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Bangalore District Court
Chandan K vs Mysore Sales International Ltd Rep By … on 23 July, 2025
KABC010095442023
Presented on : 06-04-2023
Registered on : 06-04-2023
Decided on : 23-07-2025
Duration : 2 years, 3 months, 17 days
IN THE COURT OF LXVI ADDL CITY CIVIL & SESSIONS
JUDGE, BENGALURU CITY (CCH-67)
PRESENT
SRI. JAYAPRAKASH A.
B.A.L., L.L.M.,
LXVI Addl. City Civil & Sessions Judge,
Bengaluru (CCH-67)
Dated this the 23rd day of July, 2025
Crl.Appeal.No.459/2023
APPELLANT/S Chandan.K.
S/o Sri.Kodandarama,
Aged about 32 years,
R/at No.3/19, Ganesh Nilaya,
3rd A Cross, BDA Layout,
Ittumadu, Banashankari III Stage,
Bengaluru South, Bengaluru.85.
(By Sri.H.B.Neela, Advocate)
V/s.
RESPONDENT/s:- Mysore Sales International Ltd.,
MSIL House, No.36,
Cunningham Road,
Bengaluru 560 052.
Chit Fund Division,
Malleshwaram Branch,
Bengaluru 560 003.
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Cri.A.No.459/2023
Rep by its Foremen,
Authorised Signatory
Smt.Saroja.T.C.
(By Sri.KSV, Advocate)
JUDGMENT
The appellant / accused has filed appeal under section
374(3) of Code of Criminal Procedure challenging the judgment
dated 07/03/2023 passed in C.C.No.22556/2019 on the file of
XXVIII ACMM, Bangalore.
2. The appellant is the accused and respondent is the
complainant before the trial Court. For the sake of convenience
the parties are referred by their ranks before the trial Court.
3. The brief facts of the complainant’s case is that the
complainant is a company incorporated under the Companies Act
and obtained necessary approval/permission form the competent
authority and doing chit business under the provisions of Chit Act
and Chit fund rules. The complainant is represented by its
Foreman, Malleshwaram Branch, Chit Fund Division and its
authorised signatory Smt.Saroja. The complaint has conducted
various chit groups in ordinary course of their business. The
accused had enrolled himself as subscriber to Chit Group
No.KL26/20 for a sum of Rs.25,00,000/- with monthly
subscription of Rs.50,000/- for 50 months commencing from
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Cri.A.No.459/2023
31/01/2015 and ends on 18/02/2019. The accused being
subscriber participated in the auction conducted on 18/05/2016
and being highest bidder chit was confirmed in his name and
company has paid prized amount of Rs.19,34,313/- to the
accused on 13/05/2016. The accused failed to pay the future
installments as agreed by him and when demanded for payment of
dues, towards discharge of dues accused issued cheque bearing
No.372986 dated 29/11/2018 for Rs.9,83,281/- drawn on Axis
Bank limited, Banashankari Branch, Bengaluru. When the
cheque was presented by the complainant for encashment
through its banker Vijaya Bank, Malleshwaram Branch,
Bengaluru same came to be dishonoured with shara ‘insufficient
funds’ on 01/12/2018. The complainant issued legal notice
dated 12/12/2018 calling upon the accused to pay the cheque
amount. Inspite of said legal notice appellant has not repaid the
loan amount. Therefore, the complainant has filed the private
complaint before the learned Magistrate.
4. The trial Court recorded sworn statement of the complainant
by way of affidavit. Thereafter cognizance was taken for the
offence punishable under section 138 of N.I.Act and summons
was issued to the accused. The accused appeared through his
counsel and he has been released on bail. His plea was recorded.
He pleaded not guilty and claimed to be tried. The complainant
got examined himself as PW1 and got marked 18 documents as
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Cri.A.No.459/2023
Ex.P1 to Ex.P18. The accused was examined under section 313
of Cr.P.C. The accused denied all the incriminating evidence
appearing against him but has not chosen to lead any evidence in
support of his defense.
5. After hearing arguments of both sides and considering
materials on record, the trial Court passed a judgment of
conviction sentencing the accused to pay fine of Rs.9,88,281/-
with a direction to pay a sum of Rs.9,83,281/- as compensation to
the complainant and in default to undergo simple imprisonment
for a period of one year.
