Bangalore District Court
Piramal Capitaland Housing Finance ... vs Suraj Ray on 20 February, 2026
KABC0C0340432024
IN THE COURT OF XIV ADDL.CHIEF JUDICIAL
MAGISTRATE, MAYOHALL UNIT, BENGALURU
Dated this the 20th day of February, 2026
Present: SANTHOSH S.KUNDER., B.A.,LL.M.,
XIV Addl. C.J.M., Bengaluru.
JUDGMENT UNDER SECTION 355 of Cr.P.C
C.C.No.59110/2024
Complainant M/s.Piramal Capital & Housing Finance Ltd.,
No.13, Old No.5, 1st Main Road,
Near Kodava Samaja, Vasanth Nagar,
Bengaluru, Karnataka.
Represented by its
Authorized Officer,
Sri.Anand Kumar.N.
(By Sri.S.Lakshminarayana, Advocate)
V/s
Accused Sri.Suraj Ray,
S/o Rana Prathap Ray,
Major,
R/at Astro Maison Douse,
Apartment Mb2010, Sarjapura Road,
Bengaluru-560035.
Also at:
SLV Sunflower 4-37,
Bhogenahalli Village,
Bengaluru-560103.
Also at:
2
C.C.No.59110/2024
KABC0C0340432024
AKR Tech Park, C-Block,
7th Mile, Kudlu Gate,
Krishna Reddy Industrial Area,
Bengaluru-560068.
Also at:
2LGCL New Life type,
'P' Choodasandra Village,
Sarjapura Hobli, Anekal Taluk,
Bengaluru-560035.
(By Sri.Hegde Prakash.R., Advocate)
Offence U/s 138 of Negotiable Instruments Act.
Plea of the Pleaded not guilty
accused
Final Order Accused is held guilty & convicted
This complaint is filed under Section 200 of Cr.P.C,
for the offence punishable under Section 138 of the
Negotiable Instruments Act.
2. Complaint averments in brief:
Complainant is a finance company, rendering
financial assistance to public for the purpose of purchase
of flat/constructed house, putting up additional
construction and effecting alternation/modification to the
existing structure. Complainant has introduced loan
facilities for the benefit of its customers. Accused has
approached the complainant for housing loan vide loan
application No.PHHLBNG07001000 and entered into loan
3
C.C.No.59110/2024
KABC0C0340432024
agreement. Loan was disbursed to the accused. He has
agreed for the terms and conditions of the loan. As per
agreement, he had undertaken to make entire payment of
the agreement value within the period specified therein by
making payments as per the repayment schedule.
However, after availing loan, he has failed to comply the
terms and conditions of the loan agreement. Under the
contract, a sum of ₹5,25,000/- was due and payable by
him. Towards payment of the same, he has issued a
cheque bearing No.645480 dated 28.03.2024 for
₹5,25,000/- drawn on Axis Bank Ltd., Marathahalli,
Bengaluru. Complainant has presented said cheque for
encashment through his banker, viz., Axis Bank Ltd.,
Bengaluru Main branch. But, cheque was returned
unpaid on 02.04.2024 with endorsement 'payment
stopped by the drawer'. Thereafter, the complainant has
got issued a legal notice dated 30.04.2024 calling upon
the accused to pay the dishonored cheque amount. Even
after the receipt of the notice, accused did not bother to
pay the cheque amount. Hence, this complaint is filed.
3. This court took cognizance of the offence
punishable under Section 138 of N.I.Act. Substituted
authorized representative of the complainant by name,
Raghavendra B. was examined on oath. As prima facie
4
C.C.No.59110/2024
KABC0C0340432024
case made out, criminal case was registered and accused
was summoned.
4. Pursuant to the process, accused has
appeared before the court and admitted to bail. After
compliance of Section 207 of Cr.P.C, this court recorded
his plea. He has pleaded not guilty and claimed to be
tried.
5. Sworn statement affidavit of authorized officer
complainant treated as evidence post-cognizance stage.
Documents at Ex.P-1 to 13 marked for complainant.
6. After the closure of complainant's evidence,
accused was examined under Section 313 of Cr.P.C. He
has denied the incriminating evidence. In defence, he has
examined himself as DW-1 and produced documents at
Ex.D-1 to 3.
7. Heard argument on both side.
8. Learned defence counsel has filed notes of
argument.
9. I have perused the records.
10. Complainant has cited following judgments:-
(i) Triyambak S.Hegde V/s Sripad;
(2022) 1 SCC 742;
(ii) Sripati Singh (since deceased) through his
son Gaurav Singh V/s State of Jharkhand
and another; (2022) 18 SCC 614; &
5
C.C.No.59110/2024
KABC0C0340432024
(iii) Suresh Chandra Goyal V/s Amit
Singhal; 2015 SCC OnLine Del 9459.
11. Accused has cited the judgment of Hon'ble
High Court of Karnataka rendered in M/s. Shriram
Transport Finance Co. Limited V/s Simon Correa;
Crl.A.No.1241/2015, DD 13.11.2025.
12. I have perused the records.
13. Points for consideration:-
1. Whether the complainant has proved
that the accused has issued cheque
bearing No.645480 dated 28.03.2024 for
₹5,25,000/-, drawn on Axis Bank Ltd.,
Marathahalli, Bengaluru, towards
discharge of legally recoverable
debt/liability and the said cheque was
dishonored for the reason 'payment
stopped by drawer' and in spite of service
of statutory notice dated 30.04.2024, he
has failed pay the amount covered under
the cheque and thereby committed the
offence punishable under Section 138 of
N.I.Act?
2. What order?
14. The above points are answered as under:-
Point No.1 : In the Affirmative.
