Bangalore District Court
Sri. Sudha Rani M vs Sri. Harish P.J on 4 October, 2025
CC.No.923/2023
KABC030015702023
Presented on : 11-01-2023
Registered on : 11-01-2023
Decided on : 04-10-2025
Duration : 2 years, 8 months, 24 days
IN THE COURT OF THE XVI ADDITIONAL CHIEF
JUDICIAL MAGISTRATE, BENGALURU CITY
Dated: This the 4th day of October 2025
Present: Smt.Tejaswini K.M., B.A.L. LL.M,
XVI Addl.C.J.M., Bengaluru City.
CC. No.923/2023
Smt.Sudha Rani.M
W/o Krishnappa.M
Aged about 53 years
R/at No.3/1, 3rd Floor,
Reserviour Street,
Bramhakumari Vishwa Vidhyalaya,
Bengaluru - 560004.
....Complainant
(By Sri K.Shridhara., Advocate)
Versus
2 C.C.923/2023
Sri.Harish P.J
S/o Jagadeesh
Aged about 30 years
R/at Poojarapalya Village,
Agalakote Post, Kasba Hobli,
Magadi Taluk,
Ramanagara - 562120.
.... Accused
(By Sri Dilip Kumar C.M., Advocate)
Offence complained : U/Sec.138 of Negotiable
Instrument Act.
Date of commencement
of evidence : 10.01.2023
Date of closing evidence : 01.07.2025
Opinion of the Judge : Accused found guilty
Offence complained : U/Sec.138 of Negotiable
Instrument Act.
Opinion of the Judge : Accused found guilty
3 C.C.923/2023
JUDGMENT
This case is registered against the accused for the offence punishable U/s 138 of Negotiable Instruments Act.
2. Factual matrix of the complainant's case is as under:
It is stated that the complainant is acquainted with the accused. In the last week of October 2016, the accused has approached the complainant for financial assistance of Rs.7 lakhs for his business purpose and personal commitments and agreed to repay the loan @ 2.5% within 3 years. Considering the said request, the complainant has lent an amount of Rs.7 lakhs on 02.11.2016 to the accused and in turn the accused has executed promissory note in favour of the complainant.
Accordingly, the accused has paid interest till 05.09.2017. 4 C.C.923/2023 But in the months of October and November 2017 the accused has failed to pay the interest, that time complainant insisted to pay the amount. That time accused has issued 3 cheques bearing No.154617 for Rs.50,000/-, cheque bearing No.154618 for Rs.2,00,000/- and cheque bearing No.154619 for Rs.4,50,000/-, drawn on Canara Bank, Magadi, Ramanagara District for security of the principal amount. But thereafter also the accused was not regularly paying the interest. Since agreed 3 years period was about to complete in the month of November 2019, the complainant has demanded the accused to repay the principal amount with due interest on 20.11.2019. At that time accused expressed his inability to arrange the principal amount and sought another 2 years time to return the principal. On that day the father of the accused was also present and undertook to pay the said amount within 2 years.
5 C.C.923/2023
3. The accused has paid the interest to the complainant's husband account at his convenient dates from November 2016 to August 2020 and paid the interest amount of Rs.5,91,000/- from 03.12.2016 to 20.08.2020 by way of account transfer. From August 2020 onwards the accused failed to pay the interest amount. The accused has taken undue advantage of Corona Pandemic period and postponed to pay the amount. Therefore, the complainant met the accused on 12.06.2022 and requested to pay the principal amount. On that day the negotiation was held between the accused and the complainant in presence of the father of the accused and calculation has been made with respect to the interest.
4. From November 2016 to June 2022 the accused is liable to pay the interest of Rs.17,500/- per month @ 2.5% per month to the principal amount of Rs.7 lakhs which 6 C.C.923/2023 comes to Rs.11,55,000/-. The accused has already paid Rs.5,91,000/-. After negotiation accused and his father requested the complainant to settle the principal amount and waive off the interest and the complainant has agreed for the same. The accused has finally agreed to return back the principal amount of Rs.7 lakhs and in discharge of the said amount he has directed the complainant to present the cheques which were already given in the year 2017.
5. Accordingly, the complainant has presented the cheque bearing No.154617 dated 18.07.2022 for Rs.50,000/- and it got dishonoured for the reason 'funds insufficient'. However, the accused has apologized and requested to present the 2 other cheques after 2 months and he will maintain sufficient funds. Accordingly, the complainant has presented the cheque bearing No.154618 dated 20.09.2022 for Rs.2,00,000/- and cheque 7 C.C.923/2023 bearing No.154619 dated 20.09.2022 for Rs.4,50,000/- on 22.09.2022, but again they were dishonoured for the reason 'funds insufficient' vide memo dated 19.09.2022 and 23.09.2022. Thereafter, the complainant got issued a legal notice demanding the accused to make payment of cheque amount within stipulated period. The notice was returned with an endorsement as 'party is refused, returned to sender' on 21.10.2022. However, the accused has not repaid the amount and not given reply to the demand notice. Hence the complainant has constrained to file the present complaint.
6. After receiving the complaint, this court has meticulously gone through the documents and affidavit filed along with it and then took cognizance of the offence punishable U/sec.138 of Negotiable Instruments Act and ordered for registration of the compliant as P.C.R. 8 C.C.923/2023
7. Sworn statement of the complainant was recorded and marked 14 documents as Ex.P-1 to P-14. As there were sufficient materials to constitute the offence, this court has proceeded to pass an order for issuing process against the accused.
