Bangalore District Court
Navi Finserv Ltd vs Satendra Singh on 16 December, 2025
KABC030089342025
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL
MAGISTRATE, AT BANGALORE CITY
Dated this the 16th day of December 2025
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.No.5260/2025
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 Manaswini Malladi
Authorized Signatory.
(By AS Advocate )
V/s
Accused : Satendra Singh
C/o.Pokh Pal Singh
29, Indrapuri, Uttar Dhauli
Pyau,
Mathura
UP 281 001.
(By VS - Advocate )
Plea of accused: Pleaded not guilty
Final Order: Accused is Convicted.
2
C.C.No.5260/2025
Date of judgment : 16.12.2025
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 Financial 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.10004862767 in favour of the complainant. As per the terms of agreement, the loan is required to be repaid with interest at ROI 50 monthly installments of Rs.26,800/-pm. The complainant sanctioned loan of INR 8,90,000/-. It is pleaded that the accused towards repayment of liability, executed E NACH Mandate bearing UMRN No. ICIC7011610220003344 in favour of the complainant for INR 6,00,000/- drawn on ICICI Bank. The accused assured that 3 C.C.No.5260/2025 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 1,07,200/- through HDFC Bank Ltd, Koramangala, Bangalore. But said E-NACH Mandate is dishonoured and returned with memo for the reason "Balance Insufficient" in the account of the accused to honour the same. 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 13.11.2024. Inspite of issuance 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.2020/2025 and recorded sworn statement of the authorised representative of complainant as PW 1 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 4 C.C.No.5260/2025 registering the criminal case. In response to the process issued by this court, the accused appeared before this court and he is released on bail. The copy of the complaint and documents is served to the accused 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(1) of Negotiable Instruments Act. As the evidence of the complainant on record the incriminating circumstances in the complainant evidence read over to the accused and his statement under Section 351 of Bharathiya Nagarika Sanhitha is recorded. The accused has denied the incriminating circumstances as false. Inspite of grant of sufficient opportunity, the accused has not filed any application for recalling PW 1 for cross examination as required under Section 145(2) of Negotiable Instruments Act. Inpsite of 5 C.C.No.5260/2025 grant of sufficient opportunities, the accused has not lead defence evidence. During the trial the complainant has substituted the representative of the complainant as the earlier representative has left the employment with the complainant company. But it is pertinent to note that the evidence of PW 1 is complete evidence.
6. Heard arguments of learned counsel for the complainant and Arguments of learned counsel for the accused is taken as heard and perused the material on record.
7. On the basis of the material on record following points arise for the consideration of this court :
1. Whether the complainant proves beyond reasonable doubt that the accused has issued NACH Mandate bearing UMRN No.ICIC7011610220003344 in favour of the complainant for INR 6,00,000/- drawn on ICICI Bank. and it is dishonoured on processing for collection of balance amount of Rs.1,07,200/-
on 10-10-2024 for the reason Balance Insufficient and inspite of service of demand notice dated 06- 11-2024 on 13.11.2024 he has failed to repay the amount with in 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.5260/2025
8. The findings of this court to the above points are as follows:
Point No.1 In the Affirmative,
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. The PW 1 has deposed that complainant is a non banking financial company registered under Companies Act doing its business of lending money to the customers. To prove the incorporation of the company the PW 1 has produced the web copy of certificate of incorporation 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 and prosecute the accused. 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 not cross examined PW 1 and not denied the legal status of the complainant and not denied authority of PW 1 to represent the case.
10. The offence alleged is primarily under Section 25 of The Payment and Settlement Systems Act 2007, which reads as under.
7
C.C.No.5260/2025 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 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 8 C.C.No.5260/2025 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.
11. 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 his account ii) Processing of the 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 9 C.C.No.5260/2025 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. Therefore it is proper to consider whether the statutory requirements for constituting offence under Section 25 of he Payment and Settlement Systems Act 2007 r/w Section 138 of Negotiable Instruments Act is complied by the complainant.
