Bangalore District Court
Ms Shree Gokulam Chit Finance Co P Ltd vs Rangaswamin M S on 12 January, 2026
KABC030467812024
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL
MAGISTRATE, AT BANGALORE CITY
Dated this the 12th day of January 2026
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.No.26919/2024
Complainant : M/s Sree Gokulam Chits & Finance Co.(P)
Ltd.,
Having its Corporate office at
"Sree Gokulam Towrs" NO.66
Arcot Road, Kodambakam
Chennai 600 024
Having its branch at
No.678/1, M.R.Layout
Hosur Main Road
Near Rail Over Bridge
Chandapur,
Bangalore
Rep by its GPA Holder
Sri Murali M.
(By HKS -Advocate )
V/s
Accused : Sri Rangaswami M.S.
S/o Sri Sannaiah
Ruchitha Building
Near Govt.School
Vaderamanchenahalli
Anekal Taluk
2
C.C.No.26919/2024
Bangalore 562 106.
(By SH - Advocate )
Plea of accused: Pleaded not guilty
Final Order: Accused is Acquitted
Date of judgment 12-01-2026
JUDGMENT
The complainant has filed the complaint under Section 200 of Criminal Procedure Code against the accused for the offence punishable under Section 138 of The Negotiable Instruments Act.
2. The brief case of the complainant is as under:
That the complainant is a company duly registered under the Indian Companies Act. The accused is the subscriber of chit group No.G2G 0408 with ticket No.04 for sala value of Rs.3,00,000/-. The accused participated in the bid and received bid amount of Rs.2,23,875/- on 15.11.2016. It is pleaded that after receiving the bid amount, the accused became a defaulter and failed to remit future installments. On regular follow up made by the complainant the accused accepted total outstanding liability of principal and interest of Rs.1,50,569/-
and agreed to pay the same. Towards payment of outstanding 3 C.C.No.26919/2024 due amount the accused issued a cheque bearing No.421576 for Rs.1,50,569/- dated 07-06-2024 drawn on State Bank of India, Jigani Branch, Bangalore-562106. The complainant has presented the cheque for realization through its banker i.e. CSB Bank Ltd, Bommasandra Branch, Bangalore and said cheque returned dishonored on 11.06.2024 for the reason "Account Closed ". Therefore the complainant has got issued legal notice dated 29.06.2024 by RPAD calling upon the accused to pay the amount covered in the cheque. The notice is duly served on the accused on 08.07.2024. Inspite of service 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 has taken cognizance of offence and registered the case in PCR No.10711/2024 and recorded sworn statement of the representative of the complainant as PW 1 and got marked 10 documents as Ex.P 1 to P10. This court by considering the material on record issued process under Section 204 of Cr.PC 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 4 C.C.No.26919/2024 accused along with the summons as contemplated under Section 207 of Criminal Procedure Code.
4. The substance of the acquisition as provided under Section 251 of Cr.P.C 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 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 is on record, the incriminating circumstances in the evidence of the prosecution is read over to the accused and his statement under Section 313 of Cr.P.C has been recorded. The accused denied the incriminating circumstances as false. The accused has filed application to recall PW1 for cross examination. But PW 1 has not appeared for cross examination since PW 1 left the employment with the complainant company. Hence the evidence of PW 1 is discarded on the memo of the complainant. The complainant examined another representative as PW 2 and got marked the documents as Ex.P.1 to Ex.P.13 and he is subjected to cross examination. Ex.D1 to Ex.D3 have been confronted and 5 C.C.No.26919/2024 marked during cross examination of PW 2. After the evidence of PW 2 the incriminating circumstances in the evidence of PW 2 is read over to the accused and his additional statement under Section 313 of Cr.P.C recorded. The accused has submitted no defence evidence.
6. Heard arguments of learned counsel for the complainant and arguments of learned counsel for the accused 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 issued cheque bearing No.421576 for Rs.1,50,569/-
dated 07-06-2024 drawn on State Bank of India, Jigani, Bangalore towards discharge of legally recoverable debt and on presentation of the same through its banker i.e. CSB, Bommasandra branch Bangalore it is dishonoured for the reason "Account Closed"
on 11.06.2024 and inspite of receipt of demand notice dated 29-06-2024 on 08.07.2024, the accused has not complied the demands in the notice and thus the accused has committed an offence punishable under Section 138 of Negotiable Instruments Act ?