8. In pursuance of summons, accused has appeared through his counsel and applied for bail. He was enlarged on bail. Then the substance of accusation was read over to the accused in the language known to him, for which he pleaded not guilty.
9. As per the direction of Hon'ble supreme court in "Indian Bank Association V/s Union of India and others reported in (2014)(5) SCC 590, this court treated the sworn statement of the complainant as complainant evidence and posted matter for cross-examination of PW.1. The counsel for the accused has cross-examined 9 C.C.923/2023 PW.1. During cross-examination of PW1 Ex.D1 and D2 were marked by way of confrontation.
10. The statement of accused as contemplated under the provisions of Section 313 of Cr.P.C has been recorded vide dated 24.10.2024 and the incriminating evidence as such forthcoming against the accused in the evidence of PW.1 and the documents has been read over and explained to the accused in the language known to him. He denied all incriminating evidence. The accused has not led any evidence.
11. I have heard the arguments of the learned counsel for complainant and accused. The counsel for the complainant has also filed written arguments. Learned Counsel for both have also filed memo with citations. I have perused the oral and the documentary evidence placed on record and gone through those case laws. 10 C.C.923/2023
12. Points that arise for my consideration are as under:
1. Whether the complainant proves that the accused towards discharge of his liability issued 3 cheques bearing No.154617 dated 18.07.2022 for Rs.50,000/-, cheque bearing No.154618 dated 20.09.2022 for Rs.2,00,000/-
and cheque bearing No.154619 dated 20.09.2022 for Rs.4,50,000/- drawn on Canara Bank, Magadi Branch, Ramanagara District in favour of complainant, on presentation of the same for encashment, they were dishonored for "Funds Insufficient" in the account maintained by the accused, then in-
spite of issuing demand notice to the Accused and in complying with statutory requirement under Negotiable Instrument Act, Accused did not repay the cheque amount, thereby he has committed an offence punishable U/s 138 of Negotiable Instruments Act?
2. What Order?
11 C.C.923/2023
13. My Answer to above points are as under:-
Point No.I :- In the Affirmative,
Point No.II :- As per the final order for
the following....
REASONS
14. POINT NO.I:- In nutshell, case of the
complainant is that she has lent loan of Rs.7 lakhs to the accused on 02.11.2016 and the accused has paid Rs.5,91,000/- towards interest as agreed till August 2020. After request of the complainant to repay the entire amount with interest as per negotiations the complainant has agreed to receive Rs.7 lakhs. But the cheques issued by the accused for discharge of the said settlement amount of Rs.7 lakhs got dishonoured for the reason 'Funds Insufficient'. Despite of giving notice, the accused has not repaid the amount. Hence the present complaint.
15. To substantiate her case the complainant stepped into witness box and got examined as PW.1. She 12 C.C.923/2023 has got marked Ex.P1 to P14. She has produced the cheques issued by accused and the same are marked as Ex.P-1 to P-3, the signatures of the accused are marked as Ex.P-1(a) to 3(a), copies of bank memos are marked as Ex.P-4 to P-7, copy of demand notice dated:16.10.2022 is marked as Ex.P-8, copy of postal receipt is marked as Ex.P- 9, copy of returned notice is marked as Ex.P-10, postal cover is marked as Ex.P-11, postal receipt is marked as Ex.P-12, demand promissory note and consideration receipt is marked as Ex.P-13 and complaint is marked as Ex.P-14.
16. Advocate for complainant has relied on the citations reported 2025 INSC 427 in between Ashok Singh V/s State of Uttar Pradesh and another and 2014 AIR SCW 434 in between Ajeet Seeds Ltd., V/s K.Gopala Krishnaiah. I have gone through these case laws. 13 C.C.923/2023
17. Defense of the accused:
The complainant has no source of income to lend such loan. He never borrowed loan from the complainant. The husband of the complainant was doing chit business and for that chit transaction, the cheques and pronote were taken for security purpose. Those cheques are misused by the complainant. The demand notice is not served to the accused. Hence prays to acquit him from this case.
18. Advocate for accused has relied on the citations reported in (2015) 1 SCC 99 in between K.Subramani V/s K.Damodara Naidu, (2019) 5 SCC 418 in between Basalingappa V/s Mudibasappa, (2020) 15 SCC 348 in between Anss Rajshekar V/s Augustus Jeba Ananth, (2019) 16 SCC 730 in between H.N.Jagadeesh V/s 14 C.C.923/2023 Ra.Rajeshwari, (2022) 6 SCC 735 in between Tedhi Singh V/s Nayan Dass Mahant, (2020) 12 SCC 724 in between APS forex Services Private Ltd., V/s Shakti International Fashion Linkers & Ors., 2025 SCC Online Ker 4794 in between Saju V/s Shalimar Hardwares, (2006) 6 CC 39 in between M.S.Narayana Menon Alias Mani V/s State of Kerala and another, 2012(3) KCCR 2057 in between Veerayya V/s G.K.Madivalar and ILR 2021 KAR 2437 in between The Bidar Urban Co- operative, Bank Ltd., Bidar V/s Girish. I have gone through these case laws.
19. Negotiable Instruments Act provides for some presumption in favour of the complainant i.e., Section 118 reads as here: - "That every negotiable instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, 15 C.C.923/2023 negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration".
20. Further Sec 139 of the Negotiable Instruments Act provides for presumption in favour of a holder. It reads as here: - "It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in sec 138, for the discharge, in whole or in part, or any debt or other liability."
