Bangalore District Court
Aditya Birla Finance Ltd vs Vijay Shankar Mishra on 4 January, 2025
KABC020331242021
IN THE COURT OF THE XXII ADDL. JUDGE, COURT OF
SMALL CAUSES AND ADDL. CHIEF JUDICIAL
MAGISTRATE, BENGALURU CITY (SCCH-24).
Presided Over by Smt. Roopashri, B.Com., LL.B.,
XXII ADDL., SCJ & ACJM,
MEMBER - MACT,
BENGALURU.
Dated: On this the 4th day of January 2025,
CC NO.11596/2021
1. Sl.No. of the Case : C.C.No.11596/2021
2. The date of : 02-12-2021
commission of the
offence
3. Name of the : M/s Aditya Birla Finance Ltd.,
Complainant Having its office at
No.1(78), Star Avenue,
6th cross,
Victoria Layout, Victoria road,
Bangalore -560025.
Represented by its Authorized
Representative
Mr.Anand R
Aged about 34 years
(By Sri.Rajendra Prasad N.C
Advocate)
4. Name of the Mr. Vijay Shankar Mishra
Accused C/o 204, Siri Ram Paradise,
18th cross, 2nd B main,
SCCH-24 2 C.C.11596/2021
Behind BMTC Bus depot 33,
Poorna Prajana Layout,
Bangalore South,
Subramanyapura,
Bangalore -560061.
Also at
Mr. Vijay Shankar Mishra
Bagmane World Technology
Center,
Marathalli ring road,
Doddanakhundi, Bangalore
Karnataka -560048.
(By Sri. Syed Akber Pasha,
Advocate)
4. The offence complained : Under Section 138 of the
of or proves Negotiable Instrument Act.
5. Plea of the accused and : Pleaded not guilty.
his examination
6. Final Order : Acquitted.
7. Date of such order for : 04-01-2025
the following
JUDGMENT
This complaint is filed under Sec. 200 of Cr. P. C.
for the offence punishable under Section 138 of the
Negotiable Instruments Act.
2. It is the case of the complainant that: The
accused had requested for loan and the complainant
SCCH-24 3 C.C.11596/2021
had sanctioned the personal loan of Rs.20,00,000/- on
20-06-2019 in loan account No.ABFLBANPL00000
5484. The accused had agreed to repay the loan
amount as per the repayment schedule and he had
entered into an agreement bearing
No.ABFLBANPL0000054843. Under the contract sum of
Rs.2,00,000/- was due and payable by the accused.
Towards the said due, the accused had issued cheque
No.721401 dated 20-09-2021 for Rs.20,00,000/- drawn
on CITI Bank, N.A., Bengaluru, in favour of the
complainant towards repayment of loan. When
complainant presented the cheque for collection
through his banker i.e INDUSIND Bank T C Palya Road
Branch, Bengaluru, same was returned with an
endorsement ‘Account closed’ on 23-09-2021.
Thereafter, the complainant got issued legal notice to
the accused on 16-10-2021 and same was returned
with shara “UNCLAIMED’ on 22-10-2021 and 26-10-
2021. The accused has failed to repay the loan amount.
Accordingly, the accused has committed an offence
punishable under Sec.138 of N.I Act, hence, the
complaint.
3. After recording the sworn statement of the
complainant and also verifying the documents,
cognizance was taken against the accused for the
SCCH-24 4 C.C.11596/2021
offence punishable under Sec. 138 of N.I. Act. The
accused on receiving the summons appeared before this
Court through his counsel and was enlarged on bail
and his plea was recorded. The accused pleaded not
guilty and claimed to be tried. Hence, the case was
posted for evidence of the complainant.
4. The complainant got examined himself as PW.1,
and got marked documents as Exs.P1 to 10. Then, the
case was posted for recording the statement of accused
under Sec.313 Cr.P.C. In the statement U/s 313
Cr.P.C., the accused has denied all the incriminating
evidence appearing against him and claimed to be tried.
The accused has examined himself as DW.1 and got
marked documents as Ex.D1 to Ex.D4 and closed his
side. Hence, the case was posted for arguments.
5. Heard the arguments on both side and pe-
rused the records.
6. The following points arise for my consideration:
1. Whether the complainant proves
that accused have committed an
offence punishable under Sec.138
of N.I. Act?
2. What order?
SCCH-24 5 C.C.11596/2021
7. My findings on the above points are as under
Point No.1 : In the Negative
Point No.2 : As per final order,
for the following:
-: R E A S O N S :-
8. POINT NO.1:- This is a private complaint filed
under Section 200 of Cr.P.C. for the offence punishable
under Section 138 of N.I. Act.
9. It is the case of the complainant that,
towards the discharge of personal loan of
Rs.20,00,000/, the accused has issued cheque
No.721401 dated 20-09-2021 for Rs.20,00,000/- and
when the cheque was presented for encashment, same
was returned with an endorsement “Account closed” on
23-09-2021. Though this fact was brought to the notice
of the accused by issuing legal notice but accused has
failed to repay the cheque amount.
10. In order to substantiate the contention, the
complainant finance company got examined its
authorized signatory as Pw1 and got marked in all 10
documents as ExP1 to Ex.P10. If the documents
produced by the complainant are perused, ExP1 is the
SCCH-24 6 C.C.11596/2021
letter of authority, ExP2 is the cheque. The accused
nowhere has disputed the cheque which relates to his
account. It is deposed by Pw1 that cheque in question
was issued by the accused for discharge of liability. The
cheque in question was presented by the complainant
through his banker which was returned with a memo as
per ExP3 stating ‘Account closed’. Hence, they got
issued legal notice to the accused through RPAD, which
is produced at Ex.P.4. The postal receipts are marked at
Ex.P.5 and 6. The postal covers are marked at Ex.P.7
and 8. The scanned copy of Loan account statement is
marked at Ex.P.9. The Certificate u/Sec.65B of Indian
Evidence Act is marked at Ex.P.10.
