Bangalore District Court
Kalandari Capital Private Limited vs Madbow Fashions Pvt Ltd on 5 January, 2024
1 C.C.No.11924/2022
SCCH-10
KABC020291352022
Digitally signed
AM by A M BADIGER
BADIGER Date: 2024.01.24
12:30:22 +0530
BEFORE THE COURT OF XIV ADDL. SMALL CAUSES JUDGE,
ACMM & MEMBER MOTOR ACCIDENT CLAIMS TRIBUNAL
AT BENGALURU (SCCH10)
Dated This the 5th day of January 2024
PRESENT: SRI.ALLAPPA.M.BADIGER
B.A.,LLB.,(Spl.)
XIV ADDL. SCJ, ACMM
& MEMBER - MACT,
BENGALURU.
C.C No.11924/2022
COMPLAINANT : Kalandari Capital Private Limited,
A NonBanking Finance Company
incorporated under the
CompaniesAct, 2013 and having its
registered office at 1/1, 3rd Floor,
Vinayaka Towers, 1st Cross,
Gandhinagar, Bengaluru560009.
Represented by its
Authorized representative,
White Wizard Technologies Pvt. Ltd.,
A Company incorporated under the
Companies Act, 2013, having its
Branch Office at:
2nd Floor, Incubex, HSR Layout,
(HSR 9), # 1507, 19th Main,
11th Cross, HSR Layout, Sector1,
Bengaluru - 560102
2 C.C.No.11924/2022
SCCH-10
Represented herein by its Authorized
Representative and Legal Manager,
Ms.Disha.C, Saxena,
D/o. Mr.R.C.Saxena,
Aged about 32 years.
(By Sri.U.V., Advocate)
V/s
ACCUSED: 1) Madbow Fashions Pvt. Ltd.,
A private Limited Company registered
under the Companies Act, 2013 and
having its office at 72, 2nd Floor,
Gulmohar Marg, Phase1,
Gurgaon, Haryana122002,
represented by its Director,
Mr.Naveen Mahlawat.
2) Naveen Mahlawat,
Age : 39 years,
Father's name Mr. Mahlawat,
Director of Madbow Fashions
Pvt. Ltd., having office at
72, 2nd Floor, Gulmohar Marg,
Phase1, Gurgaon,
Haryana122002,
(By Smt. S.R., Advocate)
Offence Complained of or proved : U/sec. 25 of the PSS
Act-2007
Plea of the Accused : 04.03.2023
Judgment dated : 05.01.2024
Date of pronouncement : 05.01.2024
3 C.C.No.11924/2022
SCCH-10
::J U D G M E N T::
This is the complaint instituted by the complainant against the accused under section 200 Cr.P.C. for the offence punishable under Section 25 of the Payment and Settlement Systems Act, 2007 R/w Sec. 138, 141 & 142 of Negotiable Instruments Act1881.
2. The averments of the complainant in brief is as follows:
The complainant is a nonBanking company engaged in the business of leveraging technology and innovation to enhance lending/borrowing experiences for business enterprises. Thus, it uses technology to smoothly facilitate and expedite the lending of money. It is further submitted that, it has authorized White Whizard Technologies Pvt.
Ltd., to inter alia, recover outstanding dues from its defaulting borrowers and to perform all acts in this regard on its behalf. Said White Wizard is a company incorporated under the Companies Act, 2013 and it has engaged in the business of enhancing automation financial service online.4 C.C.No.11924/2022
SCCH-10
3. Further it is submitted by the complainant that, the accused No.1 is a private Limited Company represented by its Director i.e. accused No.2. The accused involved in the business of manufacture, design and sale of Men's and Women's clothing accessories, footwear, watches etc., The accused had approached the complaint for grant of the financial facility for a sum of Rs.1,00,00,000/ for its business requirements. Thereafter, the accused entered into a loan agreement dated 29.06.2021 with the complainant, for the grant of Rs.1,00,00,000/. In terms of said loan agreement, the complainant is entitled to recover by initiating the National Automated Clearing House (NACH) mandate issued in its favour by the accused. Thus, in the event of any default committed by the accused, the complainant is entitled to initiate the NACH mandate and initiate steps for electronically debiting the account of the accused for recovering the loan amount due. The primary account of the accused No.1 in respect of which the accused had 5 C.C.No.11924/2022 SCCH-10 given NACH Mandate to the complainant is held at HDFC Bank, Sector 46 branch. Further submitted that out of the total facility of Rs.1,00,00,000/, accused availed the sum of Rs.76,48,886/. Thus, the total amount due and payable by the accused to the complainant in terms of the loan agreement is Rs.62,70,097/. The accused persons became a chronic defaulter in repayment of loan amount.