2. What Order or Sentence?6
C.C.No.26919/2024
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 authorised representative of the complainant is examined as PW-2 and in his evidence affidavit he has reiterated the averments made in the complaint. The complainant is a registered company under the Companies Act doing chit fund business. To prove incorporation of the company the complainant has produced the true copy of the Incorporation Certificate as Ex.P1. This document proves the legal status of the complainant. The complainant has produced the certified copies of Board Resolution and the general power of attorney in his favour as Ex.P.2 and Ex.P.3. He has also produced the true copy of GPA and the Board Resolution in favour of PW 1, who presented the complaint as per Ex.P.12 and Ex.P.13.
10. The accused has denied authority of PW 2 to depose on behalf of the complainant and to represent the complainant. In the cross examination of PW 2 the accused has denied due execution of the GPA as per Ex.P.3. He has taken the contention 7 C.C.No.26919/2024 that the GPA is not executed and authenticated as per requirements of law under Notaries Act. His main contention is that in Ex.P.3, GPA, the Notary who authenticated the document has not entered the Notary Registration Number and he has not authenticated due execution of the GPA. In this regard he has relied on the decision of the Honble Bombay High Court reported in AIR 2012 Bombay 50 between Nirav Deepak Modi vs. Najoo Behram Bhiwandiwala and Ors. In this decision, it is held that non compliance of mandatory requirements under Notaries Act invalidate the document, that, the serial number of notarization including number of register maintained by notary public should be disclosed in the notarized document. Absence of this mandatory particularly may rule out notarization of the document. Thus the accused has contended that Ex.P.3 does not disclose notary registration number. Therefore GPA is invalid under law. It is true that the GPA is executed before the notary public at Chennai, but, the notary registration number is not mentioned by the notary public in the document and the Ex.P.3 suffers from said legal infirmity. But the complainant has not based the authorization to represent the case only on GPA. He has also produced the extract of the Minutes of the proceedings of the Board of Directors as per Ex.P.2. As per Ex.P.2, the PW 2 is authorized to represent the complainant 8 C.C.No.26919/2024 company before the court of law and to do all other acts which are necessary for prosecuting or defending the complainant. Therefore even hough Ex.P.3 GPA suffers from legal infirmity, the authorization given by the Board of Directors authorizes the PW 2 to represent the complainant company. The complainant being the juristic person cannot appear before this court and it should be represented by its representative. The Board of Directors is having authority to represent the company and they are having authority to delegate their power to its employee by passing resolution. Therefore the authority conferred on PW2 on the basis of Ex.P.2, the Board Resolution gives authority to PW 2 to represent the case. Therefore, the complainant cannot be ousted from prosecuting the accused on the ground that there is no proper representation of the complainant before this court.
11. The PW 2 has deposed that the accused is the subscriber of chit group No.G2G 0408 with ticket No.04 for value of Rs.3,00,000/-. The accused participated in the bid and received bid amount of Rs.2,23,875/- on 15.11.2016. The accused has also not disputed the same. The PW 2 has deposed that after receiving the chit amount, the accused became a defaulter and failed to remit the future installments. The complainant has 9 C.C.No.26919/2024 produced the surety and security form executed by the accused as Ex.P.9. The PW 1 has deposed that on regular follow up made by the complainant the accused accepted the total outstanding liability of principal and interest of Rs.1,50,569/- and agreed to pay the same. It is stated that towards payment of outstanding due amount the accused issued a cheque bearing No.421576 for Rs.1,50,569/- dated 07-06-2024 drawn on State Bank of India, Jigani Branch, Bangalore-562106. The complainant has produced said cheque as EX.P 4. The PW 2 has deposed that they have presented Ex.P4 cheque for collection through their banker CSB Bank Limited, Bommasandra branch and said cheque returned dishonored on 11.06.2024 for the reasons "Account closed". The complainant has produced bank endorsement for dishonour of cheque as EX.P 5. The PW2 has deposed that they have got issued legal notice as per Ex.P6 dated 29.06.2025 calling upon the accused to pay the amount covered in the cheque. The notice sent through RPAD is duly served on the accused on 08.07.2024. Evidencing the same, the complainant has produced the postal receipt and the postal track consignment as Ex.P.7 and Ex.P.8. The PW 2 deposed that inspite of service of demand notice the accused has not paid the amount and thus 10 C.C.No.26919/2024 committed the offence under section 138 of Negotiable Instruments Act.
