Bangalore District Court
Navi Finserv. Ltd vs Shiva Raj Gururaj on 19 June, 2025
KABC030432982023
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL MAGISTRATE, AT
BANGALORE CITY
Dated this the 19th day of June 2025
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.No.24472/2023
Complainant : Navi Finserv 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 CHD - Advocate )
V/s
Accused : Shiva Raj Gururaj
No.87, 1st main, Bhuvaneshwari Nagara
Bengaluru - 560 024.
(By MA - Advocate )
2
C.C.No.24472/2023
Plea of accused: Pleaded not guilty
Final Order: Accused is convicted
Date of judgment : 19.06.2025
JUDGMENT
The complainant has filed the complaint under Section 200 of Criminal Procedure Code against the accused for the offence punishable under Section 25 of Payment and Settlement Systems Act 2007 R/w Section 138 Negotiable Instruments Act.
2. The brief case of the complainant is as under:
That the complainant is a non banking organization doing business of lending finance to its customers and accused has availed personal loan from the complainant vide loan Agreement No.10000046085. The complainant had sanctioned loan of Rs.5,00,000/- to the accused. The accused has agreed to repay the loan together with interest at the rate of 12% in 43 monthly installments of Rs.8,618/- p.m. It is stated that the accused towards repayment of liability, has issued E - NACH Mandate in favour of the complainant to the extent payable assuring to honour the 3 C.C.No.24472/2023 same when it is presented / processed for realization. The accused has assured that he will maintain sufficient amount in his account to honur the E -NACH Mandate when it is presented. It is pleaded that the complainant has processed E-NACH mandate through his banker HDFC Bank Koramangala for a sum of Rs.8,618/- drawn on Axis Bank and on processing said E NACH Mandtate, it is returned dishonored with remarks "Balance Insufficient" on 11-08-2023. On receipt of said intimation, the complainant got issued legal notice on 16.08.2023 through registered post and demanded to pay the amount dishoured under E-NACH Mandate. The notice is returned with postal endorsement "insufficient address" on 22-08-2023. It is stated that the notice is issued to the last known address of the accused provided by him. Therefore the issuance of notice to the last known address is deemed service of notice. 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 under Section 25 of the Payment and Settlement Act 2007 R/w Section 138 of Negotiable Instruments Act. Therefore the complainant has filed the complaint. 4
C.C.No.24472/2023
3. On the basis of Private complaint filed by the complainant, this court has taken cognizance of offence and registered the case in PCR No.9855/2023 and recorded sworn statement of the complainant and got marked 7 documents as Ex.P1 to Ex.P.7. This court by considering the material on record issued process under Section 204 of Cr.PC by 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 is served to the accused along with the summons as contemplated under Section 207 of Criminal Procedure Code.
4. The substance of the acquisition as provided Section 251 of Cr.PC 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. The accused has filed an application to recall PW 1 for cross examination and the application was allowed and PW 1 5 C.C.No.24472/2023 was recalled for cross examination. But the accused neither opted to cross examine PW 1 nor adduced defence evidence. When the case is posted for cross examination of PW1, the accused appeared before the court and deposited the E-NACH processed amount of Rs.8,618/- through Demand draft bearing No.489984 dt.16.06.2025 for a sum of Rs.8,618/- drawn on Karnataka Bank Limited, CJM Complex Branch, Nrupathunga Road, Bangalore and it is kept in deposit in Cr.CD. Thus the accused has submitted that he has admitted the liability and deposited entire claim amount in the complaint and claimed for acquittal.
6. Heard arguments 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 that the accused committed an offence punishable under Sec.138 of N.I. Act as alleged in the complaint?
2. Whether the complainant is entitled for compensation and how much ?
3. What Order?6
C.C.No.24472/2023
8. The findings of this court to the above points are as follows:
Point No.1&2 In the Affirmative.
Point No.3 As per final order
for the following :
REASONS
9. POINT NO.1: To prove the case the authorized representative of the complainant 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 the Certificate of Incorporation as Ex.P 1. As per Ex.P 1 the complainant is a Public Limited company registered under Companies Act. 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.
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.24472/2023 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 8 C.C.No.24472/2023 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. 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 payment 9 C.C.No.24472/2023 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.
11. Therefore it is proper to consider whether the statutory requirements for constituting the 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. The PW 1 has deposed that the complainant is a Non Banking Financial Organization extending financial services to those who are in need and that the accused availed personal loan facility of Rs.5,00,000/- from the complainant which is to be repaid with interest at 12% in 43 monthly installments of Rs.8,618/- and towards repayment of liability, the accused issued E NACH Mandate for monthly instalments. He has deposed that the the complainant has processed the Mandate on 11.08.2023 for a sum of Rs.8,618/-. The web copy of NACH is marked as Ex.P3. He has deposed that they have processed said NACH Mandate issued by the accused for realization through their banker ie HDFC Bank, Koramangala 10 C.C.No.24472/2023 Branch, Bengaluru and said NACH Mandate returned dishonored on 11.08.2023 for the reason "Balance Insufficient" in the account of the accused to execute the mandate. The PW 1 has produced said debit transaction return memo as Ex. P4. 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 disputed the dishonour of NACH mandate. The PW1 has deposed that they have got issued legal notice dated 16.08.2023 calling upon the accused to pay the due amount as per Ex.P5. The PW 1 has deposed that said notice issued through RPAD is returned unserved for the reason "Insufficient Address". Evidencing the same the complainant has produced the postal receipt and postal track consignment as Ex.P 6 and Ex.P 7. The notice is returned on 22.08.2023. He has deposed that they have issued the notice to the last known address provided by the accused while availing loan. Under Section 25 of The Payment and Settlement Systems Act and also under Section 138 of Negotiable Instruments Act the 11 C.C.No.24472/2023 requirement of law is that the beneficiary makes a demand for payment by giving notice in writing. Therefore the only requirement for the service of the demand notice is that, the notice should have been sent to the correct address of the drawer. Therefore even though notice returned as "insufficient address" it is sufficient compliance of provisions of law. Inspite of issuance of notice, the accused failed to pay the claim amount to the complainant with in the statutory time. The complaint is filed before this court on 14.09.2023. 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. 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.12
C.C.No.24472/2023
12. Hon'ble Supreme court in a decision reported in (2010) 11 SCC 411 between Rangappa V/s Sri Mohan has held that -
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.