4. It is further submitted by the complainant that, upon the default committed by the accused, the complainant has issued several reminder emails to the accused to honor its loan repayment obligations. However accused failed to pay and continued to remain in default. Hence, complainant initiated six electronic fund transfers (NACH) for the outstanding amount on 25.08.2022 and the details of dishonour /failed Electronic Fund Transfers (NACH) are provided herein under:
Sl Transaction ID Order ID Date Amount No. Rs.
1 pay_K9sOmELQNMuPRW Order_K9sOlw16unW6 25.8.2022 2,50,000/- 2 pay_K9OjxK21X7nWt Order_K9sojJSeSrgLNH 25.8.2022 2,50,000/- 3 pay_K9sOcxE3SCIGFu Order_K9sOcpjxwIAzxP 25.8.2022 2,50,000/-6 C.C.No.11924/2022
SCCH-10 4 pay_K9sOfSrHguAyvT Order_K9sOeT8EBa4QGx 25.8.2022 2,50,000/- 5 pay_K9sOhWKsQafyU Order_K9sOgtzLAsvS10 25.8.2022 2,50,000/- 6 pay_K9sOabWIyetdML Order_K9sOaOiVDP8mn6 25.8.2022 2,50,000/-
Total Rs. 15,00,000/-
5. Further submitted by the complainant, it has initiated the aforementioned NACH on 25.08.2022 for clearance with its banker ICICI Bank, Bellandur Village, Varthur Hobli, Bengaluru560103. However, the same was returned to the complainant on 25.08.2022 with an endorsement as 'Bad Request Error", the payment could not be completed due to insufficient account balance. Further submitted that the aforesaid NACH was initiated through an RBI authorized payment aggregator i.e. Razor Pay Technologies Pvt. Ltd.
6. The Payment System Operator as the payment aggregator are the entities authorized by the Reserve Bank of India to facilitate E Commerce Science & Merchants for the payment instruments from the Customers. The RBI has authorized Payment System Operators under the PSS Act. The Payment Aggregator authorized Payment 7 C.C.No.11924/2022 SCCH-10 System Operators initiated the NACH for recovery of legally enforceable debt based on standing instruction of the accused. The Payment Aggregator viz., Razorpay Maintains the Escrow Account and authorized to Electronically debt the account of the accused based on standing instructions issued by the accused for making payment. The complainant submits that upon the accused authorizing/issuing such standing instructions the complainant Payment Aggregator activate such NACH mandate / Emandate to Electronically debit the account of the accused.
7. Further, the complainant has notified the dishonour MACH mandate to the accused vide Legal notice dated 06.09.2022 demanding the payment of the NACH mandates amount by speed post calling upon them to pay the NACH mandates amount within 15 days from the date of receipt of the said notice. The said notice was served on the accused on 09.09.2022. Inspite of notice, the accused have not made any payment. Therefore, the 8 C.C.No.11924/2022 SCCH-10 accused has committed an offence punishable U/Sec.25 of Payment and Settlement System Act 2007 R/w Section 138 and 143 of Negotiable Instruments Act. Hence, the complainant prayed to punish the accused persons U/Sec.138 and 142 of N.I.Act and award compensation to the complainant. The accused No.1 is the company and the accused No.2 is the Director. The accused No.2 has represented the accused No.1 and executed the loan agreement on behalf of the accused No.1 and he has authorized the NACH mandate issued by the accused in favour of the complainant. The accused No.2 is well aware of the transaction as well as obligation of accused No.1. Therefore, the accused No.1 and 2 liable for the same.
