Bangalore District Court
Mohan Kumar R vs Shravan Kumar H M on 4 March, 2026
KABC030209792023
Presented on : 29-05-2023
Registered on : 29-05-2023
Decided on : 04-03-2026
Duration : 2 years, 9 months, 6 days
IN THE COURT OF LII ADDL. CHIEF JUDICIAL MAGISTRATE,
BENGALURU CITY
PRESENT
SMT.LAVANYA.H.N, B.Sc., LL.B.,
LII Addl. Chief Judicial Magistrate,
Bengaluru.
Dated this the 4th day of March, 2026
C.C. No.11850/2023
COMPLAINANT: MOHAN KUMAR.R,
S/o.G.Raghu,
Aged about 38 years,
R/at No.78, Akshaya Nilaya,
1st Main, 14th Cross,
Kengeri Upanagara,
Bengaluru - 560 060.
(Rep By: Sri.H.G.Revanna - Advocate)
V/s.
ACCUSED: SRI.SHRAVAN KUMAR.H.M,
S/o.Late.Manchegowda,
Aged about 34 years,
R/at Hullenahalli Village,
2
C.C.No.11850/2023
Dudda Hobli,
Mandya Taluk & District.
(Rep By : Sri.Sathya.M.N - Advocate)
Date of presenting 10.02.2023.
complaint
Date of arrest of accused NIL
Name of the Complainant MOHAN KUMAR.R.
Date of commencement of 12.12.2023.
evidence
Date of closing evidence 18.10.2025.
Offence complained of Section 138 of Negotiable Instruments
Act, 1881.
Date of Judgment 04.03.2026.
Opinion of the Judge Accused found guilty.
:JUDGMENT:
This Complainant has presented the complaint on
10.02.2023 against the accused for the offense punishable
under Sec.138 of Negotiable Instruments Act, 1881
(hereinafter it is referred to as NI Act).
2. THE BRIEF FACTS OF THE COMPLAINANT’S CASE
ARE AS UNDER:-
a) It is the case of the complainant that he has been
doing hotel business in and around Bengaluru. The accused
is well known to him. Since the accused was facing financial
crisis, he offered to sell the joint family properties in
3
C.C.No.11850/2023Sy.No.19/1B, measuring 02 acre 21 guntas, Sy.No.74/1,
measuring 00.06 guntas, Sy.No.74/8, measuring 00.12
guntas, Sy.No.13/1, measuring 00.02.08 guntas, in total 3
acre 0.01.8 guntas situated at Devarayapattana (Bacharach)
Village, Dudda Hobli, Mandya Taluk and District. The
Complainant along with his friends Sri. Muzamil and Sri.
Sunil Ramakrishna accepted the offer and accordingly
finalized the price and agreed to purchase the above properties
for Rs.60,00,000/- (Rupees Sixty lakhs only) out of this
amount complainant paid of Rs.40,00,000/- (Rupees Forty
lakhs only) as an advance in different dates by cash. In this
regard they entered into the registered sale agreement dated
10.10.2023 with the accused and his family. It was agreed
that, remaining balance sale consideration of Rs.20,00,000/-
(Rupees Twenty lakhs only) to be payable at the time of
registration and 20 months time was fixed for registration
from the date of the agreement.
b) It is further case of the complainant that after the
stipulated period of time the complainant approached the
accused and demanded to arrange all necessary documents
for registration of the said property, but accused has failed to
comply with the conditions of the said agreement and they
dragged the same for one or the other reasons till October
2022. In the month of October 2022, the complainant has
arranged the panchayath wherein it was decided that the
accused has to pay damages of Rs.10,00,000/- (Rupees Ten
lakhs only) for the advance amount of Rs.40,00,000/- (Rupees
4
C.C.No.11850/2023
Forty laksh only). According to this settlement, the accused
had issued two cheques bearing Nos.076097, for
Rs.20,00,000/- dated 16.11.2022 and another cheque bearing
No.076096, dated 31.10.2022, for a sum of Rs.30,00,000/-,
both are drawn on Axis Bank, Mandya Branch, in favour of
the complainant. After realization of the said settled amount
the complainant has agreed to cancel the said sale agreement.
Meanwhile the complainant’s friends Sri.Muzamil and
Sri.Sunil Ramakrishna they have executed registered G.P.A in
favour of the complainant on 12.04.2021 to take all necessary
steps in respect of the sale agreement since they were going to
abroad.
c) It is further case of the complainant that as per
the request of the accused, the complainant presented the
said cheques on 01.12.2022 and 12.12.2022 for encashment
through his banker i.e, The State Bank of India, Kengeri
Satellite Town Branch, Bengaluru. But, the said cheques
dishonoured for the reason “ACCOUNT CLOSED” dated
02.12.2022 and 13.12.2022 respectively. Immediately after
the dishonor of the said cheques, he approached the accused
and informed about the dishonor of the said cheques and
demanded to repay the said cheque amount, but the accused
has expressed his financial problems and promised to repay
the said cheques amount within few days, but he did not
repay the amount. Hence, the complainant was constrained to
issue the legal notice to the accused and his family members
on 28.12.2022 through Registered post and Speed Post which
5
C.C.No.11850/2023
has been duly served to the family members of accused on
31.12.2022 but, the notice sent through RPAD to the accused
has been returned as Intimation delivered and not claimed
Hence, the complainant was constrained to file this complaint.
3(a) After presenting the complaint cognizance of the
offense under Section 138 of N.I Act, was taken. As a prima-
facie case was made out against the accused, by order dated
29.05.2023 Criminal Case was registered and process was
issued to the accused.