Point No.2 : As per final order; for the following:
REASONS
15. Point No.1:- The complainant is contending
that, accused has approached for housing loan by
6
C.C.No.59110/2024
KABC0C0340432024
submitting loan application No.PHHLBNG07001000 and
executed loan agreement. On the request of the accused,
complainant has sanctioned loan and towards partial
discharge of the said loan, the accused has issued the
subject cheque which was dishonored for the reason
'payment stopped by drawer' and that in spite of service of
statutory demand notice, he has failed to pay the
dishonored cheque amount to the complainant.
16. In order to prove the case, the complainant has
offered the evidence of authorized officer, who has
examined as PW-1 and produced documents at Ex.P-1 to
13. Ex.P-1 is board resolution of complainant dated
24.10.2024; Ex.P-2 is cheque; Ex.P3 is bank
endorsement; Ex.P-4 is copy of the demand notice dated
30.04.2024; Ex.P-5 to 8 are postal receipts; Ex.P-9 is
postal track report; Ex.P10 is reply dated 03.06.2024 with
postal cover; Ex.P11 is registered tripartite agreement
dated 20.03.2019; Ex.P12 is statement of account; and
Ex.P13 is loan pre-closure statement.
17. On the other hand, accused has produced
three documents namely, certified copy of deposition of
Mr.Promod Upadhya-Cluster Manager of the complainant
(Ex.D1); certified copy of judgment in CC.No.8906/2021
(Ex.D2); and certified copy of deposition of accused herein
in CC.No.8906/2021 (Ex.D3).
7
C.C.No.59110/2024
KABC0C0340432024
18. Learned defence counsel has cross-examined
PW-1. It is elicited that accused has issued reply notice to
the demand notice sent by the complainant. He has
asserted that he knows the particulars pleaded in reply
notice. It is elicited that the complainant has sanctioned
housing loan to accused and the same was disbursed to
the Builder-LGCL New Life Project Ltd., who has not
completed the construction of house till this date. It is
elicited that complainant has Sister concern by name,
Piramal Enterprises Limited. PW-1 has pleaded ignorance
to the suggestion that Piramal Enterprises Limited has
filed Commercial O.S.No.03/2022 against LGCL New Life
Project Ltd., for recovery of loan. He has also pleaded
ignorance to the suggestion that in the said suit it was
contended by the Lender-Piramal Enterprises Limited that
loan was advanced to the larger extent of land. PW-1 has
admitted that the accused has filed case
No.CMP/210225/0007697 against the complainant
herein and LGCL New Life Project Ltd., praying for an
order for recovery of money from LGCL New Life Project
Ltd., and to pay the same to the complainant herein to
which the complainant has not filed objection. It is elicited
that the complainant has filed another case against the
accused before Court of Small Causes which is registered
as CC.No.8906/2021 in respect of very transaction. He
8
C.C.No.59110/2024
KABC0C0340432024
has denied the suggestion that the accused was
pressurized to give signed cheques including the subject
cheque at Ex.P2. He has further denied the suggestion
that false complaints are being filed against the accused
by misusing the blank cheques.
19. PW-1 was further cross-examined on
14.08.2025. It is elicited that Ex.P13-loan pre-closure
statement is a post-complaint document. PW-1 has stated
that he cannot say by perusing Ex.P12 that what was the
outstanding as on 28.03.2024. He has denied the
suggestion that complainant has intentionally suppressed
in the complaint as to what was the outstanding as on the
date of cheque. He has also denied the suggestion that
false complaints are being filed against the accused by
using signed blank cheques in order to harass the
accused.
20. Evidence of accused/DW-1 is very limited to
the extent of marking of documents viz., Ex.D1 to 3.
Except marking of these documents, DW-1 has not
deposed anything. Complainant has not cross-examined
DW-1.
21. Having perused the evidence placed on record,
it is seen that the accused is not disputing submission
loan application to the complainant requesting for
housing loan. It is also not in dispute that the
9
C.C.No.59110/2024
KABC0C0340432024
complainant has sanctioned loan. It is seen from the
evidence that there was a tripartite agreement to which,
the complainant (Lender) and accused (Borrower) and
LGCL New Life Project Ltd., (Builder) are the parties. It is
elicited in the cross-examination of PW-1 that loan was
sanctioned to the accused and the same was disbursed to
LGCL New Life Project Ltd. In this regard, relevant portion
of deposition of PW-1 is extracted as under:-
"2. ನಾವು ಆರೋಪಿಗೆ ಗೃಹ ಸಾಲವನ್ನು ಕೊಟ್ಟಿದ್ದೇವೆ. ಮನೆ
ಖರೀದಿ ಮಾಡುವ ಸಲುವಾಗಿ ನಾವು ಅವರಿಗೆ ಸಾಲ ಮಂಜೂರು
ಮಾಡಿದ್ದೇವೆ. ಸಾಲದ ಹಣವನ್ನು ಬಿಲ್ಡರಿಗೆ ವಿತರಣೆ ಮಾಡಿದ್ದೇವೆ.
