Bangalore District Court
Navi Finserv Ltd vs Jayraj Arun Singh on 22 April, 2026
KABC030055112025
IN THE COURT OF THE XXV ADDL. CHIEF JUDICIAL
MAGISTRATE, AT BANGALORE CITY
Dated this the 22nd day of April 2026
Present : SRI. GOKULA. K
B.A.LL.B.
XXV Addl. Chief Judicial Magistrate,
Bangalore City.
C.C.No.3158/2025
Complainant : Navi Finserv Ltd,
Formerly known as Chaitanya Rural
Inter mediation Development Services
Pvt. Ltd.,
Navi Finserv Ltd,
2nd floor, Vaishnavi Tech Square
Iballur village, Begur Hobli
Bengaluru
Karnataka 560 102.
Rep.by Manaswini Malladi
Authorized Signatory.
(By AS - Advocate )
V/s
Accused : Jayraj Arun Singh
H.NO.59, Flat NO.302, GREG
Apartment,
Church Rd.
Opp Urban Co Op S O C
Kumbharwada,
Manickpur
Palagh, MH 401 202.
(By SR - Advocate )
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C.C.No.3158/2025
Plea of accused: Pleaded not guilty
Final Order: Accused is convicted
Date of judgment : 22.04.2026
JUDGMENT
The complainant has filed the complaint under Section
223 of Bharathiya Nagarika Suraksha Sanhitha 2023 against
the accused for the offences punishable under Section 25 of The
Payment and Settlement Systems Act 2007 r/w Section 138 of
Negotiable Instruments Act.
2. The brief case of the complainant is as under:
That the complainant is a non banking organization doing
business of lending finance to its customers. The accused has
availed E NACH loan facility from the complainant agreeing to
abide all terms and conditions to repay the same with interest
and executed E NACH Loan Agreement No.10005743153 in
favour of the complainant. The complainant sanctioned loan of
Rs.1,00,000/- and said loan is to be repaid with interest at ROI
in 14 monthly installments of Rs.9,300/-p.m. It is pleaded that
towards repayment of liability, the accused executed E NACH
Mandate drawn from his account with Federal Bank bearing
UMRN No.FDRL7020701242000143 for limit of RS.1,00,000/-
in favour of the complainant to the extent of due payable
assuring to honour the same when it is presented / processed
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C.C.No.3158/2025for realization. The complainant has processed E-NACH
mandate through his banker HDFC Bank Koramangala for a
sum of INR 52,800/- and on processing said E NACH Mandate
bearing UMRN No.FDRL7020701242000143 is returned
dishonored with remarks “Balance Insufficient” on 10.10.2024.
It is pleaded that on receipt of said intimation, the complainant
got issued legal notice on 06.11.2024 through registered post
and demanded to pay the amount dishonored under E-NACH
Mandate. The notice is duly served on the accused on
09.11.2024. Inspite of issuance of notice, the accused failed to
pay the claim amount to the complainant with in the statutory
time. Therefore, the accused has committed the offence 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.
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.1375/2025 and recorded sworn
statement of the complainant and got marked 8 documents as
Ex.P1 to Ex.P.8. 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
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C.C.No.3158/2025
of the complaint is served to the accused along with the
summons as contemplated under Section 230 of Bharathiya
Nagarika Suraksha Sanhita.
4. The substance of the acquisition as provided Section 274
of Bharathiya Nagarika Suraksha Sanhita is read over to the
accused and his plea is recorded. The accused has pleaded not
guilty and claimed to be tried. As per the directions of Hon’ble
Supreme Court in Sanjabij Vs Kishore S Borcar and another
reported in 2025 SCC Online SC 2069, questions are put to the
accused and his response is recorded and considering the
response of the accused and submissions of both parties trial is
converted to summons trial.
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 evidence of the complainant is on record.
Hence, the incriminating circumstances in the evidence of the
complainant is read over to the accused and he has denied the
same as false. The statement of the accused as required
U/s.351 of BNSS is recorded. On the application of the accused
PW 1 is recalled for cross examination. But PW 1 has not
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C.C.No.3158/2025
appeared for cross examination. The complainant has got the
evidence of PW1 discarded and examined another representative
as PW 2 and got marked the documents as Ex.P.1 to Ex.P.13.
At this stage, the accused deposited the E-NACH processed
amount of Rs.52,800/- through Demand draft bearing
No.004382 dt.10.04.2026 drawn on Axis Bank, Bangalore
before this court. The accused has submitted that he has
admitted the liability and deposited entire claim amount in the
complaint and claimed for acquittal. The learned counsel for
the complainant submitted that he is not having instruction
from the complainant to withdraw the case even on deposit of
NACH Amount and complainant is claiming for payment of
entire due amount in the loan account for withdrawal of
complaint.