3(b) In response to the summons, accused has caused
his appearance through his advocate and got obtained the bail
on 12.12.2023. The substance of accusation was recorded on
12.12.2023. Since the accused pleaded not guilty and claimed
to be tried, the matter was posted for trial.
4. The sworn statement of the complainant was
treated as examination-in-chief of complainant and the
documents at Ex.P.1 to P.16 are marked through PW.1.
5. All the incriminating evidence appearing against
the accused in the evidence of PW.1 has been read over and
explained to the accused under Section 313 of Cr.P.C., and
accordingly, answers given by the accused were recorded.
6
C.C.No.11850/2023
6. The accused in order to prove his defense, he
himself examined as DW.1 and got the document marked at
Ex.D.1.
7. Having heard Sri.H.G.R – Advocate for the
complainant and Sri.S.M.N- Advocate for the accused and on
perusal of the materials available on record, the points that
would arise for determination are as under:-
POINTS
1) Whether the complainant proved that the
accused has issued two Cheques bearing
No.076097 and 076096 for Rs.20,00,000/- and
Rs.30,00,000/- dated 16.11.2022 and
31.10.2022 respectively drawn on Axis Bank,
Mandya Branch in favour of the complainant
towards discharge of lawful dues to the
complainant?
2) Whether the Complainant proved that the
complainant has presented the said Cheques
within a period of their validity for encashment
through his banker, State Bank of India,
Kengeri Satellite Town Branch, Bengaluru
which came to be dishonored with an
endorsement “ACCOUNT CLOSED” ?
3) Whether the Complainant proved that inspite
service of legal notice sent within one month
from the date of endorsement of the Bank the
accused has failed to repay the Cheques
amount within the stipulated period and
thereby, the accused has committed the offense
punishable under Section 138 of N.I Act ?
7
C.C.No.11850/2023
4) What order or sentence?
8. The answers to the above points are as follows:
Point No.1 : In the AFFIRMATIVE;
Point No.2 : In the AFFIRMATIVE;
Point No.3 : In the AFFIRMATIVE;
Point No.4 : As per final order
for the following:
REASONS
POINT NO.1:
9. To avoid repetition of facts, these points are taken
up together for common discussion.
9(a) It is the argument of the Learned Counsel for the
complainant that though in the cross-examination of PW.1
signatures on the cheques were denied, the accused in his
cross-examination has admitted that the cheques at Ex.P1
and 2 belong to his account and bears his signatures thereon.
When the accused admits his signatures on the cheques, the
burden lies upon accused to rebut the presumption under
Section 139 of the N.I. Act. But, the accused has failed to
rebut the presumption favor the complainant that the cheques
were issued towards discharge of a legally recoverable debt.
Since accused has issued cheques at Ex.P.1 and Ex.P.2 for
repayment of advance sale consideration of Rs.40,00,000/-
and damages of Rs.10,00,000/-, the accused neither lodged
8
C.C.No.11850/2023
any complaint against the complainant for alleged mis-use of
cheques nor taken any action for cancellation of the Ex.P15.
9(b) Learned counsel for the complainant further argued
that an offence under Section 138 of the N.I. Act is a statutory
offence. In such cases, the accused must specifically plead
and prove his defense. The accused has failed to prove his
defense that cheques in question were given to his brother and
cheques were given towards security of the loan borrowed by
his brother, and by mis-using the cheques, the present case
was filed though brother of the accused repaid the loan
borrowed from his friends and Ex.P.15 was executed towards
security of the loan borrowed by brother of the accused. On
the contrary, the complainant has proved his case beyond
reasonable doubt through oral and documentary evidence.
The complainant in support of his argument has placed
reliance upon the following decisions of Hon’ble Supreme
Court:
1. Ripudaman Singh Vs.Balkrishna reported in AIR 2019
SC 1625 wherein the Hon’ble Court has held that: –
“We find ourselves unable to accept the
finding of the learned Single Judge of the
High Court that the cheques were not
issued for creating any liability or debt, but
‘only’ for the payment of balance
consideration and that in consequence,
there was no legally enforceable debt or
other liability. Admittedly, the cheques
were issued under and in pursuance of the
9
C.C.No.11850/2023agreement to sell. Though it is well settled
that an agreement to sell does not create
any interest in immoveable property, it
nonetheless constitutes a legally
encforceable contract between the parties
to it. A payment which is made in
pursuance of such an agreement is hence a
payment made in pursuance of a duly
enforceable debt or liability for the
purposes of Section 138.”
2. In M/s Kalamani Tex and another Vs.
P.Balasubramanian‘s case in Crl.Appeal No.123/2021
decided on 10.02.2021 wherein the Hon’ble Apex Court has
held that:
“Even if we take the arguments raised by
the appellants at face value that only a
blank cheque and signed blank stamp
papers were given to the respondent, yet
the statutory presumption cannot be
obliterated. It is useful to cite Bir Singh v.
Mukesh Kumar where this court held that:
“Even a blank cheque leaf, voluntarily
signed and handed over by the accused,
which is towards some payment, would
attract presumption under Section 139 of
the Negotiable Instruments Act, in the
absence of any cogent evidence to show
that the cheque was not issued in
discharge of a debt.”
19. Considering the fact that there has
been an admitted business relationship
10
C.C.No.11850/2023
between the parties, we are of the opinion
that the defence raised by the appellants
does not inspire confidence or meet the
standard of ‘preponderance of probability.
In the absence of any other relevant
material. It appears to us that the High
Court did not err in discarding the
appellants’ defence and upholding the onus
imposed upon them in terms of Section 118
and Section 139 of the NIA.