12. Therefore now it is proper to consider whether the complainant has complied statutory requirements for constitution of the offence. 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 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. Therefore it is proper to consider whether the statutory requirements for constituting the offence under Section 138 of Negotiable Instruments Act is complied by the complainant.
13. The cheque is dated 07-06-2024. It is dishonored on 11.06.2024 for the reasons "Account closed". The demand notice is issued on 29.6.2024 and it is duly served on 08.07.2024. Therefore the cause of action for prosecuting the 11 C.C.No.26919/2024 accused arose on expiry of 15 days of service of notice on 24.07.2024. The complaint is filed before this court on 06.08.2024 with in the statutory time. The cheque is presented for collection through the account of the complainant with CSB Bank Limited, Bommasandra Branch situated within the jurisdiction of this court. 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 said cheque, unless and until same is disproved. The accused has admitted that cheque is drawn from his bank account and also admitted his signature on the cheque and issuance of cheque to the complainant. The accused has also not denied dishonor of the cheque for the reason "Account Closed".
14. The accused has denied the service of legal notice. But, he has not disputed the address mentioned in the demand notice. The complainant has produced the postal track consignment evidencing service of demand notice. The demand notice is issued to the correct address of the accused. Therefore, in view of the provisions U/s.27 of the General Clauses Act, it is to be presumed that the notice is duly served on the accused and the burden is on the accused to prove that the notice is not 12 C.C.No.26919/2024 served on him. Except denial of service of notice, the accused has not placed any material to rebut the presumption about due service of the notice. Therefore this contention of the accused that the notice is not served on him cannot be considered. 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) ..................
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 13 C.C.No.26919/2024 section 138 for the discharge, in whole or in part, of any debt or other liability.
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.
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.
15. The accused has not issued reply notice put forwarding his defence at the earliest point of time. His defence is disclosed in the cross examination of PW 2. The accused has admitted that he has subscribed the chit with the complainant and 14 C.C.No.26919/2024 received the bid amount. He has not denied the contention of the complainant that he has defaulted in repayment of the due amount. But he has denied the liability to the extent of the amount mentioned in the cheque.
16. The accused has taken contention that he has issued blank signed cheque to the complainant towards security at the time of subscription to the chit and it is misused by the complainant. Further, he has taken the defence that the chit transaction held by the complainant is in violation of the Provisions of the Chit Funds Act. Therefore the chit transaction held by the complainant is illegal transaction. Therefore, any amount due to be paid by the accused, cannot be termed as legally recoverable debt.
17. The accused in the cross examination of PW 2 has elicited that before commencing the chit details of the subscriber should be given to the registering authority and also elicited that to open a chit, the complainant should deposit the amount equivalent to the chit value in a Nationalized Bank. The PW 2 having admitted these requirements of law, has deposed that he is not having knowledge that whether alleged chit subscribed by the accused is registered with the registering authority and 15 C.C.No.26919/2024 also deposed that he has no knowledge whether the value of the chit is deposited in any of the nationalized bank by the complainant. The PW 2 has admitted that they have not initiated any recovery proceedings before the Registrar of Co- operative Societies. It is the contention of the accused that as the chit subscribed by the accused is not registered with the Registrar of Chits, it is not legally recoverable. Therefore, the complainant has not initiated any recovery proceedings before the Registrar of Co-operative Societies.
18. The accused during his arguments to substantiate his defence has relied on the provisions of Sec.4, 19 and 20 of the Chit Funds Act. The provisions of Sec.4, 19 and 20of the Chit Funds Act reads as under :
Section 4 : Prohibition of chits not sanctioned or registered under the Act.--(1) No chit shall be commenced or conducted without obtaining the previous sanction of the State Government within whose jurisdiction the chit is to be commenced or conducted or of such officer as may be empowered by that Government in this behalf, and unless the chit is registered in that State in accordance with the provisions of this Act:
Provided that a sanction obtained under this sub-section shall lapse if the chit is not 16 C.C.No.26919/2024 registered within twelve months from the date of such sanction or within such further period or periods not exceeding six months in the aggregate as the State Government may, on application made to it in this behalf, allow. (2) An application for the purpose of obtaining a sanction under sub-section (1) shall be made by the foreman in such form and in such manner as may be prescribed.