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 beyond
reasonable doubt that the accused issued E-
NACH mandate for a sum of Rs.1,00,000/-
drawn on Federal Bank in favour of
complainant and it is returned dishonoured
on processing for collection to the
outstanding amount of Rs.52,800/- through
HDFC Bank Koramangala with remarks
“Balance Insufficient” on 10.10.2024 and
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C.C.No.3158/2025
inspite of service of demand notice dated
06.11.2024 on 09.11.2024 the accused has
not paid the amount with in the statutory
time and thus the accused committed an
offence punishable under Section 25 of The
Payment and Settlement Systems Act 2007
r/w Section 138 of Negotiable Instruments
Act.?
2. Whether the complainant is entitled for
compensation and how much ?
3. What Order or sentence ?
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-2 and in her evidence
affidavit she has reiterated the averments made in the
complaint. To prove the incorporation of the company the PW 2
has produced the web copy of the Certificate of Incorporation as
Ex.P1. As per Ex.P 1 the complainant is a Public Limited
company registered under Companies Act. The PW 2 has
produced the web copy of Authorization letter as Ex.P.2. As per
Ex.P 2 the PW2 is authorized to represent the complainant
company and prosecute the accused. These documents prove
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C.C.No.3158/2025
the legal status of the complainant as a Company and authority
of PW 2 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.
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C.C.No.3158/2025
(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.
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)
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C.C.No.3158/2025
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 within the period of 15 days after receipt of the
demand notice. The Payment and Settlement Systems Act 2007
does not prescribe any time limit to file the complaint. Therefore
it is necessary to apply provisions of Section 142 of The
Negotiable Instruments Act. Therefore the complainant shall
present the complaint within a month after expiry of 15 days of
service of notice to the accused. Therefore it is proper to
consider whether the statutory requirements for constituting
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.
11. The PW 2 has deposed that the accused availed accused has
availed E NACH loan facility from the complainant agreeing to
abide all terms and conditions to repay the same with interest
and executed E NACH Loan Agreement No.10005743153 in
favour of the complainant. The complainant sanctioned loan of
Rs.1,00,000/- and said loan is to be repaid with interest at ROI
in 14 monthly installments of Rs.9,300/-. The complainant has
produced the loan agreement with summary of loan as Ex.P 11
and statement of accounts as Ex.P 12. The PW 2 has deposed
that towards repayment of liability, the accused executed E
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C.C.No.3158/2025
NACH Mandate bearing UMRN No.FDRL7020701242000143
drawn on Federal Bank in favour of the complainant. The web
copy of NACH is marked as Ex.P4.
12. The PW 2 has deposed that the complainant has processed
the Mandate for sum of Rs.52,800/- for realization through
their banker i.e HDFC Bank, Koramangala Branch, Bengaluru
and said NACH Mandate returned dishonored on 10.10.2024 for
the reason “Balance Insufficient”. The PW 1 has produced said
debit transaction return memo as Ex. P5. As provided under
Section 25(4) of The Payment and Settlement Systems Act and
also under Section 146 of Negotiable Instruments Act law
presumes that on production of banker slip or memo having
thereon the official mark denoting that the cheque/ electronic
fund transfer has been dishonored, presume the fact of
dishonor of such said cheque, unless and until same is
disproved. The accused has not disputed the dishonour of
NACH mandate. The PW2 has deposed that they have got issued
legal notice dated 06.11.2024 calling upon the accused to pay
the due amount as per Ex.P6. The said notice is duly served on
the accused on 09.11.2024. Evidencing the same the
complainant has produced the postal receipt and web copy of
postal track consignment as Ex.P7 and Ex.P8. Inspite of
issuance of notice, the accused failed to pay the claim amount
to the complainant with in the statutory time. Therefore cause
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C.C.No.3158/2025
of action arose for prosecution on 24-11-2024. The complaint is
filed before this court on 20.12.2024 within the statutory
period. 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
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C.C.No.3158/2025
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 submitted no cross examination
of PW 2 and no defence evidence and deposited the entire NACH
dishonoured amount by admitting his 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. 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.
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14. POINT NO 2 : The accused appeared before the court and
deposited Rs.52,800/- through Demand draft bearing
No.004382 dated 10.04.2026 drawn on Axis Bank , Bangalore
and it is kept in deposit in Cr.C.D. In this scenario it is proper
to rely on the decision of Hon’ble Supreme court in Sanjabij Vs
Kishore S Borcar and another reported in 2025 SCC Online SC
2069, In this decision Hon’ble Supreme court in para 38 and
39 has laid down following guidelines –
(a) If the accused pays the cheque amount
before recording of his evidence (namely defence
evidence), then the trial court may allow
compounding of the offence without imposing
any cost or penalty on the accused.