8. After filing of the complaint, the cognizance of the offence was taken and registered criminal case against the accused and the summons was issued to the accused persons. Upon service of the summons, the accused No.2 has appeared and accused No.1 is is the private Limited company.
9 C.C.No.11924/2022
SCCH-10
9. The accused No.2 appeared before the court through his counsel and was enlarged on bail. Subsequently, plea was recorded and the substance of the accusation was read over and explained to him. He pleaded not guilty and claimed to be tried then the case was posted for complainant evidence.
10. In view of the principles lead down by the Hon'ble Apex court in the case of Indian Bank Association & others V/s Union of India and others, after appearance of accused, the sworn statement of the complainant is treated as evidence of complainant as PW1 and the documents produced by the complainant at the time of sworn statement are considered as a documents of the complainant as Ex.P.1 to Ex.P.15.
11. Then the case was posted for statement of the accused as required U/Sec.313 of Cr.P.C. to enable the accused to answer the incriminating materials available in the evidence of complainant. The statement of the accused U/Sec.313 of Cr.P.C. was recorded, read over and 10 C.C.No.11924/2022 SCCH-10 explained to the accused. The accused denied the evidence of the complainant as false. Then the case was set down for defence evidence. Thereafter, the accused No.2 examined himself as DW1 and got marked documents Ex.D.1 to Ex.D.9.
12. The matter was posted for cross of DW1 inspite of sufficient time, the DW1 remained absent. Therefore, the crossexamination of DW1 is taken as not offered for crossexamination on 27.07.2023. Again as per order dated 01.09.2023 DW1 was recalled and posted on 08.09.2023 for cross examination of DW1, then also DW1 remained absent on 08.09.2023. Therefore, the cross of DW1 again taken as not offered for crossexamination.
13. Heard the arguments from the complainant and accused and Perused the records. The counsel for the complainant has placed the citations. Both have placed written arguments.
14. Now these points that arise for my consideration are as follows: 11 C.C.No.11924/2022 SCCH-10
1) Whether the complainant proves that the alleged Electronics fund transfer has been initiated by the accused or in other words whether the alleged ECS mandate has been signed by the accused for making the payment in discharge of any legally enforceable debt or liability and same has been dishonoured for funds insufficient?
2) Whether the alleged Electronics fund transfer ECS mandate has been produced by the complainant?
3) What order?
15. On the basis of the materials available on records, my finding to the above points as follows:
POINT NO.1: In the Negative.
POINT NO.2: In the Negative.
POINT NO.3: As per the final order,
for the following:
::R E A S O N S::
16. POINT NO.1 & 2: Both points have taken together for common discussion.12 C.C.No.11924/2022
SCCH-10 I have gone through the entire materials available on record. According to the complainant, the accused had approached the complaint for grant of the financial facility for a sum of Rs.1,00,00,000/ for its business requirements. Thereafter, the accused entered into a loan agreement dated 29.06.2021 with the complainant, for the grant of Rs.1,00,00,000/. In terms of said loan agreement, the complainant is entitled to recover by initiating the National Automated Clearing House (NACH) mandate issued in its favour by the accused. Thus, in the event of any default committed by the accused, the complainant is entitled to initiate the NACH mandate and initiate steps for electronically debiting the account of the accused for recovering the loan amount due. The primary account of the accused No.1 in respect of which the accused had given NACH Mandate to the complainant is held at HDFC Bank, Sector 46 branch. Further submitted that the accused availed the sum of Rs.76,48,886/. Thus, the total amount due and payable by the accused 13 C.C.No.11924/2022 SCCH-10 to the complainant in terms of the loan agreement is Rs.62,70,097/. The accused persons became a chronic defaulter in repayment of loan amount. However accused failed to pay and continued to remain in default. Hence, complainant initiated six electronic fund transfers (NACH) for the outstanding amount on 25.08.2022 and the details of dishonour /failed Electronic Fund Transfers (NACH) are provided. Further submitted by the complainant, it has initiated the aforementioned NACH on 25.08.2022 for clearance with its banker ICICI Bank, Bellandur Village, Varthur Hobli, Bengaluru560103. However, the same was returned to the complainant on 25.08.2022 with an endorsement as 'Bad Request Error", the payment could not be completed due to insufficient account balance. Further submitted that the aforesaid NACH was initiated through an RBI authorized payment aggregator i.e. Razor Pay Technologies Pvt. Ltd. Then the complainant got issued Legal notice dated 06.09.2022 demanding the payment of the NACH mandates amount by speed post 14 C.C.No.11924/2022 SCCH-10 calling upon them to pay the NACH mandates amount within 15 days from the date of receipt of the said notice. The said notice was served on the accused on 09.09.2022. Inpite of notice, the accused have not made any payment.