(3) .............
(4) ............
(5) ..........
Section 19 : Restriction on opening of new place of business.--(1) No person carrying on chit business shall open a new place of business without obtaining the prior approval of the Registrar within whose territorial jurisdiction his registered office or, as the case may be, the place or the principal place of business is situated.
(2) Before granting approval under sub-section (1), the Registrar shall consult the Registrar of the State within whose territorial jurisdiction the new place of business is proposed to be opened and shall also keep in view the financial condition and methods of operation of the foreman, the extent to whichpublic interest will be served by the opening of the new place of business and such other matters as may be prescribed.
17
C.C.No.26919/2024 (3) Where a person carrying on chit business opens a new place of business in a State other than the State (hereinafter referred to as the State of origin) in which his registered office or the place or the principal place of his business is situated, the Registrar of the State in which such new place of business is opened may also exercise and perform any of the powers and functions which the Registrar of the State oforigin may exercise and perform in respect of the chit business carried on at such new place of business.
(4) For the purposes of this section, "place of business" shall include any branch office, sub- office, or any place of business where the chit business may be conducted by such person.
Section.20: Security to be given by foreman.- (1) For the proper conduct of the chit, every foreman shall, before applying for a previous sanction under section 4,-
(a) deposit in an approved bank an amount equal to the chit amount in the name of the Registrar;or
(b) transfer Government securities of the face value or market value (whichever is less) of not less than one and a half times the chit amount in favour of the Registrar; or
(c) transfer in favour of the Registrar such other securities, being securities in which a trustee may invest money under section 20 of 18 C.C.No.26919/2024 the Indian Trusts Act, 1882 (2 of 1882)., of such value, as may be prescribed by the State Government from time to time.
Provided that the value of the securities referred to in clause (c) shall not, in any case, be less than one and a half time the value of the chit amount.
(2) Where a foreman conducts more than one chit, he shall furnish security in accordance with the provisions of sub-section (1) in respect of each chit.
19. In this aspect the accused has relied on the decision of the Hon'ble High Court of Karnataka in ILR 2018 KAR 5063 (Sahaji P.B. Vs State of Karnataka). In this decision the Hon'ble High Court has held that -
"If Section 4 of the Act is seen, what it envisages is necessity of obtaining prior sanction from the state government within whose jurisdiction chit is to be commenced or conducted. That means before commencement of every chit a separate sanction has to be obtained".
With regard to Section 19 of the Act the Hon'ble High Court has interpreted provisions under Sec.19(4) of the Act which states "Place of business" and held that "sanction under Sec.4 of the Act is required only when actual chit transaction is conducted. Mere collection of subscription amount by the branch office of sub office is not chit transaction".
19
C.C.No.26919/2024 The accused has also relied on the decision of the Hon'ble High Court of Karnataka reported in ILR 2013 KAR 559 (M/s Shriram Chits Pvt Ltd. Vs Additional Registrar of Co operative Societies). In this decision Hon'ble High Court has held that "Sec 4 of the Act provides for prohibition of chits not sanctioned or registered under the Act. Under this provision no chit shall be commenced or conducted without obtaining previous sanction of the state government and its registration in that state in accordance with provisions of the Act".
It is also observed that "There is clear prohibition of running a chit without complying all the conditions provided under the Act. The contract which is basically void, cannot be enforced in law".
20. Therefore in view of the observations made by the Hon'ble High Court of Karnataka in the above referred decisions if the chit is not registered with the registering authority, such contract of chit is void and not enforceable under law. The complainant has produced the surety and security form as Ex.P.9. In the said form the branch is shown as 'M'. The PW1 has deposed that the letters MSR in ticket number as shown in Ex.P.10 represents registration at Malleshwaram. Therefore it is clear that the chit is registered at branch office of the complainant at Malleshwaram. Now, by applying the principles under Sec.19(4) of the Act, as observed by the Hon'ble High 20 C.C.No.26919/2024 Court of Karnataka in the above referred decisions, when the actual chit transaction is conducted from the branch office which is situated outside the state where the head office is situated and registered, such chit should be registered in the state where the branch office is situated. Admittedly the head office of the complainant is situated at chennai. The chit is subscribed at Malleshwaram, Bengaluru, which is plance of buisnsess. Therefore the chit should be registered at Bangalore where the branch office is situated and actual chit transaction is conducted as per Ex.P9 and as deposed by PW2. As discussed above, PW 2 being the representative of the complainant has deposed that he has not seen any documents in the office for registration of the chit as per the requirements under Sec.4 and 19(4) of the Chit Fund Act and he has pleaded ignorance about registration of the chit as per the said provisions. Therefore, it can be safely concluded that the chit subscribed by the accused with the complainant is not registered under Section 4 of the Act or under Section 19(4) of the Act. Therefore the chit subscribed by the accused is void and not enforceable under law.