20. As regard to the claim of
compensation raised on behalf of the
respondent, we are conscious of the settled
principles that the object of Chapter XVII of
the NIA is not only punitive but also
compensatory and restitutive. The
provisions of NIA envision a single window
for criminal liability for dishonour of
cheque as well as civil liability for
realisation of the cheque amount. It is also
well settled that there needs to be a
consistent approach towards awarding
compensation and unless there exist
special circumstances, the Courts should
uniformly levy fine up to twice the cheque
amount along with simple Interest at the
rate of 9% per annum.”
10(a). Per contra, learned counsel for the accused
submits that the accused did not issue the cheques in
question to the complainant in the year 2022, towards
discharge of alleged liability of 50,00,000/- as alleged in the
complaint. There was no sale transaction between the parties
11
C.C.No.11850/2023
referred to in the Ex.P.15 as alleged by the complainant.
Since brother of the accused borrowed loan of Rs.10,00,000/-
from the complainant and his friends, towards security of the
alleged loan, Ex.P.15 was executed and Ex.P.1 and Ex.P.2
blank cheques belong to the accused were given. In fact,
Ex.P.15 is not a sale agreement and it is a security document
executed by the accused and his family members towards the
loan borrowed by the brother of the accused. Since Ex.P.15 is
not a sale agreement, the complainant and alleged purchasers
in the agreement of sale never enforced the alleged agreement
of sale. Since brother of the accused repaid the amount what
he borrowed, neither the complainant nor his friends have
filed any case for recovery of the loan nor they have filed
cheque bounce cases within 3 years from the date of expiry of
the time fixed in the alleged agreement. After 9 years of the
alleged agreement by mis-using the blank cheques given by
brother of the accused, this false case was filed for recovery of
the time barred amount.
10(b). It is further argument of the learned counsel
for the accused that as per Ex.P.15, the complainant has not
alone entered into an agreement of sale with accused alone,
but the complainant along with two others entered into the
agreement of sale with accused and his family members. As
per the terms of the agreement, the advance sale consideration
was paid to accused and his family members. Therefore, the
accused alone is not liable to repay the advance sale
consideration. When there is no liability on the part of the
12
C.C.No.11850/2023
accused to pay the entire advance sale consideration alleged to
have been paid by the complainant and his friends, it could
not be said that the cheques at Ex.P.1 and Ex.P.2 were issued
towards legally recoverable debt or liability.
10(c). It is further argument of the learned counsel for
the accused that as per the case of the complainant and as per
the terms of the Ex.P.15, the specific performance shall be
completed within 20 months from the date of agreement.
Therefore, the complainant ought to have filed the suit for
enforcing the specific performance and recovery of the advance
sale consideration within three years after expiry of 20 months
from the date of agreement. But, this case was filed in the
year 2023. Therefore, the cheques issued towards time barred
debt does not constitute a legally recoverable debt. Hence, it is
prayed that the accused be acquitted for the offence under
Section 138 of the N.I. Act. Learned counsel for the accused
in support of his argument has relied upon the following
decisions:
1. In (2019) 5 Supreme Court Cases 418 between
Basalingappa Vs. Mudibasappa‘s case, wherein Hon’ble Apex
Court has held that:
“This Court again reiterated that whereas
prosecution must prove the guilt of an accused
beyond all reasonable doubt, the standard of proof
so as to prove a defence on the part of an accused is
13
C.C.No.11850/2023“preponderance of probabilities”. In paragraph
No.34, following was laid down:-
“34. Furthermore, whereas prosecution must
prove the guilt of an accused beyond all reasonable
doubt, the standard of proof so as to prove a
defence on the part of an accused is
“preponderance of probabilities”. Inference of
preponderance of probabilities can be drawn not
only from the materials brought on record by the
parties but also by reference to the circumstances
upon which he relies.
23. We having noticed the ratio laid down by
this Court in above cases on Sections 118(a) and
139, we now summarise the principles enumerated
by this Court in following manner:-
(i) Once the execution of cheque is admitted
Section 139 of the Act mandates a presumption
that the cheque was for the discharge of any debt or
other liability. (ii) The presumption under Section
139 is a rebuttable presumption and the onus is on
the accused to raise the probable defence. The
standard of proof for rebutting the presumption is
that of preponderance of probabilities.
(iii) To rebut the presumption, it is open for the
accused to rely on evidence led by him or accused
can also rely on the materials submitted by the
complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be
drawn not only from the materials brought on
record by the parties but also by reference to the
circumstances upon which they rely.
14
C.C.No.11850/2023
(iv) That it is not necessary for the accused to
come in the witness box in support of his defence,
Section 139 imposed an evidentiary burden and not
a persuasive burden.
28. We are of the view that when evidence was
led before the Court to indicate that apart from loan
of Rs.6 lakhs given to the accused, within 02 years,
amount of Rs.18 lakhs have been given out by the
complainant and his financial capacity being
questioned, it was incumbent on the complainant to
have explained his financial capacity. Court cannot
insist on a person to lead negative evidence. The
observation of the High Court that trial court’s
finding that the complainant failed to prove his
financial capacity of lending money is perverse
cannot be supported. We fail to see that how the
trial court’s findings can be termed as perverse by
the High Court when it was based on consideration
of the evidence, which was led on behalf of the
defence. This Court had occasion to consider the
expression “perverse” in Gamini Bala Koteswara
Rao and others Vs. State of Andhra Pradesh
through Secretary, (2009) 10 SCC 636, this Court
held that although High Court can reappraise the
evidence and conclusions drawn by the trial court
but judgment of acquittal can be interfered with
only judgment is against the weight of evidence. In
Paragraph No.14 following has been held:-
“14. We have considered the arguments
advanced and heard the matter at great length. It is
true, as contended by Mr Rao, that interference in
an appeal against an acquittal recorded by the trial
court should be rare and in exceptional
circumstances. It is, however, well settled by now
15
C.C.No.11850/2023that it is open to the High Court to reappraise the
evidence and conclusions drawn by the trial court
but only in a case when the judgment of the trial
court is stated to be perverse. The word “perverse”
in terms as understood in law has been defined to
mean “against the weight of evidence”. We have to
see accordingly as to whether the judgment of the
trial court which has been found perverse by the
High Court was in fact so.”
