Bangalore District Court
Rbl Bank Ltd vs Vedavathi Balaraju on 20 November, 2025
SCCH-17 1 C.C. No. 8302/2021
KABC020244202021
IN THE COURT OF THE XIX ADDL. JUDGE COURT OF SMALL
CAUSES AND A.C.J.M AT BENGALURU
Dated this the 20th day of November - 2025
Present: Sri. KANCHI MAYANNA GOUTAM B.A.L, LL.M.,
Member, MACT
XIX ADDL. JUDGE,
Court of Small Causes,
CC. No.8302/2021
Complainant: RBL Bank Ltd.,
Having its office at Prestige Tower,
3rd floor, No. 99 & 100,
Residency Road,
Bangalore - 560 025
Represented by its
Assistant Manager and
power of attorney holder,
Satyabrata Tripathy
(By Sri. B C.Avinash Advocate)
-V/s-
Accused: Mrs. Vedavathi Balaraju,
W/o G. Balaraju,
No.7-2, 2nd cross,
Kempaiah Block Lower Palace,
Orchards Palace Guttahalli,
SCCH-17 2 C.C. No. 8302/2021
Bangalore North, Malleshwaram,
Bangalore - 560 003
(By Sri. B K Sanjay, Adv)
1. The offence Under Sec. 138 of NI Act
2. Plea of accused Pleaded not guilty
3. Final order Accused is convicted
4. Date of judgment 20.11.2025
*****
JUDGMENT
The complainant has filed this private complaint under section 200 of Cr.P.C. against the accused for the offence punishable under section 138 of Negotiable Instruments Act.
2. The brief facts of the complainant's case is as follows:
The complainant is a banking company incorporated under the provisions of Banking Regulations Act 1949.
Complainant has introduced Agri Term Loan/Hypothecation of tractor/plantation facilities to its valued customers. The complainant alleged that in SCCH-17 3 C.C. No. 8302/2021 furtherance of the request made by the accused, vide agreement cum sanction letter dated 23.06.2017 complainant has sanctioned a secured term loan of Rs.2,17,56,000/- to the accused. It is submitted that the sanctioning of said loan facility under the scheme of term loan facility shall mean a fresh loan came to be sanctioned to the accused on her specific request with an intention to close the existed loan with another bank/financial institutions.
It is further alleged by the complainant that at the time of availing financial facilities, the accused had executed the Agri business loan agreement. The accused became defaulter, therefore loan account of the accused came to be categorized as non-performing asset on 31.01.2020. As on 24.11.2020 the accused was due of sum of Rs.2,05,43,074.70/- to the complainant.
It is further alleged by the complainant that after frequent follow-up, towards the part payment of the SCCH-17 4 C.C. No. 8302/2021 liability, the accused issued cheque bearing No.453088, dated 21.10.2020 for Rs.2,00,87,000/- drawn on Axis Bank Ltd., Yelahanka branch, Bangalore and assured that she will maintain sufficient balance in her account. As per the assurance given by the accused, the complainant has presented the said cheque for encashment through its bank RBL Bank, Prestige tower branch, Bangalore, but the said cheque was dishonored and returned to the complainant with the endorsement dated 22.10.2020 with a shara of "Funds Insufficient".
Thereafter, the complainant issued legal notice, dated 27-10-2020 to the accused calling upon him to pay back the cheque amount. The said notice was served to the accused on 31-10-2020. In spite of service of notice also the accused has neither replied nor paid the cheque amount. Hence, the present complaint.
3. Upon taking cognizance and after recording the sworn statement of the complainant, the summons was SCCH-17 5 C.C. No. 8302/2021 issued against the accused. The accused appeared before this court and released on bail. The plea of the accused recorded by this court. The accused pleaded not guilty and claimed that she has defence to make.