21. Combined reading of above said sections raises a presumption in favour of the holder of the cheque that he has received the same for discharge in whole or in part of any debt or other liability. However, it is settled principle of law that the presumption available u/s 139 NI Act can be rebutted by the accused by raising a probable defense.
16 C.C.923/2023
22. The complainant has reiterated the contents of the complaint in her chief examination. During of the cross-examination of PW.1 by the counsel for the accused, PW.1 has deposed that she is doing cloth business and it was closed in 2021 during Corona. She deposed that accused is her relative. She was getting Rs.1 lakh per year from the said cloth business. She is residing in a rented house. She is also doing agriculture and her husband was also involved in agriculture and cloth business. She deposed in October 2016 accused had approached for Rs.7 lakhs, at that time he came with his father, he does not remember the date. She is not doing money lending business, but accused has admitted to repay the loan with interest @ 2.5%. She deposed that on 02.11.2016 she had given Rs.7 lakhs to the accused in presence of one Mr.Srinivas. She did not have impediment to transfer the loan money through account. She deposed that her 17 C.C.923/2023 parents are retired teachers, from them she received Rs.10 lakhs, she does not have document to show it. Her father is no more and she cannot produce documents pertaining to amount possessed by her mother.
23. Further PW1 deposed that she does not remember from which denomination notes she had given Rs.7 lakhs to the accused. She deposed that in December 2017 the accused has given cheques to her and at the time of taking loan, the accused had given promissory note and consideration receipt to her. She further deposed that herself has filled the details in the cheques. She intimated to the accused about the presentment of the cheques to the bank before presenting them to the bank. She deposed that she has given notice to the address of the accused as Poojari Palya, Agalakte Post, Magadi Taluk, Ramanagara District and the said notice is returned back.
18 C.C.923/2023
24. He deposed that from the account of the accused her husband has received Rs.17,500/- per month towards interest from December 2016 to August 2020. She denied the suggestion that her husband is doing chit business. She deposed that she had land of 2 acres from which she earns Rs.1,50,000/- per year. She denied the suggestion that accused had no transaction with her, but the transaction was with her husband. She deposed that she earns Rs.10,000/- per month from cloth business and she is not income tax payer. She deposed that her father has given Rs.10 lakhs by way of cash to her on different dates. She cannot produce account statements of her parents and their pension documents. She deposed that her mother got retired in the year 2000. She deposed in the year 2000 she received Rs.2 lakhs, in the year 2002 she received Rs.3 lakhs and about 10 years back she received Rs.5,000/- and in 2020 she received Rs.10 lakhs 19 C.C.923/2023 from her parents. She kept the said amount in her house and she was doing business.
25. PW1 further deposed that she cannot produce any document to show that she had a cloth business in Basavanagudi. She deposed that she kept the cloth shop for about 2 years between 2020-21. She deposed that she cannot produce any document to show the income she received from the cloth business. She deposed that she has bank account in Canara Bank and SBI and from past 15 years, she is doing bank transaction, she cannot tell her bank balance of the year 2015-16 and she can produce her account statement. She admits the suggestion that she does not have income of more than Rs.3 lakhs per year, as such she has not paid the tax. She admits that she has not done any account transaction with the accused so far. When it is suggested that if she had given the loan to the accused, she could have been 20 C.C.923/2023 received interest to her account from the accused , for which PW1 deposed that she deposits all the amount to her husband's account, in her business. She deposed that accused is his far relative. He becomes his husband's sister's son, but she cannot tell the said sister's name. She denied the suggestion that accused is not her relative, but he is from the neighbour village of her husband's village. She does not know that accused is doing work in KMF. She dosnot know from how many years the accused is doing which job.
26. She deposed that father of the accused is doing agriculture and also taking contract of desilting the lake or removing silt from the lake. She deposed that her husband has land at Agalakote, but she cannot tell the survey number. She deposed that she can produce the RTC pertaining to the said land. She deposed that accused has given cheques in December 2017. She deposed that 21 C.C.923/2023 accused has given pronote at the time of taking loan from her. She deposed that she herself filled the details in the pronote at Ex.P13. She deposed that she has presented Ex.P1 cheque twice, but she has not given demand notice when she got memo as per Ex.P5 for the first time, but she informed orally to the accused and accused has admitted to repay the amount. She denied the suggestion that with ill motive she has presented the cheques at Ex.P2 and P3.
27. She denied the suggestion that her husband by name Mr.Krishnappa is doing chit business. She denied the suggestion that accused had given cheques at Ex.P1 to P3 and pronote at Ex.P13 to her husband in the chit business for security purpose. She denied the suggestion that accused has paid 40 installments to the said chits. She cannot produce account statement of her husband. She denied the suggestion that to avoid about disclosure 22 C.C.923/2023 of the payments, made in chit transaction to her husband's account, she is not producing her husband's account statement. She denied the suggestion that accused is financially fit and has land and form in his village and he has no reason to take loan from her. When it is suggested that the accused gets salary of Rs.40 to 45 thousand, she deposed that accused had also borrowed loan from different persons, but she cannot tell their names from whom he borrowed loans.