6. Being aggrieved by the above said judgment the appellant /
accused preferred this appeal on the following among other
grounds:
(i) The learned Magistrate totally erred in convicting the
accused/appellant and accordingly, the judgment and conviction
passed by the trial Court is liable to be set aside.
(ii) The impugned judgment and order of conviction passed by the
learned trial Court is highly arbitrary, perverse, illegal and without
application of mind and the same is liable to be set aside.
(iii) The impugned judgment and order of conviction passed by the
learned trial Court is without appreciating the facts and it is by
giving faulty reasons which suffers lack of judicial approach.
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Cri.A.No.459/2023
(iv) The learned trial Court ought to have noted that there is no
legally recoverable debt or liability, in discharge of which the
cheque in question could have been issued by the
accused/appellant in favour of the complainant.
(v) The learned trial Court ought to have given finding that there
was no legally recoverable debt to be paid by the accused in favour
of the complainant.
(vi) The impugned judgment and sentence passed by the learned
trial Court is opposed to the settled principles of law and the facts
of the case.
(vii) If the impugned judgment and sentence is upheld, it would
cause grave injustice to the accused/appellant and it would
amount to denial of justice and fair trial to the appellant.
(viii) The finding of the trial Court that the accused/appellant was
due to the tune of Rs.9,83,281/- is totally perverse and
accordingly, the finding of the trial Court that the accused was
due to the tune of Rs.9,83,281/- is baseless and it is a fair case of
misuse of process of Hon’ble Court and accordingly the
complainant is to be curbed with awarding appropriate costs to
advance justice.
(ix) The trial Court failed to frame suitable point of dispute even
though framed a point for consideration, but deliberately failed to
make necessary further points, and failed to appreciate the
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Cri.A.No.459/2023
necessary document which rendered into total miscarriage of
justice and the conviction and sentence recorded by the learned
trial Court is totally perverse and does not meet the requirement
of law and accordingly the judgment and conviction passed by the
trial Court is totally perfunctory and in any rate liable to be set
aside.
(x) The address found on the Ex.P.10 do not belong to the
accused. The legal notice is not served on the accused as claimed
in the complaint. Hence, the alleged legal notice sent by the
complainant was not duly served either on him or his family
members. Hence, the complainant has not complied with the
mandatory provision of Section 138(b) of the NI Act. The
complainant has not taken any risk to prove that the legal notice
has been duly served on the accused. Hence, it is just and
sufficient to arrive to the conclusion that the alleged legal notice
were not addressed to the correct address of the accused. Hence,
the claim of the complainant that the legal notice was duly served
on the accused cannot be accepted. The alleged shara found on
the RPAD acknowledgment is concocted for the purpose of this
case with an intention to satisfy the Hon’ble Court for having
complied with the mandatory provisos laid down in Section 138 of
NI Act.
(xi) There is no debt or liability as claimed by the complainant
and the cheque Ex.P.8 is not issued for the due discharge of any
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Cri.A.No.459/2023
debt or liability. Hence, the accused has successfully discharged,
the burden before the Hon’ble Court that there was no debt liable
to be paid by the accused as claimed by the complainant. The
complainant has filled up the blank cheque and has filed the false
complaint knowing fully well that there is no debt or liability and
that the cheque Ex.P.8 is not issued for the due discharge of any
debt much less the alleged debt. This would clearly goes to show
the intention of the complainant in order to make out a wrongful
gain in filing the case. Under these circumstances the accused
has discharged the burden that the complainant has not lent any
money to him as claimed in the complaint. Hence, the question of
discharging the debt or liability by the accused does not arise and
the contention of the complainant that the cheque in question
Ex.P.8 was issued towards the discharge of the debt or liability
cannot be accepted.
(xii) In the chief affidavit as well as cross examination of PW.1
there are number of discrepancies. Hence, the case of complainant
creates doubt with regard to the existence of liability of the
accused to the complainant. When once such evidence is placed
by way of cross examination of {PW.1, then complainant must be
in a position to show the existence of legally recoverable debt as
on the date of issuance of cheque. The complainant has utterly
failed to prove that Ex.P.8 cheque has been issued towards legally
recoverable debt. On the other hand the accused has been
successful in raising probable defence in the mind of Court that
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Cri.A.No.459/2023
Ex.P.8 cheque was not issued by the accused to clear his alleged
debt owed to the complainant.