4. In order to discharge the burden cast upon the complainant company, initially the Assistant Manager and the GPA holder of the complainant company were examined as PW.1 and Ex.P1 to P5 were marked. Thereafter as per order dated 04-10-2023 the new authorized representative with GPA was permitted to represent the complainant and he examined himself as PW.2 by filing evidence affidavit and produced Ex.P6. Ex.P1 to P5 were identified by the PW.2 also, as such the same were retained with the same exhibits number. The PW.2 was cross examined by the learned counsel for the accused. The complainant closed their side evidence. The accused was explained about all the incriminating circumstances available against her by framing the SCCH-17 6 C.C. No. 8302/2021 statement under section 313 of Cr.P.C. The accused denied all the incriminatory materials found against her and also submitted that she has evidence to lead. On the other hand, accused has examined herself as DW.1 and no documents were produced by accused. Thereafter in spite of sufficient opportunity the DW1 neither appeared nor subjected herself for cross-examination by giving the opportunity to the opposite party to cross-examine. Thereby as per order dated 23.09.2024 the evidence of DW1 was eschewed.
5. Heard the arguments on both sides. Perused the documents.
6. On the basis of above contentions and documents, the points that arise for my consideration are:
1) Whether the complainant proves that the accused issued cheque bearing No. 453088, dated 21.10.2020 drawn on Axis Bank for a sum of Rs.2,00,87,000/-, towards the discharge of legally SCCH-17 7 C.C. No. 8302/2021 recoverable debt, which came to be dishonoured as "Funds Insufficient" and further the accused failed to clear the cheque amount within the statutory period in spite of issuance of legal notice by the complainant and thereby the accused committed an offence punishable under section 138 of Negotiable Instruments Act?
2) What order?
7. My findings to the above points are as under:
Point No. 1: In the affirmative.
Point No. 2: As per final order for the following reasons.
REASONS
8. Point No. 1:- The present case is filed on the basis of cheque allegedly issued by the accused towards the discharge of her liability in respect of repayment of the loan.
9. Before proceeding on the facts of this case it is much relevant to discuss about the ingredients of section 138 of N.I. Act to constitute the offence under this Act. In this regard, the complainant has to show: SCCH-17 8 C.C. No. 8302/2021
• That the cheque and signature in it belongs to the accused.
• Such cheque was issued towards legally recoverable debt;
• The said cheque came to be dishonoured; • The accused not paid the amount covered under the cheque even after issuance of notice within stipulated time;
10. To substantiate their case, the Assistant Manager and GPA holder of the complainant company was examined as PW 2 and Ex.P1 to 6 are marked. First, for the purpose of establishing the prima facie case, if we perused the documentary evidence filed by the complainant which were marked as Ex.P1 to 6, the Ex.P1 is a cheque, dated 21.10.2020. The said Ex.P1 was presented and returned unpaid as per Ex.P2 dated 22.10.2020, which is within the stipulated period. As such, The requirement under section 138(a) of N.I. Act is fulfilled. Further, upon presentation of the said cheque Ex.P1, the bank has given endorsement that the said SCCH-17 9 C.C. No. 8302/2021 cheque Ex.P1 was returned unpaid for the reason of "Funds Insufficient". The said endorsement of the bank is marked as Ex.P2. The Ex.P2 is dated 22.10.2020.
Thereafter, the complainant has issued legal notice which is marked as Ex.P3. Ex.P3 is written legal notice, dated 27-10-2020. The Ex.P3 is issued within the 30 days of the cheque being unpaid as per Ex.P2. Hence, the requirement under section 138(b) of N.I. Act is fulfilled. The said legal notice was posted as per Ex.P4 dated 28.10.2020. Thereafter the notice was served to the accused on 31-10-2020 as per Ex.P5. The complaint was came to be filed on 02-12-2020. Hence, The requirement under section 138(c) R/w. Sec. 142 (b) of N.I. Act is also fulfilled. Hence, the prima facie procedure as envisaged under Sec. 138 & 142 of NI Act is complied by the complainant in respect of Ex.P1 cheque..
11. At this stage, the accused has not given any reply but denied the plea and at the time of recording of SCCH-17 10 C.C. No. 8302/2021 statement under Sec. 313 of Cr.P.C. has stated that the complainant has misused the cheque which was issued for security purpose. Thereby the borrowing of loan is not disputed. It is the contention of the accused that the Ex.P1 cheque was collected at the time of sanctioning of the loan for security purpose and the same is presented without giving any intimation to the accused.