11. The accused has taken the defence that at no
point of time, he had applied for loan in the
complainant company and he never visited the
complainant company and never signed any loan
agreement for the purposes of taking loan, that the
official of complainant company by name Manjunath
colluding with one Stephen John and Raghavendra
approached the accused and other colleagues who are
working at Emphasis in the month of June 2019 and
asked them to invest money in the business of
Stephen John to get high returns and promised that
SCCH-24 7 C.C.11596/2021
they themselves get approved the loan by borrowing the
profiles of accused and promised that they will pay the
loan amount and in that way they have taken 32
cheques and signature on several papers including loan
agreement form of several banks. The accused was not
aware of any transaction made by the aforesaid three
persons and it is only when the amount was credited to
his account, he came to know that the above said three
persons have obtained personal loans from 8 entities in
single time of sum of Rs.20,00,000/-each total
amounting to Rs.1,53,00,000/- in his name and
withdrawn the said amount through cheques which
they have already taken from the accused. It is the
further case of the accused that just an eye wash, the
aforesaid persons themselves have paid EMI for few
months and stopped paying EMI amount. Immediately,
the accused approached Chandra Layout Police Station
and lodged complaint in Cr. No.02/2021 for committing
fraud under Sec.420 R/W 34 of IPC and Sec.21 of
Banning of Unregistered Deposit Schemes 2019 and the
said case was referred to CCB and after investigation
filed charge sheet in Special CC No.129/2022 wherein
accused here in was cited as witness No.49. It is further
submitted that when the salary of accused was
Rs.1,00,000/- during the month of April and May 2019,
SCCH-24 8 C.C.11596/2021
the complainant company cannot have issued personal
loan of Rs.20,00,000/- which is against the RBI rules.
The accused has already availed home loan from Canfin
Finance of Rs.25,00,000/- in the year 2015 and it was
pending in his name hence he was not entitled for loan.
The complainant company colluding with the others
committed scam by passing loan; hence there is no
legally enforceable debt to be discharge. It is further
submitted that accused has not given the cheque in
question for discharge of legally enforceable debt as
claimed by them. It is further stated that if accused had
obtained loan and defaulted in payment then
complainant company must show how much of loan
was sanctioned, what is the monthly EMI, how many
EMI the accused had paid and what is the outstanding
balance. But, neither in the complaint nor in the legal
notice there is any mention about the aforesaid facts. It
is further stated that as per the own agreement of the
complainant, they have obtained two cheques at the
time of execution of agreement, one cheque No.721397
for first EMI amount and another cheque No.721398
towards security purpose but the cheque now presented
is bearing No. 721401 and same is not mentioned in the
loan agreement that means complainant has more
number of cheques than mentioned in the agreement.
SCCH-24 9 C.C.11596/2021
12. In order to substantiate the defence, the
accused has examined himself as DW.1 and three
documents are got marked as Ex.D.1 to D4.
13. If the evidence of PW.1 and DW.1 is perused,
the accused has not disputed the Ex.P3 which relates to
his account so also his signature in the Ex.P.3.
14. At the outset the accused has denied the loan
transaction held by him in the complainant company
and the cheque as per Ex.P3 issued by him towards
discharge of the said debt. When accused has admitted
the cheque relates to his account so also his signature
in the Ex.P.3, presumption shall be drawn that cheque
in question is issued towards discharge of debt. Now it
is for the accused to rebut the presumption by
probabilising his defence.
15. The accused by cross examining the PW.1
has tried to impress upon the court that though he is
not eligible to get loan from the complainant company
but the Manager of complainant company in collusion
with Mr Stephan Jone has sanctioned excess loan.
SCCH-24 10 C.C.11596/2021
16. It is not in dispute that accused is a software
engineer and working in IT Company. As per the own
case of the accused, at the time of disputed loan
transaction, there was other loan transaction pending
in different entities and housing loan of Rs.25,00,000/-
availed by him during the year 2015 was also pending.
It is vehemently argued by the learned counsel for
accused that the complainant company without
checking the Cibil score of the accused, against to the
RBI rules has sanctioned Rs.20,00,000/- when the
salary of the accused at that time was only
Rs.1,00,000/- and the bank cannot sanction loan in
excess of 8 times of the salary amount of the loan
applicant, hence submitted that the complainant
company in collusion with Stephen John has created
the loan documents.
17. In the light of the defence taken by the
accused, if the document placed by the accused marked
as Ex.D.1 i.e., charge sheet filed in Special CC
No.129/2022 is perused, wherein the accused herein
was cited as witness No.49. IN the ExD1 at page No.69,
there is reference about the different banks from which
loan was sanctioned to the accused i.e loan from AXIS
Bank, ICICI, IDFC, HDB, Standard Chartered, YES
SCCH-24 11 C.C.11596/2021
Bank, Adithya Birla etc. If the sanctioned loan amount
from different banks referred above is calculated it
comes around Rs.1,59,65,000/-. But, it is not made
known by the accused when exactly the loan amount
was sanctioned from the other entities whether it is
prior to the present disputed loan transaction or
subsequent there to. So far as the complainant
company violating the RBI rules by sanctioning loan
amount exceeding the financial status of the loan
applicant is concerned, if the bank authority failed to
follow the RBI guidelines and failed to check the Cibil
score while lending loan, the bank can face the
consequences and accused can file a complaint with the
RBI if he believes that bank has violated the RBI
guidelines. Credit scores determine payment behavior
based on the applicants financial history and this helps
the lender to understand the credit worthiness of the
borrower. Hence, merely because the complainant
company has not followed the RBI guidelines while
sanctioning loan, the accused cannot on that ground
escape from the liability of repaying the loan amount.