28. PW1 admits that the address of the accused shown in Aadhar Card at Ex.D1, rental agreement at Ex.D2 of the accused. She denied that the notice is not served to the accused. She deposed that she has given notice to the permanent address of the accused. She deposed that she can produce her account statement. She deposed that since she does not have cheque book facility to her account, she has made the accused to deposit the interest 23 C.C.923/2023 amount to the loan to her husband's account. She admits that she does not have transaction of more than Rs.50,000/- in her account. She denied that she does not have financial capacity to pay Rs.7 lakhs to the accused. She denied that there is no loan transaction with the accused. Remaining suggestion of the counsel for the accused are denied by her.
29. I have scrupulously gone through the pleadings and evidence placed on record and also given by anxious consideration to the arguments canvassed by the advocate for complainant and accused.
30. The advocate for complainant has argued that the accused has not given reply to the demand notice, not given any explanation or introduced the defense at the time of recording plea or statement U/Sec.313 of Cr.P.C. and also not lead any defense evidence. Hence, the accused has not rebutted the initial presumption given in 24 C.C.923/2023 favour of the complainant U/Sec.139 of NI Act. He further argued that to the last known address of the accused, the complainant has given a demand notice and same is deemed to be served. He further argued that till August 2020 the accused has paid the interest. Therefore, limitation to file the case commenced after August 2020, hence complaint is well within time. Therefore, he prays to convict the accused.
31. On the other hand, advocate for accused has argued that the complainant has no source of income and she does not have money lending licence to give loan for interest and there is no documentary proof for loan transaction. He further argued that the notice is not served on the accused as it is not given to the residential address of the accused shown in the Aadhar Card. He further argued that the pronote and cheques are filled by the complainant which was given in connection to chit 25 C.C.923/2023 transaction with the husband of the complainant. During demonetization period it was difficult to arrange the cash, as such alleged loan given by way of cash is suspicious. He further argued that the complaint is filed with respect to time barred debt. He argued it is not mandatory to the accused to step into witness box to rebut the presumption given U/Sec.139 of NI Act. There is inconsistencies in the evidence of PW.1 regarding her source of income and one of the cheques given date is mentioned as 18.07.2020 in the complaint, whereas the cheque is dated 18.08.2022. Therefore, by considering afore stated grounds he prays to acquit the accused.
32. On thorough examination of the evidence of PW.1 and the contention taken by the accused during cross-examination of PW.1, it appears that the acquaintance between the parties is not in dispute. Further the accused admits that the disputed cheques 26 C.C.923/2023 belong to his account and admits his signatures on the disputed cheques.
33. The Honorable Supreme Court of India in "Triyambak S Hegde v Sripad" (2022) 1 SCC 742 while relying upon the the constitution bench judgment of Basalingappa v Mudibasappa (2019) 5 SCC 418, under para 14 of its judgment reiterated that "once the cheque was issued and that the signatures are upon the cheque are accepted by the accused, the presumptions undee Sec 118 and 139 of the NI Act arise against the accused. That is, unless the contrary is proved, it shall be presumed that the cheques in question were drawn by the accused for a consideration and that the complainant had received the cheque in question in discharge of debt/liability from the accused."
34. Therefore, as per Sec.118 and 139 of NI Act initial presumption has to drawn infavour of the complainant that cheques were issued in discharge of 27 C.C.923/2023 legally enforceable debt. The burden lies on the accused to rebut the said initial presumption on the scale of preponderance of probabilities. The accused taken various grounds to rebut the presumption stated supra.
35. The complainant has pleaded that she has lent loan of Rs.7 lakhs on 02.11.2016 by way of cash and even during her evidence also she has deposed in consonance with the pleadings. Firstly, the advocate for accused has much argued that the complaint is not maintainable, as it is filed pertaining to time barred debt and also relied upon the citations i.e. ILR 2021 KAR 2437 in between The Bidar Urban Co-operative, Bank Ltd., Bidar V/s Girish. I have gone through said citation.
36. No doubt as per the pleadings and evidence of PW.1 the alleged loan of Rs.7 lakhs was given on 02.11.2016. The complaint is fled on 16.11.2022. From the date of loan i.e. 02.11.2016 after lapse of 6 years the 28 C.C.923/2023 present complaint is filed. It is significant to note here that in para No.5 and para No.7 of complaint it is clearly pleaded that accused has paid interest @ 2.5% per month to Rs.7 lakhs for about 66 months to an extent of Rs.5,91,000/- i.e. upto August 2020. Thereafter, accused stopped making payment of interest.
37. Section 19. of LIMITATION ACT says that Effect of payment of account of debt or of interest on legacy.
"Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made"
38. As per Sec 19 of Limitation Act, the limitation to recovery the money commenced from last date of payment of loan. However no written acknowledgement is executed by the accused within 3 years. But his 29 C.C.923/2023 continuous payment of interest makes it clear about his promise to pay the principle. There is clear pleading that three cheques were given in 2017 itself for security purpose without mentioning the date. Thus security cheques ripened to present them to bank , only when the accused asked to present them to bank after he become defaultor of making payment of interest from November 2020 as per para 9 of compliant. PW1 also consistently deposed that accused has paid interest till august 2020.