12. If we perused the cross-examination of Pw.2 the accused has not disputed the borrowing of the loan but the main defence of the accused that the signed blank cheques which are collected for security purpose was presented without any intimation. As such prays to dismiss the case.
13. Coming to the main defence of accused regarding the presentation of cheque without any intimation, the complainant to establish the alleged transaction and due amount by the accused examined its official as PW.2. It is already noted that the accused has SCCH-17 11 C.C. No. 8302/2021 not disputed the borrowing of loan. The accused herself examined as DW.1 and deposed on oath that they have stopped paying EMI after the Covid due to the loss in their flower crop business.
14. It is very important to note that the accused admitted the Ex.P1 cheque and Ex.P1(a) signature. The accused also admitted the borrowing of the loan and also admitted that she has not cleared the entire loan. It is very important to note that the accused neither disputed the balance of the loan amount as mentioned in Ex.P1 cheque nor disputed her liability towards the borrowed loan. The accused after examining herself as PW1 not appeared for cross-examination. But the accused in her oral evidence also admitted that she has stopped paying the EMI after the Covid. As such the accused herself admitted the existence of legally recoverable debt.
15. The accused stated that the Ex.P1 cheque was collected at the time of borrowing of loan for security SCCH-17 12 C.C. No. 8302/2021 purpose. But the said suggestion was denied by the PW.2. No other evidence is placed by the accused to show that the Ex.P1 cheque was issued at the time of borrowing of the loan. The accused even though has stated that she has issued the cheque at the time of borrowing of the laon, no grounds are made out to impeach the credibility of the oral evidence of Pw.2 in this regard.
16. The accused has admitted the cheque and the signature on the Ex.P1 cheque. The accused admitted the existence of legally recoverable debt. The accused herself admitted that she has not cleared entire loan amount. The accused even though contended that complainant company has misused the cheque which is issued for the security purpose the accused has not lead any evidence and has not produced any documents to show that she has issued the Ex.P1 cheque at the time of borrowing of loan. Accordingly as discussed above the SCCH-17 13 C.C. No. 8302/2021 Ex.P1 cheque and also contention of the complainant company about borrowing of loan and the issuance of cheque by the accused for the repayment of her loan stands proved.
17. When the accused failed to disprove the case of the complainant in the cross-examination and also failed to disprove the documentary evidence which were marked as Ex.P1 to P6.
18. Once the case of the complainant is proved, now it is the burden of the accused to disprove the case of the complainant by the probabalized evidence. To disprove the case, the accused not led any probable evidence. The accused herself admitted that she has not cleared the entire loan amount. Hence, it can be held that the accused has not placed any evidence to disprove the case of the complainant or any effort to put up her defence.
19. When the PW2 was cross-examined by the learned counsel for the accused she has stated that in SCCH-17 14 C.C. No. 8302/2021 some of the loan accounts the accused was a borrower and in some of the loan accounts she was a co-borrower and surety. In this regard the learned counsel for the accused vehemently argues that as the accused is a surety the offence under Sec.138 of NI Act is not attracted as there is no direct liability of the surety towards the loan amount.
20. Thereby the learned counsel for the accused has contended that, the complainant bank has to proceed first against the principal debtor and then against the surety, therefore, the complaint is not maintainable. In this regard if we see Sec.128 of Contract Act which states as follows:
Sec.128. Surety's liability.--The liability of the surety is co- extensive with that of the principal debtor, unless it is otherwise provided by the contract.
Illustration A guarantees to B the payment of a bill of exchange by C, the acceptor. The bill is dishonoured by C. A is liable, not only for the amount of the bill, but also for any interest and charges which may have become due on it.SCCH-17 15 C.C. No. 8302/2021
In the judgment of the Hon'ble High Court of Andhra Pradesh reported in (2008) AIR (AP) 38 (Kurnool Chit Funds (Petitioner) Ltd. By its Managing Director S. Venkata Ramaiah v/s P.Narasimha).