18. The learned counsel for accused in further
has referred about the Arbitration award as per Ex.D.3
passed against the accused and submitted that when
SCCH-24 12 C.C.11596/2021
already arbitration proceedings is initiated against the
accused, the accused cannot be prosecuted for the
same offence or same transaction twice which is hit by
Sec.300 of Cr.P.C.
19. If Ex.D.3 is perused, it is true that, in respect
of the disputed loan transaction, arbitration
proceedings was initiated against the accused and
award was passed on 29.12.2022 directing
respondent/accused to pay Rs.19,06,080/- with future
interest at 18% p.a. But the present complaint is filed
under Sec.138 of NI Act. Complaint under Sec. 138 of
NI Act can be filed even if an arbitration award has been
passed on same loan transaction. Sec. 138 of NI Act
penalizes the dishonor of cheque. Arbitration is a formal
process for resolving disputes using a neutral third
party. A complaint under Sec. 138 of NI Act can be filed
even if a civil suit has been initiated for recovery. Hence,
the mere facts that arbitration proceeding has already
been initiated against the accused in which award has
been passed, on that ground it cannot be said that
complaint filed by the complainant under Sec. 138 of NI
Act is not maintainable and is hit by Sec. 300 of Cr.P.C.
SCCH-24 13 C.C.11596/2021
20. So far as the rest of the defence taken by the
accused, in order to probabilise the said defence, the
learned counsel for accused has cross examined the
PW.1 at length regarding the involvement of
complainant company with Stephan Jone in the scam of
money laundering and several persons were cheated by
the complainant bank in the similar way in which
accused was cheated. It is the definite case of the
accused that he has not submitted any loan application
and no loan amount was sanctioned to him, instead Mr.
Stephan Jone and the officials of complainant bank
colluding together have transferred the said amount to
the account of Stephan Jone. It is the suggestion posed
to the PW.1 that the accused had paid 15 loan
installments. By posing suggestion to the effect accused
has admitted the loan transaction and his liability to
repay the balance loan amount.
21. If the statement of account is perused, there is
an entry regarding payment of loan installment for some
months by the accused. If really the accused has not
availed loan from the complainant bank there was no
necessity for him to pay the loan installment for any of
the month.
SCCH-24 14 C.C.11596/2021
22. Further if the evidence in chief and cross
examination of Dw1 is perused, it is the evidence of
Dw.1 that the aforesaid Stephan John approached him
and asked him to invest money in the business run by
Stephen John and promised that in case if accused
invest money in the business of Stephen John, he will
give profit to the accused and also return the invested
amount with interest within 4 to 5 years. Since the
accused did not have money at that time, he did not
invest the money in the business of Stephen John. The
Stephen John again approached him and told the
accused that if accused give consent, he will apply for
loan and accordingly Stephen John collected 32
cheques and other documents like Xerox copy of Aadhar
card, PAN card and Salary slip. It is admitted by DW.1
that on 27.06.2019 sum of Rs.20,00,000/- was
deposited to his account but he came to know of the
deposit of said amount after nearly 10 days of said
deposit. As per the evidence of DW.1, there was
negotiation held between him and Stephen John to the
effect that Stephen John is borrowing loan from the
complainant company in the name of accused and
Stephen John himself will pay the EMI and for the
borrowing of loan in the name of accused, Stephen
John agreed to pay interest to the accused on the
SCCH-24 15 C.C.11596/2021
invested amount. It is admitted by DW.1 that in the
transaction held between him and Stephen John, the
officials of Complainant Company are not parties and
they have not participated in the negotiation held
between Stephen John and accused. It is admitted by
DW.1 that EMI amount was transferring from the
account of accused. The accused having deposed so in
further has deposed that Stephen John used to transfer
the amount from his account to the account of accused
towards EMI and the said amount was transferring from
the account of accused to the company account.
According to the DW.1, Stephen John had paid 8 EMI’s
and accused had paid two EMI’s amounting to
Rs.45,251/- each. If really, accused has not borrowed
money from the complainant company, there was no
necessity or obligation on the part of the accused to
pay the EMI amount. The very fact that accused
himself has given consent to borrow loan from the
complainant company to the tune of Rs.20,00,000/- so
as to invest the said amount in the business of Stephen
John and the very fact that said amount was credited to
the account of the accused and the fact that accused
had paid monthly installment of some period, so also
the fact that disputed cheque relates to the account of
the accused and it bears the signature of accused
SCCH-24 16 C.C.11596/2021
which facts clearly proves that accused had borrowed
sum of Rs.20,00,000/- from the complainant. It is
further relevant to states here that accused in his cross
examination has admitted that he had obtained
moratorium relief from the complainant company and
admitted that by granting additional time for repayment
of loan amount moratorium relief was given. It is
deposed by DW.1 that he had taken 6 months
additional time as moratorium relief to repay the loan
amount. From the aforesaid evidence also it can be
gathered that accused has admitted his liability to
repay the loan amount. If accused had not borrowed
money from the complainant company by executing
loan documents and if he had no liability to repay the
said loan amount, then he would not have asked for
moratorium relief for extension of time to repay the
loan amount.