39. If we calculate from August 2020 the complaint is filed well within time ie 3 years from last date of payment of interest. Therefore, the first ground of the accused that the complaint is not maintainable as it is filed with respect to time barred debt cannot be accepted. In recent case law Sri Sudhakar Reddy C.B vs Smt Pushpa decide on 12 October, 2023 CRIMINAL REVISION 30 C.C.923/2023 PETITION NO.256/2022 , Hon'ble karnataka High court held that "39. Thus, when the questions formulated by the learned Single Judge of High Court of Bombay was referred to the Division Bench, it took pains in considering the matter from various facets and answered both the questions in the Affirmative. Thereby, holding that issuance of cheque is a promise in writing within the meaning of sub section (3) of Section 25 of the Contract Act and it is an exception to the general rule that the agreement without consideration is void. Thus, issuance of a cheque satisfies the ingredients of sub section (3) of Section 25, i.e., promise made in writing and signed by the person to be charged therewith to pay wholly or in part a dent of which the creditor might have enforced payment, but for the law for the limitation of suits and as such, the cheque becomes a cheque drawn towards discharge of a legally enforceable debt as contemplated by the explanation to Section 138 of the NI Act. Therefore, the position of law is laid down by the Division Bench of High Court of Bombay and there is no reason for not accepting the same.
40. In view of the settled position of law, even if the contention of the learned counsel for the petitioner that the cheques were issued towards a time barred debt is to be accepted, by applying the above principle of law to the present case, issuance of cheques in question amount to written promise to pay the said debt, as provided under Section 25(3) of the Contract 31 C.C.923/2023 Act and it creates legally enforceable debt. Hence, it squarely attracts Section 138 of NI Act. "
40. Secondly, the counsel for the accused has cross- examined PW.1 on the service of notice. It is the document based offence. Ex.P1 cheque is dated 18.07.2022. In the complaint this year is wrongly mentioned as 18.07.2020 and same appears to be typographical error and the court has give due consideration to what documents speaks at ExP1 cheque pertains to its date. The remaining 2 cheques are dated 20.09.2022. The cheques got dishonoured for the reason 'funds insufficient' vide memo dated 19.09.2022 and 18.07.2022 and 23.09.2022.
41. Admittedly, the complainant has presented the cheque bearing No.154617 twice to the bank i.e. on first presentment the cheque got dishonoured vide memo dated 18.07.2022 as per Ex.P5 and for second time when 32 C.C.923/2023 it is presented it was again dishonoured for the same reason on 19.09.2022 as per Ex.P4 bank memo. However, it is well settled law that as per Sec.138 of NI Act the cheque is valid for 90 days from the date of cheque and within the period of 90 days the successive presentation of the cheque is valid. This principle is also laid by Apex court in Msr Leathers vs S. Palaniappan And Anr 2013 AIR SCW 597, held that "31. Applying the above rule of interpretation and the provisions of Section 138, we have no hesitation in holding that a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by a statutory notice and a failure to pay had not been launched. If the entire purpose underlying Section 138 of the Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be 33 C.C.923/2023 immune to prosecution simply because the holder of the cheque has not rushed to the court with a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for funds or for any other similar reason. There is in our opinion no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonoured for the second or successive time."
42. Therefore, the presentment of the Ex.P1 cheque twice to the bank is well within stipulated period and within 30 days from the date of dishonour of the cheque for second time, the complainant shall give demand notice and same is duly complied in this case.
43. The complainant has presented Ex.P2 and P3 cheques and they have also got dishonoured for the reason 'funds insufficient' vide memo dated 23.09.2022 as per Ex.P6 and P7. The complainant has given a demand notice on 16.10.2022 as per Ex.P8 through RPAD. As per 34 C.C.923/2023 Ex.P11 postal shara the postal authority has tried to serve the notice on 19.10.2022, 20.10.2022 and 21.10.2022. But all these days they could not serve the notice for the reason of 'enquiry', 'door lock' and 'party is absent'. In front portion of Ex.P11 there is a shara that 'party is refused and return to sender' on 21.10.2022.
44. The counsel for the accused has much argued that in the back side of Ex.P11 there is a shara that 'party is absent' on 21.10.2022. Therefore, postal shara as 'party is refused' in front side is created for the purpose of the case. Hence argued that notice is not served on accused. During cross-examination dated 01.07.2025 the complainant has deposed that she does not have document to show that the accused was residing in the address shown in the demand notice. The Aadhar Card of the accused showing his address has been confronted to PW1 and she has admitted it as such it is marked as Ex.D1. 35 C.C.923/2023 The complainant has deposed that the accused might be residing in the address shown in the Ex.D1. But she denied that the notice is not given to the said address shown in Ex.D1 as such notice is not served. She further deposed that while she giving money to the accused, accused was residing in his village address which is shown in the demand notice, as such the notice was given to the village address and not to the address shown in Ex.D1.
45. Further the counsel for the accused has confronted rent agreement of the accused to show that accused is residing in the address shown in his Aadhar Card at Ex.D1 and the witness has admitted it and same is marked as Ex.D2. PW.1 has deposed that she has given demand notice to the permanent address of the accused. She deposed that in the address shown in the demand notice parents of the accused also were residing, but does not have document to show it.
36 C.C.923/2023
46. It is pertinent to note here that though accused is contending that his residential address is the address shown in Ex.D1 & D2, but not denied the address shown in the demand notice is not of his address. As per PW.1 the parents of the accused are residing in the address shown in the demand notice and in that address itself accused has borrowed money from her and it is permanent address of the accused. At no stretch of imagination the complainant can produce any proof to show that the parents or the family members of the accused are residing in the address and same is not required for the present case. The burden lies on the accused to prove that he is not residing in the address shown in the demand notice. Except confronting Ex.D1 and D2 i.e. his Aadhar Card and rental agreement, the accused has not stepped into witness box to depose his correct address and to prove that the address shown in 37 C.C.923/2023 the demand notice is not his permanent address. Yet another important point noticed by the court is that cheques in question were drawn from the Canara Bank , Magadi, Ramanagra District . If the accused is not residing in said address of Magadi shown in Notice, he would have not opened account therein. It gives a clear hint that notice is given to correct address of the accused.