"11. The appellate Court further observed that the suit against the principal borrower was dismissed for nonpayment of batta and for non service of summons to him on 31.7.1990. The appellate Court further observed that Section 137 of the Indian Contract Act would show that mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety. The appellate Court further observed that on perusal of sections 128, 133, 134, 135 and 137 of the Contract Act, the liability of the surety is coextensive with that of the principal debtor and his liability is not discharged on account of the omissions and commissions on the part of the creditor in not suing the principal debtor for the reasons best known to him, except as provided under Sections 133, 134, 135 and 137 of the Indian Contract Act in the absence of a contract to the contrary. From the commentary of the text books on Contract Act even if the creditor fails to sue the principal debtor the liability of the surety is not discharged and in such case, it cannot be said that merely because the suit was filed against the principal debtor was dismissed for nonpayment of batta, it cannot be said that the liability of sureties was SCCH-17 16 C.C. No. 8302/2021 discharged or they are released of their liability by the creditor. He further observed that mere dismissal of the suit against the principal debtor does not mean that his liability does not exist and as such the liability of the sureties is discharged and it is not coextensive. Where the creditor has obtained a decree against the surety and the principal debtor, the surety has no right to restrain the execution against him, until the creditor has exhausted his remedies against the principal debtor".
21. In this case the accused not stated any grounds by showing that the accused was not a borrower and she was only a surety. But the accused himself admitted the borrowing of loan. Thereby the said contention raised by the accused cannot be accepted. Further as held in the above quoted judgment and also under Sec.128 of Contract Act the liability of the surety is co-existence along with the principal borrower. The surety has no right to demand to proceed first against the borrower. Hence, the said contention also cannot be accepted. SCCH-17 17 C.C. No. 8302/2021
22. The learned counsel for the accused at the time of arguments relied on the following judgments and argued that there is no liability of the accused, hence prays to dismiss the case against the accused. • The Hon'ble SUPREME COURT OF INDIA in the judgment of Indus Airways Pvt. Ltd. & Ors. v. Magnum Aviation Pvt. Ltd. & Anr. (2014) 12 SCC 539 held that the cheque issued as advance or security does not satisfy the requirement of "legally enforceable debt" under Section 138. Dishonour of such a cheque does not constitute an offence if no debt existed on the date of drawal.
In this case the accused has not led any probable evidence that questioned Ex.P.1 cheque was issued at the time of borrowing of loan and the said contention is not proved for the reasons discussed above. Further the accused herself admitted that she had borrowed the loan and she has not cleared the entire loan amount. The accused also not made out any grounds that the amount mentioned in the Ex.P.1 cheque is higher than the loan amount due by them. Thereby when the accused herself admitted the existence of legally recoverable debt this SCCH-17 18 C.C. No. 8302/2021 judgment relied by the learned counsel for the accused is not applicable to the facts and circumstances of this case.
• Basalingappa v. Mudibasappa (2019) 5 SCC 418 Detailed restatement of the law on rebuttal of presumption. Accused can rely on complainant's evidence to rebut the presumption. Financial capacity and improbabilities can be used to negate debt. The accused admitted the borrowing of the loan and no rebuttal presumptions was raised by showing the negative in the case of the complainant. The financial capacity is also not disputed, as such this case also not helped the petitioner in rebutting the presumption. • Aparna A. Shah v. Sheth Developers Pvt. Ltd. & Anr. (2013) 8 SCC 71 Only the drawer/signatory of the cheque is liable under Section 138. Criminal liability cannot be extended to non-drawers or third parties.
The accused not disputed her signature over Ex.P.1 cheque. She being the drawer of the Ex.P.1 cheque can be prosecuted for the offence punishable under Sec.138 SCCH-17 19 C.C. No. 8302/2021 of NI Act, hence this citation is not applicable to the present case on hand.
• Alka Khandu Avhad v. Amar Syamprasad Mishra & Anr. (2021) 4 SCC 675.
Even if a person is jointly liable for debt, that person cannot be prosecuted under Section 138 unless the cheque is drawn on an account maintained by that person. Section 138 does not recognise joint liability except under Section 141 (companies). In the present case the accused not disputed that the Ex.P.1 cheque does not belongs to her. The accused admitted borrowing of the loan and issuance of Ex.P.1 cheque. As such this citation is not applicable to the case on hand.