(b) ….
39. This court is of the view that if the accused
is willing to pay in accordance with the aforesaid
guidelines, the court may suggest to the parties
to go for compounding. If for any reason, the
financial institutions/ complainant asks for
payment other than the cheque amount or
settlement of entire loan or other outstanding
dues, then the Magistrate may suggest to the
accused to plead guilty and exercise the powers
under Section 255(2) and /or 255(3) of CrPC or
278 of BNSS, 2023 and /or give the benefit
under the Probation of Offenders Act 1958 to
the accused.
15. In this case, after the accused appeared, he is released on
bail and on the same day plea of the accused recorded. As the
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C.C.No.3158/2025
affidavit is considered as evidence under Section 145 of NI Act,
the statement of the accused have been recorded. The PW 2 also
recalled for cross examination. At this stage the accused has
proposed for payment of NACH dishonoured amount. But The
complainant has submitted that even on deposit of NACH
amount , the case cannot be withdrawn. Hence, the accused
has deposited the NACH dishonured amount before this court.
In this case evidence of the accused is not recorded. Therefore
in view of the guidelines in the above referred case the accused
is not liable for any further cost or penalty. As the complainant
has not agreed for compounding, as per the guidelines of
Hon’ble Supreme Court, the accused can be released on
Probation.
16. As provided under Section 3 of Probation of Offenders Act,
if the offence punishable with imprisonment for not more than
two years, or with fine, or with both, court can release the
accused on probation. For release of the accused under Section
3 of Probation of Offenders Act it is not necessary to obtain the
report of Probation officer as required under Section 4 of
Probation of Offenders Act. The offence under Section 25 of
PASS Act or under Section 138 of NI Act is punishable with
imprisonment which may extend to two years. Therefore, by
applying the guidelines of Hon’ble Supreme Court, provisions of
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C.C.No.3158/2025
Section 3 of Probation of offenders Act can be invoked to the
case on hand.
17. As provided under Section 5 of Probation of offenders Act
court directing the release of an offender under section 3 or
section 4, may, if it thinks fit, make at the same time a further
order directing him to pay such compensation as the court
thinks reasonable for loss or injury caused to any person by the
commission of the offence. Therefore, in view of such provision
of law, the NACH dishoured amount deposited by the accused
for a sum of Rs.52,800/- can be paid to the complainant as
compensation for the offence committed by the accused.
Therefore this court answers the Point No. 2 in the Affirmative.
18. 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 278(2) of
Bharathiya Nagarika Suraksha Sanhita 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.
By exercising powers under Section 3 of Probation of
Offenders Act 1958, the accused is released on admonition.
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By exercising powers under Section 5 of Probation of
Offenders Act 1958, the deposited NACH dishonored amount by
the accused for Rs.52,800/- (Rupees Fifty Two Thousand Eight
Hundred Only) is ordered to be paid as compensation to the
complainant. The complainant shall credit the compensation
amount to the outstanding loan dues in the loan account of the
accused.
Supply free copy of the judgment to the accused.
The accused is set at liberty.
Office to release entire compensation amount to the
complainant by following due procedure.
The bail bond and surety of the accused stands canceled.
[[(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 22nd day of April , 2026).
(GOKULA.K)
XXV A.C.J.M., BANGALORE CITY.
ANNEXURE
LIST OF WITNESSES EXAMINED FOR THE COMPLAINANT:
PW1 : Joseph Moses Parambi PW2 : Manaswini Malladi
LIST OF DOCUMENTS MARKED FOR THE COMPLAINANT:
Ex.P1 : Web copy of Incorporation Certificate
Ex.P2 : Web copy of Authorization letter
Ex.P3 : Bank Certificate
17
C.C.No.3158/2025Ex.P4 : NACH
Ex.P5 : Return Memo
Ex.P6 : Office copy of legal notice
Ex.P7 : Postal receipt
Ex.P8 : Web copy of Postal track consignment
Ex.P9 : Certificate U/s.63 of BSA
Ex.P10 : True copy of authorization letter of PW1
Ex.P11 : ecopy of Loan Agreement
Ex.P12 : e copy of Statement of Accounts
Ex.P13 : Certificate U/s.63 of BSALIST OF WITNESSES EXAMINED FOR THE ACCUSED:-
Nil
LIST OF DOCUMENTS MARKED FOR THE ACCUSED:-
Nil
(GOKULA.K.)
XXV A.C.J.M., BANGALORE CITY.