Bangalore District Court
Navi Finserv Ltd vs Raja Paul on 3 December, 2025
KABC030090352025
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL
MAGISTRATE, AT BANGALORE CITY
Dated this the 3rd day of December 2025
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.No.5329/2025
Complainant : Navifinserv Ltd,
Formerly known as Chaitanya Rural
Intermediation Development Services
Pvt.Ltd.,
Navi Finserv Ltd,
2nd floor, Vaishnavi Tech Square,
Iballur Village, Begur Hobli,
Bengaluru
Karnataka 560 102
Rep. By Joseph Moses Parambi
Authorized Signatory.
(By AS Advocate )
V/s
Accused : Raja Paul
119, P C Sarkar Sarani
Ballyguang
Ekdalia
Kolkata
West Bengal 700 019.
(By DK - Advocate )
Plea of accused: Pleaded not guilty
Final Order: Accused is Acquitted
2
C.C.No.5329/2025
Date of judgment : 03.12.2025
JUDGMENT
The complainant has filed the complaint under Section 223 of Bharathiya Nagarika Suraksha Sanhitha 2023 against the accused for the offences punishable under Section 25 of The Payment and Settlement Systems Act 2007 r/w Section 138 of Negotiable Instruments Act.
2. The brief case of the complainant is as under:
That the complainant is a Non Banking Organization doing its lending business to its customers in various financial products. The accused availed E - NACH Loan facility from the complainant agreeing to abide all the terms and conditions to repay the loan amount with interest and other applicable charges. The accused executed E-NACH Loan Agreement No.10000712926 in favour of the complainant, and as per the terms of agreement, the loan is required to be repaid with interest at ROI 42 monthly installments of Rs.12,289/-. The complainant sanctioned loan of Rs.3,00,000/-. It is pleaded that the accused towards repayment of liability, executed E NACH Mandate in favour of the complainant for Rs.3,00,000/- drawn 3 C.C.No.5329/2025 on Punjab National Bank. The accused assured that sufficient balance would be maintained to honor the E NACH Mandate when presented for encashment. The complainant presented said E NACH Mandate for realization for a sum of INR 1,56,757/- through HDFC Bank Ltd, Koramangala, Bangalore. But said E-NACH Mandate is dishonoured and returned with memo under UMRN No.PUNB702240230000482 for the reason "Balance insufficient". The complainant issued legal notice dated 06.11.2024 through RPAD demanding payment of dishonoured E NACH amount. Said notice is duly served on the accused on 09.11.2024. Inspite of service of notice, the accused failed to pay the claim amount to the complainant with in the statutory time. Therefore, the accused has committed the offence punishable Section 25 of the Payment and Settlement Systems Act 2007 r/w Section 138 of Negotiable Instruments Act. Therefore the complainant has filed the complaint.
3. On the basis of Private complaint filed by the complainant, this court taken cognizance of offence and registered the case in PCR No.1966/2025 and recorded sworn statement of the complainant and got marked 8 documents as Ex.P1 to Ex.P8. This court by considering the material on record issued process under Section 227 of Bharathiya Nagarika Suraksha Sanhita by registering the criminal case. In response 4 C.C.No.5329/2025 to the process issued by this court, the accused appeared before this court and he is released on bail. The copy of the complaint is served to the accused along with the summons as contemplated under Section 230 of Bharathiya Nagarika Suraksha Sanhita.
4. The substance of the acquisition as provided Section 274 of Bharathiya Nagarika Suraksha Sanhita is read over to the accused and his plea is recorded. The accused has pleaded not guilty and claimed to be tried.
5. In view of the law laid down by Hon'ble Supreme Court of India in Indian Bank Association V/s Union of India and others reported in AIR 2014 SCW 3463, the affidavit filed by the complainant at the stage of taking cognizance and documents marked is treated as evidence under section 145 of Negotiable Instruments Act. As the evidence of the complainant is already on record the incriminating circumstances in the evidence of complainant is read over to the accused and his statement under Section 351 of BNSS recorded. The accused has denied the incriminating circumstances as false. The PW 1 was recalled for cross examination on the application of the accused under Section 145 of Negotiable Instruments Act and he is fully cross 5 C.C.No.5329/2025 examined. Inpsite of grant of sufficient opportunities, the accused has not lead defence evidence.
6. Heard arguments of learned counsel for the complainant and learned counsel for the accused and perused the material on record.