21. As discussed above, the foreman who is the complainant in the case, should have deposited value of the chit in any of the 21 C.C.No.26919/2024 approved Bank as provided under Sec.20 of the Chit Fund Act. The PW 2 has deposed in his evidence that he is not having any knowledge about the deposit of value of the chit in the nationalized bank as per the requirements of law. Therefore, it can be safely concluded that the complainant has not deposited the chit value as per requirement Under Section 20 of the Chit Funds Act. Adverse inference can be drawn against the complainant under Section 114 of the Indian Evidence Act for non production of the documents proving registration of the chit and deposit of chit value. Therefore in view of non compliance of requirements of law under Sec.4 and 19(4) and 20 of the Chit Funds Act, the chit transaction held by the complainant shall be termed as void transaction and it is not enforceable under law. The contention of the complainant is that the accused issued cheque towards repayment of due amount under the chit, which is void under law for non compliance of the requirement of law. Therefore the amount due under the said chit, shall not be treated as legally recoverable debt. Therefore the accused established his case with probable defence that the amount claimed by the complainant under the cheque Ex.P4, cannot be brought within the framework of legally recoverable debt.
22
C.C.No.26919/2024
22. The complainant has produced the statement of account as Ex.P.10 to show that the amount involved in the cheque is due from the accused. The accused has taken contention that the Certificate filed by the complainant in respect of Ex.P.10 under Section 65 (B) of Indian Evidence Act cannot be relied upon. In the Certificate under Section 65(B) of the Indian Evidence Act marked as Ex.P.11, the PW 2 has certified that he has produced the account extract of the complainant company which is downloaded through DELL core-2 Duo computer which is in his personal and official use. But in the cross examination he has deposed that "we have obtained print out of Ex.P.10 in our office at Chandapura. I am working in Gandhinagar branch. The Branch Manager of Chandapura branch has obtained signature in Ex.P.10. The Manager of Chandapura branch has not filed affidavit as per requirement of law". In view of this evidence of PW 2, it is clear that the PW2 has not obtained the print out from the system which is in his custody and control. It is obtained in the branch office at Chandapura by the Branch Manager. Therefore certification made by PW 2 as per requirement of Sec.65 (B) of the Indian Evidence Act is defective one.
23
C.C.No.26919/2024
23. The accused has also taken contention that Ex.P.10 is not the true extract of the statement of accounts maintained by the complainant during the course of business. To substantiate said aspect, he has confronted two statement of accounts marked as Ex.D.1 and Ex.D2. The accused has stated that said statement of account is furnished by the Branch Manager of Chandapura branch when he visited the branch seeking statement of account. The PW 2 has also admitted that Ex.D.1 and D2 are furnished from their branch office to the accused. On perusal of Ex.D1 and D2 in comparison with Ex.P.10, the Statement of Accounts, it is very clear that the ledger extract produced as Ex.P.10 and Ex.D1 and D2 differs from each other. Ex.D.1 and D2 do not show the column imposing interest @ 1.5% after 05.02.2018. But in Ex.P.10 the complainant has shown a column that they have imposed interest @ 1.5 % from 15.02.2018 and by including such interest, in the balance amount shown as Rs.1,50,569/- . But in Ex.D.1 and D2, the complainant has not disclosed that they are imposing interest on the due amount and it is not reflected in the said statements. Therefore it is clear that the complainant has not disclosed the fact of imposing interest on the due amount to the accused and suppressed said fact while furnishing Ex.D.1 and D2. Therefore from this evidence the accused has substantiated his 24 C.C.No.26919/2024 defence that the calculation arrived at by the complainant under Ex.P.10 is not correct with probable material. Therefore existence of debt to the extent of the amount covered in the cheque is proved to be doubtful.