47. It is asked to PW.1 in her cross examination, whether she could examine postal authority to prove that the notice is served to the accused and she denied for the same. It is significant to note here that when the postal authority tried to serve the notice on 19.10.2022, 20.10.2022 they could not meet the accused for the reason 'door lock' and enquiry and on 21.10.2022 'party is absent'. But they have not put an endorsement stating that 'insufficient address' or 'wrong address' or the 'addressee left' etc. Had the postal authority given such 38 C.C.923/2023 shara this Court would have suspected about the correctness of the permanent address shown in the legal notice. As per Sec.27 of General Clauses Act once the notice is given to the correct last known address of the accused through RPAD it is deemed to be served irrespective of the endorsement given by the postal authority as 'party absent', 'refused', 'unclaimed' etc. Moreover, after appearance before the Court accused has not deposited the cheque amount before the Court. Therefore, he is precluded from taking the defense that the notice is not served.
48. K. Bhaskaran vs Sankaran Vaidhyan Balan And Anr reported in AIR 1999 SUPREME COURT 3762, Apex court held that "No doubt Sec 138 of the Act does not require that the notice should be given only by `post'. Nonetheless the principle incorporated in Sec 27 (quoted above) can profitably be imported in a case where the sender has despatched the notice by post 39 C.C.923/2023 with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such non-service. Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice. "
49. In C.C. Alavi Haji vs Palapetty Muhammed & Anr (2007) 6 SCC 555, the Hon'ble Apex court has held; "
17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Sec 138 the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Sec 138 of the Act, cannot obviously contend that there was no proper service of notice as under Sec 138 , by ignoring statutory presumption to the contrary under Sec 27 of the G.C. Act and Sec 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation... "40 C.C.923/2023
50. As per principles laid down in above cases. defense of the accused that notice is not served holds no water. Not responding to notice by way of giving reply is also fatal to the defence.
51. Thirdly, the accused has seriously disputed the source of income of PW.1 and the counsel for the accused has much cross-examined PW.1 with respect to the source of income. PW.1 has deposed that she is doing cloth business and also does the agriculture. She deposed that she has taken Rs.10 lakhs from her parents, but she does not have document to show it. Her father has died in March 2022, she earns Rs.10,000/- per month and herself and her husband are not tax payers. She deposed from her parents from time to time she has received Rs.2 lakhs, Rs.3 lakhs, Rs.5 lakhs as they had received money from their retirement and pension amount. Her mother had retired in the year 2000 that time she received Rs.2 lakhs 41 C.C.923/2023 from her and thereafter in 2022 she received Rs.3 lakhs, about 10 years back she received Rs.5 lakhs from her father in 2020, she received Rs.10 lakhs from her parents. She admits that she does not have document to show that she possessed Rs.7 lakhs with her. She deposed she cannot produce her parent account statement. She deposed that she can produce her account statement. She admits that she does not have transaction of amount of more than Rs.50,000/- in her account. She further deposed that she has invested money received from her parents to her business and the amount she received from business was given to the accused.
52. It is significant to note here that in view of admission of signature at Ex.P1 to P3 cheques the initial presumption U/Sec.118 of NI Act regarding the date of issuance of cheques and passing of consideration automatically comes in favour of the complainant. 42 C.C.923/2023 Therefore, this Court has to initially presume that the accused has received the loan amount shown in the complaint. Only when the accused rebuts the said presumption on the scale of preponderance of probabilities or creates dent over the prosecution case in any manner known to law or produce any cogent evidence to prove the defense, then only onus shifts back on the complainant to further prove her case.
53. The main defense of the accused is that he has paid 40 installments in chit transaction to the husband of the complainant and the cheques were given for security purpose in the said chit transaction. Except making suggestion to PW.1 regarding this chit transaction, the accused has not brought any iota of evidence before the Court to prove the said chit transaction with the husband of the complainant. In her cross-examination the complainant has denied the said chit transaction of her 43 C.C.923/2023 husband and issuance of cheques towards security,by the accused. Therefore, mere making suggetion to PW1 in this regard is not suffice to believe the defence herein. Still burden lies on the accused to establish his defense.
54. While arguing the case on merits the counsel for the accused has much argued that the complainant has not deliberately produced her account statement and the account statement of her husband and her parents. It is materiel to note here that the accused is contending that he has paid the chit installment amount to the account of the husband of the complainant. Thus as per sec 101 and 102 of Indian evidence ACT , burden lies on accused and he ought to have stepped into witness box to prove said fact.
55. AIR 2023 SC 5018 in between Rajesh Jain V/s Ajay Singh, Apex court held that 44 C.C.923/2023 "62. The fundamental error in the approach lies in the fact that the High Court has questioned the want of evidence on part of the complainant in order to support his allegation of having extended loan to the accused, when it ought to have instead concerned itself with the case set up by the accused and whether he had discharged his evidential burden by proving that there existed no debt/liability at the time of issuance of cheque.."
56. Principle laid down in above case law aptly applicable to present case. So accused could have produced his own account statement which would have been reflected the entries regarding payment of installments to the account of the complainant's husband. Why the accused has not made such endeavor to produce his account statement or bank challan slips or any other iota of evidence to prove that he has paid chit installments to the account of the husband of the complainant. When the burden lies on the accused to 45 C.C.923/2023 prove his defense and rebut the initial presumption, he ought to have been produced his account statement to show his bonafide before asking the complainant to produce document to show her source of income. No piece of evidence produced by the accused to prove the alleged chit transaction.