7. On the basis of the material on record the following points arise for the consideration of this court :
1. Whether the complainant proves beyond reasonable doubt that the accused has issued NACH Mandate UMRN No.PUNB7022402230000482 drawn on Punjab National Bank for a sum of Rs.3,00,000/- and when it is processed for the outstanding sum of Rs.1,56,757/- and it is dishonoured on 10-10-2024 for the reason "Account Blocked or Frozen" and inspite of service of demand notice dated 06-11-2024 on 09-11-2024 accused has failed to repay the amount within the statutory period and thus committed an offence punishable under Section 25 of The Payment and Settlement Systems Act r/w Section 138 of Negotiable Instruments Act ?
2. What Order or Sentence ?6
C.C.No.5329/2025
8. The findings of this court to the above points are as follows:
Point No.1 In the NEGATIVE,
Point No.2 As per final order,
for the following :
REASONS
9. POINT NO.1: To prove the case the authorized representative of the complainant is examined as PW-1 and in his evidence affidavit he has reiterated the averments made in the complaint. To prove the incorporation of the company the PW 1 has produced the web copy of Incorporation Certificate as Ex.P 1. The PW 1 has produced the Authorization Letter as Ex.P 2. As per Ex.P 2 the PW1 is authorized to represent the complainant company by its Chief Financial officer. In the letter it is averred that the Board of Directors in the resolution dated 11-02-2022 has authorised him to authorize its employees to represent the company. These documents prove the legal status of the complainant as a Company and authority of PW 1 to represent the complainant company. The accused has also not disputed legal status of complainant and not disputed authority of PW 1 to represent the case.
10. The PW 1 has deposed that the accused availed E - NACH Loan facility from the complainant agreeing to abide all the terms and conditions to repay the loan amount with interest 7 C.C.No.5329/2025 and other applicable charges. He has deposed that the accused executed E-NACH Loan Agreement No.10000712926 in favour of the complainant, and as per the terms of agreement, the loan is required to be repaid with interest at ROI 42 monthly installments of Rs.12,289/-. He has deposed that the complainant sanctioned loan of Rs.3,00,000/-. That the accused towards repayment of liability, executed E NACH Mandate in favour of the complainant for Rs.3,00,000/-. The complainant has produced the e copy of NACH Mandate as Ex.P
4. The said mandate is drawn from the account of the accused with Panjab National Bank. The PW 1 has deposed that when the complainant presented said E NACH Mandate for realization for a sum of Rs.1,56,757/- through their account with HDFC Bank Ltd, Koramangala, Bangalore said E-NACH Mandate is dishonoured and returned with memo under UMRN No.PUNB702240230000482 for the reason "Funds insufficient" . The debit transaction memo is produced as Ex.P 4. But on perusal of the same the NACH mandate is dishonoured for the reason Account Blocked or Frozen. The PW 1 has deposed that they have demanded dishonoured amount by issuing demand notice on 06-11-2024. The office copy of legal notice is produced as EX.P 6. It is stated that notice is duly served on the accused on 09-11-2024. Evidencing the same the complainant has 8 C.C.No.5329/2025 produced the postal receipt as Ex.P 7 and Postal track consignment as Ex.P 8. He has deposed that inspite of service of demand notice the accused has not paid the amount and thus committed the offence.
11. The offence alleged is primarily under Section 25 of The Payment and Settlement Systems Act 2007, which reads as under.
Section 25. Dishonour of electronic funds transfer for insufficiency, etc., of funds in the account.
(1) Where an electronic funds transfer initiated by a person from an account maintained by him cannot be executed on the ground that the amount of money standing to the credit of that account is insufficient to honour the transfer instruction or that it exceeds the amount arranged to be paid from that account by an agreement made with a bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the electronic funds transfer, or with both:
Provided that nothing contained in this section shall apply unless--
(a) the electronic funds transfer was initiated for payment of any amount of money to another person for the discharge, in whole or in part, of any debt or other liability;
(b) the electronic funds transfer was initiated in accordance with the relevant procedural guidelines issued by the system provider;
(c) the beneficiary makes a demand for the payment of the said amount of money by giving a notice in writing to the person 9 C.C.No.5329/2025 initiating the electronic funds transfer within thirty days of the receipt of information by him from the bank concerned regarding the dishonour of the electronic funds transfer; and
(d) the person initiating the electronic funds transfer fails to make the payment of the said money to the beneficiary within fifteen days of the receipt of the said notice. (2) It shall be presumed, unless the contrary is proved, that the electronic funds transfer was initiated for the discharge, in whole or in part, of any debt or other liability.