29. High Court without discarding the
evidence, which was led by defence could not have
held that finding of trial court regarding financial
capacity of the complainant is perverse. We are,
thus, satisfied that accused has raised a probable
defence and the findings of the trial court that
complainant failed to prove his financial capacity
are based on evidence led by the defence. The
observations of the High Court that findings of the
trial court are perverse are unsustainable. We,
thus, are of the view that judgment of the High
Court is unsustainable.”
2. In (2008) 4 Supreme Court Cases 54 between
Krishna Janardhan Bhat Vs. Dattatraya G.Hegde‘s case,
wherein Hon’ble Apex Court has held that:
“We are not oblivious of the fact that the
said provision has been inserted to regulate
the growing business, trade, commerce and
industrial activities of the country and the
strict liability to promote greater vigilance
in financial matters and to safeguard the
faith of the creditor in the drawer of the
cheque which is essential to the economic
life of a developing country like India. This,
16
C.C.No.11850/2023however, shall not mean that the courts
shall put a blind eye to the ground realities.
Statute mandates raising of presumption
but it stops at that. It does not say how
presumption drawn should be held to have
rebutted. Other important principles of
legal jurisprudence, namely presumption of
innocence as human rights and the
doctrine of reverse burden introduced by
Section 139 should be delicately balanced.
Such balancing acts, indisputably would
largely depend upon the factual matrix of
each case, the materials brought on record
and having regard to legal principles
governing the same”.
3. In (2006) 6 Supreme Court Cases 39 between
M.S.Narayana Menon Alias Mani Vs. State of Kerala and
another‘s case, wherein Hon’ble Apex Court has held that:
“48. In Kaliram Vs. State of HP,
Kanna.J Speaking for the 3 Judge Bench
held – One of the cardinal principles which
has always to be kept in view in our system
of administration of justice for criminal
cases is that a person arraigned as an
accused is presumed to be innocent unless
that presumption is rebutted by the
prosecution by production of evidence as
may show him to be guilty of the offence
with which he is charged. The burden of
proving the guilt of the accused is upon the
prosecution and unless it relieves itself of
that burden, the courts cannot record a
finding of the guilt of the accused. There
are certain cases in which statutory
17
C.C.No.11850/2023presumptions arise regarding the guilt of
the accused, but the burden even in those
cases is upon the prosecution to prove the
existence of facts which have to be present
before the presumption can be drawn.
Once those facts are shown by the
prosecution to exist, the Court can raise
the statutory presumption and it would, in
such an event, be for the accused to rebut
the presumption. The onus even in such
cases upon the accused is not as heavy as
is normally upon the prosecution to prove
the guilt of the accused. If some material is
brought on the record consistent with the
innocence of the accused which may
reasonably be true, even though it is not
positively proved to be true, the accused
would be entitled to acquittal”.
11. Keeping in mind the well established principle of
law lay down in the above Judgments, let this Court to discuss
and evaluate the evidence on record.
12. To prove the guilt of the accused, PW1/the
complainant, in his examination-in-chief by way of affidavit,
has reproduced the averments made in the complaint and
produced documents marked at Ex.P1 to Ex.P16.
13. Ex.P1 and 2 are the cheques bearing No.076097
and No.076096 dated 16.11.2022 and 31.10.2022 for
Rs.20,00,000/- and Rs.30,00,000/- respectively both are
drawn on Axis Bank, Mandya Branch, allegedly issued by the
18
C.C.No.11850/2023
accused in favour of the complainant. Ex.P.3 and Ex.P.4 are
the bank memos dated 13.12.2022 and 02.12.2022 wherein it
could be seen that the cheques at Ex.P1 and Ex.P.2 presented
by the complainant were returned unpaid on 13.12.2022 and
02.12.2022 for the reason of “ACCOUNT CLOSED”.
14. Ex.P5 is the office copy of the demand notice dated
28.12.2022 issued by the complainant to the accused through
his Advocate calling upon the accused to pay the cheques
amount within 15 days from the date of receipt of the notice.
Ex.P6 to Ex.P.13 are the postal receipts for having sent the
notice at Ex.P5 to the accused and his family members.
Ex.P14 is the postal returned cover wherein it could be seen
that notice issued to the accused returned with shara dated
11.01.2023 as “Not Claimed”.
15. Ex.P.15 is the registered agreement of sale dated
10.10.2013 entered into between the complainant, his friends
Mujamil and Sunil Ramakrishna as one part and accused and
his family members as second part. Ex.P16 is the registered
General Power of Attorney dated 12.04.2021 executed by
Muzamil and Sunil Ramakrishna in favour of complainant.
16. On going through the Ex.P.16 it is seen that
Muzamil and Sunilramakrishna who entered into the
agreement of sale along with the complainant for purchase of
the properties from accused and his family members have
19
C.C.No.11850/2023
given an authority to the complainant for taking necessary
action/steps for cancellation of the agreement of sale and for
recovery of the amount. Based upon this document at
Ex.P.16, the complainant has filed this case for and on behalf
of Mujamil and Sunilramakrishna.
17. It is a settled principle that once the signature on a
cheque is admitted, a presumption arises under Section 139
of the N.I. Act that the cheque was issued in discharge of a
debt or liability. This presumption extends to the existence of
a legally enforceable debt or liability. There is no doubt
regarding the initial presumption in favor of the complainant.