12. 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 and other applicable charges. The PW 1 has deposed that the accused executed E-NACH Loan Agreement No.10004862767 in favour of the complainant, and as per the terms of agreement, the loan is required to be repaid with interest at ROI 50 monthly installments of Rs.26,800/-. He has stated that the complainant sanctioned loan of INR 8,90,000/-. The PW 1 further deposed that the accused towards repayment of liability, executed E NACH Mandate bearing UMRN No.ICIC7011610220003344 in 10 C.C.No.5260/2025 favour of the complainant for INR 6,00,000/- drawn on ICICI Bank. The complainant has produced the E copy of the NACH Mandate as Ex.P 4. He has deposed that the complainant has processed said E-NACH mandate through their banker HDFC Bank, Koramangala for a outstanding sum of Rs.1,07,200/- and on processing said E NACH Mandate, it is returned dishonored with remarks "Balance Insufficient" in the account of the accused to honour the same on 10-10-2024. The debit Transaction return memo is produced as Ex.P5. As provided under Section 25(4) of The Payment and Settlement Systems Act and also under Section 146 of Negotiable Instruments Act law presumes that on production of banker slip or memo having thereon the official mark denoting that the cheque/ electronic fund transfer has been dishonored, presume the fact of dishonor of such said cheque, unless and until same is disproved. The accused has not cross examined PW1 nor adduced evidence to rebut the presumption. The PW1 has deposed that they have got issued legal notice dated 06.11.2024 calling upon the accused to pay the due amount as per Ex.P6. The PW 1 has deposed that said notice issued through RPAD is served on the accused on 13.11.2024. Evidencing the same the complainant has produced the postal receipt and postal track consignment as Ex.P.7 and Ex.P.8. The PW1 deposed that 11 C.C.No.5260/2025 inspite of issuance of notice, the accused failed to pay the claim amount to the complainant with in the statutory time. Therefore on expiry of 15 days of service of notice on 29-11-2024 the cause of action arose for prosecuting the accused. The complaint is filed before this court on 20.12.2024. Thus the complainant has complied all the statutory requirements for constitution of offence under Section 25 of The Payment and Settlement Systems Act 2007 r/w Section 138 of Negotiable Instruments Act. As stated above the accused has not denied issuance of NACH mandate, dishonur of the same and also nto denied service of demand notice. Therefore, the complainant is entitled for presumption under Section 25 (2) of The Payment and Settlement Systems Act 2007. Under Section 139 of Negotiable Instrument Act also there is similar presumption. The provisions of Section 139 of Negotiable Instrument Act reads as under:-
139- Presumption in favour of holder - It should be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
13. Hon'ble Supreme court in a decision reported in (2010) 11 SCC 411 between Rangappa V/s Sri Mohan has held that - 12
C.C.No.5260/2025 The presumption mandated by Section 139 of the act does indeed include the existence of a legally enforceable debt or liability. It is also observed that Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instrument. It is also held that in such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant caused cannot be expected to discharge an unduly high slandered or proof.
14. Therefore the principles laid down in this decision can also be made applicable to the proceedings for the offence under Section 25 of The Payment and Settlement Systems Act 2007. In view of the principles laid down in these decisions onus is on the accused to rebut the presumption.
15. The accused has not issued any reply at the initial stage at the time of service of the legal notice. The accused has also not opted to cross examine PW 1 and not filed application to recall of PW 1 as contemplated under Section 145(2) of Negotiable Instruments Act. As per the provisions of Section 145(1) of Negotiable Instruments Act the affidavit filed by the complainant shall be treated as Evidence. Therefore affidavit is not mere chief examination but it is complete evidence. If the accused has 13 C.C.No.5260/2025 not opted to file application to recall him for cross examination, the affidavit of the complainant shall be treated as complete evidence. Inspite of grant for sufficient opportunity the accused has not opted to file application to recall PW1 and not lead his evidence. As provided under Section 143(2) and (3) of NI Act the trail of the case shall be conducted as expeditiously as possible and as far as practicable, consistently with the interest of justice, be continued in day to day until its conclusion. Considering these aspects, this court has extended sufficient opportunity to the accused to rebut the presumption of law under Section 25(2) of The Payment and Settlement Systems Act R/w Section 139 of Negotiable Instruments Act. Therefore there is no defence by the accused to rebut the presumption. Therefore this court concludes that accused has failed to rebut 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 successfully proved 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 Affirmative.