• ICDS Ltd. v. Beena Shabeer & Anr. (2002) 6 SCC 426 A guarantor can be liable under Section 138 only when the guarantor has a crystallised, legally enforceable debt on the date of cheque. If the cheque is security, criminal liability does not arise.
The accused herself has not taken any defence that she has not borrowed the loan and she was only guarantor. SCCH-17 20 C.C. No. 8302/2021 In this case the accused has not led any probable evidence that questioned Ex.P.1 cheque was issued at the time of borrowing of loan and the said contention is not proved for the reasons discussed above. Further the accused herself admitted that she had borrowed the loan and she has not cleared the entire loan amount. The accused also not made out any grounds that the amount mentioned in the Ex.P.1 cheque is higher than the loan amount due by them. Thereby when the accused herself admitted the existence of legally recoverable debt this judgment relied by the learned counsel for the accused is not applicable to the facts and circumstances of this case.
• Krishna Janardhan Bhat v. Dattatraya G. Hegde (2008) 4 SCC 54 Though partially refined by Rangappa, the Supreme Court reaffirmed the core principle-existence of debt is a necessary ingredient, and accused can show non- existence of liability.
SCCH-17 21 C.C. No. 8302/2021Further the accused herself admitted that she had borrowed the loan and she has not cleared the entire loan amount. Thereby when the accused herself admitted the existence of legally recoverable debt this judgment relied by the learned counsel for the accused is not comes to the aid of the accused to disprove the case of the complainant.
• M.S. Narayana Menon @ Mani v. State of Kerala & Anr. (2006) 6 SCC 39 Presumption under Section 139 can be rebutted by showing probabilities, and once rebutted, burden shifts fully back to complainant.
It is settled principle of law the accused can rebut the presumption by showing the probabilities. But in this case by admitting the borrowing of loan the accused not denied the existence of legally recoverable debt. Thereby no probable defence is raised by the accused even at the time of cross-examination of PW1.
SCCH-17 22 C.C. No. 8302/2021• Raj Kumar Khurana v. State of (NCT of Delhi) (2009) 6 SCC 72 Cheque given as security with no debt on date of issuance does not attract Section 138. In this case the accused has not led any probable evidence that questioned Ex.P.1 cheque was issued at the time of borrowing of loan and the said contention is not proved for the reasons discussed above. Further the accused herself admitted that she had borrowed the loan and she has not cleared the entire loan amount. Thereby when the accused herself admitted the existence of legally recoverable debt this judgment relied by the learned counsel for the accused is not applicable to the facts and circumstances of this case. • Goa Plast (P) Ltd. v. Chico Ursula D'Souza (2004) 2 SCC 235 Conditions of Section 138 must be strictly fulfilled penal statute cannot be expanded beyond explicit conditions. • Smt. Parvathamma v. A. Manjunath Karnataka High Court, Criminal Appeal No. /2023 SCCH-17 23 C.C. No. 8302/2021 Security cheque not issued towards any crystallised debt cannot attract S.138. Burden returns to complainant once presumption is rebutted.
• K. Prakash Hegde v. Anand S. Murthy KHCNI Act jurisprudence A cheque issued as security and presented prematurely does not amount to an offence under Section 138.
13. Shanku Concretes Pvt. Ltd. v. State of Gujarat Approved and relied upon by SC in Indus Airways If cheque is post-dated and for payment which is not due on the date of drawal, Section 138 is inapplicable. • Swastik Coaters Pvt. Ltd. v. Deepak Brothers Andhra Pradesh High Court A cheque issued towards an uncertain future transaction or security is not under Section 138 unless liability exists on drawal date.
• Balaji Seafoods v. Mac Industries Madras High Court Cheque given as security for a transaction that did not materialise does not constitute Section 138 liability. In the above quoted judgments the Hon'ble High Court of Karnataka and other High Courts have clearly held about when the sec.138 attracts if the cheque is issued for security purpose. But in the present case in hand the SCCH-17 24 C.C. No. 8302/2021 accused admitted the transaction and not raised any probable defence by showing that the cheque was issued for security purpose, as such the above quoted judgments are not applicable to the case on hand.