57. The accused has not given proper details as to when he has commenced the chit with the husband of the complainant, what is chit value, how many subscribes/members were there, whether he has bid the chit amount, if so when and how much he has received etc. This information is crucial to the defence, as the accused claims that three signed cheques were provided as security. The issuance of three signed blank cheques suggests the possibility of significant financial transactions between the parties. Hence burden is upon the accused to disclose those transaction details in this 46 C.C.923/2023 case and suppression of such vital information makes defence vague.
58. During cross-examination of PW.1 counsel for the accused suggested that one Mr.Giriyaiah and Mr.Gangadharappa also invested for chits with her husband and same is denied by PW.1. To prove the said defense, accused could have examined any of the chit group members to substantiate his case. He conveniently kept himself away from stepping into witness box and also failed to examine any witnesses to prove the said chit transaction and same creates suspicion about the defense. No iota of evidence brought on record to prove that husband of the complainant by name Mr.Krishnappa is doing chit business. Hence mere suggestion in that regard is not acceptable and for want of proof , this court declines to accept the defence of chit transaction and issuance of cheques for security cheques. 47 C.C.923/2023
59. Percontra, the complainant has pleaded in the complaint itself that the accused has paid interest of 2.5% per month of august 2020 to an extent of Rs.5,91,000/-. The complainant also pleaded in the complaint that the amount received by the accused to an extent of Rs.5,91,000/- is towards the interest, he agreed to pay to the loan of Rs.7 lakhs. PW1 evidence is in consonance with said pleading. The burden still lies on the accused to produce any admissible evidence to believe that the said Rs.5,91,000/- was not towards interest to loan, but towards the chit amount.
60. It is also not forthcoming when exactly said chit transaction was over. If the chit transaction was over or completed then the accused could immediately taken steps to get back his security cheques from the husband of the complainant. What prevented him from taking such steps as prudent man is not forthcoming and such 48 C.C.923/2023 inaction of the accused and imprudent conduct of the accused makes the entire defense untrustworthy.
61. Cheques are dishnoured for the reason 'funds insufficient' as per Ex.P4 to P6. If chit transaction was over the accused could have given 'stop payment instructions' to his banker or police complaint against the complainant. No such endeavor is also made by the accused for the reasons best known to him. Even after completion of the chit transaction without taking the chit bid amount no prudent person would leave those security signed cheques with any person. Such imprudent conduct of the accused makes the defense suspicious.
62. At this stage the complainant has produced Ex.P13 promissory note which reflects the loan transaction and accused has not disputed his signature at Ex.P13 also. Therefore, the complainant has produced the corroborative evidence to prove her case. Under such 49 C.C.923/2023 circumstance, absence of account statements of the complainant and complainant's husband cannot be any ground to suspect the source of income of the complainant. In Ashok Singh V State of Uttar prasdesh and and another reported in 2025 Live law (SC)_ 383, Apex court by relying on M/s S. S. Production v. Tr. Pavithran Prasanth, 2024 INSC 1059, held that "Pausing here, the Court would only comment that the reasoning of the High Court as well as the First Appellate Court and Trial Court on this issue is sound. Just by taking a counter-stand to raise a probable defence would not shift the onus on the complainant in such a case for the plea of defence has to be buttressed by evidence, either oral or documentary, which in th present cases, has not been done. Moreover, even if it is presumed that the complainant had not proved the source of the money given to the petitioners by way of loan by producing statement of accounts and/or Income Tax Returns, the same ipso facto, would not negate such claim for the reason that the cheques having being issued and signed by the petitioners has not been denied, and no evidence has been led to show that the respondent lacked capacity to provide the amount(s) in question. In Tedhi Singh v Narayan Dass Mahant, (2022) 6 SCC 735: '10. The trial court and the first appellate court have noted that in the case under Section 138 of the NI Act the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the NI Act is not a civil suit. At the time, when the complainant gives his evidence, unless a case is set up 50 C.C.923/2023 in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent, the courts in our view were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents."
63. Counsel for the accused has relied upon Basalingappa vs Mudibasappa reported in AIR 2019 SUPREME COURT 1983 is also not applicable to present case facts as in that case as the complainant failed to prove his source, despite of doing multiple financial transaction at relevant point of time with different persons, the Court has asked for documentary evidence. But no such circumstances established in this case by the accused.
64. Counsel for the accused has relied upon Tedhi Singh vs Narayan Dass Mahant reported (2022)6 SCC SCC 73, even the principles laid down in the above is also not 51 C.C.923/2023 applicable to the facts and circumstances of this case as accused has not produced independent materials, namely, by examining his witnesses and giving his own evidence producing documents to establish defence.
65. Keeping all these aspects in view, the case put forth by the accused does not satisfy the requirement of rebuttal even if tested on the touchstone of preponderance of probability. Therefore, in the present facts it cannot be held that the presumption which had arisen in favour of the complainant had been successfully rebutted by the accused herein.
66. Recently in ((2019) 4 SCC 197) ie Bir Singh V Mukesh Kumar, Apex court has held that "A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption 52 C.C.923/2023 that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted". Thus she is precluded from claiming such defence.
