not issued the demand notice to the cheque amount. Therefore it is defective notice. To substantiate said argument, the learned counsel for the accused has relied on the decision of Hon'ble Supreme Court reported in 2025 SCC Online SC2019 between Kavari Plastics v. Mahoom bava Bharudheen Noorul. In this decision, Hon'ble Supreme Court has held that -
"From the afore-stated reiterative pronouncements and the principles pronounced by this court, the 18 C.C.No.27608/2025 position of law that emerges is that the notice demanding the payment of the amount covered by the dishonored cheque is one of the main ingredients of the offence under Section 138 of the NI Act. In the event of the main ingredient not being satisfied on account of discrepancy in the amount of cheque and one mentioned in the notice, all proceedings under Section 138 of the NI Act would fall flat as bad in law. The notice to be issued under Proviso (b) of Section 138 of the Act, must mention the same amount for which the cheque was issued. It is mandatory that the demand in the statutory notice has to be the very amount of the cheque. After mentioning the exact cheque amount, the sender of the service may claim in the notice amounts such as legal charges, notice charges, interest and such other additional amounts, provided the cheque amount is specified to be demanded for payment."
21. In this case on perusal of the demand notice produced as Exhibit P6, in the notice the Complainant has specifically mentioned the amount involved in the cheque is Rs..23,42,960/-. Further he has stated that after dishonour of 19 C.C.No.27608/2025 the cheque the accused has remitted a sum of Rs. 4,90,000/- as on 24.02.2025. By noting such payment made by the accused, the complainant has made the demand for balance cheque amount of Rs. 18,52,960/-. Thus, in the demand notice, the complainant has separately and specifically mentioned the cheque amount. Thus, by considering the peculiar facts in this case, the accused has made partial payment after dishonour of the cheque and before issuance of the notice and the fact that the complainant has very clearly stated the amount involved in the cheque and deduction of the payment made by the accused and made the demand for balance amount. Therefore having regard to the peculiar facts and circumstances in this case, even though the said amount in Proviso (b) of Section 138 refers the cheque amount, in this case the complainant by stating the cheque amount and also giving deduction of payment made by the accused, before presentation of the chqeque for collection and also payment made after dishonour of the cheque and before issuance of notice, has made the demand for balance amount. Therefore, no illegality can be found in demanding the lesser amount as the complainant has specifically mentioned the cheque amount in the notice.
22. The facts before the Hon'ble Supreme Court, in the said decision is that the demand made in the notice is for 20 C.C.No.27608/2025 Rs.2,00,000/- as against the cheque amount of Rs. 1,00,000/- and it is contented before Hon'ble Supreme Court that the said error is typographical error. Under such circumstances the Hon'ble Supreme Court has held that 'said amount' refered in proviso (b) represents the cheque amount and when the provision is penal and offence is technical, there is no escape from giving any deviation to the mandatory requirements of law. But as discussed above the complainant in the notice specifically mentioned the cheque amount. Then he has mentioned that the accused has made part payment of Rs.4,90,000/- and demanded to pay balance amount in the cheque.
23. Therefore, upon considering above facts and circumstances in which the demand made by the complainant for lesser amount than the cheque amount, by considering the payments made by the accused, cannot be held defective. Therefore, no illegality can be attached to the demand notice issued by the complainant to the accused and it is in compliance of the requirements of law.
24. Another limb of arguments of the learned the counsel for the accused that there is no legally recoverable debt to the extent of the amount mentioned in the cheque and the cheque does not represent existing legal liability. To substantiate existence of 21 C.C.No.27608/2025 legally recoverable debt to the extent of the amount, the complainant has produced the statement of accounts as Exhibit P11. In the cross-examination of PW2, she has deposed that the contents of Exhibit P11 statement of accounts is true. By relying on Exhibit 11 statement of accounts, learned counsel for accused has submitted that as on 28.01.2025, the outstanding amount payable by the accused to the complainant is Rs..23,42,960/-. As per the said Statement of Accounts on 12.02.2025, the accused has made payment of Rs.1,40,000/- and the outstanding balance Rs.22,02,960/-. On 14.02.2025, the accused has made payment of Rs.2,00,000/- and the outstanding due amount is Rs.20,02,960/-. The statement of accounts Exhibit P11 shows that on 17.02.2025, the complainant has presented the cheque for collection for a sum of Rs.23,42,960/- and the outstanding balance is shown in the statement of accounts as Rs.-3,40,000/-. Therefore, leaned counsel for the accused has submitted that as per Exhibit P11 statement of accounts, as on the date of presentation of the cheque on 17.02.2025, the cheque does not represent legally recoverable debt. The cheque is presented to the excess amount of Rs. 3,40,000/- than the outstanding amount. The PW2 in the cross examination has admitted the payments made by the accused as shown on Exhibit 11 is true and correct. The Exhibit P4 cheque is dated 14.02.2025 and it is presented for 22 C.C.No.27608/2025 collection and dishonoured on 17.02.2025. The accused has made payment of Rs. 2,00,000/- on 14-02-2025 and outstanding due amount as on the date of cheque is Rs. 20,02,960/-. As on the date of presentation of the cheque, the outstanding due amount is Rs. 20,02,960/-. Thus it is clear that as on the date of the cheque and as on the date of presentation of the cheque, the cheque for Rs.23,42,960/- does not represent legally recoverable debt and the cheque is for the excess amount of Rs. 3,40,000/- than the liability of the accused as per Ex.P 11 statement of accounts.