23. Once the issuance and signature is proved it is the burden of the accused to rebut the presumptions under section 138 and 139 of the N.I. Act, which is available in favour of the complainant. The same was observed in the following judgment of Hon'ble High Court of Karnataka.
K.L.J. 2000(3) Page 481 Dr.K.G. Ramachandra Gupta & Another V/S Dr. G. Adinarayana.
"NEGOTIABLE INSTRUMENTS ACT, 1881, Sections 138 and 139 -
Cheque - Presumption about drawing of
- Signature on cheque, admitted to be that of accused - Held, presumption envisaged in Section 139 that cheque was issued for discharging antecedent liability existing on date which cheque bears, can be legally drawn."
SCCH-17 25 C.C. No. 8302/2021
24. Under the presumption available under section 118 and 139 of the N.I. Act, if the accused is taking up the defence of non- existing of legally enforcible debt as mentioned in any Negotiable Instrument, it is his/accused burden to rebut the presumption. But in this case, the accused has not denied the allegation of the complainant about the borrowing of the loan by the accused. Hence, the Ex.P1 cheque is supported with the payment of consideration to the accused and it is the burden on the accused to rebut the presumption.
25. The trial of cases under N.I. Act is supported with the presumption available under section 118 and 139 of N.I. Act. For the proper adjudication of the matter the accused has to rebut the above said presumption provided under the N.I. Act in favour of complainant through other evidence. Mere denial at the time of recording statement under section 313 of Cr.P.C. is not enough to rebut the presumption to the extent that SCCH-17 26 C.C. No. 8302/2021 the Ex.P1 cheque was not issued to the complainant. Further, in this case the accused has not denied the transaction as even she has not denied the oral and documentary evidence placed by the complainant company. Hence, without any hesitation it can be held that the presumption available under section 138 of N.I. Act in favour of the complainant stands unrebutted.
26. The accused taken another contention that the complainant has filed civil proceedings and SARFAESI Act proceedings for the recovery of the loan amount hence the present case is not maintainable. The said contention cannot be acceptable because it is settled principle of law that the prresent case is filed by alleging the commission of offence punishable U/Sec.138 of NI Act and the parallel proceedings to recover the very same amount does not voids the proceedings of NI Act. The same is held in the following judgment. SCCH-17 27 C.C. No. 8302/2021 In the judgment of Hon'ble Supreme Court reported in AIR 2008 SUPREME COURT 3202 between Purushotama Reddy & Anr vs K.Sateesh "9. A suit for recovery of money due from a borrower indisputably is maintainable at the instance of the creditor. It is furthermore beyond any doubt or dispute that for the same cause of action a complaint petition under terms of Section 138 of the Act would also be maintainable".
27. Thereby, further, the transaction and issuance of cheque is proved before this court. Section 139 and 118 of N.I. Act has favourable presumptions in favour of the complainant. The accused failed to rebut these presumptions. When the presumptions are not rebutted and defence not proved by the evidence placed by the complainant, the burden shifts upon the accused to rebut the presumption. The accused not placed any probable defence evidence to disprove the case of the complainant. Hence, the answer of the accused is not acceptable in the absence of proper evidence. Thereby, SCCH-17 28 C.C. No. 8302/2021 it can be conclude that the Ex.P1 cheque was issued in the nature provided under section 138 of N.I. Act. Mere denial is not sufficient to rebut the presumption in favour of the complainant. In this regard, it is very incumbent to quote the following judgments of the Apex Court.
A.I.R. 2010 SC 1898 Rangappa V/S Mohan "The presumption mandate by Sec. 139 of the Act does indeed including the existence of the legally enforceable debt or liability."
Further, in the judgement quoted supra it is also held that "The burden of the drawer of the instrument is not just to create a doubt or offer explanation, but such explanations has to be proved satisfactorily".
