Bangalore District Court
Navi Finserv Ltd vs Chandrasekar Ramesh Patil on 18 August, 2025
KABC030511442024
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL
MAGISTRATE, AT BANGALORE CITY
Dated this the 18th day of August 2025
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.29890/2024
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 : Chandrashekar Ramesh Patil
S/o Ramesh Patil, 99 B New Colony
Dastur,
Amravati,
Maharashtra 444 606.
(By MBT - Advocate )
Plea of accused: Pleaded not guilty
Final Order: Accused is Convicted
Date of judgment : 18.08.2025
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C.C.No.29890/2024
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, 26 & 28 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 valued 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 executed E-NACH Loan Agreement No.10001111074 in favour of the complainant. Said loan is required to be repaid with interest at ROI 43 monthly installments. The complainant sanctioned loan of INR 3,90,000/-. Towards repayment of liability, the accused executed E NACH Mandate in favour of the complainant for a sum of Rs.3,90,000/- drawn on Axis Bank on 04-04-2023 bearing No.UTIB7020404230014332 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 through HDFC 3 C.C.No.29890/2024 Bank Ltd, Koramangala, Bangalore. However, said E-NACH Mandate is dishonoured and returned with memo for the reason "Balance Insufficient" on 03-08-2024. The complainant issued legal notice on 17.08.2024 through RPAD demanding payment of dishonoured E NACH amount. Said notice is duly served on the accused on 23.08.2024. 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, 26 & 28 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.11778/2024 and recorded sworn statement of the complainant and got marked 7 documents as Ex.P1 to Ex.P7. 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 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.
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C.C.No.29890/2024
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. On the application of accused the PW 1 is recalled and cross examined in full. The incriminating circumstances in the complainant evidence read over to the accused and his statement under Section 351 of BNSS is recorded. The accused has denied the incriminating circumstances as false. 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 that the accused has issued NACH Mandate UMRN No. 5 C.C.No.29890/2024 UTIB702040230014332 drawn on Axis Bank and on processing the same for collection for a outstanding sum of Rs.65,452/- and it is dishonoured on 03-
08-2024 for the reason Balance Insufficient and inspite of service of demand notice dated 17-08-2024 on 23-08-2024 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 ?
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. 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 and prosecute the accused. These documents prove 6 C.C.No.29890/2024 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.
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.7
C.C.No.29890/2024 (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.
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 8 C.C.No.29890/2024 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.
12. 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. The PW 1 has deposed that the accused has 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 executed E-NACH Loan Agreement No.10001111074 in favour of the complainant. He has deposed that said loan is required to be repaid with interest at ROI 43 monthly installments. The complainant sanctioned loan of INR 3,90,000/-. He has deposed that towards repayment of liability, the accused executed E NACH Mandate in favour of the complainant for a sum of Rs.3,90,000/- drawn on Axis Bank on 04-04-2023 bearing 9 C.C.No.29890/2024 No.UTIB7020404230014332. The web copy of the same is produced as Ex.P 3. He has deposed that the accused assured that sufficient balance would be maintained to honor the E NACH Mandate when presented for encashment. He has further deposed that the complainant presented said E NACH Mandate for realisation for the outstanding amount of Rs.65,452/- through HDFC Bank Ltd, Koramangala, Bangalore. However, said E-NACH Mandate is dishonoured and returned with memo for the reason "Balance Insufficient on 03-08-2024. The complainant has produced the debit Transaction return memo as Ex.P3. 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 complainant issued legal notice on 17.08.2024 through RPAD demanding payment of dishonoured E NACH amount. Said notice is duly served on the accused on 23.08.2024. Evidenceing service of legal notice the PW 1 has produced the postal receipt and web copy of postal track consignment as Ex.P 6 and Ex.P 7. The accused has not disputed service of notice. 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 10 C.C.No.29890/2024 09-09-2024. 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. 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 -
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.
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C.C.No.29890/2024
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. The accused has not issued any reply at the initial stage at the time of service of the legal notice. In the cross examination of PW 1 also the accused has not taken specific defence or not denied the ase of complainant as deposed by PW1. The accused only suggested that the accused has not availed any loan, which has been denied by the PW1. Thus, the accused except denying the entire transactions of loan, he has not brought on record any probable evidence to rebut the presumption under law. The accused has also not chosen to lead defence evidence. Therefore this court concludes that the defence put forward by the accused is not convincing to believe the same and it is not sufficient to rebut the presumption under Section 25 (2) of The Payment and Settlement Systems Act 2007 r/w Section 139 of Negotiable Instruments Act. The 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 12 C.C.No.29890/2024 Negotiable Instruments Act. Therefore this court answers the above point No.1 in the Affirmative.
15. POINT NO. 2 : While answering the point no. 1 this court concluded that the complainant has proved that the accused committed the offence punishable under Section 25, 26 & 28 of The Payment and Settlement Systems Act r/w Section 138 of Negotiable Instruments Act. The Amount covered under the NACH is Rs.65,452/-. When the case is posted for judgment the accused has deposited entire dishonoured amount of Rs.65,452/-. through Demand draft bearing No.209094 dt. 06.08.2025 drawn on State Bank of India, Main branch, Bangalore and it is kept in deposit in Cr.C.D. The complainant is not agreeable to withdraw the case by receiving the amount of Rs.65,452/- and prayed to pass the judgment.
16. 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 13 C.C.No.29890/2024 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 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.
17. In this case, the accused has not made any application for compounding, but when case is posted for judgment has deposited the entire dishonoured amount of Rs.65,452/- before this court. Therefore this court is of the considered view that the 14 C.C.No.29890/2024 dishonoured NACH amount itself is to be imposed as fine amount and entire fine amount to be released to the complainant as compensation. Therefore considering all these aspects this court proceed 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.65,452/- (Rupees Sixty Five Thousand Four Hundred and Fifty Two Only).
The accused has deposited entire fine amount of Rs.65,452/- (Rupees Sixty Five Thousand Four Hundred and Fifty Two 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. 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 18 th day of August 2025).
(GOKULA.K) XXV A.C.J.M., BANGALORE CITY.
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C.C.No.29890/2024 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 mandate Ex.P4 : Return Memo Ex.P5 : Office copy of Legal Notice Ex.P6 : Postal Receipt Ex.P7 : Postal Track Consignment.
LIST OF WITNESSES EXAMINED FOR THE ACCUSED:-
Nil Digitally LIST OF DOCUMENTS MARKED FOR THE ACCUSED:- signed by GOKULA K Nil GOKULA Date:
K 2025.08.19
11:50:59
+0530
(GOKULA.K.)
XXV A.C.J.M., BANGALORE CITY.