However, this presumption is rebuttable. The initial onus lies
on the accused to rebut it by raising a probable defence to the
satisfaction of the Court. The standard of proof required is
‘preponderance of probabilities’. If the accused raises a
probable defence creating doubt about the existence of a
legally enforceable debt or liability, or shows that the
consideration was improbable, doubtful, or illegal, the onus
shifts to the complainant to prove the debt as a matter of fact.
Failure to do so results in the complainant’s case failing.
18. It is true, as rightly pointed out by the learned
counsel for the complainant during the cross-examination of
complainant on behalf of the accused it was disputed the
signatures of the accused in the cheques at Ex.P.1 and ExP.2,
whereas accused in his cross-examination has categorically
20
C.C.No.11850/2023
admitted that cheques at Ex.P.1 and Ex.P.2 belong to him and
those bears his signatures thereon.
19. When accused has admitted that cheques in
question belong to him and those bears his signature, it can
be said that the complainant discharged his initial burden.
Once the complainant discharges this burden, the Court must
presume under Section 139 of the N.I. Act that the cheques
were issued in discharge of a debt or liability. However, this
presumption is rebuttable. The Court must now examine
whether the accused has raised a probable defence to rebut it.
20. The defense of the accused could be seen during
the cross-examination of the complainant as well as in the
defense of evidence of the accused.
21. Accused in this examination-in-chief has deposed
that his brother Shyamasundar was running hotel in Maddur.
On 10.10.2013 one Mohan Kumar, Sunil and another had
given Rs.10,00,000/- to his brother for hotel. On 10.10.2013
he himself, his brother and his family members had executed
agreement of sale towards security of alleged loan in favour of
Mohan Kumar, Sunil and another. In the year 2018 his
brother had repaid entire loan with interest step by step, but
agreement was not canceled. Accused has further deposed
that he has not issued the cheque to the complainant. His
account was closed on 18.04.2015. He never met the
complaint except only at the time of registration of agreement
21
C.C.No.11850/2023
of sale. Accused has further deposed that there is no
financial transaction between the complaint and himself. He
has not received any amount as alleged in the complaint and
he has not issued the cheque towards any liability.
22. The accused in order to show that his account was
closed in the year 2015, he has produced his bank statement
of cheque account of Axis Bank for the period from 01.01.2015
to 31.12.2015, which shows that after 18.04.2015 till
31.12.2015 there was no transaction in the said account, but
it does not speaks that the said account was closed on
18.04.2015. The accused has not produced the above account
statement till 31.12.2022 to show that his account was closed
in the year 2015-2016 itself. This Ex.D.1 would not help to
the defense of the accused that his account was closed on
18.04.2015.
23. During the cross-examination of PW1 on behalf of
accused the following defenses were raised:- in the year 2013,
brother of accused had borrowed loan of Rs.10,00,000/- from
the complainant and his friends; that towards security of the
alleged loan Ex.P15 was executed by accused and his family
members and at that time brother of accused had given blank
cheques of accused towards loan security; that though brother
of the accused has cleared the loan in the year 2018 which he
borrowed from the complainant in the year 2013, the
complainant did not return the blank cheques and by mis-
using the cheques which were given in the year 2013 has filed
22
C.C.No.11850/2023
this false case and it is a time barred debt; that the
complainant and two others have no financial capacity to pay
the advance sale consideration stated in the Ex.P15 and no
panchayath was held in the year 2022 and cheques in
question were not issued during the alleged panchayath.
24. PW-1 in his cross-examination has deposed that
brother of the accused is his classmate and there were small
financial transaction between them. From this part of
evidence of the PW-1 it confirms, that the complainant and
family of accused knew each other.
25. Though PW-1 was subjected to lengthy cross-
examination nothing was elicited from him which favours the
defenses of the accused that Ex.15 was executed towards
security of alleged loan borrowed by brother of the accused
and cheques in question in blank were also given by the
brother of the accused to the complainant when he borrowed
the loan from the complainant.
26. Though the accused in his evidence has deposed
that the amount borrowed from the complainant by his
brother was repaid with interest, no document has been
placed to show that brother of the accused has repaid the
alleged loan. Except oral say and suggestions made to
complaint during his cross-examination which was denied by
the complaint nothing was placed on record to show that
23
C.C.No.11850/2023
Ex.P15 was executed towards alleged loan transaction of
brother of accused and it was repaid by brother of accused in
the year 2018 and by misusing the cheques given by brother
of accused false case was filed.
27. Accused in his cross-examination has admitted
that he and his family members had executed Ex.P15 and he
knows the contents of the same. When the accused admits
execution and registration of Ex.P15 and when the
complainant has produced the original registered agreement of
sale, it is burden upon the accused to prove that there was no
sale transaction between the parties referred to in the
agreement of sale and it was executed towards security of
alleged loan.
28. The accused in order to prove his defense he could
have been examined witnesses of the Ex.P15 and remaining
parties thereto at least his brother, but he has failed to
examine his own brother who is one of the parties in the
agreement of sale. Hence, it is held that the complaint has
failed to prove that Ex.P15 was executed towards security of
the alleged loan alleged to have been borrowed by brother of
the accused. Thus, it is held that the accused and his family
members entered into sale agreement with complainant and
two others named in the Ex.P15 for sale of immovable
properties as morefully described in the sale agreement and
under the agreement of sale the accused and his family
24
C.C.No.11850/2023
members received Rs.40,00,000/- towards advance sale
consideration out of sale consideration of Rs.60,00,000/-.