XXXX"
"4. ನಾನು ಮೇಲೆ ಹೇಳಿದ ಬಿಲ್ಡರಿನ ಹೆಸರು LGCL New Life
Project Ltd. ಎಂದರೆ ಸರಿ.XXXX"
22. Defence of the accused is that, since loan was
disbursed to the builder-LGCL New Life Project Ltd., and
that the builder has not completed the construction work,
he is not liable to repay the loan. In the context of defence
set up by the accused, it would be material to go through
tripartite agreement dated 20.03.2019 which is marked at
Ex.P11. Under Ex.P11, complainant herein is the 'lender';
the accused herein is the 'borrower'; and LGCL New Life
Project Ltd., is described as 'Builder'. Recitals of the
agreement also indicate that loan was sanctioned to the
accused. As per Ex.P12-statement of account, accused is
shown as the borrower. However, loan amount was
10
C.C.No.59110/2024
KABC0C0340432024
disbursed to LGCL New Life Project Ltd., by virtue of
tripartite agreement. Notwithstanding the loan was
disbursed to the Builder, for all practical purpose,
accused is the borrower who as per the terms of Ex.P11
liable to repay the loan. Accused is contending that since
the builder did not complete construction of house, the
lender-complainant has to proceed against the builder
and not against him. This defence of the accused cannot
be accepted for the reason that it was the accused who
applied for loan; and loan was sanctioned to him.
23. In the course of cross-examination of PW-1, it
is elicited that accused has filed case
No.CMP/210225/0007697 in Real Estate Regulatory
Authority (RERA) against the builder seeking an order to
pay damages as the construction has not been completed
within the agreed period. It is also elicited that in the said
case, complainant herein also arrayed as a party. It is
elicited that in the said proceeding, the accused has
prayed for recovery of entire money from the builder and
pay the same to the complainant, to which the
complainant has submitted no objection. Relevant portion
of deposition of PW-1 at para No.6 is extracted as under:-
"6. XXXX ಒಪ್ಪಿಕೊಂಡ ಅವಧಿಯಲ್ಲಿ ಮನೆ ಕಟ್ಟಿಕೊಡದೇ
ತನಗೆ ಮತ್ತು ಈ ಕೇಸಿನ ದೂರುದಾರರಿಗೆ ಆರ್ಥಿಕ ನಷ್ಟ
ಉಂಟುಮಾಡಿದ್ದಾರೆ ಮತ್ತು ಅದನ್ನು ತುಂಬಿ ಕೊಡಬೇಕೆಂದು
ಕೇಳಿ ಆರೋಪಿಯು LGCL New Life Project Ltd.,
ನ ವಿರುದ್ದ ಕರ್ನಾಟಕದ Real Estate Regulatory
11
C.C.No.59110/2024
KABC0C0340432024
Authority ಯಲ್ಲಿ ದೂರು ಸಲ್ಲಿಸಿದ್ದಾರೆ ಎಂದರೆ ಸರಿ. ಆ
ಪ್ರಕರಣದ ಸಂಖ್ಯೆಃ CMP/210225/0007697 ಆಗಿದೆ
ಎಂದರೆ ಸರಿ. ಆ ಕೇಸಿನಲ್ಲಿ ಈ ಕೇಸಿನ ದೂರುದಾರರನ್ನೂ
ಕೂಡ ಆರೋಪಿಯು ಪಕ್ಷಗಾರರನ್ನಾಗಿ ಮಾಡಿದ್ದಾರೆ ಎಂದರೆ
ಸರಿ. ಸಾಲದ ಹಣವನ್ನು ಬಡ್ಡಿ ಸಮೇತವಾಗಿ LGCL New
Life Project Ltd., ನಿಂದ ವಸೂಲಿಮಾಡಿ ದೂರುದಾರರ
ಕಂಪನಿಗೇ ಕೊಡಿಸಬೇಕೆಂದು ಆ ದೂರಿನಲ್ಲಿ
ಪಾರ್ಥಿಸಿಕೊಂಡಿದ್ದಾರೆ ಎಂದರೆ ಸರಿ. ಅವರು ಆ ದೂರಿನಲ್ಲಿ
ಕೇಳಿದ ಪರಿಹಾರಕ್ಕೆ ನಮ್ಮ ಕಂಪನಿಯು ತಕರಾರು ಮಾಡಿಲ್ಲ
ಎಂದರೆ ಸರಿ."
24. Now the question to be considered is, whether
the accused can seek exemption from repayment of loan
on the count that one of the parties to the tripartite
agreement has not performed his obligation. As noted
above, accused is contending that he has moved RERA
seeking damages and to direct the Builder to repay the
loan to the complainant. In the context these assertion, it
would be relevant to note that the said tripartite
agreement is under Subvention Scheme. A subvention
scheme is a tripartite agreement between the borrower,
developer/builder and bank/lender where the developer
pays the interest on the buyer's home loan until
possession of the house is delivered or until a fixed date.
Schedule-II of Ex.P11 would be relevant for the purpose of
this case which is extracted as under for ready reference:-
"SCHEDULE II
SUBVENTION SCHEME
1. Possession date: 31st December 2019.
12
C.C.No.59110/2024
KABC0C0340432024
2. Subvention Period: 31st December 2019.
3. Disbursements of loan amount shall be in
accordance with the Builder Buyer/Demand
Letter of the Builder based on the stage of
Construction, Lender shall make disbursement
of loan amount up to maximum 82% of
agreement value of Unit & the balance 18 % of
the agreement value of Unit shall be payable
by the Borrower directly to the Builder in such
manner as more particularly mentioned below.
The present tentative dates for disbursement
are based on the proposed / estimated dates
for stage-wise completion of Project. The
estimated dated for stage-wise completion of
the construction may subject to vary and
accordingly, the tentative dates for further
disbursement by the Lender shall be revised
with changes in the stage of construction of the
Project.