67. As per above principle admission of PW1 that she herself has filled details in cheques and pronote will not any way exonerate the liability f the accused to prove his defence. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt Since the accused failed to probabilize his defense by cross-examining PW.1 , there is no reason to suspect the case of the complainant for lack of proof for source of income as per law laid down by 53 C.C.923/2023 Apex court in the case of Rohitbhai Jivanlal Patel v. State of Gujarat reported in 2019 (5) SCALE 138, it is held that "even after purportedly drawing the presumption under Section 139 of the N.I. Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. The Hon'ble Supreme Court observed that this approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused."
68. Interestingly the accused has also not given reply to the demand notice. Failure to take steps to recover his security cheques and promissory note, to take 54 C.C.923/2023 legal action against the complainant and her husband for misusing his security cheques and promissory notes, failure to prove alleged chit transaction makes the entire defense not reliable. Therefore, the overall defence appears weak and fails to inspire the confidence of the Court due to glaring deficiency of evidence. Accordingly court proceed to answer POINT NO.I IN THE AFFIRMATIVE.
69. POINT NO.II:- In view of the reasons assigned in above point, it is ample clear that accused has committed the offence punishable u/s 138 of the Act. A bare reading of sec.138 of the NI Act indicates that the purport of sec.138 is to prevent and punish the dishonest drawers of cheques who evade their liability. The Hon'ble Apex Court in its recent decision in M/s. Meters & instrument Pvt Ltd. Vs. Kanchana Mehta reported in (2018)1 SCC-560 held at para 18(ii) 55 C.C.923/2023 that"(ii) The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found." In view of the reasons assigned in above point, it is ample clear that accused has committed the offence punishable u/s 138 of the Act.
70. In R. Vijayan vs. Baby and Another reported in AIR 2012 SUPREME COURT 528, Apex court held that 'that unless there were special circumstances, in all cases of conviction, the Court should uniformly exercise the power to levy fine up to twice the cheque amount and keeping in view the cheque amount and the simple interest thereon at 9% per annum as the reasonable quantum of loss, direct payment of such amount as compensation. This Court rightly observed that uniformity and consistency in deciding similar cases by different courts not only increases the credibility of the 56 C.C.923/2023 cheque as a Negotiable Instrument but also the credibility of the Courts of Justice'.
71. M/S Kalamani Tex vs P. Balasubramanian reported in AIRONLINE 2021 SC 82, Apex court reaffirmed aforementioned principle and held that "20. As regard to the claim of compensation raised on behalf of the respondent, we are conscious of the settled principles that the object of Chapter XVII of the NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for dishonour of cheque as well as civil liability for realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation and unless there exist special circumstances, the Courts should uniformly levy fine up to twice the cheque amount along with simple interest at the rate of 9% per annum."
72. Therefore, having regard to the amount advanced, time from which it is lying with the accused,part payment made by the accused towards 57 C.C.923/2023 interest and keeping in mind the primary object of the provision, this court is of the opinion that, rather than imposing punitive sentence, if sentence of fine is imposed with a direction to compensate the complainant for its monitory loss, by awarding compensation U/Sec.357 of Cr.P.C, would meet the ends of justice. Accordingly, this court proceeds to pass following .....
ORDER The accused is found guilty for the offence punishable U/s.138 of Negotiable Instruments Act.
Hence, acting U/sec.255(2) of Cr.P.C, the accused is convicted and sentenced to pay a fine of Rs.10,50,000/- (Rupees Ten Lakhs Fifty Thousand Only), in default of fine amount, he shall undergo simple imprisonment for 2 years for the offence punishable under section 138 of N.I.Act.
58 C.C.923/2023
Out of the fine amount collected from the accused, an amount of Rs.10,40,000/- (Rupees Ten Lakhs Forty Thousand only) shall be paid to the complainant as compensation U/s.357 of Cr.P.C. and the remaining fine of Rs.10,000/- shall be adjusted towards the cost of state expenses.
The bail bonds of the accused shall be in force till the appeal period is over as contemplated under the provisions of Sec.437(A) of Cr.P.C.
Office to supply the copy of the Judgment to the accused forthwith at free of cost.
(Dictated to the Stenographer, typed by her, corrected by me and then judgment pronounced in the open court on this the 4 th day of October 2025).
Digitally signed by Tejaswini Tejaswini Date:
KM KM 2025.10.10 12:56:49 +0530 (Smt.Tejaswini K.M), XVI ACJM, Bengaluru 59 C.C.923/2023 ANNEXURE I. List of witnesses on behalf of complainant:
P.W.1: Smt.Sudha Rani.M II. List of documents on behalf of complainant:
Ex.P-1 to 3 : Original Cheques. Ex.P-1(a) to 3(a) : Signatures of the accused. Ex.P-4 to 7 : Bank memos.
Ex.P-8 : Copy of Legal notice. Ex.P-9 : Postal receipt.
Ex.P-10: Returned Notice. Ex.P-11 : Postal Cover.
Ex.P-12 : Postal Receipt. Ex.P-13 : Promissory note and consideration receipt. Ex.P-14 : Complaint.
III. List of witnesses for the accused:
Nil 60 C.C.923/2023 IV. List of documents for accused:
Ex.D-1 : Notarized copy of Aadhar Card of accused. Ex.D-2 : Copy of Rental Agreement.
Digitally
signed by
Tejaswini K
Tejaswini M
KM Date:
2025.10.10
12:56:57
+0530
(Smt.Tejaswini K.M ),
XVI ACJM, Bengaluru
61 C.C.923/2023