24. In the cross examination of PW 2, the accused has questioned him with regard to amount of Rs.86,800/- collection shown on 15.09.2018 and mode of payment. But, the PW 2 is not able to answer whether such payment is made by cash, DD, cheque or UPI. When Dw 1 is confronted about the variations in the statement of accounts Ex.D1 and D2 with Ex.P.10 he is not able to explain why there is variations in these statements and the tabular columns. This aspect also shows that the complainant has not produced the statement of account maintained in the regular course of business and they have produced the statement of account to suit their purpose. Therefore this aspect also creates reasonable doubt about existence of debt to the extent of the cheque amount.
25. Therefore considering above aspect, the defence put forward by the accused clearly establishes that the debt claimed by the complainant is not legally recoverable debt. The accused by producing Ex.D.1 and D2 and showing the variation in Ex.P.10, 25 C.C.No.26919/2024 statement of accounts has created reasonable doubt about the correctness of the claim made by the complainant. It is settled principal of law that the accused need not prove his defence with cogent evidence. If he is able to produce the evidence to probabalize non existence of debt or existence of debt is doubtful, is sufficient to rebut the presumption under Section 139 of Negotiable Instruments Act. For the above discussion, this court is of the considered view that the material brought on record by the accused by way of cross examination of PW 2 and by producing Ex.D.1 and D2, is sufficient to shift the onus of proving the existence of debt beyond reasonable doubt to the complainant and for rebuttal of presumption under Section 139 of Negotiable Instruments Act.
26. Therefore in view of rebuttal of presumption by the accused, the complainant is required to prove existence of debt beyond all reasonable doubt by adducing cogent evidence. As discussed above, the complainant has failed to prove that the chit subscribed by the accused is registered as per the requirement of Sec.4 and 19(4) of the Chit Funds Act. The complainant has also failed to prove that he has deposited the chit value as per the requirement of Sec.20 of the Chit Funds Act. Therefore, the alleged chit subscribed by the accused is 26 C.C.No.26919/2024 void and it is not enforceable under law. Therefore, the complainant cannot claim that the debt under the said chit subscription is a legally recoverable debt. Therefore this court concludes that the complainant has failed to prove existence of legally recoverable debt by leading cogent evidence.
27. For the above discussion this court concludes that the complainant has failed to prove that the accused has issued the cheque Ex.P.4 towards payment of legally recoverable debt. Therefore, the complainant has failed to prove guilt of the accused under Section 138 of the Negotiable Instruments Act. Therefore this court answers the above point No.1 in the Negative.
28. POINT NO. 2 : In view of the answer recorded to point No.1, this court concludes that the complainant has not proved guilt of the accused and the accused is entitled for acquittal. Hence, this court proceed to pass the following -
ORDER By exercising powers conferred U/sec.255(1) of Cr.P.C., the accused is hereby acquitted of the offences under Section 138 of Negotiable Instruments Act.
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C.C.No.26919/2024 Bail bond of the accused and that of the surety stand cancelled.
The accused is set at liberty.
(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 12th day of January, 2026).
(GOKULA.K) XXV A.C.J.M., BANGALORE CITY.
ANNEXURE LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW.1 : Ranjith K.S. PW.2 : Murali.M.
LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P1 : True Copy of the Certificate of
Incorporation
Ex.P2 : True Copy of Board Resolution
Ex.P3 : True Copy of GPA
Ex.P4 : Cheque
Ex.P5 : Bank Endorsement
Ex.P6 : Office copy of Legal Notice.
Ex.P7 : Postal receipt
Ex.P8 : Postal Track consignment
Ex.P9 : Surety and security proposal form
Ex.P10 : Statement of account
Ex.P11 : Certificate U/s.63 of BSA
Ex.P12 : True copy of Board Resolution
Ex.P13 : True copy of the GPA
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C.C.No.26919/2024
LIST OF WITNESSES EXAMINED FOR THE ACCUSED:
Nil LIST OF DOCUMENTS MARKED FOR THE ACCUSED:
Ex.D1 : Statement of accounts
Ex.D2 : Statement of accounts
Digitally
Ex.D3 : Chit passbook signed by
GOKULA GOKULA K
Date:
K 2026.01.13
11:13:10
+0530
(GOKULA.K.)
XXV A.C.J.M., BANGALORE CITY.