17. To substantiate its case, authorized representative of complainant by name Disha Chandra Saxena has been examined as PW1 and got marked Ex.P 1 to Ex.P15. The PW1 has reiterated the contents of the complaint in her affidavit evidence about lending of loan, issuance of NACH mandates by the accused towards discharge of liability and its dishonor for 'Bad Request Error", the payment could not be completed due to insufficient account balance. and issued the legal notice to the accused calling upon him to pay the amount covered under cheque and failure to comply the same.
18. At this juncture it is proper to refer the relevant provisions of The Payment And Settlement Systems Act, 2007, the relevant provision are that, 15 C.C.No.11924/2022 SCCH-10 Sec. 2 (c) ―electronic funds transfer means any transfer of funds which is initiated by a person by way of instruction, authorisation or order to a bank to debit or credit an account maintained with that bank through electronic means and includes point of sale transfers, automated teller machine transaction. Sec. 4. Payment system not to operate without authorization.-- (1) No person, other than the Reserve Bank, shall commence or operate a payment system except under and in accordance with an authorization issued by the Reserve Bank under the provisions of this Act:
Provided that nothing contained in this section shall apply to--
(a) the continued operation of an existing payment system on commencement of this Act for a period not exceeding six months from such commencement, unless within such period, the operator of such payment system obtains an authorization under this Act or the application for authorization made under section 7 of this Act is refused by the Reserve Bank;
(b) any person acting as the duly appointed agent of another person to whom the payment is due;
(c) a company accepting payments either from its holding company or any of its subsidiary 16 C.C.No.11924/2022 SCCH-10 companies or from any other company which is also a subsidiary of the same holding company;
(d) any other person whom the Reserve Bank may, after considering the interests of monetary policy or efficient operation of payment systems, the size of any payment system or for any other reason, by notification, exempt from the provisions of this section.
(2) The Reserve Bank may, under subsection (1) of this section, authorize a company or corporation to operate or regulate the existing clearing houses or new clearing houses of banks in order to have a common retail clearing house system for the banks throughout the country:
Provided, however, that not less than fiftyone per cent. of the equity of such company or corporation shall be held by public sector banks. Explanation.--For the purposes of this clause, ―public sector banks shall include a ―corresponding new bank, ―State Bank of India and ―subsidiary bank as defined in section 5 of the Banking Regulation Act, 1949.
Sec. 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 17 C.C.No.11924/2022 SCCH-10 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 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 18 C.C.No.11924/2022 SCCH-10
(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 subsection (1) that the person, who initiated the electronic funds transfer through an instruction, authorization, order or agreement, did not have reason to believe at the time of such instruction, authorization, 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 19 C.C.No.11924/2022 SCCH-10 enforceable debt or other liability, as the case may be.
Though the complaint is filed under section 25 of The Payment And Settlement Systems Act, 2007 dishonour of electronic funds transfer is offence under the said provision, but the procedure has to follow under the provisions of Chapter XVII of the Negotiable Instruments Act, 1881 (26 of 1881) shall apply to the dishonour of electronic funds transfer.