Payment plan under subvention scheme
Application Fee Amount : 5% of Unit (By the
Price Purchaser)
At the time of possession: 13% of Unit (By the
Price Purchaser)
BALANCE AS PER CONSTRUCTION LINKED PAYMENT
PLAN :
Structure: Floors (By
Lender)
S.No. Stage of Construction % Amount
of Unit
Price
1 Booking & Agreement 45%
2 On Foundation and Plinth 25%
Completion
3 On 1st Slab Completion 7%
4 On Registration/Possession 5%
13
C.C.No.59110/2024
KABC0C0340432024
4. Under the Subvention Scheme, for the
Subvention period, the Builder shall pay pre-
equated monthly installment interest ("Pre-
EMIs") on behalf of the Borrower, which shall
be calculated at the rate of interest as
mentioned in the Loan Agreement or at such
rate as may be communicated to the Builder
and the Borrower by the Lender, in writing,
from time to time of the Loan Agreement.
Or
The Pre-EMIs payable by the Builder shall be
deducted by the Lender, on upfront basis from
the each disbursal amount, and balance
amount shall be disbursed to the Builder. The
Builder herein shall issue a receipt to the
Borrower showing payment of complete
amount (including the amount deducted
upfront as Pre-EMIs).
5. The Pre-EMIs, as payable by the Builder
shall be subject to applicable tax and the
Builder agrees that they shall provide a
quarterly TDS certificate to Lender for the
same.
6. The Builder hereby agrees that if the
Subvention Period is extended due to any
reason whatsoever, the Builder shall pay the
incremental Pre-EMIs for such extended period
to the Lender.
7. The Builder agrees and acknowledges that
if there is any delay in payment of Pre-EMIs by
the Builder to Lender, the Builder shall be
liable to pay the default charges @ 2% p.m.
from the date of such default till the payment
of Pre-EMIs. Notwithstanding above in the
event the Builder defaults in making payment
14
C.C.No.59110/2024
KABC0C0340432024
of the Pre-EMI amount, the Lender shall have
recourse to claim the said amount from the
Borrower and/or Builder, in addition to other
rights and remedies available to Lender under
Applicable Law.
8. It is hereby agreed between the Parties that
the Pre-EMIs paid/borne by the Builder, for
and on behalf of the Borrower, during the
continuity of Subvention Period, to the Lender
is non-refundable. The Builder hereby
undertakes that they shall not make any claim
for refund of Pre-EMIs, which has been
already paid to Lender, in the event of
cancellation of allotment or on account of any
other reason, whatsoever. Subject to clause
6.2 above.
9. The Subvention Scheme shall continue to
bind the Parties for a period of time not
exceeding the Subvention Period and/or such
extended period as may be mutually agreed
upon by and between the Builder and the
Lender.
10. The Builder agrees that in case of re-
pricing due to change in reference rate of the
Lender during the Pre-EMI stage, an additional
interest will be paid by the Builder on tranches
of disbursed amounts earlier and such
additional interest will be recovered from the
Builder at the time of re-pricing.
11. The Loan advanced to the Borrower by
Lender shall be repayable by the Borrower by
way of EMIs. The date of commencement of
EMI shall be on at the end of Subvention
Period, and consequently the due date of
15
C.C.No.59110/2024
KABC0C0340432024
payment of first EMI shall be as per the
terms of the Loan Agreement executed by
the Borrower.
12. During the Subvention Period, the liability
for payment of Pre-EMI is joint and several by
and between the Borrower and the Builder.
The assumption of liability by the Builder in no
manner whatsoever releases, relinquishes
and/or reduces the liability of the Borrower
and the same shall not be affected in any
manner on account of any differences and/or
dispute between the Borrower and the builder
under the arrangement between them."
(bold and underlined for emphasis)
25. Above extracted recitals of the agreement are
very clear which provide that under the Scheme for the
Subvention period, the builder shall pay pre-equated
monthly installment interest (Pre-EMIs) on behalf of the
borrower, which shall be calculated at the rate of interest
as mentioned in the loan agreement or at such rate as
may be communicated to the builder and the borrower by
the lender in writing from time to time. As per Ex.P11, the
builder shall complete the construction and hand over the
possession to the borrower (accused herein) on
31.12.2019. Under the agreement, subvention period is
fixed till 31.12.2019. Ex.P11 does not absolve the
borrower/accused of the liability from paying the EMI. As
per clauses stipulated under subvention scheme
16
C.C.No.59110/2024
KABC0C0340432024
contemplated under Ex.P11 during the subvention period,
the liability for payment of pre-EMI is joint and several by
and between the borrower/accused and the builder. It is
also made clear under the agreement that the assumption
of liability by the builder in no manner whatsoever
releases/relinquishes/reduces the liability of the borrower
and the same shall not be affected in any manner on
account of any differences and/or dispute between the
borrower and the builder under the arrangement between
them.
26. Though under Ex.P11, liability of repayment of
EMI primarily on the builder, that does not by itself take
away the liability of the borrower/accused in paying the
EMIs. Though, the accused has contending that he has
filed a complaint before RERA seeking a direction to the
builder to pay the entire loan amount with interest to the
complainant, no documents produced to show the
outcome of the said petition. It is to be noted that as per
Ex.P11, subvention period was till 31.12.2019. Assuming
for a moment that the builder is exclusively liable to repay
the loan EMI, the said liability was till subvention period
only i.e., till 31.12.2019. Thereafter, as per the terms of
Ex.P11, it is the accused/borrower who is liable pay EMIs
with interest. Interest of the complainant as lender is not
affected in any manner on account of any difference/
17
C.C.No.59110/2024
KABC0C0340432024
dispute between the borrower/accused and the builder.
Therefore, the defence that accused is not liable to repay
the loan for the reason that the builder has not completed
the construction, cannot be countenanced.