29. It is worth note that as could be seen from the
cheque leaves at Ex.P1 and 2, the cheques were
manufactured/printed on 11.07.2014. When cheques were
manufactured/printed on 11.07.2014 then it could be said
that the accused himself received the cheques after
11.07.2014. When accused himself received cheques after
11.07.2024, the question of giving his blank cheques by his
brother at the time of borrowing loan in the year 2023 when
Ex.P15 was executed is nothing but false story created to
destroy the case of the complainant. Therefore, it is held that
cheques in question were not given in the year 2023 when
Ex.P15 was executed towards security of alleged loan of
brother of accused. Thus, the accused has also failed to
establish that cheques in question were issued towards
security of loan when Ex.P15 was executed.
30. The accused in his cross-examination has deposed
that he came to know filing of this case when he appeared in
the case. The accused has also deposed that he has not filed
any complaint against the complaint for alleged mis use of the
cheques. He has also deposed that he has not taken any
action against his brother who alleged to have given his
cheques to complainant.
25
C.C.No.11850/2023
31. The amount claimed in the case is not a meager
amount. Under the circumstance, no prudent person would
sit idle without taking any legal action against the
complainant for mis-use of his cheques in respect of closed
account either filing criminal case or filing suit for cancellation
of the Ex.P15. From this it could be inferred that Ex.P.1 and
Ex.P.2 were issued by the accused in favour of the
complainant for re-payment of advance sale consideration paid
under the Ex.P15 and additional damages of Rs.10,00,000/-.
32. It is no doubt, the accused along with four of his
family members executed agreement of sale in favour of
complaint and Muzamil and Sunil Ramakrishna in respect of
the family properties. It is true, the accused alone is not liable
to repay the advance sale consideration. It is true, the
accused and his family members who are parties to the
Ex.P15 are also jointly liable to repay the sale consideration
which they received under Ex.P15.
33. But, this is not the defense of the accused that
cheques were issued towards discharge of his liability. If that
was the defense then it could have been accepted the
argument of the learned counsel for the accused that the
accused is not liable to pay the entire advance sale
consideration with damages as claimed in the case. When the
accused has voluntarily issued the cheques for repayment of
of advance sale consideration paid under the Ex.P15 and
additional damages of Rs.10,00,000/- in the panchayath held
26
C.C.No.11850/2023
in favour of the complainant, now the accused cannot contend
that he is not liable to pay the entire advance sale
consideration which was paid under agreement of sale in
favour of accused and his family members. The accused has
every right to recover whatever the amount spent and to be
paid to the complainant towards agreement of sale from his
remaining family members, who are also parties to the
agreement of sale, in accordance with law.
34. The Hon’ble High Court of Karnataka between The
Bidar Urban Co-operative Bank Ltd., v/s Mr.Girish‘s case
reported in ILR 2021 KAR 2437 has held that – The penal
provision of Section 138 of NI Act, is applicable only to the
cheques which are issued for the discharge in whole or in part, of
any debt or other liability, which according to Explanation must
be a legally enforceable debt or other liability. A cheque given in
discharge of a time barred debt will not constitute an
unconditional understanding or promise in writing either
expressly or impliedly so as to attract the criminal offence under
Section 138 of NI Act – A Cheque given in discharge of a time
barred debt will not constitute a promise in writing not even an
implied promise so as to attract a criminal liability under Section
138 of NI Act”.
35. Now, legal and material point that would arises for
consideration is that whether cheques in question were issued
towards time barred debt?
27
C.C.No.11850/2023
36. It is no doubt, as per contents of Ex.P.15 the
agreement of sale, the sale deed shall be executed within 20
months from the date of agreement by receiving balance sale
consideration. It is true, as per Article 54 of Limitation Act, the
relief of specific performance has to be enforced within 3 years
from the date fixed for performance. It is true, neither the
complainant nor his friends have filed any suit for seeking relief
of specific performance based upon Ex.P.15. When this case was
filed and when the alleged cheques were issued, the time was
lapsed for enforcing relief of specific performance as per Ex.P.15.
37. The Hon’ble Supreme Court in case of Videocon
Properties Ltd Vs. Dr.Bhalchandra Laboratories, reported in
(2004) 3 SCC 711 at page 720, was pleased to observe that, the
buyer’s charge engrafted in clause (b) of subsection (6) of Section
55 of the Transfer of Property Act would extend and enure to the
purchase money or earnest money paid before the title passes
and property has been delivered by the seller to the purchaser,
on the seller’s interest in the property unless the purchaser has
improperly declined to accept delivery of property or when he
properly declines to accept delivery — including for the interest
on purchase money and costs awarded to the purchaser of a suit
to compel specific performance of the contract or to obtain a
decree for its rescission. The principle underlying the above
provision is a trite principle of justice, equity and good
conscience. The charge would last until the conveyance is
executed by the seller and possession is also given to the
28
C.C.No.11850/2023
purchaser and ceases only thereafter. The charge will not be lost
by merely accepting delivery of possession alone. This charge is a
statutory charge in favour of a buyer and is different from
contractual charge to which the buyer may become entitled to
under the terms of the contract, and in substance a converse to
the charge created in favour of the seller under Section 55(4)(b).
Consequently, the buyer is entitled to enforce the said charge
against the property and for that purpose trace the property even
in the hands of third parties and even when the property is
converted into another form by proceeding against the
substituted security, since none claiming under the seller
including a third party purchaser can take advantage of any plea
based even on want of notice of the charge. The said statutory
charge gets attracted and attaches to the property for the benefit
of the buyer the moment he pays any part of the purchase
money and is only lost in case of the purchaser’s own default or
his improper refusal to accept delivery. So far as payment of
interest is concerned, the section specifically envisages payment
of interest upon the purchase money/price prepaid, though not
so specifically on the earnest money deposit, apparently for the
reason that an amount paid as earnest money simpliciter, as
mere security for due performance does not become repayable
till the contract or agreement gets terminated and it is shown
that the purchaser has not failed to carry out his part of the
contract, and the termination was brought about not due to his
fault, the claim of the purchaser for refund of earnest money
deposit will not arise for being asserted.