(3) It shall not be a defence in a prosecution for an offence under sub-section (1) that the person, who initiated the electronic funds transfer through an instruction, authorisation, order or agreement, did not have reason to believe at the time of such instruction, authorisation, order or agreement that the credit of his account is insufficient to effect the electronic funds transfer. (4) The Court shall, in respect of every proceeding under this section, on production of a communication from the bank denoting the dishonour of electronic funds transfer, presume the fact of dishonour of such electronic funds transfer, unless and until such fact is disproved.
(5) The provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of electronic funds transfer to the extent the circumstances admit.
Explanation.--For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability, as the case may be.
12. This provision also specify that the provisions of chapter XVII of the Negotiable Instruments Act to the extent the circumstances admit is applicable. The essential ingredients of section 25 of The Payment and Settlement Systems Act 2007 to be complied are i) An electronic fund transfer initiated by the person from the account of the accused ii) Processing of the 10 C.C.No.5329/2025 NACH Mandate by the beneficiary, iii) it returning unexecuted for the reason insufficiency of funds to honour transfer instructions. iv) electronic fund transfer was initiated in discharge of any debt or liability v) it is initiated in accordance with the relevant procedural guidelines issued by the service provider vi) Beneficiary making demand with in 30 days of receipt of information of dishonour by giving notice in writing,
vii) failure of the person initiating electronic fund transfer to make payment within the period of 15 days after receipt of the demand notice. The Payment and Settlement Systems Act 2007 does not prescribe any time limit to file the complaint. Therefore it is necessary to apply provisions of Section 142 of The Negotiable Instruments Act. Therefore the complainant shall present the complaint within a month after expiry of 15 days of service of notice to the accused.
13. The specific contention of the complainant that the accused availed E-NACH Loan facility from the complainant for Rs.3,00,000/- and executed NACH Mandate for Rs.3,00,000/- drawn on Punjab National Bank bearing UMRN No. PUNB702240230000482 as per Ex.P 4. It is dishonoured when processed for payment of Rs.1,56,757/- through HDFC Bank Ltd, Koramangala, Bangalore as per debit transaction memo 11 C.C.No.5329/2025 produced as Ex.P 5. To attract provisions of Section 25 of The Payment and Settlement Systems Act the complainant primarily prove that the NACH mandate i.e. an electronic fund transfer is initiated by the accused from his bank account. Only if it is proved by the complainant than the presumption under Section 25(2) of the PASS Act or under Section 139 of Negotiable Instruments Act can be drawn that NACH is drawn for discharge of liability. In the cross examination of PW 1 the accused has specifically taken the contention that he has not availed any loan from the complainant and not executed NACH Mandate either by putting physical signature or digital signature. Therefore the accused has specifically denied availment of the loan and issuance of NACH mandate for electronic transfer of funds to the complainant.
14. In the cross examination of PW 1 the accused has specifically suggested that 'It is not true to suggest that we have not collected KYC documents of the accused and not obtained physical or digital signature of the accused on the loan documents.' 'It is not true to suggest that the accused has not authorised to process repayment of the loan through E-NACH mandate.' 'It is not true to suggest that I have not produced any document showing the authorization given by the accused by 12 C.C.No.5329/2025 executing E-NACH mandate, witness volunteers that E-NACH mandate doesn't bear digital or physical signature of the accused and the E-NACH mandate is generated by using E-KYC procedure by sending OTP to the registered mobile number of the accused. It is not true to suggest that I am deposing falsely about generation of E-NACH mandate by using E-KYC.' 'It is not true to suggest that the accused has not availed any loan from the complainant.' Thus by going through the defence of the accused, the accused totally denied loan transactions with complainant, denied execution of loan documents, and also denied execution of E-NACH mandate authorizing to initiate electronic fund transfer. The accused has also denied the liability to pay the amount claimed by the complainant.
15. As discussed above the complainant shall discharge initial burden that the accused has initiated electronic fund transfer infavour of the complainant which is at par with proof of drawing of cheque from the account of the accused for prosecution under Section 138 of Negotiable Instruments Act. If the complainant discharge said burden, then only the presumption under Section 25(2) of PASS Act can be drawn infavour of the complainant.