23. The evidence given by Dw1 to the effect that
Stephen john asked the accused to invest money in
his business assuring to pay profit on the invested
amount and to return the invested amount with
interest and assured to repay the loan amount by
himself and since accused did not have money at that
time, with the consent of accused Stephen john applied
SCCH-24 17 C.C.11596/2021
for loan in the complainant company in the name of
accused by collecting documents from the accused and
borrowed money from the complainant company and
the loan amount of Rs.20,00,000/- was credited to the
account of accused etc itself clearly reveals that the
accused hand in glove with Stephan Jone filed loan
application and got the loan amount released in his
favour only for the sake of investing it in the business of
Stephan Jone and to earn profit from it. It appears that
after the accused invested the money borrowed from
the complainant company in the business of Stephan
Jone by transferring the amount to the account of
Stephen Jone, since Stephen Jone failed to pay
interest/profit to the accused as promised by Stephan
Jone, the accused turned against Stephan Jone.
Though the accused has stated that without his
knowledge the loan amount credited to his account was
transferred to the account of Stephan Jone but accused
has not lodged any complaint either against Stephan
Jone or against the then bank Manager of the
complainant company. When accused had made serious
allegation that he was cheated by Stephan Jone and the
complainant bank, under such circumstances the
accused could have taken appropriate legal action
against the complainant bank and Stephen Jone.
SCCH-24 18 C.C.11596/2021
According to the accused the loan amount was credited
to his salary account and from the salary account the
amount was transferred to the account of Stephan
Jone. It is deposed by Dw1 that when the loan amount
was credited to his salary account, he has not received
any messages to his mobile number and it is when he
logged in to his account at that time he came to know
about the loan amount credited to his account. But this
court cannot believe the said version of the accused
because when accused is a IT employee and when his
Aadhar is linked to his account, under such
circumstances, whenever the bank transaction held in
the account of the accused message defiantly will
come to the mobile of the accused. Hence there is
every reason to believe that the loan amount credited
to his account and there after the said amount was
transferred to the account of Stephen John was well
within the knowledge of the accused and if really the
accused had no role in the said loan transaction and
really he was duped by Stephen John and company
officials, then at the right time the accused could have
taken steps against the complainant company and also
against Stephen john but till this date he has not taken
any such steps. The accused having not taken any such
steps and kept mum for all these period and now takes
SCCH-24 19 C.C.11596/2021
the defence that complainant company in collusion
with Stephan Jone cheated him, hence he is not liable
to pay the loan amount.
24. Now at this juncture, it would to be relevant
to go through the Ex.D1. The learned counsel for
accused has referred Ex.D1 to prove that Stephan Jone
has cheated not only the accused but also several other
persons by availing loan and that in that regard case
was registered against Stephan Jone.
25. If the Ex.D1 is perused, it is true that on the
basis of the complaint lodged by one Sathish D J
criminal case was registered against Stephan Jone and
one Ramakrishan and after investigation charge sheet
was filed against them. In the said charge sheet the
accused herein was cited as witness no. 49. If the
charge sheet is carefully perused, the accused herein
who is witness no.49 in Ex.D1 has borrowed loan from
8 banks in all to the tune of Rs.1,59,65,000 /- and all
the said amount was invested by witness no.49
/accused herein in Stephen Trading company of
Stephen john.
SCCH-24 20 C.C.11596/2021
26. When accused has relied upon Ex.D1 he has
to accept the said document in its entirety. Hence, from
the Ex.D1 so also from the evidence of DW.1 it can be
gathered that as Stephen Jone asked the accused to
invest money in the company of Stephen Jone, the
accused by borrowing money from different entities
including the complainant company, invested the said
loan amount in the company of Stephen Jone to earn
profit and after investing the said amount in the
company of Stephen Jone, the said Stephen Jone failed
to part with the profit and thereby cheated the accused
and several other persons who are all well qualified . It
appears that with an intention to earn money with
immediate effect without striving hard , the accused
even though is well qualified and even though has
worldly knowledge invested the money borrowed from
the complainant company in the company of Stepeh
Jone and duped from the hands of Stephen john and
for the said act of the accused company will not be held
responsible.
27. When loan amount is transferred to the
account of accused there is no reason to believe that the
accused has not applied for loan.
SCCH-24 21 C.C.11596/2021
28. At the cost of repetition the accused bent
upon stated that the complainant company by its
official and Stephen Jone have played fraud on him. It
is true that case is registered against Stephen Jone as
per Ex.D1 but there is no case registered against the
then manager of complainant bank. At first Stephen
Jone is not the employee of Complainant Company.
Even if it is taken for a while for the sake of discussion
that Stephen Jone has played fraud on the accused but
it has nothing to do with the complainant bank. The
accused may have get loan from the complainant
company at the recommendation of Stephen Jone for
the purpose of investing in the business of Stephen
Jone and stepeh Jone may have cheated the accused by
not parting with the profit and not returning the
invested money but when complainant company is no
way concerned to the said transaction of accused with
Stephen Jone and when admittedly loan amount was
transferred to the account of the accused and when
admittedly Ex.P3 relates to the account of accused and
when it is proved that signature in the Ex.P3 is the
signature of accused, under such circumstances there
is legal liability cast upon the accused to discharge the
balance loan amount after deducting the 15
installment paid by the accused.