29
C.C.No.11850/2023
38. Further, the Hon’ble Supreme Court in case of Delhi
Development Authority Vs. Skipper Construction Co. (P) Ltd.,
reported in (2000) 10 SCC 130 at page 139 was pleased to
observe that, an effect of the provisions subsection (6) of Section
55 of the Transfer of Property Act. That section starts with the
words: “In the absence of a contract to the contrary”, and reads
thus (insofar as it is material for our purpose): 55. (6)(b) The
buyer is entitled–
(a)***
(b) unless he has improperly declined
to accept delivery of the property to a
charge on the property, as against the
seller and all persons claiming under
him, to the extent of the seller’s
interest in the property, for the
amount of any purchase money
property paid by the buyer in
anticipation of the delivery and for
interest on such amount; and, when
he properly declines to accept the
delivery, also for the earnest (if any)
and for the costs (if any) awarded to
him of a suit to compel specific
performance of the contract or to
obtain a decree for its
rescission.”(emphasis supplied).
30
C.C.No.11850/2023
39. From the above provision it is clear that, in the
absence of a contract to the contrary, the buyer will have a
charge on the seller’s interest in the property which is the
subject matter of the sale agreement insofar as the purchase
money and interest on such amount are concerned, unless the
buyer has improperly declined to accept delivery. The charge is
available against the seller and all persons claiming under him.
This charge in favour of the buyer is the converse of the seller’s
charge under Section 55(4)(b). The buyer’s charge under this
section is a statutory charge and differs from a contractual
charge which a buyer may be entitled to claim under a separate
contract.
40. When a statutory charge is created for the unpaid
purchase money under section 55(6)(b) of Transfer of Property
Act, automatically Article 62 of Limitation Act alone would come
into play. Hence, as per Article 62 of Limitation Act, suit for
refund of advance amount can be filed within 12 years and not
required to be filed within three years, since Article 54 of
Limitation Act would apply for relief of Specific Performance. In
this case, the cheques in questions were issued within 12 years
from the date of execution of the agreement of sale at Ex.P.15.
Hence,it is held that, the amount covered under the cheques at
Ex.P.1 and Ex.P.2 is not time barred debt.
41. Further, it is worth to note here that, the Rule of
equity and justice requires that, if in fact money has been paid by
the complainant and his friends to the accused and his family
31
C.C.No.11850/2023
members under an agreement not otherwise unlawful, accused
should pay back amount to the complainant even if for some
reason the contract as such is not enforceable. The law
safeguards against any unlawful enrichment at the cost of a
party and provides for restitution in all such cases.
42. For the above reasons, it is held that the accused has
failed in rebutting the presumption which favours the
complainant. In view of the aforesaid discussions, it is held that
the complainant has proved that the accused has issued two
Cheques bearing No.076097 and 076096 for Rs.20,00,000/- and
Rs.30,00,000/- dated 16.11.2022 and 31.10.2022 respectively
drawn on Axis Bank, Mandya Branch in favour of the
complainant towards discharge of lawful dues to the
complainant. Hence, Point No.1 is answered in the
AFFIRMATIVE.
POINT Nos.2 AND 3:
43. These two points are taken up together for common
discussion to avoid repetition of facts.
44. It is relevant to note here that, only proving of
existence of legally recoverable debt is not suffice to convict the
accused for the offense punishable under section 138 of N.I.Act.
In addition to this, the complainant has also to satisfy the
following ingredients:-
32
C.C.No.11850/2023
1. That the complainant has presented the
said cheuqe for encahsment within its validity
period;
2. That the said Cheque has been returned
unpaid for want of sufficient funds in the account of
the accused;
3. That the complainant has issued statutory
notice demanding the amount covered under the
Cheque to the accused within the stipulated period
of 30 days form the date of receipt of notice of
dishonour of Cheques in question;
4. That the accused has failed to comply with,
the demand notice issued, within the statutory
period of 15 days from the date of receipt of such
statutory notice; and
5. That the complaint has been presented
within the period of one month after expiry of 15
days from the date of receipt of statutory notice
issued to the accused as provided under section
142 of N.I.Act.
45. It could be seen that Cheques at Ex.P1 and 2 have
been presented within its validity period. The said Cheques were
returned as dishonored with an endorsement dated 13.12.2022
and 02.12.2022 as “ACCOUNT CLOSED” as could be seen at
Ex.P3 and Ex.P.4.
46. The complainant has got the demand notice on
28.12.2022 at Ex.P5 issued within stipulated period of 30 days
from the date of receipt of intimations of dishonor of Cheques. It
33
C.C.No.11850/2023
is evident from Ex.P.14 that the notice issued to the accused was
returned with unserved as “UNCLAIMED” as per shara dated
11.01.2023.
47. When the notice issued to the accused to his correct
address returned with postal shara “UNCLAIMED” then as per
Section 27 of the General Clauses Act, the Court shall presume
that accused has been duly served with notice. The said
presumption is a rebuttable one. In order to rebut the said
presumption, the accused has to prove that notice was not sent
to his proper and correct address as such he was not served with
notice. The accused has not raised any technical defense. It is
not the defense of the accused that he was not served with the
notice and notice was not sent to his correct address. Since
accused has not taken any defense with regard to service of
notice, it is held that accused has been duly served with demand
notice.
48. It is evident from the file that the complainant has
presented the present complaint on 10.02.2023 i.e., within the
period of one month after expiry of 15 days from the date of
return of the legal notice.
49. From the above documentary evidence, it is held that
in this case all the ingredients of section 138 of N.I Act have been
complied with.