13
C.C.No.5329/2025
16. In this case the complainant has produced bank details of complainant as Ex.P 3, e-copy of NACH mandate as Ex.P 4, Debit Transaction memo as Ex.P 5, office copy of legal notice as Ex.P 6, postal receipt as Ex.P 7 and postal track consignment as Ex.P 8. Thus the complainant has only produced basic documents before this court. The accused being denied the issuance of NACH mandate for electronic transfer of funds from his account, to substantiate the fact that the accused has given necessary authentication either physically or on online mode, the complainant has not produced any material such as OTP authentication details or any other proof. The complainant has also not taken any steps to summon the Manager of Punjab National Bank to substantiate that the NACH mandate is drawn from the account maintained by the accused with their bank and it is drawn on the authentication given by accused. Therefore this court is of the considered view that the complainant has failed to prove that the Ex.P 4 NACH mandate is drawn from the account of the accused and he has authenticated electronic fund transfer infavour of the complainant. Therefore there is no compliance of basic requirements of Section 25 of Payment and Settlement Systems Act for constituting offence.
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C.C.No.5329/2025
17. The complainant has stated that accused availed E-NACH loan of Rs.3,00,000/- from the complainant. The accused has specifically denied the same. The complainant has not produced any documents to show that the accused availed any loan from the complainant. He has also not produced statement of accounts to show outstanding liability. He has also not stated when the accused has availed the loan and how it is disbursed to the accused. The accused has specifically denied availement of loan and his liability to pay any amount to the complainant. When the accused has denied entire transaction including issuance of mandate for electronic transfer of funds, the complainant should have produced the documentary evidence to prove the transactions.
18. The accused has taken the contention that the accused is suffering from mental illness and not fit to execute the loan documents. But to substantiate this defence the accused has not produced any documents or not examined any witnesses.
19. The complainant in the demand notice, complaint and evidence affidavit has stated that the NACH mandate is dishonoured for the reason funds insufficient. But as per the debit transaction memo Ex.P 5 NACH is dishonoured for the 15 C.C.No.5329/2025 reason "Account blocked or frozen". But the PW 1 in the cross examination has denied such suggestion of accused that NACH is dishonoured for the reason account blocked and deposed that the accused might have blocked the account after its dishonour. Thus the evidence of PW 1 is contrary to Ex.P 5 endorsement produced by the complainant.
20. Therefore for the above discussion, this court concludes that the complainant has failed to prove the basic requirements of section 25 of The Payment and Settlement Systems Act 2007 that the E-NACH mandate is drawn or initiated from the account of the accused on the authentication given by the accused. Therefore the complainant is not entitled to take benefit of the presumption under Section 25(2) of The Payment and Settlement Systems Act 2007 r/w Section 139 of Negotiable Instruments Act. Therefore this court concludes that the complainant has failed to prove that the accused has committed the offence punishable under Section 25 of The Payment and Settlement Systems Act 2007 r/w Section 138 of Negotiable Instruments Act. Therefore this court answers the above point No.1 in the Negative.
21. POINT NO. 2 : In view of the findings recorded to point no. 1 this court proceed to pass the following -
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C.C.No.5329/2025 ORDER By exercising powers conferred Section 278(1) of Bharathiya Nagarika Suraksha Sanhita the accused is acquitted of the offence punishable under Section 25 of The Payment and Settlement Systems Act 2007 R/w Section 138 of Negotiable Instrument Act.
The bail bond and surety bond of the accused shall continue in force for a period of 6 months for the purposes under Section 481 of BNSS.
(Dictated to the Stenographer directly on the computer, typed by her, corrected and signed then pronounced by me in the open court on this the 3rd day of December, 2025).
(GOKULA.K) XXV A.C.J.M., BANGALORE CITY.
ANNEXURE LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW1 : Joseph Moses Parambi LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P1 : Web copy of Incorporation Certificate Ex.P2 : Authorization Letter Ex.P3 : Bank Certificate Ex.P4 : NACH mandate Ex.P5 : Return Memo 17 C.C.No.5329/2025 Ex.P6 : Office copy of Legal Notice Ex.P7 : Postal Receipt Ex.P8 : Postal Track Consignment.
LIST OF WITNESSES EXAMINED FOR THE ACCUSED:-
Nil LIST OF DOCUMENTS MARKED FOR THE ACCUSED:- Digitally signed by Nil GOKULA GOKULA K Date:
K 2025.12.03
16:08:48
+0530
(GOKULA.K.)
XXV A.C.J.M., BANGALORE CITY.