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 the onus is on the accused to rebut the presumption. The accused has not issued any reply at the initial stage at the time of service of the legal notice. After plea of the accused is recorded, he has not contested the case to rebut the presumption. The accused appeared before the court and deposited the entire NACH amount by admitting his liability and filed a memo by depositing the amount and there by admitted the 13 C.C.No.24472/2023 liability. Therefore there is no defence from the accused to rebut the presumption under Section 25 (3) of The Payment and Settlement Systems Act 2007 r/w Section 139 of Negotiable Instruments Act. As discussed above all the statutory requirements are complied. The accused has failed to rebut the presumption under Section 25 (3) 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.
13. POINT NO. 2 : The accused appeared before the court and filed a memo by depositing the amount of Rs. 8,618/- through DD bearing No.489984 dated 16.06.2025 drawn on Karnataka Bank Limited, CJM Complex Branch, Nrupathunga Road, Bangalore. As per the memo, the accused has deposited the entire NACH/Cheque amount of Rs.8,618/- before this court towards claim amount. The complainant is not ready to receive the said amount and withdraw the case or settle the case. Therefore the accused has deposited said amount before the court. 14
C.C.No.24472/2023
14. In this scenario it is proper to rely on the decision of Hon'ble Supreme court reported in (2010)5SCC 663 between Damodar S Prabhu Vs Sayed Babalal. In this decision Hon'ble Supreme court in para 21 has laid down following guidelines -
With regard to the progression of litigation in cheque bouncing cases, the learned Attorney General has urged this Court to frame guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence. It was submitted that the requirement of deposit of the costs will act as a deterrent for delayed composition, since at present, free and easy compounding of offences at any stage, however belated, gives an incentive to the drawer of the cheque to delay settling the cases for years. An application for compounding made after several years not only results in the system being burdened but the complainant is also deprived of effective justice. In view of this submission, we direct that the following guidelines be followed:
(i) In the circumstances, it is proposed as follows:
(a) That directions can be given that the writ of summons be suitably modified making it clear to the accused that he could make an application for compounding of the offences at the first or second hearing of the case and that if such an application is made, compounding may be allowed by the court without imposing any costs on the accused.
(b) If the accused does not make an application for compounding as aforesaid, then if an application for compounding is made before the Magistrate at a subsequent stage, compounding can be allowed subject to the condition that the accused will be 15 C.C.No.24472/2023 required to pay 10% of the cheque amount to be deposited as a condition for compounding with the Legal Services Authority, or such authority as the court deems fit.
(c) Similarly, if the application for compounding is made before the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs.
(d) Finally, if the application for compounding is made before the Supreme Court, the figure would increase to 20% of the cheque amount.
In this case, after the accused appeared, he is released on bail and on the same day plea of the accused recorded and case is posted for cross examination of PW1 on the basis of application filed by the accused under Section 145 of Negotiable Instruments Act. Thereafter within 3 hearing dates the accused came up with the proposal for settlement by paying the NACH amount. But the complainant has not agreed and finally the accused has deposited the entire NACH amount dishonoured. Therefore by applying the guidelines issued by the Hon'ble Supreme court in the above decision, the accused is not liable for any cost since at the initial stage itself he came forward for payment of dishonoured NACH amount. Therefore this court is of the considered view that the dishonoured NACH amount itself is to be imposed as fine amount 16 C.C.No.24472/2023 and entire fine amount to be released to the complainant as compensation. Therefore this court answers the Point No. 2 in the Affirmative.
15. Point No.3 : In view of the findings on Point Nos.1 and 2 , this court proceeds to pass the following :
ORDER By exercising powers conferred under Section 255(2) of Criminal Procedure Code 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.8,618/- (Rupees Eight Thousand Six Hundred and Eighteen Only).
The accused has deposited entire fine amount of Rs.8,618/- (Rupees Eight Thousand Six Hundred and Eighteen Only) before this court.
Further by exercising powers conferred under Section 357(1)
(b) of Criminal Procedure Code entire fine amount shall be paid as compensation to the complainant.
Supply free copy of the judgment to the accused. 17
C.C.No.24472/2023 In view of deposit of entire fine amount by the accused he is set at liberty.
Office to release entire compensation amount to the complainant by following due procedure.
[[ (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 19th day of June 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 : NACH Ex.P4 : Return Memo Ex.P5 : Office copy of legal notice Ex.P6 : Postal receipt Ex.P7 : Postal track consignment 18 C.C.No.24472/2023 LIST OF WITNESSES EXAMINED FOR THE ACCUSED:-
Nil LIST OF DOCUMENTS MARKED FOR THE ACCUSED:-
Nil (GOKULA.K.) XXV A.C.J.M., BANGALORE CITY.