SCCH-24 22 C.C.11596/2021
29. From the aforesaid materials it can be said that
accused himself has borrowed money from the
complainant bank and it is also admitted fact that
ExP3 relates to his account so also his signature , now
the question to be decided is whether accused has
issued disputed cheque for the discharge of loan
amount of Rs 20,00,000/- on the date mentioned in the
said cheque. The learned counsel for the accused at
the outset while disputing the loan of Rs 20,00,000/-
borrowed by the accused has also disputed the fact of
cheque in question issued by the accused towards
discharge of cheque amount . The learned counsel for
the accused by relying upon the evidence of Pw1 so also
the line of cross examination done to the Dw1 has
vehemently submitted that when accused stated to
have paid 15 monthly installments amounting to
Rs.4,64,606/- and when as per the statement of
account of complainant company the pending
installment amount was Rs.14,45,936/-, under such
circumstances the complainant ought to have
presented the cheque for the balance amount by
deducting the installments for a period of 15 months
paid by the accused, instead the complainant
company have presented the cheque for the whole
SCCH-24 23 C.C.11596/2021
alleged loan amount of Rs 20,00,000/-. It is further
submitted that the complainant company by misusing
the blank signed cheque given by the accused to
Stepphen john has presented the said cheque. The
learned counsel at this juncture has referred section 56
of the NI Act and also the judgment rendered in
Criminal Appeal NO 1497 of 2022 between Dashrthabai
Trikambhai Patel / Hitesh Mahendrabhai Patel and
another. The learned counsel in further has much
argued about the non disclosure of material loan
particulars either in the legal notice or in the complaint
or in the evidence in chief of the Pw1.
30. In the light of the argument canvassed by the
leaned defense counsel if the evidence placed on record
is perused, though the statement of account discloses
the payment of 15 loan installments and the said fact
has even been deposed by Pw1 but if the averments of
complaint, legal notice and the evidence in chief of
PW.1 is perused, nowhere in the complaint, legal notice
and evidence, the complainant has stated, what was
the loan amount sought by the accused, the rate of
interest charged on the loan, the tenure of loan,
regarding EMI, the total EMI paid by the accused and
the balance amount due by the accused etc. In the
SCCH-24 24 C.C.11596/2021
complaint, it is vaguely stated that accused has availed
loan but has failed to repay the loan and towards the
discharge of which the accused has issued the disputed
cheque. The PW.1 during his cross examination has
admitted that they have not given any particulars
regarding the aforesaid material aspects either in their
complaint or in the legal notice, but deposed that they
have produced statement of loan account and it gives
all the particulars of loan transaction, When accused
has contested the case in tooth and nail and
categorically contended that he is not liable to pay the
amount in the cheque, under such circumstances it is
for the complainant to prove that as on the date of the
issuance of disputed cheque, the accused was due of
the cheque amount and it has to be proved with cogent
materials. If the statement of account produced by the
complainant is perused, it does not disclose that as on
20/9/2021 the accused was due of Rs.20,00,000/- It is
not made known by the complainant company as to
how the accused was due of Rs.20,00,000/- when he
had already paid 15 monthly installment amount, It is
not made known what was the rate of interest charged
on the loan amount. The complainant neither has
produced the loan application nor the loan agreement.
Merely because accused has not disputed his cheque
SCCH-24 25 C.C.11596/2021
and signature, it does not mean that complainant has
proved the case beyond reasonable doubt. When
accused has questioned the case of the complainant on
the ground that he is not due of the loan amount
stated in the disputed cheque, under such
circumstances the complainant ought to have
produced the material documents to prove the case of
the complainant. As observed supra even if complainant
had produced the statement of loan account but it does
not disclose what is the principal loan amount due and
what is the interest charged on the arrears of loan
amount and what is the total sum due by the accused
as on the date of issuance of disputed cheque. Nothing
prevented the complainant from producing the reliable
document to prove the loan amount due as on the date
of issuance of disputed cheque. Since complainant has
not produced the material documents which goes to the
root of the case of complainant. Taking in to
consideration all the aforesaid facts and evidence it can
be said that complainant has not proved that accused is
due of the cheque amount. If the defense taken by the
accused is considered, it clearly reveals that
complainant has misused the blank signed cheque of
the accused taken at the time of loan availed by the
accused and filled the amount in the cheque
SCCH-24 26 C.C.11596/2021
according to their convenience even though there is no
proper loan account maintained by them. In a
judgment relied by the learned counsel for the accused
rendered by Hon’ble High court of Karnataka Dharwad
Bench decided on 5th March 2019 in Criminal Appeal
NO 2772 /2010 Lahu and Dhanji Rao Ramachandrq
Haibati. In the said case the Hon’ble High court
confirmed the order of acquittal of accused. In the said
case the complainant has not mentioned the particulars
of transaction in the complaint, even purpose of
borrowing money by accused is also not mentioned but
it is mentioned only at the time of leading evidence.
Even date of lending money also not mentioned and he
has not produced any document in support of the case.
Under the given set of facts it was held that
complainant has failed to prove the guilt of the accused
and accordingly acquitted the accused. The observation
made in the aforesaid judgment is squarely applicable
to the case in hand.
31. So far as the presentation of cheque for
entire loan amount without making any endorsement
regarding the part payment of loan amount is
concerned, it was observed in criminal Appeal NO
1497 /2022 by the hon’ble supreme court that ”
SCCH-24 27 C.C.11596/2021
there is statutory presumption that the sum drawn in
the cheque is a debt or liability that is owned by the
drawer of the cheque to the drawee . The part payment
made by the first respondent ought to have been
reflected in the statutory notice issued by the
complainant. The sum in the cheque is higher than the
amount that was due to the complainant. Thus the
statutory notice issued under section 138 is not valid. It
is an omnibus notice since it did not recognize the part
payment that was made. It was further observed that
the term debt or other liability used in section 138 of
the Act means legally enforceable debt or other liability.