27. Accused has produced judgment in
CC.No.8906/2021 passed by learned XIX Addl. Judge,
Court of Small Causes & ACJM, Bengaluru which is
marked at Ex.D2. Parties to the present complaint are the
parties in CC.No.8906/2021. Of course, in the said case
the court has acquitted the accused by assigning its own
reason. Finding recorded by the said court does not bind
this court. As noted above, after the subvention period,
i.e., 31.12.2019, the accused is liable to pay the loan
EMIs.
28. Subject cheque is dated 28.03.2024 which is
drawn for ₹5,25,000/-. Pertinently, accused does not
dispute his signature on the cheque. It is also not in
dispute that the cheque is drawn from his account. As
could be seen from loan account statement at Ex.P12,
loan is repayable in 385 monthly installments. Due date
for first installment was on 05.05.2019 and last
installment payable on 05.01.2055. Amount payable on
each installment is ₹4,834/-. Out of 385 installments,
only 14 installments are paid. As per this document,
future installment payable is 354. Principal outstanding
18
C.C.No.59110/2024
KABC0C0340432024
amount is ₹5,20,215/- and capitalized amount is
₹20,215/-. Considering the fact that only 14 installments
were paid, this court opines that complainant could able
to prove existence of legally recoverable debt/liability as
on the date of cheque i.e., 28.03.2024.
29. In matters relating to offence under Section
138 of the Act, the complainant is required to establish
that the cheque is genuine, presented within time and
upon it being dishonoured, due notice was sent within 30
days of such dishonour, to which repayment must be
received within 15 days, failing which a complaint can be
preferred by the complainant within one month as
contemplated under Section 142(1)(b) of the Act.
30. In Kusum Ingots And Alloys Ltd vs Pennar
Peterson Securities Ltd. And Ors; (2000) 2 SCC 745,
Hon'ble Supreme Court has highlighted the ingredients
forming the basis of the offence under Section 138 of the
NI Act in the following structure:-
"The object of bringing Section 138 on statute
is to inculcate faith in the efficacy of banking
operation and credibility in transacting
business on negotiable instruments. The
ingredients which are to be satisfied for
making out the case under Section 138 NI Act
are:
(i) a person must have drawn a cheque on an
account maintained by him in a bank for
payment of a certain amount of money to
19
C.C.No.59110/2024
KABC0C0340432024
another person from out of that account for
the discharge of any debt or other liability;
(ii) that cheque has been presented to the
bank within a period of six months from the
date on which it is drawn or within the period
of its validity whichever is earlier;
(iii) that cheque is returned by the bank
unpaid. either because of the amount of
money standing to the credit of the account is
insufficient to honour the cheque or that it
exceeds the amount arranged to be paid from
that account by an agreement made with the
bank;
(iv) the payee or the holder in due course of
the cheque makes a demand for the payment
of the said amount of money by giving a
notice in writing, to the drawer of the cheque,
within 15 days of the receipt of information
by him from the bank regarding the return of
the cheque as unpaid;
(v) the drawer of such cheque fails to make
payment of the said amount of money to the
payee or the holder in due course of the
cheque within 15 days of the receipt of the
said notice;
If the aforementioned ingredients are satisfied then
the person who has drawn the cheque shall be
deemed to have committed an offence. In the
explanation to the section clarification is made that
the phrase "debt or other liability" means a legally
enforceable debt or other liability."
20
C.C.No.59110/2024
KABC0C0340432024
31. In Gimpex Private Limited vs. Manoj Goel,
[(2022) 11 SCC 705], Hon'ble Supreme Court has
highlighted the ingredients of the offence under Section
138 of the NI Act as under:
"(i) The drawing of a cheque by person on
do account maintained by him with the
banker for the payment of any amount of
money to another from that account;
(ii) The cheque being drawn for the
discharge in whole or in part of any debt or
other liability;
(iii) Presentation of the cheque to the bank
arranged to be paid from that account;
(iv) The return of the cheque by the drawee
bank as unpaid either because the amount
of money standing to the credit of that
account is insufficient to honour the cheque
or that it exceeds the amount;
(v) A notice by the payee or the holder in
due course making a demand for the
payment of the amount to the drawer of the
cheque within 30 days of the receipt of
information from the bank in regard to the
return of the cheque; and;
(vi) The drawer of the cheque failing to
make payment of the amount of money to
the payee or the holder in due course
within 15 days of the receipt of the notice."
21
C.C.No.59110/2024
KABC0C0340432024
32. The NI Act provides for two presumptions:-
Section 118 and Section 139. Section 118 of the Act inter
alia directs that it shall be presumed, until the contrary is
proved, that every negotiable instrument was made or
drawn for consideration. Section 139 of the Act stipulates
that "unless the contrary is proved, it shall be presumed,
that the holder of the cheque received the cheque, for the
discharge of, whole or part of any debt or liability".
Because Section 139 requires that the court "shall
presume" the fact stated therein, it is obligatory on the
court to raise this presumption in every case where the
factual basis for the raising of the presumption has been
establish. Therefore, the court will necessarily presume
that the cheque is issued towards discharge of a legally
enforceable debt/liability in two circumstances. Firstly,
when the drawer of the cheque admits
issuance/execution of the cheque and secondly, in the
event where the complainant proves that the cheque was
issued/executed in his favour by the drawer. The
circumstances set out above form the fact(s) which bring
about the activation of the presumptive Clause. [Bharat
Barrel & Drum Mfg.Co. V/s Amin Chand Pyarelal,
(1999) 3 SCC 35].
33. In the present case, since the execution of the
cheque is, admittedly, not under dispute, the limited
22
C.C.No.59110/2024
KABC0C0340432024
question to be considered, is whether the accused has
discharged his 'evidential burden' to arrive at the
conclusion that the presumption of law supplied by
Section 139 has been rebutted.