19. In this scenario, let me scrutinize the documents relied by complainant in order to examine the compliance of statutory requirements envisaged under section 25 of the Payment And Settlement Systems Act and section 138 of N.I. Act. Ex.P.1 is the Board of Resolution passed by the White Wizard Technologies Pvt. Ltd., Ex.P.2 & Ex.P.3 are the Certificates of Incorporation, Ex.P.4 is the True copy of Resolution passed by the Complainant, Ex.P.5 is the Loan agreement, Ex.P.6 is the Outstanding Summary, Ex.P.7 is the reminder through mail for 20 C.C.No.11924/2022 SCCH-10 payment, Ex.P.8 is the memo issued by the payment aggregator i.e. Razorpay for dishonour of MACH mandates, Ex.P.9 is the RBI Notification for the guidelines on regulation of payment Aggregators and payment Gateways, Ex.P.10 is the Screen shorts and video grab of the authorized/consent provided by the accused, Ex.P.11 is the Legal Notice, Ex.P.12 is the Postal receipts, Ex.P.13 is the Track consignment, Ex.P.14 is the Accounts statement and Ex.P.15 is the Certificate u/s 65B of Indian Evidence Act.
20. According to the complainant the accused has executed Electronic Fund Transfer in favour of the complainant under National Automated Clearing House (NACH) Mandate for payment through his HDFC bank, Sector 46 Branch, Gurugram under Account No.50200026137247. The complainant contended that the NACH Emandate has dishonoured for the funds insufficient. The complainant has produced six E mandates under Ex.P.8. According to the complainant 21 C.C.No.11924/2022 SCCH-10 there is a due sum of Rs.62,70,097/ and out of it, the complainant has initiated NACH Mandate under ECS which are produced as per Ex.P.8 for a sum of Rs.15,00,000/. The accused has produced the Outstanding balance as per Ex.P.6, it shows that summary of outstanding as of Rs.62,70,097/. Further the complainant has produced accounts statement as per Ex.P.14, it shows that the deposit amount is of Rs.4,00,100/.
21.The present case is filed under the provisions of Payment and Settlement System Act for the offence punishable u/s 25 of PSS Act as the Emandate issued by the accused is dishonoured. The complainant has produced only Dishonoured memo as per Ex.P.8, but the complainant has not produced the Emandate i.e. NACH for Electronic Fund Transfer from the accused account.
22. A perusal of Section 25 of the Payment and settlement Systems Act shows that one of the basic 22 C.C.No.11924/2022 SCCH-10 ingredient of the offence under Section 25 is that the electronics funds transfer is initiated by the accused out of the account maintained by him with a bank for payment of any amount of money to another person for the discharge, in whole or in part, of any debt or other liability, in accordance with the relevant procedural guidelines issued by the system provider. In other words not only the ECS mandate must be signed by the accused but also it should be initiated in accordance with relevant guidelines issued by system provider. In the present case, the complainant has failed to prove that the alleged ECS mandate has been signed and given to the complainant by the accused by producing the such ECS mandate. The complainant has failed to prove the ESC mandate as per the relevant provisions of Indian Evidence Act regarding proof of facts by documentary evidence.
23. The first and foremost condition for applicability of Section 25 of the payment and Settlement Systems Act, 2007 is that the electronic funds transfer must be 23 C.C.No.11924/2022 SCCH-10 initiated by the accused in accordance with the procedural guidelines laid down by the system provider. There is no presumption under the law regarding the initiation of electronic funds transfer by the account holder/accused and the fact as to whether or not the electronic funds transfer has been initiated by the accused is required to be proved as per the provisions of Indian Evidence Act. The burden of proving the aforesaid fact is on the complainant and the complainant is required to prove the same beyond reasonable doubts. Even the presumption that the electronic funds transfer has been initiated for payment of money in discharge of any legally enforceable debt or liability can only be raised after the proper initiation of the transfer is duly proved by the complainant.
24. It would be pertinent, at this stage, to reproduce the relevant portion of guidelines "Electronic Clearing Service (Debit Clearing) Procedural Guidelines" issued by 24 C.C.No.11924/2022 SCCH-10 Department of Payment and Settlement Systems, Reserve Bank of India which reads as follows:
"v) Responsibility of the Destination Banks: The ECS Debit works on the strength of the mandates given by the destination account holders to the user institution for effecting payment from their accounts. The mandates are required to be authenticated (primarily for signature verification of the bank's customer) by the respective bank branches within a period of seven days from the date of receipt of such requests. After authentication, the branch would retain a copy for its record, and the customer would submit the other copy to the user institution. At the time of authenticating the mandates, the destination branches should ensure the nomenclature of the accounts visàvis those appearing in the mandates.25 C.C.No.11924/2022
SCCH-10 The destination branches can debit their customers' account only on the basis of the mandates given to them. The account holder / customer is also entitled to withdraw the mandate / ECS Debit instructions from its banker without involvement of the user institution, The withdrawal instructions of a customer would be treated equivalent to a 'stop payment' instruction in cheque clearing system. The user institution should stop including the relative transaction in the ECS file, after receipt of such countermanding by the customer.