Thus the demand made in the statutory notice must be
for a sum that is legally enforceable. If the debtor has
paid part of the debt, a statutory notice seeking the
payment of entire sum I the cheque without any
endorsement under section 56 of the part payment
made would not be legally sustainable and since
accused has paid off a part of the debt, the
complainant cannot initiate action if the cheque which
represented the principal amount without deducing or
endorsing a part payment has been dishonored.
32. Section 56 of the Act provides that: No writing
on a negotiable instrument is valid for the purpose of
SCCH-24 28 C.C.11596/2021
negotiation if such writing purports to transfer only a
part of the amount appearing to be due on the
instrument, but where such amount has been partly
paid a note to that effect may be indorsed on the
instrument, which may then be negotiated for balance.
33. The Division bench of Kerala High Court in
Joseph Sartho / Gopinathan in (2008) 3 KLJ 784 has
held that ” Since the representation in the cheque was
for a sum higher than the amount that was due on the
date that it was presented for encashment the drawer of
the cheque cannot be convicted for the offence under
section 138 of the Act.
34. In Alliance Infracture Project Ltd / Vinay
Mittal reported in ILR (2010) III Delhi 459 it was
observed by Hon’ble High court that “when part
payment is made after the cheque is drawn, the payee
has the option of either taking a new cheque for the
reduced amount or by making an endorsement on the
cheque acknowledging that a part payment was made
according to the provisions of section 56 of the Act. It
was also held that the notice of demand which requires
the drawer of the cheque to make payment of the whole
amount represented in the cheque despite receiving
SCCH-24 29 C.C.11596/2021
part payment against the sum before the issue of
notice, cannot be valid under section 138(b) of the
Act.
35. In Ciminal Appeal No 1497 of 2022 referred
by the learend counsel for accused it was observed
that when the aprt payment is made after the cheue is
drawn, the payee has the option either taking a new
cheque for the reduced amount or by making an
endorsement on the cehque acknowledging that a part
payment was made according to the provisions of
section 56 of the Act. It was also held that notice of
demand which requires the dawer of the cheque to
make payment of the whole amount represented in the
cheque despite receiving part payment against the
sum , before the issue of notice can not be valid under
section 138(b) of the Act.
36. If the observation made in the aforesaid
rulings is applied to the case in hand, though the
accused has received loan from the complainant
during the year 2019 but he had made part payment
of debt before the cheque was presented but such
payment was not endorsed on the cheque under
section 56 of the act and even in the notice said fact
was not whispered. Hence as on the date of issuance of
SCCH-24 30 C.C.11596/2021
notice the sum stated there in was not the legally
recoverable debt but it was much lesser than the said
amount. The complainant ought not to have presented
the cheque for encashment without recording the par t
payment. Hence section 138 of NI Act would not attract
since Cheque does not represent legally enforceable
debt at the time of encashment of the loan amount. The
sum represented in the cheque was not legally
enforceable debt on the date of maturity.
37. The learned defense counsel in further has
much disputed the competency of Mrs. Shwetha PM to
lodge the complaint on behalf of the complainant and
also Mr. Anand R to prosecute the proceedings on
behalf of the company. It is vehemently submitted by
the learned counsel for accused that Mrs. Shwetha PM
and Anand R were not having authority to represent
the complainant as there was no resolution passed by
the company authorizing them to file the complaint
and to represent the company
38. In the back ground of the aforesaid defense
taken by the accused, if the documents produced by
the complainant is perused, ExP1 is the letter of
authority dated 10/1/2023 given to the Pw1.
SCCH-24 31 C.C.11596/2021
Admittedly the complaint was lodged by Mrs Shwetha
PM as the authorized representative. The complaint
bears the signature of Mrs. Shwetha. The letter of
Authority alleged to be given to Mrs. Shwetha PM,
though its notarized copy has been produced but same
has not been marked as exhibit. If the said letter of
authority given to Mrs. Shwetha PM which is in the case
file is perused, it is dated 5/7/2021. The learned
counsel for the complainant by referring the said
documents has submitted that as per the said letter
of authorities both Mrs. Shwetha PM and Anand M
were authorized by the company to represent the
company as Authorized Officer and Authorized
Representative.
39. Though the Pw1 has produced Letter of
Authority as per ExP1 to prove that he was authorized
by the company to represent the company, but there is
no Board Resolution as such placed to prove that
there was board Resolution passed authorizing Mrs.
Shwetha and Mr Anand R to represent the company
so as to sign the complaint, to present the complaint
and to give evidence . In the ExP1 and in the letter of
authority given to Mrs Shwetha PM there is reference
about the Power of Attorney dated 16/3/2015 and by
SCCH-24 32 C.C.11596/2021
virtue of the said Power of attorney Mr. Rakesh Singh as
the constituted Attorney authorized Mrs. Shwetha PM
to represent the company but admittedly, the
complainant has not produced the Power Attorney
dated 16/3/2015 one referred in the ExP1 to prove that
Rakesh Sing was conferred with the power to represent
the company and he was authorized to sub delegate the
power given to him to any other person. It is further
relevant to state here that in order to sub delegate the
power to some other person, there must be specific
mention in the resolution passed by the directors of the
company. The learned counsel for complainant has
submitted that they have produced the Xerox copy of
the board resolution and it is in the case file. At first
Xerox copy of the document has no evidentiary value in
the eye of law unless the Xerox copy of the document
is confronted to the witness during their cross
examination and same has been admitted by them.