34. Discussing the burden of proof and
presumptions, Hon'ble Supreme Court in Rajesh Jain
V/s Ajay Singh, [(2023) 10 SCC 148] held as under:-
"28. There are two senses in which the
phrase 'burden of proof' is used in the
Indian Evidence Act, 1872 ("Evidence Act,
hereinafter"). One is the burden of proof
arising as a matter of pleading and the
other is the one which deals with the
question as to who has first to prove a
particular fact. The former is called the
"legal burden" and it never shifts, the latter
is called the 'evidential burden' and it
shifts from one side to the other. [See
Kundanlal v. Custodian (Evacuee
Property); AIR 1961 SC 1316.]
29. The legal burden is the burden of proof
which remains constant throughout a trial.
It is the burden of establishing the facts
and contentions which will support a
party's case. If, at the conclusion of the
trial a party has failed to establish these
to the appropriate standards, he would
lose to stand. The incidence of the burden
is usually clear from the pleadings and
usually, it is incumbent on the plaintiff or
complainant to prove what he pleaded or
contends. On the other hand, the
evidential burden may shift from one
23
C.C.No.59110/2024
KABC0C0340432024
party to another as the trial progresses
according to the balance of evidence given
at any particular stage; the burden rests
upon the party who would fail if no
evidence at all, or no further evidence, as
the case may be is adduced by either side
(See Halsbury's Laws of England, 4th
Edition para 13). While the former, the
legal burden arising on the pleadings is
mentioned in Section 101 of the Evidence
Act, the latter, the evidential burden, is
referred to in Section 102 thereof. [G.Vasu
V. Syed Yaseen Sifuddin Quadri; AIR
1987 AP 139. affirmed in Bharat Barrel &
Drum Mfg.Co. Vs. Amin Chand Payrelal;
(1999) 3 SCC 35]
30. Presumption, on the other hand,
literally means "taking as true without
examination or proof". In Kumar Exports v.
Sharma Exports; (2009) 2 SCC 513, this
Court referred to presumption as "devices
by use of which courts are enabled and
entitled to pronounce on an issue
notwithstanding that there is no evidence
or insufficient evidence."
31. Broadly speaking, presumptions are of
two kinds, presumptions of fact and of
law. Presumptions of fact are inferences
logically drawn from one fact as to the
existence of other facts. Presumptions of
fact are rebuttable by evidence to the
contrary. Presumptions of law may be
either irrebuttable (conclusive
presumptions), so that no evidence to the
contrary may be given or rebuttable. A
rebuttable presumption of law is a legal
24
C.C.No.59110/2024
KABC0C0340432024
rule to be applied by the Court in the
absence of conflicting (Halsbury, 4th
Edition paras 111, 112). Among the class
of rebuttable presumptions, a further
distinction can be made between
discretionary presumptions ("may
presume") and compulsive or compulsory
presumptions ("shall presume")."
35. In P.Rasiya V/s Abdul Nazer and another;
(AIR Online 2022 SC 1373), the Hon'ble Apex Court
reiterated the position of law that once the complainant
discharges his initial burden of proving issuance of
cheque by the accused with his signature, the
presumption under Section 139 of NI Act would arise and
burden shifts on the accused to rebut the same. Of
course, the degree of proof required to be proved by the
accused is not as high as the burden on the complainant
to prove the guilt of the accused, but he is required to
probabilize his defence. Hon'ble Supreme Court also
made it clear that once the initial burden of proving the
issuance of cheque by the accused with his signature is
proved by the complainant, the burden shifts on the
accused to prove the contrary and to rebut the
presumption.
36. The Hon'ble Apex Court in Kumar Exports V/s
Sharma Carpets (AIR 2009 SC 1518) held as under:
25
C.C.No.59110/2024
KABC0C0340432024
"20. The accused in a trial under
Section 138 of the Act has two
options. He can either show that
consideration and debt did not exist
or that under the particular
circumstances of the case the non-
existence of consideration and debt
is so probable that a prudent man
ought to suppose that no
consideration and debt existed. To
rebut the statutory presumptions an
accused is not expected to prove his
defence beyond reasonable doubt as
is expected of the complainant in a
criminal trial. The accused may
adduce direct evidence to prove that
the note in question was not
supported by consideration and that
there was no debt or liability to be
discharged by him. However, the
court need not insist in every case
that the accused should disprove the
non-existence of consideration and
debt by leading direct evidence
because the existence of negative
evidence is neither possible nor
contemplated. At the same time, it is
clear that bare denial of the passing
of the consideration and existence of
debt, apparently would not serve the
purpose of the accused. Something
which is probable has to be brought
on record for getting the burden of
proof shifted to the complainant. To
disprove the presumptions, the
accused should bring on record such
facts and circumstances, upon
consideration of which, the court
26
C.C.No.59110/2024
KABC0C0340432024
may either believe that the
consideration and debt did not exist
or their non- existence was so
probable that a prudent man would
under the circumstances of the case,
act upon the plea that they did not
exist. Apart from adducing direct
evidence to prove that the note in
question was not supported by
consideration or that he had not
incurred any debt or liability, the
accused may also rely upon
circumstantial evidence and if the
circumstances so relied upon are
compelling, the burden may likewise
shift again on to the complainant.
The accused may also rely upon
presumptions of fact, for instance,
those mentioned in Section 114 of
the Evidence Act to rebut the
presumptions arising under Sections
118 and 139 of the Act.