25. In this regard, learned counsel for the accused has drawn attention of the court to the provisions of Section 56 of Negotiating Instruments Act, which reads as under -
56. Indorsement of part of sum due - No writing on a negotiable instrument is valid for the purpose of negotiation if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has been partly paid, a note to that effect may be indorsed on the instrument, which may then be negotiated for the balance.
Thus, on plain reading of Section 56 of Negotiable Instruments Act, it stipulates that if there is an endorsement on the 23 C.C.No.27608/2025 negotiable instrument, that a part of the sum mentioned in the cheque has been paid, then the instrument may be negotiated for the balance. It implies that the holder of the cheque cannot negotiate the cheque or present the cheque for collection, without such endorsement of part payment made by the drawer of the cheque and if cheque is presented and dishonoured without such endorsement, it is not valid under law.
26. In this aspect Learned Counsel for the accused has relied on the decision of Hon'ble Supreme Court reported in 2023 SCC 578 between Dashrathbhai Trikamahbai Patel Vs Hitesh Mahendrabhai Patel and another , where in it is held that -
34. In view of the discussion above, we summarise our findings below:
34.1. For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation.
34.2. If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque.
34.3. When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the 24 C.C.No.27608/2025 payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted.
34.4. The first respondent has made part-payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the "legally enforceable debt" on the date of maturity.
Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds.
34.5. The notice demanding the payment of the "said amount of money" has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138. Since in this case, the first respondent has not committed an offence under Section 138, the validity of the form of the notice need not be decided.
27. From the principles laid down in this decision, it is clear that when part payment of the debt is made after the cheque was drawn, but before cheque was encashed, such payment must be endorsed on the cheque under Section 56 of Negotiable Instruments Act, and the cheque cannot be presented for 25 C.C.No.27608/2025 encashment without endorsing part payment. Therefore, if the cheque is dishonored on presentation, without such endorsement of part payment, it will not represent legally recoverable debt and the offence under Section 138 would not be attracted. In this case admittedly the liability as on the date of the cheque and also as on date of presentation of cheque is Rs. 20,02,960/-. But the cheque was presented for collection for a sum of Rs. 23,42,960/- without any endorsement of part payment made by the accused. Therefore the cheque does not represent legally enforceable debt or liability at the time of presentation for encashment. On this account itself the prosecution initiated by the Complainant against the accused shall fail. Thus the accused has established that there is no legally recoverable debt to the extent of the cheque amount at the time of presentation of the cheque for collection or as on the date of the cheque itself.
28. Therefore for the above discussion this Court can safely conclude that the accused with probable evidence has established that there is no legally recoverable debt to the extent or the cheque amount as on the date of cheque. Therefore the accused has rebutted the presumption available under Section 139 of Negotiable Instruments Act in favour of the complainant. As discussed above, by producing Exhibit P11 Statement of 26 C.C.No.27608/2025 Accounts, the complainant itself admitted that the cheque does not represent the legally recoverable debt as on the date of cheque. Therefore there is no material to prove beyond all reasonable doubt that the cheque represent the legally recoverable debt. Further as discussed above the PW2 represented the complainant is not having personal knowledge about the transactions in this case. Therefore for all the above reasons it can be safely concluded that the complainant has failed to prove the guilt of the accused for the offence under Section 138 of Negotiable Instruments Act. Therefore this Court answers the above point number 1 in the negative.
29. POINT NO. 2 : In view of the findings recorded to above point no. 1 the accused is entitled for acquittal. Therefore this court proceed to pass the following -
ORDER By exercising powers conferred U/sec.278(1) of Bharathiya Nagarika Suraksha Sanhita the accused no. 1 and 2 are acquitted the offence punishable under Section 138 of Negotiable Instrument Act The bail bond and surety bond of the accused shall be in force for a period of 6 months for the purposes of Section 481 of Bharathiya Nagarika Suraksha Sanhita.
27
C.C.No.27608/2025 The accused are set at liberty.
(Partly dictated to the Stenographer directly on the computer, typed by her, partly dictated to Adalath AI computer application, transcribed by it corrected and signed then pronounced by me in the open court on this the 7th day of March 2026 ).
(GOKULA.K) XXV A.C.J.M., BANGALORE CITY.
ANNEXURE LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW.1 : Utkarsh Kulvi PW.2 : Tanya Rani
LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P1 : Web copy of the Certificate of Incorporation Ex.P2 : True copy of the Board Resolution Ex.P3 : Business Association Application Form Ex.P4 : Cheque Ex.P5 : Bank Endorsement Ex.P6 : Legal Notice.
Ex.P7&8 : Postal receipts
Ex.P9&10 : Postal Track Consignments
Ex.P11 : Web copy of ledger statement
Ex.P12&13 : e copies of tax invoices
Ex.P14 : Certificate U/s.63 of BSA
Ex.P15 : True copy of the Board Resolution of
earlier representative.
28
C.C.No.27608/2025
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.