Even if for the sake of discussion the Xerox copy of the
board resolution which is in the case file is taken in to
consideration, the said board resolution is dated
4/8/2021. As per the said Board Resolution the
persons mentioned there in were authorized to
represent the company as authorized officer and
authorized representatives of the company. In the list of
SCCH-24 33 C.C.11596/2021
persons mentioned in the said Board Resolution is
perused, we do not find the name either of Mrs.
Shwetha PM or of Pw1 i.e Anand R. It is true that in
the said Board Resolution we find the name Shwetha
M but the name of the person who presented the
complaint is Mrs Shwetha PM and there is no reason
to believe that Mrs. Shwetha PM who has lodged the
complaint herself is the person mentioned in the Board
Resolution as Shwetha M. Further there is no mention
of the name Ananda M. Further the complainant has
relied upon ExP1 and the notarized copy of the Letter
of Authority (un exhibited) to prove that both Mrs
Shwetha PM and Anand R to represent the case as
the authorized person. The letter of authorities referred
by the complainant are of the year 2023 and 2021
respectively and said letter of authorities were given
based on the power of authority conferred to one
Rakesh Singh by virtue of power of attorney deed dated
16/3/2015 and Pw1 and Shwetha PM have
represented the case on the basis of the said power
conferred to them by Rakesh singh. Hence, when
complainant and Pw1 admittedly have not produced
any document to prove that company Directors have
authorized said Rakesh Singh to sub delegate the
power, under such circumstances it can be said that
SCCH-24 34 C.C.11596/2021
the complaint lodged by Mrs. Shwetha PM and the
evidence given by Anand R are without any authority
and they have no locus standi to represent the
complainant company.
40. Now at this juncture it would be relevant to
refer here the ruling reported in ILR 2014 KAR 2186
Between CRFF Finance Limited Kolkata / Sree Shanthi
Homes Private Limited Bangalore and Another. In the
said the person who has signed the complaint had no
authority in law to represent the company as there is
no resolution by the company authorizing him to file
the complaint . In the said case it was further held that
“the Board of Directors of the company collectively
entitled to exercise the powers and to do the acts on
behalf of the company. Section 291 of the companies
Act confers authority to the Board of Directors
collectively. Therefore if a complaint is to be filed , it is
necessary for the Board of Directors to authorize any
person to file a complaint or to depose to the facts in a
case and such an authority could be granted by the
Board of Directors only under a Resolution. Company
is a juristic person and any person on behalf of the
company has to be authorized by the company under
SCCH-24 35 C.C.11596/2021
Articles of Association or by a separate Resolution to
depose on behalf of the company.
41. In 2023 LiveLaw (SC) 121:Mita India Pvt., Ltd.,
Vs. Mahendra Jain wherein it was observed that the
General Power of attorney cannot delegate powers to
another person but the same can be delegated when
there is a specific clause permitting sub- delegation. In
the said case, it was contended by the accused that the
complaint was not filed by the person authorized and
that the person who has given the power of attorney to
the complainant had no authority of law to sub-delegate
the said power to the authorized representative. In the
said case, the company in its meeting of the Board of
Directors has resolved to appoint one of its directors as
its attorney of the company who was specially
authorized to appoint special attorney and accordingly
he has given authorization letter to lodge the complaint
to some other person and accordingly the authorized
person lodged the complaint. Under the given set of
facts it was observed that “the law is settled that though
the General Power of Attorney cannot delegate his
powers to another person but the same can be delegate
when there is a specific clause permitting sub-
delegation.
SCCH-24 36 C.C.11596/2021
42. It means only if there is specific clause in the
document permitting sub delegation then only
authorized representative can sub delegate otherwise
not.
43. In AC Narayanan Vs. State of Maharashtra
and Anr., reported in (2014) 11 SCC 790 the Hon’ble
High Court through the said decision has laid down the
following principals
” i) Filing of a complaint under Section
138 Negotiable Instruments Act, 1881
through power of attorney holder is
perfectly legal provided he has due
knowledge about the transaction (s) in
question;
ii) Power of attorney holder can depose
and verify on oath to prove the contents
of the complaint if he has witnessed the
transaction;
iii) The complaint filed through power of
attorney holder must contain an
assertion/ that he had the knowledge
about transactions in question;
iv) Functions under General power of
attorney cannot be delegated to another
SCCH-24 37 C.C.11596/2021
person without a specific clause
permitting the same in the general power
of attorney.
v) The affidavits of complainant, his
witnesses or his power of attorney holder
are permissible and sufficient for taking
cognizance on the compliant; and
vi) The complaint by power of attorney
holder on behalf of the original
complainant is maintainable though he
cannot file a complaint in his own name”.
In the aforesaid case also it was clearly
observed that functions under General
power of attorney cannot be delegated to
another person without a specific clause
permitting the same in the general power
of attorney.
44. In 1998 Cri.LJ 419: Satish and Company Vs.
S.R Traders & Ors., It was held that the complaint filed
by Manager of company having no proper authorization
to file the complaint such complaint is not
maintainable. Referring to the facts of the said case it
was further observed that “The Manager being an
employee of the company is deemed to be authorized to
file the complaint. But the powers of the Manager are
SCCH-24 38 C.C.11596/2021
slightly different from that of the Managing Director of
the company. A Managing Director may derives his
powers from the articles of association directly or for
certain other Acts may be authorized to do so but in
case of Manager such powers may be traced either
through his appointment order or through specific
authorization given to him regarding particular aspect
or aspect of the business. It is quite common that there
are purchase managers entitled to make only purchases
and there are sales managers authorized only to sell
the commodities ect., Therefore, on the basis of
designation it cannot be inferred that he has all the
powers of the company or firm including the power to
file the complaint. The designation “Manager does not
clothe a person with all the powers to file a suit and
defend the suit or file a complaint on or behalf of the
company.