21. The accused has also an option
to prove the non-existence of
consideration and debt or liability
either by letting in evidence or in
some clear and exceptional cases,
from the case set out by the
complainant, that is, the averments
in the complaint, the case set out in
the statutory notice and evidence
adduced by the complainant during
the trial. Once such rebuttal evidence
is adduced and accepted by the
court, having regard to all the
circumstances of the case and the
preponderance of probabilities, the
27
C.C.No.59110/2024
KABC0C0340432024
evidential burden shifts back to the
complainant and, thereafter, the
presumptions under Sections 118
and 139 of the Act will not again
come to the complainant's rescue."
37. Recently, Hon'ble Apex Court in Sanjabij Tari
V/s Kishore S.Borcar & Another; (2025) SCC OnLine
SC 2069, held as under:-
"15. In the present case, the cheque in
question has admittedly been signed by the
Respondent No.1-Accused. This Court is of the
view that once the execution of the cheque is
admitted, the presumption under Section 118
of the NI Act that the cheque in question was
drawn for consideration and the presumption
under Section 139 of the NI Act that the holder
of the cheque received the said cheque in
discharge of a legally enforceable debt or
liability arises against the accused. It is
pertinent to mention that observations to the
contrary by a two Judges Bench in Krishna
Janardhan Bhat vs. Dattatraya G. Hegde,
(2008) 4 SCC 54 have been set aside by a
three Judges Bench in Rangappa (supra).
16. This Court is further of the view that by
creating this presumption, the law reinforces
the reliability of cheques as a mode of
payment in commercial transactions.
17. Needless to mention that the presumption
contemplated under Section 139 of the NI Act,
is a rebuttable presumption. However, the
initial onus of proving that the cheque is not in
discharge of any debt or other liability is on
28
C.C.No.59110/2024
KABC0C0340432024
the accused/drawer of the cheque [See: Bir
Singh vs. Mukesh Kumar, (2019) 4 SCC 197].
XXXXX
21. This Court also takes judicial notice of the
fact that some District Courts and some High
Courts are not giving effect to the
presumptions incorporated in Sections 118
and 139 of NI Act and are treating the
proceedings under the NI Act as another civil
recovery proceedings and are directing the
complainant to prove the antecedent debt or
liability. This Court is of the view that such an
approach is not only prolonging the trial but is
also contrary to the mandate of Parliament,
namely, that the drawer and the bank must
honour the cheque, otherwise, trust in cheques
would be irreparably damaged."
38. Thus, it is settled proposition of law that the
complainant is required to discharge his initial burden of
issuance of cheque by the accused with his signature to
raise the legal presumption under Section 139 of NI Act.
When the legal presumption arises, the burden shifts on
the accused to rebut the same by probabilizing his
defence.
39. Accused has contended that complainant has
taken some cheques at the time of disbursement of loan.
In this regard, suggestion is given to PW-1 who has denied
the same. Except giving bare suggestion, nothing is placed
on record to substantiate that cheques were taken by the
29
C.C.No.59110/2024
KABC0C0340432024
complainant at the time of disbursement of loan.
Assuming that security cheque(s) was/were taken, it is
not fatal to the case of the complainant. In this regard, it
is useful to quote the judgment of Hon'ble Supreme Court
in Sripati Singh (supra) held as under:-
17. A cheque issued as security pursuant to
a financial transaction cannot be considered as
a worthless piece of paper under every
circumstance. 'Security' in its true sense is the
state of being safe and the security given for a
loan is something given as a pledge of
payment. It is given, deposited or pledged to
make certain the fulfilment 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 timeframe and issues a cheque as
security to secure such repayment; if 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
N.I. Act would flow.
18. When a cheque is issued and is treated as
'security' towards repayment of an amount
with a time period being stipulated for
repayment, all that it ensures is that such
cheque which is issued as 'security' cannot be
30
C.C.No.59110/2024
KABC0C0340432024
presented prior to the loan or the instalment
maturing for repayment towards which such
cheque is issued as security. Further, the
borrower would have the option of repaying the
loan amount or such financial liability in any
other form and in that manner if the amount of
loan due and payable has been discharged
within the agreed period, the cheque issued as
security cannot thereafter be presented.
Therefore, the prior discharge of the loan or
there being an altered situation due to which
there would be understanding between the
parties is a sine qua non to not present the
cheque which was issued as security. These
are only the defences that would be available
to the drawer of the cheque in a proceedings
initiated under Section 138 of the N.I. Act.
Therefore, there cannot be a hard and fast rule
that a cheque which is issued as security can
never be presented by the drawee of the
cheque. If such is the understanding a cheque
would also be reduced to an 'on demand
promissory note' and in all circumstances, it
would only be a civil litigation to recover the
amount, which is not the intention of the
statute. When a cheque is issued even though
as 'security' the consequence flowing therefrom
is also known to the drawer of the cheque and
in the circumstance stated above if the cheque
is presented and dishonoured, the holder of the
cheque/drawee would have the option of
initiating the civil proceedings for recovery or
the criminal proceedings for punishment in the
fact situation, but in any event, it is not for the
drawer of the cheque to dictate terms with
regard to the nature of litigation."
31
C.C.No.59110/2024
KABC0C0340432024
40. Therefore, the contention of the accused in this
regard cannot be accepted. Complainant having proved
lending of housing loan to accused and issuance of
cheque, burden is on the accused to substantiate the
defence that the subject cheque is not issued for
consideration which the cheque represents. But, he has
failed to discharge the burden of establishing his defence.
41. Accused has relied on the judgment in M/s.
Shriram Transport Finance Co. Limited V/s Simon
Correa; (supra) rendered by Hon'ble High Court of
Karnataka where the Hon'ble Court has confirmed the
judgment of acquittal recorded by the trial court by
affirming the findings of the trial court that complainant
has failed to prove existence of legally recoverable debt as
on the date of cheque. Fact situation of the said judgment
is altogether different than the one in the case on hand.