25. The destination account holder may also be given the facility of putting an upper limit for each individual transaction in the mandate, and/or a time limit for operations of a particular ECS mandate (life of a mandate) by the user/ destination banker. The destination branch may also allot a unique identification number to the mandate, which could be referred to by the ECS User in all the transactions. The number could include a reference to the branch identity, the type of 26 C.C.No.11924/2022 SCCH-10 account and a reference to the customer's account, the purpose of the debit, etc. This would also serve the destination branch as a control reference tool to monitor the ECS debits being received through the clearing house."
26. Thus, in terms of the aforesaid guidelines, the ECS mandate is required to be authenticated by the destination bank before it can be submitted to the user institution. In the present case, the alleged ECS mandate is not at all produced by the complainant to show its authenticated by the destination bank i.e. banker of the accused. In terms of Section 64 of the Indian Evidence Act, the contents of document must be proved by production of the original document and the secondary evidence of it is generally inadmissible except in cases provided under Section 65 of the Act. Though, the complainant has produced the dishonoured memo as per Ex.P.8 those dishonour memos have not disclosed the account number of the accused account as mentioned in 27 C.C.No.11924/2022 SCCH-10 the complaint. Moreover, the ECS mandate has not been authenticated by the destination bank in terms of guidelines issued by RBI and as such the said ECS mandate cannot form the basis of complaint under Section 25 of the Payment and Settlement Systems Act, 2007.
27. The complainant has produced the Screen shorts and video grab of the authorized/consent provided by the accused as per Ex.P.10. I have carefully perused the Ex.P.10, the same is also not discloses the account number of the accused, which is referred in the complaint as alleged to be ECS mandate executed by the accused of the said account number authorized the complainant for Electronic Funds Transfer ECS mandate in favour of the complainant.
28. Further the Payment and Settlement System Act is also says that the debt or other liability means a legally enforceable debt or other liability, as the case may be. In this case, the complainant has produced as Outstanding 28 C.C.No.11924/2022 SCCH-10 Summary as per Ex.P.6 and Accounts Statement as per Ex.P.14. The Ex.P.6 and Ex.P.14 do not disclose the loan account number, but it disclose the customer ID and also same is not find place in the complaint. The Ex.P.6 and Ex.P.14 do not tally with each other. Therefore, the debt must be legally recoverable debt and as stated in explanation of Section 25 of PSS Act. At this juncture, I would like to refer the decision of Hon'ble High Court reported in 2018(4) KCCR 674 between Branch Manager, PCA & RD Bank Ltd.,Belthangady Vs. Suresh Das, wherein it was held as under;
"Negotiable Instruments Act1881 Section 138 - Acquittal - Cheque not issued by accused towards a legally recoverable debt - But was issued as security for loan borrowed from complainant/bank - Complainant not producing account extract relating to loan account of accused - No infirmity in judgment of acquittal.
Para no.6 : On hearing the learned counsel for the parties and on evaluating the material 29 C.C.No.11924/2022 SCCH-10 on record, I find that there is no illegality committed by the Trial Court, which calls for interference. It is to be seen that the cheque was not issued by the accused respondent towards a legally recoverable debt. It was issued as a security for the loan which he had borrowed from the complainant. This is further fortified by the judgment relied on by the counsel for the appellant himself in Sampelly Satyanarayana Rao (supra), which reads that, "If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise." Hence, it is proved that as on the date of issuance of the blank cheque, there was no legal liability of the accused to pay any amount to the complainant, which is evident from the evidence of PW1 the Manager of the bank himself. Further, the complainant Bank has also not produced any account extract relating to the loan account of the accused."