34
C.C.No.11850/2023
50. In view of the aforesaid discussions, in the considered
opinion of this court, the complainant has proved the point No.2
and 3. Therefore, the Point No.2 and 3 are answered in the
AFFIRMATIVE.
Point No.4:
51. On going through the entire oral and documentary
evidence on record, the conduct of the accused goes to show that
he has issued the Cheques in question at Ex.P1 and 2 even by
knowing that his account is in-operative. From this it could be
said that the intention is to defraud the complainant and to
escape from his liability to pay the Cheques amount, the accused
has intentionally issued the cheques in question, though the
account itself in-operative.
52. Regarding the quantum of compensation, Section 143
of NI Act is inserted by the Negotiable Instruments (Amendment
& Miscellaneous Provisions) Act, 2002 with effect from
06.02.2003. Thus from the date on wards, even the Judicial
Magistrate First Class may pass sentence exceeding Rs.10,000/-.
In view of conferring of special jurisdiction or power on this Court
in the matter of awarding sentences by inserting Sec.143 of
Negotiable Instruments Act the limitation stipulated prescribed in
Sec.29 (2) of Cr.P.C. is obviated. In this connection, it is proper to
place reliance of the ratio laid down by Hon’ble High Court of
Karnataka in 2006 (3) Kar.L.J 649 between Mrs. Shaila P.
35
C.C.No.11850/2023
Prabhu v/s Nagendra K. Mallya & Anr, wherein at Para No.7 it is
held that:-
“Section 143 of the Negotiable Instruments Act
is inserted by the Negotiable Instruments
(Amendment and Miscellaneous Provisions) Act,
2002 with effect from 6-2-2003. Thus, from that
date onwards, even the Judicial Magistrate First
Class may pass sentence of fine exceeding Rs.
5,000/-. In view of conferring of the special
jurisdiction or powers on the Magistrate of First
Class in the matter of awarding sentences by
inserting Section 143 of N. I. Act, the limitation
stipulated in Section 29(2) of Cr.P.C. is obviated.
Similar provisions are also incorporated in Section
12 of the Essential Commodities Act, Section 36 of
the Drugs and Cosmetics Act and Section 21 of the
Prevention of Food Adulteration Act (these instances
are only illustrative and not exhaustive). Thus, it is
clear that even the Magistrate of First Class may
impose fine exceeding Rs.5,000/- for the offence
punishable Under Section 138 of N. I. Act, after the
aforesaid amendment.”
53. In the instant case, accused issued Cheques in
question to the complainant towards repayment amount which
was received by him along with his family members under the
agreement of sale as an advance sale consideration of
Rs.40,00,000/- plus Rs.10,00,000/- damages for delay of
repayment but, he has failed to keep up his promise which
amounts to unjust enrichment for which complainant is to be
compensated. Hence, having been considering the aforesaid
aspects and also in view of foregoing answer on Point No.1 to 3,
36
C.C.No.11850/2023
the accused is liable to be punished under section 138 of N.I.Act.
Considering the length of the case, amount under the Cheques,
rate of interest at the rate of 9% p.a., from the date of issuance of
the cheques, the cost of expenses of the litigation and time spent
by the complainant, this Court is of the view that it is proper to
impose fine of Rs.55,10,000/- out of which Rs.55,00,000/- shall
be payable to the complainant as compensation and remaining
Rs.10,000/- towards State. Accordingly, this court proceeds to
pass the following:-
ORDER
Acting under section 255(2) of Cr.P.C, the
accused is convicted of the offense
punishable under section 138 of Negotiable
Instrument Act, 1881.
Accused is sentenced to pay fine of
Rs.55,10,000/- (Rupees Fifty Five Lakhs and
Ten Thousand Only), in default to undergo
simple imprisonment for Six months.
Further, it is ordered that out of fine
amount of Rs.55,10,000/-, Rs.55,00,000/-
(Rupees Fifty Five Lakhs Only) shall be
payable to the complainant as compensation
and the remaining amount of Rs.10,000/-
(Rupees Ten Thousand Only) shall be payable
towards State.
37
C.C.No.11850/2023
Supply free copy of the judgment to the
accused forthwith.
The bail bond and surety bond dated
12.12.2023 stands canceled.
(Dictated to Stenographer directly on computer, computerized
by him, corrected and then pronounced by me in the open
court on this the 4th day of March, 2026)
(LAVANYA.H.N)
LII ADDL. C.J.M., BENGALURU.
ANNEXURE
WITNESSES EXAMINED ON BEHALF OF THE
COMPLAINANT/S:
PW-1 : SRI.MOHAN KUMAR.R.
DOCUMENTS EXHIBITED ON BEHALF OT THE
COMPLAINANT/S:
Ex.P-1 & 2 Two Cheques dated 16.11.2022 and 31.10.2022
respectively.
Ex.P-3 & 4 Bank Memos.
Ex.P-5 Notice dated 28.12.2022.
Ex.P-6 to 13 8 Postal Receipts.
Ex.P-14 Returned Postal Cover.
Ex.P-15 Registered Sale Agreement.
Ex.P-16 Registered General Power of Attorney.
WITNESSES EXAMINED ON BEHALF OF THE ACCUSED/S:
DW.1 : SRI.SHRAVAN KUMAR.H.M.
38
C.C.No.11850/2023
DOCUMENTS EXHIBITED ON BEHALF OF THE ACCUSED/S:
Ex.D.1 : Axis Bank Statement of accused.
(LAVANYA.H.N)
LII ADDL. C.J.M., BENGALURU.
Digitally
signed by
LAVANYA H N
LAVANYA
Date:
HN 2026.03.05
11:40:42
+0530