42. Prima facie, cheque at Ex.P-2 is drawn from
the bank account of the accused. Indisputably, cheque
was presented for encashment well within its validity and
dishonoured for the reason 'payment stopped by drawer'
which is appearing from bank endorsement at Ex.P3
dated 02.04.2024. Thereafter, complainant has issued
notice dated 30.04.2024, copy of which is at Ex.P4 calling
upon the accused to pay the amount covered under the
dishonored cheque. The said notice served on 01.05.2024.
32
C.C.No.59110/2024
KABC0C0340432024
Accused has reply as per Ex.P10. But, not complied with
the demand made in the notice. Therefore, by statutory
fiction, offence is deemed to have committed. Accused has
failed to probabilize his defence to dislodge the statutory
presumption. Therefore, this court holds that the
complainant has proved that the accused has committed
the offence punishable under Section 138 of N.I.Act.
Accordingly, I answer Point No.1 in the Affirmative.
43. Point No.2:-Punishment prescribed for the
offence under Section 138 of Negotiable Instruments Act
is imprisonment for a period which may extend to two
years or with fine which may extend to twice the amount
of the cheque or with both. Object of Chapter-XVII of the
Negotiable Instruments Act, which prescribes punishment
for the dishonour of the cheque is both punitive as well as
compensatory and restitutive. In R.Vijayan V/s Baby and
another (AIR 2012 SC 528), Hon'ble Supreme Court has
observed that Chapter-XVII of the N.I. Act is an unique
exercise which blurs the dividing line between civil and
criminal jurisdictions and it provides a single forum and
single proceeding for enforcement of criminal liability and
also for the enforcement of the civil liability i.e., for
realization of the cheque amount and thereby obviating
the need for the creditor to move to different forums for
the relief. Hon'ble Apex Court has reiterated that the
33
C.C.No.59110/2024
KABC0C0340432024
apparent intention is to ensure that not only the offender
is punished, but also ensure that the complainant
invariably receives the amount of cheque along with
compensation. Hon'ble Supreme Court has further
observed that a stage has reached when most of the
complainants in particular the financial institutions view
the proceedings under Section 138 of N.I. Act as a
proceeding for recovery of the cheque amount and
therefore, the punishment of the drawer of the cheque for
the offence of dishonour become secondary. The said
judgment is relied by Hon'ble High Court of Karnataka in
M/s. Banavathy & Company V.s Mahaeer Electro Mech
(P) Ltd., and others, (NC: 2025:KHC:25140).
44. Keeping in mind the principles laid down in
the aforesaid judgments, sentence has to be passed. In
the present case, loan was advanced in the year 2019. As
per Ex.P12, sanctioned loan amount was ₹18,34,328/-. It
is brought on record that accused has not paid the loan
installments. Subject cheque is dated 28.03.2024. Having
regard to the facts and circumstances of the case, it is a
fit case to impose sentence of fine which is quantified at
₹6,50,000/- and out of the said amount, it is just and
proper to award a sum of ₹6,40,000/- as compensation to
the complainant as provided under Section 357(1)(b) of
Cr.P.C and the remaining sum of ₹10,000/- shall be
34
C.C.No.59110/2024
KABC0C0340432024
defrayed to State. In view of the findings recorded above, I
proceed to pass the following:
ORDER
Acting under Section 255(2) of Cr.P.C., accused is held guilty and convicted for the offence punishable under Section 138 of Negotiable Instruments Act.
Accused is sentenced to pay a fine of ₹6,50,000/-. In default to pay fine, accused shall undergo simple imprisonment for a period of four months.
Out of the realized fine amount, a sum of ₹6,40,000/- is ordered to be paid to the complainant as compensation and the remaining sum of ₹10,000/- shall be defrayed to State.
Bail bonds executed by accused shall stand cancelled.
Office to supply a free copy of this judgment to accused.
(Dictated to the Stenographer, transcript computerized by her, revised corrected and then pronounced by me in the open Court on this the 20 th day of February, 2026) Digitally signed SANTHOSH by SANTHOSH S KUNDER S KUNDER Date: 2026.02.20 17:42:50 +0530 ( SANTHOSH S.KUNDER ) XIV Addl. C.J.M., Bengaluru.
35C.C.No.59110/2024 KABC0C0340432024 ANNEXURE List of witnesses examined for the Complainant:
PW.1 Raghavendra.B List of documents marked for the Complainant:
Ex.P.1 Board resolution of complainant dated 24.10.2024 Ex.P.2 Cheque Ex.P.2(a) Signature of the accused Ex.P.3 Bank endorsement Ex.P.4 Copy of legal notice dated 30.04.2024 Ex.P.5 to 8 Postal receipts-4 Ex.P.9 Postal track report Ex.P.10 Reply dated 03.06.2024 with postal cover Ex.P.11 Registered Tripartite agreement dated 20.03.2019 Ex.P.12 Statement of account Ex.P.13 Loan pre-closure statement List of witness examined for the defence:
DW.1 Suraj Ray List of documents marked for the defence:
Ex.D.1 Certified copy of deposition of Pramod Upadhya in CC.No.8906/2021 Ex.D.2 Certified copy of judgment in CC.No.8906/2021 Ex.D.3 Certified copy of deposition of accused herein in CC No.8906/2021 Digitally signed by SANTHOSH SANTHOSH S KUNDER S KUNDER Date: 2026.02.20 17:42:42 +0530 XIV Addl.C.J.M., Bengaluru.