(xiii) The complainant has utterly failed to prove that Ex.P.8
cheque has been issued towards legally recoverable debt. The
accused has been successful in raising probable defense that
Ex.P.8 cheque has not been given towards legally recoverable debt
or liability. He is not liable to pay any amount to the complainant
and the legal notices were not served on him.
(xiv) The complainant has failed to make out a case against the
accused for the offence punishable under Section 138 of NI Act.
The accused deserves to be acquitted.
On the above among other grounds the appellant / accused
prayed to allow the appeal and to set aside the judgment of Trial
Court.
7. After registering the appeal notice was issued to the
respondent. The respondent appeared through his counsel and
trial Court records were secured.
8. Heard the arguments of learned counsel for the respondent
and perused the materials placed on record. Inspite of sufficient
opportunity the counsel for appellant has neither addressed his
arguments nor filed notes of argument.
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Cri.A.No.459/2023
8. On hearing the arguments and on perusal of the materials
placed before the Court the points that arise for consideration are:
(1) Whether the finding of the trial Court that
the accused failed to discharge the presumption
under section 138 of N.I. Act with probable
defence that the cheque was not issued for
discharge of legally recoverable debt or liability
is justified ?
(2) Whether the finding of the trial Court that
the complainant proved that cheque is issued
towards discharge of legally enforceable debt is
justified ?
(3) Whether the impugned judgment of the trial
Court is capricious and erroneous and liable to
be interfered ?
(4) What order ?
9. My answer to the above points are:
Point No.1: In the Affirmative.
Point No.2 : In the Affirmative.
Point No.3: In the Negative.
Point No.4: As per final order
for the following:
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Cri.A.No.459/2023
REASONS
10. Point No.1 & 2: Since these points are inter-linked with
each other they are taken up together for common discussion in
order to avoid repetition of facts and appreciation of evidence.
11. It is the case of the complainant that the complainant is a
company incorporated under the Companies Act and obtained
necessary approval permission form the competent authority and
doing chit business under the provisions of Chit Act and Chit fund
rules. The complainant is represented by its Foreman,
Malleshwaram Branch, Chit Fund Division and its authorised
signatory Smt.Saroja. The complaint has conducted various chit
groups in ordinary course of their business. The accused had
enrolled himself as subscriber to Chit Group No.KL26/20 for a
sum of Rs.25,00,000/- with monthly subscription of Rs.50,000/-
for 50 months commencing from 31/01/2015 and ends on
18/02/2019. The accused being subscriber participated in the
auction conducted on 18/05/2016 and being highest bidder chit
was confirmed in his name and company has paid prized amount
of Rs.19,34,313/- to the accused on 13/05/2016. The accused
failed to pay the future installments as agreed by him and when
demanded for payment of dues, towards discharge of dues
accused issued cheque bearing No.372986 dated 29/11/2018 for
Rs.9,83,284/- drawn on Axis Bank limited, Banashankari Branch,
Bengaluru. When the cheque was presented by the complainant
for encashment through his banker Vijaya Bank, Malleshwaram
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Cri.A.No.459/2023
Branch, Bengaluru same came to be dishonoured with shara
‘insufficient funds’ on 01/12/2018.
12. In support of the case of the complainant, he got examined
himself as PW1 and has filed his affidavit in lieu of oral evidence.
In his evidence he has testified regarding the transaction,
issuance of cheque towards discharge of liability, subsequent
dishonour of cheque, service of legal notice and failure of accused
to pay the amount. In his further examination he got marked
Ex.P1 to Ex.P18.
13. In the proceeding under section 138 of N.I.Act, the plaintiff
is not required to establish either legality or enforceability of the
debt or liability. He is guarded by the presumption under section
118 and 139 of N.I.Act. By virtue of these presumptions the
accused has to establish that the cheque in question was not
issued towards any legally enforceable debt or other liability and
the burden is upon the accused to rebut the presumption
available in favour of the complainant.
14. In the present case the accused has not disputed Ex.P8
cheque. The factum of dishonour due to “funds insufficient” is
not in dispute. After the service of legal notice, accused has not
repaid the amount within the period of limitation. Therefore the
complainant has discharged the initial burden that was caste
upon him and consequently it is for the accused to rebut the
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Cri.A.No.459/2023
presumption under section 139 of N.I.Act and to show that the
cheque in question was not issued towards any legally enforceable
debt or liability. The accused is required to rebut the presumption
not by plausible explanation but by cogent evidence in support of
his defence.