Though, in this case the complainant has produced the Outstanding Balance Summary and Accounts Statement as per Ex.P.6 and Ex.P.14 do not tally with each other. 30 C.C.No.11924/2022
SCCH-10 Though, the complainant is banking finance company incorporated under the Company's Act facilitated to its customers must maintained the proper account in accordance with law. In this case, such accounts statement is not produced by the complainant. The counsel for the complainant has relied the decision of Hon'ble High Court of Kerala in the case of RCI Industries and Technology Ltd. Vs State of Kerala (2023) SCC Online Kerala 8215 and another decision of Hon'ble High Court of Delhi in the case of Lotus Pay Solutions Pvt. Ltd. And another Vs Union of India and others in W.P(C) No.8215/2020, CM Application No.26623/2020 and 34346/2021 dated 15.09.2022. I have gone through the both judgments, both decisions says about the functioning and procedure for operation of payment system under the provisions of PSS Act.
29. As per Section 2(c) of PSS Act, the legislature has defined the Electronic Funds Transfer, thereby the 31 C.C.No.11924/2022 SCCH-10 complainant has to produce the Electronic Funds Transfer document i.e. ECS mandates either original or copy of the same to show the accused has executed ECS mandates unless prove the execution of ECS mandates, it cannot be held that there is an offence punishable under Section 25 of PSS Act. Therefore, the claim made by the complainant is not proved by the complainant as it is legally recoverable debt as on the date of initiation of ECS mandate. Therefore, the complainant has failed to prove that the accused has executed the ECS mandates and it has been dishonoured and committed an offence punishable under Section 25 of PSS Act R/w Section 138 of N.I.Act. Hence, I answer to point No.1 and 2 in the Negative.
30. Point No.3: In view of reasons assigned in point No.1 and 2, I proceed to pass the following;
ORDER Acting under section 255(1) of Criminal Procedure Code, accused is hereby acquitted for 32 C.C.No.11924/2022 SCCH-10 the offence punishable u/s 25 of the Payment and Settlement Systems Act, 2007 R/w section 138, 141 & 142 of Negotiable Instruments Act 1881.
The bail bond shall stand cancelled.
(Dictated to the Stenographer directly on computer, typed by her and corrected by me and then pronounced in the open court on 5th day of January 2024).
(ALLAPPA. M. BADIGER) XIV ADDL.SMALL CAUSES JUDGE & ACMM, BENGALURU.
::A N N E X U R E::
LIST OF WITNESSES EXAMINED ON BEHALF OF THE COMPLAINANT: P.W.1 : Disha Chandra Saxena LIST OF DOCUMENTS MARKED ON BEHALF OF THE COMPLAINANT: Ex.P.1 : Board Resolution passed by White Wizard Technologies Pvt.Ltd.
Ex.P.2 : Certificate of Incorporation Ex.P.3 : Certificate of Incorporation Ex.P.4 : True copy of Resolution Ex.P.5 : Loan agreement Ex.P.6 : Summary of the Outstanding Ex.P.7 : Reminder through EMails for payment Ex.P.8 : Memo of dishonour of NACH mandates Ex.P.9 : RBI notification for guidelines on
regulation of payment Aggregators and payment Gateways Ex.P.10 : Screen Shorts & video grab 33 C.C.No.11924/2022 SCCH-10 Ex.P.11 : Legal notice Ex.P.12 : Postal receipts Ex.P.13 : Track consignment Ex.P.14 : Accounts statement Ex.P.15 : Certificate u/s 65B of Indian Evidence Act LIST OF WITNESSES EXAMINED ON BEHALF OF THE ACCUSED: D.W.1 : Naveen Mahlawat LIST OF DOCUMENTS MARKED ON BEHALF OF THE ACCUSED: Ex.D.1 : Mail Copy Ex.D.2 : Bank Statement Ex.D.3 : Whats app Message screen shots Ex.D.4 : Email Ex.D.5 : Account statement Ex.D.6 : EMail with Whats app screen shots Ex.D.7 : Account statement Ex.D.8 : Email Ex.D.9 : Certificate u/s.65B of Evidence Act (ALLAPPA. M. BADIGER) XIV ADDL.SMALL CAUSES JUDGE & ACMM, BENGALURU.