A.I.R. 2001 SC 2895 K.N. Beena V/S Muniyappan and Another:
"The burden to prove the consideration for the cheque lies on the accused if not rebutted, the presumption is that the cheque was issued for consideration. It is for the accused to prove that the cheque was not issued towards a SCCH-17 29 C.C. No. 8302/2021 debt or liability. He has to lead credible evidence for the rebuttal of this presumption. Mere denial of averments will be suffice to shift this burden on to the complainant."
These citations are squarely applicable to this case as there is no rebutal evidence on the allegations of the complainant company.
28. The accused admitted the signature and also borrowing of the loan. No doubt that the said presumption available to the Ex.P.1 cheque is rebuttable presumption. No grounds are made out in the cross- examination of the PW1 by raising the probable defence which negates the liability. Except arguing that the cheque was issued for the security purpose no probable evidence placed in this regard. The cheque counter slips are not produced by the accused by showing the issuance of date of cheque. In the cross-examination the PW2 specifically stated that the accused issued cheque on 01.10.2020. Thereby no evidence is placed by the SCCH-17 30 C.C. No. 8302/2021 accused by showing that the cheque was issued at the time of borrowing of loan. Thereby no probable defence is raised by the accused by showing that the complainant is conceding the fact of collecting the cheque as a security purpose. There are series cases are filed against the present accused and her husband and daughter for the different loan accounts. In some of the loan accounts the accused is borrower and her husband and daughter are the co-borrowers and vice-versa for the loan amount borrowed by the husband and daughter of the accused, the accused is a co-borrower. No grounds are made out by raising the probable defence which creates doubt about the existence of legally enforceable debt.
29. The learned counsel for the accused vehemently argues that the alleged transaction and borrowing of the loan as stated by the PW2 in his cross-examination was on 10.08.2017 and they have presented the cheque on 05.10.2020 and the account was declared as NPA on SCCH-17 31 C.C. No. 8302/2021 31.01.2020 as such the cheque was presented after the lapse of 3 years the said loan amount becomes time barred debt as such it is not legally recoverable debt accordingly Sec.138 of NI Act is not applicable to this case.
30. In this regard in the judgment of Hon'ble High Court of Karnataka reported in ILR 2006 KAR 4242 between H. Narasimha Rao vs R. Venkataram decided on 11.10.2006 it is held as follows:
"12. Admittedly, the loan transaction took place in the month of May, 1994. The accused issued two cheques one cheque dated 15.5.1999 for a sum of Rs. 50,000/- and another cheque dated 25.5.1999 for a sum of Rs. 10,000/-(both drawn on Bangalore City Co-operative Bank Limited, Bangalore,) in favour of the complainant towards discharge of the loan amount. As on 12.6.1997, the entire debt of Rs. 60,000/- had become time barred, but there is no legal bar for the debtor agreeing to pay the time barred debt. No fresh consideration is required for debtor's promise to pay the time barred debt. There is moral obligation on the accused, who is none other than the friend of the complainant, to refund the loan amount. It SCCH-17 32 C.C. No. 8302/2021 would be useful to refer to the observation made by Lord Mansfield, in Hawkers v. Saunders (1782) 98 ER 1091 which reads as under:
Where a man is under a legal or equitable obligation to pay, the law implies a promise, though none was ever actually made. A fortiori, a legal or equitable duty is a sufficient consideration for an actual promise. Where a man is under a moral obligation, which no Court of Law or Equity can enforce, and promises, the honesty and rectitude of the thing is a consideration. As if a man promises, to pay a just debt, the recovery of which is barred by the Statute of Limitations; or, if a man, after he comes of age, promises to pay a meritorious debt contracted during his minority, but not for necessaries; or if a bankrupt, in affluent circumstances after his certificate, promises to pay the whole of his debts; or if a man promises to perform a secret trust, or a trust void for want of writing, by the Statute of Frauds.
In such and many other instances, though the promise gives a compulsory remedy, where there was none before either in law or equity; yet as the promise is only to do what an honest man ought to do, the ties of conscience upon an upright mind are a sufficient consideration".SCCH-17 33 C.C. No. 8302/2021
11. The Hon'ble Apex Court in A.V. Murthy v. B.S. Nagabasavanna, supra, has made an observation in para-5 of the judgment as under:
...Under Section 118 of the Act, there is a presumption (hat until the contrary is proved, every negotiable instruments was drawn for consideration. Even under Section 139 of the Act, it is specifically stated that it shall be presumed, unless the contrary is proved that, the holder of a cheque received the cheque of the nature referred to in Section 138 of discharge, in whole or in part, of any debt or other liability. It is also pertinent to note that under Sub-section (3) of Section 25 of the Indian Contract, 1872, a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits, is a valid contract....