15. The complainant in support of his case got examined himself
as PW.1 and produced Ex.P.1 certified copy of certificate of
commencement of business, Ex.P.2 is the Memorandum of
Association, Ex.P.3 is the Articles of Association of the
complainant company, Ex.P.4 is the letter of authority, Ex.P.5 is
the ledger account, Ex.P.6 is the Memorandum of interest, Ex.P.7
is the certificate of electronic document, Ex.P.8 is the cheque.
Ex.P.9 is the bank endorsement which indicates that cheque was
dishonured for the reason funds insufficient, Ex.P.10 is the legal
notice wherein the complainant called upon the appellant to pay
the cheque amount, Ex.P.11 is the postal receipt, Ex.P.12 is the
complaint, Ex.P.13 is the application for enrollment, Ex.P.14 is
the chit payment voucher, Ex.P.15 is the request for RTGS
transfer, Ex.P.16 is the identity card of PW.1, Ex.P.17 is the early
payment document, Ex.P.18 is the bank statement.
16. During the cross examination of PW.1 the accused has
disputed the authority of PW.1 to depose before the Court. But
Ex.P.4 indicates that the Managing Director of the complainant
company has issued the letter of authority to PW.1. to file
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Cri.A.No.459/2023
complaint and depose on behalf of the company. However, it is to
be noted that the appellant has not raised any grounds in the
appeal in so for as the letter of authority issued by the
complainant company. Therefore no much discussion is required
in respect of the same.
17. The accused has contended that he has not received the
notice. Ex.P.10(a) is the postal receipt which indicates that
though notice was sent to the accused by RPAD same was not
served on him. Ex.P.11 is the unclaimed notice and the
endorsement on the postal cover indicates that the accused has
not claimed the notice. It is not the case of the accused that the
address shown in the notice is not his address. It is pertinent to
note that as per Ex.P.13 the accused has applied for membership
before complainant company which is a undisputed document.
The address shown in Ex.P.13 and address shown in Ex,P.11 are
one and the same. The available materials on record indicates
that complainant has issued the notice to the correct address of
the accused. Once the complainant issues notice to the correct
address of the accused, it is the burden of the accused to prove
that the said address is not his address.
18. At this juncture it is necessary to go through a judgment of
Hon’ble High Court of Karnataka in Crl.R.P.No.814/2021 in the
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Cri.A.No.459/2023
case of C.Niranjan Yadav Vs D.Ravikumar wherein it is held
that:
” What is to be looked into is, whether the address
of the accused which is known to the complainant
has been properly mentioned on the registered
cover. If it is sent to such registered address,
responsibility of the complainant would end and it
is for the accused to say as to why he could not
receive the cover. Law in this regard is well settled
by decisions rendered by the co-ordinate benches
of this court in the case of Fakirappa Vs
Shiddalingappa and another reported in ILR 2002
KAR 181 and Chikkachowdappa.”
Therefore the contention of the accused that he has not received
the notice cannot be accepted.
19. It is pertinent to note that as per the version of the accused
cheque was issued as a security. Even though cheque was issued
as security, it would attract the provisions of section 138 of N.I.
Act. Therefore the accused has to prove with cogent evidence that
complainant has presented the cheque not for legally recoverable
debt and the accused has failed to prove the same. The fact of
issuance of cheque and the statutory presumption available in
favour of the complainant is not rebutted by the accused.
15
Cri.A.No.459/2023
20. At this juncture it is necessary to go through a ruling
rendered by Hon’ble Apex Court reported in (2016) 10 SCC 458
in the case of Sampelly Sathyanarayana Rao Vs. Indian
Renewable Energy Development Agency Limited wherein it is
held that a post-dated cheque described as ‘security’ in the loan
agreement is dishonoured, the same would be punishable under
section 138 of Negotiable Instruments Act. Since the accused has
taken a contention that he had issued the cheque as security, it
indicates that there was existing liability on the part of the
accused and accused issued the cheque in respect of the same.
Under these circumstances the above ruling is squarely applicable
to the facts of this case.
21. It is the contention of the accused that the amount claimed
by the complainant is not a legally recoverable debt. Except the
said contention the accused has not establsihed his defense that
the claim of the complainant is not a legally recoverable debt. It is
not in dispute that the accused being a member of the
complainant company involved in chit business with the
complainant. Therefore, there are no materials to show that the
amount claimed by the complainant is not a legally recoverable
debt.