45. In (1994) Crl.LR 2374 between Sudesh Kumar
Vs. Selvamani the Hon’ble Madras High Court has held
that a person who is competent to file a complaint
u/Sec.138 of Act must be a payee or holder in due
course. It further held that by no stretch of imagination,
a Manager can be said to be a payee or holder in due
SCCH-24 39 C.C.11596/2021
course. Therefore, unless there is specific authorization,
complaint filed by such Manager was in competent.
46. In M/s Tri Krosaki Refractoriness Ltd., Vs
M/s Sms Asia Private Limited it was held that, “the
manner in which complaint is drafted may vary from
case to case and would also depend on the skills of the
person drafting the same which by itself, cannot defeat
a substantive right. However, what is necessary to be
taken note of it as to whether the contents as available
in the pleading would convey the meaning to the effect
that the person, who has filed the complaint, is stated
to be authorized to claims to have knowledge of the
same. In addition, the supporting documents which
were available on the record by themselves demonstrate
the fact that an authorized person, being a witness to
the transaction and having knowledge of the case had
instituted the compliant on behalf of the “payee”
company and therefore, the requirement of Section 142
of NI Act was satisfied. If at all, there is any serious
dispute with regard to the person prosecuting the
complaint not being authorized or if it is to be
demonstrated that the person who filed the complaint
has no knowledge of the transaction and, as such that
person could not have instituted and prosecuted the
SCCH-24 40 C.C.11596/2021
complaint. It would be open for the accused to dispute
the position and establish the same during the course
of the trial.
47. As per Section 142 (1) of the Act, no court
shall take cognizance of any offence punishable under
Section 138 except upon a compliant in writing made by
the payee or as the case may be the holder in due
course of the cheque.
48. In the present case as observed supra, there
is no document to prove that company had given
authority to Sri Rakesh Singh either through
resolution of the board of directors of the company or
memorandum of Articles or such powers are given
either in the appointment order to represent the
company and was provided with power to sub delegate
the function so as to file the complaint by Mrs.
Shewtha on behalf of the company. As the complainant
has failed to show that Mrs. Shewtha and Anand R
were authorized to proceed and prosecute the present
case, it can be said that complaint filed by Mrs.
Shwetha is without any authority and is not
maintainable. Hence, on that count itself the complaint
is liable to be dismissed and accordingly accused is to
be acquitted.
SCCH-24 41 C.C.11596/2021
49. In the light of the observation made in the
aforesaid judgment, coming to the case in hand, it is
true that the accused has admitted that the disputed
cheque relates to his account so also his signature but
has taken the defense that disputed cheque was taken
by the complainant at the time of loan transaction and
as on the date of presentation of disputed cheque there
was no legally enforceable debt. Now after considering
the entire materials placed on record it can be said that
there is every possibility of the complainant taking the
disputed signed cheque as security at the time of
sanctioning the loan amount and there after presented
the said cheque by filling the amount to suit their case.
The materials placed on record probalised the defense
taken by the accused as to how the cheque has reached
the hands of the complainant company and there by
rebutted the presumption raised under section 139 and
118 of NI Act.
50. In the light of the discussion made herein
above, this court is of the considered opinion that
complainant has failed to prove that accused has issued
disputed cheque for the arrears of loan amount. Hence
the complainant has failed to prove that accused has
committed offence punishable under Section 138 of
SCCH-24 42 C.C.11596/2021
Negotiable Instruments Act. Accordingly, I answer point
No.1 in the Negative.
51. POINT No.2 :- In the light of the reasons on the
point No.1 and 2, I proceed to pass the following;
ORDER
Acting under Sec. 255 (1) of Cr.PC,
the accused is not found guilty of the
o/p/u/s 138 read with section 142 of
NI Act.
The bail and surety bond of the
accused and surety shall stand
cancelled.
(Dictated to the stenographer directly on computer, corrected and
then pronounced by me in open court, on this the 4th day of January
2025.)
(ROOPASHRI)
XXII Addl.SCJ & ACJM
Bengaluru.
:ANNEXTURE:
LIST OF WITNESSES EXAMINED ON BEHALF THE
COMPLAINANT
P.W.1 : Mr.Anand. R
SCCH-24 43 C.C.11596/2021LIST OF DOCUMENTS MARKED ON BEHALF OF COMPLAINANT:
Ex.P.1 : Notarized copy of Letter of authority
Ex.P.2 : Cheque
Ex.P.2(a) Signature of the accused
Ex.P.3 : Bank memo
Ex.P.4 : Legal notice
Ex.P.5 and 6 : Postal receipts
Ex.P.7 and 8 : Notice returned covers
Ex.P.9 : Scanned copy of Statement of loan
account
Ex.P.10 : Section 65-B of Indian Evidence Act
certificateLIST OF WITNESSES EXAMINED BY THE ACCUSED
DW.1 Mr.Vijay Shankar Mishra
LIST OF DOCUMENTS MARKED ON BEHALF OF ACCUSED:
Ex.D.1 : Certified copy of charge sheet filed in
Spl CC No.129/2024
Ex.D.2 : Certified copy of the judgment passed
in CC No.57176/2021
Ex.D.3 : True copy of Arbitration award
passed in Arbitration case No.3/338
dated 30-12-2022.
Ex.D.4 : Statement of account for the period
from 01.01.2014 to 16.10.2020.
XXII Addl. SCJ & ACJM
Bengaluru.