14
C.C.No.5260/2025
16. POINT NO. 2 : While answering the point no. 1 this court concluded that the complainant proved that the accused committed the offence punishable under Section 25 of The Payment and Settlement Systems Act r/w Section 138 of Negotiable Instruments Act. The NACH mandate is processed for collection on 10-10-2024 for a sum of Rs.1,07,200/-.. The money involved in the case is used in commercial transactions. Therefore considering all these aspects the amount of fine calculated for a sum of Rs.1,23,450/-.
17. The Ho'ble High Court of Karnataka in the reportable decision in CRL.RP No. 996 of 2016 dated 09-07-2025 between M/s Banavathy and Company VS Mahaveer Electro Mech (P) Ltd at para 21 has held that -
21. In case lesser interest is awarded and only default sentence is imposed, the rigor of offence under Section 138 will be diluted and thereby the object of the Statute will be defeated. If recovery and compensatory part is not taken care of while determining the quantum of sentence and appropriate interest is not awarded, until the date of recovery of the entire amount, the complainant will be forced to file civil suit on the same subject matter. In view of Section 143(3) the trial for offence under Section 138 of N.I.Act has to be completed within six months. If the said provision is not adhered to and the trial for the offence under Section 138 of N.I.Act takes 4 to 5 years, in the mean time, the claim of the complainant for recovery of the cheque amount by filing civil suit becomes barred by limitation. Not only that the accused who is convicted for offence 15 C.C.No.5260/2025 under Section 138 of N.I.Act challenges the same before the Sessions Court wherein the matter takes 2 to 3 years. The accused unsuccessful in the said appeal prefers revision petition before the High Court and it is seen that the disposal of revision takes more than 5 years. After all this if the complainant has to receive the fine/compensation as awarded by the trial Court, if it is cheque amount or little higher than the cheque amount, he will be at loss and put to injustice. Therefore, while passing the order of sentence after determining the fine/compensation, the Court shall also pass an order to pay future interest @ 9% p.a. on the compensation amount payable to the complainant by fixing time of one/two months to deposit compensation amount so that even if the matter is challenged before the Sessions Court in appeal and High Court in revision the interest of the complainant will be protected.
Therefore considering directions issued by the Hon'ble High Court issued in the above refereed judgment, it is also proper to direct the accused to pay future interest on the fine amount at the rate of 9 % P.A. till payment. Therefore considering all these aspects this court proceed to pass the following -
ORDER By exercising powers conferred under Section 278(2) of Bharathiya Nagarika Suraksha Sanhitha the accused is convicted for the offence punishable under Section 25 of The Payment and Settlement Systems Act 2007 R/w Section 138 of Negotiable Instrument Act and he is sentenced to pay a fine of Rs.1,23,450/- (Rupees One Lakh Twenty Three Thousand Four 16 C.C.No.5260/2025 Hundred and Fifty only), which shall be deposited with in a month and in default, the accused shall pay interest at the rate of 9% from this day till payment of fine amount, In default to pay the fine with interest, the accused shall undergo simple imprisonment of 6 months.
Further acting Section 395(1)(a) of Bharathiya Nagarika Suraksha Sanhitha out of the fine amount a sum of Rs.5,000/- (Rupees Five Thousand only) shall be defrayed as prosecution expenses to the state.
Further acting Section 395(1)(a) of Bharathiya Nagarika Suraksha Sanhitha a sum of Rs.1,18,450/- (Rupees One Lakh Eighteen Thousand Four Hundred and Fifty only) with interest out of the fine amount on recovery shall be paid as compensation to the complainant.
Supply free copy of the judgment to the accused. (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 16th day of December, 2025).
(GOKULA.K) XXV A.C.J.M., BANGALORE CITY.
17
C.C.No.5260/2025 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 : Web copy of Authorization Letter Ex.P3 : Web copy of Bank Certificate Ex.P4 : NACH mandate Ex.P5 : Return Memo Ex.P6 : Office copy of Legal Notice Ex.P7 : Postal Receipt Ex.P8 : Postal Track Consignment.
LIST OF WITNESSES EXAMINED FOR THE ACCUSED:-
Nil Digitally signed by LIST OF DOCUMENTS MARKED FOR THE ACCUSED:- GOKULA GOKULA K Nil Date:
K 2025.12.18
15:21:04
+0530
(GOKULA.K.)
XXV A.C.J.M., BANGALORE CITY.