16
Cri.A.No.459/2023
22. It is the case of the accused that complainant has misused
the cheque. The burden is upon the accused to prove that cheque
was misused by the complainant by producing cogent evidence.
The accused was at liberty to take any legal action against the
complainant if the cheque was misused. But, no such steps were
taken by the accused alleging that cheque was misused by the
complainant. He has categorically stated during the cross
examination that she has not taken any legal action against the
complainant alleging that he has misused the cheque. Therefore,
there are no materials to substantiate the said contention of the
accused. The available materials on record probabillises the case
of the complainant. The accused has failed to raise a probable
defence and also failed to rebut the presumption available in
favour of the complainant.
23. At this juncture it is worthwhile to go through a judgment
reported in AIR (2010) 11 Supreme Court Cases 441, 1898, in
the case of Rangappa Vs. Mohan, wherein by relying upon the
ruling of Hithen P Dalal Vs. Bratheendranath Banerji, it is
reiterated that once the accused admits his signature the legal
presumption will have to be raised in favour of the complainant.
The accused can prove non-existence of a consideration by raising
a probable defence. In the case on hand the accused has failed to
raise probable defence.
17
Cri.A.No.459/2023
24. In a proceeding under section 138 of N.I. Act it is for the
accused to prove that cheque was not issued towards legally
recoverable debt or liability. He has to lead credible evidence for
rebuttal of this presumption. The presumption under section 139
of N.I.Act is a presumption of law, it is not the presumption of
fact. This presumption has to be raised by the Court in all the
cases. Once the factum of dishonour is established, the onus to
rebut the presumption lies on accused and such evidence must be
sufficient, cogent, and to be proved beyond all reasonable doubt.
Therefore mere explanation is not enough to repel this
presumption of law. In the present case the complainant has
discharged its initial burden that the accused had issued the
cheque in question in its favour and the same was dishonoured.
It has also complied with the mandatory provisions prescribed by
law. Such being the case, burden is caste on the accused to prove
that the cheque was not issued towards any legally recoverable
debt.
25. The cumulative effect of oral as well as documentary
evidence produced by the complainant is that the accused has
issued cheque bearing No.372986 dated 29/11/2018 for
Rs.9,83,281/- drawn on Axis Bank limited, Banashankari Branch,
Bengaluru. When the cheque was presented by the complainant
for encashment through his banker Vijaya Bank, Malleshwaram
Branch, Bengaluru same came to be dishonoured with shara
‘insufficient funds’ on 01/12/2018 and the accused has failed to
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Cri.A.No.459/2023
make payment within stipulated period prescribed by law.
Accordingly point Nos.1 and 2 are answered in the Affirmative.
26. Point No.3: The trial Court has passed the judgment of
conviction against the accused and sentenced him to pay a fine of
Rs.9,88,281/- and in default to pay fine ordered him to undergo
simple imprisonment for a period of one year by considering oral
as well as documentary evidence produced before it. The trial
Court has considered the oral as well as the documentary
evidence in its right perspective. Therefore I find no perversity or
error of judgment on the part of the learned Magistrate in
convicting the accused. Therefore point No.3 is answered in the
Negative.
27. Point No.4:- In view of the findings given on point No.1 to 4, I
proceed to pass the following:-
ORDER
The appeal filed by the appellant
under section 374(3) of Code of Criminal
Procedure is dismissed.
The judgment of conviction and
sentence passed by the trial Court in
C.C.No.22556/2019 dated 7/03/2023
passed by XXVIII ACMM, Bangalore is
hereby confirmed.
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Cri.A.No.459/2023
Office is directed to transmit the
records to the trial Court along with the
copy of this order.
(Dictated to the Stenographer Grade-I, Online, typed by her directly on
computer, corrected and then pronounced by me in the Open Court on this
23rd day of July, 2025)(JAYAPRAKASH. A)
LXVI Addl. City Civil & Sessions Judge,
Bengaluru
20
Cri.A.No.459/2023Pronounced vide separate judgment
with following operative portion:
ORDER
The appeal filed by the appellant
under section 374(3) of Code of
Criminal Procedure is dismissed.
The judgment of conviction and
sentence passed by the trial Court in
C.C.No.22556/2019 dated 7/03/2023
passed by XXVIII ACMM, Bangalore is
hereby confirmed.
Office is directed to transmit the
records to the trial Court along with
the copy of this order.
LXVI Addl. CC & SJ,
Bengaluru
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