12. The Division Bench of the Kerala High Court in Ramakrishnan case, supra, following the ratio laid down in the A. V. Murthy's case, supra, held that when a person writes, signs and delivers a cheque to another it is an acknowledgement of a legally enforceable liability and therefore, if the cheque is dishonoured such a person shall not be entitled to plead that at the time of his writing the cheque the claim had become barred by limitation and thus, he is not liable to be punished under Section 138 of the Act.
13. The complainant has not disputed his signature on the dishonoured cheques in question. Therefore, they constitute an agreement or promise by the debtor to pay the time barred debt, Since the accused has not paid the cheque SCCH-17 34 C.C. No. 8302/2021 amounts inspite of demand made by the complainant the accused has committed an offence under Section 138 of the Act. The learned Magistrate has committed an error in dismissing the complaint and recording and order of acquittal in favour of the accused".
In this case also the accused not disputed their signature on Ex.P1 cheque. Thereby, by issuing the cheque the accused admitted the liability. Thereby, the defence of time-barred debt cannot be accepted.
31. The accused has not made out any sufficient grounds to disprove the complainant's case. On the other hand, the complainant successfully proved his case beyond all reasonable doubt. As such, the point No. 1 is answered in the affirmative.
32. Point No. 2: In this case, both the parties have taken sufficient opportunity for the adjudication of the case. By keeping the time spent by both the parties in the trial, the amount of compensation is going to be SCCH-17 35 C.C. No. 8302/2021 determined. In view of the above findings on point No. 1, I proceed to pass the following order.
ORDER The accused found guilty of an offence punishable under section 138 of Negotiable Instrument Act.
In exercise of powers vested under section 255(2) of Cr.P.C. 1973, the accused is convicted for the offence punishable under section 138 of Negotiable Instruments Act.
Further, the accused sentenced to pay fine of Rs.2,05,10,000/- (Rupees Two crore Five lakhs ten thousand only). In default, the accused shall undergo Simple Imprisonment for the period of six months. It is clarified that the serving on default sentence will not absolve the accused on payment of the fine amount.
Further it is held that after realizing the fine amount from the accused, a sum of Rs.2,05,00,000/- (Rupees Two crore five lakhs only) shall be paid to the SCCH-17 36 C.C. No. 8302/2021 complainant as compensation under section 357(1)(b) of Cr.P.C. and the remaining Rs.10,000/- (Rupees Ten thousand only) shall be adjusted towards the expense of the State.
The bail bond and surety bond of the accused stands canceled.
(Dictated to the Stenographer directly on the computer, corrected by me and then pronounced in the open court on this the 20th day of November, 2025) (KANCHI MAYANNA GOUTAM) XIX ADDL.JUDGE, Court of Small Causes & ACJM, BENGALURU.
ANNEXURE List of witnesses examined for the complainant:
PW .1 : Sri Ranjan Hanumant Naik. PW.2 : Sri Satyabrata Tripathy.
List of witnesses examined for the accused:
DW.1 : Smt. Vedavathi Balaraju.
SCCH-17 37 C.C. No. 8302/2021List of documents marked for the complainant:
Ex.P1 Cheque Ex.P1(a) Signature of accused Ex.P2 Bank return memo Ex.P3 Office copy of legal notice Ex.P4 Postal receipt Ex.P5 Postal acknowledgment Ex.P6 GPA
List of documents marked for the accused:
NIL (KANCHI MAYANNA GOUTAM) XIX ADDL.JUDGE, Court of Small Causes & ACJM, BENGALURU.
Digitally
signed by
KANCHI
KANCHI MAYANNA
MAYANNA GOUTAM
GOUTAM Date:
2025.11.28
12:16:10
+0530